EXHIBIT 99
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$40,000,000
CREDIT AGREEMENT
among
XXXXXX DRILLING COMPANY,
as Borrower
The Several Lenders
from Time to Time Parties Hereto
XXXXXX BROTHERS INC.,
as Sole Advisor, Sole Lead Arranger and Sole Bookrunner
BANK OF AMERICA, N.A.,
as Syndication Agent
and
XXXXXX COMMERCIAL PAPER INC.,
as Administrative Agent
Dated as of December 20, 2004
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TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS........................................................................................1
1.1 Defined Terms...................................................................................1
1.2 Other Definitional Provisions..................................................................19
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS...................................................................19
2.1 Commitments....................................................................................20
2.2 Procedure for Borrowing........................................................................20
2.3 Borrowing Base Calculations; Inclusion of Assets in Borrowing Base.............................20
2.4 Repayment of Loans; Evidence of Debt...........................................................20
2.5 Commitment Fees, etc...........................................................................21
2.6 Termination or Reduction of Credit Commitments.................................................22
2.7 Optional Prepayments...........................................................................22
2.8 Mandatory Prepayments..........................................................................22
2.9 Conversion and Continuation Options............................................................22
2.10 Minimum Amounts and Maximum Number of Eurodollar Tranches......................................23
2.11 Interest Rates and Payment Dates...............................................................23
2.12 Computation of Interest and Fees...............................................................24
2.13 Inability to Determine Interest Rate...........................................................24
2.14 Pro Rata Treatment and Payments................................................................24
2.15 Requirements of Law............................................................................26
2.16 Taxes..........................................................................................27
2.17 Indemnity......................................................................................28
2.18 Illegality.....................................................................................29
2.19 Change of Lending Office.......................................................................29
2.20 Bank Products..................................................................................29
SECTION 3. LETTERS OF CREDIT.................................................................................30
3.1 L/C Commitment.................................................................................30
3.2 Procedure for Issuance of Letter of Credit.....................................................30
3.3 Fees and Other Charges.........................................................................31
3.4 L/C Participations.............................................................................31
3.5 Reimbursement Obligation of the Borrower.......................................................32
3.6 Obligations Absolute...........................................................................33
3.7 Letter of Credit Payments......................................................................33
3.8 Applications...................................................................................33
3.9 Indemnification; Exoneration; Power of Attorney................................................33
3.10 Supporting Letter of Credit; Cash Collateral...................................................35
3.11 Letters of Credit Issued for Subsidiaries......................................................36
3.12 Determination of Amount........................................................................36
SECTION 4. REPRESENTATIONS AND WARRANTIES....................................................................36
4.1 Financial Condition............................................................................36
4.2 No Change......................................................................................37
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Page
4.3 Corporate Existence; Compliance with Law.......................................................37
4.4 Corporate Power; Authorization; Enforceable Obligations........................................37
4.5 No Legal Bar...................................................................................38
4.6 No Material Litigation.........................................................................38
4.7 No Default.....................................................................................38
4.8 Ownership of Property; Liens...................................................................38
4.9 Intellectual Property..........................................................................38
4.10 Taxes..........................................................................................38
4.11 Federal Regulations............................................................................39
4.12 Labor Matters..................................................................................39
4.13 ERISA..........................................................................................39
4.14 Investment Company Act; Other Regulations......................................................39
4.15 Subsidiaries...................................................................................39
4.16 Use of Proceeds................................................................................40
4.17 Environmental Matters..........................................................................40
4.18 Accuracy of Information, etc...................................................................41
4.19 Security Documents.............................................................................41
4.20 Solvency.......................................................................................41
SECTION 5. CONDITIONS PRECEDENT..............................................................................42
5.1 Conditions to Initial Extension of Credit......................................................42
5.2 Conditions to Each Extension of Credit.........................................................44
SECTION 6. AFFIRMATIVE COVENANTS.............................................................................44
6.1 Financial Statements...........................................................................44
6.2 Certificates; Other Information................................................................45
6.3 Conduct of Business and Maintenance of Existence, etc..........................................46
6.4 Maintenance of Property; Insurance.............................................................46
6.5 Inspection of Property; Books and Records; Discussions.........................................46
6.6 Notices........................................................................................47
6.7 Environmental Laws.............................................................................47
6.8 Additional Collateral, etc.....................................................................47
6.9 Borrowing Base Certificate.....................................................................48
6.10 Cash Management Systems........................................................................49
6.11 Inspection of Collateral.......................................................................50
6.12 Further Assurances.............................................................................50
SECTION 7. NEGATIVE COVENANTS................................................................................50
7.1 Financial Condition Covenants..................................................................50
7.2 Limitation on Indebtedness.....................................................................51
7.3 Limitation on Liens............................................................................52
7.4 Limitation on Fundamental Changes..............................................................53
7.5 Limitation on Disposition of Property..........................................................53
7.6 Limitation on Restricted Payments..............................................................54
7.7 Limitation on Optional Payments and Modifications of Debt Instruments, etc.....................55
7.8 Limitation on Transactions with Affiliates.....................................................55
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Page
7.9 Limitation on Changes in Fiscal Periods........................................................56
7.10 Limitation on Negative Pledge Clauses..........................................................56
7.11 Limitation on Restrictions on Subsidiary Distributions.........................................56
7.12 Limitation on Lines of Business................................................................56
7.13 Limitation on Hedge Agreements.................................................................57
SECTION 8. EVENTS OF DEFAULT.................................................................................57
SECTION 9. THE ADMINISTRATIVE AGENT..........................................................................60
9.1 Appointment....................................................................................60
9.2 Delegation of Duties...........................................................................60
9.3 Exculpatory Provisions.........................................................................60
9.4 Reliance by Administrative Agent...............................................................60
9.5 Notice of Default..............................................................................61
9.6 Non-Reliance on Administrative Agent and Other Lenders.........................................61
9.7 Indemnification................................................................................62
9.8 Agent in Its Individual Capacity...............................................................62
9.9 Successor Administrative Agent.................................................................62
9.10 Authorization to Release Liens and Guarantees..................................................63
9.11 The Arrangers; the Syndication Agent...........................................................63
SECTION 10. MISCELLANEOUS....................................................................................63
10.1 Amendments and Waivers.........................................................................63
10.2 Notices........................................................................................64
10.3 No Waiver; Cumulative Remedies.................................................................65
10.4 Survival of Representations and Warranties.....................................................66
10.5 Payment of Expenses............................................................................66
10.6 Successors and Assigns; Participations and Assignments.........................................67
10.7 Adjustments; Set-off...........................................................................69
10.8 Counterparts...................................................................................70
10.9 Severability...................................................................................70
10.10 Integration....................................................................................70
10.11 GOVERNING LAW..................................................................................70
10.12 Submission To Jurisdiction; Waivers............................................................70
10.13 Acknowledgments................................................................................71
10.14 Confidentiality................................................................................71
10.15 Release of Guarantees and Liens................................................................72
10.16 Accounting Changes.............................................................................73
10.17 Delivery of Lender Addenda.....................................................................73
10.18 Usury Not Intended.............................................................................73
10.19 WAIVERS OF JURY TRIAL..........................................................................74
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ANNEXES:
A Pricing Grid
B Existing Letters of Credit
SCHEDULES:
1.1 Borrowing Base Provisions
4.4 Consents, Authorizations, Filings and Notices
4.15 Subsidiaries
4.17 Environmental Matters
4.19 UCC Filing Jurisdictions
7.2(d) Existing Indebtedness
7.3(f) Existing Liens
EXHIBITS:
A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Assignment and Acceptance
E-1 Form of Legal Opinion of Xxxxxxxxx & Xxxxxxxxx, L.L.P.
E-2 Form of Legal Opinion of General Counsel of the Borrower
F Form of Note
G Form of Borrowing Base Certificate
H Form of Exemption Certificate
I Form of Lender Addendum
J Form of Borrowing Notice
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CREDIT AGREEMENT, dated as of December 20, 2004, among XXXXXX
DRILLING COMPANY, a Delaware corporation (the "Borrower"), the several banks and
other financial institutions or entities from time to time parties to this
Agreement (the "Lenders"), XXXXXX BROTHERS INC., as sole advisor, sole lead
arranger and sole bookrunner (in such capacity, the "Arranger"), BANK OF
AMERICA, N.A., as syndication agent (in such capacity, the "Syndication Agent"),
and XXXXXX COMMERCIAL PAPER INC., as administrative agent (in such capacity, the
"Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders extend to
it the credit facility provided for herein and the Lenders are willing to make
such credit facility available upon and subject to the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
agreements hereinafter set forth, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed
in this Section 1.1 shall have the respective meanings set forth in this Section
1.1.
"Accounts": as defined in Schedule 1.1.
"ACH Transactions": any cash management or related services
including controlled disbursement accounts and the automated clearinghouse
transfer of funds by any Lender for the account of the Borrower or any of its
Subsidiaries pursuant to agreement or overdrafts.
"Adjustment Date": as defined in the Pricing Grid.
"Administrative Agent": as defined in the preamble hereto.
"Advance Rate": as defined in Schedule 1.1.
"Affiliate": as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person means
the power, directly or indirectly, either to (a) vote 10% or more of the
securities having ordinary voting power for the election of directors (or
persons performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"Agents": the collective reference to the Syndication Agent
and the Administrative Agent.
"Agreement": this
Credit Agreement, as amended, supplemented
or otherwise modified from time to time.
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"Applicable Margin": (a) in the case of Base Rate Loans,
1.50%, and (b) in the case of Eurodollar Loans, 2.50%; provided, that on and
after the first Adjustment Date occurring after the completion of one full
fiscal quarter of the Borrower after the Closing Date, the Applicable Margin for
each Type of Loan will be determined pursuant to the Pricing Grid.
"Application": an application, in such form as the relevant
Issuing Lender may specify from time to time, requesting such Issuing Lender to
issue a Letter of Credit.
"Arranger": as defined in the preamble hereto.
"Assignee": as defined in Section 10.6(c).
"Assignor": as defined in Section 10.6(c).
"Available Commitment": with respect to any Lender at any
time, an amount equal to the excess, if any, of (a) such Lender's Commitment
then in effect over (b) such Lender's Extensions of Credit then outstanding.
"Bank Products": all (a) ACH Transactions and credit card
facilities extended to the Borrower or any of its Subsidiaries by any Lender (or
any Affiliate of any Lender in reliance on such Lender's agreement to indemnify
such Affiliate), and any instruments governing any of the foregoing and (b)
Specified Hedge Agreements.
"Base Rate": for any day, a rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate
in effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the prime
lending rate as set forth on the British Banking Association Telerate Page 5 (or
such other comparable publicly available page as may, in the reasonable opinion
of the Administrative Agent after notice to the Borrower, replace such page for
the purpose of displaying such rate if such rate no longer appears on the
British Bankers Association Telerate Page 5), as in effect from time to time.
The Prime Rate is a reference rate and does not necessarily represent the lowest
or best rate actually available. Any change in the Base Rate due to a change in
the Prime Rate or the Federal Funds Effective Rate shall be effective as of the
opening of business on the effective day of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.
"Base Rate Loans": Loans for which the applicable rate of
interest is based upon the Base Rate.
"Benefitted Lender": as defined in Section 10.7.
"Board": the Board of Governors of the Federal Reserve System
of the United States (or any successor).
"Borrower": as defined in the preamble hereto.
"Borrowing Base": as defined in Schedule 1.1.
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"Borrowing Base Certificate": a borrowing base certificate
substantially in the form of Exhibit G, as the same may be modified from time to
time as agreed by the Borrower and the Administrative Agent.
"Borrowing Date": any Business Day specified by the Borrower
as a date on which the Borrower requests the relevant Lenders to make Loans
hereunder.
"Borrowing Notice": with respect to any request for borrowing
of Loans hereunder, a notice from the Borrower, substantially in the form of,
and containing the information prescribed by, Exhibit J, delivered to the
Administrative Agent.
"Business Day": (a) for all purposes other than as covered by
clause (b) below, a day other than a Saturday, Sunday or other day on which
commercial banks in
New York City are authorized or required by law to close and
(b) 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 (a) and which is also a day for trading by and
between banks in Dollar deposits in the interbank eurodollar market.
"Capital Lease Obligations": with respect to any Person, the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP;
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"Capital Stock": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.
"Cash Equivalents": (a) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States government or issued by
any agency thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of six months or less from the date of
acquisition issued by any Lender or by any commercial bank organized under the
laws of the United States of America or any state thereof having combined
capital and surplus of not less than $500,000,000; (c) commercial paper of an
issuer rated at least A-2 by Standard & Poor's Ratings Services ("S&P") or P-2
by Xxxxx'x Investors Service, Inc. ("Moody's"), or carrying an equivalent rating
by a nationally recognized rating agency if both of the two named rating
agencies cease publishing ratings of commercial paper issuers generally, and
maturing within six months from the date of acquisition; (d) repurchase
obligations of any Lender or of any commercial bank satisfying the requirements
of clause (b) of this definition, having a term of not more than 30 days with
respect to securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any
4
foreign government, the securities of which state, commonwealth, territory,
political subdivision, taxing authority or foreign government (as the case may
be) are rated at least A by S&P or A by Moody's; (f) securities with maturities
of six months or less from the date of acquisition backed by standby letters of
credit issued by any Lender or any commercial bank satisfying the requirements
of clause (b) of this definition; (g) shares of money market mutual or similar
funds which invest exclusively in assets satisfying the requirements of clauses
(a) through (f) of this definition; and (h) shares of the Nations Cash Reserves
fund for which an affiliate of Bank of America, N.A. provides investment
advisory services.
"Change of Control": the occurrence of any of the following
events: (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) shall become, or obtain rights (whether by means or warrants, options or
otherwise) to become, the "beneficial owner" (as defined in Rules 13(d)-3 and
13(d)-5 under the Exchange Act), directly or indirectly, of more than 35% of the
outstanding common stock of the Borrower; (b) the board of directors of the
Borrower shall cease to consist of a majority of Continuing Directors; or (c) a
Specified Change of Control.
"Closing Date": the date on which the conditions precedent set
forth in Section 5.1 shall have been satisfied, which date shall be not later
than December 31, 2004.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": all Property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any Security
Document.
"Commitment": as to any Lender, the obligation of such Lender
to make Loans and participate in Letters of Credit in an aggregate principal
and/or face amount not to exceed the amount set forth on Schedule 1 to the
Lender Addendum delivered by such Lender, or, as the case may be, in the
Assignment and Acceptance pursuant to which such Lender became a party hereto,
as the same may be changed from time to time pursuant to the terms hereof. The
original aggregate amount of the Total Commitments is $40,000,000.
"Commitment Fee Rate": 1/2 of 1% per annum.
"Commitment Period": the period from and including the Closing
Date to the Termination Date.
"Commonly Controlled Entity": an entity, whether or not
incorporated, that is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group that includes the Borrower and
that is treated as a single employer under Section 414 of the Code.
"Compliance Certificate": a certificate duly executed by a
Responsible Officer, substantially in the form of Exhibit B.
"Concentration Account": one or more bank accounts maintained
by the Administrative Agent, over which the Administrative Agent shall have sole
dominion and
5
control, into which proceeds of Collateral shall be transferred from other
accounts maintained by the Borrower and the Subsidiary Guarantors, in the event
that the Administrative Agent requires such transfer during the existence of an
Event of Default.
"Consolidated Current Assets": of any Person at any date, all
amounts (other than cash and Cash Equivalents) that would, in conformity with
GAAP, be set forth opposite the caption "total current assets" (or any like
caption) on a consolidated balance sheet of such Person and its Subsidiaries at
such date.
"Consolidated Current Liabilities": of any Person at any date,
all amounts that would, in conformity with GAAP, be set forth opposite the
caption "total current liabilities" (or any like caption) on a consolidated
balance sheet of such Person and its Subsidiaries at such date, but excluding,
with respect to the Borrower, (a) the current portion of any Funded Debt of the
Borrower and its Subsidiaries and (b), without duplication, all Indebtedness
consisting of Loans, to the extent otherwise included therein.
"Consolidated EBITDA": of any Person for any period,
Consolidated Net Income of such Person and its Subsidiaries for such period
plus, without duplication and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such period, the sum of (a) income
tax expense, (b) Consolidated Interest Expense of such Person and its
Subsidiaries, amortization or writeoff of debt discount and debt issuance costs
and commissions, discounts and other fees and charges associated with
Indebtedness, (c) depreciation and amortization expense, (d) amortization of
intangibles (including, but not limited to, goodwill) and organization costs,
(e) any extraordinary, unusual or non-recurring expenses or losses (including,
whether or not otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, losses on sales of assets outside of
the ordinary course of business), to the extent such additions are found to be
acceptable by the Administrative Agent, acting reasonably, and (f) any other
non-cash charges, and minus, to the extent included in the statement of such
Consolidated Net Income for such period, the sum of (a) interest income (except
to the extent deducted in determining Consolidated Interest Expense), (b) any
extraordinary, unusual or non-recurring income or gains (including, whether or
not otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, gains on the sales of assets outside of
the ordinary course of business), to the extent such deductions are found to be
acceptable by the Administrative Agent, acting reasonably, (c) any other
non-cash income, all as determined on a consolidated basis and (d) the amount of
any cash expenditures during such period in respect of items that were added as
non-cash charges in determining Consolidated EBITDA for a prior period.
"Consolidated Interest Coverage Ratio": for any period, the
ratio of (a) Consolidated EBITDA of the Borrower and its Subsidiaries for such
period to (b) Consolidated Interest Expense of the Borrower and its Subsidiaries
for such period.
"Consolidated Interest Expense": of any Person for any period,
total interest expense (including that attributable to Capital Lease
Obligations) of such Person and its Subsidiaries for such period with respect to
all outstanding Indebtedness of such Person and its Subsidiaries (including,
without limitation, all commissions, discounts and other fees and charges owed
by such Person with respect to letters of credit and bankers' acceptance
financing
6
and net costs of such Person under Hedge Agreements in respect of interest rates
to the extent such net costs are allocable to such period in accordance with
GAAP).
"Consolidated Leverage Ratio": as at the last day of any
period of four consecutive fiscal quarters of the Borrower, the ratio of (a)
Consolidated Total Debt on such day to (b) Consolidated EBITDA of the Borrower
and its Subsidiaries for such period; provided that for purposes of calculating
Consolidated EBITDA of the Borrower and its Subsidiaries for any period, (i) the
Consolidated EBITDA of any Person acquired by the Borrower or its Subsidiaries
during such period shall be included on a pro forma basis for such period
(assuming the consummation of such acquisition and the incurrence or assumption
of any Indebtedness in connection therewith occurred on the first day of such
period) if the consolidated balance sheet of such acquired Person and its
consolidated Subsidiaries as at the end of the period preceding the acquisition
of such Person and the related consolidated statements of income and
stockholders' equity and of cash flows for the period in respect of which
Consolidated EBITDA is to be calculated (x) have been previously provided to the
Administrative Agent and the Lenders and (y) either (1) have been reported on
without a qualification arising out of the scope of the audit by independent
certified public accountants of nationally recognized standing or (2) have been
found acceptable by the Administrative Agent and (ii) the Consolidated EBITDA of
any Person Disposed of by the Borrower or its Subsidiaries during such period
shall be excluded for such period (assuming the consummation of such Disposition
and the repayment of any Indebtedness in connection therewith occurred on the
first day of such period).
"Consolidated Net Income": of any Person for any period, the
consolidated net income (or loss) of such Person and its Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP; provided,
that in calculating Consolidated Net Income of the Borrower and its consolidated
Subsidiaries for any period, there shall be excluded (a) the income (or deficit)
of any Person accrued prior to the date it becomes a Subsidiary of the Borrower
or is merged into or consolidated with the Borrower or any of its Subsidiaries,
(b) the income (or deficit) of any Person (other than a Subsidiary of the
Borrower) in which the Borrower or any of its Subsidiaries has an ownership
interest, except to the extent that any such income is actually received by the
Borrower or such Subsidiary in the form of cash dividends or similar cash
distributions and (c) the undistributed earnings of any Subsidiary of the
Borrower to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any Contractual Obligation (other than under any Loan Document) or Requirement
of Law applicable to such Subsidiary.
"Consolidated Senior Secured Debt": all Consolidated Total
Debt that is secured by a Lien on any Property.
"Consolidated Senior Secured Leverage Ratio": as of the last
day of any period of four consecutive fiscal quarters, the ratio of (a)
Consolidated Senior Secured Debt on such day to (b) Consolidated EBITDA of the
Borrower and its Subsidiaries for such period.
"Consolidated Total Debt": at any date, the aggregate
principal amount of all Indebtedness of the Borrower and its Subsidiaries at
such date (other than Indebtedness of the type described in clause (f) of the
definition of "Indebtedness"), determined on a consolidated basis in accordance
with GAAP.
7
"Consolidated Working Capital": at any date, the difference of
(a) Consolidated Current Assets of the Borrower on such date less (b)
Consolidated Current Liabilities of the Borrower on such date.
"Continuing Directors": the directors of the Borrower on the
Closing Date and each other director of the Borrower, if, in each case, such
other director's nomination for election to the board of directors of the
Borrower is recommended by at least a majority of the then Continuing Directors.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.
"Control Agreement": in respect of each account identified as
provided in Section 6.10(a), a Control Agreement, in form and substance
reasonably satisfactory to the Administrative Agent and the Borrower, pursuant
to which (a) the Borrower or the Subsidiary Guarantor, as the case may be, that
is the owner of such account irrevocably instructs the bank or securities
intermediary that maintains such account that such bank or securities
intermediary shall follow the instructions or entitlement orders, as the case
may be, of the Administrative Agent without further consent of the Borrower or
such Subsidiary Guarantor and (b) the Administrative Agent agrees that it will
not give any instructions or entitlement orders, as the case may be, in respect
of such account unless an Event of Default has occurred and is continuing. Each
Control Agreement shall contain such other terms as shall be customary for
agreements of such type.
"Control Investment Affiliate": as to any Person, any other
Person that (a) directly or indirectly, is in control of, is controlled by, or
is under common control with, such Person and (b) is organized by such Person
primarily for the purpose of making equity or debt investments in one or more
companies. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"Default": any of the events specified in Section 8, whether
or not any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Derivatives Counterparty": as defined in Section 7.6.
"Disposition": with respect to any Property, any sale, sale
and leaseback, assignment, conveyance, transfer or other disposition thereof;
and the terms "Dispose" and "Disposed of" shall have correlative meanings.
"Dollars" and "$": lawful currency of the United States of
America.
"Domestic Subsidiary": any Subsidiary of the Borrower
organized under the laws of any jurisdiction within the United States of
America.
"Eligible Accounts Receivable": as defined in Schedule 1.1.
8
"Eligible Rental Equipment": as defined in Schedule 1.1.
"Environmental Laws": any and all laws, rules, orders,
regulations, statutes, ordinances, guidelines, codes, decrees, or other legally
enforceable requirements (including, without limitation, common law) of any
international authority, foreign government, the United States, or any state,
local, municipal or other governmental authority, regulating, relating to or
imposing liability or standards of conduct concerning protection of the
environment or of human health, or employee health and safety, as has been, is
now, or may at any time hereafter be, in effect.
"Environmental Permits": any and all permits, licenses,
approvals, registrations, notifications, exemptions and other authorizations
required under any Environmental Law.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day, the
aggregate (without duplication) of the maximum rates (expressed as a decimal
fraction) of reserve requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves) under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period, the rate per annum determined on the basis of the rate for
deposits in Dollars for a period equal to such Interest Period commencing on the
first day of such Interest Period appearing on Page 3750 of the Telerate screen
as of 11:00 A.M., London time, two Business Days prior to the beginning of such
Interest Period. In the event that such rate does not appear on Page 3750 of the
Telerate screen (or otherwise on such screen), the "Eurodollar Base Rate" for
purposes of this definition shall be determined by reference to such other
comparable publicly available service for displaying eurodollar rates as may be
selected by the Administrative Agent.
"Eurodollar Loans": Loans for which the applicable rate of
interest is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period, a rate per annum determined for such day in accordance with the
following formula (rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar
Loans the then current Interest Periods with respect to all of which begin on
the same date and end on the same later date (whether or not such Loans shall
originally have been made on the same day).
9
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"Excluded Subsidiaries": (a) Xxxxxx Drilling Investment
Company, an Oklahoma corporation, (b) PKD Sales Corporation, an Oklahoma
corporation, and (c) any Foreign Subsidiary; provided, that a Subsidiary shall
cease to be an Excluded Subsidiary if either (y) it provides a guaranty of the
obligations under any Indenture or (z) in the case of each of Xxxxxx Drilling
Investment Company and PKD Sales Corporation, it ceases to be an "Unrestricted
Subsidiary" under the Indentures.
"Existing Credit Facilities": the
Credit Agreement, dated as
of October 10, 2003, as amended, among the Borrower, the lenders party thereto,
Xxxxxx Brothers Inc. and Deutsche Bank Securities Inc., as joint advisors, joint
lead arrangers and joint bookrunners, Deutsche Bank Securities Inc., as
syndication agent, Bank of America, N.A., as documentation agent, Deutsche Bank
Trust Company Americas, as collateral agent, and Xxxxxx Commercial Paper Inc.,
as administrative agent.
"Existing Issuing Lender": Bank of America, N.A.
"Existing Letters of Credit": the letters of credit described
in Annex B.
"Extensions of Credit": as to any Lender at any time, an
amount equal to the sum of (a) the aggregate principal amount of all Loans made
by such Lender then outstanding and (b) such Lender's Percentage of the L/C
Obligations then outstanding.
"Facility": the Commitments and the Loans made thereunder.
"Federal Funds Effective Rate": for any day, 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 on the
next succeeding Business Day by the Federal Reserve Bank of
New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the
Administrative Agent from three federal funds brokers of recognized standing
selected by it.
"Foreign Subsidiary": any Subsidiary of the Borrower that is
not a Domestic Subsidiary.
"FQ1", "FQ2", "FQ3", and "FQ4": when used with a numerical
year designation, means the first, second, third or fourth fiscal quarters,
respectively, of such fiscal year of the Borrower. (e.g., FQ4 2004 means the
fourth fiscal quarter of the Borrower's 2004 fiscal year, which ends December
31, 2004).
"Funded Debt": with respect to any Person, all Indebtedness of
such Person of the types described in clauses (a) through (e) of the definition
of "Indebtedness" in this Section.
"Funding Office": the office specified from time to time by
the Administrative Agent as its funding office by notice to the Borrower and the
Lenders.
10
"GAAP": generally accepted accounting principles in the United
States of America as in effect from time to time.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guarantee and Collateral Agreement": the Guarantee and
Collateral Agreement to be executed and delivered by the Borrower and each
Subsidiary Guarantor, substantially in the form of Exhibit A, as the same may be
amended, supplemented or otherwise modified from time to time.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit), if to
induce the creation of such obligation of such other Person the guaranteeing
person has issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness (the
"primary obligations") of any other third Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any Property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase Property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation of any guaranteeing person shall be deemed to be the lower
of (a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in good
faith.
"Hedge Agreements": all interest rate or currency swaps, caps
or collar agreements, foreign exchange agreements, commodity contracts or
similar arrangements entered into by the Borrower or its Subsidiaries providing
for protection against fluctuations in interest rates, currency exchange rates,
commodity prices or the exchange of nominal interest obligations, either
generally or under specific contingencies. For avoidance of doubt, Hedge
Agreements shall include any interest rate swap or similar agreement that
provides for the payment by the Borrower or any of its Subsidiaries of (i)
amounts based upon a floating rate in exchange for receipt by the Borrower or
such Subsidiary of amounts based upon a fixed rate or (ii) amounts based upon a
fixed rate in exchange for receipt the Borrower or such Subsidiary of amounts
based upon a floating rate.
11
"Immaterial Account": any account in which the aggregate
amount on deposit (or, in the case of any securities account, the total fair
market value of all securities held in such account) does not at any time exceed
$25,000.
"Immaterial Subsidiary": any Subsidiary designated by the
Borrower, by written notice to the Administrative Agent, as an "Immaterial
Subsidiary"; provided, that (a) no Subsidiary may be so designated unless such
Subsidiary (i) had assets having an aggregate book value, as of the end of the
fiscal year most recently ended, not exceeding $1,000,000 and (ii) had
Consolidated Net Income not exceeding $1,000,000 for such fiscal year and (b)
any Subsidiary shall automatically cease to be an Immaterial Subsidiary if at
the end of any subsequent fiscal year such Subsidiary would not meet the
requirements set forth in the foregoing clause (a).
"Indebtedness": of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money, (b) all
obligations of such Person for the deferred purchase price of Property or
services (other than trade payables incurred in the ordinary course of such
Person's business), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to Property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such Property), (e) all Capital Lease Obligations of
such Person, (f) all obligations of such Person, contingent or otherwise, as an
account party or applicant under acceptance, letter of credit or similar
facilities, (g) all obligations of such Person, contingent or otherwise, to
purchase, redeem, retire or otherwise acquire for value (other than through the
issuance of common stock of such Person) any Capital Stock of such Person, other
than any such obligations the payment of which would be permitted by Section
7.6(c), (h) all Guarantee Obligations of such Person in respect of obligations
of the kind referred to in clauses (a) through (g) above; (i) all obligations of
the kind referred to in clauses (a) through (h) above secured by (or for which
the holder of such obligation has an existing right, contingent or otherwise, to
be secured by) any Lien on Property (including, without limitation, accounts and
contract rights) owned by such Person, whether or not such Person has assumed or
become liable for the payment of such obligation and (j) for the purposes of
Section 8(e) only, all obligations of such Person in respect of Hedge
Agreements.
"Indemnified Liabilities": as defined in Section 10.5.
"Indemnitee": as defined in Section 10.5.
"Indentures": the collective reference to the 10.125% Senior
Notes Indenture, the Senior Notes Indenture and the Senior Floating Rate Notes
Indenture.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": the collective reference to all
rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, copyrights, copyright licenses, patents,
12
patent licenses, trademarks, trademark licenses, technology, know-how and
processes, and all rights to xxx at law or in equity for any infringement or
other impairment thereof, including the right to receive all proceeds and
damages therefrom.
"Interest Payment Date": (a) as to any Base Rate Loan, the
last day of each March, June, September and December to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any Eurodollar
Loan having an Interest Period of three months or shorter, the last day of such
Interest Period, (c) as to any Eurodollar Loan having an Interest Period longer
than three months, each day that is three months, or a whole multiple thereof,
after the first day of such Interest Period and the last day of such Interest
Period and (d) as to any Eurodollar Loan, the date of any repayment or
prepayment made in respect thereof.
"Interest Period": as to any Eurodollar Loan, (a) initially,
the period commencing on the borrowing or conversion date, as the case may be,
with respect to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the last day of
the then current Interest Period with respect thereto; provided that, all of the
foregoing provisions relating to Interest Periods are subject to the following:
(1) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended
to the next succeeding Business Day unless the result of such
extension would be to carry such Interest Period into another
calendar month in which event such Interest Period shall end
on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend beyond the
Termination Date shall end on the Termination Date; and
(3) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of
the calendar month at the end of such Interest Period.
"Investment": with respect to any Person, any advance, loan,
extension of credit (by way of guaranty or otherwise) or capital contribution
to, or purchase of any Capital Stock, bonds, notes, debentures or other debt
securities of, or any assets constituting an ongoing business from, or any other
investment in, any other Person.
"ISP": with respect to any Letter of Credit, the
"International Standby Practices 1998" published by the Institute of
International Banking Law & Practice (or such later version thereof as may be in
effect at the time of issuance of such Letter of Credit).
"Issuing Lender": (a) in respect of the Existing Letters of
Credit only, the Existing Issuing Lender and (b) in respect of each Letter of
Credit issued hereunder on or after the
13
Closing Date, Bank of America, N.A. and any Lender from time to time designated
by the Borrower as an Issuing Lender with the consent of such Lender and the
Administrative Agent.
"L/C Commitment": $25,000,000.
"L/C Fee Payment Date": the last day of each March, June,
September and December and the last day of the Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of
(a) the aggregate then undrawn and unexpired amount of the then outstanding
Letters of Credit and (b) the aggregate amount of drawings under Letters of
Credit that have not then been reimbursed pursuant to Section 3.5. For purposes
of computing the undrawn amount of any Letter of Credit, such amount shall be
determined in accordance with Section 3.12. For all purposes of this Agreement,
if on any date of determination a Letter of Credit has expired by its terms but
any amount may still be drawn thereunder by reason of the operation of Rule 3.14
of the ISP, such Letter of Credit shall be deemed to be undrawn, unexpired and
outstanding in the amount so remaining available to be drawn.
"L/C Participants": with respect to any Letter of Credit, the
collective reference to all Lenders other than the Issuing Lender that issued
such letter of Credit.
"Xxxxxx Entity": any of Xxxxxx Commercial Paper Inc. or any of
its affiliates (including Syndicated Loan Funding Trust).
"Lender Addendum": with respect to any initial Lender, a
Lender Addendum, substantially in the form of Exhibit I, to be executed and
delivered by such Lender on the Closing Date as provided in Section 10.17.
"Lenders": as defined in the preamble hereto.
"Letters of Credit": as defined in Section 3.1(a).
"Lien": any mortgage, pledge, hypothecation, collateral
assignment, encumbrance, lien (statutory or other), charge or other security
interest of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any capital lease having
substantially the same economic effect as any of the foregoing).
"Loan Documents": this Agreement, the Security Documents, the
Applications and the Notes.
"Loan": as defined in Section 2.1.
"Loan Parties": the Borrower and each Subsidiary Guarantor.
"Lockbox Agreement": in respect of each lockbox account, and
related lockbox and collection account, an agreement, in form and substance
reasonably satisfactory to the Administrative Agent and the Borrower, pursuant
to which the bank that maintains such account and the Borrower or the Subsidiary
Guarantor, as the case may be, that is the named owner of
14
such account shall agree with the Administrative Agent (a) that such lockbox and
accounts shall be used solely for the collection and deposit of proceeds of
Collateral, (b) that, upon notice from the Administrative Agent, such bank shall
transfer at the end of each business day all collected funds in any such account
to a Concentration Account and (c) the Administrative Agent agrees that it will
not give the notice described in the foregoing clause (b) unless an Event of
Default has occurred and is continuing. Each Lockbox Agreement shall contain
such other terms as shall be customary for agreements of such type.
"Material Adverse Effect": a material adverse effect on (a)
the business, assets, property or financial condition of the Borrower and its
Subsidiaries taken as a whole or (b) the validity or enforceability of any
material provision of this Agreement or any of the other Loan Documents or the
material rights or remedies of the Agents or the Lenders hereunder or
thereunder.
"Material Subsidiary": each Domestic Subsidiary that is not an
Immaterial Subsidiary.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, urea-formaldehyde insulation, asbestos, pollutants,
contaminants, radioactivity, and any other substances or forces of any kind,
whether or not any such substance or force is defined as hazardous or toxic
under any Environmental Law, that is regulated pursuant to or could give rise to
liability under any Environmental Law.
"Maximum Rate": as defined in Section 10.18.
"Multiemployer Plan": a Plan that is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": in connection with any issuance or sale
of debt securities or instruments or the incurrence of loans, the cash proceeds
received from such issuance or incurrence, net of attorneys' fees, investment
banking fees, accountants' fees, underwriting discounts and commissions and
other customary fees and expenses actually incurred in connection therewith.
"Non-Excluded Taxes": as defined in Section 2.16(a).
"Non-U.S. Lender": as defined in Section 2.16(d).
"Note": any promissory note evidencing any Loan.
"Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity of the
Loans and Reimbursement Obligations and interest accruing after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
the Loans, the Reimbursement Obligations and all other obligations and
liabilities of the Borrower to the Administrative Agent or to any Lender or any
Qualified Counterparty, whether direct or indirect,
15
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, this Agreement,
any other Loan Document, the Letters of Credit, any Bank Products or any other
document made, delivered or given in connection herewith or therewith, whether
on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including, without limitation, all fees, charges and
disbursements of counsel to the Administrative Agent or to any Lender that are
required to be paid by the Borrower pursuant hereto) or otherwise; provided,
that (i) obligations of the Borrower or any Subsidiary under any Bank Products
shall be secured and guaranteed pursuant to the Security Documents only to the
extent that, and for so long as, the other Obligations are so secured and
guaranteed and (ii) any release of Collateral or Subsidiary Guarantors effected
in the manner permitted by this Agreement shall not require the consent of
holders of obligations under Bank Products.
"Other Taxes": any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.
"Participant": as defined in Section 10.6(b).
"Participation Amount": as defined in Section 3.4(b).
"Paying Subsidiary": as defined in Section 7.6(a).
"Payment Office": the office specified from time to time by
the Administrative Agent as its payment office by notice to the Borrower and the
Lenders.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"Percentage": as to any Lender at any time, the percentage
which such Lender's Commitment then constitutes of the Total Commitments (or, at
any time after the Commitments shall have expired or terminated, the percentage
which the aggregate amount of such Lender's Extensions of Credit then
outstanding constitutes of the amount of the Total Extensions of Credit then
outstanding).
"Permitted Liens": any Liens permitted by paragraphs (a), (b),
(c), (d) and (e) of Section 7.3.
"Person": an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"Plan": at a particular time, any employee benefit plan that
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
16
"Pricing Grid": the pricing grid attached hereto as Annex A.
"Projections": as defined in Section 6.2(c).
"Property": any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock.
"Quail Tools": Quail Tools, L.P. an Oklahoma limited
partnership.
"Qualified Counterparty": with respect to any Specified Hedge
Agreement, any counterparty thereto that, at the time such Specified Hedge
Agreement was entered into, was a Lender or an affiliate of a Lender.
"Refinancing Debt": any Indebtedness permitted by clause (II)
of Section 7.2(d).
"Register": as defined in Section 10.6(d).
"Regulation U": Regulation U of the Board as in effect from
time to time.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse each Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit issued by such Issuing Lender.
"Related Fund": with respect to any Lender, any fund that (x)
invests in commercial loans and (y) is managed or advised by the same investment
advisor or an affiliate thereof as such Lender, by such Lender or an Affiliate
of such Lender.
"Rental Equipment": as defined in Schedule 1.1.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event": any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of
PBGC Reg. Section 4043.
"Required Lenders": at any time, the holders of more than 50%
of the Total Commitments then in effect or, if the Commitments have been
terminated, the Total Extensions of Credit then outstanding.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its Property or to which such Person or
any of its Property is subject.
17
"Responsible Officer": the chief executive officer, president,
chief financial officer or treasurer of the Borrower, but in any event, with
respect to financial matters, the chief financial officer of the Borrower.
"Restricted Payments": as defined in Section 7.6.
"SEC": the Securities and Exchange Commission (or successors
thereto or an analogous Governmental Authority).
"Secured Parties": as defined in the Guarantee and Collateral
Agreement.
"Security Documents": the collective reference to the
Guarantee and Collateral Agreement, the Lockbox Agreements, the Control
Agreements and all other security documents hereafter delivered to the
Administrative Agent granting a Lien on any Property of any Person to secure the
obligations and liabilities of any Loan Party under any Loan Document.
"Senior Floating Rate Notes": the $150,000,000 aggregate
principal amount of senior floating rate notes of the Borrower issued pursuant
to the Senior Floating Rate Notes Indenture.
"Senior Floating Rate Notes Indenture": the Indenture, dated
as of September 2, 2004, in respect of the Senior Floating Rate Notes, together
with all instruments and other agreements entered into by the Borrower or its
Subsidiaries in connection therewith, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with Section 7.7.
"Senior Notes Indenture": the Indenture, dated as of October
10, 2003, in respect of the Senior Notes, together with all instruments and
other agreements entered into by the Borrower or such Subsidiaries in connection
therewith, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with Section 7.7.
"Senior Notes": the $175,000,000 aggregate principal amount of
senior unsecured notes of the Borrower issued pursuant to the Senior Notes
Indenture.
"Single Employer Plan": any Plan that is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Solvent": with respect to any Person, as of any date of
determination, (a) the amount of the "present fair saleable value" of the assets
of such Person will, as of such date, exceed the amount of all "liabilities of
such Person, contingent or otherwise", as of such date, as such quoted terms are
determined in accordance with applicable federal and state laws governing
determinations of the insolvency of debtors, (b) the present fair saleable value
of the assets of such Person will, as of such date, be greater than the amount
that will be required to pay the probable liability of such Person on its debts
as such debts become absolute and matured, (c) such Person will not have, as of
such date, an unreasonably small amount of capital with which to conduct its
business, and (d) such Person will be able to pay its debts as they mature. For
purposes of this definition, (i) "debt" means liability on a "claim", and (ii)
"claim" means any (x) right to payment, whether or not such a right is reduced
to judgment, liquidated, unliquidated,
18
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or not such
right to an equitable remedy is reduced to judgment, fixed, contingent, matured
or unmatured, disputed, undisputed, secured or unsecured.
"Specified Change of Control": a "Change of Control", or like
event, as defined in any of the Indentures.
"Specified Hedge Agreement": any Hedge Agreement entered into
by the Borrower or any Subsidiary Guarantor and any Qualified Counterparty which
has been designated as a Specified Hedge Agreement pursuant to a notice given by
the Borrower and such Qualified Counterparty to the Administrative Agent (or, in
the case of any Hedge Agreement entered into prior to the Closing Date, to the
Administrative Agent under (and as defined in) the Existing Credit Facilities)
within 60 days after such Hedge Agreement is entered into.
"Specified Personal Property": any Property of a type in which
a security interest is purported to be granted pursuant to the Guarantee and
Collateral Agreement.
"Subsidiary": as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned or otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries
of the Borrower.
"Subsidiary Guarantor": (i) each Material Subsidiary of the
Borrower other than any Excluded Subsidiary and (ii) Quail USA, LLC.
"Supporting Letter of Credit": as defined in Section 3.10.
"10.125% Senior Notes": the Borrower's 10.125% Senior Notes
due November 2009.
"10.125% Senior Notes Indenture": the Indenture, dated as of
May 2, 2002, in respect of the 10.125% Senior Notes, together with all
instruments and other agreements entered into by the Borrower or its
Subsidiaries in connection therewith, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with Section 7.7.
"Termination Date": December 20, 2007.
"Total Commitments": at any time, the aggregate amount of the
Commitments then in effect.
"Total Extensions of Credit": at any time, the aggregate
amount of the Extensions of Credit of the Lenders outstanding at such time.
19
"Transferee": as defined in Section 10.15.
"Type": as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
"Wholly Owned Subsidiary": as to any Person, any other Person
all of the Capital Stock of which (other than directors' qualifying shares
required by law) is owned by such Person directly and/or through other Wholly
Owned Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor
that is a Wholly Owned Subsidiary of the Borrower.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the other Loan Documents or any certificate or other
document made or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Borrower and its Subsidiaries not defined in
Section 1.1 and accounting terms partly defined in Section 1.1, to the extent
not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(e) All calculations of financial ratios set forth in Section
7.1 and the calculation of the Consolidated Leverage Ratio for purposes of
determining the Applicable Margin shall be calculated to the same number of
decimal places as the relevant ratios are expressed in and shall be rounded
upward if the number in the decimal place immediately following the last
calculated decimal place is five or greater. For example, if the relevant ratio
is to be calculated to the hundredth decimal place and the calculation of the
ratio is 5.126, the ratio will be rounded up to 5.13.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Commitments. (a) Subject to the terms and conditions
hereof, the Lenders severally agree to make revolving credit loans ("Loans") to
the Borrower from time to time during the Commitment Period in an aggregate
principal amount at any one time outstanding for each Lender which, when added
to such Lender's Percentage of the L/C Obligations then outstanding, does not
exceed the amount of such Lender's Commitment; provided that after giving effect
to the making of each Loan and the immediate application of the proceeds
thereof, the Total Extensions of Credit shall not exceed the Borrowing Base at
such time. During the Commitment Period the Borrower may use the Commitments by
borrowing, prepaying the Loans in whole or in part, and reborrowing, all in
accordance with the terms and conditions hereof. The
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Loans may from time to time be Eurodollar Loans or Base Rate Loans, as
determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.2 and 2.9, provided that no Loan shall be made as a
Eurodollar Loan after the day that is one month prior to the Termination Date.
(b) The Borrower shall repay all outstanding Loans on the
Termination Date.
2.2 Procedure for Borrowing. The Borrower may borrow under the
Commitments on any Business Day during the Commitment Period, provided that the
Borrower shall deliver to the Administrative Agent a Borrowing Notice (which
Borrowing Notice must be received by the Administrative Agent prior to 12:00
Noon,
New York City time, (a) three Business Days prior to the requested
Borrowing Date in the case of Eurodollar Loans, or (b) one Business Day prior to
the requested Borrowing Date in the case of Base Rate Loans. Each borrowing of
Loans that are Eurodollar Loans shall be in an amount equal to $500,000 or a
whole multiple of $100,000 in excess thereof. Upon receipt of any such Borrowing
Notice from the Borrower, the Administrative Agent shall promptly notify each
Lender thereof. Each Lender will make its Percentage of the amount of each
borrowing of Loans available to the Administrative Agent for the account of the
Borrower at the Funding Office prior to 3:00 P.M.,
New York City time, on the
Borrowing Date requested by the Borrower in funds immediately available to the
Administrative Agent. Such borrowing will then be made available to the Borrower
by the Administrative Agent in like funds as received by the Administrative
Agent.
2.3 Borrowing Base Calculations; Inclusion of Assets in
Borrowing Base. (a) At any time when the Total Extensions of Credit equal or
exceed $25,000,000, based on the most recent Borrowing Base Certificate
delivered by the Borrower to the Administrative Agent, the Administrative Agent
shall in its good faith credit judgment determine which Accounts and Rental
Equipment shall be "Eligible Accounts" and "Eligible Rental Equipment,"
respectively, for purposes of this Agreement, utilizing the criteria set forth
on Schedule 1.1.
(b) Concurrently with delivery by the Borrower to the
Administrative Agent of (i) any notice pursuant to the definition of "Specified
Hedge Agreement" in Section 1.1 designating any Hedge Agreement as a "Specified
Hedge Agreement" and (ii) any Borrowing Base Certificate, the Borrower will
deliver to the Administrative Agent a report from the relevant counterparty
setting forth the "xxxx-to-market" value of such Hedge Agreement, determined in
accordance with procedures customary in the relevant market. The Administrative
Agent will calculate from time to time the net amount of the "xxxx-to-market"
values of all Specified Hedge Agreements on the basis of such counterparty
report, and if such net amount is unfavorable to the Borrower (i.e., the
Borrower would owe a net amount under all Specified Hedge Agreements if all
Specified Hedge Agreements were terminated on such date), the Administrative
Agent will establish a reserve for purposes of calculating the Borrowing Base
pursuant to Schedule 1.1 in an amount equal to such net unfavorable amount, and
will maintain such reserve until the next determination by the Administrative
Agent pursuant to this paragraph.
2.4 Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of the appropriate Lender (i) the then unpaid principal amount of each
Loan of such Lender on the Termination Date (or on such earlier date on which
the Loans become due and payable pursuant to Section 8).
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The Borrower hereby further agrees to pay interest on the unpaid principal
amount of the Loans from time to time outstanding from the date hereof until
payment in full thereof at the rates per annum, and on the dates, set forth in
Section 2.11. The Borrower agrees that, if an Event of Default shall have
occurred and is continuing, the Administrative Agent may (and the Administrative
Agent hereby agrees that it shall) (i) cause each bank that maintains any
account subject to a Control Agreement or a Lockbox Agreement to transfer, on a
daily basis, all collected funds in any such account to a Concentration Account
and (ii) apply any amounts on deposit in a Concentration Account to repay Loans
whenever any Loans are outstanding.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower to such
Lender resulting from each Loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Administrative Agent, on behalf of the Borrower, shall
maintain the Register pursuant to Section 10.6(d), and a subaccount therein for
each Lender, in which shall be recorded (i) the amount of each Loan made
hereunder and any Note evidencing such Loan, the Type of such Loan and each
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) both the amount of any sum received by the Administrative
Agent hereunder from the Borrower and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each
Lender maintained pursuant to Section 2.4(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made to
the Borrower by such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will promptly execute and
deliver to such Lender a promissory note of the Borrower evidencing any Loans of
such Lender, substantially in the form of Exhibit F (a "Note"), with appropriate
insertions as to date and principal amount; provided, that delivery of Notes
shall not be a condition precedent to the occurrence of the Closing Date or the
making of the extensions of credit on the Closing Date.
2.5 Commitment Fees, etc. (a) The Borrower agrees to pay to
the Administrative Agent for the account of each Lender, a commitment fee for
the period from and including the Closing Date to the last day of the Commitment
Period, computed at the Commitment Fee Rate on the average daily amount of the
Available Commitment of such Lender during the period for which payment is made.
(b) The Borrower agrees to pay to the Administrative Agent the
fees in the amounts and on the dates from time to time agreed to in writing by
the Borrower and the Administrative Agent.
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2.6 Termination or Reduction of Credit Commitments. The
Borrower shall have the right, upon not less than three Business Days' notice to
the Administrative Agent, to terminate the Commitments or, from time to time, to
reduce the aggregate amount of the Commitments; provided that no such
termination or reduction of Commitments shall be permitted if, after giving
effect thereto and to any prepayments of the Loans made on the effective date
thereof, the Total Extensions of Credit would exceed the Total Commitments. Any
such reduction shall be in an amount equal to $1,000,000, or a whole multiple
thereof, and shall reduce permanently the Commitments then in effect.
2.7 Optional Prepayments. The Borrower may at any time and
from time to time prepay the Loans, in whole or in part, without premium or
penalty (except as otherwise provided herein), upon irrevocable notice delivered
to the Administrative Agent at least three Business Days prior thereto in the
case of Eurodollar Loans and at least one Business Day prior thereto in the case
of Base Rate Loans, which notice shall specify the date and amount of such
prepayment and whether such prepayment is of Eurodollar Loans or Base Rate
Loans; provided, that if a Eurodollar Loan is prepaid on any day other than the
last day of the Interest Period applicable thereto, the Borrower shall also pay
any amounts owing pursuant to Section 2.17. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof. If any
such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, together with (except in the case of Base
Rate Loans) accrued interest to such date on the amount prepaid. Partial
prepayments of Loans shall be in an aggregate principal amount of $1,000,000 or
a whole multiple thereof.
2.8 Mandatory Prepayments. If, at any time during the
Commitment Period, the amount of the Total Extensions of Credit exceeds the
lesser of (i) the Borrowing Base and (ii) the Total Commitments then in effect
(whether as a result of the sale of, or any casualty or condemnation with
respect to, assets included in the Borrowing Base or otherwise), the Borrower
shall, without notice or demand, prepay, in accordance with this Section, the
Loans in an aggregate principal amount equal to such excess, together (except in
the case of Base Rate Loans) with interest accrued to the date of such payment
or prepayment; provided that if the aggregate principal amount of Loans then
outstanding is less than the amount of such excess (because L/C Obligations
constitute a portion thereof), the Borrower shall, to the extent of the balance
of such excess, replace outstanding Letters of Credit and/or cash collateralize
such Letters of Credit in the manner described in Section 3.10(ii).
2.9 Conversion and Continuation Options. (a) The Borrower may
elect from time to time to convert Eurodollar Loans to Base Rate Loans by giving
the Administrative Agent at least two Business Days' prior irrevocable notice of
such election, provided that any such conversion of Eurodollar Loans may be made
only on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert Base Rate Loans to Eurodollar Loans by
giving the Administrative Agent at least three Business Days' prior irrevocable
notice of such election (which notice shall specify the length of the initial
Interest Period therefor), provided that no Base Rate Loan may be converted into
a Eurodollar Loan (i) when any Event of Default has occurred and is continuing
and the Administrative Agent has, or the Required Lenders have, determined in
its or their sole discretion not to permit such conversions or (ii) after the
date that is one month prior to the Termination Date. Upon receipt of any such
notice the Administrative Agent shall promptly notify each relevant Lender
thereof.
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(b) The Borrower may elect to continue any Eurodollar Loan as
such upon the expiration of the then current Interest Period with respect
thereto by giving irrevocable notice to the Administrative Agent, in accordance
with the applicable provisions of the term "Interest Period" set forth in
Section 1.1, of the length of the next Interest Period to be applicable to such
Loans, provided that no Eurodollar Loan may be continued as such (i) when any
Event of Default has occurred and is continuing and the Administrative Agent
has, or the Required Lenders have, determined in its or their sole discretion
not to permit such continuations or (ii) after the date that is one month prior
to the Termination Date, and provided, further, that if the Borrower shall fail
to give any required notice as described above in this paragraph or if such
continuation is not permitted pursuant to the preceding proviso, such Loans
shall be converted automatically to Base Rate Loans on the last day of such then
expiring Interest Period. Upon receipt of any such notice the Administrative
Agent shall promptly notify each relevant Lender thereof.
2.10 Minimum Amounts and Maximum Number of Eurodollar
Tranches. Notwithstanding anything to the contrary in this Agreement, all
borrowings, conversions, continuations and optional prepayments of Eurodollar
Loans and all selections of Interest Periods shall be in such amounts and be
made pursuant to such elections so that, (a) after giving effect thereto, the
aggregate principal amount of the Eurodollar Loans comprising each Eurodollar
Tranche shall be equal to $5,000,000 or a whole multiple of $1,000,000 in excess
thereof and (b) no more than five Eurodollar Tranches shall be outstanding at
any one time.
2.11 Interest Rates and Payment Dates. (a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin in effect for such day.
(b) Each Base Rate Loan shall bear interest for each day on
which it is outstanding at a rate per annum equal to the Base Rate in effect for
such day plus the Applicable Margin in effect for such day.
(c) (i) If all or a portion of the principal amount of any
Loan or Reimbursement Obligation shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), all outstanding Loans and
Reimbursement Obligations (whether or not overdue) (to the extent legally
permitted) shall bear interest at a rate per annum that is equal to (x) in the
case of the Loans, the rate that would otherwise be applicable thereto pursuant
to the foregoing provisions of this Section plus 2% or (y) in the case of
Reimbursement Obligations, the rate applicable to Base Rate Loans plus 2%, and
(ii) if all or a portion of any interest payable on any Loan or Reimbursement
Obligation or any commitment fee or other amount payable hereunder shall not be
paid when due (whether at the stated maturity, by acceleration or otherwise),
such overdue amount shall bear interest at a rate per annum equal to the rate
then applicable to Base Rate Loans plus 2%, in each case, with respect to
clauses (i) and (ii) above, from the date of such non-payment until such amount
is paid in full (after as well as before judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date, provided that interest accruing pursuant to paragraph (c) of this
Section shall be payable from time to time on demand.
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2.12 Computation of Interest and Fees. (a) Interest, fees,
commissions payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to Base Rate
Loans on which interest is calculated on the basis of the Prime Rate, the
interest thereon shall be calculated on the basis of a 365- (or 366-, as the
case may be) day year for the actual days elapsed. The Administrative Agent
shall as soon as practicable notify the Borrower and the relevant Lenders of
each determination of a Eurodollar Rate. Any change in the interest rate on a
Loan resulting from a change in the Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of the effective date
and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the Borrower,
deliver to the Borrower a statement showing the quotations used by the
Administrative Agent in determining any interest rate pursuant to Section
2.12(a).
2.13 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by reason
of circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from
the Required Lenders that the Eurodollar Rate determined or to be determined for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders (as conclusively certified by such Lenders) of making or maintaining
their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans requested to be made on the first day
of such Interest Period shall be made as Base Rate Loans, (y) any Loans that
were to have been converted on the first day of such Interest Period to
Eurodollar Loans shall be continued as Base Rate Loans and (z) any outstanding
Eurodollar Loans shall be converted, on the last day of the then current
Interest Period with respect thereto, to Base Rate Loans. Until such notice has
been withdrawn by the Administrative Agent, no further Eurodollar Loans shall be
made or continued as such, nor shall the Borrower have the right to convert
Loans to Eurodollar Loans.
2.14 Pro Rata Treatment and Payments. (a) Each borrowing by
the Borrower from the Lenders hereunder, each payment by the Borrower on account
of any commitment fee or Letter of Credit fee, and any reduction of the
Commitments of the Lenders, shall be made pro rata according to the respective
Percentages of the Lenders.
25
(b) Each payment (including each prepayment) by the Borrower
on account of principal of and interest on the Loans shall be made pro rata
according to the respective outstanding principal amounts of the Loans then held
by the Lenders. Each payment in respect of Reimbursement Obligations in respect
of any Letter of Credit shall be made to the Issuing Lender that issued such
Letters of Credit.
(c) The application of any payment of Loans (including
optional and mandatory prepayments) shall be made, first, to Base Rate Loans
and, second, to Eurodollar Loans. Each payment of the Loans (except in the case
of Base Rate Loans) shall be accompanied by accrued interest to the date of such
payment on the amount paid.
(d) All payments (including prepayments) to be made by the
Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 12:00 Noon,
New York City time, on the due date thereof to the Administrative
Agent, for the account of the relevant Lenders, at the Payment Office, in
Dollars and in immediately available funds. Any payment made by the Borrower
after 12:00 Noon,
New York City time, on any Business Day shall be deemed to
have been on the next following Business Day. The Administrative Agent shall
distribute such payments to the Lenders promptly upon receipt in like funds as
received. If any payment hereunder (other than payments on the Eurodollar Loans)
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day. If any payment on a Eurodollar
Loan becomes due and payable on a day other than a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day unless the result
of such extension would be to extend such payment into another calendar month,
in which event such payment shall be made on the immediately preceding Business
Day. In the case of any extension of any payment of principal pursuant to the
preceding two sentences, interest thereon shall be payable at the then
applicable rate during such extension.
(e) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this paragraph shall be conclusive in the
absence of manifest error. If such Lender's share of such borrowing is not made
available to the Administrative Agent by such Lender within three Business Days
after such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
Base Rate Loans, on demand, from the Borrower.
(f) Unless the Administrative Agent shall have been notified
in writing by the Borrower prior to the date of any payment due to be made by
the Borrower hereunder that the Borrower will not make such payment to the
Administrative Agent, the Administrative Agent
26
may assume that the Borrower is making such payment, and the Administrative
Agent may, but shall not be required to, in reliance upon such assumption, make
available to the Lenders their respective pro rata shares of a corresponding
amount. If such payment is not made to the Administrative Agent by the Borrower
within three Business Days after such due date, the Administrative Agent shall
be entitled to recover, on demand, from each Lender to which any amount which
was made available pursuant to the preceding sentence, such amount with interest
thereon at the rate per annum equal to the daily average Federal Funds Effective
Rate. Nothing herein shall be deemed to limit the rights of the Administrative
Agent or any Lender against the Borrower.
(g) Notwithstanding any other provision of this Agreement or
any other Loan Document, any proceeds of any foreclosure or other realization by
the Administrative Agent in respect of any Collateral shall be applied as
provided in the Guarantee and Collateral Agreement.
2.15 Requirements of Law. (a) If the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any
Letter of Credit, any Application or any Eurodollar
Loan made by it, or change the basis of taxation of
payments to such Lender in respect thereof (except
for Non-Excluded Taxes covered by Section 2.16 and
changes in the rate of tax on the overall net
income of such Lender);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or
similar requirement against assets held by,
deposits or other liabilities in or for the account
of, advances, loans or other extensions of credit
by, or any other acquisition of funds by, any
office of such Lender that is not otherwise
included in the determination of the Eurodollar
Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable. If any Lender becomes entitled
to claim any additional amounts pursuant to this Section, it shall promptly
notify the Borrower (with a copy to the Administrative Agent) of the event by
reason of which it has become so entitled.
(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or
27
directive regarding capital adequacy (whether or not having the force of law)
from any Governmental Authority made subsequent to the date hereof shall have
the effect of reducing the rate of return on such Lender's or such corporation's
capital as a consequence of its obligations hereunder or under or in respect of
any Letter of Credit to a level below that which such Lender or such corporation
could have achieved but for such adoption, change or compliance (taking into
consideration such Lender's or such corporation's policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time, after submission by such Lender to the Borrower (with a copy to
the Administrative Agent) of a written request therefor, the Borrower shall pay
to such Lender such additional amount or amounts as will compensate such Lender
or such corporation for such reduction.
(c) A certificate as to any additional amounts payable
pursuant to this Section submitted by any Lender to the Borrower (with a copy to
the Administrative Agent) shall be conclusive in the absence of manifest error.
The obligations of the Borrower pursuant to this Section shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.16 Taxes. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes imposed on any Agent
or any Lender as a result of a present or former connection between such Agent
or such Lender and the jurisdiction of the Governmental Authority imposing such
tax or any political subdivision or taxing authority thereof or therein (other
than any such connection arising solely from such Agent's or such Lender's
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") or any Other Taxes are required to be
withheld from any amounts payable to any Agent or any Lender hereunder, the
amounts so payable to such Agent or such Lender shall be increased to the extent
necessary to yield to such Agent or such Lender (after payment of all
Non-Excluded Taxes and Other Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement; provided,
however, that the Borrower shall not be required to increase any such amounts
payable to any Lender with respect to any Non-Excluded Taxes (i) that are
attributable to such Lender's failure to comply with the requirements of
paragraph (d) or (e) of this Section or (ii) that are United States withholding
taxes imposed on amounts payable to such Lender at the time such Lender becomes
a party to this Agreement, except to the extent that such Lender's assignor (if
any) was entitled, at the time of assignment, to receive additional amounts from
the Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph
(a).
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable
by the Borrower, as promptly as possible thereafter the Borrower shall send to
the Administrative Agent for the account of the relevant Agent or Lender, as the
case may be, a certified copy of an
28
original official receipt received by the Borrower showing payment thereof. If
the Borrower fails to pay any Non-Excluded Taxes or Other Taxes when due to the
appropriate taxing authority or fails to remit to the Administrative Agent the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Administrative Agent and the Lenders for any incremental taxes,
interest or penalties that may become payable by the Administrative Agent or any
Lender as a result of any such failure. The agreements in this Section shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
(d) Each Lender (or Transferee) that is not a citizen or
resident of the United States of America, a corporation, partnership or other
entity created or organized in or under the laws of the United States of America
(or any jurisdiction thereof), or any estate or trust that is subject to federal
income taxation regardless of the source of its income (a "Non-U.S. Lender")
shall deliver to the Borrower and the Administrative Agent (or, in the case of a
Participant, to the Lender from which the related participation shall have been
purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or
Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from U.S.
federal withholding tax under Section 871(h) or 881(c) of the Code with respect
to payments of "portfolio interest" a statement substantially in the form of
Exhibit H and a Form W-8BEN, or any subsequent versions thereof or successors
thereto properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding any
other provision of this paragraph, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this paragraph that such Non-U.S. Lender is not
legally able to deliver.
(e) A Lender that is entitled to an exemption from or
reduction of non-U.S. withholding tax under the law of the jurisdiction in which
the Borrower is located, or any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement shall deliver to the Borrower
(with a copy to the Administrative Agent), at the time or times prescribed by
applicable law or reasonably requested by the Borrower, such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate, provided that such
Lender is legally entitled to complete, execute and deliver such documentation
and in such Lender's reasonable judgment such completion, execution or
submission would not materially prejudice the legal position of such Lender.
2.17 Indemnity. The Borrower agrees to indemnify each Lender
for, and to hold each Lender harmless from, any loss (other than loss of
anticipated profits) or expense that such Lender may sustain or incur as a
consequence of (a) default by the Borrower in making a borrowing of, conversion
into or continuation of Eurodollar Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement, (b)
default by the Borrower in making any prepayment of Eurodollar Loans after the
Borrower has given a
29
notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment or conversion of Eurodollar Loans on a day that is not
the last day of an Interest Period with respect thereto. A certificate as to any
amounts payable pursuant to this Section submitted to the Borrower by any Lender
shall be conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
2.18 Illegality. Notwithstanding any other provision herein,
if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall
forthwith be suspended for the duration of such illegality and (b) such Lender's
Loans then outstanding as Eurodollar Loans, if any, shall be converted
automatically to Base Rate Loans on the respective last days of the then current
Interest Periods with respect to such Loans or within such earlier period as
required by law. If any such conversion of a Eurodollar Loan occurs on a day
which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to Section 2.17.
2.19 Change of Lending Office. Each Lender agrees that, upon
the occurrence of any event giving rise to the operation of Section 2.15,
2.16(a) or 2.18 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 affected by such
event with the object of avoiding the consequences of such event; provided, that
such designation is made on terms that, in the sole judgment of such Lender,
cause such Lender and its lending office(s) to suffer no economic, legal or
regulatory disadvantage, and provided, further, that nothing in this Section
shall affect or postpone any of the obligations of any Borrower or the rights of
any Lender pursuant to Section 2.15, 2.16(a) or 2.18.
2.20 Replacement of Lenders under Certain Circumstances.
The Borrower shall be permitted to replace any Lender that (a) requests
reimbursement for amounts owing pursuant to Section 2.15 or 2.16 or gives a
notice of illegality pursuant to Section 2.18 or (b) defaults in its obligation
to make Loans hereunder, with a replacement financial institution; provided that
(i) such replacement does not conflict with any Requirement of Law, (ii) no
Event of Default shall have occurred and be continuing at the time of such
replacement, (iii) prior to any such replacement, such Lender shall have taken
no action under Section 2.19 so as to eliminate the continued need for payment
of amounts owing pursuant to Section 2.15 or 2.16 or to eliminate the illegality
referred to in such notice of illegality given pursuant to Section 2.18, (iv)
the replacement financial institution shall purchase, at par, all Loans and
other amounts owing to such replaced Lender on or prior to the date of
replacement, (v) the Borrower shall be liable to such replaced Lender under
Section 2.17 (as though Section 2.17 were applicable) if any Eurodollar Loan
owing to such replaced Lender shall be purchased other than on the last day of
the Interest Period relating thereto, (vi) the replacement financial
institution, if not already a Lender, shall be reasonably satisfactory to the
Administrative Agent, (vii) the replaced Lender shall be obligated to make such
replacement in accordance with the provisions of Section 10.6
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(provided that the replacement financial institution shall be obligated to pay
the registration and processing fee referred to therein), (viii) the Borrower
shall pay all additional amounts (if any) required pursuant to Section 2.15 or
2.16, as the case may be, in respect of any period prior to the date on which
such replacement shall be consummated, (ix) in the event the replaced Lender is
an Issuing Lender, the outstanding Letters of Credit issued by such replaced
Lender shall be replaced and/or cash-collateralized in an amount and manner
satisfactory to such replaced Lender and (x) any such replacement shall not be
deemed to be a waiver of any rights that the Borrower, the Administrative Agent
or any other Lender shall have against the replaced Lender.
2.20 Bank Products. The Borrower may request and any Lender or
Affiliate of any Lender may, in its sole and absolute discretion, arrange for
the Borrower to obtain from such Lender or such Affiliate Bank Products (which
shall be subject to all rules and regulations of such Lender or such Affiliate)
although the Borrower is not required to do so.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Prior to the date hereof, the Existing
Issuing Lender has issued the Existing Letters of Credit which, from and after
the Closing Date, shall constitute Letters of Credit hereunder. Subject to the
terms and conditions hereof, each Issuing Lender, in reliance on the agreements
of the other Lenders set forth in Section 3.4(a), agrees to issue letters of
credit (the letters of credit issued on and after the Closing Date pursuant to
this Section 3, together with the Existing Letters of Credit collectively,
"Letters of Credit") for the account of the Borrower or any Subsidiary on any
Business Day during the Commitment Period in such form as may be approved from
time to time by such Issuing Lender; provided, that no Issuing Lender shall have
any obligation to issue any Letter of Credit if, after giving effect to such
issuance, (i) the L/C Obligations would exceed the L/C Commitment or (ii) the
aggregate amount of the Available Commitments would be less than zero. Each
Letter of Credit shall (i) be denominated in Dollars and (ii) expire no later
than the earlier of (x) the first anniversary of its date of issuance and (y)
the date which is five Business Days prior to the Termination Date; provided
that any Letter of Credit with a one-year term may provide for the renewal
thereof for additional one-year periods (which shall in no event extend beyond
the date referred to in clause (y) above).
(b) No Issuing Lender shall at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
such Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 Procedure for Issuance of Letter of Credit. The Borrower
may from time to time request that an Issuing Lender issue a Letter of Credit by
delivering to such Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of such Issuing Lender, and
such other certificates, documents and other papers and information as such
Issuing Lender may request. Concurrently with the delivery of an Application to
an Issuing Lender, the Borrower shall deliver a copy thereof to the
Administrative Agent. Upon receipt of any Application, an Issuing Lender will
process such Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby by issuing the original of such Letter of Credit to the beneficiary
thereof or as otherwise may be agreed to
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by such Issuing Lender and the Borrower (but in no event shall any Issuing
Lender be required to issue any Letter of Credit earlier than two Business Days
after its receipt of the Application therefor and all such other certificates,
documents and other papers and information relating thereto). Promptly after
issuance by an Issuing Lender of a Letter of Credit, such Issuing Lender shall
furnish a copy of such Letter of Credit to the Borrower. Each Issuing Lender
shall promptly give notice to the Administrative Agent of the issuance of each
Letter of Credit issued by such Issuing Lender (including the amount thereof),
and shall provide a copy of such Letter of Credit to the Administrative Agent as
soon as possible after the date of issuance.
3.3 Fees and Other Charges. (a) The Borrower will pay to the
Administrative Agent for distribution to the Lenders a fee on the aggregate
drawable amount of all outstanding Letters of Credit at a per annum rate equal
to the Applicable Margin then in effect with respect to Eurodollar Loans, to be
shared ratably among the Lenders in accordance with their respective Percentages
and payable quarterly in arrears on each L/C Fee Payment Date after the issuance
date. In addition, the Borrower shall pay to the relevant Issuing Lender for its
own account a fronting fee on the aggregate drawable amount of all outstanding
Letters of Credit issued by it at the rate per annum agreed upon from time to
time by the Borrower and such Issuing Lender, payable quarterly in arrears on
each L/C Fee Payment Date after the issuance date.
(b) In addition to the foregoing fees, the Borrower shall pay
or reimburse each Issuing Lender for such normal and customary costs and
expenses as are incurred or charged by such Issuing Lender in issuing,
negotiating, effecting payment under, amending or otherwise administering any
Letter of Credit.
3.4 L/C Participations. (a) Each Issuing Lender irrevocably
agrees to grant and hereby grants to each L/C Participant, and, to induce each
Issuing Lender to issue Letters of Credit hereunder, each L/C Participant
irrevocably agrees to accept and purchase and hereby accepts and purchases,
without recourse or warranty, from each Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant's own account and risk,
an undivided interest equal to such L/C Participant's Percentage in each Issuing
Lender's obligations and rights under each Letter of Credit issued by such
Issuing Lender hereunder and the amount of each draft paid by such Issuing
Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees
with each Issuing Lender that, if a draft is paid under any Letter of Credit
issued by such Issuing Lender for which such Issuing Lender is not reimbursed in
full by the Borrower in accordance with the terms of this Agreement, such L/C
Participant shall pay to the Administrative Agent for the account of such
Issuing Lender upon demand at such Issuing Lender's address for notices
specified herein (and thereafter the Administrative Agent shall promptly pay to
such Issuing Lender) an amount equal to such L/C Participant's Percentage of the
amount of such draft, or any part thereof, that is not so reimbursed.
(b) If any amount (a "Participation Amount") required to be
paid by any L/C Participant to an Issuing Lender pursuant to Section 3.4(a) in
respect of any unreimbursed portion of any payment made by such Issuing Lender
under any Letter of Credit is paid to such Issuing Lender within three Business
Days after the date such payment is due, such Issuing Lender shall so notify the
Administrative Agent (which shall notify the L/C Participants), and each L/C
Participant shall pay to Administrative Agent, for the account of such Issuing
Lender, on demand (and thereafter the Administrative Agent shall promptly pay to
such Issuing Lender)
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an amount equal to the product of (i) such Participation Amount, times (ii) the
daily average Federal Funds Effective Rate during the period from and including
the date such payment is required to the date on which such payment is
immediately available to such Issuing Lender, times (iii) a fraction the
numerator of which is the number of days that elapse during such period and the
denominator of which is 360. If any Participation Amount required to be paid by
any L/C Participant pursuant to Section 3.4(a) is not made available to the
Administrative Agent for the account of the relevant Issuing Lender by such L/C
Participant within three Business Days after the date such payment is due, the
Administrative Agent on behalf of such Issuing Lender shall be entitled to
recover from such L/C Participant, on demand, such Participation Amount with
interest thereon calculated from such due date at the rate per annum applicable
to Base Rate Loans. A certificate of the Administrative Agent on behalf of an
Issuing Lender submitted to any L/C Participant with respect to any amounts
owing under this Section shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after an Issuing Lender has made
payment under any Letter of Credit and has received from the Administrative
Agent any L/C Participant's its pro rata share of such payment in accordance
with Section 3.4(a), such Issuing Lender receives any payment related to such
Letter of Credit (whether directly from the Borrower or otherwise, including
proceeds of collateral applied thereto by such Issuing Lender), or any payment
of interest on account thereof, such Issuing Lender will distribute to the
Administrative Agent for the account of such L/C Participant (and thereafter the
Administrative Agent will promptly distribute to such L/C Participant) its pro
rata share thereof; provided, however, that in the event that any such payment
received by such Issuing Lender shall be required to be returned by such Issuing
Lender, such L/C Participant shall return to the Administrative Agent for the
account of such Issuing Lender (and thereafter the Administrative Agent shall
promptly return to such Issuing Lender) the portion thereof previously
distributed by such Issuing Lender.
3.5 Reimbursement Obligation of the Borrower. The Borrower
agrees to reimburse each Issuing Lender, on each date on which such Issuing
Lender notifies the Borrower of the date and amount of a draft presented under
any Letter of Credit (including any Letter of Credit issued for the account of
any Subsidiary) and paid by such Issuing Lender, for the amount of (a) such
draft so paid and (b) any taxes, fees, charges or other costs or expenses
incurred by such Issuing Lender in connection with such payment (the amounts
described in the foregoing clauses (a) and (b) in respect of any drawing,
collectively, the "Payment Amount"). Each such payment shall be made to such
Issuing Lender at its address for notices specified herein in lawful money of
the United States of America and in immediately available funds. Interest shall
be payable on each Payment Amount from the date of the applicable drawing until
payment in full at the rate set forth in (i) until the second Business Day
following the date of the applicable drawing, Section 2.11(b) and (ii)
thereafter, Section 2.11(c). Each drawing under any Letter of Credit shall
(unless an event of the type described in clause (i) or (ii) of Section 8(f)
shall have occurred and be continuing with respect to the Borrower, in which
case the procedures specified in Section 3.4 for funding by L/C Participants
shall apply) constitute a request by the Borrower to the Administrative Agent
for a borrowing pursuant to Section 2.2 of Base Rate Loans in the amount of such
drawing. The Borrowing Date with respect to such borrowing shall be the first
date on which a borrowing of Loans could be made, pursuant to Section 2.2, if
the Administrative Agent had received a notice of such borrowing at the time the
Administrative
33
Agent receives notice from the relevant Issuing Lender of such drawing under
such Letter of Credit.
3.6 Obligations Absolute. The Borrower's obligations under
this Section 3 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
that the Borrower may have or have had against any Issuing Lender, any
beneficiary of a Letter of Credit or any other Person. The Borrower also agrees
with each Issuing Lender that such Issuing Lender shall not be responsible for,
and the Borrower's Reimbursement Obligations under Section 3.5 shall not be
affected by, among other things, the validity or genuineness of documents or of
any endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or any dispute between or among the Borrower and
any beneficiary of any Letter of Credit or any other party to which such Letter
of Credit may be transferred or any claims whatsoever of the Borrower against
any beneficiary of such Letter of Credit or any such transferee. No Issuing
Lender shall be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
such Issuing Lender. The Borrower agrees that any action taken or omitted by an
Issuing Lender under or in connection with any Letter of Credit issued by it or
the related drafts or documents, if done in the absence of gross negligence or
willful misconduct and in accordance with the standards or care specified in the
Uniform Commercial Code of the State of
New York, shall not excuse the
Reimbursement Obligations of the Borrower hereunder and shall not result in any
liability of such Issuing Lender to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented
for payment under any Letter of Credit, the relevant Issuing Lender shall
promptly notify the Borrower and the Administrative Agent of the date and amount
thereof. The responsibility of the relevant Issuing Lender to the Borrower in
connection with any draft presented for payment under any Letter of Credit, in
addition to any payment obligation expressly provided for in such Letter of
Credit issued by such Issuing Lender, shall be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment appear on their face to be in conformity with
such Letter of Credit.
3.8 Applications. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.
3.9 Indemnification; Exoneration; Power of Attorney.
(a) Indemnification. IN ADDITION TO AMOUNTS PAYABLE AS
ELSEWHERE PROVIDED IN THIS SECTION, THE BORROWER HEREBY AGREES TO
PROTECT, INDEMNIFY, PAY AND SAVE THE LENDERS AND THE AGENTS HARMLESS
FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, LIABILITIES, DAMAGES,
LOSSES, COSTS, CHARGES AND EXPENSES (INCLUDING REASONABLE ATTORNEYS'
FEES) WHICH ANY LENDER OR ANY AGENT (OTHER THAN ANY LENDER IN ITS
CAPACITY AS
34
AN ISSUING LENDER) MAY INCUR OR BE SUBJECT TO AS A CONSEQUENCE, DIRECT
OR INDIRECT, OF THE ISSUANCE OF ANY LETTER OF CREDIT OTHER THAN ANY
CLAIMS, DEMANDS, LIABILITIES, DAMAGES, LOSSES, COSTS, CHARGES, AND
EXPENSES RESULTING SOLELY FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF ANY SUCH INDEMNIFIED PERSON. THE AGREEMENT IN THIS
SECTION SHALL SURVIVE PAYMENT OF ALL OBLIGATIONS. NOTHING CONTAINED IN
THIS AGREEMENT IS INTENDED TO LIMIT THE BORROWER'S RIGHTS, IF ANY, WITH
RESPECT TO ANY ISSUING LENDER WHICH ARISE BY OPERATION OF LAW OR AS A
RESULT OF THE APPLICATION AND RELATED DOCUMENTS EXECUTED BY AND BETWEEN
THE BORROWER AND ANY ISSUING LENDER.
(b) Assumption of Risk by the Borrower. As among the Loan
Parties, the Lenders, the Issuing Lenders and the Agents, the Borrower
or the relevant Loan Party assumes all risks of the acts and omissions
of, or misuse of any of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, the Lenders, the Issuing Lenders and the
Agents shall not be responsible for: (i) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document
submitted by any Person in connection with the application for and
issuance of and presentation of drafts with respect to any of the
Letters of Credit, even if it should prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason; (iii) the failure of
the beneficiary of any Letter of Credit to comply duly with conditions
required in order to draw upon such Letter of Credit; (iv) errors,
omissions, interruptions, or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not
they be in cipher; (v) errors in interpretation of technical terms;
(vi) any loss or delay in the transmission or otherwise of any document
required in order make a drawing under any Letter of Credit or of the
proceeds thereof; (vii) the misapplication by the beneficiary of any
Letter of Credit of the proceeds of any drawing under such Letter of
Credit; or (viii) any consequences arising from causes beyond the
control of the Lenders, the Issuing Lenders or the Agents, including
any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto Governmental Authority. None of the
foregoing shall affect, impair or prevent the vesting of any rights or
powers of any Agent, any Issuing Lender or any Lender under this
Section.
(c) Exoneration. In furtherance and extension, and not in
limitation, of the specific provisions set forth above, any action
taken or omitted by any Agent, any Issuing Lender or any Lender under
or in connection with any of the Letters of Credit or any related
certificates, if taken or omitted in good faith, shall not put any
Agent, any Issuing Lender or any Lender under any resulting liability
to any Loan Party or relieve the relevant Loan Party of any of its
obligations hereunder to any such Person.
(d) Indemnification by Lenders. The Lenders agree to indemnify
each Issuing Lender (to the extent not reimbursed by the Borrower and
without limiting the
35
obligations of the Borrower hereunder) ratably in accordance with their
respective Percentages in effect on the date on which indemnification
is sought under this Section (or, if indemnification is sought after
the date upon which the Commitments shall be terminated and the Loans
shall have been paid in full, ratably in accordance with such
Percentages immediately prior to such date), for any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including attorneys' fees) or
disbursements of any kind and nature whatsoever that may be imposed on,
incurred by or asserted against such Issuing Lender in any way relating
to or arising out of any Letter of Credit or the transactions
contemplated thereby or any action taken or omitted by such Issuing
Lender under any Letter of Credit or any Loan Document in connection
therewith; provided that no Lender shall be liable for any of the
foregoing to the extent it arises from the gross negligence or willful
misconduct of the Person to be indemnified. Without limitation of the
foregoing, each Lender agrees to reimburse each Issuing Lender promptly
upon demand for its Percentage of any costs or expenses payable by the
Borrower to such Issuing Lender, to the extent that such Issuing Lender
is not promptly reimbursed for such costs and expenses by the Borrower.
The agreement contained in this Section shall survive payment in full
of all Obligations.
(e) Power of Attorney. In connection with all inventory
financed by Letters of Credit, the Borrower hereby appoints each
Issuing Lender, or such Issuing Lender's designee, as its attorney,
with full power and authority: (i) to sign and/or endorse the
Borrower's name upon any warehouse or other receipts; (ii) to sign the
Borrower's name on bills of lading and other negotiable and
non-negotiable documents; (iii) to clear inventory through customs in
such Issuing Lender's or the Borrower's name, and to sign and deliver
to customs officials powers of attorney in the Borrower's name for such
purpose; (iv) to complete in the Borrower's or such Issuing Lender's
name, any order, sale, or transaction, obtain the necessary documents
in connection therewith, and collect the proceeds thereof; and (v) to
do such other acts and things as are necessary in order to enable such
Issuing Lender to obtain possession or control of the inventory and to
obtain payment of the Obligations. None of the Issuing Lenders or any
of their respective designees, as the Borrower's attorney, will be
liable for any acts or omissions, nor for any error of judgment or
mistakes of fact or law. This power, being coupled with an interest, is
irrevocable until all Obligations have been paid and satisfied.
(f) Account Party. The Borrower hereby authorizes and directs
any Issuing Lender to name the Borrower as the "Account Party" therein
and to deliver to the Administrative Agent all instruments, documents
and other writings and property received by such Issuing Lender
pursuant to the Letter of Credit, and to accept and rely upon the
Administrative Agent's instructions and agreements with respect to all
matters arising in connection with the Letter of Credit or the
Application therefor.
3.10 Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of this Section and Section 8, any Letter of
Credit is outstanding upon the termination of this Agreement, then upon such
termination the Borrower shall deposit with the Administrative Agent, for the
ratable benefit of the Issuing Lenders and the Lenders, with respect to each
Letter of Credit then outstanding, as the Required Lenders in their discretion
shall specify, either (i) a standby letter of credit (a "Supporting Letter of
Credit") in form and
36
substance satisfactory to the Administrative Agent, issued by an issuer
satisfactory to the Administrative Agent in an amount equal to the greatest
amount for which such Letter of Credit may be drawn plus any fees and expenses
associated with such Letter of Credit, under which Supporting Letter of Credit
the Administrative Agent is entitled to draw amounts necessary to reimburse the
Administrative Agent, the Issuing Lenders and the Lenders for payments to be
made under or in connection with such Letter of Credit and any fees and expenses
associated with such Letter of Credit, or (ii) cash in amounts necessary to
reimburse the Administrative Agent, the Issuing Lenders and the Lenders for
payments made under or in connection with such Letter of Credit and any fees and
expenses associated with such Letter of Credit. Such Supporting Letter of Credit
or deposit of cash shall be held by the Administrative Agent, for the ratable
benefit of the Administrative Agent, the Issuing Lenders and the Lenders, as
security for, and to provide for the payment of, the aggregate undrawn amount of
such Letters of Credit remaining outstanding. Reasonable interest shall accrue
on any such cash deposit, which accrued interest shall be for the account of the
Borrower, subject to this Agreement.
3.11 Letters of Credit Issued for Subsidiaries.
Notwithstanding that a Letter of Credit issued or outstanding hereunder is in
support of any obligations of, or is for the account of, a Subsidiary, the
Borrower shall be obligated to reimburse the Issuing Lender that issued such
Letter of Credit for any and all drawings thereunder. The Borrower hereby
acknowledges that the issuance of Letters of Credit for the account of
Subsidiaries inures to the benefit of the Borrower, and that the Borrower's
business derives substantial benefits from the businesses of such Subsidiaries.
3.12 Determination of Amount. Unless otherwise specified
herein, the amount of a Letter of Credit at any time shall be deemed to be the
stated amount of such Letter of Credit in effect at such time; provided,
however, that with respect to any Letter of Credit that, by its terms or the
terms of any agreement related thereto, provides for one or more automatic
increases in the stated amount thereof, the amount of such Letter of Credit
shall be deemed to be the maximum stated amount of such Letter of Credit after
giving effect to all such increases, whether or not such maximum stated amount
is in effect at such time.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter
into this Agreement and to make the Loans and issue or participate in the
Letters of Credit, the Borrower hereby represents and warrants to each Agent and
each Lender that:
4.1 Financial Condition. The audited consolidated balance
sheets of the Borrower as at December 31, 2002 and December 31, 2003, and the
related consolidated statements of income and of cash flows for the fiscal years
ended on such dates, reported on by and accompanied by an unqualified report
from PricewaterhouseCoopers LLP, present fairly in all material respects the
consolidated financial condition of the Borrower as at such date, and the
consolidated results of its operations and its consolidated cash flows for the
respective fiscal years then ended. The unaudited consolidated balance sheets of
the Borrower as at March 31, 2004, June 30, 2004 and September 30, 2004, and the
related unaudited consolidated statements of income and cash flows for the
periods ended on such date, present fairly in all material respects the
consolidated financial condition of the Borrower as at such dates, and the
37
consolidated results of its operations and its consolidated cash flows for the
quarterly periods then ended (subject to normal year-end audit adjustments). All
such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by the aforementioned firm of accountants
and disclosed therein). The Borrower and its Subsidiaries do not have any
material Guarantee Obligations, contingent liabilities and liabilities for taxes
(except for any such tax liabilities to taxing authorities outside of the United
States which are not, in the aggregate, material to the Borrower and its
Subsidiaries taken as a whole) or any long-term leases or unusual forward or
long-term commitments, including, without limitation, any interest rate or
foreign currency swap or exchange transaction or other obligation in respect of
derivatives, that are not reflected in the most recent financial statements
referred to in this paragraph. During the period from December 31, 2003 to and
including the date hereof there has been no Disposition by the Borrower of any
material part of its business or Property, except as reflected in the foregoing
financial statements.
4.2 No Change. Since December 31, 2003 there has been no
development or event that has had or could reasonably be expected to have a
Material Adverse Effect.
4.3 Corporate Existence; Compliance with Law. Each of the
Borrower and its Subsidiaries (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (b) has
the corporate power and authority, and the legal right, to own and operate its
Property, to lease the Property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of Property or the conduct of its business
requires such qualification except to the extent that the failure to be so
qualified could not reasonably be expected to have a Material Adverse Effect and
(d) is in compliance with all Requirements of Law except to the extent that the
failure to comply therewith could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations.
Each Loan Party has the corporate power and authority, and the legal right, to
make, deliver and perform the Loan Documents to which it is a party and, in the
case of the Borrower, to borrow hereunder. Each Loan Party has taken all
necessary corporate or other action to authorize the execution, delivery and
performance of the Loan Documents to which it is a party and, in the case of the
Borrower, to authorize the borrowings on the terms and conditions of this
Agreement. No consent or authorization of, filing with, notice to or other act
by or in respect of, any Governmental Authority or any other Person is required
in connection with the borrowings hereunder or the execution, delivery,
performance, validity or enforceability of this Agreement or any of the other
Loan Documents, except (i) consents, authorizations, filings and notices
described in Schedule 4.4, which consents, authorizations, filings and notices
have been obtained or made and are in full force and effect (except as noted on
Schedule 4.19) and (ii) the filings referred to in Section 4.4. Each Loan
Document has been duly executed and delivered on behalf of each Loan Party that
is a party thereto. This Agreement constitutes, and each other Loan Document
upon execution will constitute, a legal, valid and binding obligation of each
Loan Party that is a party thereto, enforceable against each such Loan Party in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium
38
or similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
4.5 No Legal Bar. The execution, delivery and performance of
this Agreement and the other Loan Documents, the issuance of Letters of Credit,
the borrowings hereunder and the use of the proceeds thereof will not violate
any Requirement of Law or any material Contractual Obligation of the Borrower or
any of its Subsidiaries and will not result in, or require, the creation or
imposition of any Lien on any of their respective properties or revenues
pursuant to any Requirement of Law or any such Contractual Obligation (other
than the Liens created by the Security Documents). No Requirement of Law or
Contractual Obligation applicable to the Borrower or any of its Subsidiaries
could reasonably be expected to have a Material Adverse Effect.
4.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrower, threatened by or against the Borrower or any
of its Subsidiaries or against any of their respective properties or revenues
(a) with respect to any of the Loan Documents or any of the transactions
contemplated hereby or thereby, or (b) that could reasonably be expected to have
a Material Adverse Effect.
4.7 No Default. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect that could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
4.8 Ownership of Property; Liens. Each of the Borrower and its
Subsidiaries has title in fee simple to, or a valid leasehold interest in, all
its material real property, and good title to, or a valid leasehold interest in,
all its other material Property, and none of such Property is subject to any
Lien except as permitted by Section 7.3.
4.9 Intellectual Property. The Borrower and each of its
Subsidiaries owns, or is licensed to use, all material Intellectual Property
necessary for the conduct of its business as currently conducted; no material
claim has been asserted and is pending by any Person challenging or questioning
the use of any such Intellectual Property or the validity or effectiveness of
any such Intellectual Property, nor does the Borrower know of any valid basis
for any such claim; and the use of such Intellectual Property by the Borrower
and its Subsidiaries does not infringe on the rights of any Person in any
material respect.
4.10 Taxes. Each of the Borrower and each of its Subsidiaries
has filed or caused to be filed all Federal, state and other material tax
returns that are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
Property and all other taxes, fees or other charges imposed on it or any of its
Property by any Governmental Authority (other than any the amount or validity of
which are currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be); and no tax Lien
has been filed, and, to the knowledge of the Borrower, no claim is being
asserted, with respect to any such tax, fee or other charge (other than
39
any such Liens and claims in favor of taxing authorities outside of the United
States which are not, in the aggregate, material to the Borrower and its
Subsidiaries taken as a whole).
4.11 Federal Regulations. No part of the proceeds of any Loans
will be used in violation of Regulation U as now and from time to time hereafter
in effect or for any purpose that violates the provisions of the Regulations of
the Board.
4.12 Labor Matters. There are no strikes or other labor
disputes against the Borrower or any of its Subsidiaries pending or, to the
knowledge of the Borrower, threatened that (individually or in the aggregate)
could reasonably be expected to have a Material Adverse Effect. Hours worked by
and payment made to employees of the Borrower and its Subsidiaries have not been
in violation of the Fair Labor Standards Act or any other applicable Requirement
of Law dealing with such matters that (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect. All payments due from
the Borrower or any of its Subsidiaries on account of employee health and
welfare insurance that (individually or in the aggregate) could reasonably be
expected to have a Material Adverse Effect if not paid have been paid or accrued
as a liability on the books of the Borrower or the relevant Subsidiary.
4.13 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan, and
each Plan has complied in all material respects with the applicable provisions
of ERISA and the Code, except where, individually or in the aggregate, such
occurrence or noncompliance has not had and could not reasonably be expected to
have a Material Adverse Effect. No termination of a Single Employer Plan has
occurred, and no Lien in favor of the PBGC or a Plan has arisen, during such
five-year period. The present value of all accrued benefits under each Single
Employer Plan (based on those assumptions used to fund such Plans) did not, as
of the last annual valuation date prior to the date on which this representation
is made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits by a material amount. Neither the Borrower nor any
Commonly Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan that has resulted or could reasonably be expected to result
in a material liability under ERISA, and neither the Borrower nor any Commonly
Controlled Entity would become subject to any material liability under ERISA if
the Borrower or any such Commonly Controlled Entity were to withdraw completely
from all Multiemployer Plans as of the valuation date most closely preceding the
date on which this representation is made or deemed made. No such Multiemployer
Plan is in Reorganization or Insolvent.
4.14 Investment Company Act; Other Regulations. No Loan Party
is an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
No Loan Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) which limits its ability to incur Indebtedness.
4.15 Subsidiaries. (a) The Subsidiaries listed on Schedule
4.15 constitute all of the Subsidiaries of the Borrower at the date hereof.
Schedule 4.15 sets forth as of the Closing
40
Date the name and jurisdiction of incorporation of each such Subsidiary and, as
to each, the percentage of each class of Capital Stock owned by each Loan Party.
(b) As of the date hereof, there are no outstanding
subscriptions, options, warrants, calls, rights or other agreements or
commitments (other than stock options granted to employees or directors and
directors' qualifying shares) of any nature relating to any Capital Stock of the
Borrower or any Subsidiary, except as disclosed on Schedule 4.15.
4.16 Use of Proceeds. The proceeds of the Loans, and the
Letters of Credit, shall be used for the general corporate purposes of the
Borrower and its Subsidiaries.
4.17 Environmental Matters. Other than as set forth on
Schedule 4.17 and exceptions to any of the following that could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect:
(a) The Borrower and its Subsidiaries: (i) are, and within the
period of all applicable statutes of limitation have been, in compliance with
all applicable Environmental Laws; (ii) hold all Environmental Permits (each of
which is in full force and effect) required for any of their current or intended
operations or for any property owned, leased, or otherwise operated by any of
them; (iii) are, and within the period of all applicable statutes of limitation
have been, in compliance with all of their Environmental Permits; and (iv)
reasonably believe that: each of their Environmental Permits will be timely
renewed and complied with, without material expense; any additional
Environmental Permits that may be required of any of them will be timely
obtained and complied with, without material expense; and compliance with any
Environmental Law that is or is expected to become applicable to any of them
will be timely attained and maintained, without material expense.
(b) Materials of Environmental Concern are not present at, on,
under, in, or about any real property now or formerly owned, leased or operated
by the Borrower or any of its Subsidiaries, or at any other location (including,
without limitation, any location to which Materials of Environmental Concern
have been sent for re-use or recycling or for treatment, storage, or disposal)
which could reasonably be expected to (i) give rise to liability of the Borrower
or any of its Subsidiaries under any applicable Environmental Law or otherwise
result in costs to the Borrower or any of its Subsidiaries, or (ii) interfere
with the Borrower's or any of its Subsidiaries' continued operations, or (iii)
impair the fair saleable value of any real property owned or leased by the
Borrower or any of its Subsidiaries.
(c) There is no judicial, administrative, or arbitral
proceeding (including any notice of violation or alleged violation) under or
relating to any Environmental Law to which the Borrower or any of its
Subsidiaries is, or to the knowledge of the Borrower or any of its Subsidiaries
will be, named as a party that is pending or, to the knowledge of the Borrower
or any of its Subsidiaries, threatened.
(d) Neither the Borrower nor any of its Subsidiaries has
received any written request for information, or been notified that it is a
potentially responsible party under or relating to the federal Comprehensive
Environmental Response, Compensation, and Liability Act or any similar
Environmental Law, or with respect to any Materials of Environmental Concern.
41
(e) Neither the Borrower nor any of its Subsidiaries has
entered into or agreed to any consent decree, order, or settlement or other
agreement, or is subject to any judgment, decree, or order or other agreement,
in any judicial, administrative, arbitral, or other forum for dispute
resolution, relating to compliance with or liability under any Environmental
Law.
(f) Neither the Borrower nor any of its Subsidiaries has
assumed or retained, by contract or operation of law, any liabilities of any
kind, fixed or contingent, known or unknown, under any Environmental Law or with
respect to any Material of Environmental Concern other than indemnity
obligations in the ordinary course of business.
4.18 Accuracy of Information, etc. No written statement or
information contained in this Agreement, any other Loan Document or any other
document, certificate or written statement furnished to the Administrative Agent
or the Lenders or any of them, by or on behalf of any Loan Party for use in
connection with the transactions contemplated by this Agreement or the other
Loan Documents, contained as of the date such statement, information, document
or certificate was so furnished, any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
contained herein or therein, taken as a whole, not materially misleading in
light of the circumstances under which made. The projections and pro forma
financial information contained in the materials referenced above are based upon
good faith estimates and assumptions believed by management of the Borrower to
be reasonable at the time made, it being recognized by the Lenders that such
financial information as it relates to future events is not to be viewed as fact
and that actual results during the period or periods covered by such financial
information may differ from the projected results set forth therein by a
material amount. As of the Closing Date, there is no fact known to any Loan
Party that could reasonably be expected to have a Material Adverse Effect that
has not been expressly disclosed herein, in the other Loan Documents or in any
other documents, certificates and statements furnished to the Administrative
Agent and the Lenders for use in connection with the transactions contemplated
hereby and by the other Loan Documents.
4.19 Security Documents. The Guarantee and Collateral
Agreement is effective to create in favor of the Administrative Agent, for the
benefit of the Secured Parties, a legal, valid and enforceable security interest
in the Collateral described therein and proceeds thereof. When financing
statements in appropriate form are filed in the offices specified on Schedule
4.19, the Guarantee and Collateral Agreement shall constitute a fully perfected
Lien on, and security interest in, all right, title and interest of the Loan
Parties in such Collateral and the proceeds thereof, as security for the
Obligations (as defined in the Guarantee and Collateral Agreement), in each case
prior and superior in right to any other Person (except Liens permitted by
Section 7.3).
4.20 Solvency. As of the Closing Date, each of the Borrower
and each Loan Party that is a Material Subsidiary is, and after giving effect to
the incurrence of all Indebtedness and obligations being incurred in connection
herewith and therewith will be and will continue to be, Solvent.
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SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement
of each Lender to make the initial extension of credit requested to be made by
it hereunder is subject to the satisfaction, prior to or concurrently with the
making of such extension of credit on the Closing Date, of the following
conditions precedent:
(a) Loan Documents. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by a duly authorized officer
of the Borrower, (ii) the Guarantee and Collateral Agreement, executed and
delivered by a duly authorized officer of the Borrower and each Subsidiary
Guarantor and (iii) a Lender Addendum executed and delivered by each Lender and
accepted by the Borrower.
(b) Financial Statements. The Lenders shall have received (i)
audited consolidated financial statements of the Borrower for the 2002 and 2003
fiscal years and (ii) unaudited interim consolidated financial statements of the
Borrower for each fiscal quarterly period ended subsequent to the date of the
latest applicable financial statements delivered pursuant to clause (i) of this
paragraph as to which such financial statements are available, and such
financial statements shall not, in the reasonable judgment of the Lenders,
reflect any material adverse change in the consolidated financial condition of
the Borrower, as reflected in the financial statements or projections previously
delivered to them.
(c) Approvals. All governmental and third party approvals
necessary in connection with this Agreement, the continuing operations of the
Borrower and its Subsidiaries and the transactions contemplated hereby shall
have been obtained and be in full force and effect.
(d) Related Agreements. The Administrative Agent shall have
received (in a form reasonably satisfactory to the Administrative Agent), true
and correct copies, certified as to authenticity by the Borrower, of the Senior
Floating Rate Notes Indenture.
(e) Termination of Existing Credit Facilities. The
Administrative Agent shall have received evidence satisfactory to it that the
Existing Credit Facilities shall be simultaneously terminated, all amounts owing
thereunder (if any) shall be simultaneously paid in full and arrangements
satisfactory to the Administrative Agent shall have been made for the
termination (or assignment) of Liens and security interests granted in
connection therewith.
(f) Fees. The Lenders, the Arrangers and the Administrative
Agent shall have received all fees required to be paid, and all expenses for
which invoices have been presented (including reasonable fees, disbursements and
other charges of counsel to the Administrative Agent), on or before the Closing
Date.
(g) Business Plan. The Lenders shall have received a
satisfactory business plan for fiscal years 2004-2007.
(h) Lien Searches. The Administrative Agent shall have
received the results of a recent lien search in each of the jurisdictions in
which Uniform Commercial Code financing statement or other domestic filings or
recordations should be made to evidence or perfect security interests in all
personal property assets of the Loan Parties, and such search shall reveal
43
no liens on any of the assets of the Loan Party, except for Liens permitted by
Section 7.3 or Liens to be released in connection with this Agreement.
(i) Environmental Affairs. The Lenders shall be reasonably
satisfied with the environmental affairs of the Borrower and its Subsidiaries.
(j) Closing Certificate. The Administrative Agent shall have
received a certificate of each Loan Party, dated the Closing Date, substantially
in the form of Exhibit C, with appropriate insertions and attachments.
(k) Legal Opinions. The Administrative Agent shall have
received the following executed legal opinions:
(i) the legal opinion of Xxxxxxxxx & Xxxxxxxxx, L.L.P.,
substantially in the form of Exhibit E-1; and
(ii) the legal opinion of Xxxxxx Xxxxxx, Esq., general
counsel of the Borrower and its Subsidiaries,
substantially in the form of Exhibit E-2.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(l) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code financing statement)
required by the Security Documents or under law or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to create in
favor of the Administrative Agent, for the benefit of the Secured Parties, a
perfected Lien on the Collateral described therein, prior and superior in right
to any other Person (other than with respect to Liens expressly permitted by
Section 7.3), shall have been delivered to the Administrative Agent in proper
form for filing, registration or recordation.
(m) Insurance. The Administrative Agent shall have received
insurance certificates satisfying the requirements of Section 5.3 of the
Guarantee and Collateral Agreement.
(n) Section 6.10. The Borrower and each Subsidiary Guarantor
shall have satisfied each of the requirements of Section 6.10 which are required
to be satisfied on or before the Closing Date.
(o) Pledged Stock; Stock Powers; Acknowledgment and Consent.
The Collateral Agent shall have received (i) the certificates representing the
shares of Capital Stock pledged pursuant to the Guarantee and Collateral
Agreement, together with an undated stock power for each such certificate
executed in blank by a duly authorized officer of the pledgor thereof and (ii)
an Acknowledgment and Consent, substantially in the form of Annex II to the
Guarantee and Collateral Agreement, duly executed by any issuer of Capital Stock
pledged pursuant to the Guarantee and Collateral Agreement that is not itself a
party to the Guarantee and Collateral Agreement.
44
5.2 Conditions to Each Extension of Credit. The agreement of
each Lender to make any extension of credit requested to be made by it hereunder
on any date is subject to the satisfaction of the following conditions
precedent:
(a) Representations and Warranties. (i) Each of the
representations and warranties made by any Loan Party in or pursuant to the Loan
Documents which is qualified by materiality shall be true and correct and (ii)
each of the other representations and warranties made by any Loan Party in or
pursuant to the Loan Documents shall be true and correct in all material
respects, in each case on and as of such date as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the extensions
of credit requested to be made on such date.
(c) Borrowing Base. At any time when the Total Extensions of
Credit equal or exceed $25,000,000, the Administrative Agent shall be satisfied
that, after giving effect to such extension of credit and the use of proceeds
thereof, the Borrowing Base shall not be less than the Total Extensions of
Credit.
Each borrowing by and issuance of a Letter of Credit on behalf
of the Borrower hereunder shall constitute a representation and warranty by the
Borrower as of the date of such extension of credit that the conditions
contained in this Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Letter of Credit remains outstanding or any Loan or other
amount is owing to any Lender or any Agent hereunder, the Borrower shall and
shall cause each of its Subsidiaries (other than any Immaterial Subsidiary) to:
6.1 Financial Statements. Furnish to the Administrative Agent
(which shall promptly furnish to each Lender):
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Borrower, a copy of the audited
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at the end of such year and the related audited consolidated statements of
income and of cash flows for such year, setting forth in each case in
comparative form the figures as of the end of and for the previous year,
reported on without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by PricewaterhouseCoopers
LLP or other independent certified public accountants of nationally recognized
standing;
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the Borrower
and its consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and of cash flows for such quarter
and the portion of the fiscal year through the end of such quarter, setting
forth in each case in comparative form the figures as of the end of and for the
corresponding period in the
45
previous year, certified by a Responsible Officer as being fairly stated in all
material respects (subject to normal year-end audit adjustments); and
(c) as soon as available, but in any event not later than 30
days after the end of each month occurring during each fiscal year of the
Borrower (other than the third, sixth, ninth and twelfth such month), the
unaudited consolidated balance sheets of the Borrower and its Subsidiaries as at
the end of such month and the related unaudited consolidated statements of
income and of cash flows for such month and the portion of the fiscal year
through the end of such month, setting forth in each case in comparative form
the figures as of the end of and for the corresponding period in the previous
year, certified by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments);
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 Certificates; Other Information. Furnish to the
Administrative Agent (which shall promptly furnish to each Lender), or, in the
case of clause (f), to the relevant Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent certified public
accountants reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default, except as specified in such certificate (it being understood that
such certificate shall be limited to the items that independent certified public
accountants are permitted to cover in such certificates pursuant to their
professional standards and customs of the profession);
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) a certificate of a Responsible Officer stating
that, to the best of such Responsible Officer's knowledge, each Loan Party
during such period has observed or performed all of its covenants and other
agreements, and satisfied every condition, contained in this Agreement and the
other Loan Documents to which it is a party to be observed, performed or
satisfied by it, in each case to the extent any failure to do so would
constitute a Default or Event of Default hereunder, and that such Responsible
Officer has obtained no knowledge of any Default or Event of Default except as
specified in such certificate and (ii) in the case of quarterly or annual
financial statements, (x) a Compliance Certificate containing all information
and calculations necessary for determining compliance by the Borrower and its
Subsidiaries with the provisions of this Agreement referred to therein as of the
last day of the fiscal quarter or fiscal year of the Borrower, as the case may
be, and (y) any UCC financing statements or other filings specified in such
Compliance Certificate as being required to be delivered therewith;
(c) as soon as available, and in any event no later than 45
days after the end of each fiscal year of the Borrower, a detailed consolidated
budget for the following fiscal year (including a projected consolidated balance
sheet of the Borrower and its Subsidiaries as of the end of the following fiscal
year, and the related consolidated statements of projected cash flow, projected
changes in financial position and projected income), and, as soon as available,
46
significant revisions, if any, of such budget and projections with respect to
such fiscal year (collectively, the "Projections"), which Projections shall in
each case be accompanied by a certificate of a Responsible Officer stating that
such Projections are based on reasonable estimates, information and assumptions
and that such Responsible Officer has no reason to believe that such Projections
are incorrect or misleading in any material respect;
(d) no later than 10 Business Days prior to the effectiveness
thereof, copies of substantially final drafts of any proposed amendment,
supplement, waiver or other modification with respect to the Indentures;
(e) within five days after the same are sent, copies of all
financial statements and reports that the Borrower sends to the holders of any
class of its debt securities or public equity securities and, within five days
after the same are filed, copies of all financial statements and reports that
the Borrower may make to, or file with, the SEC; and
(f) promptly, such additional financial and other information
as any Lender may from time to time reasonably request.
6.3 Conduct of Business and Maintenance of Existence, etc. (a)
(i) Preserve, renew and keep in full force and effect its corporate or other
existence and (ii) take all reasonable action to maintain all rights, privileges
and franchises useful and necessary in the normal conduct of its business,
except, in each case, as otherwise permitted by Section 7.4 and except, in the
case of clause (ii) above, to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect; and (b) comply with
all Contractual Obligations and Requirements of Law, except to the extent that
failure to comply therewith could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.
6.4 Maintenance of Property; Insurance. (a) Keep all material
Property and systems useful and necessary in its business in good working order
and condition, ordinary wear and tear excepted and (b) maintain with financially
sound and reputable insurance companies insurance on all its Property in at
least such amounts and against at least such risks (but including in any event
public liability, product liability and business interruption) as are usually
insured against in the same general area by companies engaged in the same or a
similar business.
6.5 Inspection of Property; Books and Records; Discussions.
(a) Keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities and (b)
permit any Lender (accompanied by any other Lender that so elects) to visit and
inspect any of its properties and examine and make abstracts from any of its
books and records at any reasonable time, upon reasonable prior notice, and to
discuss the business, operations, properties and financial and other condition
of the Borrower and its Subsidiaries with officers and employees of the Borrower
and its Subsidiaries and with its independent certified public accountants (it
being understood that all such notices shall be given through the Administrative
Agent and shall be coordinated with any other such notices to the extent
reasonably possible), in each case no more often than twice in any calendar year
in the aggregate for all Lenders unless an Event of Default shall have occurred
and be continuing.
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6.6 Notices. Promptly give notice to the Administrative Agent
(which shall promptly furnish such notice to the Lenders) of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries that could reasonably be
expected to have a Material Adverse Effect or (ii) litigation, investigation or
proceeding which may exist at any time between the Borrower or any of its
Subsidiaries and any Governmental Authority that, if adversely determined, could
reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any
of its Subsidiaries (i) in which the amount involved is $5,000,000 or more and
not covered by insurance or (ii) in which injunctive or similar relief is sought
which, if granted, could reasonably be expected to have a Material Adverse
Effect;
(d) the following events, as soon as possible and in any event
within 10 days after the Borrower knows or has reason to know thereof: (i) the
occurrence of any Reportable Event with respect to any Plan, a failure to make
any required contribution to a Plan, the creation of any Lien in favor of the
PBGC or a Plan or any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or
the taking of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the withdrawal from,
or the termination, Reorganization or Insolvency of, any Plan; and
(e) any development or event that has had or could reasonably
be expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower or the relevant Subsidiary proposes to take
with respect thereto.
6.7 Environmental Laws. Comply in all respects with, and take
all reasonable action to ensure compliance in all respects by all tenants and
subtenants, if any, with, all applicable Environmental Laws, and obtain and
comply in all respects with and maintain, and take all reasonable action to
ensure that all tenants and subtenants obtain and comply in all respects with
and maintain, any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws, except to the extent that any
failures to so comply or maintain could not, in the aggregate, reasonably be
expected to result in a Material Adverse Effect.
6.8 Additional Collateral, etc. (a) With respect to any
Specified Personal Property acquired after the Closing Date by the Borrower or
any Subsidiary Guarantor (other than any Property subject to a Lien expressly
permitted by Section 7.3(g) or 7.3(j)) as to which the Administrative Agent, for
the benefit of the Secured Parties, does not have a perfected Lien, promptly (i)
execute and deliver to the Administrative Agent such amendments to the Guarantee
and Collateral Agreement or such other documents as the Administrative Agent
reasonably deems necessary to grant to the Administrative Agent, for the benefit
of the Secured Parties, a
48
security interest in such Property and (ii) take all actions necessary or
advisable to grant to the Administrative Agent, for the benefit of the Secured
Parties, a perfected first priority security interest in such Property, subject
to Permitted Liens, including without limitation, the filing of Uniform
Commercial Code financing statements in such jurisdictions as may be required by
the Guarantee and Collateral Agreement or by law or as may be requested by the
Administrative Agent.
(b) With respect to any new Material Subsidiary (other than an
Excluded Subsidiary) created or acquired after the Closing Date (which, for the
purposes of this paragraph, shall include any existing Material Subsidiary that
ceases to be an Excluded Subsidiary and any existing Domestic Subsidiary that
ceases to be an Immaterial Subsidiary), by the Borrower or any of the Subsidiary
Guarantors, promptly (i) cause such new Subsidiary (A) to become a party to the
Guarantee and Collateral Agreement and (B) in the case of any Domestic
Subsidiary, to take such actions necessary or advisable to grant to the
Administrative Agent for the benefit of the Secured Parties a perfected first
priority security interest in the Collateral described in the Guarantee and
Collateral Agreement with respect to such new Subsidiary (subject to Permitted
Liens), including, without limitation, the filing of Uniform Commercial Code
financing statements in such jurisdictions as may be required by the Guarantee
and Collateral Agreement or by law or as may be reasonably requested by the
Administrative Agent, and (ii) if reasonably requested by the Administrative
Agent, deliver to the Administrative Agent legal opinions relating to the
matters described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent.
6.9 Borrowing Base Certificate. In the case of the Borrower,
at any time when the Total Extensions of Credit equal or exceed $25,000,000,
deliver or cause to be delivered, at the Borrower's expense, the following:
(a) to the Administrative Agent, the following documents in a
form satisfactory to it:
(i) on a monthly basis and in no event later than 20
days after the end of each such month or, if an
Event of Default shall exist, more frequently as
the Administrative Agent may reasonably request
(but in no event more often than weekly) or as
the Borrower shall elect, a Borrowing Base
Certificate, accompanied by such supporting
detail and documentation as is contemplated by
the Borrowing Base Certificate and/or as shall
be requested by the Administrative Agent in its
reasonable discretion (in a form and detail
satisfactory to the Administrative Agent);
(ii) on a monthly basis and in no event later than
twenty days after the end of each such month or,
if an Event of Default shall exist, more
frequently as the Administrative Agent may in
good faith request (but in no event more often
than weekly), detailed agings of Accounts and a
detailed listing of the inventory of Quail Tools
(together with a reconciliation to its general
ledger);
49
(iii) upon the Administrative Agent's request in good
faith (but in no event more often than (x)
monthly so long as no Event of Default shall
exist or (y) weekly if an Event of Default shall
exist), (A) copies of customer statements and
credit memos, remittance advices and reports,
and copies of deposit slips and bank statements,
and (B) a statement of the outstanding loans and
payments made, and Accounts owing to, Affiliates
as of the last day of the immediately preceding
month.
(b) To the Administrative Agent such other reports, statements
and reconciliations with respect to the Borrowing Base or the Collateral as it
shall from time to time request in its reasonable discretion.
6.10 Cash Management Systems. (a) On or before the Closing
Date, deliver to the Administrative Agent a schedule (the "Initial Account
Identification Schedule") identifying, for the Borrower and each Subsidiary
Guarantor, (i) the name and location of each bank and securities intermediary at
which the Borrower or such Subsidiary Guarantor maintains a deposit account,
securities account, lockbox account, concentration account, collection account
or disbursement account in the United States and (ii) the account number and
account name or other relevant descriptive data with respect to each such
account and such other information with respect to each such account as the
Administrative Agent shall reasonably request. Within 30 days after the opening
of any deposit account, securities account, lockbox account, concentration
account, collection account or disbursement account, in each case other than any
Immaterial Account, in the United States not identified in the Initial Account
Identification Schedule, deliver to the Administrative Agent a schedule (a
"Supplemental Account Identification Schedule") which provides, in respect of
each such account opened since the date of the Initial Account Identification
Schedule, the information set forth in clauses (i) and (ii) of the preceding
sentence.
(b) On or before the date which is 30 days after the Closing
Date, cause to be delivered to the Administrative Agent a Control Agreement
and/or a Lockbox Agreement, as appropriate, with respect to each account (other
than any Immaterial Account) described in the Initial Account Identification
Schedule which the Administrative Agent reasonably requires to be subject to
such an agreement, in each case duly executed and delivered by the Borrower or
the relevant Subsidiary Guarantor and by the bank or securities intermediary
that maintains such account. On or before the date which is 30 days after the
delivery of any Supplemental Account Identification Schedule, cause to be
delivered to the Administrative Agent a Control Agreement and/or a Lockbox
Agreement with respect to each account described in such Supplemental Account
Identification Schedule which the Administrative Agent reasonably requires to be
subject to such an agreement, in each case duly executed and delivered by the
Borrower or the relevant Subsidiary Guarantor and by the bank or securities
intermediary that maintains such account.
(c) Cause all proceeds of any Collateral in every form,
including, without limitation, cash, checks, wire transfers and other forms of
receipts, to be deposited promptly in a collection account or lockbox account
(i) in respect of which a Control Agreement and/or Lockbox Agreement, as
appropriate, is in effect and (ii) which, at any time after an Event of
50
Default has occurred and is continuing, is used solely for the purpose of
receiving proceeds of Collateral.
6.11 Inspection of Collateral. The Borrower agrees that the
Administrative Agent or its agents may, as the Administrative Agent shall deem
necessary or appropriate in the exercise of its sole discretion, enter upon the
premises of the Borrower or any Subsidiary Guarantor at any time and from time
to time, during normal business hours and upon reasonable notice under the
circumstances, and at any time whatsoever on and after the occurrence of a
Default or Event of Default, for the purposes of conducting field examinations
and appraisals and inspecting, evaluating and verifying the Collateral, all of
the above to be at the Borrower's expense during the existence of an Event of
Default and at the Administrative Agent's expense if no Event of Default exists.
6.12 Further Assurances. From time to time execute and
deliver, or cause to be executed and delivered, such additional instruments,
certificates or documents, and take such actions, as the Administrative Agent
may reasonably request for the purposes of implementing or effectuating the
provisions of this Agreement and the other Loan Documents, or of more fully
perfecting or renewing the rights of the Administrative Agent and the Lenders
with respect to the Collateral (or with respect to any additions thereto or
replacements or proceeds thereof or with respect to any other property or assets
hereafter acquired by the Borrower or any Subsidiary which may be deemed to be
part of the Collateral) pursuant hereto or thereto. Upon the exercise by the
Administrative Agent or any Lender of any power, right, privilege or remedy
pursuant to this Agreement or the other Loan Documents which requires any
consent, approval, recording, qualification or authorization of any Governmental
Authority, the Borrower will execute and deliver, or will cause the execution
and delivery of, all applications, certifications, instruments and other
documents and papers that the Administrative Agent or such Lender may be
required to obtain from the Borrower or any of its Subsidiaries for such
governmental consent, approval, recording, qualification or authorization.
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Letter of Credit remains outstanding or any Loan or other
amount is owing to any Lender or any Agent hereunder, the Borrower shall not,
and shall not permit any of its Subsidiaries (other than any Immaterial
Subsidiary) to, directly or indirectly:
7.1 Financial Condition Covenants.
51
(a) Consolidated Leverage Ratio. Permit the Consolidated
Leverage Ratio as at the last day of any period of four consecutive fiscal
quarters of the Borrower to exceed 5.75:1.00.
(b) Consolidated Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio for any period of four consecutive fiscal
quarters of the Borrower to be less than 1.75:1.00.
(c) Consolidated Senior Secured Leverage Ratio. Permit the
Consolidated Senior Secured Leverage Ratio as at the last day of any period of
four consecutive fiscal quarters of the Borrower to exceed 1.25:1.00.
7.2 Limitation on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness, except:
(a) (I) Indebtedness of any Loan Party pursuant to any Loan
Document and (II) any unsecured Indebtedness of any Loan Party the Net Cash
Proceeds of which are used (i) to repay any Indebtedness referred to in the
preceding clause (I), provided that such repayment is accompanied by an equal
permanent reduction of the Commitments, or (ii) to pay premiums, fees or
expenses payable in connection with any such repayment;
(b) Indebtedness (i) of the Borrower to any Subsidiary and of
any Wholly Owned Subsidiary Guarantor to the Borrower or any other Subsidiary
and (ii) of any Subsidiary to any Loan Party or other Subsidiary;
(c) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted by Section 7.3(g) in an aggregate
principal amount not to exceed $5,000,000 at any one time outstanding;
(d) (I) Indebtedness outstanding on the date hereof and listed
on Schedule 7.2(d) and (II) any Indebtedness the Net Cash Proceeds of which are
used (i) to refinance, refund, renew or extend any Indebtedness referred to in
the preceding clause (I) (without any shortening of the maturity of any
principal amount thereof) or (ii) to pay premiums, fees or expenses payable in
connection with any such refinancing, refunding, renewal or extension;
(e) (i) Guarantee Obligations of the Borrower or any
Subsidiary in respect of Indebtedness permitted under this Section 7.2 and (ii)
Guarantee Obligations made in the ordinary course of business by the Borrower or
any of its Subsidiaries of obligations of the Borrower or any Subsidiary
Guarantor;
(f) Indebtedness represented by agreements of the Borrower or
any Subsidiary providing for indemnification, adjustment of purchase price, or
similar obligations, in each case, incurred or assumed in connection with the
Disposition of any business, assets, or Capital Stock of the Borrower or any
Subsidiary; provided that the maximum aggregate liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds actually received by the
Borrower and its Subsidiaries in connection with such Disposition; and
52
(g) additional Indebtedness of the Borrower or any of its
Subsidiaries in an aggregate principal amount (for the Borrower and all
Subsidiaries) not to exceed $10,000,000 at any one time outstanding.
7.3 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its Property, whether now owned or hereafter
acquired, except for:
(a) Liens for taxes, assessments or governmental charges or
claims not yet due or which are being contested in good faith by appropriate
proceedings, provided that adequate reserves with respect thereto are maintained
on the books of the Borrower or its Subsidiaries, as the case may be, in
conformity with GAAP;
(b) Landlords', carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 30 days or that are
being contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation;
(d) deposits to secure the payment or performance of bids,
tenders, government contracts, trade contracts (other than for borrowed money),
leases, statutory or regulatory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the aggregate,
are not substantial in amount and which do not in any case materially detract
from the value of the Property subject thereto or materially interfere with the
ordinary conduct of the business of the Borrower or any of its Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule
7.3(f), securing Indebtedness permitted by Section 7.2(d), provided that no such
Lien is spread to cover any additional Property after the Closing Date;
(g) Liens securing Indebtedness of the Borrower or any other
Subsidiary incurred pursuant to Section 7.2(c) to finance the acquisition of
fixed or capital assets, provided that (i) such Liens shall be created within 90
days after the acquisition of such fixed or capital assets, (ii) such Liens do
not at any time encumber any Property other than the Property financed by such
Indebtedness and (iii) the amount of Indebtedness secured thereby is not
increased;
(h) Liens created pursuant to the Security Documents;
(i) any interest or title of a lessor under any lease entered
into by the Borrower or any other Subsidiary in the ordinary course of its
business and covering only the assets so leased;
(j) Liens not otherwise permitted by this Section 7.3 so long
as neither (i) the aggregate outstanding principal amount of the obligations
secured thereby nor (ii) the aggregate
53
fair market value (determined, in the case of each such Lien, as of the date
such Lien is incurred) of the assets subject thereto exceeds (as to the Borrower
and all Subsidiaries) $10,000,000 at any one time;
(k) judgment Liens not giving rise to an Event of Default so
long as any appropriate legal proceedings which may have been duly initiated for
the review of such judgment shall not have been finally terminated or the period
within which such proceedings may be initiated shall not have expired;
(l) Liens upon specific items of inventory or other goods of
the Borrower or any Subsidiary securing such Person's obligations in respect of
bankers acceptances issued or created for the account of such Person to
facilitate the purchase, shipment, or storage of such inventory or other goods;
and
(m) Liens securing reimbursement obligations with respect to
commercial letters of credit that encumber documents and other property or
assets relating to such letters of credit and products and proceeds thereof.
7.4 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or Dispose of all or substantially all
of its Property or business, except that:
(a) any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower shall be the
continuing or surviving corporation) or with or into any Subsidiary Guarantor
(provided that (i) the Subsidiary Guarantor shall be the continuing or surviving
corporation or (ii) simultaneously with such transaction, the continuing or
surviving corporation shall become a Subsidiary Guarantor and the Borrower shall
comply with Section 6.9 in connection therewith);
(b) any Subsidiary may merge with any other Subsidiary so long
as, in the case of any merger involving a Subsidiary Guarantor, the surviving
Subsidiary shall be a Subsidiary Guarantor and such merger could not reasonably
be expected to have a material adverse effect on the business, assets, property
or financial condition of the surviving Subsidiary; and
(c) any Subsidiary of the Borrower may Dispose of any or all
of its assets (upon voluntary liquidation or otherwise) to the Borrower or any
Subsidiary Guarantor and may be dissolved following such Disposition.
7.5 Limitation on Disposition of Property. Dispose of (i) any
barge rig located in the Gulf of Mexico, (ii) any Eligible Accounts Receivable
or (iii) any Eligible Rental Equipment, in each case whether now owned or
hereafter acquired, or issue or Dispose of any Capital Stock of any Person that
directly or indirectly owns any of the foregoing, except:
(a) Dispositions permitted by Section 7.4(c);
(b) the Disposition of obsolete or worn out property, or
property that is no longer used or useful in such Person's business, in the
ordinary course of business;
54
(c) the Disposition of inventory or other assets in the
ordinary course of business or consistent with past practice;
(d) Dispositions of cash or Cash Equivalents;
(e) the sale or issuance of any Subsidiary's Capital Stock to
the Borrower or any Subsidiary Guarantor;
(f) transfers of assets between or among the Borrower and the
Subsidiary Guarantors;
(g) any Dispositions constituted by the granting of Liens
permitted by Section 7.3;
(h) any lease of drill pipe by Quail Tools to a customer
located outside of the United States and any subsequent sale to such customer of
any such drill pipe; and
(i) any sale by the Borrower or any Subsidiary to its
customers of drill pipe, tools, and associated drilling equipment utilized in
connection with a drilling contract for the employment of a drilling rig in the
ordinary course of business and consistent with past practice.
7.6 Limitation on Restricted Payments. Declare or pay any
dividend on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any Capital Stock of the Borrower or any
Subsidiary, whether now or hereafter outstanding, or make any other distribution
in respect thereof, either directly or indirectly, whether in cash or property
or in obligations of the Borrower or any Subsidiary, or enter into any
derivatives or other transaction with any financial institution, commodities or
stock exchange or clearinghouse (a "Derivatives Counterparty") obligating the
Borrower or any Subsidiary to make payments to such Derivatives Counterparty as
a result of any change in market value of any such Capital Stock (collectively,
"Restricted Payments"), except that:
(a) any Subsidiary (a "Paying Subsidiary") may make Restricted
Payments (i) to the Borrower or any Subsidiary Guarantor, (ii) in the case of
any Paying Subsidiary that is a partnership or a limited liability company,
ratably to the partners or members thereof, as the case may be, so long as at
least one such partner or member, as the case may be, is a Subsidiary Guarantor
and (iii) if such Paying Subsidiary is not a Subsidiary Guarantor, to any other
Subsidiary which is the parent of such Paying Subsidiary;
(b) the Borrower may make Restricted Payments in the form of
common stock of the Borrower;
(c) so long as no Event of Default has occurred and is
continuing or would be caused thereby, the Borrower or any Subsidiary may
repurchase, redeem, or otherwise acquire or retire any Capital Stock of the
Borrower or any Subsidiary held by any existing or former officer or employee of
the Borrower or any Subsidiary pursuant to any equity subscription agreement,
stock option agreement, or similar agreement, provided, that the aggregate
amount of payments under this paragraph subsequent to the date hereof (net of
any proceeds received by the Borrower
55
subsequent to the date hereof in connection with resales of any common stock or
common stock options so purchased) shall not exceed $2,000,000 in any 12 month
period; and
(d) the Borrower may acquire Capital Stock in connection with
the exercise of stock options or stock appreciation rights by way of cashless
exercise or in connection with the satisfaction of withholding tax obligations.
7.7 Limitation on Optional Payments and Modifications of Debt
Instruments, etc. (a) At any time when the Total Extensions of Credit equal or
exceed $25,000,000, make or offer to make any optional or voluntary payment,
prepayment, repurchase or redemption of, or otherwise voluntarily or optionally
defease, the Senior Notes, the Senior Floating Rate Notes, any Refinancing Debt
or the 10.125% Senior Notes, or segregate funds for any such payment,
prepayment, repurchase, redemption or defeasance (in each case other than with
proceeds of any Refinancing Debt), or enter into any derivative or other
transaction with any Derivatives Counterparty obligating the Borrower or any
Subsidiary to make payments to such Derivatives Counterparty as a result of any
change in market value of the Senior Notes, the Senior Floating Rate Notes, any
Refinancing Debt or the 10.125% Senior Notes, (b) amend, modify or otherwise
change, or consent or agree to any amendment, modification, waiver or other
change to, any of the terms of the Senior Notes, the Senior Floating Rate Notes,
any Refinancing Debt or the 10.125% Senior Notes to the extent that any such
amendment, modification, waiver or other change would shorten the maturity or
increase the amount of any payment of principal thereof, increase the rate or
shorten the date for payment of interest thereon or make any covenant or other
restriction applicable to the Borrower or any of its Subsidiaries materially
more restrictive) or (c) amend its certificate of incorporation in any manner
adverse to the Administrative Agent or the Lenders.
7.8 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of Property, the rendering of any service or the payment of any
management, advisory or similar fees, with any Affiliate (other than the
Borrower or any Subsidiary Guarantor) unless such transaction is (a) otherwise
permitted under this Agreement, (b) in the ordinary course of business of the
Borrower or such Subsidiary, as the case may be, and (c) upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary, as the
case may be, than it would obtain in a comparable arm's length transaction with
a Person that is not an Affiliate, except for transactions permitted by the
following sentence. This Section 7.8 shall not apply to the following
transactions: (i) any employment agreement entered into by the Borrower or any
of its Subsidiaries in the ordinary course of business and consistent with past
practices, (ii) payment of reasonable directors' fees to Persons who are not
otherwise Affiliates of the Borrower, (iii) sales of Capital Stock of the
Borrower to Affiliates of the Borrower, (iv) any Restricted Payment otherwise
permitted under Section 7.6 or any Investment, (v) indemnification agreements
with, and payments made, to officers, directors, and employees of the Borrower
or any Subsidiary pursuant to charter, bylaw, statutory, or contractual
provisions, and (vi) the performance of obligations of the Borrower or any
Subsidiary under the terms of any agreement to which the Borrower or any
Subsidiary is a party as of the date of this Agreement, and any amendments,
modifications, supplements, extensions, or renewals of such agreements; provided
that any such amendments, modifications, supplements, extensions, or renewals of
such agreements are not materially more
56
disadvantageous, taken as a whole, to the Administrative Agent and the Lenders
than the terms of such agreements as in effect on the date of this Agreement.
7.9 Limitation on Changes in Fiscal Periods. Permit the fiscal
year of the Borrower to end on a day other than December 31 or change the
Borrower's method of determining fiscal quarters.
7.10 Limitation on Negative Pledge Clauses. Enter into or
suffer to exist or become effective any agreement that prohibits or limits the
ability of the Borrower or any of its Subsidiaries to create, incur, assume or
suffer to exist any Lien upon any of its Property or revenues, whether now owned
or hereafter acquired, to secure the Obligations or, in the case of any
guarantor, its obligations under the Guarantee and Collateral Agreement, other
than (a) this Agreement and the other Loan Documents, (b) the Indentures, (c)
any agreements governing any purchase money Liens or Capital Lease Obligations
or other secured Indebtedness otherwise permitted hereby (in which case, any
prohibition or limitation shall only be effective against the assets financed
thereby or securing such Indebtedness), (d) customary non assignment provisions
in any contract or lease entered into in the ordinary course of business and
consistent with past practices, (e) applicable law or any applicable rule,
regulation, or order of any Governmental Authority, (f) provisions with respect
to the disposition or distribution of assets or property in joint venture
agreements, asset sale agreements, stock sale agreements, and other similar
agreements entered into in the ordinary course of business, and (g) restrictions
on cash or other deposits or net worth imposed by customers under contracts
entered into in the ordinary course of business.
7.11 Limitation on Restrictions on Subsidiary Distributions.
Enter into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary to (a) make Restricted Payments in
respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness
owed to, the Borrower or any other Subsidiary, (b) make Investments in the
Borrower or any other Subsidiary or (c) transfer any of its assets to the
Borrower or any other Subsidiary, except for such encumbrances or restrictions
existing under or by reason of (i) any restrictions existing under the Loan
Documents, (ii) any restrictions with respect to a Subsidiary imposed pursuant
to an agreement that has been entered into in connection with the Disposition of
all or substantially all of the Capital Stock or assets of such Subsidiary,
(iii) any restrictions imposed pursuant to agreements governing any purchase
money Liens or Capital Lease Obligations or other secured Indebtedness otherwise
permitted hereby (in which case, any prohibition or limitation shall only be
effective as to transfers of the assets financed thereby or securing such
Indebtedness), (iv) customary non assignment provisions in any contract or lease
entered into in the ordinary course of business and consistent with past
practices, (v) applicable law or any applicable rule, regulation, or order of
any Governmental Authority, (vi) provisions with respect to the disposition or
distribution of assets or property in joint venture agreements, asset sale
agreements, stock sale agreements, and other similar agreements entered into in
the ordinary course of business, provided that such provisions apply only to the
assets subject to such agreements, and (vii) restrictions on cash or other
deposits or net worth imposed by customers under contracts entered into in the
ordinary course of business.
7.12 Limitation on Lines of Business. Enter into any material
business except for those businesses in which the Borrower and its Subsidiaries
are engaged on the date of this
57
Agreement or that are incidental or reasonably related thereto or that are a
reasonable extension thereof, as determined in good faith by the Borrower or
applicable Subsidiary.
7.13 Limitation on Hedge Agreements. Enter into any Hedge
Agreement other than Hedge Agreements entered into in the ordinary course of
business, and not for speculative purposes, to protect against changes in
interest rates or foreign exchange rates.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan
or Reimbursement Obligation when due in accordance with the terms hereof; or the
Borrower shall fail to pay any interest on any Loan or Reimbursement Obligation,
or any other amount payable hereunder or under any other Loan Document, within
three Business Days after any such interest or other amount becomes due in
accordance with the terms hereof or thereof; or
(b) Any representation or warranty made or deemed made by any
Loan Party herein or in any other Loan Document or in any certificate, document
or financial or other statement furnished by it at any time under or in
connection with this Agreement or any such other Loan Document shall prove to
have been inaccurate in any material respect on or as of the date made or deemed
made or furnished; or
(c) (i) Any Loan Party shall default in the observance or
performance of any agreement contained in clause (i) or (ii) of Section 6.3(a)
(with respect to the Borrower only), Section 6.6(a) or Section 7, or in Section
5 of the Guarantee and Collateral Agreement or (ii) any Loan Party shall default
in the observance or performance of any agreement contained in Section 6.1 or in
clause (i) of Section 6.9(a) and such default shall continue unremedied for a
period of 10 days; or
(d) Any Loan Party shall default in the observance or
performance of any other agreement contained in this Agreement or any other Loan
Document (other than as provided in paragraphs (a) through (c) of this Section),
and such default shall continue unremedied for a period of 30 days; or
(e) The Borrower or any of its Subsidiaries shall (i) default
in making any payment of any principal of any Indebtedness (including, without
limitation, but without duplication of the Indebtedness guaranteed thereby, any
Guarantee Obligation, but excluding the Loans and Reimbursement Obligations) on
the scheduled or original due date with respect thereto; or (ii) default in
making any payment of any interest on any such Indebtedness beyond the period of
grace, if any, provided in the instrument or agreement under which such
Indebtedness was created; or (iii) default in the observance or performance of
any other agreement or condition relating to any 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 beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or to become subject to or mandatory offer to
purchase by the obligor thereunder or (in
58
the case of any such Indebtedness constituting a Guarantee Obligation) to become
payable; provided, that a default, event or condition described in clause (i),
(ii) or (iii) of this paragraph (e) shall not at any time constitute an Event of
Default unless, at such time, one or more defaults, events or conditions of the
type described in clauses (i), (ii) and (iii) of this paragraph (e) shall have
occurred and be continuing with respect to Indebtedness the outstanding
principal amount of which exceeds in the aggregate $7,500,000; or
(f) (i) The Borrower or any of its Subsidiaries (other than
any Immaterial Subsidiary) shall commence any case, proceeding or other action
(A) under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking to adjudicate
it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or the Borrower or any of its Subsidiaries
(other than any Immaterial Subsidiary) shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against the Borrower
or any of its Subsidiaries (other than any Immaterial Subsidiary) any case,
proceeding or other action of a nature referred to in clause (i) above that (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a period of
60 days; or (iii) there shall be commenced against the Borrower or any of its
Subsidiaries (other than any Immaterial Subsidiary) any case, proceeding or
other action seeking issuance of a warrant of attachment, execution, distraint
or similar process against all or any substantial part of its assets that
results in the entry of an order for any such relief that shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60 days from the
entry thereof; or (iv) the Borrower or any of its Subsidiaries shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above;
or (v) the Borrower or any of its Subsidiaries (other than any Immaterial
Subsidiary) shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(g) Any Person shall engage in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Plan, or any Lien
in favor of the PBGC or a Plan shall arise on the assets of the Borrower or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect
to, or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders, likely to result
in the termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
Borrower or any Commonly Controlled Entity shall incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or exist
with respect to a Plan; and in each case in clauses (i) through (vi) above, such
event or condition, together with all other such events or conditions, if any,
could reasonably be expected to have a Material Adverse Effect; or
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(h) One or more judgments or decrees shall be entered against
the Borrower or any of its Subsidiaries involving for the Borrower and its
Subsidiaries taken as a whole a liability (not paid or fully covered by
insurance as to which the relevant insurance company has acknowledged coverage)
of $7,500,000 or more, and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal by the earlier of (i) the
date which 30 days from the entry thereof and (ii) the date on which the
relevant judgment creditor(s) has begun to enforce such judgment(s) or
decree(s); or
(i) Any of the Security Documents shall cease, for any reason
(other than by reason of the express release thereof pursuant to Section 10.15),
to be in full force and effect, or any Loan Party or any Affiliate of any Loan
Party shall so assert, or any Lien on a material portion of the Collateral
created by any of the Security Documents shall cease (other than by reason of
the express release thereof pursuant to Section 10.15) to be enforceable and of
the same effect and priority purported to be created thereby; or
(j) The guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason (other than by reason of the
express release thereof pursuant to Section 10.15), to be in full force and
effect or any Loan Party or any Affiliate of any Loan Party shall so assert; or
(k) Any Change of Control shall occur;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) shall immediately become due and payable, and (B) if such event is
any other Event of Default, either or both of the following actions may be
taken: (i) with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to the Borrower declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; and (ii) with
the consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Borrower, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement and the other Loan Documents
(including, without limitation, all amounts of L/C Obligations, whether or not
the beneficiaries of the then outstanding Letters of Credit shall have presented
the documents required thereunder) to be due and payable forthwith, whereupon
the same shall immediately become due and payable. In the case of all Letters of
Credit with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to this paragraph, the Borrower shall at
such time deposit in a cash collateral account opened by the Administrative
Agent an amount equal to the aggregate then undrawn and unexpired amount of such
Letters of Credit. Amounts held in such cash collateral account shall be applied
by the Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the other Loan
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Documents. After all such Letters of Credit shall have expired or been fully
drawn upon, all Reimbursement Obligations shall have been satisfied and all
other obligations of the Borrower hereunder and under the other Loan Documents
shall have been paid in full, the balance, if any, in such cash collateral
account shall be returned to the Borrower (or such other Person as may be
lawfully entitled thereto).
SECTION 9. THE ADMINISTRATIVE AGENT
9.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each Lender irrevocably authorizes
the Administrative Agent, in such capacity, to take such action on its behalf
under the provisions of this Agreement and the other Loan Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
9.2 Delegation of Duties. The Administrative Agent may execute
any of its duties under this Agreement and the other Loan Documents by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from its or 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 Loan Party or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of any Loan Party to perform its obligations
hereunder or thereunder. The Administrative Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party.
9.4 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order
61
or other document or conversation believed by it to be genuine and correct and
to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without limitation, counsel
to the Loan Parties), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless such Note shall have been
transferred in accordance with Section 10.6 and all actions required by such
Section in connection with such transfer shall have been taken. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders (or, if so specified
by this Agreement, all Lenders or any other instructing group of Lenders
specified by this Agreement) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any
such action. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders (or, if so
specified by this Agreement, all Lenders or any other instructing group of
Lenders specified by this Agreement), and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.
9.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Administrative Agent shall have received notice
from a Lender or the Borrower referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that the Administrative Agent shall receive such a
notice, the Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders (or, if
so specified by this Agreement, all Lenders or any other instructing group of
Lenders specified by this Agreement); provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
9.6 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Administrative Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or affiliates
have made any representations or warranties to it and that no act by the
Administrative Agent hereafter taken, including any review of the affairs of a
Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates 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 Administrative Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such
62
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party that may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
9.7 Indemnification. The Lenders agree to indemnify each Agent
in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Percentages in effect on the date on which indemnification is
sought under this Section (or, if indemnification is sought after the date upon
which the Commitments shall have terminated and the Loans shall have been paid
in full, ratably in accordance with such Percentages immediately prior to such
date), for, and to save each Agent harmless from and against, any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever that may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against such Agent in any way relating to
or arising out of, the Commitments, this Agreement, any of the other Loan
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by such Agent under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements that are found by a final and nonappealable decision
of a court of competent jurisdiction to have resulted from such Agent's gross
negligence or willful misconduct. The agreements in this Section shall survive
the payment of the Loans and all other amounts payable hereunder.
9.8 Agent in Its Individual Capacity. Each Agent and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with any Loan Party as though such Agent were not an Agent.
With respect to its Loans made or renewed by it and with respect to any Letter
of Credit issued or participated in by it, each Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not an Agent, and the terms "Lender" and
"Lenders" shall include each Agent in its individual capacity.
9.9 Successor Administrative Agent. The Administrative Agent
may resign as Administrative Agent upon 10 days' notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 8(a) or Section
8(f) with respect to the Borrower shall have occurred and be continuing) be
subject to approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent
63
effective upon such appointment and approval, and the former Administrative
Agent's rights, powers and duties as Administrative Agent shall be terminated,
without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement or any holders of
the Loans. If no successor agent has accepted appointment as Administrative
Agent by the date that is 10 days following a retiring Administrative Agent's
notice of resignation, the retiring Administrative Agent's resignation shall
nevertheless thereupon become effective, and the Lenders shall assume and
perform all of the duties of the Administrative Agent hereunder until such time,
if any, as the Required Lenders appoint a successor agent as provided for above.
After any retiring Administrative Agent's resignation as Administrative Agent,
the provisions of this Section 9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent under this
Agreement and the other Loan Documents.
9.10 Authorization to Release Liens and Guarantees. The
Administrative Agent is hereby irrevocably authorized by each of the Lenders to
effect any release of Liens or guarantee obligations contemplated by Section
10.15.
9.11 The Arrangers; the Syndication Agent. Neither the
Arrangers nor the Syndication Agent, in their respective capacities as such,
shall have no duties or responsibilities, and shall incur no liability, under
this Agreement and the other Loan Documents.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement or any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section 10.1. The Required Lenders, the Administrative Agent and each Loan Party
party to the relevant Loan Document may, or (with the written consent of the
Required Lenders) the Administrative Agent and each Loan Party party to the
relevant Loan Document may, from time to time, (a) enter into written
amendments, supplements or modifications hereto and to the other Loan Documents
(including amendments and restatements hereof or thereof) for the purpose of
adding any provisions to this Agreement or the other Loan Documents or changing
in any manner the rights of the Lenders or of the Loan Parties hereunder or
thereunder or (b) waive, on such terms and conditions as may be specified in the
instrument of waiver, any of the requirements of this Agreement or the other
Loan Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
modification shall:
(i) forgive the principal amount or extend the final
scheduled date of maturity of any Loan or
Reimbursement Obligation, reduce the stated rate
of any interest or fee payable hereunder or
extend the scheduled date of any payment
thereof, or increase the amount or extend the
expiration date of any Commitment of any Lender,
in each case without the consent of each Lender
directly affected thereby;
(ii) amend, modify or waive any provision of this
Section or reduce the percentage specified in
the definition of Required Lenders, consent to
the assignment or transfer by the Borrower of
any of its
64
rights and obligations under this Agreement and
the other Loan Documents, release a material
portion of the Collateral or release any
material Subsidiary Guarantor from its guarantee
obligations under the Guarantee and Collateral
Agreement, in each case without the consent of
all Lenders;
(iii) amend, modify or waive any provision of Section
9, or any other provision affecting the rights,
duties or obligations of any Agent, without the
consent of any Agent directly affected thereby;
(iv) amend, modify or waive any provision of Section
2.14 without the consent of each Lender directly
affected thereby;
(v) amend, modify or waive any provision of Section
3 without the consent of each Issuing Lender
affected thereby;
(vi) impose restrictions on assignments and
participations that are more restrictive than,
or additional to, those set forth in Section
10.6 without the consent of all Lenders;
(vii) increase the Advance Rates under the Borrowing
Base or increase the L/C Commitment without the
consent of all Lenders; or
(viii) amend, modify or waive any provision of (A) the
definition of "Borrowing Base" or (B) any of the
capitalized terms used in such definition, in
each case without the consent of Lenders whose
Percentages are no less than 75% in the
aggregate.
Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Loan Parties, the
Lenders, the Administrative Agent and all future holders of the Loans. In the
case of any waiver, the Loan Parties, the Lenders and the Administrative Agent
shall be restored to their former position and rights hereunder and under the
other Loan Documents, and any Default or Event of Default waived shall be deemed
to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon. Any such waiver, amendment, supplement or modification shall be
effected by a written instrument signed by the parties required to sign pursuant
to the foregoing provisions of this Section; provided, that delivery of an
executed signature page of any such instrument by facsimile transmission shall
be effective as delivery of a manually executed counterpart thereof.
10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed (a) in the case of the Borrower and the Administrative
Agent, as follows and (b) in the case of the Lenders, as set forth in an
administrative questionnaire delivered to the Administrative Agent or on
Schedule I to the Lender Addendum to which such Lender is a party or, in the
case of a Lender which becomes a party to this Agreement pursuant to
65
an Assignment and Acceptance, in such Assignment and Acceptance or (c) in the
case of any party, to such other address as such party may hereafter notify to
the other parties hereto:
The Borrower: Xxxxxx Drilling Company
0000 Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxx Xxxxxx
Telecopy: 000-000-0000
Telephone: 000-000-0000
The Administrative Agent: In the case of any borrowing request or any
notice relating to any prepayment or the
conversion or continuation of any Loan,
Xxxxxx Commercial Paper Inc.
Bank Loan Operations
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Rosolinksy
Telecopy: 646-758- 5015
Telephone: 000-000-0000
In the case of any other notice or
communication,
Xxxxxx Commercial Paper Inc.
Loan Portfolio Group
000 Xxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
Telecopy: 000-000-0000
Telephone: 000-000-0000
Issuing Lender: As notified by such Issuing Lender to the
Administrative Agent and the Borrower
provided that any notice, request or demand to or upon the Administrative
Agent, any Issuing Lender or any Lender shall not be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent or any
Lender, any right, remedy, power or privilege hereunder or under the other Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or
66
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All
representations and warranties made herein, in the other Loan Documents and in
any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans and other extensions of credit hereunder.
10.5 Payment of Expenses. The Borrower agrees (a) to pay or
reimburse the Administrative Agent for all its reasonable out-of-pocket costs
and expenses incurred in connection with the syndication of the Facility (other
than fees payable to syndicate members) and the development, preparation and
execution of, and any amendment, supplement or modification to, this Agreement
and the other Loan Documents and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements and other charges of counsel to the
Administrative Agent and the charges of Intralinks, (b) to pay or reimburse each
Lender and the Administrative Agent for all their costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any other documents prepared in
connection herewith or therewith, including, without limitation, the fees and
disbursements of counsel (including the allocated fees and disbursements and
other charges of in-house counsel) to each Lender and of counsel to the
Administrative Agent, (c) to pay, indemnify, or reimburse each Lender and the
Administrative Agent for, and hold each Lender and the Administrative Agent
harmless from, any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp, excise and other
taxes, if any, which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, the other
Loan Documents and any such other documents, and (d) to pay, indemnify or
reimburse each Lender, the Administrative Agent, their respective affiliates,
and their respective officers, directors, trustees, employees, advisors, agents
and controlling persons (each, an "Indemnitee") for, and hold each Indemnitee
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement, the other Loan
Documents and any such other documents, including, without limitation, any of
the foregoing relating to the use of proceeds of the Loans or the violation of,
noncompliance with or liability under, any Environmental Law applicable to the
operations of the Borrower any of its Subsidiaries or any of the Properties and
the fees and disbursements and other charges of legal counsel in connection with
the foregoing (all the foregoing in this clause (d), collectively, the
"Indemnified Liabilities"), provided, that the Borrower shall have no obligation
hereunder to any Indemnitee with respect to Indemnified Liabilities to the
extent such Indemnified Liabilities have resulted from the gross negligence or
willful misconduct of such Indemnitee, and provided further that the Borrower
shall have no obligation hereunder to any Indemnitee which is such an advisor
with respect to losses, damages, liabilities or related expenses of such advisor
in respect of any claims brought by any other Indemnitee against such advisor
arising from the negligence of such advisor in the provision of services to such
other Indemnitee. No Indemnitee shall be liable for any damages arising from
67
the use by unauthorized persons of Information or other materials sent through
electronic, telecommunications or other information transmission systems that
are intercepted by such persons or for any special, indirect, consequential or
punitive damages in connection with the Facility. Without limiting the
foregoing, and to the extent permitted by applicable law, the Borrower agrees
not to assert and to cause its Subsidiaries not to assert, and hereby waives and
agrees to cause its Subsidiaries so to waive, all rights for contribution or any
other rights of recovery with respect to all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature, under or related to Environmental Laws, that any of them might have by
statute or otherwise against any Indemnitee. All amounts due under this Section
shall be payable not later than 30 days after written demand therefor.
Statements payable by the Borrower pursuant to this Section shall be submitted
to the Borrower at the address of the Borrower set forth in Section 10.2, or to
such other Person or address as may be hereafter designated by the Borrower in a
notice to the Administrative Agent. The agreements in this Section shall survive
repayment of the Loans and all other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Administrative Agent, all future holders of the Loans
and their respective successors and assigns, except that the Borrower may not
assign or transfer any of its rights or obligations under this Agreement without
the prior written consent of the Administrative Agent and each Lender.
(b) Any Lender may, without the consent of the Borrower, in
accordance with applicable law, at any time sell to one or more banks, financial
institutions or other entities (each, a "Participant") participating interests
in any Loan owing to such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder and under the other Loan Documents. In the
event of any such sale by a Lender of a participating interest to a Participant,
such Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Loan for all purposes under this Agreement and the other Loan Documents, and the
Borrower and the Administrative Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Agreement and the other Loan Documents. In no event shall any Participant
under any such participation have any right to approve any amendment or waiver
of any provision of any Loan Document, or any consent to any departure by any
Loan Party therefrom, except to the extent that such amendment, waiver or
consent would require the consent of the Lender from whom such Participant
purchased such participation pursuant to Section 10.1. The Borrower agrees that
if amounts outstanding under this Agreement and the Loans are due or unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall, to the maximum extent
permitted by applicable law, be deemed to have the right of setoff in respect of
its participating interest in amounts owing under this Agreement to the same
extent as if the amount of its participating interest were owing directly to it
as a Lender under this Agreement, provided that, in purchasing such
participating interest, such Participant shall be deemed to have agreed to share
with the Lenders the proceeds thereof as provided in Section 10.7(a) as fully as
if such Participant were a Lender hereunder. The Borrower also agrees that each
Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17
with respect to its participation in the Commitments and the Loans outstanding
from time to time as if such Participant were a Lender; provided that, in the
case of Section 2.16,
68
such Participant shall have complied with the requirements of said Section, and
provided, further, that no Participant shall be entitled to receive any greater
amount pursuant to any such Section than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred by
such transferor Lender to such Participant had no such transfer occurred.
(c) Any Lender (an "Assignor") may, in accordance with
applicable law and upon written notice to the Administrative Agent, at any time
and from time to time assign to any Lender or any affiliate, Related Fund or
Control Investment Affiliate thereof or, with the consent of the Borrower and
the Administrative Agent and the written consent of the Issuing Lender (which,
in each case, shall not be unreasonably withheld or delayed) (provided (x) that
no such consent need be obtained by the Administrative Agent or any of its
Affiliates and (y) the consent of the Borrower need not be obtained with respect
to any assignment if an Event of Default shall have occurred and be continuing),
to an additional bank, financial institution or other entity that is not a
competitor of the Borrower or its Subsidiaries (an "Assignee") all or any part
of its rights and obligations under this Agreement pursuant to an Assignment and
Acceptance, substantially in the form of Exhibit D, executed by such Assignee
and such Assignor (and, where the consent of the Borrower, the Administrative
Agent or the Issuing Lender is required pursuant to the foregoing provisions, by
the Borrower and such other Persons) and delivered to the Administrative Agent
for its acceptance and recording in the Register; provided that ((i) no such
assignment to an Assignee (other than any Lender or any affiliate thereof) shall
be in an aggregate principal amount of less than $2,500,000 and (ii) after
giving effect thereto, the assigning Lender shall have Commitments and Loans
aggregating at least $2,500,000, unless otherwise agreed by the Borrower and the
Administrative Agent (in each case other than in the case of an assignment of
all of a Lender's interests under the Facility), unless otherwise agreed by the
Borrower and the Administrative Agent. Upon such execution, delivery, acceptance
and recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with Commitments and/or Loans as set forth
therein, and (y) the Assignor thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of an Assignor's
rights and obligations under this Agreement, such Assignor shall cease to be a
party hereto, except as to Section 2.15, 2.16 and 10.5 in respect of the period
prior to such effective date). Notwithstanding any provision of this Section,
the consent of the Borrower shall not be required for any assignment that occurs
at any time when any Event of Default shall have occurred and be continuing. For
purposes of the minimum assignment amounts set forth in this paragraph, multiple
assignments by or to two or more Related Funds, or to two or more funds that
will be Related Funds after giving effect to such assignments, shall be
aggregated.
(d) The Administrative Agent shall, on behalf of the Borrower,
maintain at its address referred to in Section 10.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Commitment of, and
principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Administrative Agent and the Lenders shall treat each
Person whose name is recorded in the Register as the owner of the Loans and any
Notes evidencing such Loans
69
recorded therein for all purposes of this Agreement. Any assignment of any Loan,
whether or not evidenced by a Note, shall be effective only upon appropriate
entries with respect thereto being made in the Register (and each Note shall
expressly so provide). Any assignment or transfer of all or part of a Loan
evidenced by a Note shall be registered on the Register only upon surrender for
registration of assignment or transfer of the Note evidencing such Loan,
accompanied by a duly executed Assignment and Acceptance; thereupon one or more
new Notes in the same aggregate principal amount shall be issued to the
designated Assignee, and the old Notes shall be returned by the Administrative
Agent to the Borrower marked "canceled". The Register shall be available for
inspection by the Borrower or any Lender (with respect to any entry relating to
such Lender's Loans) at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an Assignor and an Assignee (and, in any case where the consent of any other
Person is required by Section 10.6(c), by each such other Person) together with
payment to the Administrative Agent of a registration and processing fee of
$3,500 (treating multiple, simultaneous assignments by or to two or more Related
Funds, or to two or more funds that will be Related Funds after giving effect to
such assignments, as a single assignment) (except that no such registration and
processing fee shall be payable in the case of an Assignee which is already a
Lender or is an affiliate or Related Fund of a Lender or a Person under common
management with a Lender), the Administrative Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register and
give notice of such acceptance and recordation to the Borrower. On or prior to
such effective date, the Borrower, at its own expense, upon request, shall
execute and deliver to the Administrative Agent (in exchange for the Note of the
assigning Lender) a new Note to the order of such Assignee in an amount equal to
the Commitment assumed by it pursuant to such Assignment and Acceptance and, if
the Assignor has retained a Commitment, upon request, a new Note to the order of
the Assignor in an amount equal to the Commitment retained by it hereunder. Such
new Note shall be dated the Closing Date and shall otherwise be in the form of
the Note replaced thereby.
(f) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section concerning assignments of Loans
and Notes relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests in Loans and Notes, including,
without limitation, any pledge or assignment by a Lender of any Loan or Note to
any Federal Reserve Bank in accordance with applicable law.
10.7 Adjustments; Set-off. (a) Except to the extent that this
Agreement provides for payments to be allocated to a particular Lender, if any
Lender (a "Benefitted Lender") shall at any time receive any payment of all or
part of the Obligations owing to it, or receive any collateral in respect
thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in Section 8(f), or otherwise), in a
greater proportion than any such payment to or collateral received by any other
Lender, if any, in respect of such other Lender's Obligations, such Benefitted
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender's Obligations, or shall provide such
other Lenders with the benefits of any such collateral, as shall be necessary to
cause such Benefitted Lender to share the excess payment or benefits of such
collateral ratably
70
with each of the other Lenders; provided, however, that if all or any portion of
such excess payment or benefits is thereafter recovered from such Benefitted
Lender, such purchase shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder (whether at the stated maturity, by acceleration or
otherwise), to set off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrower. Each Lender agrees
promptly to notify the Borrower and the Administrative Agent after any such
setoff and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such setoff and application.
10.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. Delivery of an executed signature page of this
Agreement or of a Lender Addendum by facsimile transmission shall be effective
as delivery of a manually executed counterpart hereof. A set of the copies of
this Agreement signed by all the parties shall be lodged with the Borrower and
the Administrative Agent.
10.9 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan Documents
represent the entire agreement of the Borrower, the Agents, the Arranger and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Arranger, any Agent
or any Lender relative to subject matter hereof not expressly set forth or
referred to herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
10.12 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
71
(a) submits for itself and its Property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of
New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in Section 10.2 or at such other address of
which the Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential damages.
10.13 Acknowledgments. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) neither the Arranger, any Agent nor any Lender has any
fiduciary relationship with or duty to the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between the Arranger, the Agents and the Lenders, on one hand, and
the Borrower, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Arranger, the Agents and the Lenders or among the Borrower and the
Lenders.
10.14 Confidentiality. Each of the Agents and the Lenders
agrees to keep confidential all non-public information provided to it by any
Loan Party pursuant to this Agreement that is designated by such Loan Party as
confidential; provided that nothing herein shall prevent any Agent or any Lender
from disclosing any such information (a) to the Arranger, any Agent, any other
Lender or any affiliate of any thereof, (b) to any Participant or Assignee
(each, a "Transferee") or prospective Transferee that agrees to comply with the
provisions of this Section or substantially equivalent provisions, (c) to any of
its employees, directors, agents, attorneys, accountants and other professional
advisors, (d) to any financial institution that is a direct or indirect
contractual counterparty in swap agreements or such contractual counterparty's
professional advisor (so long as such contractual counterparty or professional
advisor to such
72
contractual counterparty agrees to be bound by the provisions of this Section),
(e) upon the request or demand of any Governmental Authority having jurisdiction
over it, (f) in response to any order of any court or other Governmental
Authority or as may otherwise be required pursuant to any Requirement of Law,
(g) in connection with any litigation or similar proceeding, (h) that has been
publicly disclosed other than in breach of this Section, (i) to the National
Association of Insurance Commissioners or any similar organization or any
nationally recognized rating agency that requires access to information about a
Lender's investment portfolio in connection with ratings issued with respect to
such Lender or (j) in connection with the exercise of any remedy hereunder or
under any other Loan Document. Notwithstanding anything to the contrary in the
foregoing sentence or any other express or implied agreement, arrangement or
understanding, the parties hereto hereby agree that, from the commencement of
discussions with respect to the financing provided hereunder, any party hereto
(and each of its employees, representatives, or agents) is permitted to disclose
to any and all persons, without limitation of any kind, the tax structure and
tax aspects of the transactions contemplated hereby, and all materials of any
kind (including opinions or other tax analyses) related to such tax structure
and tax aspects.
10.15 Release of Guarantees and Liens. (a) Notwithstanding
anything to the contrary contained herein or in any other Loan Document,
promptly upon request of the Borrower (i) in connection with any Disposition of
Property permitted by the Loan Documents, the Administrative Agent shall
(without notice to, or vote or consent of, any Lender, or any party to any Bank
Product) take such actions as shall be required to release its security interest
in any Collateral being Disposed of in such Disposition and (ii) upon any
Disposition of a Person permitted by the Loan Documents, the Administrative
Agent shall (without notice to, or vote or consent of, any Lender, or any party
to any Bank Product) take such actions as shall be required to release any
guaranty and other obligations of such Person under any Loan Document. In
addition, upon Xxxxxx Drilling Offshore International, Inc., ceasing to guaranty
the Senior Notes and the 10.125% Senior Notes, Xxxxxx Drilling Offshore
International, Inc., shall automatically be released from its guaranty
obligations and any other obligations under the Loan Documents, and the
Administrative Agent shall (without notice to, or vote or consent of, any Lender
or any party to any Bank Product) take such actions as shall be required or
reasonably requested by the Borrower to evidence such release.
(b) Notwithstanding anything to the contrary contained herein
or any other Loan Document, when all Obligations (other than obligations in
respect of any Bank Product) have been paid in full, all Commitments have
terminated or expired and no Letter of Credit shall be outstanding, upon request
of the Borrower, the Administrative Agent shall (without notice to, or vote or
consent of, any Lender, or any party to any Bank Product) take such actions as
shall be required to release its security interest in all Collateral, and the
Administrative Agent shall (without notice to, or vote or consent of, any
Lender, or any party to any Bank Product) take such actions as shall be required
to release all guarantee obligations under any Loan Document, whether or not on
the date of such release there may be outstanding Obligations in respect of Bank
Products. Any such release of guarantee obligations shall be deemed subject to
the provision that such guarantee obligations shall be reinstated if after such
release any portion of any payment in respect of the Obligations guaranteed
thereby shall be rescinded or must otherwise be restored or returned upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or any Guarantor, or upon or as a result of the appointment of a
73
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its property, or otherwise,
all as though such payment had not been made.
10.16 Accounting Changes. In the event that any "Accounting
Change" (as defined below) shall occur and such change results in a change in
the method of calculation of financial covenants, standards or terms in this
Agreement, then the Borrower and the Administrative Agent agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Change with the desired result that the
criteria for evaluating the Borrower's financial condition shall be the same
after such Accounting Change as if such Accounting Change had not been made.
Until such time as such an amendment shall have been executed and delivered by
the Borrower, the Administrative Agent and the Required Lenders, all financial
covenants, standards and terms in this Agreement shall continue to be calculated
or construed as if such Accounting Change had not occurred. "Accounting Change"
refers to any change in accounting principles required by the promulgation of
any rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants or, if
applicable, the SEC.
10.17 Delivery of Lender Addenda. Each initial Lender shall
become a party to this Agreement by delivering to the Administrative Agent a
Lender Addendum duly executed by such Lender, the Borrower and the
Administrative Agent.
10.18 Usury Not Intended. It is the intent of the Borrower and
each Lender in the execution and performance of this Agreement and the other
Loan Documents to contract in strict compliance with applicable usury laws,
including conflicts of law concepts, from time to time in effect governing the
Loans of each Lender. In furtherance thereof, the Lenders and the Borrower
stipulate and agree that none of the terms and provisions contained in this
Agreement or the other Loan Documents shall ever be construed to create a
contract to pay, as consideration for the use, forbearance or detention of
money, interest at a rate in excess of the maximum nonusurious interest rate
under applicable law (the "Maximum Rate") and that for purposes hereof
"interest" shall include the aggregate of all charges which constitute interest
under such laws that are contracted for, charged or received under this
Agreement; and in the event that, notwithstanding the foregoing, under any
circumstances the aggregate amounts taken, reserved, charged, received or paid
on the Loans, include amounts which by applicable law are deemed interest which
would exceed the Maximum Rate, then such excess shall be deemed to be a mistake
and each Lender receiving same shall credit the same on the principal of its
Loans (or if such Loans shall have been paid in full, refund said excess to the
Borrower). In the event that the maturity of any Loans is accelerated by reason
of any election of the holder thereof resulting from any Event of Default under
this Agreement or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest may never include
more than the Maximum Rate and excess interest, if any, provided for in this
Agreement or otherwise shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited on the
applicable Loans (or, if the applicable Loans shall have been paid in full,
refunded to the Borrower). In determining whether or not the interest paid or
payable under any specific contingencies exceeds the Maximum Rate, the Borrower
and the Lenders shall to the maximum extent permitted under applicable law
amortize, prorate, allocate and spread in equal parts during the period of the
full stated term of the Loans all amounts
74
considered to be interest under applicable law at any time contracted for,
charged, received or reserved in connection with the Obligations. The provisions
of this Section 10.18 shall control over all other provisions of this Agreement
or the other Loan Documents which may be in apparent conflict herewith.
10.19 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND
FOR ANY COUNTERCLAIM THEREIN.
75
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
XXXXXX DRILLING COMPANY
By:
------------------------------------------------
Name:
Title:
XXXXXX BROTHERS INC., as Arranger
By:
------------------------------------------------
Name:
Title:
XXXXXX COMMERCIAL PAPER INC.,
as Administrative Agent
By:
------------------------------------------------
Name:
Title: Authorized Signatory
BANK OF AMERICA, N.A.,
as Syndication Agent and as Issuing Lender
By:
------------------------------------------------
Name:
Title:
Annex A
PRICING GRID
====================================================================================================================
Applicable Margin Applicable Margin for
Consolidated Leverage Ratio for Eurodollar Loans Base Rate Loans
--------------------------------------------------------------------------------------------------------------------
> or = to 5.50:1.00 3.00% 2.00%
--------------------------------------------------------------------------------------------------------------------
> or = to 4.50:1.00 and <5.50:1.00 2.75% 1.75%
--------------------------------------------------------------------------------------------------------------------
> or = to 3.50:1.00 and <4.50:1.00 2.50% 1.50%
--------------------------------------------------------------------------------------------------------------------
<3.50:1.00 2.00% 1.00%
====================================================================================================================
Changes in the Applicable Margin resulting from changes in the Consolidated
Leverage Ratio shall become effective on the date (the "Adjustment Date") on
which financial statements are delivered to the Lenders pursuant to Section
6.1(a) or 6.1(b) (but in any event not later than the 45th day after the end of
each of the first three quarterly periods of each fiscal year or the 90th day
after the end of each fiscal year, as the case may be) and shall remain in
effect until the next change to be effected pursuant to this paragraph. If any
financial statements referred to above are not delivered within the time periods
specified above, then, until such financial statements are delivered, the
Consolidated Leverage Ratio as at the end of the fiscal period that would have
been covered thereby shall for the purposes of this definition be deemed to be
greater than 5.50 to 1:00. Each determination of the Consolidated Leverage Ratio
pursuant to this Pricing Grid shall be made for the periods and in the manner
contemplated by Section 7.1(a).
Annex B
EXISTING LETTERS OF CREDIT
SCHEDULE 1.1
BORROWING BASE PROVISIONS
SCHEDULE 4.4
CONSENTS, AUTHORIZATIONS, FILINGS AND NOTICES
SCHEDULE 4.15
SUBSIDIARIES
SCHEDULE 4.17
ENVIRONMENTAL MATTERS
SCHEDULE 4.19
UCC FILING JURISDICTIONS
Loan Party Filing Office
----------------------------- -----------------------------
[Borrower to list name of each Loan Party which is a party to
any Security Document and each filing office in which a UCC financing statement
must be filed in respect of such Loan Party and its collateral]
SCHEDULE 7.2(d)
EXISTING INDEBTEDNESS
SCHEDULE 7.3(f)
EXISTING LIENS
EXHIBIT A TO
CREDIT AGREEMENT
================================================================================
GUARANTEE AND COLLATERAL AGREEMENT
made by
XXXXXX DRILLING COMPANY
and certain of its Subsidiaries
in favor of
XXXXXX COMMERCIAL PAPER INC.,
as Administrative Agent
Dated as of December 20, 2004
================================================================================
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINED TERMS....................................................................................1
1.1 Definitions.....................................................................................1
1.2 Other Definitional Provisions...................................................................7
SECTION 2. GUARANTEE........................................................................................7
2.1 Guarantee.......................................................................................7
2.2 Right of Contribution...........................................................................8
2.3 Subrogation.....................................................................................9
2.4 Amendments, etc. with Respect to the Borrower Obligations.......................................9
2.5 Guarantee Absolute and Unconditional...........................................................10
2.6 Reinstatement..................................................................................11
2.7 Payments.......................................................................................12
SECTION 3. GRANTS OF SECURITY INTERESTS....................................................................12
3.1 Grants of Security Interests...................................................................12
SECTION 4. REPRESENTATIONS AND WARRANTIES..................................................................12
4.1 Representations in Credit Agreement............................................................12
4.2 Title; No Other Liens..........................................................................12
4.3 Perfected First Priority Liens.................................................................12
4.4 Jurisdiction of Organization; Chief Executive Office...........................................13
4.5 Farm Products..................................................................................13
4.6 Investment Property............................................................................13
4.7 Receivables....................................................................................13
SECTION 5. COVENANTS.......................................................................................14
5.1 Covenants in Credit Agreement..................................................................14
5.2 Delivery of Instruments and Chattel Paper......................................................14
5.3 Maintenance of Insurance.......................................................................14
5.4 Maintenance of Perfected Security Interest; Further Documentation..............................14
5.5 Changes in Name, etc...........................................................................15
5.6 Notices........................................................................................15
5.7 Investment Property............................................................................15
5.8 Receivables....................................................................................17
5.9 [Reserved].....................................................................................17
5.10 Cash Management Systems........................................................................17
SECTION 6. REMEDIAL PROVISIONS.............................................................................18
6.1 Certain Matters Relating to Receivables........................................................18
6.2 Concentration Accounts.........................................................................19
6.3 Communications with Obligors; Grantors Remain Liable...........................................19
6.4 Pledged Stock..................................................................................19
6.5 Proceeds to be Turned Over To Administrative Agent.............................................20
6.6 Application of Proceeds........................................................................20
6.7 Code and Other Remedies........................................................................21
i
Page
----
6.8 Registration Rights............................................................................22
6.9 Deficiency.....................................................................................23
SECTION 7. THE ADMINISTRATIVE AGENT........................................................................23
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc....................................23
7.2 Duty of Administrative Agent...................................................................24
7.3 Execution of Financing Statements..............................................................25
7.4 Authority of Administrative Agent..............................................................25
SECTION 8. MISCELLANEOUS...................................................................................25
8.1 Amendments in Writing..........................................................................25
8.2 Notices........................................................................................25
8.3 No Waiver by Course of Conduct; Cumulative Remedies............................................25
8.4 Enforcement Expenses; Indemnification..........................................................26
8.5 Successors and Assigns.........................................................................26
8.6 Set-Off........................................................................................26
8.7 Counterparts...................................................................................27
8.8 Severability...................................................................................27
8.9 Section Headings...............................................................................27
8.10 Integration....................................................................................27
8.11 GOVERNING LAW..................................................................................27
8.12 Submission To Jurisdiction; Waivers............................................................27
8.13 Acknowledgements...............................................................................28
8.14 Additional Grantors............................................................................28
8.15 Releases.......................................................................................28
8.16 Xxxxxx International...........................................................................29
8.17 WAIVER OF JURY TRIAL...........................................................................29
8.18 Consent to Security Interest...................................................................29
Schedules
Schedule 1 Notice Addresses of Guarantors
Schedule 2 Description of Pledged Stock
Schedule 3 Filings and Other Actions Required to Perfect Security Interest
Schedule 4 Jurisdiction of Organization, Identification Number and Location
of Chief Executive Office
Annexes
Annex I Assumption Agreement
Annex II Acknowledgment and Consent
ii
GUARANTEE AND COLLATERAL AGREEMENT, dated as of December 20,
2004, made by each of the signatories hereto (together with any other entity
that may become a party hereto as provided herein, the "Grantors"), in favor of
XXXXXX COMMERCIAL PAPER INC., as Administrative Agent (in such capacity, the
"Administrative Agent") for the Lenders from time to time parties to the
Credit
Agreement described below.
W I T N E S S E T H:
WHEREAS, XXXXXX DRILLING COMPANY, a Delaware corporation (the
"Borrower"), is a party to the
Credit Agreement, dated as of December 20, 2004
(as amended, supplemented or otherwise modified from time to time, the "
Credit
Agreement"), with the Lenders parties thereto, XXXXXX BROTHERS INC., as
Arranger, BANK OF AMERICA, N.A., as Syndication Agent and the Administrative
Agent;
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Borrower upon the terms and
subject to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of
companies that includes each other Grantor;
WHEREAS, the proceeds of the extensions of credit under the
Credit Agreement will be used in part to enable the Borrower to make valuable
transfers to one or more of the other Grantors in connection with the operation
of their respective businesses;
WHEREAS, certain of the Lenders or their affiliates may enter
into Bank Products with one or more of the Grantors;
WHEREAS, the Borrower and the other Grantors are engaged in
related businesses, and each Grantor will derive substantial direct and indirect
benefit from the extensions of credit under the Credit Agreement and from the
Bank Products; and
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective extensions of credit to the Borrower under the
Credit Agreement that the Grantors shall have executed and delivered this
Agreement to the Administrative Agent;
NOW, THEREFORE, in consideration of the premises and to induce
the Arranger, the Agents and the Lenders to enter into the Credit Agreement and
to induce the Lenders to make their respective extensions of credit to the
Borrower thereunder, each Grantor hereby agrees with the Administrative Agent,
for the benefit of the Secured Parties, as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given to
them in the Credit Agreement and
2
the following terms are used herein as defined in the New York UCC: Accounts,
Certificated Security, Chattel Paper, Equipment, Farm Products, General
Intangibles, Instruments, Inventory and Supporting Obligations.
(b) The following terms shall have the following meanings:
"ACH Transactions": any cash management or related services
including controlled disbursement accounts and the automated clearinghouse
transfer of funds by any Lender for the account of the Borrower or any of its
Subsidiaries pursuant to agreement or overdrafts.
"Agreement": this Guarantee and Collateral Agreement, as the
same may be amended, supplemented or otherwise modified from time to time.
"Bank Products": all (a) ACH Transactions and credit card
facilities extended to the Borrower or any of its Subsidiaries by any Lender (or
any Affiliate of any Lender in reliance on such Lender's agreement to indemnify
such Affiliate), and any instruments governing any of the foregoing and (b)
Specified Hedge Agreements.
"Borrower Bank Product Obligations": the collective reference
to all obligations and liabilities of the Borrower (including, without
limitation, interest accruing at the then applicable rate provided in any Bank
Product after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) to any Qualified Counterparty, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, any Bank Product
or any other document made, delivered or given in connection therewith, in each
case whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the relevant Qualified Counterparty that
are required to be paid by the Borrower pursuant to the terms of any Bank
Product).
"Borrower Credit Agreement Obligations": the collective
reference to the unpaid principal of and interest on the Loans and Reimbursement
Obligations and all other obligations and liabilities of the Borrower
(including, without limitation, interest accruing at the then applicable rate
provided in the Credit Agreement after the maturity of the Loans and
Reimbursement Obligations and interest accruing at the then applicable rate
provided in the Credit Agreement after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) to the Administrative
Agent or to any Lender, whether direct or indirect, absolute or contingent, due
or to become due, or now existing or hereafter incurred, which may arise under,
out of, or in connection with, the Credit Agreement, this Agreement (other than
Section 2.1(a)(ii)), or the other Loan Documents, or any Letter of Credit, or
any other document made, delivered or given in connection therewith, in each
case whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and
3
disbursements of counsel to the Administrative Agent or to the Lenders that are
required to be paid by the Borrower pursuant to the terms of any of the
foregoing agreements), but excluding any Borrower Bank Product Obligations.
"Borrower Guarantee Obligations": the collective reference to
the obligations of the Borrower which may arise under, out of, or in connection
with Section 2.1(a)(ii) of this Agreement.
"Borrower Obligations": the collective reference to (i) the
Borrower Credit Agreement Obligations and (ii) to the extent that, and only so
long as, the Borrower Credit Agreement Obligations are secured and guaranteed
pursuant hereto, the Borrower Bank Product Obligations and the Borrower
Guarantee Obligations.
"Collateral": (i) with respect to each Grantor (other than
Xxxxxx International), all Accounts in which such Grantor now has or may
hereafter acquire any right, title or interest and, to the extent not otherwise
included in the foregoing, all Proceeds and products of any and all of the
foregoing, all books and records relating to any of the foregoing and all
collateral, guarantees and other Supporting Obligations given by any Person with
respect to any of the foregoing, (ii) with respect to each Grantor (other than
Xxxxxx International), all Control Accounts, Concentration Accounts and Lockbox
Accounts in which such Grantor now has or may hereafter acquire any right, title
or interest and, to the extent not otherwise included in the foregoing, all
Proceeds and products of any and all of the foregoing, and all collateral,
guarantees and other Supporting Obligations given by any Person with respect to
any of the foregoing, (iii) with respect to each Grantor (other than Xxxxxx
International), all Pledged Stock in which such Grantor has or may hereafter
acquire any right, title or interest and, to the extent not otherwise included
in the foregoing, all Proceeds and products of any and all of the foregoing, and
all collateral, guarantees and other Supporting Obligations given by any Person
with respect to any of the foregoing and (iv) with respect to Quail Tools only,
all Inventory and Equipment in which Quail Tools now has or may hereafter
acquire any right, title or interest and, to the extent not otherwise included
in the foregoing, all Proceeds and products of any and all of the foregoing, and
all collateral, guarantees and other Supporting Obligations given by any Person
with respect to any of the foregoing; provided that the Collateral shall not
include any Excluded Assets.
"Concentration Account": one or more bank accounts maintained
by the Administrative Agent, over which the Administrative Agent shall have sole
dominion and control, into which proceeds of Collateral and any other amounts on
deposit shall be transferred from other accounts maintained by the Borrower and
the Guarantors, in the event that the Administrative Agent requires such
transfer during the existence of an Event of Default.
"Control Account": any account in respect of which a Control
Agreement has been delivered in accordance with Section 6.10 of the Credit
Agreement.
"Control Agreement": in respect of each account identified as
provided in Section 5.10(a), a Control Agreement, in form and substance
reasonably satisfactory to the Administrative Agent, pursuant to which (a) the
Borrower or the Guarantor, as the case may be, that is the owner of such account
irrevocably instructs the bank or securities intermediary that maintains such
account that such bank or securities intermediary shall follow the instructions
or entitlement orders, as the case may be, of the Administrative Agent without
further consent of
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the Borrower or such Guarantor and (b) the Administrative Agent agrees that it
will not give any instructions or entitlement orders, as the case may be, in
respect of such account unless an Event of Default has occurred and is
continuing. Each Control Agreement shall contain such other terms as shall be
customary for agreements of such type.
"Deposit Account": as defined in the Uniform Commercial Code
of any applicable jurisdiction and, in any event, including, without limitation,
any demand, time, savings, passbook or like account maintained with a depositary
institution.
"Excluded Assets": the collective reference to (i) any
Receivable or any money or other amounts due or to become due under any
contract, letter of credit, General Intangible, or license ("Intangible
Assets"), in each case to the extent the grant by the relevant Grantor of a
security interest pursuant to this Agreement in such Grantor's right, title and
interest in such Intangible Asset (A) is prohibited by legally enforceable
provisions of any contract, agreement, instrument or indenture governing such
Intangible Asset, (B) would give any other party to such contract, agreement,
instrument or indenture a legally enforceable right to terminate its obligations
thereunder or (C) is permitted only with the consent of another party, if the
requirement to obtain such consent is legally enforceable and such consent has
not been obtained; provided, that in any event any such Receivable or any money
or other amounts due or to become due under any such contract, agreement,
instrument or indenture shall not be Excluded Assets to the extent that any of
the foregoing is (or if it contained a provision limiting the transferability or
pledge thereof would be) subject to Section 9-406 of the New York UCC, (ii) the
Capital Stock of any Person organized under the laws of any jurisdiction outside
the United States of America, including, without limitation, Foreign Subsidiary
Stock, (iii) any Property to the extent that the Grantors are prohibited from
granting a security interest in, pledge of, or lien upon any such Property by
reason of (A) an existing and enforceable negative pledge provision to the
extent such provision does not violate the terms of the Credit Agreement or (B)
applicable law or regulation to which such Grantors are subject, except (in the
case of either of the foregoing clauses (A) and (B)) to the extent such
prohibition is ineffective under Sections 9-406, 9-407, 9-408 or 9-409 of the
New York UCC, and (iv) Deposit Accounts exclusively used for payroll, payroll
taxes and other employee wage and benefit payments to or for the benefit of any
Grantor's salaried employees in each case as long as such account remains a
zero-balance account.
"Foreign Subsidiary": any Subsidiary organized under the laws
of any jurisdiction outside the United States of America.
"Foreign Subsidiary Stock": the Capital Stock of any Foreign
Subsidiary.
"Guarantor Bank Product Obligations": the collective reference
to all obligations and liabilities of a Guarantor (including, without
limitation, interest accruing at the then applicable rate provided in any Bank
Product after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to such Guarantor,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) to any Qualified Counterparty, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, any Bank Product
or any other document made, delivered or given in connection therewith, in each
case whether on account of principal, interest, reimbursement obligations, fees,
indemnities,
5
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the relevant Qualified Counterparty that are
required to be paid by such Guarantor pursuant to the terms of any Bank
Product).
"Guarantor Obligations": with respect to any Guarantor, the
collective reference to (i) any Guarantor Bank Product Obligations of such
Guarantor, but only to the extent that, and only so long as, the obligations of
such Guarantor described in clause (ii) below are secured and guaranteed
pursuant hereto, and (ii) all obligations and liabilities of such Guarantor
(other than Guarantor Bank Product Obligations) which may arise under or in
connection with this Agreement (including, without limitation, Section 2) or any
other Loan Document to which such Guarantor is a party, in each case whether on
account of guarantee obligations, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent or any other Secured Party
that are required to be paid by such Guarantor pursuant to the terms of this
Agreement or any other Loan Document).
"Guarantors": the collective reference to each Grantor other
than the Borrower.
"Hedge Agreements": as to any Person, all interest rate swaps,
currency exchange agreements, commodity swaps, caps or collar agreements or
similar arrangements entered into by such Person providing for protection
against fluctuations in interest rates, currency exchange rates or commodity
prices or the exchange of nominal interest obligations, either generally or
under specific contingencies. For avoidance of doubt, Hedge Agreements shall
include any interest rate swap or similar agreement that provides for (i) the
payment by the Borrower or any of its Subsidiaries of amounts based upon a
floating rate in exchange for receipt by the Borrower or such Subsidiary of
amounts based upon a fixed rate or (ii) the payment by the Borrower or any of
its Subsidiaries of amounts based upon a fixed rate in exchange for receipt by
the Borrower or such Subsidiary of amounts based on a floating rate.
"Investment Property": the collective reference to (i) all
"investment property" as such term is defined in Section 9-102(a)(49) of the New
York UCC (other than any Foreign Subsidiary Stock and any other Capital Stock
constituting Excluded Assets) and (ii) whether or not constituting "investment
property" as so defined, all Pledged Notes and all Pledged Stock.
"Issuers": the collective reference to each issuer of any
Investment Property that constitutes Collateral.
"Lockbox": any U.S. Postal Service lockbox maintained by a
Lockbox Bank pursuant to a Lockbox Agreement.
"Lockbox Account": any account in respect of which a Lockbox
Agreement has been delivered in accordance with Section 6.10 of the Credit
Agreement.
"Lockbox Agreement": in respect of each lockbox account, and
related lockbox and collection account, an agreement, in form and substance
reasonably satisfactory to the Administrative Agent, pursuant to which the bank
that maintains such account and the Borrower or the Guarantor, as the case may
be, that is the named owner of such account shall agree with the Administrative
Agent (a) that such lockbox and accounts shall be used solely for the
6
collection and deposit of proceeds of Collateral, (b) that, upon notice from the
Administrative Agent, such bank shall transfer at the end of each business day
all collected funds in any such account to a Concentration Account and (c) the
Administrative Agent agrees that it will not give the notice described in the
foregoing clause (b) unless an Event of Default has occurred and is continuing.
Each Lockbox Agreement shall contain such other terms as shall be customary for
agreements of such type.
"Lockbox Bank": any bank maintaining a Lockbox and Lockbox
Account pursuant to a Lockbox Agreement.
"New York UCC": the Uniform Commercial Code as from time to
time in effect in the State of New York.
"Obligations": (i) in the case of the Borrower, the Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor Obligations.
"Xxxxxx International": Xxxxxx Drilling Offshore
International, Inc., a Cayman Islands corporation.
"Pledged Notes": all promissory notes, if any, issued to or
held by any Grantor (other than promissory notes issued in connection with
extensions of trade credit by any Grantor in the ordinary course of business)
which constitute Collateral.
"Pledged Securities": the collective reference to the Pledged
Notes and the Pledged Stock.
"Pledged Stock": the shares of Capital Stock listed on
Schedule 2, together with any other shares, stock certificates, options or
rights of any nature whatsoever in respect of the Capital Stock of any Person
that may be issued or granted to, or held by, any Grantor while this Agreement
is in effect; provided that in no event shall any Foreign Subsidiary Stock or
any other Capital Stock constituting Excluded Assets be required to be pledged
hereunder.
"Proceeds": all "proceeds" as such term is defined in Section
9-102(a)(64) of the Uniform Commercial Code in effect in the State of New York
on the date hereof and, in any event, including, without limitation, all
dividends or other income from the Pledged Stock, collections thereon or
distributions or payments with respect thereto.
"Quail Tools": Quail Tools, L.P., an Oklahoma limited
partnership.
"Qualified Counterparty": with respect to any Bank Product,
any counterparty thereto that, at the time such Bank Product was entered into,
was a Lender or an affiliate of a Lender.
"Receivable": any right to payment for goods sold, leased,
licensed, assigned or otherwise disposed of, or for services rendered, whether
or not such right is evidenced by an Instrument or Chattel Paper and whether or
not it has been earned by performance (including, without limitation, any
Account), that constitutes, or arises out of or in connection with, the
Collateral.
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"Secured Parties": the collective reference to the
Administrative Agent, the Lenders (including any Issuing Lender in its capacity
as Issuing Lender) and any Qualified Counterparties.
"Securities Act": the Securities Act of 1933, as amended.
"Specified Hedge Agreement": any Hedge Agreement entered into
by the Borrower or any Subsidiary Guarantor and any Qualified Counterparty which
has been designated as a Specified Hedge Agreement pursuant to a notice given by
the Borrower and such Qualified Counterparty to the Administrative Agent (or, in
the case of any Hedge Agreement entered into prior to the Closing Date, to the
Administrative Agent under (and as defined in) the Existing Credit Facilities)
within 60 days after such Hedge Agreement is entered into.
1.2 Other Definitional Provisions. (a) The words "hereof,"
"herein", "hereto" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Section and Schedule references are to this
Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the
Collateral or any part thereof, when used in relation to a Grantor, shall refer
to such Grantor's Collateral or the relevant part thereof.
SECTION 2. GUARANTEE
2.1 Guarantee. (a) (i) The Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantee to the Administrative
Agent, for the ratable benefit of the Secured Parties and their respective
successors and assigns, the prompt and complete payment and performance by the
Borrower when due (whether at stated maturity, by acceleration or otherwise) of
the Borrower Obligations (other than, in the case of each Guarantor, Borrower
Obligations arising pursuant to clause (ii) of this Section 2.1(a) in respect of
Guarantor Bank Product Obligations in respect of which such Guarantor is a
primary obligor).
(ii) The Borrower hereby unconditionally and irrevocably
guarantees to the Administrative Agent, for the ratable benefit of the Secured
Parties and their respective successors and assigns, the prompt and complete
payment and performance by each Guarantor when due (whether at stated maturity,
by acceleration or otherwise) of the Guarantor Bank Product Obligations of such
Guarantor.
(b) Anything herein or in any other Loan Document to the
contrary notwithstanding, (i) the maximum liability of each Guarantor hereunder
and under the other Loan Documents shall in no event exceed the amount which can
be guaranteed by such Guarantor under applicable federal and state laws relating
to fraudulent conveyances or transfers or the insolvency of debtors (after
giving effect to the right of contribution established in Section 2.2) and (ii)
the maximum liability of the Borrower under this Section 2 shall in no event
exceed
8
the amount which can be guaranteed by the Borrower under applicable federal and
state laws relating to fraudulent conveyances or transfers or the insolvency of
debtors (after giving effect to the right of contribution established in Section
2.2).
(c)(i) Each Guarantor agrees that the Borrower Obligations may
at any time and from time to time exceed the amount of the liability of such
Guarantor hereunder without impairing the guarantee of such Guarantor contained
in this Section 2 or affecting the rights and remedies of the Administrative
Agent or any Secured Party hereunder.
(ii) The Borrower agrees that the Guarantor Bank Product
Obligations may at any time and from time to time exceed the amount of the
liability of the Borrower under this Section 2 without impairing the guarantee
of the Borrower contained in this Section 2 or affecting the rights and remedies
of the Administrative Agent or any Secured Party hereunder.
(d) The guarantee contained in this Section 2 shall remain in
full force and effect until this Agreement terminates pursuant to Section 8.15,
notwithstanding that from time to time during the term of the Credit Agreement
the Borrower may be free from any Borrower Obligations and any or all of the
Guarantors may be free from their respective Guarantor Bank Product Obligations.
(e) No payment made by the Borrower, any of the Guarantors,
any other guarantor or any other Person or received or collected by any Agent or
any Secured Party from the Borrower, any of the Guarantors, any other guarantor
or any other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction of or
in payment of the Borrower Obligations or the Guarantor Bank Product Obligations
shall be deemed to modify, reduce, release or otherwise affect the liability of
the Borrower or any Guarantor under this Section 2 which shall, notwithstanding
any such payment (other than any payment made by the Borrower or such Guarantor
in respect of the Borrower Obligations or the Guarantor Bank Product Obligations
or any payment received or collected from the Borrower or such Guarantor in
respect of the Borrower Obligations or the Guarantor Bank Product Obligations),
remain liable for the Borrower Obligations and the Guarantor Bank Product
Obligations up to the maximum liability of the Borrower or such Guarantor
hereunder until this Agreement terminates pursuant to Section 8.15.
2.2 Right of Contribution. (a) Each Guarantor hereby agrees
that to the extent that a Guarantor shall have paid more than its proportionate
share of any payment made hereunder or the Guarantor Bank Product Obligations,
such Guarantor shall be entitled to seek and receive contribution from and
against any other Guarantor hereunder which has not paid its proportionate share
of such payment.
(b) The Borrower and each Guarantor agrees that to the extent
that the Borrower or any Guarantor shall have paid more than its proportionate
share of any payment made hereunder in respect of any Guarantor Bank Product
Obligation of any other Guarantor, the Borrower or such Guarantor, as the case
may be, shall be entitled to seek and receive contribution from and against the
Borrower and any other Guarantor which has not paid its proportionate share of
such payment.
9
(c) The Borrower's and each Guarantor's right of contribution
under this Section 2.2 shall be subject to the terms and conditions of Section
2.3. The provisions of this Section 2.2 shall in no respect limit the
obligations and liabilities of the Borrower or any Guarantor to the Agents and
the Secured Parties, and the Borrower and each Guarantor shall remain liable to
the Agents and the Secured Parties for the full amount guaranteed by the
Borrower or such Guarantor hereunder.
(d) The rights and obligations of the Grantors under this
Section 2.2 shall survive termination of this Agreement.
2.3 Subrogation. Notwithstanding any payment made by the
Borrower or any Guarantor hereunder or any set-off or application of funds of
the Borrower or any Guarantor by any Agent or any Secured Party, neither the
Borrower nor any Guarantor shall be entitled to be subrogated to any of the
rights of any Agent or any Secured Party against the Borrower or any other
Guarantor or any collateral security or guarantee or right of offset held by any
Agent or any Secured Party for the payment of the Borrower Obligations or the
Guarantor Bank Product Obligations, nor shall the Borrower or any Guarantor seek
or be entitled to seek any contribution or reimbursement from the Borrower or
any other Guarantor in respect of payments made by the Borrower or such
Guarantor hereunder, until this Agreement terminates pursuant to Section 8.15.
If any amount shall be paid to the Borrower or any Guarantor on account of such
subrogation rights at any time prior to termination of this Agreement pursuant
to Section 8.15, such amount shall be held by the Borrower or such Guarantor in
trust for the Agents and the Secured Parties, segregated from other funds of the
Borrower or such Guarantor, and shall, forthwith upon receipt by the Borrower or
such Guarantor, be turned over to the Administrative Agent in the exact form
received by the Borrower or such Guarantor (duly indorsed by the Borrower or
such Guarantor to the Administrative Agent, if required), to be applied against
the Obligations, whether matured or unmatured, in the order prescribed by the
Credit Agreement.
2.4 Amendments, etc. with Respect to the Borrower Obligations.
The Borrower and each Guarantor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against the Borrower or any Guarantor
and without notice to or further assent by the Borrower or any Guarantor, any
demand for payment of any of the Borrower Obligations or Guarantor Bank Product
Obligations made by any Agent or any Secured Party may be rescinded by any Agent
or such Secured Party and any of the Borrower Obligations or Guarantor Bank
Product Obligations continued, and the Borrower Obligations or Guarantor Bank
Product Obligations, or the liability of any other Person upon or for any part
thereof, or any collateral security or guarantee therefor or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by any Agent or any Secured Party (to the extent permitted by the Loan
Documents and the Bank Products), and the Bank Products, the Credit Agreement
and the other Loan Documents and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Agents (or the relevant group of Lenders in accordance
with the Credit Agreement, as the case may be) may (to the extent permitted by
the Loan Documents and the Bank Products) deem advisable from time to time, and
any collateral security, guarantee or right of offset at any time held by any
Agent or any Secured Party for the payment of the Borrower Obligations or
Guarantor Bank Product Obligations may (to the extent permitted by the Loan
Documents and
10
the Bank Products) be sold, exchanged, waived, surrendered or released. Neither
any Agent nor any Secured Party shall, except to the extent set forth in, and
for the benefit of the parties to, the agreements and instruments governing such
Lien or guarantee, have any obligation to protect, secure, perfect or insure any
Lien at any time held by it as security for the Borrower Obligations or
Guarantor Bank Product Obligations or for the guarantees contained in this
Section 2 or any property subject thereto.
2.5 Guarantee Absolute and Unconditional. (a) Each Guarantor
waives any and all notice of the creation, renewal, extension or accrual of any
of the Borrower Obligations (other than any notice with respect to any Guarantor
Bank Product Obligation with respect to which such Guarantor is a primary
obligor and to which it is entitled pursuant to the applicable Bank Product) and
notice of or proof of reliance by any Agent or any Secured Party upon the
guarantee contained in this Section 2 or acceptance of the guarantee contained
in this Section 2; the Borrower Obligations, and any of them, shall conclusively
be deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon the guarantee contained in this Section 2;
and all dealings between the Borrower and any of the Guarantors, on the one
hand, and the Agents and the Secured Parties, on the other hand, likewise shall
be conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 2. Each Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Borrower or any of the Guarantors with respect to the Borrower
Obligations (other than any diligence, presentment, protest, demand or notice
with respect to any Guarantor Bank Product Obligation with respect to which such
Guarantor is a primary obligor and to which it is entitled pursuant to the
applicable Bank Product). Each Guarantor understands and agrees that the
guarantee of such Guarantor contained in this Section 2 shall be construed as a
continuing, absolute and unconditional guarantee of payment without regard to
(a) the validity or enforceability of the Credit Agreement or any other Loan
Document, any of the Borrower Obligations or any collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by any Agent or any Secured Party, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by the Borrower or any other Person against
any Agent or any Secured Party, or (c) any other circumstance whatsoever (with
or without notice to or knowledge of the Borrower or such Guarantor) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrower for the Borrower Obligations, or of such Guarantor
under the guarantee of such Guarantor contained in this Section 2, in bankruptcy
or in any other instance. When making any demand hereunder or otherwise pursuing
its rights and remedies hereunder against any Guarantor, any Agent or any
Secured Party may, but shall be under no obligation to, make a similar demand on
or otherwise pursue such rights and remedies as it may have against the
Borrower, any other Guarantor or any other Person or against any collateral
security or guarantee for the Borrower Obligations or any right of offset with
respect thereto, and any failure by any Agent or any Secured Party to make any
such demand, to pursue such other rights or remedies or to collect any payments
from the Borrower, any other Guarantor or any other Person or to realize upon
any such collateral security or guarantee or to exercise any such right of
offset, or any release of the Borrower, any other Guarantor or any other Person
or any such collateral security, guarantee or right of offset, shall not relieve
any Guarantor of any obligation or liability under this Section 2, and shall not
impair or affect the rights and remedies, whether express, implied or available
as a matter of law, of any
11
Agent or any Secured Party against any Guarantor. For the purposes hereof
"demand" shall include the commencement and continuance of any legal
proceedings.
(b) The Borrower waives any and all notice of the creation, renewal,
extension or accrual of any of the Guarantor Bank Product Obligations and notice
of or proof of reliance by the Administrative Agent or any Secured Party upon
the guarantee by the Borrower contained in this Section 2 or acceptance of the
guarantee by the Borrower contained in this Section 2; the Guarantor Bank
Product Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon the guarantee by the Borrower contained in this Section 2; and all
dealings between the Borrower and any of the Guarantors, on the one hand, and
the Agents and the Secured Parties, on the other hand, with respect to any
Guarantor Bank Product Obligation likewise shall be conclusively presumed to
have been had or consummated in reliance upon the guarantee by the Borrower
contained in this Section 2. The Borrower waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
Borrower with respect to the Guarantor Bank Product Obligations. The Borrower
understands and agrees that the guarantee by the Borrower contained in this
Section 2 shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity or enforceability of the
Guarantor Bank Product Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by any Agent or any Secured Party, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by any Person against any Agent or any
Secured Party, or (c) any other circumstance whatsoever (with or without notice
to or knowledge of the Borrower or any Guarantor) which constitutes, or might be
construed to constitute, an equitable or legal discharge of the applicable
Guarantor for the applicable Guarantor Bank Product Obligations, or of the
Borrower under its guarantee contained in this Section 2, in bankruptcy or in
any other instance. When making any demand under this Section 2 or otherwise
pursuing its rights and remedies under this Section 2 against the Borrower, any
Agent or any Secured Party may, but shall be under no obligation to, make a
similar demand on or otherwise pursue such rights and remedies as it may have
against any Guarantor or any other Person or against any collateral security or
guarantee for the Guarantor Bank Product Obligations or any right of offset with
respect thereto, and any failure by any Agent or any Secured Party to make any
such demand, to pursue such other rights or remedies or to collect any payments
from any Guarantor or any other Person or to realize upon any such collateral
security or guarantee or to exercise any such right of offset, or any release of
any Guarantor or any other Person or any such collateral security, guarantee or
right of offset, shall not relieve the Borrower of any obligation or liability
under this Section 2, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of any Agent or any
Secured Party against the Borrower under this Section 2. For the purposes hereof
"demand" shall include the commencement and continuance of any legal
proceedings.
2.6 Reinstatement. The guarantee contained in this Section 2
shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Borrower Obligations or
Guarantor Bank Product Obligations is rescinded or must otherwise be restored or
returned by the Administrative Agent or any Secured Party upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower or any
Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or conservator of,
12
or trustee or similar officer for, the Borrower or any Guarantor or any
substantial part of its property, or otherwise, all as though such payments had
not been made. The provisions of this Section 2.6 shall survive termination of
this Agreement.
2.7 Payments. The Borrower and each Guarantor hereby
guarantees that payments by it hereunder will be paid (i) in the case of
obligations in respect of Borrower Obligations arising under the Credit
Agreement or any other Loan Document, to the Administrative Agent without
set-off or counterclaim in Dollars at the Payment Office specified in the Credit
Agreement and (ii) in the case of obligations in respect of any Borrower Bank
Product Obligations or any Guarantor Bank Product Obligations, to the relevant
Secured Party in the currency and at the place specified in the applicable Bank
Product.
SECTION 3. GRANTS OF SECURITY INTERESTS
3.1 Grants of Security Interests. Each Grantor (other than
Xxxxxx International) hereby grants to the Administrative Agent, as security for
such Grantor's Obligations, a first priority security interest in all right,
title and interest of such Grantor in all Collateral, whether now existing or
hereafter acquired.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into the Credit
Agreement and to induce the Lenders to make their respective extensions of
credit to the Borrower thereunder, each Grantor hereby represents and warrants
to the Agents and each Lender that:
4.1 Representations in Credit Agreement. (a) In the case of
each Guarantor, the representations and warranties set forth in Section 4 of the
Credit Agreement as they relate to such Guarantor or to the Loan Documents to
which such Guarantor is a party, each of which is hereby incorporated herein by
reference, are (i) if qualified by materiality, true and correct, and (ii) if
not so qualified, true and correct in all material respects, and the Agents and
each Lender shall be entitled to rely on each of them as if they were fully set
forth herein, provided that each reference in each such representation and
warranty to the Borrower's knowledge shall, for the purposes of this Section
4.1, be deemed to be a reference to such Guarantor's knowledge.
4.2 Title; No Other Liens. Except for the security interests
granted to the Administrative Agent for the benefit of the Secured Parties
pursuant to this Agreement and the other Liens permitted to exist on the
Collateral by the Credit Agreement, such Grantor owns each item of the
Collateral free and clear of any and all Liens or claims of others. No financing
statement or other public notice with respect to all or any part of the
Collateral is on file or of record in any public office, except such as have
been filed in favor of the Administrative Agent, for the ratable benefit of the
Secured Parties, pursuant to this Agreement or as are permitted by the Credit
Agreement.
4.3 Perfected First Priority Liens. The security interests
granted pursuant to this Agreement (a) upon completion of the filings and other
actions specified on Schedule 3 will constitute valid perfected security
interests in all of the Collateral in favor of the Administrative
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Agent, for the benefit of the Secured Parties, as collateral security for such
Grantor's Obligations, enforceable in accordance with the terms hereof against
all creditors of such Grantor and any Persons purporting to purchase any
Collateral from such Grantor and (b) are prior to all other Liens on the
Collateral in existence on the date hereof except for the Liens permitted by the
Credit Agreement; provided that no representations are made with respect to the
requirements of any laws of any jurisdiction other than the United States or any
State thereof.
4.4 Jurisdiction of Organization; Chief Executive Office. On
the date hereof, such Grantor's jurisdiction of organization, identification
number from the jurisdiction of organization (if any), and the location of such
Grantor's chief executive office or sole place of business or principal
residence, as the case may be, are specified on Schedule 4. Such Grantor has
furnished to the Administrative Agent a certified charter, certificate of
incorporation or other organization document and good standing certificate as of
a date which is recent to the date hereof.
4.5 Farm Products. None of the Collateral constitutes, or is
the Proceeds of, Farm Products.
4.6 Investment Property. (a) The shares of Pledged Stock
pledged by such Grantor hereunder constitute all the issued and outstanding
shares of all classes of the Capital Stock of each Issuer owned by such Grantor.
(b) All the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable.
(c) Each of the Pledged Notes constitutes the legal, valid and
binding obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and
has good title to the Investment Property pledged by it hereunder, free of any
and all Liens or options in favor of, or claims of, any other Person, except the
security interest created by this Agreement and other Liens permitted by the
Credit Agreement; provided, that no representations are made with respect to the
requirements of any laws of any jurisdiction other than the United States or any
State thereof.
4.7 Receivables. (a) No amount payable to such Grantor under
or in connection with any Receivable is evidenced by any Instrument or Chattel
Paper which has not been delivered to the Administrative Agent to the extent
required by Section 5.2.
(b) None of the obligors on any Receivable is a Governmental
Authority.
(c) The amounts represented by such Grantor to the Secured
Parties from time to time as owing to such Grantor in respect of the Receivables
will at such times be accurate in all material respects.
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(d) All Receivables of such Grantor existing on the Closing
Date arise from bona fide sales or leases by such Grantor of goods and services.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Agents and the
Secured Parties that, from and after the date of this Agreement until this
Agreement terminates in accordance with Section 8.15:
5.1 Covenants in Credit Agreement. In the case of each
Guarantor, such Guarantor shall take, or shall refrain from taking, as the case
may be, each action that is necessary to be taken or not taken, as the case may
be, so that no Default or Event of Default is caused by the failure to take such
action or to refrain from taking such action by such Guarantor or any of its
Subsidiaries.
5.2 Delivery of Instruments and Chattel Paper. If any amount
payable under or in connection with any of the Collateral shall be or become
evidenced by any Instrument, Certificated Security or Chattel Paper, such
Instrument, Certificated Security or Chattel Paper shall be immediately
delivered to the Administrative Agent, duly indorsed in a manner satisfactory to
the Administrative Agent, to be held as Collateral pursuant to this Agreement;
provided, that the Grantors shall not be obligated to deliver to the
Administrative Agent any Instruments or Chattel Paper held by any Grantor at any
time to the extent that (a) the aggregate face amount of all such Instruments
and Chattel Paper held by all Grantors at such time does not exceed $5,000,000,
and (b) the face amount of any individual Instrument or Chattel Paper held by
such Grantor at such time does not exceed $1,000,000.
5.3 Maintenance of Insurance. (a) Such Grantor will maintain
or cause to be maintained, with financially sound and reputable companies,
insurance on all its material Property in at least such amounts and against at
least such risks (but including in any event public liability, product liability
and business interruption) as are usually insured against in the same general
area by companies engaged in the same or a similar business.
(b) Within a reasonable period of time (as determined by the
Administrative Agent), such Grantor shall cause the Administrative Agent to be
named as insured party or loss payee in respect of any such insurance maintained
with third parties on the Collateral.
(c) The Borrower shall deliver to the Administrative Agent and
the Lenders a report of a reputable insurance broker with respect to such
insurance maintained with third parties substantially concurrently with the
delivery by the Borrower to the Administrative Agent of its audited financial
statements for each fiscal year and such supplemental reports with respect
thereto as the Administrative Agent may from time to time reasonably request.
5.4 Maintenance of Perfected Security Interest; Further
Documentation. (a) Such Grantor shall maintain the security interest created by
this Agreement as a perfected security interest having at least the priority
described in Section 4.3 and shall defend such security interest against the
claims and demands of all Persons whomsoever.
15
(b) Such Grantor will furnish to the Administrative Agent and
the Lenders from time to time statements and schedules further identifying and
describing the assets and property of such Grantor and such other reports in
connection with the Collateral as the Administrative Agent may reasonably
request, all in reasonable detail.
(c) At any time and from time to time, upon the written
request of the Administrative Agent, and at the sole expense of such Grantor,
such Grantor will promptly and duly execute and deliver, and have recorded, such
further instruments and documents and take such further actions as the
Administrative Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted, including, without limitation, (i) the filing of any financing
or continuation statements under the Uniform Commercial Code (or other similar
laws) in effect in any jurisdiction in the United States with respect to the
security interests created hereby and (ii) in the case of Investment Property
that constitutes Collateral, taking any actions necessary to enable the
Administrative Agent to obtain "control" (within the meaning of the applicable
Uniform Commercial Code) with respect thereto.
5.5 Changes in Name, etc.. Such Grantor will not, except upon
15 days' prior written notice to the Administrative Agent and delivery to the
Administrative Agent of all additional executed financing statements and other
documents reasonably requested by the Administrative Agent to maintain the
validity, perfection and priority of the security interests provided for herein:
(i) change its jurisdiction of organization or the location
of its chief executive office or sole place of business or principal
residence, as the case may be, from that referred to in Section 4.3; or
(ii) change its name.
5.6 Notices. Such Grantor will advise the Administrative Agent
and the Lenders promptly, in reasonable detail, of:
(a) any Lien (other than security interests created hereby or
Liens permitted under the Credit Agreement) on any of the Collateral which would
adversely affect the ability of the Administrative Agent to exercise any of its
remedies hereunder; and
(b) the occurrence of any other event which could reasonably
be expected to have a Material Adverse Effect.
5.7 Investment Property. (a) If such Grantor shall become
entitled to receive or shall receive any certificate (including, without
limitation, any certificate representing a dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or rights in
respect of the Capital Stock of any Issuer, whether in addition to, in
substitution of, as a conversion of, or in exchange for, any shares of the
Pledged Stock, or otherwise in respect thereof, such Grantor shall accept the
same as the agent of the Administrative Agent and the Secured Parties, hold the
same in trust for the Administrative Agent and the Secured Parties and deliver
the same forthwith to the Administrative Agent in the exact form received, duly
indorsed by such Grantor to the
16
Administrative Agent, if required, together with an undated stock power covering
such certificate duly executed in blank by such Grantor and with, if the
Administrative Agent so request, signature guaranteed, to be held by the
Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations. Any sums paid upon or in respect of the Investment
Property that constitutes Collateral upon the liquidation or dissolution of any
Issuer shall be paid over to the Administrative Agent to be held by it hereunder
as additional collateral security for the Obligations, and in case any
distribution of capital shall be made on or in respect of such Investment
Property, or any property shall be distributed upon or with respect to such
Investment Property pursuant to the recapitalization or reclassification of the
capital of any Issuer or pursuant to the reorganization thereof, the property so
distributed shall, unless otherwise subject to a perfected security interest in
favor of the Administrative Agent, be delivered to the Administrative Agent to
be held by it hereunder as additional collateral security for the Obligations.
If any sums of money or property so paid or distributed in respect of the
Investment Property that constitutes Collateral shall be received by such
Grantor, such Grantor shall, until such money or property is paid or delivered
to the Administrative Agent, hold such money or property in trust for the
Secured Parties, segregated from other funds of such Grantor, as additional
collateral security for the Obligations. Notwithstanding the foregoing, the
Grantors shall not be required to pay over to the Administrative Agent or
deliver to the Administrative Agent as Collateral any proceeds of any
liquidation or dissolution of any Issuer, or any distribution of capital or
property in respect of any Investment Property, to the extent that such
liquidation, dissolution or distribution, if treated as a Disposition of the
relevant Issuer, would be permitted by the Credit Agreement.
(b) Such Grantor will not (i) vote to enable, or take any
other action to permit, any Issuer to issue any stock or other equity securities
of any nature or to issue any other securities convertible into or granting the
right to purchase or exchange for any stock or other equity securities of any
nature of any Issuer, unless such securities are delivered to the Administrative
Agent, concurrently with the issuance thereof, to be held by the Administrative
Agent as Collateral, or (ii) without the prior written consent of the
Administrative Agent, (x) sell, assign, transfer, exchange, or otherwise dispose
of, or grant any option with respect to, the Investment Property that
constitutes Collateral or Proceeds thereof (except pursuant to a transaction
expressly permitted by the Credit Agreement), (y) create, incur or permit to
exist any Lien or option in favor of, or any claim of any Person with respect
to, any of the Investment Property that constitutes Collateral or Proceeds
thereof, or any interest therein, except for the security interests created by
this Agreement and the other Liens permitted by the Credit Agreement or (z)
enter into any agreement or undertaking restricting the right or ability of such
Grantor or the Administrative Agent to sell, assign or transfer any of the
Pledged Securities or Proceeds thereof.
(c) In the case such Grantor is an Issuer, such Issuer agrees
that (i) it will be bound by the terms of this Agreement relating to the Pledged
Securities issued by it and will comply with such terms insofar as such terms
are applicable to it, (ii) it will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 5.7(a) with
respect to the Pledged Securities issued by it and (iii) it will comply with
17
instructions received by it pursuant to the terms of Section 6.4(c) with respect
to the Pledged Securities issued by it.
(d) In the case such Grantor is an Issuer that is a
partnership or a limited liability company, such Issuer (i) confirms that none
of the terms of any equity interest issued by it provides that such equity
interest is a "security" within the meaning of Sections 8-102 and 8-103 of the
New York UCC (a "Security"), (ii) agrees that it will take no action to cause or
permit any such equity interest to become a Security, (iii) agrees that it will
not issue any certificate representing any such equity interest and (iv) agrees
that if, notwithstanding the foregoing, any such equity interest shall be or
become a Security, such Issuer will (and the Grantor that holds such equity
interest hereby instructs such Issuer to) comply with instructions originated by
the Administrative Agent without further consent by such Grantor.
5.8 Receivables. (a) Other than in the ordinary course of
business consistent with its past practice, such Grantor will not (i) grant any
extension of the time of payment of any Receivable, (ii) compromise or settle
any Receivable for less than the full amount thereof, (iii) release, wholly or
partially, any Person liable for the payment of any Receivable, (iv) allow any
credit or discount whatsoever on any Receivable or (v) amend, supplement or
modify any Receivable in any manner that could adversely affect the value
thereof.
(b) Such Grantor will deliver to the Administrative Agent a
copy of each material written demand, notice or document received by it that
questions or calls into doubt the validity or enforceability of more than 5% of
the aggregate amount of the then outstanding Receivables.
5.9 [Reserved].
5.10 Cash Management Systems. (a) On or before the Closing
Date, such Grantor shall deliver to the Administrative Agent a schedule (the
"Initial Account Identification Schedule") identifying the name and location of
each bank and securities intermediary at which such Grantor maintains a deposit
account, securities account, lockbox account, concentration account, collection
account or disbursement account in the United States and (ii) the account number
and account name or other relevant descriptive data with respect to each such
account and such other information with respect to each such account as the
Administrative Agent shall reasonably request. Within 30 days after the opening
of any deposit account, securities account, lockbox account, concentration
account, collection account or disbursement account, in each case other than any
Immaterial Account, in the United States not identified in the Initial Account
Identification Schedule, such Grantor shall deliver to the Administrative Agent
a schedule (a "Supplemental Account Identification Schedule") which provides, in
respect of each such account opened since the date of the Initial Account
Identification Schedule, the information set forth in clauses (i) and (ii) of
the preceding sentence.
(b) On or before the date which is 30 days after the Closing
Date, such Grantor shall cause to be delivered to the Administrative Agent a
Control Agreement and/or a Lockbox Agreement, as appropriate, with respect to
each account (other than any Immaterial Account) described in the Initial
Account Identification Schedule which the Administrative Agent reasonably
requires to be subject to such an agreement, in each case duly executed and
delivered by such Grantor and by the bank or securities intermediary that
maintains such account. On or before the date which is 30 days after the
delivery of any Supplemental Account Identification
18
Schedule, such Grantor shall cause to be delivered to the Administrative Agent a
Control Agreement and/or a Lockbox Agreement with respect to each account
described in such Supplemental Account Identification Schedule which the
Administrative Agent reasonably requires to be subject to such an agreement, in
each case duly executed and delivered by such Grantor and by the bank or
securities intermediary that maintains such account.
(c) Such Grantor shall cause all proceeds of any Collateral
received by it in every form, including, without limitation, cash, checks wire
transfers and other forms or receipts, to be deposited promptly in a Control
Account or Lockbox Account (i) in respect of which a Control Agreement and/or
Lockbox Agreement, as appropriate, is in effect and (ii) which, at any time
after an Event of Default has occurred and is continuing, is used solely for the
purpose of receiving proceeds of Collateral.
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables. (a) The
Administrative Agent shall have the right, at any time after the occurrence and
during the continuance of an Event of Default, to make test verifications of the
Receivables in any manner and through any medium that it reasonably considers
advisable, and each Grantor shall furnish all such assistance and information as
the Administrative Agent may require in connection with such test verifications.
At any time and from time to time after the occurrence and during the
continuance of an Event of Default, upon the Administrative Agent's request and
at the expense of the relevant Grantor, such Grantor shall cause independent
public accountants or others satisfactory to the Administrative Agent to furnish
to the Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Receivables.
(b) The Administrative Agent hereby authorizes each Grantor to
collect such Grantor's Receivables, subject to the Administrative Agent's
direction and control after the occurrence and during the continuance of an
Event of Default, and the Administrative Agent may curtail or terminate said
authority at any time after the occurrence and during the continuance of an
Event of Default. Each Grantor shall cause all payments in respect of Accounts
to be made either by check delivered to a Lockbox or by funds transfer to a
Lockbox Account or Control Account.
(c) At the Administrative Agent's request at any time after
the occurrence and during the continuance of an Event of Default, each Grantor
shall deliver to the Administrative Agent all original and other documents
evidencing, and relating to, the agreements and transactions which gave rise to
the Receivables, including, without limitation, all original orders, invoices
and shipping receipts.
19
6.2 Concentration Accounts. If required by the Administrative
Agent at any time after an Event of Default has occurred and is continuing, any
collected funds or other cash amounts held in any Lockbox Account or Control
Account shall be forthwith at the end of each Business Day transferred to a
Concentration Account. To the extent that Loans are outstanding on any day,
amounts held in any Concentration Account on such day shall be transferred to
the Administrative Agent and applied to repay such Loans as more particularly
provided in the Control Agreement in effect with respect to such Concentration
Account.
6.3 Communications with Obligors; Grantors Remain Liable. (a)
If an Event of Default shall occur and be continuing, the Administrative Agent
in its own name or in the name of others may at any time communicate with
obligors under the Receivables to verify with them to the Administrative Agent's
satisfaction the existence, amount and terms of any Receivables.
(b) Anything herein to the contrary notwithstanding, each
Grantor shall remain liable under each of the Receivables (or any agreement
giving rise thereto) to observe and perform all the conditions and obligations
to be observed and performed by it thereunder, all in accordance with the terms
of any agreement giving rise thereto. Neither any Agent nor any Secured Party
shall have any obligation or liability under any Receivable (or any agreement
giving rise thereto) by reason of or arising out of this Agreement or the
receipt by any Agent or any Secured Party of any payment relating thereto, nor
shall any Agent or any Secured Party be obligated in any manner to perform any
of the obligations of any Grantor under or pursuant to any Receivable (or any
agreement giving rise thereto), to make any payment, to make any inquiry as to
the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party thereunder, to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be entitled
at any time or times.
6.4 Pledged Stock. (a) Unless an Event of Default shall have
occurred and be continuing and the Administrative Agent shall have given notice
to the relevant Grantor of the Administrative Agent's intent to exercise its
corresponding rights pursuant to Section 6.4(b), each Grantor shall be permitted
to receive all cash dividends paid in respect of the Pledged Stock and all
payments made in respect of the Pledged Notes, in each case paid in the normal
course of business of the relevant Issuer and consistent with past practice or
otherwise in accordance with the terms of the Pledged Notes, to the extent
permitted in the Credit Agreement, and to exercise all voting and corporate
rights with respect to the Pledged Securities; provided, however, that no vote
shall be cast or corporate right exercised or other action taken in a manner
which would impair the Collateral or which would be inconsistent with or result
in any violation of any provision of the Credit Agreement, this Agreement or any
other Loan Document.
(b) If an Event of Default shall occur and be continuing and
the Administrative Agent shall give notice of its intent to exercise such rights
to the relevant Grantor or Grantors, (i) the Administrative Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Pledged Securities and make application thereof to the
Obligations in the order set forth in Section 6.6, and (ii) any or all of the
Pledged Securities shall be registered in the name of the Administrative Agent
or its nominee, and the Administrative Agent or its nominee may thereafter
exercise (x) all voting, corporate and other rights pertaining to such Pledged
Securities at any meeting of shareholders of the relevant Issuer or Issuers or
otherwise and (y) any and all rights of conversion, exchange and subscription
and any other
20
rights, privileges or options pertaining to such Pledged Securities as if it
were the absolute owner thereof (including, without limitation, the right to
exchange at its discretion any and all of the Pledged Securities upon the
merger, consolidation, reorganization, recapitalization or other fundamental
change in the corporate structure of any Issuer, or upon the exercise by any
Grantor or the Administrative Agent of any right, privilege or option pertaining
to such Pledged Securities, and in connection therewith, the right to deposit
and deliver any and all of the Pledged Securities with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as the Administrative Agent may determine), all without liability
except to account for property actually received by it, but the Administrative
Agent shall have no duty to any Grantor to exercise any such right, privilege or
option and shall not be responsible for any failure to do so or delay in so
doing.
(c) Each Grantor hereby authorizes and instructs each Issuer
of any Pledged Securities pledged by such Grantor hereunder to (i) comply with
any instruction received by it from the Administrative Agent in writing that (x)
states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each Issuer
shall be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Pledged Securities directly to the Administrative Agent.
6.5 Proceeds to be Turned Over To Administrative Agent. In
addition to the rights of the Administrative Agent and the Secured Parties
specified in Section 6.1 with respect to payments of Receivables, if an Event of
Default shall occur and be continuing, all Proceeds of Collateral other than
Accounts received by any Grantor consisting of cash, checks and Instruments
shall be held by such Grantor in trust for the Administrative Agent and the
Secured Parties, segregated from other funds of such Grantor, and shall,
forthwith upon receipt by such Grantor, be turned over to the Administrative
Agent in the exact form received by such Grantor (duly indorsed by such Grantor
to the Administrative Agent, if required). All Proceeds received by the
Administrative Agent hereunder shall be held by the Administrative Agent in a
Control Account maintained under its sole dominion and control. All Proceeds
while held by the Administrative Agent in a Control Account (or by such Grantor
in trust for the Administrative Agent and the Secured Parties) shall continue to
be held as collateral security for all the Obligations and shall not constitute
payment thereof until applied as provided in Section 6.6.
6.6 Application of Proceeds. At such intervals as may be
agreed upon by the Borrower and the Administrative Agent, or, if an Event of
Default shall have occurred and be continuing, at any time at the Administrative
Agent's election, the Administrative Agent shall apply all or any part of
Proceeds constituting Collateral, whether or not held in any Control Account,
and any proceeds of the guarantee set forth in Section 2, in payment of the
Obligations in the following order:
FIRST, to reimburse the Administrative Agent for any
theretofore unreimbursed costs, fees or expenses incurred by
it in connection with the Facilities;
SECOND, to pay accrued and unpaid interest, Letter of Credit
fees and commitment fees owing under the Loan Documents;
21
THIRD, to repay the principal amount of any outstanding Loans
and Reimbursement Obligations;
FOURTH, in an amount equal to the aggregate undrawn amount of
all outstanding Letters of Credit, to be deposited in a
collateral account under the sole dominion and control of the
Administrative Agent to be held as collateral for such
obligations;
FIFTH, to repay Borrower Bank Product Obligations and
Guarantor Bank Product Obligations;
SIXTH, to pay any other Obligations not described above; and
SEVENTH, to be delivered to the Borrower or as otherwise may
be required by applicable law.
6.7 Code and Other Remedies. If an Event of Default shall
occur and be continuing, the Administrative Agent, on behalf of the Secured
Parties, may exercise, in addition to all other rights and remedies granted to
it in this Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the New York UCC or any other applicable law. Without limiting the
generality of the foregoing, the Administrative Agent, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except notice pursuant to Section 6.4(b) and any notice required by
law referred to below) to or upon any Grantor or any other Person (all and each
of which demands, defenses, advertisements and notices are hereby waived), may
in such circumstances forthwith collect, receive, appropriate and realize upon
the Collateral, or any part thereof, and/or may forthwith sell, lease, assign,
give option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or office of the Administrative Agent or any Secured Party or elsewhere
upon such terms and conditions as it may deem advisable and at such prices as it
may deem best, for cash or on credit or for future delivery without assumption
of any credit risk. Any Agent or any Secured Party shall have the right upon any
such public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption in any Grantor, which right or
equity is hereby waived and released. Each Grantor further agrees, at the
Administrative Agent's request, to assemble the Collateral and make it available
to the Administrative Agent at places which the Administrative Agent shall
reasonably select, whether at such Grantor's premises or elsewhere. The
Administrative Agent shall apply the net proceeds of any action taken by it
pursuant to this Section 6.7 with respect to any Grantor's Collateral, after
deducting all reasonable costs and expenses of every kind incurred in connection
therewith or incidental to the care or safekeeping of any of the Collateral of
such Grantor or in any way relating to the Collateral of such Grantor or the
rights of the Agents and the Secured Parties hereunder with respect thereto,
including, without limitation, reasonable attorneys' fees and disbursements, to
the payment in whole or in part of the Obligations of such Grantor, in the order
specified in Section 6.6, and only after such application and after the payment
by the Administrative Agent of any other amount required by any provision of
law, including, without limitation, Section 9-615(a)(3) of the New York UCC,
need the Administrative Agent account for the surplus, if any, to any Grantor.
To the extent
22
permitted by applicable law, each Grantor waives all claims, damages and demands
it may acquire against any Agent or any Secured Party arising out of the
exercise by them of any rights hereunder, to the extent such exercise does not
constitute gross negligence or willful misconduct. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 days before such sale
or other disposition.
6.8 Registration Rights. (a) If the Administrative Agent shall
determine to exercise the right to sell any or all of the Pledged Stock pursuant
to Section 6.7, and if in the opinion of the Administrative Agent it is
necessary or advisable to have the Pledged Stock, or that portion thereof to be
sold, registered under the provisions of the Securities Act, the relevant
Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the
directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts as may
be, in the opinion of the Administrative Agent, necessary or advisable to
register the Pledged Stock, or that portion thereof to be sold, under the
provisions of the Securities Act, (ii) use its best efforts to cause the
registration statement relating thereto to become effective and to remain
effective for a period of one year from the date of the first public offering of
the Pledged Stock, or that portion thereof to be sold, and (iii) make all
amendments thereto and/or to the related prospectus which, in the opinion of the
Administrative Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. Each Grantor agrees to
cause such Issuer to comply with the provisions of the securities or "Blue Sky"
laws of any and all jurisdictions which the Administrative Agent shall designate
and to make available to its security holders, as soon as practicable, an
earnings statement (which need not be audited) which will satisfy the provisions
of Section 11(a) of the Securities Act.
(b) Each Grantor recognizes that the Administrative Agent may
be unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Administrative
Agent shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.
(c) Each Grantor agrees to use its best efforts to do or cause
to be done all such other acts as may be necessary to make such sale or sales of
all or any portion of the Pledged Stock pursuant to this Section 6.8 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Each Grantor further agrees that a breach of any of the covenants contained in
this Section 6.8 will cause irreparable injury to the Administrative Agent and
the Secured Parties, that the Administrative Agent and the Secured Parties have
no adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant
23
contained in this Section 6.8 shall be specifically enforceable against such
Grantor, and such Grantor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred under the Credit Agreement.
6.9 Deficiency. Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay its Obligations and the fees and disbursements of any
attorneys employed by the Administrative Agent or any Secured Party to collect
such deficiency.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1 Administrative Agent's Appointment as Attorney-in-Fact,
etc. (a) Each Grantor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be necessary or desirable to accomplish
the purposes of this Agreement, and, without limiting the generality of the
foregoing, each Grantor hereby gives the Administrative Agent the power and
right, on behalf of such Grantor, without notice to or assent by such Grantor,
to do any or all of the following:
(i) in the name of such Grantor or its own name, or
otherwise, take possession of and indorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
moneys due under any Receivable or with respect to any other Collateral
and file any claim or take any other action or proceeding in any court
of law or equity or otherwise deemed appropriate by the Administrative
Agent for the purpose of collecting any and all such moneys due under
any Receivable or with respect to any other Collateral whenever
payable;
(ii) pay or discharge taxes and Liens levied or placed on
or threatened against the Collateral, effect any repairs or any
insurance called for by the terms of this Agreement and pay all or any
part of the premiums therefor and the costs thereof;
(iii) execute, in connection with any sale provided for in
Section 6.7 or 6.8, any endorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral; and
(iv) (1) direct any party liable for any payment under any
of the Collateral to make payment of any and all moneys due or to
become due thereunder directly to the Administrative Agent or as the
Administrative Agent shall direct; (2) ask or demand for, collect, and
receive payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of or arising
out of any Collateral; (3) sign and indorse any invoices, freight or
express bills, bills of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications, notices and other
documents in connection with any of the Collateral; (4) commence and
prosecute any
24
suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any portion thereof
and to enforce any other right in respect of any Collateral; (5) defend
any suit, action or proceeding brought against such Grantor with
respect to any Collateral; (6) settle, compromise or adjust any such
suit, action or proceeding and, in connection therewith, give such
discharges or releases as the Administrative Agent may deem
appropriate; and (7) generally, sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Administrative Agent were the
absolute owner thereof for all purposes, and do, at the Administrative
Agent's option and such Grantor's expense, at any time, or from time to
time, all acts and things which the Administrative Agent deems
necessary to protect, preserve or realize upon the Collateral and the
Administrative Agent's and the Secured Parties' security interests
therein and to effect the intent of this Agreement, all as fully and
effectively as such Grantor might do.
Anything in this Section 7.1 (a) to the contrary
notwithstanding, the Administrative Agent agrees that it will not exercise any
rights under the power of attorney provided for in this Section 7.1(a) unless an
Event of Default shall have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option but without
any obligation so to do, may perform or comply, or otherwise cause performance
or compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in
connection with actions undertaken as provided in this Section 7.1, together
with interest thereon at a rate per annum equal to the rate per annum at which
interest would then be payable on past due Loans that are Base Rate Loans under
the Credit Agreement, from the date of payment by the Administrative Agent to
the date reimbursed by the relevant Grantor, shall be payable by such Grantor to
the Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
7.2 Duty of Administrative Agent. The Administrative Agent's
sole duty with respect to the custody, safekeeping and physical preservation of
the Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. Neither the
Administrative Agent, any Secured Party nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Administrative Agent and the Secured Parties hereunder are
solely to protect the Administrative Agent's and the Secured Parties' interests
in the Collateral and shall not impose any duty upon the Administrative Agent or
any Secured Party to exercise any such powers. The Administrative Agent and the
Secured Parties shall be accountable only for amounts that they
25
actually receive as a result of the exercise of such powers, and neither they
nor any of their officers, directors, employees or agents shall be responsible
to any Grantor for any act or failure to act hereunder, except for their own
gross negligence or willful misconduct.
7.3 Execution of Financing Statements. Pursuant to any
applicable law, each Grantor authorizes the Administrative Agent to file or
record financing statements and other filing or recording documents or
instruments with respect to the Collateral without the signature of such Grantor
in such form and in such offices as the Administrative Agent determines
appropriate to perfect the security interests of the Administrative Agent under
this Agreement. Each Grantor hereby ratifies and authorizes the filing by the
Administrative Agent of any financing statement with respect to the Collateral
made prior to the date hereof.
7.4 Authority of Administrative Agent. Each Grantor
acknowledges that the rights and responsibilities of the Administrative Agent
under this Agreement with respect to any action taken by the Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any option,
voting right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the Secured Parties, be governed by the Credit Agreement and by such
other agreements with respect thereto as may exist from time to time among them,
but, as between the Administrative Agent and the Grantors, the Administrative
Agent shall be conclusively presumed to be acting as agent for the Secured
Parties with full and valid authority so to act or refrain from acting, and no
Grantor shall be under any obligation, or entitlement, to make any inquiry
respecting such authority. Notwithstanding any other provision herein or in any
Loan Document, the only duty or responsibility of the Administrative Agent to
any Qualified Counterparty under this Agreement is the duty to remit to such
Qualified Counterparty any amounts to which it is entitled pursuant to Section
6.6.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of
this Agreement may be waived, amended, supplemented or otherwise modified except
in accordance with Section 10.1 of the Credit Agreement. No consent of any
Qualified Counterparty shall be required for any waiver, amendment, supplement
or other modification to this Agreement.
8.2 Notices. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 10.2 of the Credit Agreement; provided that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 1.
8.3 No Waiver by Course of Conduct; Cumulative Remedies.
Neither the Administrative Agent nor any Secured Party shall by any act (except
by a written instrument pursuant to Section 8.1), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default. No failure to exercise, nor any
delay in exercising, on the part of the Administrative Agent or any Secured
Party, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the
26
Administrative Agent or any Secured Party of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy which
the Administrative Agent or such Secured Party would otherwise have on any
future occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor
agrees to pay, or reimburse each Secured Party and the Administrative Agent for,
all its costs and expenses incurred in collecting against such Guarantor under
the guarantee contained in Section 2 or otherwise enforcing or preserving any
rights under this Agreement and the other Loan Documents to which such Guarantor
is a party, including, without limitation, the fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to each Secured
Party and of counsel to the Administrative Agent.
(b) Each Guarantor agrees to pay, and to save the
Administrative Agent and the Secured Parties harmless from, any and all
liabilities with respect to, or resulting from any delay in paying, any and all
stamp, excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral or in connection with any of the
transactions contemplated by this Agreement.
(c) Each Guarantor agrees to pay, and to save the
Administrative Agent and the Secured Parties harmless from, any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement to the extent the Borrower would be required to do so pursuant to
Section 10.5 of the Credit Agreement.
(d) The agreements in this Section shall survive repayment of
the Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.
8.5 Successors and Assigns. This Agreement shall be binding
upon the successors and assigns of each Grantor and shall inure to the benefit
of the Administrative Agent and the Secured Parties and their successors and
assigns; provided that no Grantor may assign, transfer or delegate any of its
rights or obligations under this Agreement without the prior written consent of
the Administrative Agent.
8.6 Set-Off. Each Grantor hereby irrevocably authorizes the
Administrative Agent and each Secured Party at any time and from time to time
while an Event of Default pursuant to Section 8(a) of the Credit Agreement shall
have occurred and be continuing, without notice to such Grantor or any other
Grantor, any such notice being expressly waived by each Grantor, to set-off and
appropriate and apply any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the
Administrative Agent or such Secured Party to or for the credit or the account
of such Grantor, or any part thereof in such amounts as the Administrative Agent
or such Secured Party may elect, against and on account of the obligations and
liabilities of such Grantor to the Administrative Agent or such Secured Party
hereunder and claims of every nature and description of the Administrative Agent
or such Secured Party against
27
such Grantor, in any currency, whether arising hereunder, under the Credit
Agreement, any other Loan Document or otherwise, as the Administrative Agent or
such Secured Party may elect, whether or not the Administrative Agent or any
Secured Party has made any demand for payment and although such obligations,
liabilities and claims may be contingent or unmatured. The Administrative Agent
and each Secured Party shall notify such Grantor promptly of any such set-off
and the application made by the Administrative Agent or such Secured Party of
the proceeds thereof, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the
Administrative Agent and each Secured Party under this Section are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) which the Administrative Agent or such Secured Party may have.
8.7 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
8.8 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9 Section Headings. The Section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
8.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Grantors, the Administrative Agent and the
Secured Parties with respect to the subject matter hereof and thereof, and there
are no promises, undertakings, representations or warranties by the
Administrative Agent or any Secured Party relative to subject matter hereof and
thereof not expressly set forth or referred to herein or in the other Loan
Documents.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers. Each Grantor hereby
irrevocably and unconditionally:
(a) submits for itself and its Property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
28
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to such
Grantor at its address referred to in Section 8.2 or at such other address of
which the Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential damages.
8.13 Acknowledgements. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents to which
it is a party;
(b) neither the Administrative Agent nor any other Secured
Party has any fiduciary relationship with or duty to any Grantor arising out of
or in connection with this Agreement or any of the other Loan Documents, and the
relationship between the Grantors, on the one hand, and the Administrative Agent
and Secured Parties, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Secured Parties or among the Grantors and the Secured Parties.
8.14 Additional Grantors. Each Subsidiary of the Borrower that
is required to become a party to this Agreement pursuant to Section 6.8 of the
Credit Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex 1 hereto.
8.15 Releases. (a) At such time as the Loans, the
Reimbursement Obligations and the other Obligations (other than Borrower Bank
Product Obligations, Guarantor Bank Product Obligations, the Borrower Guarantee
Obligations and the obligations of the Guarantors in respect of such Borrower
Guarantee Obligations that arise under Section 2.1(a)(i)) shall have been paid
in full, the Commitments have been terminated and no Letters of Credit shall be
outstanding, the Collateral shall be released from the Liens created hereby, and
this Agreement and all obligations (other than the provisions of this Agreement
and the obligations hereunder that are herein expressly stated to survive such
termination) of the Administrative Agent and each Grantor hereunder shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Grantors. At the
request and sole expense of any Grantor following any such termination, the
Administrative Agent shall (without notice to, or vote or consent of, any
Lender, or any party to any Bank Product) take such actions as shall be required
to release its security interest in all Collateral, and shall (without notice
to, or vote or consent of, any Lender, or any party to any Bank Product) take
such actions as shall be required to release all guarantee obligations under any
Loan Document, whether or not on the date of such release there may be
outstanding Obligations in respect of Bank Products.
29
Any such release of guarantee obligations shall be deemed subject to the
provision that such guarantee obligations shall be reinstated if after such
release any portion of any payment in respect of the Obligations guaranteed
thereby shall be rescinded or must otherwise be restored or returned upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its property, or otherwise,
all as though such payment had not been made.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by any Grantor in a transaction permitted by the Credit
Agreement, then the Administrative Agent, at the request and sole expense of
such Grantor, shall (without notice to, or vote or consent of, any Lender, or
any party to any Bank Product) take such actions as shall be required to release
its security interest in any Collateral being Disposed of in such Disposition
(including, in the case of a Disposition of any Person, all Capital Stock of
such Person and all Property of such Person), and shall (without notice to, or
vote or consent of, any Lender, or any party to any Bank Product) take such
actions as shall be required to release any guarantee and other obligations
under any Loan Document of any Person being Disposed of in such Disposition;
provided that the Borrower shall have delivered to the Administrative Agent, at
least ten Business Days prior to the date of the proposed release of any
Guarantor in connection with the Disposition of all of its Capital Stock, a
written request for release identifying the relevant Guarantor and the terms of
the sale or other disposition in reasonable detail, including the price thereof
and any expenses in connection therewith, together with a certification by the
Borrower stating that such transaction is in compliance with the Credit
Agreement and the other Loan Documents. In addition, Xxxxxx International shall
be automatically released from its obligations under this Agreement at the time
and pursuant to the conditions set forth in Section 10.15(a) of the Credit
Agreement.
(c) No consent of any Qualified Counterparty shall be required
for any release of Collateral or Guarantors pursuant to this Section.
8.16 Xxxxxx International. For avoidance of doubt, the parties
hereto confirm that Xxxxxx International is not hereby creating a security
interest in any of its assets; that the Collateral does not include any assets
of Xxxxxx International; and that Xxxxxx International is not hereby making any
representations and warranties with respect to any Collateral.
8.17 WAIVER OF JURY TRIAL. EACH GRANTOR AND, BY ACCEPTANCE OF
THE BENEFITS HEREOF, EACH AGENT AND EACH SECURED PARTY, HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.18 Consent to Security Interest. Each Grantor (each
"Consenting Grantor") that owns or holds Capital Stock of any Issuer (a) hereby
consents to any security interest being granted pursuant to this Agreement by
any other Grantor in any other Capital Stock of such Issuer and to any transfer
of such other Capital Stock resulting from any foreclosure or the exercise of
any other right or remedy by any Agent or Lender in accordance with this
Agreement, (b) agrees that the Agents and the Lenders and their respective
assignees or transferees who own or hold any interest in such other Capital
Stock as a result of or in
30
connection with any foreclosure or exercise of any other right or remedy by any
Agent or Lender in accordance with this Agreement shall be automatically
admitted as a partner (whether general or limited), member, or shareholder, as
the case may be, and consents thereto without the necessity of any further
consent or action of such Grantor, and (c) acknowledges and agrees that no
further consents or approvals are required from such Consenting Grantor in
connection with the security interest being granted pursuant to this Agreement
by such other Grantor in such other Capital Stock or the exercise by any Agent
or Lender of any right or remedy in accordance with this Agreement.
31
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee and Collateral Agreement to be duly executed and delivered as of the
date first above written.
[NAME OF GRANTOR]
By:
------------------------------------
Name:
Title:
Schedule 1
NOTICE ADDRESSES OF GUARANTORS
Schedule 2
DESCRIPTION OF PLEDGED STOCK
Issuer Class of Stock Stock Certificate No. No. of Shares
--------------------------------------------------------------------------------------------------------------------
Schedule 3
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
[List each office where a is financing statement to be filed]
Actions with respect to Pledged Stock
Other Actions
[Describe other actions to be taken]
Schedule 4
JURISDICTION OF ORGANIZATION, IDENTIFICATION NUMBER AND
LOCATION OF CHIEF EXECUTIVE OFFICE
Jurisdiction of Identification Location of Chief
Grantor Organization Number Executive Office
------- -------------- ------------------ -----------------
Annex I
to
Guarantee and Collateral Agreement
ASSUMPTION AGREEMENT, dated as of ________________, 200__,
made by ______________________________, a ______________ corporation (the
"Additional Grantor"), in favor of XXXXXX COMMERCIAL PAPER INC., as
administrative agent (in such capacity, the "Administrative Agent") for the
banks and other financial institutions (the "Lenders") parties to the Credit
Agreement referred to below. All capitalized terms not defined herein shall have
the meaning ascribed to them in such Credit Agreement.
W I T N E S S E T H :
WHEREAS, XXXXXX DRILLING COMPANY (the "Borrower"), the Lenders
and the Administrative Agent have entered into a Credit Agreement, dated as of
December 20, 2004 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement") with Xxxxxx Brothers Inc., as Arranger, and Bank
of America, N.A., as Syndication Agent;
WHEREAS, in connection with the Credit Agreement, the Borrower
and certain of its Affiliates (other than the Additional Grantor) have entered
into the Guarantee and Collateral Agreement, dated as of December 20, 2004 (as
amended, supplemented or otherwise modified from time to time, the "Guarantee
and Collateral Agreement") in favor of the Administrative Agent for the benefit
of the Secured Parties;
WHEREAS, the Credit Agreement requires the Additional Grantor
to become a party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and
deliver this Assumption Agreement in order to become a party to the Guarantee
and Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and
delivering this Assumption Agreement, the Additional Grantor, as provided in
Section 8.15 of the Guarantee and Collateral Agreement, hereby becomes a party
to the Guarantee and Collateral Agreement as a Grantor thereunder with the same
force and effect as if originally named therein as a Grantor and, without
limiting the generality of the foregoing, hereby expressly assumes all
obligations and liabilities of a Grantor thereunder. The information set forth
in Annex 1-A hereto is hereby added to the information set forth in Schedules
_____ to the Guarantee and Collateral Agreement. The Additional Grantor hereby
represents and warrants that each of the representations and warranties
contained in Section 4 of the Guarantee and Collateral Agreement is true and
correct on and as the date hereof (after giving effect to this Assumption
Agreement) as if made on and as of such date.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By:
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Name:
Title:
Annex II
to
Guarantee and Collateral Agreement
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Guarantee
and Collateral Agreement dated as of December 20, 2004 (the "Agreement"), made
by the Grantors parties thereto for the benefit of XXXXXX COMMERCIAL PAPER INC.,
as Administrative Agent. The undersigned agrees for the benefit of the
Administrative Agent and the Secured Parties as follows:
1. The undersigned will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 5.7(a) of
the Agreement with respect to the Pledged Securities issued by the undersigned.
2. The undersigned will comply with any instructions received by it
pursuant to Section 6.4(c) of the Agreement with respect to the Pledged
Securities issued by the undersigned.
[NAME OF ISSUER]
By:
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Name:
Title:
Address for Notices:
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Fax:
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