EXHIBIT 4(g)
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AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of
February 9, 1998
Among
TUBOSCOPE INC., AS BORROWER
AND
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
ABN AMRO BANK N.V., HOUSTON AGENCY,
AND THE OTHER LENDERS PARTY HERETO,
AND
ABN AMRO BANK N.V., HOUSTON AGENCY,
AS ADMINISTRATIVE AGENT
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS; INTERPRETATION.............................................. 1
Section 1.1. Definitions................................................ 1
Section 1.2. Interpretation............................................. 16
SECTION 2. THE CREDIT FACILITIES.................................................... 16
Section 2.1. Borrowings of Revolving Loans.............................. 16
Section 2.2. Letters of Credit.......................................... 17
Section 2.3. Term Loans................................................. 20
Section 2.4. Types of Loans and Minimum Borrowing Amounts............... 21
Section 2.5. Manner of Borrowing........................................ 21
Section 2.6. Interest Periods........................................... 23
Section 2.7. Maturity of Loans.......................................... 24
Section 2.8. Applicable Interest Rates.................................. 27
Section 2.9. Default Rate............................................... 28
Section 2.10. Optional Prepayments....................................... 29
Section 2.11. Mandatory Prepayments of Loans............................. 30
Section 2.12. The Notes.................................................. 30
Section 2.13. Breakage Fees.............................................. 31
Section 2.14. Commitment Terminations.................................... 31
Section 2.15. Acknowledgment............................................. 32
SECTION 3. FEES AND PAYMENTS........................................................ 32
Section 3.1. Fees....................................................... 32
Section 3.2. Place and Application of Payments.......................... 34
Section 3.3. Withholding Taxes.......................................... 34
SECTION 4. CONDITIONS............................................................... 36
Section 4.1. Conditions Precedent to all Borrowings..................... 36
SECTION 5. REPRESENTATIONS AND WARRANTIES........................................... 38
Section 5.1. Corporate Organization..................................... 38
Section 5.2. Corporate Power and Authority; Validity.................... 38
Section 5.3. No Violation............................................... 38
Section 5.4. Litigation................................................. 39
Section 5.5. Use of Proceeds; Margin Regulations........................ 39
Section 5.6. Investment Company Act..................................... 39
Section 5.7. Public Utility Holding Company Act......................... 39
Section 5.8. True and Complete Disclosure............................... 39
Section 5.9. Financial Statements....................................... 40
Section 5.10. No Material Adverse Change................................. 40
Section 5.11. Labor Controversies........................................ 40
Section 5.12. Taxes...................................................... 40
Section 5.13. ERISA...................................................... 40
Section 5.14. Consents................................................... 40
Section 5.15. Capitalization............................................. 41
Section 5.16. Intellectual Property...................................... 41
Section 5.17. Ownership of Property...................................... 41
Section 5.18. Compliance with Statutes, Etc.............................. 41
Section 5.19. Environmental Matters...................................... 41
Section 5.20. Existing Indebtedness...................................... 00
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XXXXXXX 0. COVENANTS................................................................ 42
Section 6.1. Corporate Existence........................................ 42
Section 6.2. Maintenance................................................ 42
Section 6.3. Taxes...................................................... 42
Section 6.4. ERISA...................................................... 43
Section 6.5. Burdensome Restrictions, Etc............................... 43
Section 6.6. Insurance.................................................. 43
Section 6.7. Financial Reports and Other Information.................... 44
Section 6.8. Lender Inspection Rights................................... 46
Section 6.9. Conduct of Business........................................ 46
Section 6.10. Interest Rate Protection................................... 47
Section 6.11. New Subsidiaries; Foreign Subsidiaries..................... 47
Section 6.12. Limitation on Certain Restrictions on Subsidiaries;
Dividends; Negative Pledges................................ 47
Section 6.13. Restrictions on Fundamental Changes........................ 48
Section 6.14. Environmental Laws......................................... 49
Section 6.15. Liens...................................................... 49
Section 6.16. Indebtedness............................................... 52
Section 6.17. Advances, Investments and Loans............................ 53
Section 6.18. Modifications of Corporate Documents....................... 54
Section 6.19. Transfer of Assets......................................... 54
Section 6.20. Transactions with Affiliates............................... 55
Section 6.21. Compliance with Laws....................................... 55
Section 6.22. Interest Coverage Ratio.................................... 55
Section 6.23. Total Funded Debt to Total Capital Ratio................... 56
Section 6.24. Minimum Consolidated Net Worth............................. 56
SECTION 7. EVENTS OF DEFAULT AND REMEDIES........................................... 56
Section 7.1. Events of Default.......................................... 56
Section 7.2. Non-Bankruptcy Defaults.................................... 58
Section 7.3. Bankruptcy Defaults........................................ 58
Section 7.4. Collateral for Undrawn Letters of Credit................... 59
Section 7.5. Notice of Default.......................................... 59
Section 7.6. Expenses................................................... 59
Section 7.7. Distribution and Application of Proceeds from.............. 60
Collateral
SECTION 8. CHANGE IN CIRCUMSTANCES.................................................. 61
Section 8.1. Change of Law.............................................. 61
Section 8.2. Unavailability of Deposits or Inability to................. 61
Ascertain LIBOR Rate
Section 8.3. Increased Cost and Reduced Return.......................... 61
Section 8.4. Lending Offices............................................ 63
Section 8.5. Discretion of Lender as to Manner of Funding............... 63
Section 8.6. Substitution of Lender..................................... 63
SECTION 9. THE AGENT................................................................ 64
Section 9.1. Appointment and Authorization of Agent..................... 64
Section 9.2. Rights and Powers.......................................... 64
Section 9.3. Action by Agent............................................ 64
Section 9.4. Consultation with Experts.................................. 65
Section 9.5. Indemnification Provisions................................. 65
Section 9.6. Indemnity.................................................. 66
Section 9.7. Resignation of Agent and Successor Agent................... 66
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SECTION 10. MISCELLANEOUS............................................................ 66
Section 10.1. Reallocation of Commitments................................ 66
Section 10.2. Effectiveness.............................................. 67
Section 10.3. No Waiver of Rights........................................ 68
Section 10.4. Non-Business Day........................................... 68
Section 10.5. Documentary Taxes.......................................... 68
Section 10.6. Survival of Representations................................ 69
Section 10.7. Survival of Indemnities.................................... 69
Section 10.8. Setoff..................................................... 69
Section 10.9. Notices.................................................... 69
Section 10.10. Counterparts............................................... 70
Section 10.11. Successors and Assigns..................................... 70
Section 10.12. Sales and Transfers of Borrowings and Notes;
Participations in Borrowings and Notes..................... 70
Section 10.13. Amendments................................................. 73
Section 10.14. Headings................................................... 73
Section 10.15. Legal Fees, Other Costs and Indemnification................ 73
Section 10.16. Governing Law; Submission to Jurisdiction; Waiver of
Jury Trial................................................. 74
Section 10.17. Confidentiality............................................ 75
Section 10.18. Severability............................................... 75
Section 10.19. Currency Conversion........................................ 75
Section 10.20. Dollar Equivalent Combinations............................. 76
Section 10.21. Change in Accounting Principles or Tax Laws................ 76
Section 10.22. Notice..................................................... 76
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TABLE OF CONTENTS
(Continued) Page
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EXHIBITS
2.2A - Form of Borrowing Request
2.2B - Form of Application for Letter of Credit
2.12A - Form of Revolving Note (U.S. Dollars)
2.12B - Form of Revolving Note (British Pounds Sterling)
2.12C - Form of Revolving Note (Canadian Dollars)
2.12D - Form of Term Note
2.12E - Form of Agent Note
6.7 - Form of Compliance Certificate
6.13 - Form of Acquisition Report
10.2A - Form of Subsidiary Guaranty
10.2B - Form of Opinions of Counsel
10.12 - Form of Assignment Agreement
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SCHEDULES
2.1 - List of Prior Indebtedness and Reallocations
2.7 - Term Loan Repayment Schedule
5.1 - List of Subsidiaries
5.4 - List of Litigation
5.13 - ERISA Disclosure
5.15 - Stock Disclosure
5.16 - Intellectual Property
5.19 - List of Environmental Claims
5.20 - List of Existing Indebtedness
6.15 - List of Existing Liens
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AMENDED AND RESTATED CREDIT AGREEMENT, dated as of February 9, 1998, among
Tuboscope Inc., a Delaware corporation (the "Borrower") Chase Bank of Texas,
National Association ("Chase"), ABN AMRO Bank N.V. ("ABN AMRO"), a Netherlands
chartered bank acting through its Houston agency, and the other lenders from
time to time parties hereto (each a "Lender" and collectively, the "Lenders"),
and ABN AMRO as administrative agent for the Lenders (in such capacity, the
"Agent").
WITNESSETH:
WHEREAS, Tuboscope Vetco International Inc., a Texas corporation
("Tuboscope Vetco"), and Drexel Holdings, Inc., a Delaware corporation ("Drexel
Holdings"), the Lenders and the Agent have previously entered into that certain
Secured Credit Agreement dated as of August 6, 1996, as amended by that certain
First Amendment to Secured Credit Agreement dated as of March 7, 1997, and that
certain Second Amendment to Secured Credit Agreement dated as of November 26,
1997 (such agreement, as so amended, the "Prior Credit Agreement");
WHEREAS, Drexel Holdings has merged into Tuboscope Vetco effective as of
July 31, 1997, and Tuboscope Vetco is a wholly owned subsidiary of the Borrower;
WHEREAS, the Borrower desires to assume all of the obligations of Tuboscope
Vetco under the Prior Credit Agreement, and the parties to the Prior Credit
Agreement desire to amend and restate such agreement in its entirety as provided
herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION.
Section 1.1. Definitions. Unless otherwise defined herein, the following
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terms shall have the following meanings, which meanings shall be equally
applicable to both the singular and plural form of such terms:
"Accepting Lenders" shall have the meaning ascribed to such term in Section
2.7(b).
"Acquisition" means a direct or indirect purchase by the Borrower or any of
its Subsidiaries after the date hereof for cash, stock or other securities or
other property, whether in one or more related transactions, of all or
substantially all of the assets or voting securities or other equity interests
of a Person or a business unit, division or group of a Person.
"Adjusted LIBOR Rate" means, for any Borrowing of Eurodollar Loans, a rate
per annum determined in accordance with the following formula:
Adjusted LIBOR Rate = LIBOR Rate
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1.00 - Eurodollar Reserve Percentage
"Affiliate" means for any Person, (i) any other Person that directly or
indirectly through one or more intermediaries controls, or is under common
control with, or is controlled by, such Person, and (ii) any other Person owning
beneficially or controlling ten percent (10%) or more of the equity interests in
such Person. As used in this definition, "control" means the power, directly or
indirectly, to direct or cause the direction of management or policies of a
Person (through ownership of voting securities or other equity interests, by
contract or otherwise).
"Agent" means ABN AMRO acting in its capacity as administrative agent for
the Lenders, and any successor agent appointed hereunder pursuant to Section
9.7.
"Agent Commitment Amount" means $5,000,000, as such amount may be reduced
from time to time pursuant to the terms of this Agreement.
"Agent Commitment Termination Date" means the earliest of (i) August 6,
2001; (ii) the date on which the Agent Credit Commitment is terminated in full
or reduced to zero pursuant to Section 2.14; or (iii) the occurrence of any
Event of Default described in Sections 7.1(g) or (h) with respect to the
Borrower or the occurrence and continuance of any other Event of Default and
either (x) the declaration of the Agent Loans to be due and payable pursuant to
Section 7.2, or (y) in the absence of such declaration, the giving of written
notice by ABN AMRO to the Borrower pursuant to Section 7.2 that the Agent Credit
Commitment has been terminated.
"Agent Credit Commitment" means the Agent's obligations to make Agent Loans
and issue Agent Letters of Credit pursuant to Sections 2.1(b) and 2.2(b).
"Agent L/C Obligations" means the undrawn face amounts of all outstanding
Agent Letters of Credit and all unpaid Agent Reimbursement Obligations.
"Agent Letter of Credit" means any of the letters of credit, each in an
initial face amount of less than $300,000, to be issued by the Agent on its own
behalf for the account of the Borrower pursuant to Section 2.2(b).
"Agent Note" means that certain promissory note of the Borrower as defined
in Section 2.12.
"Agent Reimbursement Obligation" means the obligations of the Borrower to
reimburse the Agent for each drawing under an Agent Letter of Credit as
described in Section 2.2(d).
"Agent Revolving Loans" means the revolving loans by the Agent described in
Section 2.1(b).
"Agent Revolving Obligations" means the sum of the principal amount of all
Agent Revolving Loans and Agent L/C Obligations outstanding.
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"Agent Swing Line" means the credit facility for making Agent Revolving
Loans and issuing Agent Letters of Credit described in Sections 2.1(b) and
2.2(b).
"Agreement" means this Amended and Restated Credit Agreement, as amended,
restated or supplemented from time to time.
"Amortization Date" means a scheduled repayment date of the Term Loans as
set forth in Section 2.7 and Schedule 2.7.
"Applicable Margin" means, for any day, at such times as the relevant Total
Funded Debt to Total Capital Ratio is in one of the following ranges, the
percentage per annum set forth opposite such Total Funded Debt to Total Capital
Ratio:
Total Funded Debt to Total Capital Ratio Percentage
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Less than 30% 0.450%
Equal to or greater than 30% 0.500%
but less than 35%
Equal to or greater than 35% 0.575%
but less than 37.5%
Equal to or greater than 37.5% 0.625%
but less than 40%
Equal to or greater than 40% 0.750%
but less than 45%
Equal to or greater than 45% 0.875%
For the period from the Effective Date through the date the Borrower is to
provide the Agent with the financial statements for the fiscal year ending
December 31, 1997, as required by Section 6.7(a)(ii), the Applicable Margin
shall be 0.750% per annum. The Borrower shall give written notice to the Agent
of any change to the Total Funded Debt to Total Capital Ratio affecting the
Applicable Margin within three (3) Business Days thereof and any change to the
Applicable Margin shall be effective one (1) day thereafter.
"Application" means an application for a Letter of Credit or an Agent
Letter of Credit as defined in Section 2.2(c).
"Assignment Agreement" means an agreement in substantially the form of
Exhibit 10.12 whereby a Lender conveys part or all of its Commitments, Loans and
participations in Letters of Credit to another Person that thereupon becomes a
Lender, or that increases its Commitments, outstanding Loans and outstanding
participations in Letters of Credit pursuant to Section 10.12.
3
"Assumed Agent Letters of Credit" means the assumed Agent Letters of Credit
defined in Section 2.2(b).
"Assumed Agent Revolving Loans" means the assumed Agent Revolving Loans
defined in Section 2.1(b).
"Assumed Letters of Credit" means the assumed Letters of Credit defined in
Section 2.2(a).
"Assumed Revolving Loans" means the assumed Revolving Loans defined in
Section 2.1(a).
"Assumed Term Loans" means the assumed Term Loans defined in Section 2.3.
"Base Rate" means, for any day, the greater of:
(i) the fluctuating commercial loan rate announced by the Lender which
is the Agent from time to time at its Chicago, Illinois office as its base
rate for U.S. Dollar loans in the United States of America in effect on
such day (which base rate may not be the lowest rate charged by such Lender
on loans to any of its customers), with any change in the Base Rate
resulting from a change in such announced rate to be effective on the date
of the relevant change; and
(ii) the sum of (x) the rate per annum (rounded upwards, if necessary,
to the nearest 1/16th of 1%) equal to the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the next Business Day, provided that
(A) if such day is not a Business Day, the rate on such transactions on the
immediately preceding Business Day as so published on the next Business Day
shall apply, and (B) if no such rate is published on such next Business
Day, the rate for such day shall be the average of the offered rates quoted
to the Agent by two (2) federal funds brokers of recognized standing on
such day for such transactions as selected by the Agent, plus (y) one-half
of one percent (0.50%) per annum.
"Base Rate Loan" means a Loan bearing interest prior to maturity at the
rate specified in Section 2.8(a).
"Borrower" means Tuboscope Inc., a Delaware corporation.
"Borrowing" means any extension of credit made by the Lenders by way of
Revolving Loans, Term Loans, Agent Revolving Loans, Letters of Credit or Agent
Letters of Credit, including any Borrowings advanced, continued or converted. A
Borrowing is "advanced" on the day the Lenders or ABN AMRO advance funds
comprising such Borrowing to the Borrower or a Letter of Credit or Agent Letter
of Credit is issued, is "continued" (in the case of Eurodollar Loans) on the
date a new Interest Period commences for such Borrowing and is "converted" when
4
such Borrowing is changed from one type of Loan to the other, all as requested
by the Borrower pursuant to Section 2.5(a).
"Borrowing Request" means each Borrowing Request as defined in Section
2.2(c).
"Business Day" means any day other than a Saturday or Sunday on which banks
are not authorized or required to close in Houston, Texas, or New York, New York
and, if the applicable Business Day relates to the advance or continuation of,
conversion into or payment on a Eurodollar Loan, on which banks are dealing in
Dollar, Pounds or Canadian Dollar deposits, as applicable, in the applicable
interbank eurocurrency market in London, England.
"Canadian Dollar" means lawful money of the Commonwealth of Canada.
"Capitalized Lease Obligations" means, for any Person, the amount of such
Person's liabilities under all leases of real or personal property (or any
interest therein) which is required to be capitalized on the balance sheet of
such Person as determined in accordance with GAAP.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof having maturities of not more than twelve (12) months
from the date of acquisition; (ii) U.S. Dollar denominated time deposits and
certificates of deposit maturing within one (1) year from the date of
acquisition thereof with any Lender, or any other financial institution whose
short-term senior unsecured debt rating is at least A-1 from S&P or P-1 from
Xxxxx'x; (iii) LIBOR denominated time deposits and certificates of deposit
maturing within six (6) months from the date of acquisition thereof with any
Lender, or any other financial institution whose short-term senior unsecured
debt rating is at least A-1 from S&P or P-1 from Xxxxx'x; (iv) commercial paper
or Eurocommercial paper with a rating of at least A-1 from S&P or P-1 from
Xxxxx'x, with maturities of not more than twelve (12) months from the date of
acquisition; (v) repurchase obligations entered into with any Lender or any
other financial institution whose short-term senior unsecured debt rating is at
least A-1 from S&P or P-1 from Xxxxx'x, which are secured by a fully perfected
security interest in any obligation of the type described in (i) above and has a
market value of the time such repurchase is entered into of not less than 100%
of the repurchase obligation of such Lender or such other Person thereunder;
(vi) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within twelve (12) months from the date of
acquisition thereof or providing for the resetting of the interest rate
applicable thereto not less often than annually and, at the time of acquisition,
having one of the two highest ratings obtainable from either S&P or Xxxxx'x; and
(vii) money market funds which have at least $1,000,000,000 in assets and which
invest primarily in securities of the types described in clauses (i) through
(vi) above.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Account" means the cash collateral account for outstanding
undrawn Letters of Credit or Agent Letters of Credit defined in Section 7.4(b).
5
"Collateral Agent" means ABN AMRO acting in its capacity as collateral
agent for the Lenders, and any successor collateral agent appointed hereunder
pursuant to Section 9.7.
"Commitment" means, relative to any Lender, such Lender's obligations to
make Loans pursuant to Sections 2.1 and 2.3 in the percentage set forth opposite
its signature hereto or pursuant to Section 10.12, as such commitment may be
reduced from time to time pursuant to the terms of this Agreement, and each
Lender's L/C Commitment.
"Compliance Certificate" means a certificate in the form of Exhibit 6.7.
"Consolidated Interest Expense" means, for any period, total interest
expense of the Borrower and its Subsidiaries on a consolidated basis for such
period in connection with Indebtedness, determined in accordance with GAAP.
"Consolidated Interest Income" means, for any period, total interest income
of the Borrower and its Subsidiaries on a consolidated basis for such period,
determined in accordance with GAAP.
"Consolidated Net Income" means, for any period, the net income (or loss),
after provision for taxes, of the Borrower and its Subsidiaries on a
consolidated basis for such period, determined in accordance with GAAP.
"Consolidated Net Worth" means, (i) as of any date of determination, the
Borrower's consolidated stockholders equity determined in accordance with GAAP,
excluding (x) the effects of any Unrestricted Subsidiaries except for the
aggregate equity investments therein, (y) treasury stock and any capital stock
subject to mandatory redemption before the Maturity Date of the Term Loans, or
if the Term Loans are prepaid, the Maturity Date of the Revolving Loans, and (z)
currency translation adjustments provided, and only to the extent that, the
amount of such currency translation adjustments as of such date is up to
$5,000,000 greater or less than the amount of the currency translation
adjustment reflected on the Borrower's unaudited balance sheet as of September
30, 1997; plus (ii) for purposes of Section 6.13(a) and 6.24(iv) and to the
extent not included in (i) above, for any entity acquired in an Acquisition,
such entity's stockholders equity determined in accordance with GAAP.
"Credit" means the credit facilities for making Loans and issuing Letters
of Credit described in Sections 2.1, 2.2 and 2.3.
"Credit Documents" means this Agreement, the Notes, the Subsidiary
Guaranties, the Borrowing Requests, the Applications, the Stock Pledge
Agreements, if any, and any other documents or instruments executed by a Credit
Party in connection with this Agreement.
"Credit Party" means the Borrower, each Guarantor and any other Person
which is a party to any Credit Document.
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"Declining Lender" shall have the meaning ascribed to such term in Section
2.7(b).
"Default" means any event or condition the occurrence of which would, with
the passage of time or the giving of notice, or both, constitute an Event of
Default.
"Designated Commitment" means, relative to any Lender, the lesser of (i)
such Lender's Commitment to make Revolving Loans and (ii) from and after the
Election Effective Date, the amount specified by such Lender in the most recent
notice provided by such Lender pursuant to Section 2.7(a) and resulting from the
Borrower's election in Section 2.7(b).
"Dollar" and "U.S. Dollar" and the sign "$" means lawful money of the
United States of America.
"EBITDA" means, for any period, the sum of (i) Consolidated Net Income
before (a) Consolidated Interest Expense, (b) Consolidated Interest Income, (c)
provisions for taxes based on income or revenues, and (d) any extraordinary,
unusual or nonrecurring gains or losses; (ii) the amount of all depreciation,
amortization expense and other non-cash charges deducted in determining
Consolidated Net Income, all calculated on a consolidated basis for the Borrower
and its Subsidiaries and as determined in accordance with GAAP; plus (iii) all
cash dividends or distributions paid any Subsidiary of the Borrower from any
Unrestricted Subsidiaries.
"Effective Date" means the date this Agreement shall become effective as
defined in Section 10.2.
"Election Effective Date" means the date specified in the Election Notice
as the date on which Commitments of any of the Lenders are to terminate or
reduce as a result of the Borrower's election in Section 2.7(b).
"Election Notice" shall have the meaning ascribed to such term in Section
2.7(b).
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of non-
compliance or violations, investigations or proceedings relating to any
Environmental Law ("Claims") or any permit issued under any Environmental Law,
including, without limitation, (i) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and (ii)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of injury to health
or safety in relation to the environment.
"Environmental Law" means any federal, state or local statute, law, rule,
regulation, ordinance, code, policy or rule of common law now or hereafter in
effect, including any judicial
7
or administrative order, consent, decree or judgment relating to (i) the
environment, (ii) health or safety in relation to the environment or (iii)
Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Eurodollar Loan" means a Loan bearing interest before maturity at the rate
specified in Section 2.8(b).
"Eurodollar Reserve Percentage" means, with respect to each Interest Period
for a Eurodollar Loan, a percentage (expressed as a decimal) equal to the daily
average during such Interest Period of the percentages in effect on each day of
such Interest Period, if any, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor thereto), for determining the maximum
reserve requirements (including, without limitation, any supplemental, marginal
and emergency reserves) applicable to "Eurocurrency Liabilities" pursuant to
Regulation D of the Board of Governors of the Federal Reserve System or any
other then applicable regulation of the Board of Governors which prescribes
reserve requirements applicable to "Eurocurrency Liabilities" as presently
defined in Regulation D.
"Event of Default" means any of the events or circumstances specified in
Section 7.1.
"Fee Letters" means those certain letter agreements dated July 3, 1996, by
and between each of the Agent and the Syndication Agent and Tuboscope Vetco
International Corporation.
"Foreign Plan" means any pension, profit sharing, deferred compensation, or
other employee benefit plan, program or arrangement maintained by any foreign
Subsidiary of the Borrower which, under applicable local law, is required to be
funded through a trust or other funding vehicle, but shall not include any
benefit provided by a foreign government or its agencies.
"GAAP" means generally accepted accounting principles from time to time in
effect as set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the statements and pronouncements of the Financial Accounting Standards Board or
in such other statements, opinions and pronouncements by such other entity as
may be approved by a significant segment of the U.S. accounting profession.
"Guarantor" means each of Tuboscope I/P, Inc., a Delaware corporation,
Tuboscope Vetco International Inc., a Texas corporation, Tubo-FGS, Inc., a
Delaware corporation, Fiber Glass Systems Holdings, Inc., a Delaware
corporation, Tuboscope (Holding U.S.) Inc., a Delaware corporation,
Environmental Procedures, Inc., a Delaware corporation, Tuboscope Pipeline
Services Inc., a Texas corporation, and any other Material Subsidiary required
to become a Guarantor pursuant to Section 6.11.
"Guaranty" by any Person means all obligations (other than endorsements in
the ordinary course of business of negotiable instruments for deposit or
collection) of such Person guarantying or in effect guarantying any
Indebtedness, dividend or other obligation (including, without limitation,
obligations in connection with sales of any property) of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without
8
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness or obligation, or
to purchase any property or assets constituting security therefor, primarily for
the purpose of assuring the owner of such Indebtedness or obligations of the
ability of the primary obligor to make payment of the Indebtedness or
obligation; or (ii) to advance or supply funds (x) for the purchase or payment
of such Indebtedness or obligation, or (y) to maintain working capital or other
balance sheet condition, or otherwise to advance or make available funds for the
purchase or payment of such Indebtedness or obligation, in each case primarily
for the purpose of assuring the owner of such Indebtedness or obligation of the
ability of the primary obligor to make payment of the Indebtedness or
obligation; or (iii) to lease property or to purchase securities or other
property or services of the primary obligor primarily for the purpose of
assuring the owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of the Indebtedness or obligation; or (iv)
otherwise to assure the owner of the Indebtedness or obligation of the primary
obligor against loss in respect thereof. For the purpose of all computations
made under this Agreement, the amount of a Guaranty in respect of any obligation
shall be deemed to be equal to the amount that would apply if such obligation
were the direct obligation of such Person rather than the primary obligor or, if
less, the maximum aggregate potential liability of such Person under the terms
of the Guaranty.
"Hazardous Material" shall have the meaning assigned to that term in the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Acts of 1986, and shall
also include petroleum, including crude oil or any fraction thereof, or any
other substance defined as "hazardous" or "toxic" or words used in place thereof
under any Environmental Law applicable to the Borrower or any of its
Subsidiaries.
"Highest Lawful Rate" means the maximum nonusurious interest rate, if any,
that any time or from time to time may be contracted for, taken, reserved,
charged or received on the Loans, the Agent Loans, the Reimbursement Obligations
or the Agent Reimbursement Obligations, or under laws applicable to any of the
Lenders or ABN AMRO, as applicable, which are presently in effect or, to the
extent allowed by applicable law, under such laws which may hereafter be in
effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow. Determination of the rate of interest for the
purpose of determining whether the Loans or Reimbursement Obligations are
usurious under all applicable laws shall be made by amortizing, prorating,
allocating, and spreading, in equal parts during the period of the full stated
term of the Loans, all interest at any time contracted for, taken, reserved,
charged or received from the Borrower in connection with the Loans, the Agent
Loans, the Reimbursement Obligations or the Agent Reimbursement Obligations, as
applicable.
"Indebtedness" means, for any Person, the following obligations of such
Person, without duplication: (i) obligations of such Person for borrowed money;
(ii) obligations of such Person representing the deferred purchase price of
property or services other than accounts payable arising in the ordinary course
of business and other than amounts which are being contested in
9
good faith and for which reserves in conformity with GAAP have been provided;
(iii) obligations of such Person evidenced by bonds, notes, bankers acceptances,
debentures or other similar instruments of such Person or reimbursement
obligations or other obligations with respect to letters of credit issued for
such Person's account or letters of credit issued pursuant to such Person's
application therefor; (iv) obligations of other Persons, whether or not assumed,
secured by Liens upon property or payable out of the proceeds or production from
property now or hereafter owned or acquired by such Person, but only to the
extent of such property's fair market value; (v) Capitalized Lease Obligations
of such Person; (vi) obligations under (x) Interest Rate Protection Agreements,
(y) commodity hedge, swap, exchange, forward, future, collar or cap
arrangements, fixed price agreements and all other agreements or arrangements
designed to protect against fluctuations in commodity prices, and (z) futures
agreements, arrangements or options designed to protect against fluctuations in
currency exchange rates; and (vii) obligations of such Person pursuant to a
Guaranty of any of the foregoing of another Person. For purposes of this
Agreement, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture to the extent such Indebtedness has recourse to
such Person.
"Indemnified Taxes" shall have the meaning ascribed to such term in Section
3.3.
"Interest Coverage Ratio" means, as of the end of any fiscal quarter, the
ratio of (i) EBITDA for the four fiscal quarter period then ended, minus all
non-acquisition related capital expenditures and all cash income taxes paid
during such four fiscal quarter period by the Borrower and its Subsidiaries, to
(ii) Consolidated Interest Expense plus all dividends paid by the Borrower as
permitted by Section 6.12(b) for the four fiscal quarter period then ended.
"Interest Payment Date" means (i) for a Base Rate Loan, the last Business
Day of each calendar quarter such Loan is outstanding commencing March 31, 1998,
and (ii) for a Eurodollar Loan, the last Business Day of each Interest Period
for such Loan and, during any Interest Period of six (6) months, the next
Business Day occurring three (3) months after the commencement of such Interest
Period.
"Interest Period" means the period commencing on the date that a Borrowing
of Eurodollar Loans is advanced, continued or created by conversion and, subject
to Section 2.6, ending on the date 1, 2, 3 or 6 months thereafter as selected by
the Borrower pursuant to the terms of this Agreement.
"Interest Rate Protection Agreement" shall mean any interest rate swap,
interest rate cap, interest rate collar, or other interest rate hedging
agreement or arrangement designed to protect against fluctuations in interest
rates.
"Investments" shall have the meaning ascribed to such term in Section 6.17.
"L/C Commitments" means, relative to any Lender, such Lender's obligation
to participate in Letters of Credit pursuant to Section 2.2 in the percentage
set forth opposite its signature hereto or pursuant to Section 10.12, as such
commitments may be reduced from time to time pursuant to the terms of this
Agreement.
10
"L/C Commitment Amount" means $20,000,000, as such amount may be reduced
from time to time pursuant to the terms of this Agreement.
"L/C Documents" means this Agreement, the Letters of Credit, the Agent
Letters of Credit, any Borrowing Requests and Applications with respect thereto
and any draft or other document presented in connection with a drawing
thereunder.
"L/C Obligations" means the undrawn face amounts of all outstanding Letters
of Credit and all unpaid Reimbursement Obligations with respect to Letters of
Credit.
"Lender" is defined in the preamble.
"Lending Office" means the branch, office or affiliate of a Lender
specified on the appropriate signature page hereof or designated pursuant to
Sections 8.4 or 10.12.
"Letter of Credit" means any of the letters of credit issued by the Agent
on behalf of the Lenders for the account of the Borrower pursuant to Section
2.2(a).
"LIBOR Rate" means, relative to any Interest Period for each Eurodollar
Loan comprising part of the same Borrowing, a rate of interest per annum
(rounded upwards, if necessary, to the nearest whole multiple of 1/16 of 1%),
equal to the arithmetic average of the quotation by each of the Reference Banks
(notified to the Agent by such Reference Bank) of the rate of interest per annum
at which deposits in U.S. Dollars, Canadian Dollars or Pounds, as the case may
be, in immediately available and freely transferable funds are offered to such
Reference Bank two (2) Business Days before the commencement of such Interest
Period by major banks in the London interbank market as at or about 10:00 a.m.
(New York, New York time) for a period approximately equal to such Interest
Period and in an amount equal or comparable to the aggregate principal amount of
the Eurodollar Loan to which such Interest Period relates scheduled to be made,
continued or converted pursuant to the terms hereof, as applicable, by such
Reference Bank as part of such Borrowing. If on any occasion any Reference Bank
is unable, or for any reason fails, to so notify the Agent by 10:00 a.m. (New
York, New York time) two (2) Business Days before the first day of such Interest
Period, the applicable LIBOR rate shall be determined on the basis of each
quotation furnished by those of the Reference Banks which so notify the Agent at
or prior to such time.
"Lien" means any interest in any property or asset in favor of a Person
other than the owner of the property or asset and securing an obligation owed to
such Person, whether such interest is based on the common law, statute or
contract, including, but not limited to, the security interest lien arising from
a mortgage, encumbrance, pledge, conditional sale, security agreement or trust
receipt, or a lease, consignment or bailment for security purposes.
"Loan" mean a Base Rate Loan or Eurodollar Loan, each of which is a "type"
of Loan hereunder, outstanding as a Revolving Loan, a Term Loan or an Agent
Loan.
11
"Majority Lenders" means, at any time, the Lenders then holding in the
aggregate at least sixty-six and two-thirds percent (66 2/3%) of the aggregate
of the Commitments and the Agent Credit Commitment, or if any such commitments
have terminated pursuant to the terms hereof, the aggregate Revolving
Obligations or Agent Revolving Obligations with respect thereto. The percentage
set forth opposite each Lender's name and the line "Voting Percentage" on the
signature page hereto reflects the initial voting percentage of each Lender
hereunder on the Effective Date.
"Material Adverse Effect" means an effect that results in a material
adverse change since September 30, 1997, in (i) the business, properties, assets
or financial condition of the Borrower or of the Borrower and its Subsidiaries
taken as a whole, or (ii) in the ability of the Borrower or of the Borrower and
the other Credit Parties taken as a whole to perform their Obligations under
this Agreement, the Notes or the other Credit Documents to which they are a
party.
"Material Subsidiary" means each of the Guarantors and each other
Subsidiary of the Borrower that has assets having a fair market value of at
least $10,000,000 or, if a Subsidiary is acquired after the Effective Date,
having an acquisition cost of at least $10,000,000.
"Maturity Date" means (i) in the case of the Revolving Loans, August 6,
2001, or such later date as the Maturity Date is extended pursuant to the terms
of Section 2.7(a), (ii) in the case of the Agent Loans, August 6, 2001, and
(iii) in the case of the Term Loans, August 6, 2002, or such earlier date as a
result of any prepayment of the Term Loans pursuant to the terms of Sections
2.10 or 2.11.
"Moody's" means Xxxxx'x Investors Service, Inc., or any successor thereto.
"Multicurrency Funding Limit" means $40,000,000, as such amount may be
reduced pursuant to the terms of this Agreement.
"Net Cash Proceeds" means, for any Transfer, the cash proceeds (including
any cash payments actually received as a deferred payment of principal pursuant
to a note, installment receivable, purchase price adjustment receivable or
otherwise) of such Transfer net of (x) all legal fees, accountant fees,
investment banking fees, brokerage fees, finders fees, survey costs, title
insurance premiums, required debt payments (other than of Obligations) and other
customary fees, costs and expenses actually incurred or paid in connection
therewith, and (y) taxes or other governmental fees or charges paid or payable
as a result thereof.
"Note" means any of the promissory notes of the Borrower defined in Section
2.12.
"Obligations" means all joint and several obligations of the Borrower and
any other Credit Parties to pay fees, costs and expenses hereunder, to pay
principal or interest on Loans and Reimbursement Obligations, to pay fees, costs
and expenses pursuant to the terms of the Fee Letters and to pay any other
obligations to the Agent or any Lender arising under or in relation to any
Credit Document.
12
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Percentage" means, for each Lender, the percentage of the Commitments
represented by such Lender's Commitment; provided that, if the Commitments are
terminated, each Lender's Percentage shall be calculated based on its Commitment
in effect immediately before such termination, subject to any assignments by
such Lender of Obligations pursuant to Section 10.12.
"Permitted Business" means any business described in Section 6.9.
"Permitted Liens" means the Liens described in Section 6.15.
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization or any other entity or
organization, including a government or any agency or political subdivision
thereof.
"Plan" means an employee pension benefit plan covered by Title IV of ERISA
or subject to the minimum funding standards under Section 412 of the Code that
is either (i) maintained by the Borrower or any of its Subsidiaries, or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
the Borrower or any of its Subsidiaries is then making or accruing an obligation
to make contributions or has within the preceding five (5) plan years made or
had an obligation to make contributions.
"Pounds" means British Pounds Sterling.
"Public Debt Issue" means a public offering of debt securities of the
Borrower in an aggregate principal amount of not more than $200,000,000, which
debt securities will have a tenor of no less than ten (10) years, have no
required principal payments thereof before the maturity date thereof, contain
typical investment grade covenants no more onerous than the covenants contained
in this Agreement and rank pari passu with the Obligations hereunder.
"Reduced Declining Lender" shall have the meaning ascribed to such term in
Section 2.7(a).
"Reference Banks" means ABN AMRO, Chase and the Arab Banking Corporation
(B.S.C.).
"Reimbursement Obligation" means the obligations of the Borrower to
reimburse the Agent for each drawing under a Letter of Credit or an Agent Letter
of Credit as described in Section 2.2(d).
"Revolving Commitment Termination Date" means the earliest of (i) August 6,
2001, or such date as the Revolving Commitment Termination Date is extended
pursuant to the terms of Section 2.7; (ii) the date on which the Revolving
Credit Commitments are terminated in full or reduced to zero pursuant to Section
2.14; or (iii) the occurrence of any Event of Default described
13
in Sections 7.1(g) or (h) with respect to the Borrower or the occurrence and
continuance of any other Event of Default and either (x) the declaration of the
Loans to be due and payable pursuant to Section 7.2, or (y) in the absence of
such declaration, the giving of written notice by the Agent, acting at the
direction of the Majority Lenders, to the Borrower pursuant to Section 7.2 that
the Revolving Credit Commitments have been terminated.
"Revolving Credit" means the credit facility for making Revolving Loans and
issuing Letters of Credit described in Sections 2.1 and 2.2.
"Revolving Credit Commitment" means, relative to any Lender, such Lender's
obligations to make Revolving Loans and participate in Letters of Credit
pursuant to Sections 2.1 and 2.2.
"Revolving Credit Commitment Amount" means an amount equal to $100,000,000,
as such amount may be reduced from time to time pursuant to the terms of this
Agreement.
"Revolving Loans" means the revolving loans by the Lenders defined in
Section 2.1(a).
"Revolving Notes" means the revolving promissory notes of the Borrower as
defined in Section 2.12.
"Revolving Obligations" means the sum of the principal amount of all
Revolving Loans and L/C Obligations outstanding.
"SEC" means the Securities and Exchange Commission.
"S&P" means Standard & Poor's Rating Group or any successor thereto.
"Stock Pledge Agreements" means any Stock Pledge Agreements in
substantially the form as provided under the Prior Credit Agreement (provided
that the Public Debt Issue shall be equally and ratably secured thereby)
executed and delivered by the Borrower or any other Credit Party if required
pursuant to the terms of this Agreement, as any of same may be amended,
supplemented or otherwise modified from time to time.
"Subsidiary" means, for any Person, any corporation or other entity
(excluding Unrestricted Subsidiaries) of which more than fifty percent (50%) of
the outstanding stock or comparable equity interests having ordinary voting
power for the election of the board of directors of such corporation, any
managers of such limited liability company or similar governing body
(irrespective of whether or not, at the time, stock or other equity interests of
any other class or classes of such corporation or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned by such Person, as applicable, or by one or
more of its Subsidiaries.
"Subsidiary Guaranty" means any Guaranty by any Subsidiary delivered
pursuant to the terms of this Agreement.
14
"Syndication Agent" means Chase Securities Inc.
"Taxes" shall have the meaning ascribed to such term in Section 5.12.
"Term Loans" means the term loans defined in Section 2.3.
"Term Notes" means the term promissory notes of the Borrower as defined in
Section 2.12.
"Total Capital" means, as of any date of determination, the sum of Total
Funded Debt plus Consolidated Net Worth as of such date.
"Total Commitment Amount" means the lesser of (i) the Revolving Credit
Commitment Amount, and (ii) the aggregate of the Designated Commitments.
"Total Funded Debt" means, as of any date of determination, the sum of (i)
Indebtedness for borrowed money, all obligations evidenced by bonds, debentures,
notes or similar instruments, and obligations to pay the deferred purchase price
of property which in accordance with GAAP would be shown on a consolidated
balance sheet as a liability, (ii) all reimbursement obligations or other
obligations due and payable with respect to letters of credit and bankers
acceptances issued and outstanding and (iii) all obligations as lessee under
Capitalized Lease Obligations (excluding any obligation to purchase any asset at
the end of a lease term until such asset is so purchased), all calculated on a
consolidated basis for the Borrower and its Subsidiaries.
"Total Funded Debt to Total Capital Ratio" means, as of any date, the
ratio, expressed as a percentage, of Total Funded Debt to Total Capital. For
purposes of this ratio, each of Consolidated Net Worth and the aggregate amount
of overdrafts permitted pursuant to Section 6.16(j) shall be fixed for each
fiscal quarter on the date of the delivery of the relevant financial statement
pursuant to Section 6.7 based on the determination of Consolidated Net Worth and
the aggregate amount of such overdrafts as of the end of the preceding fiscal
quarter.
"Transfer" means a sale, transfer, conveyance, assignment or other
disposition (or a series of related dispositions), including, without
limitation, any transfer pursuant to an option to purchase, any sale or
assignment (with or without recourse) of any accounts receivable and any sale
and leaseback of assets, of an asset having a net book value as established in
accordance with GAAP in excess of $500,000, but excluding any involuntary
transfer by operation of law and any transfers of an asset pursuant to any
casualty or theft with respect to such asset.
"Unfunded Vested Liabilities" means, for any Plan at any time, the amount
(if any) by which the present value of all vested nonforfeitable accrued
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, determined as of the then most recent valuation date
for such Plan, but only to the extent that such excess represents a potential
liability of the Borrower or any of its Subsidiaries to the PBGC or such Plan.
"Unrestricted Subsidiary" means any Subsidiary that is not a Guarantor that
is designated by the Borrower as an Unrestricted Subsidiary with the consent of
the Agent (which consent shall
15
not be unreasonably withheld), except that the Borrower may designate up to one
(1) such Person that but for such designation would have been required to become
a Guarantor pursuant to the terms of Section 6.11 and that is not a Guarantor on
the Effective Date, and provided that the Borrower shall not designate as an
Unrestricted Subsidiary any Person that but for its designation as an
Unrestricted Subsidiary would be a Subsidiary that owns, directly or indirectly,
any Material Subsidiary or Guarantor or that is any direct Subsidiary of the
Borrower. The Borrower may elect to treat any Subsidiary as an Unrestricted
Subsidiary, and may rescind any such prior election, so long as no Default or
Event of Default shall have occurred and be continuing, by giving written notice
thereof to the Agent specifying the name of such Subsidiary and the effective
date of such election, which shall be a date within sixty (60) days after the
date such notice is given, and obtaining the consent of the Agent as provided
herein. The election to treat a particular Subsidiary as an Unrestricted
Subsidiary may only be made once.
Section 1.2. Interpretation. The foregoing definitions shall be equally
--------------
applicable to the singular and plural forms of the terms defined. All
references to times of day in this Agreement shall be references to New York,
New York time unless otherwise specifically provided.
SECTION 2. THE CREDIT FACILITIES.
Section 2.1. Borrowings of Revolving Loans. (a) Syndicated Revolving
----------------------------- --------------------
Loans. As of the Effective Date, Tuboscope Vetco has the aggregate principal
-----
amount of Revolving Loans (as defined in the Prior Credit Agreement)
outstanding under the Prior Credit Agreement, together with accrued and unpaid
interest thereon, listed on Schedule 2.1 (the "Assumed Revolving Loans"). The
Borrower hereby assumes, as its direct and primary obligation, the payment of
such Assumed Revolving Loans evidenced by the Revolving Notes (as defined in the
Prior Credit Agreement). Subject to the terms and conditions hereof, each Lender
severally and not jointly agrees to make one or more additional loans (each such
loan, together with the Assumed Revolving Loans of such Lender, a "Revolving
Loan") to the Borrower, from time to time before the Revolving Commitment
Termination Date on a revolving basis in an aggregate principal amount
(including the Assumed Revolving Loans of such Lender) not to exceed at any time
outstanding an amount equal to its Percentage of the Revolving Credit Commitment
Amount (for each Lender, its "Revolving Credit Commitment"), subject to any
reductions thereof pursuant to the terms of this Agreement. No Lender shall be
permitted or required to make any Revolving Loan if, after giving effect
thereto, (i) the aggregate principal amount of the Revolving Loans of all
Lenders and other Revolving Obligations outstanding of the Borrower would
thereby exceed the Revolving Credit Commitment Amount then in effect; or (ii)
all Revolving Loans of such Lender and its participating interest in all Letters
of Credit would thereby exceed the Percentage of such Lender of the Revolving
Credit Commitment Amount then in effect. Each Borrowing of Revolving Loans
shall be made ratably from the Lenders in proportion to their respective
Percentages. Revolving Loans may be repaid, in whole or in part, and all or any
portion of the principal amount thereof reborrowed, before the Revolving
Commitment Termination Date, subject to the terms and conditions hereof.
Funding of any Revolving Loans shall be in any combination of Dollars, Pounds or
Canadian Dollars as specified by the Borrower as set forth in Section 2.2(c) or
2.5, as applicable; provided that the Dollar equivalent amount of outstanding
Revolving Loans funded and
16
Letters of Credit issued in Pounds and Canadian Dollars, determined on the date
each such Revolving Loan is advanced, continued or converted or such Letter of
Credit is so issued in accordance with Section 10.20, as applicable, shall not
exceed the Multicurrency Funding Limit.
(b) Agent Revolving Loans. As of the Effective Date, Tuboscope Vetco has
---------------------
the aggregate principal amount of Agent Revolving Loans (as defined in the Prior
Credit Agreement) outstanding under the Prior Credit Agreement, together with
accrued and unpaid interest thereon, listed on Schedule 2.1 (the "Assumed Agent
Revolving Loans"). The Borrower hereby assumes, as its direct and primary
obligation, the payment of such Assumed Agent Revolving Loans evidenced by the
Agent Note (as defined in the Prior Credit Agreement). Subject to the terms and
conditions hereof, the Agent agrees to make one or more additional loans (each
such loan, together with the Assumed Agent Loans, an "Agent Revolving Loan") to
the Borrower, from time to time before the Agent Commitment Termination Date on
a revolving basis in an aggregate principal amount (including the Assumed Agent
Loans) not to exceed at any time outstanding the Agent Commitment Amount,
subject to any reductions thereof pursuant to the terms of this Agreement. The
Agent shall not be permitted or required to make any Agent Revolving Loan if,
after giving effect thereto, the aggregate principal amount of the Agent
Revolving Loans and other Agent Revolving Obligations outstanding of the
Borrower would thereby exceed the Agent Commitment Amount then in effect. Agent
Revolving Loans may be repaid, in whole or in part, and all or any portion of
the principal amount thereof reborrowed, before the Revolving Commitment
Termination Date, subject to the terms and conditions hereof. Funding of the
Agent Loans shall be in Dollars.
Section 2.2. Letters of Credit. (a) Syndicated Letters of Credit. As of
----------------- ----------------------------
the Effective Date, the Agent has issued the Letters of Credit (as defined in
the Prior Credit Agreement) under the Prior Credit Agreement listed on Schedule
2.1 (the "Assumed Letters of Credit"). The Borrower hereby assumes, as its
direct and primary obligation, all Reimbursement Obligations (as defined in the
Prior Credit Agreement) in connection with the Assumed Letters of Credit.
Subject to the terms and conditions hereof, the Agent agrees to issue, from time
to time prior to the Revolving Commitment Termination Date, at the request of
the Borrower and on behalf of the Lenders and in reliance on their obligations
under this Section 2.2, one or more additional letters of credit (each such
letter of credit, together with the Assumed Letters of Credit, a "Letter of
Credit") for the Borrower's account in a face amount of at least $300,000 and in
an aggregate undrawn face amount (including the face amount of the Assumed
Letters of Credit) at any time outstanding not to exceed the L/C Commitment
Amount; provided that the Agent shall have no obligation to issue a Letter of
Credit if, after the issuance thereof, (i) the outstanding Revolving Obligations
would thereby exceed the Revolving Credit Commitment Amount then in effect, (ii)
the outstanding L/C Obligations would thereby exceed the L/C Commitment Amount
then in effect, or (z) the issuance of such Letter of Credit would violate any
legal or regulatory restriction then applicable to the Agent or any Lender as
notified by such Lender to the Agent before the date of issuance of such Letter
of Credit. Letters of Credit and any renewals thereof hereunder, may be issued
in face amounts of either Dollars, Pounds or Canadian Dollars; provided further
that the Dollar equivalent amount of outstanding Revolving Loans funded and
Letters of Credit issued in Pounds and Canadian Dollars, determined on the date
each such Revolving Loan is advanced,
17
continued or converted or such Letter of Credit is so issued in accordance with
Section 10.19, as applicable, shall not exceed the Multicurrency Funding Limit.
(b) Agent Letters of Credit. As of the Effective Date, the Agent has
-----------------------
issued the Agent Letters of Credit (as defined in the Prior Credit Agreement)
under the Prior Credit Agreement listed on Schedule 2.1 (the "Assumed Agent
Letters of Credit"). The Borrower hereby assumes, as its direct and primary
obligation, all Agent Reimbursement Obligations (as defined in the Prior Credit
Agreement) in connection with the Assumed Agent Letters of Credit. Subject to
the terms and conditions hereof, the Agent agrees to issue, on its behalf only,
one or more additional letters of credit (each such letter of credit, together
with the Assumed Agent Letters of Credit, an "Agent Letter of Credit") for the
Borrower's account, jointly and severally, each in an initial face amount of
less than $300,000 and in an aggregate undrawn face amount (including the face
amount of the Assumed Agent Letters of Credit) at any time outstanding not to
exceed the Agent Commitment Amount; provided, that the Agent shall have no
obligation to issue an Agent Letter of Credit if (i) the outstanding Agent
Revolving Obligations would thereby exceed the Agent Commitment Amount then in
effect, or (ii) the issuance of such Agent Letter of Credit would conflict with
any legal or regulatory restriction then applicable to the Agent. All Agent
Letters of Credit shall be issued in face amounts of Dollars.
(c) Issuance Procedure. To request that the Agent issue a Letter of Credit
------------------
or an Agent Letter of Credit, the Borrower shall deliver to the Agent (with a
duplicate copy to an operations employee of the Agent as designated by the Agent
from time to time) a duly executed Borrowing Request in the form of Exhibit 2.2A
(each a "Borrowing Request"), together with a duly executed application for the
relevant Letter of Credit or Agent Letter of Credit substantially in the form of
Exhibit 2.2B (each an "Application"), or such other computerized issuance or
application procedure, instituted from time to time by the Agent and agreed to
by the Borrower, completed to the reasonable satisfaction of the Agent, and such
other documentation and information as the Agent may reasonably request. In the
event of any irreconcilable difference or inconsistency between this Agreement
and an Application, the provisions of this Agreement shall govern. Upon receipt
of a properly completed and executed Application and any other reasonably
requested documents or information at least three (3) Business Days prior to any
requested issuance date, the Agent will process such Application in accordance
with its customary procedures and issue the requested Letter of Credit or Agent
Letter of Credit on the requested issuance date. The Borrower may cancel any
requested issuance of a Letter of Credit or Agent Letter of Credit prior to the
issuance thereof. The Agent will notify each Lender of the amount and
expiration date of each Letter of Credit it issues promptly upon issuance
thereof. Each Letter of Credit and Agent Letter of Credit shall have an
expiration date no later than four (4) Business Days before the Maturity Date
for Revolving Loans or Agent Loans, as applicable. If the Agent issues any
Letters of Credit or Agent Letters of Credit with expiration dates that
automatically extend unless the Agent gives notice that the expiration date will
not so extend, the Agent will give such notice of non-renewal before the time
necessary to prevent such automatic extension if before such required notice
date (w) the expiration date of such Letter of Credit or Agent Letter of Credit
if so extended would be later than four (4) Business Days before the Maturity
Date for Revolving Loans or Agent Loans, as applicable, (x) the Revolving
Commitment Termination Date or the Agent Commitment
18
Termination Date, as applicable, shall have occurred, (y) an Event of Default
has occurred and is continuing, or (z) the Agent is so directed by the Borrower.
The Agent agrees to issue amendments to any Letter of Credit or Agent Letter of
Credit increasing its amount, or extending its expiration date, at the request
of the Borrower subject to the conditions precedent for all Loans of Section 4.1
and the other terms and conditions of this Section 2.2.
(d) The Borrower's Reimbursement Obligations.
----------------------------------------
(i) The Borrower hereby irrevocably and unconditionally agree to
reimburse the Agent for each payment or disbursement made by the Agent to settle
its obligations under any draft drawn under a Letter of Credit (including the
Assumed Letters of Credit) or an Agent Letter of Credit (including the Assumed
Agent Letters of Credit) (each, a "Reimbursement Obligation") within two (2)
Business Days from when such draft is paid with either funds not borrowed
hereunder or with a Borrowing subject to Section 2.5 and the other terms and
conditions contained in this Agreement. The Reimbursement Obligation shall bear
interest (which the Borrower hereby promises to pay) from and after the date
such draft is paid until (but excluding the date) the Reimbursement Obligation
is paid at the lesser of the Highest Lawful Rate or the Base Rate so long as the
Reimbursement Obligation shall not be past due, and thereafter at the default
rate per annum as set forth in Section 2.9(c), whether or not the Maturity Date
for the Revolving Credit or the Agent Swing Line, as applicable, shall have
occurred. If any such payment or disbursement is reimbursed to the Agent on the
date such payment or disbursement is made by the Agent, interest shall be paid
on the reimbursable amount for one (1) day. The Agent shall give the Borrower
notice of any drawing on a Letter of Credit or an Agent Letter of Credit within
one (1) Business Day after such drawing is paid.
(ii) The Borrower agrees for the benefit of the Agent and each Lender
that, notwithstanding any provision of any Application, the obligations of the
Borrower under this Section 2.2(d) and each applicable Application shall be
absolute, unconditional and irrevocable (subject to Section 2.2(c)) and shall be
performed strictly in accordance with the terms of this Agreement and each
applicable Application under all circumstances whatsoever (other than the
defense of payment in accordance with this Agreement or a defense based on the
gross negligence or willful misconduct of the Agent or any Lender), including,
without limitation, the following circumstances (subject in all cases to the
defense of payment in accordance with this Agreement or a defense based on the
gross negligence or willful misconduct of the Agent or any Lender):
(1) any lack of validity or enforceability of any of the L/C
Documents;
(2) any amendment or waiver of or any consent to depart from all
or any of the provisions of any of the L/C Documents;
(3) the existence of any claim, setoff, defense or other right
the Borrower may have at any time against a beneficiary of a Letter of
Credit or an Agent Letter of Credit (or any Person for whom a
beneficiary may be acting),
19
the Agent, any Lender or any other Person, whether in connection with
this Agreement, another L/C Document or any unrelated transaction;
(4) any statement or any other document presented under a Letter
of Credit or an Agent Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(5) payment by the Agent under a Letter of Credit or an Agent
Letter of Credit against presentation to the Agent of a draft or
certificate that does not comply with the terms of the Letter of
Credit or the Agent letter of Credit, provided that the Agent's
determination that documents presented under the Letter of Credit or
the Agent Letter of Credit comply with the terms thereof did not
constitute gross negligence or willful misconduct of the Agent; or
(6) any other act or omission to act or delay of any kind by the
Agent, any Lender or any other Person or any other event or
circumstance whatsoever that might, but for the provisions of this
Section 2.2(d), constitute a legal or equitable discharge of the
Borrower's obligations hereunder or under any L/C Document, provided
that such act or omission of the Agent did not constitute gross
negligence or willful misconduct of the Agent.
(d) The Participating Interests. Each Lender severally and not jointly
---------------------------
agrees to purchase from the Agent, and the Agent hereby agrees to sell to each
Lender, an undivided percentage participating interest, to the extent of its
Percentage, in each Letter of Credit (including Assumed Letters of Credit)
issued by, and Reimbursement Obligation owed to, the Agent in connection with a
Letter of Credit. Upon any failure by the Borrower to pay any Reimbursement
Obligation in connection with a Letter of Credit at the time required in
Sections 2.2(d) and 2.5(b), or if the Agent is required at any time to return to
the Borrower or to a trustee, receiver, liquidator, custodian or other Person
any portion of any payment by the Borrower of any Reimbursement Obligation in
connection with a Letter of Credit, the Agent shall promptly give notice of same
to each Lender, and the Agent shall have the right to require each Lender to
fund its participation in such Reimbursement Obligation. Each Lender (except
the Agent to the extent it is also a Lender) shall pay to the Agent an amount
equal to each Lender's Percentage of such unpaid or recaptured Reimbursement
Obligation not later than the Business Day it receives notice from the Agent to
such effect, if such notice is received before 2:00 p.m., or not later than the
following Business Day if such notice is received after such time. If a Lender
fails to pay timely such amount to the Agent, it shall also pay to the Agent
interest on such amount accrued from the date payment of such amount was made by
the Agent to the date of such payment by the Lender at a rate per annum equal to
the Base Rate in effect for each such day, and only after such payment shall
such Lender be entitled to receive its Percentage of each payment received on
the relevant Reimbursement Obligation and of interest paid thereon. If any such
Lender fails to pay such amount to the Agent, any payments made by the Borrower
with respect to the relevant Reimbursement Obligation shall first be applied by
the Agent to the unfunded participation in such
20
Reimbursement Obligation before any other Lenders receive any payments or
proceeds. The several obligations of the Lenders to the Agent under this Section
2.2(d) shall be absolute, irrevocable and unconditional under any and all
circumstances whatsoever and shall not be subject to any setoff, counterclaim or
defense to payment any Lender may have or have had against the Borrower, any
Guarantor, the Agent, any other Lender or any other Person whatsoever including,
but not limited to, any defense based on the failure of the demand for payment
under the Letter of Credit to conform to the terms of such Letter of Credit or
the legality, validity, regularity or enforceability of such Letter of Credit
and INCLUDING, BUT NOT LIMITED TO, THOSE RESULTING FROM THE AGENT'S OWN SIMPLE
OR CONTRIBUTORY NEGLIGENCE. Without limiting the generality of the foregoing,
such obligations shall not be affected by any Default or Event of Default or by
any subsequent reduction or termination of any Commitment of a Lender, and each
payment by a Lender under Section 2.2 shall be made without any offset,
abatement, withholding or reduction whatsoever.
Section 2.3. Term Loans. As of the Effective Date, Tuboscope Vetco has
----------
the aggregate principal amount of Term Loans (as defined in the Prior Credit
Agreement) outstanding under the Prior Credit Agreement, together with accrued
and unpaid interest thereon, listed on Schedule 2.1 (the "Assumed Term Loans").
The Borrower hereby assumes, as its direct and primary obligation, the payment
of all Assumed Term Loans evidenced by the Term Notes (as defined in the Prior
Credit Agreement) (each such loan, a "Term Loan").
Section 2.4. Types of Loans and Minimum Borrowing Amounts. Borrowings of
--------------------------------------------
both Revolving Loans, Term Loans and Agent Loans may be outstanding as either
Base Rate Loans or Eurodollar Loans, as selected by the Borrower pursuant to
Section 2.5; provided, however, that any Revolving Loans funded in Pounds or
Canadian Dollars may only be outstanding as Eurodollar Loans. Each Borrowing of
Base Rate Loans shall be in an amount of not less than $300,000 (except with
respect to Agent Loans) and each Borrowing of Eurodollar Loans shall be in an
amount of not less than $3,000,000 (except with respect to Agent Loans) (or the
equivalent thereof in Pounds or Canadian Dollars as applicable and as determined
in accordance with Section 10.19). Each Borrowing of an Agent Loan as a Base
Rate Loan shall be in an amount of less than $300,000, and each Borrowing of an
Agent Loan as a Eurodollar Loan shall be in an amount of less than $3,000,000.
Section 2.5. Manner of Borrowing. (a) Notice to the Agent. The Borrower
------------------- -------------------
shall give notice to the Agent by no later than 12:00 p.m. (i) at least three
(3) Business Days before the date on which the Borrower requests the Lenders to
advance a Borrowing of Eurodollar Loans to be funded in Dollars and at least
four (4) Business Days before the date on which the Borrower requests the
Lenders to advance a Borrowing of Eurodollar Loans in Canadian Dollars or
Pounds, and (ii) on the date the Borrower requests the Lenders to advance a
Borrowing of Base Rate Loans pursuant to a duly executed Borrowing Request. The
Borrower may select multiple Interest Periods for the Term Loans, for the Agent
Loans and for the Revolving Loans constituting any particular Borrowing,
provided that at no time shall the number of different Interest Periods for
outstanding Eurodollar Loans exceed eight (8) (it being understood for such
purposes that (x) Interest Periods of the same duration, but commencing on
different dates, shall be counted as
21
different Interest Periods and (y) all Interest Periods commencing on the same
date and of the same duration shall be counted as different Interest Periods if
Revolving Loans, Agent Loans and Term Loans are involved. The Loans included in
each Borrowing shall bear interest initially at the type of rate specified in
such new Borrowing Request with respect to such Borrowing. Thereafter, the
Borrower may from time to time elect to change or continue the type of interest
rate borne by each Borrowing or, subject to Section 2.4's minimum amount
requirement for each outstanding Borrowing, a portion thereof, as follows: (i)
if such Borrowing is of Eurodollar Loans, the Borrower may continue part or all
of such Borrowing as Eurodollar Loans for an Interest Period specified by the
Borrower or convert part or all of such Borrowing into Base Rate Loans on the
last day of the Interest Period applicable thereto, or the Borrower may earlier
convert part or all of such Borrowing into Base Rate Loans so long as they pay
the breakage fees and funding losses provided in Section 2.13, and (ii) if such
Borrowing is of Base Rate Loans, the Borrower may convert all or part of such
Borrowing into Eurodollar Loans for an Interest Period specified by the Borrower
on any Business Day. Notices of the continuation of a Borrowing of Eurodollar
Loans for an additional Interest Period or of the conversion of part or all of a
Borrowing of Eurodollar Loans into Base Rate Loans or of Base Rate Loans into
Eurodollar Loans must be given by no later than 12:00 p.m. at least three (3)
Business Days with respect to Eurodollar Loans funded in Dollars and four (4)
Business Days before such Borrowing with respect to Eurodollar Loans funded in
Canadian Dollars or Pounds, before the date of the requested continuation or
conversion. The Borrower shall give such notices concerning the advance,
continuation, or conversion of a Borrowing by telephone or facsimile (which
notice shall be irrevocable once given and, if by telephone, shall be promptly
confirmed in writing) pursuant to a Borrowing Request which shall specify the
date of the requested advance, continuation or conversion (which shall be a
Business Day), the amount and currency of the requested Borrowing, whether any
portion the requested Borrowing shall be used for funding any acquisition
pursuant to the provisions of Sections 5.5 and 6.13, the Credit under which the
Borrowing is to be advanced, continued, or converted, the type of Loans to
comprise such new, continued or converted Borrowing and, if such Borrowing is to
be comprised of Eurodollar Loans, the Interest Period applicable thereto. The
Borrower agrees that the Agent may rely on any such telephonic or facsimile
notice given by any person it in good faith believes is an authorized
representative of the Borrower without the necessity of independent
investigation and that, if any such notice by telephone conflicts with any
written confirmation, such telephonic notice shall govern if the Agent has acted
in reliance thereon. The Agent shall give prompt telephonic, telex or facsimile
notice to each Lender of any notice received pursuant to Section 2.5(a) relating
to a Borrowing under such Credit.
(b) Borrower's Failure to Notify. If the Borrower fails to give notice
----------------------------
pursuant to Section 2.5(a) of (i) the continuation or conversion of any
outstanding principal amount of a Borrowing of Eurodollar Loans or of (ii) a
Borrowing of Loans to pay outstanding Reimbursement Obligations, and has not
notified the Agent by 12:00 p.m. at least three (3) Business Days before the
last day of the Interest Period for such Borrowing of Eurodollar Loans funded in
Dollars or at least four (4) Business Days before the last day of the Interest
Period for such Borrowing of Eurodollar Loans funded in Canadian Dollars or
Pounds or the day such Reimbursement Obligation becomes due that it intends to
repay such Borrowing or such Reimbursement Obligation with funds not borrowed
hereunder, the Borrower shall be deemed to have requested, as
22
applicable, (x) the continuation of such Borrowing as a Eurodollar Loan with an
Interest Period of one (1) month, (y) the advance of a new Borrowing of Base
Rate Loans under the Revolving Credit (after converting, if necessary, the
Reimbursement Obligation into Dollars as provided in Section 10.19) on such day
in the amount of the Reimbursement Obligation then due, or (z) with respect to
Agent Loans or Agent Letters of Credit, the advance of a new Borrowing of an
Agent Loan as a Base Rate Loan under the Agent Swing Line on such day in the
amount of the Agent Reimbursement Obligation then due, which Borrowing shall be
deemed to have been funded on such day to pay the Reimbursement Obligation or
Agent Reimbursement Obligation, as the case may be, then due, in each case so
long as no Default or Event of Default shall have occurred and be continuing or
would occur as a result of such Borrowing but otherwise disregarding the
conditions to Borrowing set forth in Section 4.1. Upon the occurrence and during
the continuance of any Event of Default, (i) each Eurodollar Loan will
automatically, on the last day of the then existing Interest Period therefor,
convert into a Base Rate Loan and (ii) the obligation of the Lenders to fund
loans in Canadian Dollars or Pounds and make, continue or convert Loans into
Eurodollar Loans shall be suspended.
(c) Disbursement of Loans. Not later than 12:00 p.m. on the date of any
---------------------
requested advance of a new Borrowing of Loans, each Lender under the relevant
Credit, subject to all other provisions hereof, shall make available its Loan
comprising its ratable share of such Borrowing in funds immediately available in
New York, New York for the benefit of the Agent and according to the
disbursement instructions of the Agent. The Agent shall make the proceeds of
each such Borrowing available in immediately available funds to the Borrower on
such date. No Lender shall be responsible to the Borrower for any failure by
another Lender to fund its portion of a Borrowing, and no such failure by a
Lender shall relieve any other Lender from its obligation, if any, to fund its
portion of a Borrowing.
(d) Agent Reliance on Lender Funding. Unless the Agent shall have been
--------------------------------
notified by a Lender before the date on which such Lender is scheduled to make
payment to the Agent of the proceeds of a Loan (which notice shall be effective
upon receipt) that such Lender does not intend to make such payment, the Agent
may assume that such Lender has made such payment when due and in reliance upon
such assumption may (but shall not be required to) make available to the
Borrower the proceeds of the Loan to be made by such Lender and, if any Lender
has not in fact made such payment to the Agent, such Lender shall, on demand,
pay to the Agent the amount made available to the Borrower attributable to such
Lender together with interest thereon for each day during the period commencing
on the date such amount was made available to the Borrower and ending on (but
excluding) the date such Lender pays such amount to the Agent at a rate per
annum equal to the interest rate attributable to the relevant Loan. If such
corresponding amount is not in fact made available to the Agent by such Lender
on the date of the Borrowing, the Agent shall be entitled to recover such
corresponding amount on demand from such Lender, together with interest at its
cost of funds. If such amount is not received from such Lender by the Agent
immediately upon demand, the Borrower will, on demand, repay to the Agent the
proceeds of the Loan attributable to such Lender with interest thereon at a rate
per annum equal to the interest rate applicable to the relevant Loan.
23
Section 2.6. Interest Periods. As provided in Section 2.5(a), at the
----------------
time of each request for the advance or continuation of, or conversion into, a
Borrowing of Eurodollar Loans, the Borrower shall select an Interest Period
applicable to such Loans from among the available options subject to the
limitations in Section 2.5(a); provided, however, that:
(i) the Borrower may not select an Interest Period for a Borrowing
of Revolving Loans or Agent Loans that extend beyond the applicable
Maturity Date for Revolving Loans or Agent Loans, as the case may be;
(ii) the Borrower may not select an Interest Period for a Borrowing
of Term Loans that would end after an Amortization Date if, as a result,
the aggregate principal amount of Term Loans scheduled to be outstanding
with Interest Periods ending after such Amortization Date would exceed the
principal amount of Term Loans permitted to be outstanding after such
Amortization Date;
(iii) whenever the last day of any Interest Period would otherwise be
a day that is not a Business Day, the last day of such Interest Period
shall either be (i) extended to the next succeeding Business Day, or (ii)
reduced to the immediately preceding Business Day if the next succeeding
Business Day is in the next calendar month; and
(iv) for purposes of determining an Interest Period, a month means a
period starting on one day in a calendar month and ending on the
numerically corresponding day in the next calendar month; provided,
however, that if there is no such numerically corresponding day in the
month in which an Interest Period is to end or if an Interest Period begins
on the last Business Day of a calendar month, then such Interest Period
shall end on the last Business Day of the calendar month in which such
Interest Period is to end.
Section 2.7. Maturity of Loans. (a) Revolving Loans. Each Revolving
----------------- ---------------
Loan shall mature and become due and payable by the Borrower on the applicable
Maturity Date for Revolving Loans. Each Agent Loan shall mature and become due
and payable by the Borrower on the applicable Maturity Date for the Agent Loans.
At least ninety (90) days prior to August 6, 2000, the Borrower may provide the
Agent with a written notice requesting the Lenders to extend the Revolving
Commitment Termination Date and the Maturity Date for Revolving Loans for an
additional one (1) year period. If the Borrower shall request the Revolving
Commitment Termination Date and the Maturity Date for Revolving Loans to be
extended for an additional one (1) year period, then the Agent shall promptly
notify each Lender of such request and each Lender shall notify the Agent, not
fewer than thirty (30) days prior to the Revolving Commitment Termination Date
and the Maturity Date for the Revolving Loans, whether, in the exercise of its
sole discretion, it will extend the Revolving Commitment Termination Date and
the Maturity Date for Revolving Loans for an additional one (1) year period and,
in the event such Lender commits to such extensions but only at a lower
Commitment (each such Lender, a "Reduced Declining Lender"), such notice will
specify a proposed Total Commitment Amount and its proposed Designated
Commitment. Any Lender which shall not timely notify the Agent whether it will
extend the Revolving Commitment Termination Date and the Maturity Date for
Revolving Loans
24
shall be deemed to not have agreed to such extensions. No Lender shall have any
obligation whatsoever to extend the Revolving Commitment Termination Date and
the Maturity Date for Revolving Loans.
(b) Extension of Maturity Date for Revolving Loans. If the Lenders notify
----------------------------------------------
the Agent pursuant to Section 2.7(a) of their agreement to extend the Revolving
Commitment Termination Date and the Maturity Date for Revolving Loans (each such
Lender, an "Accepting Lender"), then the Agent shall so notify each Lender and
the Borrower, and such extensions shall be effective without other or further
action by any party hereto for such additional one-year period. If any one or
more of the Lenders shall notify or be deemed to have notified the Agent that it
will not extend the Revolving Commitment Termination Date and the Maturity Date
for Revolving Loans at the then current Total Commitment Amount (each such
Lender, a "Declining Lender"), then (i) the Agent shall promptly so notify the
Borrower and the Accepting Lenders; (ii) the Accepting Lenders shall, upon the
Borrower's election to extend the Revolving Commitment Termination Date and the
Maturity Date for Revolving Loans in accordance with clause (w), (x) or (y)
below, extend the Revolving Commitment Termination Date and the Maturity Date
for Revolving Loans; and (iii) the Borrower shall, pursuant to a notice (an
"Election Notice") delivered to the Agent, the Accepting Lenders and the
Declining Lenders not fewer than ten (10) Business Days prior to the Election
Effective Date, either:
(w) elect to extend the Revolving Commitment Termination Date and the
Maturity Date for Revolving Loans with respect to the Accepting Lenders and
direct the Declining Lenders to terminate their Commitments, which
termination shall become effective on the Election Effective Date. On such
Election Effective Date (A) the Borrower shall deliver notice of the
effectiveness of such termination to the Declining Lenders and to the
Agent, (B) the Borrower shall pay in full in immediately available funds
all Obligations of the Borrower hereunder including, without limitation,
all breakage fees provided for in Section 2.13 and all other costs, fees
and expenses payable and owing to each such Declining Lender hereunder and
otherwise cause the Declining Lenders no longer to have any liability or
obligation under or with respect to any Letter of Credit issued hereunder,
whether by termination, cancellation, expiration or amendment of all such
Letters of Credit, replacement of such Letters of Credit or otherwise, and
upon the events described in this clause (x), the Declining Lenders shall
cease to be a "Lender" hereunder for all purposes, other than for purposes
of Sections 2.13, 3.3, 8.3 and 10.15 and shall cease to have any
obligations or any Commitment hereunder, other than to the Agent pursuant
to Section 9.6 and to the Borrower pursuant to Section 10.17, and the Agent
shall promptly notify the Accepting Lenders and the Borrower of the new
Total Commitment Amount and the respective Percentages of each Accepting
Lender. So long as (A) no Default or Event of Default has occurred and is
continuing, and (B) the aggregate principal amount of the Revolving Loans
of all Lenders and other Revolving Obligations outstanding of the Borrower
do not exceed the new Revolving Credit Commitment Amount, the Agent shall
reallocate the Percentage of each Lender in the Letters of Credit issued
hereunder at such time; or
25
(x) elect to extend the Revolving Commitment Termination Date and the
Maturity Date for Revolving Loans with respect to (x) the Accepting Lenders
and (y) all of the Reduced Declining Lenders and direct any Declining
Lenders to terminate their respective Commitments, which termination shall
become effective on the Election Effective Date; provided that effective on
the Election Effective Date, the Total Commitment Amount shall be reduced
to the lower of (A) the lowest Total Commitment Amount proposed by a
Reduced Declining Lender in the notice provided pursuant to Section 2.7(a)
and (B) the aggregate of the Designated Commitments of all Accepting
Lenders and all Reduced Declining Lenders and each remaining Lender's
Percentage shall be adjusted to equal the quotient of (1) such Lender's
Designated Commitment divided by (2) the reduced Total Commitment Amount.
On such Election Effective Date, the Borrower shall pay in full, in
immediately available funds, all Obligations of the Borrower hereunder
including, without limitation, all breakage fees provided for in Section
2.13 and all other costs, fees and expenses payable to each Declining
Lender hereunder and otherwise cause such Declining Lenders no longer to
have any liability or obligation under or with respect to any Letter of
Credit issued hereunder, whether by termination, cancellation, expiration
or amendment of all such Letters of Credit, replacement of such Letters of
Credit or otherwise and pay to the Reduced Declining Lenders and the
Accepting Lenders such amounts as are necessary to cause the amounts owing
to the Reduced Declining Lenders and the Accepting Lenders to reflect their
reduced Commitments and their new Percentages thereafter; each Declining
Lender as is terminating its respective Commitments shall cease to be a
"Lender" hereunder for all purposes, other than for purposes of Sections
2.13, 3.3, 8.3 and 10.15 and shall cease to have any obligations or any
Commitment hereunder, other than to the Agent pursuant to Section 9.6 and
to the Borrower pursuant to Section 10.17; and the Agent shall promptly
notify the Accepting Lenders, the Reduced Declining Lenders and the
Borrower of the new Total Commitment Amount and the respective Percentages
of each Lender. So long as (A) no Default or Event of Default has occurred
and is continuing, and (B) the aggregate principal amount of the Revolving
Loans of all Lenders and other Revolving Obligations outstanding of the
Borrower do not exceed the new Revolving Credit Commitment Amount, the
Agent shall reallocate the Percentage of each Lender in the Letters of
Credit issued hereunder at such time; or
(y) elect to extend the Revolving Commitment Termination Date and the
Maturity Date for Revolving Loans with respect to the Accepting Lenders and
the Reduced Declining Lenders, and to replace one or more of the Reduced
Declining Lenders or the Declining Lenders effective on the Election
Effective Date, with one or more banks reasonably acceptable to the Agent;
provided that (A) if one or more Lenders shall be a Reduced Declining
Lender that is not being replaced, then effective on the Election Effective
Date, the Total Commitment Amount shall be reduced to the lower of (1) the
lowest Total Commitment Amount proposed by a Reduced Declining Lender that
is not being replaced and (2) the aggregate of the Designated Commitments
of all Accepting Lenders and the Reduced Declining Lenders that are not
being replaced; (B) on such date the Borrower shall pay in immediately
available funds to such Reduced Declining Lenders
26
that are not being replaced and to the Accepting Lenders such amounts as
are necessary to cause amounts owing to such Reduced Declining Lenders and
the Accepting Lenders to reflect their reduced Commitments and their new
Percentages thereafter; (C) the replacement banks shall purchase the Note
or Notes of the Declining Lender or Lenders being replaced and such
Declining Lender's or Lenders' rights hereunder, without recourse or
expense to, or warranty by, such Declining Lender or Lenders being replaced
for a purchase price equal to the sum of the aggregate outstanding
principal amount of the Note or Notes payable to the Declining Lender or
Lenders, such Declining Lender's or Lenders' respective Percentage of any
outstanding Reimbursement Obligations, any accrued but unpaid interest on
such Note or Notes and such Reimbursement Obligations, and any accrued but
unpaid fees in respect of such Declining Lender's or Lenders' outstanding
Borrowings and percentage of Commitments hereunder, and such replacement
banks shall assume such Declining Lender's or Lenders' respective
Percentage with respect to any outstanding Letters of Credit hereunder; (D)
all Obligations of the Borrower owing under or in connection with this
Agreement and the Credit Documents to the Declining Lender or Lenders being
replaced (including, without limitation, all breakage fees provided for in
Section 2.13 and all other costs, fees and expenses payable to each
Declining Lender hereunder) shall be paid by the Borrower in full in
immediately available funds to such Declining Lender or Lenders being
replaced concurrently with such replacement; and (E) upon the payment of
such amounts, the replacement banks shall each constitute a "Lender"
hereunder and the Declining Lenders or Lenders being replaced shall no
longer constitute a "Lender" hereunder (other than for purposes of Sections
2.13, 3.3, 8.3 and 10.17) and shall no longer have any obligations
hereunder, other than to the Agent pursuant to Section 9.6 and to the
Borrower pursuant to Section 10.17. So long as (A) no Default or Event of
Default has occurred and is continuing, and (B) the aggregate principal
amount of the Revolving Loans of all Lenders and other Revolving
Obligations outstanding of the Borrower do not exceed the new Revolving
Credit Commitment Amount, the Agent shall reallocate the Percentage of each
Lender in the Letters of Credit issued hereunder at such time; or
(z) elect to revoke and cancel the written notice requesting the
Lenders to extend the Revolving Commitment Termination Date and the
Maturity Date for Revolving Loans for an additional one (1) year period by
giving written notice of such revocation and cancellation to the Agent
(which shall promptly notify the Lenders thereof) at least ten (10)
Business Days prior to the Revolving Commitment Termination Date and the
Maturity Date for Revolving Loans.
If the Borrower fails to provide an Election Notice on or prior to the tenth
(10th) Business Day preceding the Revolving Commitment Termination Date and the
Maturity Date for Revolving Loans, the Borrower shall be deemed to have revoked
and cancelled its written notice requesting the Lenders to extend the Revolving
Commitment Termination Date and the Maturity Date for Revolving Loans for an
additional one (1) year period. Upon the election by the Borrower described in
Section 2.7(c), the Borrower shall give prompt notice to the Agent of such
election.
27
(c) Term Loans. The Borrower shall repay a portion of the Term Loans on
----------
the last Business Day of each calendar quarter (except with respect to the last
payment date which day shall be the applicable Maturity Date for Term Loans),
commencing on March 31, 1998 ("Amortization Date"), in the amount set forth
opposite such period on Schedule 2.7 (or, if less, the aggregate principal
amount of Term Loans then outstanding). The Borrower shall repay in full the
unpaid principal amount of the Term Loans on the applicable Maturity Date for
Term Loans.
Section 2.8. Applicable Interest Rates. (a) Base Rate Loans. Each Base
------------------------- ---------------
Rate Loan shall bear interest (computed on the basis of a 360-day year and
actual days elapsed excluding the date of repayment) on the unpaid principal
amount thereof from the date such Loan is made until maturity (whether by
acceleration or otherwise) or conversion to a Eurodollar Loan, at a rate per
annum equal to the lesser of (i) the Highest Lawful Rate, or (ii) the Base Rate
from time to time in effect, payable on each Interest Payment Date for such Loan
and at maturity (whether by acceleration or otherwise).
(b) Eurodollar Loans. Each Eurodollar Loan shall bear interest (computed
----------------
on the basis of a 360-day year and actual days elapsed, except with respect to
Eurodollar Loans funded in Pounds, in which case interest will be computed on
the basis of a 365-day year and actual days elapsed, in each case excluding the
date of repayment) on the unpaid principal amount thereof from the date such
Loan is made until maturity (whether by acceleration or otherwise) or conversion
to a Base Rate Loan at a rate per annum equal to the lesser of (i) the Highest
Lawful Rate, or (ii) the sum of Adjusted LIBOR Rate plus the Applicable Margin,
payable on each Interest Payment Date for such Loan and at maturity (whether by
acceleration or otherwise) or conversion to a Base Rate Loan.
(c) Rate Determinations. The Agent shall determine each interest rate
-------------------
applicable to the Loans and Reimbursement Obligations hereunder and such
determination shall be conclusive and binding except in the case of the Agent's
manifest error or willful misconduct. The Agent shall give prompt telephonic,
telex or facsimile notice to the Borrower and each Lender of the interest rate
applicable to each Loan or Reimbursement Obligation (but, if such notice is
given by telephone, the Agent shall confirm such rate in writing) promptly after
the Agent has made such determination.
Section 2.9. Default Rate. If any payment of principal on any Loan is
------------
not made when due after the expiration of the grace period therefor provided in
Section 7.1(a) (whether by acceleration or otherwise), such Loan shall bear
interest (computed on the basis of a year of 360, 365 or 366 days, as
applicable, and actual days elapsed) from the date such payment was due until
such principal then due is paid in full, payable on demand, at a rate per annum
equal to:
(a) for any Base Rate Loan the lesser of (i) the Highest Lawful Rate, or
(ii) the sum of two percent (2%) per annum plus the Base Rate from time to time
in effect (but not less than the Base Rate in effect at maturity);
28
(b) for any Eurodollar Loan the lesser of (i) the Highest Lawful Rate, or
(ii) the sum of two percent (2%) per annum plus the rate of interest in effect
thereon at the time of such default until the end of the Interest Period for
such Loan and, thereafter, at a rate per annum equal to the sum of two percent
(2%) per annum plus the Base Rate from time to time in effect (but not less than
the Base Rate in effect at maturity); and
(c) for any unpaid Reimbursement Obligations with respect to Letters of
Credit or Agent Letters of Credit, the lesser of (i) the Highest Lawful Rate, or
(ii) the sum of two percent (2%) per annum plus the Base Rate from time to time
in effect (but not less than the Base Rate in effect at maturity).
It is the intention of the Agent and the Lenders to conform strictly to usury
laws applicable to them. Accordingly, if the transactions contemplated hereby
or the Loans would be usurious as to any of the Lenders or ABN AMRO under laws
applicable to it (including the laws of the United States of America and the
State of New York or any other jurisdiction whose laws may be mandatorily
applicable to such Lender notwithstanding the other provisions of this
Agreement, the Notes or any other Credit Document), then, in that event,
notwithstanding anything to the contrary in this Agreement, the Notes or any
other Credit Document, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under laws applicable to the Lender or
ABN AMRO that is contracted for, taken, reserved, charged or received by such
Lender under this Agreement, the Notes or any other Credit Document or otherwise
shall under no circumstances exceed the Highest Lawful Rate, and any excess
shall be credited by such Lender on the principal amount of the Notes or to the
Reimbursement Obligations (or, if the principal amount of the Notes and all
Reimbursement Obligations shall have been paid in full, refunded by such Lender
or ABN AMRO to the Borrower); and (ii) in the event that the maturity of the
Notes is accelerated by reason of an election of the holder or holders thereof
resulting from any Event of Default hereunder or otherwise, or in the event of
any required or permitted prepayment, then such consideration that constitutes
interest under laws applicable to the Lender may never include more than the
Highest Lawful Rate, and excess interest, if any, provided for in this
Agreement, the Notes, any other Credit Document or otherwise shall be
automatically canceled by such Lender or ABN AMRO as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited by the
Lender or ABN AMRO on the principal amount of the Notes or to the Reimbursement
Obligations (or if the principal amount of the Notes and all Reimbursement
Obligations shall have been paid in full, refunded by such Lender or ABN AMRO to
the Borrower). The Agent and the Lenders hereby elect to determine the
applicable rate ceiling under Article 5069-1D.001 to 1D.013 of the Texas Credit
Revised Civil Statutes by the weekly rate ceiling from time to time in effect,
subject to the Agent's and the Lenders' rights subsequently to change such
method in accordance with applicable law. In the event the Loans and all
Reimbursement Obligations are paid in full by the Borrower prior to the full
stated term of the Loans and the interest received for the actual period of the
existence of the Loans exceeds the Highest Lawful Rate, the Lenders or ABN AMRO
shall refund to the Borrower the amount of the excess or shall credit the amount
of the excess against amounts owing under the Loans and none of ABN AMRO or the
Lenders shall be subject to any of the penalties provided by law for contracting
for, taking, reserving, charging or receiving interest in excess of the Highest
Lawful
29
Rate. The provisions of Chapter 346 of Tex. Finance Code Xxx. (Xxxxxx 1998),
regulating certain revolving credit accounts shall not apply to this Agreement
or any of the Notes.
Section 2.10. Optional Prepayments. The Borrower shall have the privilege
--------------------
of prepaying Base Rate Loans without premium or penalty at any time in whole or
at any time and from time to time in part (but, if in part, then in an amount
which is equal to or greater than $300,000), provided, however, that the
Borrower shall have given notice of such prepayment to the Agent no later than
12:00 p.m. on the date of such prepayment. The Borrower shall have the
privilege of prepaying Eurodollar Loans (a) without premium or penalty in whole
or in part (but, if in part, then in an amount which is equal to or greater than
$3,000,000 (or the equivalent thereof in Pounds or Canadian Dollars, as
applicable and as determined in accordance with Section 10.19)) only on the last
Business Day of an Interest Period for such Loan, and (b) at any other time so
long as the breakage fees and funding losses provided for in Section 2.13 are
paid; provided, however, that the Borrower shall have given notice of such
prepayment to the Agent no later than 12:00 p.m. at least three (3) Business
Days before the last Business Day of such Interest Period or the proposed
prepayment date. Any such prepayments shall be made by the payment of the
principal amount to be prepaid and accrued and unpaid interest thereon to the
date of such prepayment. Optional prepayments shall be applied as selected by
the Borrower to the Term Loans, the Revolving Loans and the Agent Loans. Any
optional prepayments of the Term Loans shall be applied in inverse order of
maturity and amounts prepaid under the Term Loans may not be reborrowed. Any
optional prepayments of the Revolving Loans shall be applied to the Revolving
Loans, then pro rata to the Reimbursement Obligations with respect to Letters of
Credit. Any optional prepayments of the Agent Loans shall be applied to Agent
Loans, then pro rata to the Agent Reimbursement Obligations with respect to
Agent Letters of Credit. The Borrower may direct the application of any
optional prepayment hereunder to the Base Rate Loans or Eurodollar Loans
outstanding of the type of Loans being prepaid.
Section 2.11. Mandatory Prepayments of Loans. (a) If the aggregate
------------------------------
principal amount of outstanding Revolving Loans and L/C Obligations shall at any
time for any reason exceed the Revolving Credit Commitment Amount then in
effect, the Borrower shall, immediately and without notice or demand, pay the
amount of such excess to the Agent for the ratable benefit of the Lenders as a
prepayment of the Revolving Loans and, if all Revolving Loans have been paid, a
pre-funding of Letters of Credit. If the aggregate principal amount of
outstanding Agent Loans and Agent L/C Obligations shall at any time for any
reason exceed the Agent Commitment Amount then in effect, the Borrower shall,
immediately and without notice or demand, pay the amount of such excess to the
Agent for the benefit of the Agent, as a prepayment of the Agent Loans and, if
all Agent Loans have been paid, a pre-funding of Agent Letters of Credit. Any
mandatory prepayment of Loans pursuant hereto shall not be limited by the notice
provision for prepayments set forth in Section 2.10, but immediately upon
determining the need to make any such prepayment, the Borrower shall notify the
Agent of such required prepayment. Each such prepayment shall be accompanied by
a payment of all accrued and unpaid interest on the Loans prepaid and any
applicable breakage fees and funding losses pursuant to Section 2.13.
(b) (i) Within ten (10) Business Days after receipt by the Borrower or any
of its Subsidiaries of Net Cash Proceeds from any Transfer of an asset or group
of assets (except
30
Transfers permitted by Section 6.19) with cumulative proceeds in excess of
$10,000,000 in any fiscal year, the Borrower shall make a mandatory prepayment
of the Term Loans, which mandatory prepayment shall be applied in inverse order
of maturity, in an amount equal to the Net Cash Proceeds from such Transfer, and
(ii) within ten (10) Business Days after receipt by the Borrower or any of its
Subsidiaries of the proceeds of insurance on or condemnation of any property,
the Borrower shall make a mandatory prepayment of the Term Loans of such funds,
which mandatory prepayment shall be applied in inverse order of maturity, unless
such proceeds are segregated in a special account denoted as insurance or
condemnation proceeds and used promptly for replacement or reconstruction of
such property; provided, however, the Borrower shall not be required to make the
mandatory prepayments required in (i) or (ii) above to the extent such proceeds
are reinvested in a Permitted Business within six (6) months of the receipt of
such proceeds. Amounts prepaid under the Term Loans may not be reborrowed. After
the Term Loans have been paid in full, the Borrower shall not be required to
make any further mandatory prepayments pursuant to this Section 2.11(b).
Section 2.12. The Notes. (a) The Revolving Loans outstanding to the
---------
Borrower from each Lender shall be evidenced by three promissory notes of the
Borrower payable to such Lender in the forms of Exhibits 2.12A (Dollars), 2.12B
(Pounds) and 2.12C (Canadian Dollars), respectively (each a "Revolving Note").
The Term Loans outstanding to the Borrower from each Lender shall be evidenced
by a single promissory note of the Borrower payable to such Lender in the form
of Exhibit 2.12D (each a "Term Note"). The Agent Revolving Loans outstanding to
the Borrower from ABN AMRO shall be evidenced by a single promissory note of the
Borrower payable to ABN AMRO in the form of Exhibit 2.12E (the "Agent Note").
(b) Each holder of a Note shall record on its books and records or on a
schedule to its appropriate Note the amount of each Loan outstanding from it to
the Borrower, all payments of principal and interest and the principal balance
from time to time outstanding thereon, the type of such Loan and, if a
Eurodollar Loan, the Interest Period and interest rate applicable thereto. Such
record, whether shown on the books and records of a holder of a Note or on a
schedule to its Note, shall be prima facie evidence as to all such matters;
provided, however, that the failure of any holder to record any of the foregoing
or any error in any such record shall not limit or otherwise affect the
obligation of the Borrower to repay all Loans outstanding to it hereunder
together with accrued interest thereon. At the request of any holder of a Note
and upon such holder tendering to the Borrower the Note to be replaced, the
Borrower shall furnish a new Note to such holder to replace any outstanding Note
and at such time the first notation appearing on the schedule on the reverse
side of, or attached to, such new Note shall set forth the aggregate unpaid
principal amount of all Loans, if any, then outstanding thereon.
Section 2.13. Breakage Fees. If any Lender incurs any loss, cost or
-------------
expense (including, without limitation, any loss, cost, expense or premium
incurred by reason of the liquidation or re-employment of deposits or other
funds acquired by such Lender to fund or maintain any Eurodollar Loan or the
relending or reinvesting of such deposits or amounts paid or prepaid to such
Lender) as a result of any of the following events other than any such
occurrence as a result of a change of circumstance described in Sections 8.1 or
8.2:
31
(i) any payment, prepayment or conversion of a Eurodollar Loan on a date
other than the last day of its Interest Period (whether by acceleration,
mandatory prepayment or otherwise);
(ii) any failure to make a principal payment of a Eurodollar Loan on the
due date therefor; or
(iii) any failure by the Borrower to borrow, continue, prepay or
convert to a Eurodollar Loan on the date specified in a notice given pursuant to
Section 2.5(a),
then the Borrower shall pay to such Lender such amount as will reimburse such
Lender for such loss, cost or expense. If any Lender makes such a claim for
compensation, it shall provide to the Borrower a certificate executed by an
officer of such Lender setting forth the amount of such loss, cost or expense in
reasonable detail (including an explanation of the basis for and the computation
of such loss, cost or expense), and the amounts shown on such certificate shall
be conclusive and binding absent manifest error. Within ten (10) days of
receipt of such certificate, the Borrower shall pay directly to such Lender such
amount as will compensate such Lender for such loss, cost or expense as provided
herein.
Section 2.14. Commitment Terminations. The Borrower shall have the right
-----------------------
at any time and from time to time, upon five (5) Business Days' prior and
irrevocable written notice to the Agent, to terminate or reduce the Revolving
Credit Commitments (including the Multicurrency Funding Limit) without premium
or penalty, in whole or in part, any partial termination to be (i) in an amount
not less than $5,000,000 as determined by the Borrower and in integral multiples
of $5,000,000, and (ii) allocated ratably among the Lenders in proportion to
their respective Revolving Credit Commitments; provided that the Revolving
Credit Commitment Amount may not be reduced to an amount less than the sum of
the aggregate principal amount of outstanding Revolving Loans plus the aggregate
undrawn face amount of outstanding Letters of Credit plus any unpaid
Reimbursement Obligations with respect to Letters of Credit, and the L/C
Commitment Amount may not be reduced to an amount less than the aggregate
undrawn face amount of outstanding Letters of Credit plus any unpaid
Reimbursement Obligations with respect to Letters of Credit, in each case after
converting, if necessary, any such outstanding Obligations to Dollars in
accordance with Section 10.19 and after giving effect to payments on such
proposed termination or reduction date, unless the Borrower provide to the Agent
cash collateral in an amount sufficient to cover such shortage or back to back
letters of credit from a bank whose long-term senior unsecured debt rating is
rated A or above from either S&P or Xxxxx'x or such other bank satisfactory to
the Majority Lenders in an amount equal to the undrawn face amount of any
applicable outstanding Letters of Credit with an expiration date of at least
five (5) days after the expiration date of any applicable Letter of Credit and
which provide that the Agent may make a drawing thereunder in the event that it
pays a drawing under such Letter of Credit. The Agent shall give prompt notice
to each Lender of any such termination of the Revolving Credit Commitments. Any
termination of Revolving Credit Commitments pursuant to this Section 2.14 is
permanent and may not be reinstated. The Borrower shall have the right at any
time and from time to time, upon five (5) Business Days' prior and irrevocable
written notice to ABN AMRO, to terminate or reduce the Agent Credit Commitment
without premium or penalty, in whole or in part; provided that the Agent
Commitment Amount may not be reduced to an amount less than the
32
sum of the aggregate principal amount of outstanding Agent Loans plus the
aggregate undrawn face amount of outstanding Agent Letters of Credit plus any
unpaid Agent Reimbursement Obligations with respect to Agent Letters of Credit.
Any termination of Agent Credit Commitment pursuant to this Section 2.14 is
permanent and may not be reinstated.
Section 2.15. Acknowledgment. The Borrower and the Lenders acknowledge
--------------
and agree that the Obligations under this Agreement shall be pari passu and of
equal rank and preference in any proceeding to the Indebtedness related to the
Public Debt Issue.
SECTION 3. FEES AND PAYMENTS.
Section 3.1. Fees. (a) Commitment Fee. For the period from the
---- --------------
Effective Date to and including the Revolving Commitment Termination Date with
respect to the Revolving Credit Commitment Amount, the Borrower shall pay (i) to
the Agent for the ratable account of the Lenders, a commitment fee (computed on
a basis of a 360-day year and actual days elapsed) on an amount equal to the
average daily difference between the Revolving Credit Commitment Amount and the
outstanding Revolving Obligations, and (ii) to ABN AMRO for its own account, a
commitment fee (computed on a basis of 360-day year and actual days elapsed) on
an amount equal to the average daily difference between the Agent Commitment
Amount and the outstanding Agent Revolving Obligations, such commitment fees to
be calculated, for any day, at such times as the relevant Total Funded Debt to
Total Capital Ratio is in one of the following ranges, based upon the percentage
per annum set forth opposite such Total Funded Debt to Total Capital Ratio set
forth below times such amount:
Total Funded Debt to Total Capital Ratio Commitment Fee
---------------------------------------- --------------
Less than 30% 0.175%
Equal to or greater than 30% 0.200%
but less than 35%
Equal to or greater than 35% 0.250%
but less than 37.5%
Equal to or greater than 37.5% 0.250%
but less than 40%
Equal to or greater than 40% 0.250%
but less than 45%
Equal to or greater than 45% 0.375%
For the period from the Effective Date through the date the Borrower is to
provide the Agent with the financial statements for the fiscal year ending
December 31, 1997, as required by Section 6.7(a)(ii), the commitment fees shall
be calculated as provided above based upon a commitment fee percentage of 0.250%
per annum. Such fees shall be payable in arrears commencing on March 31, 1998,
and on the last Business Day of each calendar quarter thereafter and on the
Maturity Date for Revolving Loans and the Maturity Date for Agent Loans, as
applicable, unless the Revolving Credit Commitment or the Agent Credit
Commitment, as the case may be, is terminated in whole on an earlier date, in
which event the commitment fee with respect thereto for the period
33
to but not including the date of such termination shall be paid in whole on the
date of such termination. Any change to the commitment fee as a result of a
change in the Total Funded Debt to Total Capital Ratio shall be effective as of
the date provided in the definition of Applicable Margin.
(b) Letter of Credit Fees. Commencing upon the date of issuance or
---------------------
extension of any Letter of Credit or Agent Letter of Credit, the Borrower shall
pay to the Agent quarterly in advance (pro rated, if necessary for any portion
of such quarter) (i) for the ratable account of the Lenders and (ii) to the
Agent for its own account, as the case may be, a non-refundable fee equal to the
greater of (x) $500, or (y) the face amount of such Letter of Credit or Agent
Letter of Credit times the Applicable Margin, calculated in each case on the
basis of a 360-day year and actual days elapsed and based on the then scheduled
expiration date of the Letter of Credit or the Agent Letter of Credit, as the
case may be. Thereafter, such fees shall be payable by the Borrower in advance
on the last Business Day of each calendar quarter of each year commencing with
the next succeeding calendar quarter, with the last such payment on the date any
such Letter of Credit or Agent Letter of Credit expires. The fees paid
quarterly in advance for Assumed Letters of Credit and Assumed Agent Letters of
Credit under the Prior Credit Agreement shall be carried forward under this
Agreement, such that the first such fees payable by the Borrower under this
Agreement for such Assumed Letters of Credit and Assumed Agent Letters of Credit
shall be on March 31, 1998. For any Letter of Credit issued with a face amount
in Pounds or Canadian Dollars, the fees shall be converted into Dollars in
accordance with Section 10.19 as of two (2) days before the issuance date
thereof, and thereafter five (5) days before any fee with respect thereto shall
be due and payable hereunder. In addition, the Borrower shall pay to the Agent
solely for the Agent's account, in connection with each Letter of Credit or
Agent Letter of Credit, administrative and amendment fees and expenses for
letters of credit established by the Agent from time to time and as agreed
between the Agent and the Borrower.
(c) Agent Fees. The Borrower shall pay to each of the Agent and the
----------
Syndication Agent the fees agreed to between the Agent and the Borrower and the
Syndication Agent and the Borrower pursuant to the Fee Letters, and any other
fees from time to time agreed to by the Borrower and the Agent or the
Syndication Agent.
Section 3.2. Place and Application of Payments. (a) All payments of
---------------------------------
principal of and interest on the Loans, the Reimbursement Obligations, and all
other amounts payable by the Borrower under the Credit Documents shall be made
by the Borrower to the Agent by no later than 1:30 p.m. on the due date thereof
at the office of the Agent in New York, New York (or such other location as the
Agent may designate to the Borrower) for the benefit of the Lenders entitled to
such payments. Any payments received by the Agent from the Borrower after 1:30
p.m. shall be deemed to have been received on the next Business Day. If the
Borrower does not, or is unable for any reason to, effect payment of a Revolving
Loan or Reimbursement Obligation to the Lenders in the applicable currency or if
the Borrower shall default in the payment when due of any payment in such
currency, the Lenders may, at their option, require such payment to be made to
the Lenders in the Dollar equivalent of such currency determined in accordance
with Section 10.20. With respect to any amount due and payable in Pounds or
Canadian Dollars, the Borrower agrees to hold the Lenders harmless from any
losses incurred by the Lenders arising from any
34
change in the value of Dollars in relation to such currency between the date
such payment became due and the date of payment thereof. The Agent will, on the
same day each payment is received, cause to be distributed like funds in like
currency to each Lender owed an Obligation for which such payment was received,
pro rata based on the respective amounts of such type of Obligation then owing
to each Lender.
(b) If any payment received by the Agent under any Credit Document
(including from the proceeds of Collateral) is insufficient to pay in full all
amounts then due and payable to the Agent and the Lenders under the Credit
Documents, such payment shall be distributed by the Agent and applied by the
Agent and the Lenders in the order set forth in Section 7.7. In calculating the
amount of Obligations owing each Lender other than for principal and interest on
Loans and Reimbursement Obligations and fees under Section 3.1, the Agent shall
only be required to include such other Obligations that Lenders have certified
to the Agent in writing are due to such Lenders.
Section 3.3. Withholding Taxes. (a) Payments Free of Withholding.
----------------- ----------------------------
Except as otherwise required by law and subject to Section 3.3(b), each payment
by the Borrower or any Guarantor to the Agent or any Lender under this Agreement
or any other Credit Document shall be made without withholding for or on account
of any present or future taxes (other than overall net income taxes on the
recipient) imposed by or within the jurisdiction in which the Borrower or such
Guarantor is domiciled, any jurisdiction from which the Borrower or such
Guarantor makes any payment, or (in each case) any political subdivision or
taxing authority thereof or therein, excluding, in the case of each Lender and
the Agent, taxes, assessments or other governmental charges:
(i) imposed on, based upon, or measured by its income, and branch profits,
franchise and similar taxes imposed on it, by any jurisdiction in which the
Agent or such Lender, as the case may be, is incorporated or maintains its
principal place of business or Lending Office or which subjects the Agent
or such Lender to tax by reason of a connection between the taxing
jurisdiction and the Agent or such Lender (other than a connection
resulting from the transactions contemplated by this Agreement);
(ii) imposed as a result of a connection between the taxing jurisdiction
and the Agent or such Lender, as the case may be, other than a connection
resulting from the transactions contemplated by this Agreement;
(iii) imposed as a result of the transfer by such Lender of its interest
in this Agreement or any other Credit Document or a designation by such
Lender (other than pursuant to Section 3.3(d) hereof) of a new Lending
Office (other than taxes imposed as a result of any change in treaty, law
or regulation after such transfer of the Lender's interest in this
Agreement or any Credit Document or designation of a new Lending Office);
(iv) imposed by the United States of America upon a Lender organized under
the laws of a jurisdiction outside of the United States, except to the
extent that such tax is imposed or increased as a result of any change in
applicable law, regulation or treaty (other than any addition of or change
in any "anti-treaty shopping," "limitation of benefits," or similar
35
provision applicable to a treaty) after the date hereof, in the case of
each Lender originally a party hereto or, in the case of any Purchasing
Lender (as defined in Section 10.12), after the date on which it becomes a
Lender;
(v) which would not have been imposed but for (a) the failure of the Agent
or any Lender, as the case may be, to provide (x) an Internal Revenue
Service Form 1001 or 4224, as the case may be, or any substitute or
successor form prescribed by the Internal Revenue Service pursuant to
Section 3.3(b) below, or (y) any other certification, documentation or
proof which is reasonably requested by the Borrower, or (b) a determination
by a taxing authority or a court of competent jurisdiction that a
certification, documentation or other proof provided by such Lender or the
Agent to establish an exemption from such tax, assessment or other
governmental charge is false
(all such non-excluded taxes, assessments or other governmental charges and
liabilities being hereinafter referred to as "Indemnified Taxes"). If any such
withholding is so required, the Borrower or such Guarantor, as applicable, shall
make the withholding, pay the amount withheld to the appropriate governmental
authority before penalties attach thereto or interest accrues thereon and
forthwith pay such additional amount as may be necessary to ensure that the net
amount actually received by the Agent and each Lender is free and clear of such
Indemnified Taxes (including Indemnified Taxes on such additional amount) and is
equal to the amount that the Agent or such Lender (as the case may be) would
have received had such withholding not been made. If the Agent or any Lender
pays any amount in respect of any Indemnified Taxes, penalties or interest, the
Borrower or such Guarantor, as applicable, shall reimburse the Agent or that
Lender for the payment on demand in the currency in which such payment was made.
If the Borrower or such Guarantor pays any Indemnified Taxes, penalties or
interest, it shall deliver official tax receipts evidencing the payment or
certified copies thereof, or other satisfactory evidence of payment if such tax
receipts have not yet been received by the Borrower or such Guarantor (with such
tax receipts to be promptly delivered when actually received), to the Agent or
the Lender on whose account such withholding was made (with a copy to the Agent
if not the recipient of the original) within fifteen (15) days of such payment.
(b) U.S. Withholding Tax Exemptions. Each Lender that is not a United
-------------------------------
States person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Borrower and the Agent on or before the Effective Date, two duly
completed and signed copies of either Form 1001 (entitling such Lender to a
complete exemption from withholding under the Code on all amounts to be received
by such Lender, including fees, pursuant to the Credit Documents) or Form 4224
(relating to all amounts to be received by such Lender, including fees, pursuant
to the Credit Documents) of the Internal Revenue Service. Thereafter and from
time to time, each Lender shall submit to the Borrower and the Agent such
additional duly completed and signed copies of one or the other of such forms
(or such successor forms as shall be adopted from time to time by the relevant
United States taxing authorities) as may be (i) notified by the Borrower,
directly or through the Agent, to such Lender, and (ii) required under then-
current United States law or regulations to avoid United States withholding
taxes on payments in respect of all amounts to be received by such Lender,
including fees, pursuant to the Credit Documents. Upon the request of
36
the Borrower, each Lender that is a United States person shall submit to the
Borrower a certificate to the effect that it is such a United States person.
(c) Inability of Lender to Submit Forms. If any Lender determines, as a
-----------------------------------
result of any change in applicable law, regulation or treaty, or in any official
application or interpretation thereof, that it is unable to submit to the
Borrower or the Agent any form or certificate that such Lender is obligated to
submit pursuant to Section 3.3(b) or that such Lender is required to withdraw or
cancel any such form or certificate previously submitted or any such form or
certificate otherwise becomes ineffective or inaccurate, such Lender shall
promptly notify the Borrower and the Agent of such fact and the Lender shall to
that extent not be obligated to provide any such form or certificate and will be
entitled to withdraw or cancel any affected form or certificate, as applicable.
(d) Refund of Taxes. If any Lender or the Agent receives a refund of any
---------------
Indemnified Tax or any tax referred to in Section 10.3 with respect to which the
Borrower or any Guarantor has paid any amount pursuant to this Section 3.3 or
Section 10.3, such Lender or the Agent shall pay the amount of such refund
(including any interest received with respect thereto) to the Borrower or such
Guarantor.
SECTION 4. CONDITIONS.
Section 4.1. Conditions Precedent to all Borrowings. In the case of each
--------------------------------------
advance of a Borrowing hereunder (including the issuance of, increase in the
amount of, or extension of the expiration date of, a Letter of Credit or Agent
Letter of Credit:
(a) Notices. In the case of a Borrowing, the Agent shall have received the
-------
Borrowing Request required by Section 2.5, and in the case of the issuance,
extension or increase of Letter of Credit or Agent Letter of Credit, the Agent
shall have received a duly completed Borrowing Request and Application for such
Letter of Credit or Agent Letter of Credit, as the case may be, meeting the
requirements of Section 2.2;
(b) Warranties True and Correct. Each of the representations and
---------------------------
warranties of the Borrower and its Subsidiaries set forth herein and in the
Credit Documents shall be true and correct in all material respects as of the
time of such new Borrowing, except as a result of the transactions expressly
permitted hereunder or thereunder and except to the extent that any such
representation or warranty relates solely to an earlier date, in which case it
shall have been true and correct in all material respects as of such earlier
date;
(c) No Default. No Default or Event of Default shall have occurred and be
----------
continuing or would occur as a result of such Borrowing;
(d) New Litigation and Changes in Pending Litigation. Except as set forth
------------------------------------------------
in Schedule 5.4, no litigation (including, without limitation, derivative
actions), arbitration proceedings or governmental proceedings shall be pending
or known to be threatened against the Borrower or any of its Subsidiaries or any
Unrestricted Subsidiary, which could reasonably be expected to have a
37
Material Adverse Effect; and no material development (whether or not disclosed)
shall have occurred in any litigation (including, without limitation, derivative
actions), arbitration proceedings or governmental proceedings so disclosed,
which could reasonably be expected to have a Material Adverse Effect;
(e) Regulation U; Other Laws. The Borrowings to be made by the Borrower
------------------------
shall not result in the Borrower or any Lender being in non-compliance with or
in violation of Regulation U and shall not be prohibited by any other legal
requirement (including Regulations G, T and X) imposed by the banking laws of
the United States of America, and shall not otherwise subject the Lenders to a
penalty or other onerous conditions under or pursuant to any legal requirement;
and
(f) Material Adverse Change. There has occurred no event or effect that
-----------------------
has had or could reasonably be expected to have a Material Adverse Effect.
Each request for the advance of a Borrowing and each request for the issuance
of, increase in the amount of, or extension of the expiration date of, a Letter
of Credit or an Agent Letter of Credit shall be deemed to be a representation
and warranty by the Borrower on the date of such Borrowing, or issuance of,
increase in the amount of, or extension of the expiration date of, such Letter
of Credit or Agent Letter of Credit, as the case may be, (a) that all conditions
precedent to such Borrowing have been satisfied or fulfilled unless the Borrower
give to the Lenders written notice to the contrary, in which case none of the
Lenders shall be required to fund such advances and the Agent shall not be
required to issue, increase the amount of or extend the expiration date of such
Letter of Credit unless the Majority Lenders shall have previously waived in
writing such non-compliance. In the event that any of the conditions specified
in Section 4.1(c) are not satisfied, the Borrower may not convert any Base Rate
Loan into a Eurodollar Loan or continue any Eurodollar Loan and may only convert
or continue any Eurodollar Loan into or as a Base Rate Loan, subject to the
applicability of the provisions of Section 2.8 regarding default rates of
interest. Further, in such case, any Eurodollar Loan which has not been
accelerated pursuant to the terms hereof shall automatically convert into a Base
Rate Loan at the end of the applicable Interest Period unless prior to time, the
conditions specified in Section 4.1(c) shall have been satisfied or waived
pursuant to the terms hereof.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to each Lender and the Agent as
follows:
Section 5.1. Corporate Organization. (a) The Borrower and each of its
----------------------
Material Subsidiaries: (i) is a duly organized and existing corporation (or
other Person) in good standing under the laws of the jurisdiction of its
organization; (ii) has all necessary corporate power (or comparable power, in
the case of a Material Subsidiary that is not a corporation) to own the property
and assets it uses in its business and otherwise to carry on its present
business and the business it currently proposes to transact; and (iii) is duly
licensed or qualified and in good standing in each jurisdiction in which the
nature of the business transacted by it or the nature of the property owned or
leased by it makes such licensing or qualification necessary except where
38
the failure to be so licensed or qualified or to be in good standing, as the
case may be, could not reasonably be expected to have a Material Adverse Effect.
(b) As of the Effective Date, the Borrower has no Subsidiaries other than
the Subsidiaries listed on Schedule 5.1. Schedule 5.1 correctly sets forth, as
of the Effective Date, the percentage ownership (direct and indirect) of the
Borrower in each class of capital stock of each of its Subsidiaries and also
identifies the direct owner thereof.
Section 5.2. Corporate Power and Authority; Validity. Each Credit Party
---------------------------------------
has the corporate power and authority to execute, deliver and carry out the
terms and provisions of the Credit Documents to which it is a party and has
taken all necessary corporate action (or comparable action, in the case of a
Credit Party that is not a corporation) to authorize the execution, delivery and
performance of such Credit Documents. Each Credit Party has duly executed and
delivered each Credit Document to which it is a party and each such Credit
Document constitutes the legal, valid and binding obligation of such Credit
Party enforceable in accordance with its terms, subject as to enforcement only
to bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally.
Section 5.3. No Violation. Neither the execution, delivery nor
------------
performance (to the best of their knowledge) by any Credit Party of the Credit
Documents to which it is a party nor compliance by it with the terms and
provisions thereof, nor the consummation by it of the transactions contemplated
herein or therein, will (i) contravene any applicable provision of any law,
statute, rule or regulation, or any applicable order, writ, injunction or decree
of any court or governmental instrumentality, (ii) conflict with or result in
any breach of any term, covenant, condition or other provision of, or constitute
a default under, or result in the creation or imposition of (or the obligation
to create or impose) any Lien other than any Permitted Lien upon any of the
property or assets of the Borrower or any of its Subsidiaries under the terms of
any contractual obligation to which the Borrower or any of its Subsidiaries is a
party or by which they or any of their properties or assets are bound or to
which they may be subject, or (iii) violate or conflict with any provision of
the Certificate or Articles of Incorporation or By-laws of the Borrower or any
of its Subsidiaries.
Section 5.4. Litigation. There are no actions, suits or proceedings
----------
(including, without limitation, derivative or injunctive actions) pending or, to
the best knowledge of the Borrower, threatened, involving the Borrower or any of
its Subsidiaries that could reasonably be expected to have a Material Adverse
Effect, except as set forth in Schedule 5.4.
Section 5.5. Use of Proceeds; Margin Regulations. (a) The proceeds of
-----------------------------------
the Revolving Credit and the Agent Swing Line may be used to (i) provide working
capital, including the issuance of Letters of Credit and Agent Letters of
Credit, and otherwise for general corporate purposes, and (ii) for Acquisitions
as provided herein.
(b) Neither the Borrower, nor any of its Subsidiaries is engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock. No proceeds of any Loan
39
will be used to purchase or carry any "margin stock" (as defined in Regulation U
of the Board of Governors of the Federal Reserve System), to extend credit for
the purpose of purchasing or carrying any "margin stock," or for a purpose which
violates Regulations G, T, U or X of the Board of Governors of the Federal
Reserve System.
Section 5.6. Investment Company Act. Neither the Borrower nor any of its
----------------------
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
Section 5.7. Public Utility Holding Company Act. Neither the Borrower
----------------------------------
nor any of its Subsidiaries is a "holding company," or a "subsidiary company" of
a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
Section 5.8. True and Complete Disclosure. All factual information
----------------------------
heretofore or contemporaneously furnished by the Borrower or any of its Material
Subsidiaries in writing to the Agent or any Lender in connection with any Credit
Document or any transaction contemplated therein is, and all other such factual
information hereafter furnished by any such Persons in writing to the Agent or
any Lender in connection herewith, any of the other Credit Documents, the Loans
or the Collateral will be, true and accurate in all material respects, taken as
a whole, on the date of such information and not incomplete by omitting to state
any material fact necessary to make the information therein not misleading at
such time in light of the circumstances under which such information was
provided. The Agent and each Lender acknowledges that the projections
heretofore or hereafter furnished by the Borrower or any of its Material
Subsidiaries in writing to the Agent or any Lender will be accurate and correct,
to the best of such entity's knowledge, without guaranteeing the results of such
projections.
Section 5.9. Financial Statements. The financial statements heretofore
--------------------
delivered to the Lenders for the Borrower's fiscal year ending December 31,
1996, and the Borrower's fiscal quarters ending March 31, June 30, and September
30, 1997, have been prepared in accordance with GAAP applied on a basis
consistent, except as otherwise noted therein, with that of such entity for the
previous fiscal year, and (ii) for periods ending on or after December 31, 1997,
will be prepared in accordance with GAAP applied on a basis consistent with the
Borrower's financial statements for the previous fiscal quarter or year, as the
case may be, except as otherwise noted therein. Each of such annual and
quarterly financial statements fairly presents on a consolidated basis the
financial position of the Borrower as of the dates thereof, and the results of
operations for the periods covered thereby, subject in the case of interim
financial statements, to normal year-end audit adjustments and omission of
certain footnotes as permitted by the SEC. The Borrower and its Subsidiaries,
taken as a whole, have no material contingent liabilities or Indebtedness other
than those disclosed in the financial statements referred to in this Section
5.9.
Section 5.10. No Material Adverse Change. There has occurred no event or
--------------------------
effect that has had, or to the best knowledge of the Borrower could reasonably
be expected to have, a Material Adverse Effect.
40
Section 5.11. Labor Controversies. There are no labor controversies
-------------------
pending or, to the best knowledge of the Borrower, threatened against the
Borrower or any of its Subsidiaries that could reasonably be foreseen to have a
Material Adverse Effect.
Section 5.12. Taxes. The Borrower and its Subsidiaries have filed all
-----
United States federal tax returns and all other tax returns required to be
filed, whether in the United States or in any foreign jurisdiction, and have
paid all governmental taxes, rates, assessments, fees, charges and levies
(collectively, "Taxes") except such Taxes, if any, as are being contested in
good faith and for which reserves have been provided in accordance with GAAP.
No tax liens have been filed and no claims are being asserted for Taxes, which
liens or claims could reasonably be foreseen to have a Material Adverse Effect.
The charges, accruals and reserves on the books of the Borrower and its
Subsidiaries for Taxes and other governmental charges have been determined in
accordance with GAAP.
Section 5.13. ERISA. With respect to each Plan, the Borrower and its
-----
Subsidiaries have fulfilled their obligations under the minimum funding
standards of, and are in compliance in all material respects with, ERISA and
with the Code to the extent applicable to it, and have not incurred any
liability under Title IV of ERISA to the PBGC or a Plan other than a liability
to the PBGC for premiums under Section 4007 of ERISA except as described in
reasonable detail in Schedule 5.13. Neither the Borrower nor any of its
Subsidiaries has any contingent liability with respect to any post-retirement
benefits under a welfare plan as defined in ERISA, other than liability for
continuation coverage described in Part 6 of Title I of ERISA and as disclosed
in the financial statements of the Borrower for the fiscal quarter ending
September 30, 1997, described in Section 5.9.
Section 5.14. Consents. At the time of consummation thereof, all consents
--------
and approvals of, and filings and registrations with, and all other actions of,
all governmental agencies, authorities or instrumentalities required to
consummate the Borrowings hereunder have been obtained or made and are or will
be in full force and effect.
Section 5.15. Capitalization. Except as disclosed on Schedule 5.15, all
--------------
outstanding shares of the Borrower and its Material Subsidiaries have been duly
and validly issued, are fully paid and nonassessable. Except as disclosed on
Schedule 5.15, neither the Borrower nor any Material Subsidiary has outstanding
any securities convertible into or exchangeable for its capital stock or
outstanding any rights to subscribe for or to purchase, or any options for the
purchase of, or any agreement providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to,
its capital stock.
Section 5.16. Intellectual Property. Except as disclosed on Schedule
---------------------
5.16, the Borrower and its Material Subsidiaries own or hold valid licenses to
use all the material patents, trademarks, permits, service marks, and trade
names free of any burdensome restrictions, that are necessary to the operation
of the business of the Borrower and its Material Subsidiaries as presently
conducted.
41
Section 5.17. Ownership of Property. The Borrower and each domestic
---------------------
Material Subsidiary has good and marketable title to or a valid leasehold
interest in all of its property and good title to, or a valid leasehold interest
in, all of its other property, and each foreign Material Subsidiary owns or has
a valid leasehold interest in all of its property and owns or has a valid
leasehold interest in, all of its other properties, in each case, except to the
extent, in the aggregate, no Material Adverse Effect could reasonably be
expected to result therefrom, subject to no Liens except Permitted Liens.
Section 5.18. Compliance with Statutes, Etc. The Borrower and its
-----------------------------
Subsidiaries are in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic and foreign, with respect to the conduct of their businesses and the
ownership of their properties, except for such instances of non-compliance as
could not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect.
Section 5.19. Environmental Matters. (a) Except as described in Schedule
---------------------
5.19, the Borrower and its Subsidiaries have complied in all material respects
with, and on the date of each Borrowing will be in compliance in all material
respects with, all applicable Environmental Laws and the requirements of any
permits issued under such Environmental Laws. To the best knowledge of the
Borrower, there are no pending, past or threatened Environmental Claims against
the Borrower or any of its Subsidiaries or any property owned or operated by the
Borrower or any of its Subsidiaries except as described in Schedule 5.19. To
the best knowledge of the Borrower, except as disclosed on Schedule 5.19, there
are no conditions or occurrences on any property owned or operated by the
Borrower or any of its Subsidiaries or on any property adjoining or in the
vicinity of any such property that could reasonably be expected (i) to form the
basis of an Environmental Claim against the Borrower or any of its Subsidiaries
or any property owned or operated by the Borrower or any of its Subsidiaries
that individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect, or (ii) to cause any such property to be subject to any
material restrictions on the ownership, occupancy, use or transferability of
such property by the Borrower or any of its Subsidiaries under any applicable
Environmental Law.
(b) Except as disclosed on Schedule 5.19 and except as could not reasonably
be expected to have a Material Adverse Effect or to materially impair the
ability of the Borrower or any of the Guarantors to perform their respective
Obligations under this Agreement, the Notes, or the Credit Documents to which
they are a party, to the best knowledge of the Borrower (i) Hazardous Materials
have not at any time been generated, used, treated or stored on, or transported
to or from, any property owned or operated by the Borrower or any of its
Subsidiaries in a manner that has violated or could reasonably be expected to
violate any Environmental Law, and (ii) Hazardous Materials have not at any time
been released on or from any property owned or operated by the Borrower or any
of its Subsidiaries.
Section 5.20. Existing Indebtedness. Schedule 5.20 contains a complete
---------------------
list of all Indebtedness (other than the Obligations hereunder and Indebtedness
permitted by Section 6.16(c) through (m)) of the Borrower and its Subsidiaries
on the Effective Date in each case showing the aggregate principal amount
thereof, the name of the respective borrower and any other entity
42
which directly or indirectly guaranteed such Indebtedness and the scheduled
payments of such Indebtedness.
SECTION 6. COVENANTS.
The Borrower covenants and agrees that, so long as any Note, Letter of
Credit, Agent Letter of Credit, Reimbursement Obligation or any other Obligation
is outstanding or any Commitment or Agent Credit Commitment is outstanding
hereunder:
Section 6.1. Corporate Existence. The Borrower and its Material
-------------------
Subsidiaries will preserve and maintain their existence except (i) for the
dissolution of any Material Subsidiaries whose assets are transferred to the
Borrower or any of its Material Subsidiaries, (ii) as otherwise expressly
permitted herein, and (iii) that any Subsidiary which is not a Guarantor or a
direct foreign Subsidiary of the Borrower may be dissolved and/or liquidated.
Section 6.2. Maintenance. The Borrower and its Material Subsidiaries
-----------
will maintain, preserve and keep its plants, properties and equipment necessary
to the proper conduct of its business in reasonably good repair, working order
and condition (normal wear and tear excepted) and will from time to time make
all reasonably necessary repairs, renewals, replacements, additions and
betterments thereto so that at all times such plants, properties and equipment
are reasonably preserved and maintained; provided, however, that nothing in this
Section 6.2 shall prevent the Borrower or any of its Subsidiaries from
discontinuing the operation or maintenance of any such plants, properties or
equipment if such discontinuance is, in the judgment of the Borrower or any of
its Subsidiaries, as applicable, desirable in the conduct of their businesses
and not materially disadvantageous to the Lenders.
Section 6.3. Taxes. The Borrower and its Material Subsidiaries will duly
-----
pay and discharge all Taxes upon or against it or its properties before payment
is delinquent and before penalties accrue thereon, unless and to the extent that
the same is being contested in good faith and by appropriate proceedings and
reserves have been established in conformity with GAAP.
Section 6.4. ERISA. The Borrower and its Subsidiaries will promptly pay
-----
and discharge all obligations and liabilities arising under ERISA or otherwise
with respect to each Plan of a character which if unpaid or unperformed might
result in the imposition of a material Lien against any properties or assets of
the Borrower and its Subsidiaries and will promptly notify the Agent of (i) the
occurrence of any reportable event (as defined in ERISA) relating to a Plan
(other than a multi-employer plan, as defined in ERISA, so long as the event
thereunder cannot reasonably be foreseen to have a Material Adverse Effect on
the Borrower or any of its Subsidiaries), other than any such event with respect
to which the PBGC has waived notice by regulation; (ii) receipt of any notice
from PBGC of its intention to seek termination of any Plan or appointment of a
trustee therefor; (iii) the Borrower's or any of its Subsidiaries' intention to
terminate or withdraw from any Plan; and (iv) the occurrence of any event that
could result in the incurrence of any material liability, fine or penalty, or
any material increase in the contingent liability of the Borrower or any of its
Subsidiaries, in connection with any post-retirement benefit under a welfare
plan benefit (as defined in ERISA). The Borrower will also promptly notify the
Agent of (i) any
43
material contributions to any Foreign Plan that have not been made by the
required due date for such contribution if such default could reasonably be
expected to have a Material Adverse Effect; (ii) any Foreign Plan that is not
funded to the extent required by the law of the jurisdiction whose law governs
such Foreign Plan based on the actuarial assumptions reasonably used at any time
if such underfunding (together with any penalties likely to result) could
reasonably be expected to have a Material Adverse Effect; and (iii) any material
change anticipated to any Foreign Plan that could reasonably be expected to have
a Material Adverse Effect.
Section 6.5. Burdensome Restrictions, Etc. Promptly upon the existence
-----------------------------
or occurrence thereof, the Borrower shall give to the Agent written notice of
the existence or occurrence of (i) any contractual obligation or the adoption of
any new requirement of law which could reasonably be expected to have a Material
Adverse Effect, and (ii) the existence or occurrence of any strike, slow down or
work stoppage which could reasonably be expected to have a Material Adverse
Effect.
Section 6.6. Insurance. The Borrower and its Material Subsidiaries will
---------
maintain or cause to be maintained with responsible insurance companies,
insurance against any loss or damage to all insurable property and assets owned
by it, such insurance to be of a character and in or in excess of such amounts
as are customarily maintained by well-insured companies similarly situated and
operating like property or assets (subject to self-insured retentions), all of
which policies shall provide that no policy shall terminate without at least
thirty (30) days' advance written notice to the Agent and be reasonably
acceptable to the Agent. The Borrower and its Material Subsidiaries will also
insure employers' and public and product liability risks with responsible
insurance companies, all as reasonably acceptable to the Agent. The Borrower
will on or before March 31st of each calendar year and upon the request of the
Agent, furnish a certificate from an officer of the Borrower setting forth the
nature and extent of the insurance maintained pursuant to this Section 6.6.
Section 6.7. Financial Reports and Other Information. (a) The Borrower
---------------------------------------
and its Subsidiaries and the Unrestricted Subsidiaries will maintain a system of
accounting in such manner as will enable preparation of financial statements in
accordance with GAAP and will furnish to the Lenders and their respective
authorized representatives such information about the business and financial
condition of the Borrower and its Subsidiaries and the Unrestricted Subsidiaries
as any Lender may reasonably request; and, without any request, will furnish to
the Agent:
(i) within forty-five (45) days after the end of each of the first
three (3) fiscal quarters of each fiscal year of the Borrower, the
consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as at the end of such fiscal quarter and the related
consolidated and consolidating statements of income and retained earnings
and of cash flows for such fiscal quarter and for the portion of the fiscal
year ended with the last day of such fiscal quarter, all of which shall be
in reasonable detail and in the case of consolidated statements in the form
filed with the SEC, and certified by the chief financial officer of the
Borrower that they fairly present the financial condition of the Borrower
and its Subsidiaries as of the dates indicated and the results of their
operations and changes in their cash flows for the periods indicated and
that they have been prepared in accordance
44
with GAAP, in each case, subject to normal year-end audit adjustments and
omission of any footnotes as permitted by the SEC;
(ii) within ninety (90) days after the end of each fiscal year of the
Borrower, the consolidated and consolidating balance sheets of the Borrower
and its Subsidiaries as at the end of such fiscal year and the related
consolidated and consolidating statements of income and retained earnings
and of cash flows for such fiscal year and setting forth consolidated
comparative figures for the preceding fiscal year and comparable budgeted
figures for such fiscal year and certified by the chief financial officer
of the Borrower, to the effect that such statements fairly present the
financial condition of the Borrower and its Subsidiaries as of the dates
indicated and the results of their operations and changes in their cash
flows, and in the case of the consolidated statements, audited by an
independent nationally-recognized accounting firm acceptable to the Agent
and in the form filed with the SEC;
(iii) promptly after presentation to the Board of Directors of the
Borrower, a projection for such year or the next year, as applicable, of
the Borrower's and its Subsidiaries' consolidated balance sheet and
consolidated income, retained earnings and cash flows showing such
projected budget for each fiscal quarter of the Borrower and its
Subsidiaries ending during such year or the next year, as applicable, and
for the Borrower's and its Subsidiaries' fiscal year-to-date at the end of
each fiscal quarter; and
(iv) within ten (10) days after the sending or filing thereof, copies
of all financial statements, projections, documents and other
communications that the Borrower sends to its stockholders or files with
the SEC or any similar governmental authority.
The Agent will forward promptly to the Lenders the information provided by the
Borrower pursuant to (i) through (iv) above.
(b) Each financial statement furnished to the Lenders pursuant to
subsections (i) and (ii) of Section 6.7(a) shall be in a form which shall
contain calculations (i) excluding the effects of any Unrestricted Subsidiaries,
(ii) separately stating all information required by such subsections for all
Unrestricted Subsidiaries, (iii) separately stating any eliminations used in
order to calculate the consolidated balance sheet, and (iv) stating aggregated
figures matching the consolidated statements of the Borrower in the form filed
with the SEC. Each such financial statement shall also be accompanied by (i) a
written certificate signed by the Borrower's chief financial officer, in his
capacity as such, to the effect that (x) no Default or Event of Default has
occurred during the period covered by such statements or, if any such Default or
Event of Default has occurred during such period, setting forth a description of
such Default or Event of Default and specifying the action, if any, taken by the
Borrower to remedy the same, and (y) the representations and warranties
contained herein are true and correct in all material respects as though made on
the date of such certificate, except to the extent that any such representation
or warranty relates solely to an earlier date, in which case it was true and
correct as of such earlier date and except as otherwise described therein, as a
result of the transactions expressly permitted hereunder or as previously
disclosed to the Lenders, and (ii) a Compliance Certificate in the form of
Exhibit 6.7 showing the Borrower's compliance with the covenants set forth
herein. Together
45
with the financial statements required pursuant to subsections (i) and (ii) of
Section 6.7(a), the Borrower shall furnish to the Lenders a certificate of the
chief financial officer of the Borrower reporting all Transfers of assets
effected by the Borrower and its Subsidiaries during the fiscal year covered by
such financial statements, including the asset value of such assets and the
amounts received by the Borrower and its Subsidiaries with respect to such
Transfers, and such other information regarding such transactions as the Agent
may reasonably request.
(c) Each projection furnished to the Lenders pursuant to subsection (iii)
of Section 6.7(a) shall be accompanied by a written certificate signed by the
Borrower's chief financial officer, in his capacity as such, to the effect that
(i) it has been prepared on the basis of the Borrower's historical financial
statements and records, and (ii) it reflects the reasonable assumptions of the
Borrower's management as to the matters set forth therein.
(d) Promptly upon receipt thereof, the Borrower will provide the Agent with
a copy of each report or "management letter" submitted to the Borrower, any of
its Material Subsidiaries or any Unrestricted Subsidiary by its independent
accountants or auditors in connection with any annual, interim or special audit
made by them of the books and records of the Borrower, any of its Material
Subsidiaries or any Unrestricted Subsidiary.
(e) Promptly after obtaining knowledge of any of the following, the
Borrower will provide the Agent with written notice in reasonable detail of:
(i) any pending or threatened material Environmental Claim against the
Borrower, any of its Subsidiaries or any Unrestricted Subsidiary or any
property owned or operated by the Borrower, any of its Subsidiaries or any
Unrestricted Subsidiary;
(ii) any condition or occurrence on any property owned or operated by
the Borrower, any of its Subsidiaries or any Unrestricted Subsidiary that
results in material noncompliance by the Borrower, any of its Subsidiaries
or any Unrestricted Subsidiary with any Environmental Law;
(iii) the taking of any material removal or remedial action in
response to the actual or alleged presence of any Hazardous Material on any
property owned or operated by the Borrower, any of its Subsidiaries or any
Unrestricted Subsidiary.
In addition, the Borrower shall provide the Agent with copies of all
Environmental Claims and responses thereto by the Borrower, any of its
Subsidiaries or any Unrestricted Subsidiary and any reports or data submitted to
any governmental agency relating to an Environmental Claim, and such detailed
reports of and material communications with any Person concerning any
Environmental Claim as may reasonably be requested by the Agent.
(f) The Borrower will promptly and in any event, within five (5) days after
an officer of the Borrower has knowledge thereof, give written notice to the
Agent of (who will in turn provide notice to the Lenders thereof): (i) any
pending or threatened litigation against the Borrower, any of its Subsidiaries
or any Unrestricted Subsidiary asserting any claim or claims
46
against any of same in excess of $5,000,000 in the aggregate; (ii) the
occurrence of any mandatory prepayment event, Default, Event of Default or
default or event of default under the Subordinated Indenture; (iii) any
litigation or governmental proceeding of the type described in Section 5.4; (iv)
any circumstance that has had or reasonably threatens a Material Adverse Effect;
and (v) any event which would result in a breach of, or reasonably threatens a
breach of, Sections 6.22, 6.23 or 6.24.
Section 6.8. Lender Inspection Rights. Upon reasonable notice from the
------------------------
Agent or any Lender, the Borrower will permit the Agent or any Lender (and such
Persons as the Agent or such Lender may designate) during normal business hours
following reasonable notice to visit and inspect any of the properties of the
Borrower, any of its Subsidiaries or any Unrestricted Subsidiary, to examine all
of their books and records, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants (and by this provision
the Borrower each authorize such accountants to discuss with the Agent and any
Lender (and such Persons as the Agent or such Lender may designate) the affairs,
finances and accounts of the Borrower and its Subsidiaries), all at such
reasonable times and as often as may be reasonably requested. Any such
inspection shall be at the expense of the Borrower up to one (1) time a year,
and if conducted any more frequently, at the expense of the Agent or the Lender
conducting such inspection unless a Default or Event of Default shall have
occurred and be continuing, in which event such inspection shall be at the
expense of the Borrower.
Section 6.9. Conduct of Business. Except as expressly permitted herein,
-------------------
the Borrower and its Material Subsidiaries will not engage in any line of
business other than the oilfield services and oilfield equipment manufacturing
businesses and except for the application of acquired, existing and developed
technologies to industries and markets outside of such business (each, a
"Permitted Business").
Section 6.10. Interest Rate Protection. The Borrower will maintain
------------------------
protection against increases in interest rates pursuant to one or more Interest
Rate Protection Agreements on at least fifty percent (50%) of the outstanding
balance of the Term Loans until August 6, 1999. If ABN AMRO or a Lender is the
counterparty to an Interest Rate Protection Agreement, any obligations of the
Borrower thereunder shall be secured pari passu by the Stock Pledge Agreements,
if any, and cross defaulted.
Section 6.11. New Subsidiaries; Foreign Subsidiaries. (a) The Borrower
--------------------------------------
will cause any direct or indirect domestic Subsidiary of the Borrower (i) which
Subsidiary is formed or acquired after the Effective Date and which is a
Material Subsidiary, or (ii) which Subsidiary becomes a Material Subsidiary
after the Effective Date, to become a Guarantor with respect to, and jointly and
severally liable with all other Guarantors for, all of the obligations under
this Agreement and the Notes within thirty (30) days following such formation or
acquisition pursuant to a Subsidiary Guaranty substantially in the form of
Exhibit 10.2A hereto. The Borrower will cause the capital stock of any foreign
Material Subsidiary to be owned at all times directly by it or by a domestic
Subsidiary of the Borrower which shall be a Guarantor hereunder. The Borrower
shall pledge all of the capital stock owned by it of, but in no event more than
sixty-six percent (66%) of the capital
47
stock, of any foreign Subsidiary which is a direct Material Subsidiary or which
becomes a direct Material Subsidiary of the Borrower after the Effective Date
pursuant to a Stock Pledge Agreement, and any certificates representing such
stock, together with stock powers duly executed in blank, or such other
documentation as necessary to perfect the pledge of such stock shall be
delivered to the Agent within thirty (30) days following such formation or
acquisition.
Section 6.12. Limitation on Certain Restrictions on Subsidiaries;
---------------------------------------------------
Dividends; Negative Pledges. (a) The Borrower and its Subsidiaries will not,
---------------------------
directly or indirectly, create or otherwise permit to exist or become effective
any restriction on the ability of any of their Subsidiaries to (i) pay dividends
or make any other distributions on its capital stock, or any other interest or
participation in its profits, owned by the Borrower or pay any Indebtedness owed
to the Borrower, or (ii) make loans or advances to the Borrower or any of its
Subsidiaries, except in either case for restrictions existing under or by reason
of applicable law, this Agreement and the other Credit Documents or in the
Public Debt Issue documents and except for any restrictions existing in
connection with any Subsidiary acquired by the Borrower after the Effective
Date, in which case the Borrower shall either promptly cause the removal or
release of any such restrictions or not advance the proceeds of any Loan to such
Subsidiary even if otherwise permitted by this Agreement.
(b) The Borrower and it Subsidiaries shall not redeem, purchase or
otherwise acquire any shares of its capital stock other than as permitted
herein, or declare or pay any dividends on its capital stock, make any
distribution or payment to stockholders, or set aside any funds for such
purpose, except: (i) the Borrower may redeem, purchase or otherwise acquire its
capital stock or declare and pay dividends on its capital stock so long as it
maintains (after giving effect to any such redemption, purchase or acquisition
or the payment of any such distribution or dividend) a ratio of Total Funded
Debt to Total Capital of no greater than 40%, provided that the Borrower may
redeem, purchase or otherwise acquire its capital stock in an aggregate amount
of up to $15,000,000 during the period from January 1, 1998, through December
31, 1998; (ii) any Subsidiary of the Borrowers may declare and pay dividends or
make distributions to the Borrowers and make payments to the Borrowers on any
obligations or liabilities, including Indebtedness, owing to any of the
Borrowers; (iii) scheduled interest payments may be made on the Public Debt
Issue; (iv) any Subsidiary of the Borrower may make payments to the Borrower for
all reasonable amounts owing to the Borrower in the ordinary course of business
for the Borrower's and their Subsidiaries' pro rata share of such ordinary
course items as insurance, taxes and professional fees and expenses, provided
that such ordinary course items are incurred in compliance with the arm's length
requirements of Section 6.20 and (v) capital stock of the Borrower may be
purchased (or the purchase thereof funded) or otherwise acquired by the Borrower
or its Subsidiaries for any Code Section 401(K) plan, Code Section 423 plan or
Plan of the Borrower or any of its Subsidiaries; in each case so long as no
Default or Event of Default shall have occurred and be continuing or would occur
as a result of such redemption, purchase, acquisition or payment.
(c) The Borrower and its Subsidiaries shall not enter into any agreement
other than this Agreement, the Credit Documents and the Public Debt Issue
documents prohibiting the creation or assumption of any Lien upon its
properties, revenues or assets, whether now owned or hereafter acquired (except
in connection with any Permitted Liens described in Section 6.15(e), (f) or (g),
48
or prohibiting or restricting the ability of the Borrower or any of its
Subsidiaries to amend or otherwise modify this Agreement or any Credit Document.
Section 6.13. Restrictions on Fundamental Changes. Neither the Borrower
-----------------------------------
nor any of its Subsidiaries shall be a party to any merger into or consolidation
with, or purchase or otherwise acquire all or substantially all of the assets or
stock of, any other Person, or sell all or substantially all of its assets or
stock, except:
(a) the Borrower or any of its Subsidiaries may merge into or consolidate
with, or purchase or otherwise acquire all or substantially all of the assets or
stock of any other Person if upon the consummation of any such merger,
consolidation, purchase or acquisition, (i) the Borrower or such Subsidiary is
the surviving corporation to any such merger or consolidation (or the other
Person will thereby become a Subsidiary); (ii) Sections 6.11 and 6.12(a) are
complied with to the extent applicable; (iii) the Borrower or such Subsidiary
has the power and authority under the pertinent agreement and under applicable
law to subject the assets of such acquired Person to the provisions of this
Agreement and such assets are so subjected to the provisions of this Agreement;
(iv) the nature of the business of such acquired Person is a Permitted Business;
(v) such merger, consolidation, purchase or Acquisition is non-hostile in
nature; (vi) the Borrower shall have delivered to the Agent within ten (10)
Business Days prior to the consummation of any Acquisition a report signed by an
executive officer of the Borrower in the form of Exhibit 6.13 which shall
contain a certification that the purchase price of such Acquisition does not
exceed $40,000,000 and which shall contain calculations demonstrating on a pro
forma basis (x) the Borrower's compliance with Section 6.23 (such calculation to
include pro forma Indebtedness incurred or assumed in connection with such
Acquisition) and Section 6.24 and (y) that the ratio of EBITDA to Consolidated
Interest Expense plus all dividends paid by the Borrower as permitted herein
shall not be less than 3:0 to 1:0 immediately after the consummation of such
Acquisition (such calculations to use historical EBITDA and dividends paid for
the prior twelve (12)-month period except for (i) the normalization of
dividends, distributions or bonuses to any prior owner and of corporate overhead
costs that will not recur after the Acquisition date, and (2) any appropriate
adjustments for non-GAAP reporting and such calculations to include pro forma
interest expense for the following twelve (12)-month period with respect to any
Indebtedness incurred or assumed in connection with such Acquisition) all as
reasonably satisfactory to the Agent; and (vii) no Default or Event of Default
shall have occurred and be continuing or would otherwise be existing as a result
of such merger, consolidation, purchase or acquisition;
(b) the Borrower may purchase or otherwise acquire all or substantially all
of the stock or assets of, or otherwise acquire by merger or consolidation, any
Subsidiary; and any Subsidiary may merge into, or consolidate with, or purchase
or otherwise acquire all or substantially all of the assets or stock of or sell
all or substantially all of their assets or stock to, any other Subsidiary or
the Borrower; in each case so long as (i) if the transaction is with the
Borrower, the Borrower shall be the surviving entity to any such merger or
consolidation, (ii) Sections 6.11 and 6.12(a) are complied with to the extent
applicable, and (iii) no Default or Event of Default shall have occurred and be
continuing or would otherwise be existing after or result from such merger,
consolidation, purchase or acquisition; provided however (x) no domestic
Material Subsidiary may sell all or substantially all of its assets to a foreign
Subsidiary, or merge into or consolidate with
49
any foreign Subsidiary unless the domestic Material Subsidiary shall be the
surviving corporation; and (y) no direct foreign Material Subsidiary may sell
all or substantially all of its assets to an indirect foreign Subsidiary, or
merge into or consolidate with any indirect foreign Subsidiary, unless the
direct foreign Material Subsidiary shall be the surviving corporation or unless
the aggregate amount of all such sales, or the assets of any such direct foreign
Material Subsidiaries so merged or consolidated into an indirect foreign
Subsidiary, as the case may be, during the term of this Agreement shall not
exceed $20,000,000 (in each case valued at fair market value as determined by
the Borrower with the consent of the Agent, which consent shall not be
unreasonably withheld); and
(c) any majority ownership of the Borrower or any of its Subsidiaries in a
foreign joint venture or foreign Subsidiary may decrease to a minority ownership
as necessary to comply with any foreign law or other requirements to doing
business in such foreign jurisdiction; and
(d) any other Transfers permitted hereunder.
Except as otherwise permitted in this Section 6.13, (i) the Borrower shall not
issue, sell or dispose of any capital stock of any Material Subsidiaries and
(ii) neither the Borrower nor any of its Subsidiaries shall issue, sell or
dispose of any capital stock of any other Subsidiary unless the Net Cash
Proceeds are made as a prepayment of the Term Loans pursuant to Section 2.11.
Section 6.14. Environmental Laws. The Borrower and its Subsidiaries shall
------------------
comply with all Environmental Laws applicable to or affecting the properties or
business operations of the Borrower or any of its Subsidiaries except as could
not reasonably be expected to have a Material Adverse Effect.
Section 6.15. Liens. The Borrower shall not create, incur, assume or
-----
suffer to exist any Lien of any kind on any property or asset of any kind of the
Borrower or any of its Subsidiaries, except the following (collectively, the
"Permitted Liens"):
(a) Liens arising in the ordinary course of business by operation of law in
connection with workers' compensation, unemployment insurance, old age benefits,
social security obligations, taxes, assessments, statutory obligations or other
similar charges, good faith deposits, pledges or other Liens in connection with
(or to obtain letters of credit in connection with) bids, performance bonds,
contracts or leases to which the Borrower or its Subsidiaries are a party or
other deposits required to be made in the ordinary course of business; provided
that in each case the obligation secured is not for Indebtedness and is not
overdue or, if overdue, is being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP have been provided therefor;
(b) mechanics', workmen, materialmen, landlords', carriers' or other
similar Liens arising in the ordinary course of business (or deposits to obtain
the release of such Liens) related to obligations not due or, if due, that are
being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP have been provided therefor;
50
(c) Inchoate Liens under ERISA and liens for Taxes not yet due or which are
being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP have been provided therefor;
(d) Liens arising out of judgments or awards against the Borrower or any of
its Subsidiaries, or in connection with surety or appeal bonds or the like in
connection with bonding such judgments or awards, the time for appeal from which
or petition for rehearing of which shall not have expired or for which the
Borrower or such Subsidiary shall be prosecuting on appeal or proceeding for
review, and for which it shall have obtained a stay of execution or the like
pending such appeal or proceeding for review; provided that the aggregate amount
of uninsured or underinsured liabilities (including interest, costs, fees and
penalties, if any) of the Borrower and its Subsidiaries secured by such Liens
shall not exceed $5,000,000 at any one time outstanding and provided further
that there is adequate assurance, in the sole discretion of the Majority Lenders
that the insurance proceeds attributable thereto shall be paid promptly upon the
expiration of such time period or resolution of such proceeding if necessary to
remove such Liens;
(e) Liens securing Indebtedness permitted by Sections 6.16(f);
(f) Liens securing indebtedness permitted by Section 6.16(n) and to the
extent included in Section 6.16(n), Section 6.16(l), up to an aggregate amount
of $20,000,000, provided that such Liens do not encumber cash, deposit accounts,
Cash Equivalents, accounts receivable, stock or interests in the Borrower or any
of its Subsidiaries (including, without limitation, Collateral), or any other
Investments permitted hereunder;
(g) Liens existing on the date hereof and listed on Schedule 6.15;
(h) any extension, renewal or replacement (or successive extensions,
renewals or replacements) in whole or in part of any Lien referred to in the
foregoing subsections (e) through (g), provided, however, that the principal
amount of Indebtedness secured thereby does not exceed the principal amount
secured at the time of such extension, renewal or replacement and such
extension, renewal or replacement is limited to the property already subject to
the Lien so extended, renewed or replaced;
(i) Liens on property (other than Collateral) securing Indebtedness
aggregating no greater than $1,000,000, with no one Lien securing Indebtedness
in an amount greater than $500,000, provided the Borrower causes the release or
bonding around of any such Liens within thirty (30) days of the attachment of
any such Lien;
(j) Liens created by any Credit Documents;
(k) rights reserved to or vested in any municipality or governmental,
statutory or public authority by the terms of any right, power, franchise,
grant, license or permit, or by any provision of law, to terminate such right,
power, franchise, grant, license or permit or to purchase, condemn, expropriate
or recapture or to designate a purchaser of any of the property of a Person;
51
(l) rights reserved to or vested in any municipality or governmental,
statutory or public authority to control, regulate or use any property of a
Person;
(m) rights of a common owner of any interest in property held by a Person
and such common owner as tenants in common or through other common ownership;
(n) encumbrances (other than to secure the payment of Indebtedness),
easements, restrictions, servitudes, permits, conditions, covenants, exceptions
or reservations in any property or rights-of-way of a Person for the purpose of
roads, pipelines, transmission lines, transportation lines, distribution lines,
removal of gas, oil, coal, metals, steam, minerals, timber or other natural
resources, and other like purposes, or for the joint or common use of real
property, rights-of-way, facilities or equipment, or defects, irregularity and
deficiencies in title of any property or rights-of-way;
(o) zoning, planning and Environmental Laws and ordinances and municipal
regulations;
(p) financing statements filed by lessors of property (but only with
respect to the property so leased) and Liens under any conditional sale or title
retention agreements entered into in the ordinary course of business;
(q) Liens of no greater than $500,000 in the aggregate on the assets (other
than Collateral) of any Subsidiary;
(r) rights of lessees of equipment owned by the Borrower or any of its
Subsidiaries; and
(s) Liens on the stock or assets of Unrestricted Subsidiaries.
Section 6.16. Indebtedness. The Borrower and its Subsidiaries shall not
------------
contract, assume or suffer to exist any Indebtedness, except:
(a) Indebtedness under the Credit Documents;
(b) existing Indebtedness outstanding on the Effective Date and listed on
Schedule 5.20, and any subsequent extensions, renewals or refinancings thereof
so long as such Indebtedness is not increased in amount, the maturity date
thereof is not made earlier in time, the interest rate per annum applicable
thereto is not increased, any amortization of principal thereunder is not
shortened and the payments thereunder are not increased;
(c) Indebtedness under any Interest Rate Protection Agreements entered into
to protect the Borrower against fluctuations in interest rates on Obligations
under the Loans;
(d) Indebtedness incurred in connection with the Liens permitted by Section
6.15 (other than Section 6.15(f));
52
(e) Capitalized Lease Obligations;
(f) purchase money Indebtedness on assets acquired, but only if such
Indebtedness does not exceed eighty percent (80%) of the purchase price of such
assets and the aggregate amount of such Indebtedness does not exceed $2,000,000
at any one time outstanding;
(g) unsecured intercompany loans and advances from the Borrower to any of
its Subsidiaries or from any of its Subsidiaries to the Borrower or any other
such Subsidiaries except as expressly restricted hereunder;
(h) Indebtedness under unsecured foreign exchange futures agreements,
arrangements or options designed to protect against fluctuations in currency
exchange rates from time to time entered into not for speculative purposes and
in accordance with customary industry practice;
(i) Indebtedness under unsecured overdraft lines of credit; provided that
the aggregate amount of such Indebtedness shall not exceed $10,000,000 at any
time outstanding;
(j) Indebtedness of Unrestricted Subsidiaries, provided that, the obligee
thereof has no recourse of any nature (including, but not limited to, as a
result of a performance or payment Guaranty) to the Borrower or any of its
Subsidiaries;
(k) unsecured Indebtedness assumed or seller financing incurred in
connection with an Acquisition; provided that such Indebtedness is subordinated
to the Obligations hereunder on terms and conditions reasonably satisfactory to
the Agent; and provided further that such seller financing may be secured
provided that such secured seller financing shall be included as other
Indebtedness under Section 6.16(m) and not this Section 6.16(k);
(l) Indebtedness under the Public Debt Issue and any unsecured Guaranties
of such Indebtedness by any Guarantor, provided that no optional redemptions or
other prepayments can be made thereof prior to the repayment of all Obligations,
the expiration of all Letters of Credit and the termination of all Commitments,
the payment of such Indebtedness may not be guaranteed by any Subsidiary of the
Borrower which is not a Guarantor hereunder and the terms and provisions of any
Guaranties of such Indebtedness shall be no more onerous than the terms and
provisions of the Subsidiary Guaranties; and
(m) other Indebtedness not otherwise covered by this Section 6.16 not to
exceed $20,000,000 at any time outstanding; provided that the terms and
conditions of such Indebtedness are no more onerous than the terms and
conditions of the Obligations hereunder and no payments or prepayments can be
made thereon so long as a Default or Event of Default shall have occurred and be
continuing hereunder.
Section 6.17. Advances, Investments and Loans. The Borrower and its
-------------------------------
Subsidiaries shall not lend money or make advances to any Person, or purchase or
acquire any stock, indebtedness, obligations or securities of, or any other
interest in, or make any capital contribution to, any Person (any of the
foregoing, an "Investment") except:
53
(a) Investments in Cash Equivalents and deposit accounts;
(b) receivables owing to the Borrower or its Subsidiaries created or
acquired in the ordinary course of business and payable on customary trade terms
of the Borrower or such Subsidiary and in compliance with the arm's-length
requirements of Section 6.20;
(c) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising in the
ordinary course of business;
(d) Interest Rate Protection Agreements entered into in compliance with
Section 6.16(d);
(e) deposits made in the ordinary course of business consistent with past
practices to secure the performance of leases;
(f) unsecured intercompany loans, advances and capital contributions from
the Borrower to any of its Subsidiaries from any of its Subsidiaries to the
Borrower or any other such Subsidiaries except as expressly restricted
hereunder;
(g) loans and advances by the Borrower and its Subsidiaries to employees of
the Borrower and its Subsidiaries for (i) short-term loans in an aggregate
amount of no greater than $500,000 at any one time outstanding and in an amount
no greater than $50,000 for any Person, (ii) moving and travel expenses and
other similar expenses; in each case incurred in the ordinary course of
business, and (iii) loans in an aggregate amount of no greater than $2,500,000
for purchases of stock of the Borrower by officers of the Borrower or its
Subsidiaries;
(h) joint ventures between any foreign Subsidiary of the Borrower and any
other Person;
(i) the purchase of stock in, or an investment by a foreign Subsidiary of
the Borrower in, an insurance company for the purpose of obtaining credit and
political risk insurance for export sales;
(j) the purchase or acquisition of stock in the Borrower for a Code Section
401K plan, Code Section 423 plan or Plan of the Borrower or any of its
Subsidiaries;
(k) as permitted by Sections 6.12 or 6.13; and
(l) Investments in Unrestricted Subsidiaries and Investments in minority
interests in entities engaged primarily in a Permitted Business, provided that
none of the Borrower or its Subsidiaries shall be liable for any Indebtedness or
other obligations of any of such Unrestricted Subsidiaries or entities and all
such Investments (including any future required capital contributions) do not
exceed in the aggregate $10,000,000 at any time outstanding, the value of such
Investments if not made in cash to be agreed upon by the Borrower and the Agent
at the time of such Investment, or, if required by the Agent, to be determined
by a third party appraiser to
54
be agreed upon by the Borrower and the Agent (or selected by the Agent if such
agreement is not reached).
Section 6.18. Modifications of Corporate Documents. The Borrower nor any
------------------------------------
of its Subsidiaries shall amend, modify or change in any way materially adverse
to the interests of the Lenders, its Certificate or Articles of Incorporation or
By-laws or other comparable corporate governance documents or any agreement
entered into by it related to its capital stock (including any shareholders'
agreement), or enter into any new agreement related to its capital stock;
provided that the Borrower may adopt poison pill provisions in the exercise of
its business judgment. The Borrower shall not amend or modify, or permit the
amendment or modification of, any provision of the Public Debt Issue or any
Guaranty of the Public Debt Issue in any way adverse to the interests of the
Lenders.
Section 6.19. Transfer of Assets. The Borrower and its Subsidiaries shall
------------------
not permit any Transfer of an asset of the Borrower or any of its Subsidiaries
except:
(a) Transfers of inventory and mill equipment and other assets in the
ordinary course of business;
(b) the discounting and sale of trade accounts receivable of foreign
account debtors of the Borrower and such Subsidiaries consistent with the
Borrower's and such Subsidiaries' past practice and in the ordinary course of
their businesses;
(c) the retirement or replacement of assets in the ordinary course of
business;
(d) Transfers of any assets among the Borrower or any of its Subsidiaries,
provided that, except as otherwise permitted hereunder (i) a domestic Subsidiary
may not Transfer any assets to a foreign Subsidiary, except for any obsolete
assets or assets not used by such domestic Subsidiary and which assets shall be
used by the foreign Subsidiary in the ordinary course of its business; and (ii)
a domestic Material Subsidiary may not Transfer any assets to a foreign
Subsidiary which is not a direct Material Subsidiary of the Borrower, except for
any assets to be used by such indirect foreign Subsidiary in the ordinary course
of its business and as advisable to perform a contract or services in a
particular geographical area and except as provided in Section 6.13(b);
(e) any Transfers permitted by Sections 6.12 or 6.13;
(f) the Transfers of any assets not otherwise covered by this Section 6.19
(including the sale and leaseback of assets) generating Net Cash Proceeds of up
to an aggregate of $1,000,000 per fiscal year; provided that Transfers of assets
generating Net Cash Proceeds of an aggregate amount greater than $1,000,000 per
fiscal year may be made so long as a mandatory prepayment of such Net Cash
Proceeds is made pursuant to the provisions of Section 2.11;
(g) the Liens permitted by Section 6.15; and
55
(h) the sale and license back of licenses, patents or other intellectual
property.
Section 6.20. Transactions with Affiliates. Except as otherwise
----------------------------
specifically permitted herein, the Borrower and its Subsidiaries shall not enter
into or be a party to any material transaction or arrangement or series of
related transactions or arrangements which in the aggregate would be material
with any Affiliate of such Person, including without limitation, the purchase
from, sale to or exchange of property with, any merger or consolidation with or
into, or the rendering of any service by or for, any Affiliate, except pursuant
to the reasonable requirements of such entity's business and upon fair and
reasonable terms no less favorable to such entity than would be able to be
obtained in a comparable arm's-length transaction with a Person other than an
Affiliate.
Section 6.21. Compliance with Laws. Without limiting any of the other
--------------------
covenants of the Borrower and its Subsidiaries in this Section 6, the Borrower
and its Subsidiaries shall conduct their businesses and otherwise be, in
compliance with all applicable laws, regulations, ordinances and orders of any
governmental or judicial authorities; provided, however, that this Section 6.21
shall not require the Borrower or any of its Subsidiaries to comply with any
such law, regulation, ordinance or order if (i) it shall be contesting such law,
regulation, ordinance or order in good faith by appropriate proceedings and
reserves in conformity with GAAP have been provided therefor, or (ii) the
failure to comply therewith could not reasonably be expected to have a Material
Adverse Effect.
Section 6.22. Interest Coverage Ratio. The Borrower will not permit the
-----------------------
Interest Coverage Ratio at any time to be less than 2:5 to 1:0.
Section 6.23. Total Funded Debt to Total Capital Ratio. The Borrower will
----------------------------------------
maintain a ratio of Total Funded Debt to Total Capital of (i) no greater than
50% during the period from the Effective Date through December 31, 1997, (ii) no
greater than 45% during the period from January 1, 1998 through December 31,
1998, and (iii) no greater than 40% during the period from January 1, 1999,
until the final Maturity Date for all Loans.
Section 6.24. Minimum Consolidated Net Worth. The Borrower will maintain
------------------------------
a minimum Consolidated Net Worth of not less than the Minimum Amount. The term
"Minimum Amount" means, as of any date of determination, an amount equal to the
sum of (i) $191,992,000 plus (ii) for each full fiscal year ended prior to (but
not on) such date of determination, commencing for the fiscal year ended on
December 31, 1997, an amount equal to 50% of Consolidated Net Income for such
full fiscal year, if positive, plus (iii) for the fiscal year during which such
date of determination falls, an amount equal to 75% of the amount of any equity
issuance by the Borrower, including a secondary offering or where equity is used
to acquire another entity in an Acquisition, plus (iv) 80% of the stockholders
equity of any entity acquired in an Acquisition for which the Borrower uses the
pooling of interest method of accounting in accordance with GAAP.
SECTION 7. EVENTS OF DEFAULT AND REMEDIES.
56
Section 7.1. Events of Default. Any one or more of the following shall
-----------------
constitute an Event of Default:
(a) default by the Borrower in the payment of the principal amount of any
Loan, any Reimbursement Obligation, any interest thereon or any fees payable
hereunder within five (5) days following the date when due;
(b) default by the Borrower in the observance or performance of any
covenant set forth in Sections 6.12, 6.13, 6.19, 6.22, 6.23 or 6.24;
(c) default by any Credit Party in the observance or performance of any
provision hereof or of any other Credit Document not mentioned in (a) or (b)
above, which is not remedied within thirty (30) days after notice thereof to the
Borrower by the Agent;
(d) any representation or warranty made herein or in any other Credit
Document by the Borrower or any of its Subsidiaries proves untrue in any
material respect as of the date of the issuance or making, or deemed issuance or
making thereof;
(e) default occurs in the payment when due (after any applicable grace
period) of Indebtedness in an aggregate principal amount of $5,000,000 or more
of the Borrower or any of its Subsidiaries, default occurs in the payment when
due (after any applicable grace period) of the Public Debt Issue, or the
occurrence of any other default, which with the passage of time or notice would
permit the holder or beneficiary of such Indebtedness, or a trustee therefor, to
cause the acceleration of the maturity of any such Indebtedness or any mandatory
unscheduled prepayment, purchase, or other early funding thereof;
(f) the Borrower or any of its Material Subsidiaries (i) has entered
involuntarily against it an order for relief under the United States Bankruptcy
Code or a comparable action is taken under any bankruptcy or insolvency law of
another country or political subdivision of such country, (ii) generally does
not pay, or admits its inability generally to pay, its debts as they become due,
(iii) makes a general assignment for the benefit of creditors, (iv) applies for,
seeks, consents to, or acquiesces in, the appointment of a receiver, custodian,
trustee, examiner, liquidator or similar official for it or any substantial part
of its property, (v) institutes any proceeding seeking to have entered against
it an order for relief under the United States Bankruptcy Code or any comparable
law, to adjudicate it insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fails to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, (vi) makes any
board of directors resolution in direct furtherance of any matter described in
clauses (i)-(v) above, or (vii) fails to contest in good faith any appointment
or proceeding described in Section 7.1(g);
(g) a custodian, receiver, trustee, examiner, liquidator or similar
official is appointed for the Borrower or any of its Subsidiaries or any
substantial part of its property, or a proceeding described in Section 7.1(f)(v)
is instituted against the Borrower or any of its Material Subsidiaries,
57
and such appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of sixty (60) days;
(h) the Borrower or any of its Subsidiaries fails within thirty (30) days
(or such earlier date as any steps to execute on such judgment or order take
place) to pay, bond or otherwise discharge, or to obtain an indemnity against on
terms and conditions satisfactory to the Majority Lenders in their sole
discretion, any judgment or order for the payment of money in excess of
$5,000,000 which is uninsured or underinsured by at least such amount (provided
that there is adequate assurance, in the sole discretion of the Majority
Lenders, that the insurance proceeds attributable thereto shall be paid promptly
upon the expiration of such time period or resolution of such proceeding), which
is not stayed on appeal or otherwise being appropriately contested in good faith
in a manner that stays execution;
(i) the Borrower or any of its Subsidiaries fails to pay when due an amount
aggregating in excess of $5,000,000 that it is liable to pay to the PBGC or to a
Plan under Title IV of ERISA; or a notice of intent to terminate a Plan having
Unfunded Vested Liabilities of the Borrower or any of its Subsidiaries in excess
of $5,000,000 (a "Material Plan") is filed under Title IV of ERISA; or the PBGC
institutes proceedings under Title IV of ERISA to terminate or to cause a
trustee to be appointed to administer any Material Plan; or a proceeding is
instituted by a fiduciary of any Material Plan against the Borrower or any of
its Subsidiaries to collect any liability under Section 515 or 4219(c)(5) of
ERISA and such proceeding is not dismissed within thirty (30) days thereafter;
or a condition exists by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated;
(j) any Credit Party, any Person acting on behalf of a Credit Party, or any
governmental authority challenges the validity of any Credit Document or such
Credit Party's obligations thereunder or any Credit Document ceases to be in
full force and effect or ceases to give to the Agent and the Lenders the rights
and powers purported to be granted in their favor thereby;
(k) any event of default or default described in any Interest Rate
Protection Agreement or futures agreement permitted pursuant to Section 6.16(i)
with any Lender shall occur after any applicable grace period therefor; or
(l) any Person or two or more Persons acting in concert, other than (a)
X.X. Xxxxxxx, (b) SCF-III L.P., (c) D.O.S. Partners, Ltd., (d) Kadoorie XxXxxxx
International Ltd., (e) Actinium Holding Corporation, (f) Xxxxx Xxxxxx
Incorporated or (g) any Affiliates of the Persons listed in (a) - (f), shall
acquire beneficial ownership (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934), directly or indirectly, of securities of the Borrower (or
other securities convertible into such securities) representing fifty percent
(50%) or more of the combined voting power of all outstanding securities of the
Borrower entitled to vote in the election of directors, other than securities
having such power only by reason of the happening of a contingency.
58
Section 7.2. Non-Bankruptcy Defaults. When any Event of Default other
-----------------------
than those described in subsections (f) or (g) of Section 7.1 has occurred and
is continuing, the Agent shall, by notice to the Borrower: (a) if so directed by
the Majority Lenders, terminate the remaining Commitments and Agent Credit
Commitment and all other obligations of the Lenders hereunder on the date stated
in such notice (which may be the date thereof); (b) if so directed by the
Majority Lenders, declare the principal of and the accrued interest on all
outstanding Notes to be forthwith due and payable and thereupon all outstanding
Notes, including both principal and interest thereon, shall be and become
immediately due and payable together with all other amounts payable under the
Credit Documents without further demand, presentment, protest or notice of any
kind, including, but not limited to, notice of intent to accelerate and notice
of acceleration, each of which is expressly waived by the Borrower; (c) if so
directed by the Majority Lenders, demand that the Borrower immediately pay to
the Agent (to be held by the Agent pursuant to Section 7.4) the full amount then
available for drawing under each or any outstanding Letter of Credit; and (d) if
so elected by the Agent, demand that the Borrower immediately pay to the Agent
the full amount then available for drawing under each or any outstanding Agent
Letter of Credit; and the Borrower agrees to immediately make such payment and
acknowledges and agrees that the Lenders would not have an adequate remedy at
law for failure by the Borrower to honor any such demand and that the Agent, for
the benefit of the Lenders (or on its own behalf with respect to Agent Letters
of Credit), shall have the right to require the Borrower to specifically perform
such undertaking whether or not any drawings or other demands for payment have
been made under any Letter of Credit or Agent Letter of Credit. The Agent,
after giving notice to the Borrower pursuant to Section 7.1(c) or (d) or this
Section 7.2, shall also promptly send a copy of such notice to the other
Lenders, but the failure to do so shall not impair or annul the effect of such
notice.
Section 7.3. Bankruptcy Defaults. When any Event of Default described in
-------------------
subsections (f) or (g) of Section 7.1 has occurred and is continuing with
respect to the Borrower, then all outstanding Notes shall immediately become due
and payable together with all other amounts payable under the Credit Documents
without presentment, demand, protest or notice of any kind, each of which is
expressly waived by the Borrower; and all obligations of the Lenders to extend
further Credit pursuant to any of the terms hereof shall immediately terminate,
and the Borrower shall immediately pay to the Agent (to be held by the Agent
pursuant to Section 7.4) the full amount then available for drawing under all
outstanding Letters of Credit and Agent Letters of Credit, the Borrower
acknowledging that the Lenders and the Agent would not have an adequate remedy
at law for failure by the Borrower to honor any such demand and that the Lenders
and the Agent shall have the right to require the Borrower to specifically
perform such undertaking whether or not any drawings or other demands for
payment have been made under any of the Letters of Credit or Agent Letters of
Credit.
Section 7.4. Collateral for Undrawn Letters of Credit. (a) If the
----------------------------------------
prepayment of the amount available for drawing under any or all outstanding
Letters of Credit or Agent Letters of Credit is required under Section 7.2 or
7.3, the Borrower shall forthwith pay the amount required to be so prepaid, to
be held by the Agent as provided in subsection (b) below.
(b) All amounts prepaid pursuant to subsection (a) above shall be held by
the Agent in a separate collateral account (such account, and the credit
balances, properties and any investments
59
from time to time held therein, and any substitutions for such account, any
certificate of deposit or other instrument evidencing any of the foregoing and
all proceeds of and earnings on any of the foregoing being collectively called
the "Collateral Account") as security for, and for application by the Agent (to
the extent available) to, the reimbursement of any drawing under any Letter of
Credit and Agent Letter of Credit then or thereafter made by the Agent, and to
the payment of the unpaid balance of any Loans and all other due and unpaid
Obligations (collectively, the "Collateralized Obligations"). The Collateral
Account shall be held in the name of and subject to the exclusive dominion and
control of the Agent, for the benefit of the Agent and the Lenders, as pledgee
hereunder. If and when requested by the Borrower, the Agent shall invest and
reinvest funds held in the Collateral Account from time to time in Cash
Equivalents specified from time to time by the Borrower, provided that the Agent
is irrevocably authorized to sell investments held in the Collateral Account
when and as required to make payments out of the Collateral Account for
application to Collateralized Obligations due and owing from the Borrower to the
Agent or Lenders. When and if (i) the Borrower shall have made payment of all
Collateralized Obligations then due and payable, (ii) all relevant preference or
other disgorgement periods relating to the receipt of such payments have passed,
and (iii) no Letters of Credit, Agent Letters of Credit, Commitments, Agent
Credit Commitment, Loans, Reimbursement Obligations or other Obligations remain
outstanding hereunder, the Agent shall repay to the Borrower any remaining
amounts held in the Collateral Account.
Section 7.5. Notice of Default. The Agent shall give notice to the
-----------------
Borrower under Section 7.1(c) and (d) and 7.2 promptly upon being requested to
do so by the Majority Lenders and shall thereupon notify all the Lenders
thereof.
Section 7.6. Expenses. The Borrower agrees to pay to the Agent and each
--------
Lender all reasonable fully documented expenses incurred or paid by the Agent or
such Lender, including reasonable attorneys' fees and court costs, in connection
with any Default or Event of Default by the Borrower hereunder or in connection
with the enforcement of any of the Credit Documents.
Section 7.7. Distribution and Application of Proceeds from Collateral.
--------------------------------------------------------
After the occurrence of and during the continuance of an Event of Default, any
payment to the Agent or any Lender hereunder or under any Subsidiary Guaranty or
from the proceeds of any collateral shall be paid to the Agent to be distributed
and applied as follows (unless otherwise agreed by the Agent and all Lenders):
(a) First, to the payment of any and all reasonable and out-of-pocket costs
and expenses of the Agent, including, without limitation, reasonable attorneys'
fees and out of pocket costs and expenses as provided for by this Agreement or
by any other Credit Document, incurred in connection with the collection of such
payment or in respect of the enforcement of any rights of the Agreement or the
Lenders under this Agreement or any other Credit Document;
(b) Second, to the payment of any and all reasonable costs and expenses of
the Lenders or any Lender, including, without limitation, reasonable attorneys'
fees and out-of-pocket costs and expenses as provided for by this Agreement or
by any other Credit Document, incurred in connection with the collection of such
payment or in respect of the enforcement of any rights of
60
the Lenders under this Agreement or any other Credit Document; pro rata in the
--- ----
proportion in which the amount of such costs and expenses unpaid to each such
Lender bears to the aggregate amount of the costs and expenses unpaid to all
Lenders collectively, until all such fees, costs and expenses have been paid in
full;
(c) Third, to the payment of any due and unpaid fees to the Agent or any
Lender as provided for by this Agreement or any other Credit Document, pro rata
--- ----
in the proportion in which the amount of such fees due and unpaid to the Agent
and each such Lender bears to the aggregate amount of the fees due and unpaid to
the Agent and all Lenders collectively, until all such fees have been paid in
full;
(d) Fourth, to the payment of accrued and unpaid interest on the Notes or
the Reimbursement Obligations to the date of such application, pro rata in the
--- ----
proportion in which the amount of such interest, accrued and unpaid to each such
Lender bears to the aggregate amount of such interest accrued and unpaid to all
Lenders collectively, until all such accrued and unpaid interest has been paid
in full;
(e) Fifth, to the payment of the outstanding due and payable principal
amount of each of the Notes and the amount of the outstanding Reimbursement
Obligations (reserving cash collateral for all undrawn face amounts of any
outstanding Letters of Credit or Agent Letters of Credit (if Section 7.4(a) has
not been complied with), pro rata in the proportion in which the outstanding
--- ----
principal amount of such Notes and the amount of such outstanding Reimbursement
Obligations owing to each such Lender, together (if Section 7.4(a) has not been
complied with) with the undrawn face amounts of such outstanding Letters of
Credit or Agent Letters of Credit, bears to the aggregate amount of all
outstanding Notes, outstanding Reimbursement Obligations and (if Section 7.4(a)
has not been complied with) the undrawn face amounts of all outstanding Letters
of Credit or Agent Letters of Credit. In the event that any such Letters of
Credit or Agent Letters of Credit, or any portions thereof, expire without being
drawn, any cash collateral therefore shall be distributed pro rata by the Agent
--- ----
until the principal amount of all Notes and Reimbursement Obligations shall have
been paid in full;
(f) Sixth, to the payment of any other outstanding Obligations then due and
payable, pro rata in the proportion in which the outstanding Obligations owing
--- ----
to each such Lender bears to the aggregate amount of such Obligations until all
Obligations have been paid in full; and
(g) Seventh, to the Borrower or as the Borrower may direct.
SECTION 8. CHANGE IN CIRCUMSTANCES.
Section 8.1. Change of Law. Notwithstanding any other provisions of this
-------------
Agreement or any Note, if at any time any change in applicable law or regulation
or in the interpretation thereof makes it unlawful for any Lender to make or
continue to maintain Eurodollar Loans or to give effect to its obligations as
contemplated hereby, such Lender shall promptly give notice thereof to the
Borrower and such Lender's obligations to fund loans in Canadian Dollars or
Pounds and make, continue or convert Loans into Eurodollar Loans under this
Agreement shall
61
be suspended until it is no longer unlawful for such Lender to make or maintain
Eurodollar Loans. The Borrower shall prepay on demand the outstanding principal
amount of any such affected Eurodollar Loans, together with all interest accrued
thereon and all other amounts then due and payable to such Lender under this
Agreement; provided, however, subject to all of the terms and conditions of this
Agreement, the Borrower may then elect to borrow the principal amount of the
affected Eurodollar Loans from such Lender by means of Base Rate Loans from such
Lender that shall not be made ratably by the Lenders but only by such affected
Lender.
Section 8.2. Unavailability of Deposits or Inability to Ascertain LIBOR
----------------------------------------------------------
Rate. If on or before the first day of any Interest Period for any Borrowing of
----
Eurodollar Loans the Agent determines (after consultation with other Lenders)
that, due to changes in circumstances since the date hereof, adequate and fair
means do not exist for determining the Adjusted LIBOR Rate or such rate will not
accurately reflect the cost to the Majority Lenders of funding Eurodollar Loans
for such Interest Period, the Agent shall give notice of such determination to
the Borrower and the Lenders, whereupon until the Agent notifies the Borrower
and Lenders that the circumstances giving rise to such suspension no longer
exist, the obligations of the Lenders to fund loans in Canadian Dollars or
Pounds and make, continue or convert Loans into Eurodollar Loans shall be
suspended.
Section 8.3. Increased Cost and Reduced Return. (a) If, on or after the
---------------------------------
date hereof, the adoption of or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Lending Office), including the Agent in its capacity as the issuer of Letters of
Credit, with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency:
(i) subjects any Lender of that type (or its Lending Office) to any
tax, duty or other charge related to any Eurodollar Loan, Letter of Credit,
Agent Letter of Credit, or Reimbursement Obligation, or its participation
in any thereof, or its obligation to advance or maintain Eurodollar Loans,
issue Letters of Credit, issue Agent Letters of Credit or to participate
therein, or shall change the basis of taxation of payments to any Lender
(or its Lending Office) of the principal of or interest on its Eurodollar
Loans, Letters of Credit, Agent Letters of Credit or participations
therein, or any other amounts due under this Agreement related to its
Eurodollar Loans, Letters of Credit, Agent Letters of Credit, Reimbursement
Obligations, or participations therein, or its obligation to make
Eurodollar Loans, issue Letters of Credit, issue Agent Letters of Credit or
acquire participations therein (except for changes in the rate of tax on
the overall net income of such Lender or its Lending Office imposed by the
jurisdiction in which such Lender's principal executive office or Lending
Office is located); or
(ii) imposes, modifies or deems applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve
System) against assets of, deposits with or for the account of, or credit
extended by, any Lender of that type (or its Lending Office) or imposes on
any Lender of that type (or its Lending Office) or on the interbank market
any
62
other condition affecting its Eurodollar Loans, its Letters of Credit, its
Agent Letters of Credit, any Reimbursement Obligation owed to it, or its
participation in any thereof, or its obligation to advance or maintain
Eurodollar Loans, issue Letters of Credit, issue Agent Letters of Credit or
to participate in any thereof;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Lending Office) of advancing or maintaining any Eurodollar Loan, issuing
or maintaining a Letter of Credit or participation therein, or issuing or
maintaining an Agent Letter of Credit, or to reduce the amount of any sum
received or receivable by such Lender (or its Lending Office) in connection
therewith under this Agreement or its Note(s), by an amount deemed by such
Lender to be material, then, within fifteen (15) days after demand in reasonable
detail by such Lender (with a copy to the Agent), the Borrower shall be
obligated to pay to such Lender such additional amount or amounts as will
compensate such Lender for such increased cost or reduction.
(b) If, after the date hereof, the Agent or any Lender shall have
determined that the adoption after the date hereof of any applicable law, rule
or regulation regarding capital adequacy, or any change therein (including,
without limitation, any revision in the Final Risk-Based Capital Guidelines of
the Board of Governors of the Federal Reserve System (12 CFR Part 208, Appendix
A; 00 XXX Xxxx 000, Xxxxxxxx X) or of the Office of the Comptroller of the
Currency (12 CFR Part 3, Appendix A), or in any other applicable capital
adequacy rules heretofore adopted and issued by any governmental authority), or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Agent or any Lender (or its Lending
Office) with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Lender's capital, or on the capital of any corporation controlling such Lender,
as a consequence of its obligations hereunder to a level below that which such
Lender could have achieved but for such adoption, change or compliance (taking
into consideration such Lender's policies with respect to capital adequacy) by
an amount deemed by such Lender to be material, then from time to time, within
fifteen (15) days after demand in reasonable detail by such Lender (with a copy
to the Agent), the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.
(c) The Agent and each Lender that determines to seek compensation under
this Section 8.3 shall notify the Borrower and, in the case of a Lender other
than the Agent, the Agent of the circumstances that entitle the Agent or Lender
to such compensation and will designate a different Lending Office if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the sole judgment of such Lender, be otherwise disadvantageous
to it; provided that, the foregoing shall not in any way affect the rights of
any Lender or the obligations of the Borrower under this Section 8.3, and
provided further that no Lender shall be obligated to make its Eurodollar Loans
hereunder at any office located in the United States. A certificate of any
Lender claiming compensation under this Section 8.3 and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, such Lender may use
any reasonable averaging and attribution methods.
63
Section 8.4. Lending Offices. The Agent and each Lender may, at its
---------------
option, elect to make its Loans hereunder at the Lending Office for each type of
Loan available hereunder or at such other of its branches, offices or Affiliates
as it may from time to time elect and designate in a written notice to the
Borrower and the Agent subject to Section 8.3(c).
Section 8.5. Discretion of Lender as to Manner of Funding.
--------------------------------------------
Notwithstanding any other provision of this Agreement, each Lender shall be
entitled to fund and maintain its funding of all or any part of its Loans in any
manner it sees fit, it being understood, however, that for the purposes of this
Agreement all determinations hereunder shall be made as if each Lender had
actually funded and maintained each Eurodollar Loan through the purchase of
deposits in the eurodollar interbank market having a maturity corresponding to
such Loan's Interest Period and bearing an interest rate equal to LIBOR for such
Interest Period.
Section 8.6. Substitution of Lender. If (i) any Lender has demanded
----------------------
compensation or given notice of its intention to demand compensation under
Section 8.3, or (ii) the Borrower is required to pay any additional amount to
any Lender under Section 2.13, the Borrower shall have the right, with the
assistance of the Agent, to seek a substitute lender or lenders reasonably
satisfactory to the Agent (which may be one or more of the Lenders) to replace
such Lender under this Agreement. The Lender to be so replaced shall cooperate
with the Borrower and substitute lender to accomplish such substitution on the
terms of Section 10.12, as applicable, provided that all such Lender's
Commitments are replaced and such Lender is paid any amounts which it is owed
pursuant to Sections 2.13, 3.3, 7.6, 8.3 and 10.15. Any such replaced Lender
shall retain the benefit of Sections 3.3 and 10.15.
64
SECTION 9. THE AGENT.
Section 9.1. Appointment and Authorization of Agent. Each Lender hereby
--------------------------------------
appoints ABN AMRO Bank N.V. as the Agent and the Collateral Agent under the
Credit Documents and hereby authorizes the Agent and the Collateral Agent to
take such action as Agent or the Collateral Agent on its behalf and to exercise
such powers under the Credit Documents as are delegated to the Agent and the
Collateral Agent by the terms thereof, together with such powers as are
reasonably incidental thereto.
Section 9.2. Rights and Powers. The Agent and the Collateral Agent shall
-----------------
have the same rights and powers under the Credit Documents as any other Lender
and may exercise or refrain from exercising such rights and power as though it
were not the Agent or the Collateral Agent, and the Agent, the Collateral Agent
and its Affiliates may accept deposits from, lend money to, and generally engage
in any kind of business with the Borrower or any of its Subsidiaries or
Affiliates as if it were not the Agent or the Collateral Agent under the Credit
Documents. The term Lender as used in all Credit Documents, unless the context
otherwise clearly requires, includes the Agent and the Collateral Agent in its
individual capacity as a Lender, including its capacity as a Lender under the
Agent Swing Line. References herein to the Agent's and the Collateral Agent's
Loans, or to the amount owing to the Agent and the Collateral Agent for which an
interest rate is being determined, refer to the Agent and the Collateral Agent
in its individual capacity as a Lender.
Section 9.3. Action by Agent. The obligations of the Agent and the
---------------
Collateral Agent under the Credit Documents are only those expressly set forth
therein. Without limiting the generality of the foregoing, the Agent shall not
be required to take any action concerning any Default or Event of Default,
except as expressly provided in Sections 7.2 and 7.5. Upon the occurrence of an
Event of Default, the Agent and the Collateral Agent shall take such action to
enforce its Lien on the Collateral and to preserve and protect the Collateral as
may be directed by the Majority Lenders. Unless and until the Majority Lenders
give such direction, the Agent and the Collateral Agent may take or refrain from
taking such actions as it deems appropriate and in the best interest of all the
Lenders. In no event, however, shall the Agent and the Collateral Agent be
required to take any action in violation of applicable law or of any provision
of any Credit Document, and the Agent and the Collateral Agent shall in all
cases be fully justified in failing or refusing to act hereunder or under any
other Credit Document unless it first receives any further assurances of its
indemnification from the Lenders that it may require, including prepayment of
any related expenses and any other protection it requires against any and all
costs, expenses, and liabilities it may incur in taking or continuing to take
any such action. The Agent and the Collateral Agent shall be entitled to assume
that no Default or Event of Default exists unless notified in writing to the
contrary by a Lender or the Borrower. In all cases in which the Credit
Documents do not require the Agent or the Collateral Agent to take specific
action, as applicable, the Agent and the Collateral Agent shall be fully
justified in using its discretion in failing to take or in taking any action
thereunder. Any instructions of the Majority Lenders, or of any other group of
Lenders called for under specific provisions of the Credit Documents, shall be
binding on all the Lenders and holders of Notes.
65
Section 9.4. Consultation with Experts. The Agent and the Collateral
-------------------------
Agent may consult with legal counsel, independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.
Section 9.5. Indemnification Provisions. Neither the Agent nor the
--------------------------
Collateral Agent nor any of their directors, officers, agents, or employees
shall be liable for any action taken or not taken by it in connection with the
Credit Documents (i) with the consent or at the request of the Majority Lenders
or (ii) in the absence of its own gross negligence or willful misconduct.
Neither the Agent nor the Collateral Agent nor any of their directors, officers,
agents or employees shall be responsible for or have any duty to ascertain,
inquire into or verify (i) any statement, warranty or representation made in
connection with this Agreement, any other Credit Document or any Borrowing; (ii)
the performance or observance of any of the covenants or agreements of the
Borrower or any of its Subsidiaries contained herein or in any other Credit
Document; (iii) the satisfaction of any condition specified in Section 4 hereof,
except receipt of items required to be delivered to the Agent; or (iv) the
validity, effectiveness, genuineness, enforceability, perfection, value, worth
or collectability hereof or of any other Credit Document or of the Liens
provided for by the Stock Pledge Agreements, if any, or of any other documents
or writing furnished in connection with any Credit Document or of any
collateral; and the Agent and the Collateral Agent makes no representation of
any kind or character with respect to any such matters mentioned in this
sentence. The Agent and the Collateral Agent may execute any of its duties
under any of the Credit Documents by or through employees, agents, and
attorneys-in-fact and shall not be answerable to the Lenders or any other Person
for the default or misconduct of any such agents or attorneys-in-fact selected
with reasonable care. The Agent and the Collateral Agent shall not incur any
liability by acting in reliance upon any notice, consent, certificate, other
document or statement (whether written or oral) believed by it to be genuine or
to be sent by the proper party or parties. In particular and without limiting
any of the foregoing, the Agent and the Collateral Agent shall have no
responsibility for confirming the existence or worth of any collateral or the
accuracy of any Compliance Certificate or other document or instrument received
by it under the Credit Documents. The Agent and the Collateral Agent may treat
the payee of any Note as the holder thereof until written notice of transfer
shall have been filed with the Agent and the Collateral Agent signed by such
owner in form satisfactory to the Agent and the Collateral Agent. Each Lender
acknowledges that it has independently and without reliance on the Agent and the
Collateral Agent or any other Lender obtained such information and made such
investigations and inquiries regarding the Borrower and its Subsidiaries as it
deems important, and based upon such information, investigations and inquiries
made its own credit analysis and decision to extend credit to the Borrower in
the manner set forth in the Credit Documents. It shall be the responsibility of
each Lender to keep itself informed about the creditworthiness and business
properties, assets, liabilities, condition (financial or otherwise) and
prospects of the Borrower and its Subsidiaries, the creditworthiness of all
account debtors of the Borrower and its Subsidiaries, and the Agent and the
Collateral Agent shall have no liability whatsoever to any Lender for such
matters. The Agent and the Collateral Agent shall have no duty to disclose to
the Lenders information that is not required by any Credit Document to be
furnished by the Borrower or any of its Subsidiaries to the Agent and the
Collateral Agent at such time, but is voluntarily furnished to the Agent and the
Collateral Agent (either in its capacity as Agent or Collateral Agent or in its
individual capacity).
66
Section 9.6. Indemnity. The Lenders shall ratably, in accordance with
---------
their Percentages, indemnify and hold the Agent and the Collateral Agent, and
its directors, officers, employees, agents and representatives harmless from and
against any liabilities, losses, costs or expenses suffered or incurred by it or
by any security trustee under any Credit Document or in connection with the
transactions contemplated thereby, regardless of when asserted or arising,
except to the extent they are promptly reimbursed for the same by the Borrower
or out of the proceeds of any collateral and except to the extent that any event
giving rise to a claim was caused by the gross negligence or willful misconduct
of the party seeking to be indemnified. The obligations of the Lenders under
this Section 9.6 shall survive termination of this Agreement.
Section 9.7. Resignation of Agent and Successor Agent. The Agent and the
----------------------------------------
Collateral Agent may resign at any time upon at least thirty (30) days' prior
written notice to the Lenders and the Borrower. Upon any such resignation of
the Agent or the Collateral Agent, the Majority Lenders, with the consent of the
Borrower (which consent shall not be unreasonably withheld) shall have the right
to appoint a successor Agent or Collateral Agent, as the case may be. If no
successor Agent or Collateral Agent, as the case may be, shall have been so
appointed by the Majority Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Agent's or Collateral Agent's giving
of notice of resignation, then the retiring Agent or Collateral Agent, as the
case may be, may, on behalf of the Lenders, appoint a successor Agent or
Collateral Agent, as the case may be, which shall be any Lender hereunder or any
commercial bank organized under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of its appointment as the Agent or the
Collateral Agent hereunder, such successor Agent or Collateral Agent, as the
case may be, shall thereupon succeed to and become vested with all the rights
and duties of the retiring Agent or Collateral Agent, as the case may be, under
the Credit Documents, and the retiring Agent or Collateral Agent, as the case
may be, shall be discharged from its duties and obligations thereunder. After
any retiring Agent's or Collateral Agent's resignation hereunder as Agent or
Collateral Agent, as the case may be, the provisions of this Section 9 and all
protective provisions of the other Credit Documents shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent or
Collateral Agent, as the case may be.
SECTION 10. MISCELLANEOUS.
Section 10.1. Reallocation of Commitments. The Lenders hereby sell,
---------------------------
assign, transfer and convey, and the Lenders hereby purchase and accept so much
of the Assumed Revolving Loans, the Assumed Letters of Credit and the Assumed
Term Loans (collectively, the "Prior Indebtedness") and all of the rights,
titles, benefits, interests, privileges, claims, liens, security interests, and
obligations existing and to exist (collectively the "Interests") such that each
Lender's Percentage of the outstanding Revolving Loans, Letters of Credit and
Term Loans and the Revolving Credit Commitments under this Agreement shall be as
set forth in Schedule 2.1 hereto as of the Effective Date. The foregoing
assignment, transfer and conveyance are without recourse to the Lenders and
without any warranties whatsoever as to title, enforceability, collectability,
documentation or freedom from liens or encumbrances, in whole or in part, other
than the warranty by each Lender that it has not sold, transferred, conveyed or
encumbered such Interests. If as a result thereof, a Lender's Percentage of the
outstanding Revolving Loans, Letters of Credit
67
and Term Loans under this Agreement is less than its outstanding Revolving Loans
and Term Loans and participations in Letters of Credit under this Agreement, the
difference set forth in the last column of Schedule 2.1 shall be remitted to
such Lender by the Agent upon receipt of funds from the other Lenders shown in
the last column of Schedule 2.1 on the Effective Date. Each Lender so acquiring
a part of such outstanding Prior Indebtedness assumes its Percentage of the
outstanding Prior Indebtedness and Revolving Credit Commitments, and rights,
titles, interests, privileges, claims, liens, security interests, benefits and
obligations under this Agreement. The Lenders are proportionately released from
the obligations assumed by the Lenders so acquiring such obligations and, to
that extent, the Lenders so released shall have no further obligation under this
Agreement. The Borrower hereby represents and warrants that it has no defenses,
offsets or counterclaims to the Prior Indebtedness or its obligations or rights
under this Agreement, including, without limitation, the Interests being
assigned pursuant to this Section 10.1. The Interest Periods with respect to any
Loans outstanding under this Agreement on the Effective Date bearing interest at
an Adjusted LIBOR Rate shall be broken by the Borrower on the Effective Date,
the Borrower shall pay any breakage fees as provided in Section 2.13 in
connection therewith, and the Borrower shall elect new Interest Periods with
respect thereto after giving the required notice to the Agent in connection
therewith. As a condition to the effectiveness of this Agreement, the Borrower
shall also prepay the portion of the Assumed Revolving Loans and the Assumed
Term Loans set forth in Schedule 2.1, which amounts may not be reborrowed under
the Agreement.
Section 10.2. Effectiveness. This Agreement shall become effective on
-------------
February 13, 1998 (the "Effective Date") provided that (a) the Agent has
received each of the following, duly executed as of the Effective Date, and in
sufficient number of signed counterparts to provide one for each Lender (except
for the Notes, of which only one original shall be signed for each Lender):
(i) Notes. The duly executed Notes of the Borrower;
-----
(ii) Guaranties. The duly executed Subsidiary Guaranty of each
----------
Guarantor in substantially the form of Exhibit 10.2A;
(iii) Opinions of Counsel. The opinions of Xxxxxx & Xxxxxx and Xxxxx
-------------------
X. Xxxxxxx, III, legal counsel to the Credit Parties, in substantially the
forms attached as Exhibit 10.2B, as applicable, and covering such
additional matters as the Lenders may reasonably require;
(iv) Certificates of Officers of Credit Parties. Certificates of the
------------------------------------------
Secretary or Assistant Secretary and the President or Vice President of
each Credit Party containing specimen signatures of the persons authorized
to execute Credit Documents on each Credit Party's behalf or any other
documents provided for herein, together with (x) copies of resolutions of
the Board of Directors or other appropriate body of each Credit Party
authorizing the execution and delivery of the Credit Documents to which it
is a party and of all other legal documents or proceedings taken by the
Credit Parties in connection with the execution and delivery of the Credit
Documents, (y) copies of each Credit Party's Certificate or Articles of
Incorporation and Bylaws or other governing documents, certified
68
by the Secretary of State or other applicable entity of such Credit Party's
jurisdiction of organization, to the extent such corporate governance
documents have been amended since August 6, 1996, and (z) a certificate of
existence and good standing from the appropriate governing agency of such
Credit Party's jurisdiction of organization and of all jurisdictions where
such Credit Party is authorized to do business;
(v) Consents. Certified copies of all documents evidencing any
--------
necessary corporate action, consents and governmental approvals (if any)
taken or obtained by any Credit Party with respect to the Credit Documents;
(vi) Fees. Payment of all fees and expenses incurred through the
----
Effective Date then due and owing to the Agent and the Syndication Agent
pursuant to this Agreement and the Fee Letters;
(vii) Prepayment. Payment of the portion of the Assumed Revolving
----------
Loans and the Assumed Term Loans set forth in Schedule 2.1 as provided in
Section 10.1; and
(viii) Other Documents. Such other documents as the Agent may
---------------
reasonably request.
(b) All legal matters incident to the execution and delivery of the Credit
Documents shall be reasonably satisfactory to the Agent and the Agent shall have
received counterpart signature pages hereto from all parties hereto.
Section 10.3. No Waiver of Rights. No delay or failure on the part of the
-------------------
Agent or any Lender, or on the part of the holder or holders of any Notes, in
the exercise of any power, right or remedy under any Credit Document shall
operate as a waiver thereof or as an acquiescence in any default, nor shall any
single or partial exercise thereof preclude any other or further exercise of any
other power, right or remedy. To the fullest extent permitted by applicable
law, the powers, rights and remedies under the Credit Documents of the Agent,
the Collateral Agent, the Lenders and the holder or holders of any Notes are
cumulative to, and not exclusive of, any rights or remedies any of them would
otherwise have.
Section 10.4. Non-Business Day. If any payment of principal or interest
----------------
on any Loan, Reimbursement Obligation or of any other Obligation shall fall due
on a day which is not a Business Day, interest or fees (as applicable) at the
rate, if any, such Loan or other Obligation bears for the period prior to
maturity shall continue to accrue in the manner set forth herein on such
Obligation from the stated due date thereof to and including the next succeeding
Business Day, on which the same shall be payable.
Section 10.5. Documentary Taxes. The Borrower agrees that they will pay
-----------------
any documentary, stamp or similar taxes payable with respect to any Credit
Document, including interest and penalties, in the event any such taxes are
assessed irrespective of when such assessment is made and regardless whether any
credit is then in use or available hereunder.
69
Section 10.6. Survival of Representations. All representations and
---------------------------
warranties made herein or in certificates given pursuant hereto shall survive
the execution and delivery of this Agreement and the other Credit Documents, and
shall continue in full force and effect with respect to the date as of which
they were made as long as the Borrower have any Obligation hereunder or any
Commitment or Agent Credit Commitment hereunder is in effect.
Section 10.7. Survival of Indemnities. All indemnities and all other
-----------------------
provisions relative to reimbursement to the Lenders of amounts sufficient to
protect the yield of the Lenders with respect to the Loans, including, but not
limited to, Section 2.13, Section 3.3, Section 7.6, Section 8.3 and Section
10.17 hereof, shall survive the termination of this Agreement and the other
Credit Documents and the payment of the Loans and all other Obligations for a
period of one (1) year.
Section 10.8. Setoff. In addition to any rights now or hereafter granted
------
under applicable law and not by way of limitation of any such rights, upon the
occurrence of, and throughout the continuance of, any Default or Event of
Default, each Lender and each subsequent holder of any Note is hereby authorized
by the Borrower at any time or from time to time, without notice to the
Borrower, to any Guarantor or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, including, but not limited to, Indebtedness
evidenced by certificates of deposit, whether matured or unmatured, but not
including trust accounts, and in whatever currency denominated) and any other
Indebtedness at any time held or owing by that Lender or that subsequent holder
to or for the credit or the account of the Borrower, whether or not matured,
against and on account of the obligations and liabilities of the Borrower to
that Lender or that subsequent holder under the Credit Documents, including, but
not limited to, all claims of any nature or description arising out of or
connected with the Credit Documents, irrespective of whether or not (i) that
Lender or that subsequent holder shall have made any demand hereunder or (ii)
the principal of or the interest on the Loans or Notes and other amounts due
hereunder shall have become due and payable hereunder and although said
obligations and liabilities, or any of them, may be contingent or unmatured.
Each Lender agrees with each other Lender a party hereto that if such Lender
receives and retains any payment, whether by setoff or application of deposit
balances or otherwise, on any of the Loans or L/C Obligations in excess of its
ratable share of payments on all such Obligations then owed to the Lenders
hereunder, then such Lender shall purchase for cash at face value, but without
recourse, ratably from each of the other Lenders such amount of the Loans or L/C
Obligations, or participations therein, held by each such other Lenders (or
interest therein) as shall be necessary to cause such Lender to share such
excess payment ratably with all the other Lenders; provided, however, that if
any such purchase is made by any Lender, and if such excess payment or part
thereof is thereafter recovered from such purchasing Lender, the related
purchases from the other Lenders shall be rescinded ratably and the purchase
price restored as to the portion of such excess payment so recovered, but
without interest.
Section 10.9. Notices. Except as otherwise specified herein, all notices
-------
under the Credit Documents shall be in writing (including cable, telecopy or
telex) and shall be given to a party hereunder at its address, telecopier number
or telex numbers set forth below or such other address, telecopier number or
telex as such party may hereafter specify by notice to the Agent and the
Borrower, given by courier, by United States certified or registered mail, by
telegram or by other
70
telecommunication device capable of creating a written record of such notice and
its receipt. Notices under the Credit Documents to the Lenders and the Agent
shall be addressed to their respective addresses, telecopier, telex, or
telephone numbers set forth on the signature pages hereof or pursuant to Section
10.12, and to the Borrower (duplicate copies) as follows:
Tuboscope Inc.
0000 Xxxxxx Xxxx
X.X. Xxx 000 (77001)
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
and
Attention: General Counsel
Telephone: (000) 000-0000
Fax No. (000) 000-0000
Each such notice, request or other communication shall be effective (i) if
given by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section 10.9, on the signature pages hereof or pursuant to
Section 10.12 and a confirmation of receipt of such telecopy has been received
by the sender, (ii) if given by telex, when such telex is transmitted to the
telex number specified in this Section 10.9, on the signature pages hereof or
pursuant to Section 10.12 and the answerback is received by sender, (iii) if
given by courier, when delivered, (iv) if given by mail, five (5) days after
such communication is deposited in the mail, registered with return receipt
requested, addressed as aforesaid or (v) if given by any other means, when
delivered at the addresses specified in this Section 10.9, on the signature
pages hereof or pursuant to Section 10.12; provided that any notice given
pursuant to Section 2 shall be effective only upon receipt and, provided
further, that any notice that but for this provision would be effective after
the close of business on a Business Day or on a day that is not a Business Day
shall be effective at the opening of business on the next Business Day.
Section 10.10. Counterparts. This Agreement may be executed in any
------------
number of counterparts, and by the different parties on different counterpart
signature pages, each of which when executed shall be deemed an original but all
such counterparts taken together shall constitute one and the same Agreement.
Section 10.11. Successors and Assigns. This Agreement shall be
----------------------
binding upon the Borrower and its successors and assigns, and shall inure to the
benefit of each of the Lenders and their respective successors and assigns,
including any subsequent holder of any Note. Except as expressly permitted in
Section 6.13, the Borrower may not assign any of its rights or obligations under
any Credit Document without the written consent of all of the Lenders.
Section 10.12. Sales and Transfers of Borrowings and Notes; Participations
-----------------------------------------------------------
in Borrowings and Notes.
-----------------------
(a) Any Lender may at any time sell to one or more banks ("Participants"),
participating interests in any Borrowing owing to such Lender, any Note held by
such Lender, any
71
Commitment or Agent Credit Commitment of such Lender or any other interest of
such Lender hereunder, provided that no Lender may sell any participating
interests in any such Borrowing, Note, Commitment, Agent Credit Commitment or
other interest hereunder without also selling to such Participant the
appropriate pro rata share of its Borrowings, Notes, Commitments, Agent Credit
Commitments and other interests hereunder, and provided further that no Lender
shall transfer, grant or assign any participation under which the Participant
shall have rights to vote upon or consent to any matter to be decided by the
Lender or the Majority Lenders hereunder or under any Credit Document or approve
any amendment to or waiver of this Agreement or any other Credit Document except
to the extent such amendment or waiver would (i) increase the amount of such
Lender's Commitment or Agent Credit Commitment and such increase would affect
such Participant, (ii) reduce the principal of, or interest on, any of such
Lender's Borrowings, or any fees or other amounts payable to such Lender
hereunder and such reduction would affect such Participant, (iii) postpone any
date fixed for any scheduled payment of principal of, or interest on, any of
such Lender's Borrowings, or any fees or other amounts payable to such Lender
hereunder, or (iv) release all or substantially all collateral security for any
Obligation (including, without limitation, the Parent Company Guaranty or any
Subsidiary Guaranty), except as otherwise specifically provided in any Credit
Document. In the event of any such sale by a Lender of participating interests
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 Note for all purposes under this Agreement and the Borrower
and the Agent shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. The
Borrower agrees that if amounts outstanding under this Agreement and the Notes
are due and unpaid, or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, each Participant shall be
deemed to have the right of setoff in respect of its participating interest in
amounts owing under this Agreement and any Note to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement or any Note, provided that such right of setoff shall be subject
to the obligation of such Participant to share with the Lenders, and the Lenders
agree to share with such Participant, as provided in Section 10.8. The Borrower
also agrees that each Participant shall be entitled to the benefits of Sections
2.13 and 8.3 with respect to its participation in the Commitments and the
Borrowings outstanding from time to time, provided that no Participant shall be
entitled to receive any greater amount pursuant to such Sections than the
transferor Lender would have been entitled to receive in respect of the amount
of the participation transferred.
(b) Any Lender may at any time sell to any Lender or any Affiliate thereof,
and, with the consent of the Agent and the Borrower (which shall not be
unreasonably withheld or delayed), to one or more banks (a "Purchasing Lender"),
all or any part of its rights and obligations under this Agreement and the
Notes, pursuant to an Assignment Agreement in the form attached as Exhibit 10.12
hereto, executed by such Purchasing Lender and such transferor Lender (and, in
the case of a Purchasing Lender which is not then a Lender or an Affiliate
thereof, by the Borrower and the Agent) and delivered to the Agent; provided
that, each such sale to a Purchasing Lender shall be in an amount of $10,000,000
or more, or if in a lesser amount, such sale shall be of all of the Lender's
rights and obligations under this Agreement and all of the Notes payable to it
to one eligible assignee. Notwithstanding the above, any Lender may sell to one
or more eligible
72
assignees all or any part of their rights and obligations under this Agreement
and the Notes with only the consent of the Agent (which shall not be
unreasonably withheld) if an Event of Default shall have occurred and be
continuing. No Lender may sell any Loans to a Purchasing Lender without also
selling to such Purchasing Lender the appropriate pro rata share of its
Borrowings, Notes, Commitments and other interests hereunder, including
participations in Letters of Credit hereunder; provided that, the Agent shall
not be required to sell its Agent Revolving Obligations and its Agent Credit
Commitment at such time as it may sell any other portion of its Borrowings,
Notes, Commitments and other interests hereunder. Upon such execution, delivery,
acceptance and recording, from and after the effective date of the transfer
determined pursuant to such Assignment Agreement (x) the Purchasing Lender
thereunder shall be a party hereto and, to the extent provided in such
Assignment Agreement, have the rights and obligations of a Lender hereunder with
a Commitment as set forth therein and (y) the transferor Lender thereunder
shall, to the extent provided in such Assignment Agreement, be released from its
obligations under this Agreement (and, in the case of an Assignment Agreement
covering all or the remaining portion of a transferor Lender's rights and
obligations under this Agreement, such transferor Lender shall cease to be a
party hereto). Such Assignment Agreement shall be deemed to amend this Agreement
to the extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of Commitments and Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement, the Notes
and the other Credit Documents. On or prior to the effective date of the
transfer determined pursuant to such Assignment Agreement, the Borrower, at
their own expense, shall execute and deliver to the Agent in exchange for any
surrendered Notes, new Notes as appropriate to the order of such Purchasing
Lender in an amount equal to the Commitments assumed by it pursuant to such
Assignment Agreement, and, if the transferor Lender has retained a Commitment or
Borrowing hereunder, new Notes to the order of the transferor Lender in an
amount equal to the Commitments or Borrowings retained by it hereunder. Such new
Notes shall be dated the Effective Date and shall otherwise be in the form of
the Notes replaced thereby. The Notes surrendered by the transferor Lender shall
be returned by the Agent to the Borrower marked "canceled."
(c) Upon its receipt of an Assignment Agreement executed by a transferor
Lender, a Purchasing Lender and the Agent (and, in the case of a Purchasing
Lender that is not then a Lender or an Affiliate thereof, by the Borrower),
together with payment to the Agent hereunder of a registration and processing
fee of $3,500, the Agent shall (i) promptly accept such Assignment Agreement,
and (ii) on the effective date of the transfer determined pursuant thereto give
notice of such acceptance and recordation to the Lenders and the Borrower.
(d) The provisions of the foregoing clauses (b) and (c) shall not apply to
or restrict, or require the consent of or any notice to any Person to
effectuate, the pledge or assignment by any Lender of its rights under this
Agreement and its Notes to any Federal Reserve Bank.
(e) If, pursuant to this Section 10.12 any interest in this Agreement or
any Note is transferred to any transferee which is organized under the laws of
any jurisdiction other than the United States of America or any State thereof,
the transferor Lender shall cause such transferee, concurrently with the
effectiveness of such transfer, (i) to represent to the transferor Lender (for
73
the benefit of the transferor Lender, the Agent and the Borrower) that under
applicable law and treaties no taxes will be required to be withheld by the
Agent, the Borrower or the transferor Lender with respect to any payments to be
made to such transferee in respect of the Loans or the L/C Obligations, (ii) to
furnish to the transferor Lender (and, in the case of any Purchasing Lender, the
Agent and the Borrower) either U.S. Internal Revenue Service Form 4224 or U.S.
Internal Revenue Service Form 1001 or such successor forms as shall be adopted
from time to time by the relevant United States taxing authorities (wherein such
transferee claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder), and (iii) to agree (for the
benefit of the transferor Lender, the Agent and the Borrower) to provide the
transferor Lender (and, in the case of any Purchasing Lender, the Agent and the
Borrower) a new Form 4224 or Form 1001 upon the expiration or obsolescence of
any previously delivered form and comparable statements in accordance with
applicable U.S. laws and regulations and amendments dully executed and completed
by such Transferee, and to comply from time to time with all applicable U.S.
laws and regulations with regard to such withholding tax exemption.
Section 10.13. Amendments. Any provision of the Credit Documents may be
----------
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by (a) the Borrower, (b) the Majority Lenders, and (c) if the rights or
duties of the Agent are affected thereby, the Agent; provided that:
(i) no amendment or waiver shall (A) increase the Revolving Credit
Commitment Amount, the Total Commitment Amount or the Agent Commitment Amount
without the consent of all Lenders or increase any Commitment of any Lender
without the consent of such Lender, (B) postpone any Maturity Date without the
consent of all Lenders (or ABN AMRO in the case of Agent Revolving Loans) or
reduce the amount of or postpone the date for any scheduled payment of any
principal of or interest on any Loan or Reimbursement Obligation or of any fee
payable hereunder without the consent of each Lender owed such Obligation or (C)
release any Stock Pledge Agreement or any other collateral or any Subsidiary
Guaranty without the consent of all the Lenders, provided that the Lenders
hereby consent to the release and hereby release all capital stock pledged under
the Prior Credit Agreement on the Effective Date and direct the Agent to execute
such documents in order to effectuate such release; and
(ii) no amendment or waiver shall, unless signed by each Lender, change the
provisions of this Section 10.13 or the definition of Majority Lenders or affect
the number of Lenders required to take any action under any other provision of
the Credit Documents.
Section 10.14. Headings. Section headings used in this Agreement are for
--------
reference only and shall not affect the construction of this Agreement.
Section 10.15. Legal Fees, Other Costs and Indemnification. The Borrower,
-------------------------------------------
upon demand by the Agent, agrees to pay the reasonable fees and disbursements of
legal counsel to the Agent in connection with the preparation and execution of
the Credit Documents, and any amendment, waiver or consent related thereto,
whether or not the transactions contemplated therein are consummated (provided
that the Borrower shall be obligated hereunder to pay such fees and
disbursements for only one (1) law firm and any local counsel), and all
reasonable recording,
74
filing, or other fees, costs and taxes incident to perfecting a Lien upon the
Collateral described in the Security Documents. The Borrower further agrees to
indemnify each Lender, the Agent, the Collateral Agent, the Syndication Agent,
and their respective directors, officers, employees and attorneys (collectively,
the "Indemnified Parties"), against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, all
reasonable attorneys' fees and other reasonable expenses of litigation or
preparation therefor, whether or not the indemnified Person is a party thereto)
which any of them may pay or incur arising out of or relating to (a) any Credit
Document, the Loans or the application or proposed application by the Borrower
of the proceeds of any Loan, REGARDLESS OF WHETHER SUCH CLAIMS OR ACTIONS ARE
FOUNDED IN WHOLE OR IN PART UPON THE ALLEGED SIMPLE OR CONTRIBUTORY NEGLIGENCE
OF ANY OF THE INDEMNIFIED PARTIES AND/OR ANY OF THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES OR ATTORNEYS, (b) any investigation of any third party or
any governmental authority involving any Lender (as a lender hereunder), the
Agent (in such capacity hereunder), the Collateral Agent (in such capacity
hereunder), or the Syndication Agent (in such capacity hereunder) and related to
any use made or proposed to be made by the Borrower of the proceeds of the
Borrowings, or any transaction financed or to be financed in whole or in part,
directly or indirectly with the proceeds of any Borrowing, and (c) any
investigation of any third party or any governmental authority, litigation or
proceeding, related to any environmental cleanup, audit, compliance or other
matter relating to any Environmental Law or the presence of any Hazardous
Material (including, without limitation, any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any Environmental
Law) with respect to the Borrower or any of its Subsidiaries, regardless of
whether caused by, or within the control of, the Borrower or any of its
Subsidiaries; provided, however, that the Borrower shall not be obligated to
indemnify any Indemnified Party for any of the foregoing arising out of such
Indemnified Party's gross negligence or willful misconduct. The Borrower, upon
demand by the Agent, the Collateral Agent, the Syndication Agent or a Lender at
any time, shall reimburse the Agent, the Collateral Agent, the Syndication Agent
or such Lender for (i) any legal or other expenses incurred in connection with
investigating or defending against any of the foregoing except if the same is
excluded from indemnification pursuant to the provisions of the foregoing
sentence and (ii) if an Event of Default has occurred and is continuing,
reasonable fees of legal counsel (including the allocated costs of in-house
counsel) in connection with the Agent's, the Collateral Agent's, the Syndication
Agent's or such Lender's enforcement of their rights and remedies in the Credit
Documents.
Section 10.16. Governing Law; Submission to Jurisdiction; Waiver of Jury
---------------------------------------------------------
Trial. This Agreement and the other Credit Documents, and the rights and duties
-----
of the parties thereto, shall be construed in accordance with and governed by
the internal laws of the State of New York. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in the City of New
York for purposes of all legal proceedings arising out of or relating to this
Agreement, any other Credit Document or the transactions contemplated thereby.
The Borrower irrevocably waives, to the fullest extent permitted by law, any
objection they may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum. EACH PARTY
TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
ANY CREDIT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY.
Section 10.17. Confidentiality. Each Lender agrees it will not disclose
---------------
without the Borrower's consent (other than to its employees, auditors, counsel
or other professional advisors, to its Affiliates or to another Lender) any
information concerning the Borrower or any of its Subsidiaries furnished
pursuant to any of the Credit Documents; provided that any Lender may disclose
any such information (i) that has become generally available to the public other
than through the Lenders, (ii) if required or appropriate in any examination or
audit or any report, statement or testimony submitted to any federal or state
regulatory body having or claiming to have jurisdiction over such Lender, (iii)
if required or appropriate in response to any summons or subpoena or in
connection with any litigation, (iv) in order to comply with any law, order,
regulation or ruling applicable to such Lender, (v) to any prospective or actual
permitted transferee in connection with any contemplated or actual permitted
transfer of any of the Notes or any interest therein by such Lender, and (vi) in
connection with the exercise of any remedies by the Agent or any Lender;
provided that such actual or prospective transferee executes an agreement with
such Lender containing provisions substantially identical to those contained in
this Section 10.17 prior to such transferee's receipt of any such information.
Section 10.18. 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.
Section 10.19. Currency Conversion. All payments of Obligations under
-------------------
this Agreement, the Notes or any other Credit Document shall be made in Dollars,
except for Revolving Loans funded, or Reimbursement Obligations with respect to
Letters of Credit issued, in Pounds or Canadian Dollars, which shall be repaid,
including interest thereon, in the applicable currency. If any payment of any
Obligation, except for Revolving Loans funded in Pounds or Canadian Dollars or
any Reimbursement Obligation with respect to Letters of Credit issued in Pounds
or Canadian Dollars, whether through payment by the Borrower, any Guarantor or
the proceeds of any collateral, if any exists, shall be made in a currency other
than Dollars, such amount shall be converted into Dollars at the official rate
for the purchase of Dollars with the applicable currency as quoted by the Agent
in accordance with the methods customarily used by the Agent for such purposes
as of the close of business on the date of determination. If for the purposes
of obtaining any judgment or award it becomes necessary to convert from either
Pounds or Canadian Dollars into Dollars any amount in connection with the
Obligations, then the conversion shall be made as provided above on the Business
Day before the day on which the judgment or award is given. In the event that
there is a change in the rate of exchange prevailing between the Business Day
before the day on which the judgment or award is given and the date of payment,
the Borrower will pay to the Agent such additional amounts (if any) as may be
necessary, and the Agent will pay to the Borrower such excess amounts (if any)
as result from such change in the rate of exchange, to assure that the amount
paid on such date is the amount in Pounds or Canadian Dollars, as
76
applicable, which when converted at the rate of exchange described herein on the
date of payment, is the amount then due in Dollars. Any amount due from the
Borrower under this Section 10.19 shall be due as a separate debt and shall not
be affected by judgment or award being obtained for any other sum due. For the
avoidance of doubt, the parties affirm and agree that neither the fixation of
the conversion rate of Pounds against the Euro as a single currency, in
accordance with the Treaty Establishing the European Economic Community, as
amended by the Treaty on the European Union (The Maastricht Treaty), nor the
conversion of the Obligations under this Agreement from Pounds into Euro will be
a reason for early termination or revision of this Agreement or prepayment of
any amount due under this Agreement or create any liability of any party towards
any other party for any direct or consequential loss arising from any of these
events. As of the date that Pounds are no longer the lawful currency of the
United Kingdom, all funding and payment Obligations to be made in such currency
under this Agreement will have to be satisfied in Euro.
Section 10.20. Dollar Equivalent Combinations. Unless otherwise provided
------------------------------
herein, to the extent that the determination of compliance with any requirement
of this Agreement requires the conversion to Dollars of foreign currency
amounts, such Dollar amount shall be computed using the Dollar equivalent of the
amount of such foreign currency at the time such item is to be calculated or is
incurred, created, transferred or sold for purposes of this Agreement. The
Dollar equivalent shall be determined by converting such currency involved in
such computation into Dollars at the spot rate for the purchase of Dollars with
the applicable currency as quoted by the Agent in accordance with the methods
customarily used by the Agent for such purposes as of the close of business on
the date of determination thereof specified herein or, if the date of
determination thereof is not otherwise specified herein, on the date two (2)
applicable Business Days prior to such determination.
Section 10.21. Change in Accounting Principles or Tax Laws. If (i) any
-------------------------------------------
change in accounting principles from those used in the preparation of the
financial statements of the Borrower referred to in Section 5.9 is hereafter
occasioned by the promulgation of rules, regulations, pronouncements and
opinions by or required by the Financial Accounting Standards Board or the
American Institute of Certified Public Accounts (or successors thereto or
agencies with similar functions) and such change materially affects the
calculation of any component of any financial covenant, standard or term found
in this Agreement, or (ii) there is a material change in federal or foreign tax
laws which materially affects the Borrower ability to comply with the financial
covenants, standards or terms found in this Agreement, the Borrower and the
Majority Lenders agree to enter into negotiations in order to amend such
provisions so as to equitably reflect such changes with the desired result that
the criteria for evaluating the Borrower's and its Subsidiaries' consolidated
financial condition shall be the same after such changes as if such changes had
not been made. Unless and until such provisions have been so amended, the
provisions of this Agreement shall govern.
Section 10.22. Notice. The Credit Documents constitute the entire
------
understanding among the Borrower, the Lenders, and the Agent and supersede all
earlier or contemporaneous agreements, whether written or oral, concerning the
subject matter of the Credit Documents. THIS WRITTEN AGREEMENT TOGETHER WITH THE
OTHER CREDIT DOCUMENTS
77
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their duly authorized officers as of the day and
year first above written.
BORROWER:
--------
TUBOSCOPE INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
LENDERS:
-------
Percentage of Revolving ABN AMRO BANK N.V., Houston Agency,
-----------------------
Credit Commitment as Administrative Agent and as a Lender
-----------------
and Term Credit
---------------
Commitment: _________________________________%
----------
Voting Percentage: _________________________%
-----------------
By:
---------------------------------
Xxxxxx X. Xxxxxxxx
Group Vice President and Director
Address:
-------
ABN AMRO Bank, N.V. By:
Houston Agency ---------------------------------
Three Riverway, Suite 0000 Xxxxxxx X. Xxxxxxx
Xxxxxxx, XX 00000 Senior Vice President and Managing Director
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
Percentage of Revolving CHASE BANK OF TEXAS,
----------------------- NATIONAL ASSOCIATION
Credit Commitment
-----------------
and Term Credit
---------------
Commitment: % By:
---------- ----------------- -----------------------
Name:
---------------------
Voting Percentage: % Title:
----------------- ---------- --------------------
Address:
-------
Chase Bank of Texas, National Association
Attention: Xx. Xxxx Xxxx
000 Xxxxxx
0-XXXX-00
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
Percentage of Revolving ARAB BANKING CORPORATION (B.S.C.)
-----------------------
Credit Commitment
-----------------
and Term Credit
---------------
Commitment: % By:
---------- ------------------ ---------------------------------
Name:
-------------------------------
Voting Percentage: % Title:
----------------- ----------- ------------------------------
Address:
-------
Arab Banking Corporation (B.S.C.)
Attn: Loan Administration
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
with a copy to:
Arab Banking Corporation (B.S.C.)
Attn: Xx. Xxxxxxx Xxxxxxx
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
Percentage of Revolving BANK OF AMERICA NATIONAL TRUST AND SAVINGS
----------------------- ASSOCIATION
Credit Commitment
-----------------
and Term Credit
---------------
Commitment: % By:
---------- ------------------- ----------------------------------------
Name:
--------------------------------------
Voting Percentage: % Title:
----------------- ------------ -------------------------------------
Address:
-------
Bank of America National Trust
and Savings Association
Attn: Xx. Xxxxxx Xxx
Three Xxxxx Center
000 Xxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
with copy to:
Bank of America National Trust
and Savings Association
Attn: Xx. Xxxxxx Xxxxxx
0000 Xxxxxxx Xxxx.
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
Percentage of Revolving XXX XXXX XX XXXX XXXXXX, XXXXXXX
----------------------- AGENCY
Credit Commitment
-----------------
and Term Credit
---------------
Commitment: %
---------- ------------------
By:
-------------------------------
Name:
-----------------------------
Voting Percentage: % Title:
----------------- ----------- ----------------------------
Address:
-------
The Bank of Nova Scotia,
Atlanta Agency
Attn: Xx. Xxxxxxx Xxxxxx
000 Xxxxxxxxx Xxxxxx XX, Xxxxx 0000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
with a copy to:
The Bank of Nova Scotia
Attn: Xx. Xxxxxxx Xxxxxxxxx
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
Percentage of Revolving XXXXX FARGO BANK (TEXAS), NATIONAL
----------------------- ASSOCIATION
Credit Commitment
-----------------
and Term Credit
---------------
Commitment: %
---------- -----------------
By:
------------------------------
Name:
----------------------------
Voting Percentage: % Title:
----------------- ---------- ---------------------------
Address:
-------
Xxxxx Fargo Bank (Texas), National Association
Attn: Xx. Xxxxx Xxxxxxxxx
0000 Xxxxxxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
Percentage of Revolving CREDIT LYONNAIS NEW YORK BRANCH
-----------------------
Credit Commitment
-----------------
and Term Credit
---------------
Commitment: %
---------- -------------------
By:
--------------------------
Name:
------------------------
Voting Percentage: % Title:
----------------- ------------ -----------------------
Address:
-------
Credit Lyonnais
Houston Representative Office
Attn: Mr. Page Dillehunt
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax No.: (000) 000-0000/0420
with a copy to:
Credit Lyonnais New York Branch
Attn: Xx. Xxxxxx X. Xxxx
Legal Department
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Percentage of Revolving FIRST NATIONAL BANK OF COMMERCE
-----------------------
Credit Commitment
-----------------
and Term Credit
---------------
Commitment: %
---------- ------------------
By:
---------------------------
Name:
-------------------------
Voting Percentage: % Title:
----------------- ----------- ------------------------
Address:
-------
First National Bank of Commerce
Attn: Mr. J. Xxxxxxx Xxxxx, Xx.
000 Xx. Xxxxxxx Xxx., 00/xx/ Xxxxx
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
Percentage of Revolving THE FUJI BANK, LIMITED
-----------------------
Credit Commitment
-----------------
and Term Credit
---------------
Commitment: %
---------- -----------------
By:
----------------------------
Name:
--------------------------
Voting Percentage: % Title:
----------------- ---------- -------------------------
Address:
-------
The Fuji Bank, Limited
Attn: Xx. Xxxx X. Xxxxxxx
0000 XxXxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
FAX No.: (000) 000-0000
Percentage of Revolving CREDIT SUISSE FIRST BOSTON
-----------------------
Credit Commitment
-----------------
and Term Credit
---------------
Commitment: %
---------- -----------------
By:
------------------------------
Name:
----------------------------
Voting Percentage: % Title:
----------------- ---------- ---------------------------
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Address:
-------
Credit Suisse First Boston
Attn: Xx. Xxxxx Xxxxx
00 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
Percentage of Revolving HIBERNIA NATIONAL BANK
-----------------------
Credit Commitment
-----------------
and Term Credit
---------------
Commitment: %
---------- ---------------
By:
-----------------------------
Name:
---------------------------
Voting Percentage: % Title:
----------------- -------- --------------------------
Address:
-------
Hibernia National Bank
Attn: Xx. Xxxxx Xxxx
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
EXHIBIT 2.2A
FORM OF BORROWING REQUEST
EXHIBIT 2.2B
FORM OF APPLICATION FOR LETTER OF CREDIT
EXHIBIT 2.12A
FORM OF REVOLVING NOTE (U.S. DOLLARS)
EXHIBIT 2.12B
FORM OF REVOLVING NOTE (BRITISH POUNDS STERLING)
EXHIBIT 2.12C
FORM OF REVOLVING NOTE (CANADIAN DOLLARS)
EXHIBIT 2.12D
FORM OF TERM NOTE
EXHIBIT 2.12E
FORM OF AGENT NOTE
EXHIBIT 6.7
FORM OF COMPLIANCE CERTIFICATE
EXHIBIT 6.13
FORM OF ACQUISITION REPORT
EXHIBIT 10.2A
FORM OF SUBSIDIARY GUARANTY
EXHIBIT 10.2B
FORM OF OPINIONS OF COUNSEL
EXHIBIT 10.12
FORM OF ASSIGNMENT AGREEMENT
SCHEDULE 2.1
LIST OF PRIOR INDEBTEDNESS AND REALLOCATIONS
SCHEDULE 2.7
TERM LOAN REPAYMENT SCHEDULE
SCHEDULE 5.1
LIST OF SUBSIDIARIES
SCHEDULE 5.4
LIST OF LITIGATION
SCHEDULE 5.13
ERISA DISCLOSURE
SCHEDULE 5.16
STOCK DISCLOSURE
SCHEDULE 5.17
INTELLECTUAL PROPERTY
SCHEDULE 5.20
LIST OF ENVIRONMENTAL CLAIMS
SCHEDULE 5.21
LIST OF EXISTING INDEBTEDNESS
SCHEDULE 6.16
LIST OF EXISTING LIENS
SCHEDULE 2.7
TERM LOAN REPAYMENT SCHEDULE
--------------
Principal Repayment
Period -------------------
------
March 31, 1998 [TO COME]
June 30, 1998
September 30, 1998
December 31, 1998
March 31, 1999
June 30, 1999
September 30, 1999
December 31, 1999
March 31, 2000
June 30, 2000
September 30, 2000
December 31, 2000
March 31, 2001
June 30, 2001
September 30, 2001
December 31, 2001
March 31, 2002
August 6, 2002
SCHEDULE 5.1
LIST OF SUBSIDIARIES/1/
-----------------------
1. Tuboscope Vetco International Corporation's direct Subsidiaries:
Jurisdiction
of
Name of Subsidiaries Organization
-------------------- ------------
Tuboscope Vetco International Inc. Texas
CTI Inspection Services, Inc. California
Tuboscope Vetco Capital Corp. Nevada
Drexel Equipment (UK) Ltd United Kingdom
Drexel Holdings, Inc. Delaware
Drexel Equipment A/S Norway
Drexel Oilfield Services (S) PTE Ltd. Singapore
Drexel Oilfield Services BDN (49% Stock) Malaysia
Drexel Oilfield Services, Ltd. Bermuda
2. Tuboscope Vetco International Inc.'s direct Subsidiaries:
Jurisdiction
of
Name of Subsidiaries Organization
-------------------- ------------
Tuboscope Vetco Japan Ltd. Japan
Tuboscope Vetco (France) S.A. France
Linalog de Venezuela, Inc. Nevada
Tuboscope Vetco Export Sales Corporation Barbados
Tuboscope MECL (Trinidad) Ltd. (50% Stock) Trinidad
Tuboscope Pipeline Services Limited United Kingdom
Vetco Inspection Norge AS Norway
Tuboscope Vetco Canada Inc. Canada
TVI Inspecciones de Venezuela, C.A. Venezuela
Tuboscope Vetco De Argentina, S.A. Argentina
Vetco Enterprises A.G. Switzerland
Tuboscope Overseas Corp. S.A. Switzerland
Tuboscope Vetco Services (Panama) Inc. Panama
Tuboscope Vetco Moscow Ltd. Russia
Tuboscope Vetco (Thailand) Ltd. Thailand
Tuboscope Pipeline Services Inc. (79% Stock) Texas
Tuboscope Vetco do Brazil Equipamentos e Servicos Ltda. Brazil
Tube-Kote, Inc. d/b/a Tuboscope Vetco International
Oilfield Services Texas
--------------------------
/1/Except to the extent shown, direct parent corporation listed owns 100%
of the stock of each Subsidiary listed.
TVI Wadeco Inc. Canada
3. Tuboscope Vetco Capital Corp.'s direct Subsidiary:
Jurisdiction
of
Name of Subsidiary Organization
------------------ ------------
Tuboscope Vetco Capital Ltd. Scotland
4. Drexel Holdings, Inc.'s direct Subsidiaries:
Jurisdiction
of
Name of Subsidiaries Organization
-------------------- ------------
Drexel Oilfield Services, Inc. Texas
Hydra-Rig, Inc. Texas
The ONEA Corporation Texas
Environmental Procedures, Inc. Delaware
Hydra-Rig Tools (Dormant) Texas
5. Drexel Equipment (UK) Ltd's direct Subsidiaries:
Jurisdiction
of
Name of Subsidiaries Organization
-------------------- ------------
Environmental Procedures (UK) Limited United Kingdom
Winlersol s.r.l. (95%) Stock Italy
6. Tuboscope Pipeline Services Ltd.'s direct Subsidiaries:
Jurisdiction
of
Name of Subsidiaries Organization
-------------------- ------------
Tuboscope Vetco (UK) Ltd. United Kingdom
Linalog Limited United Kingdom
Tuboscope Pipeline Services Inc. (21% Stock) Texas
7. Tuboscope Vetco Canada Inc.'s direct Subsidiaries:
Jurisdiction
of
Name of Subsidiaries Organization
-------------------- ------------
Tuboscope Vetco Far East Pte Ltd. Singapore
Tuboscope Pipeline Services Canada Inc. Canada
Xxxxxx s.r.l. (5% Stock) Italy
8. Vetco Enterprises A.G.'s direct Subsidiaries:
Jurisdiction
of
Name of Subsidiaries Organization
-------------------- ------------
Tuboscope Vetco Osterreich GmbH Austria
Vetco Saudi Arabia Ltd. (45% Stock) Saudi Arabia
Tuboscope Vetco (Deutschland) GmbH Germany
9. Tuboscope Overseas Corp. S.A.'s direct Subsidiaries:
Jurisdiction
of
Name of Subsidiary Organization
------------------ ------------
Tuboscope OGI GmbH Germany
10. Tuboscope Vetco Services (Panama) Inc.'s direct Subsidiaries:
Jurisdiction
of
Name of Subsidiaries Organization
-------------------- ------------
Tuboscope Vetco (Nigeria) Ltd. (40% Stock) Nigeria
Xxxxxx s.r.l. (95% Stock) Italy
Tuboscope Vetco (Italia) s.r.l. (95% Stock) Italy
11. TVI Wadeco Inc.'s direct Subsidiaries:
Jurisdiction
of
Name of Subsidiary Organization
------------------ ------------
Wadeco Oilfield Services Ltd. Canada
12. Drexel Oilfield Services Ltd.'s direct Subsidiaries:
Jurisdiction
of
Name of Subsidiaries Organization
-------------------- ------------
Drexel Oilfield Services, L.L.C. (49% Stock) Abu Dhabi
Xxxxxx Company de Argentina S.A. Argentina
Venezuela Well Analysis, S.A. Venezuela
Screen Manufacturing Company, Ltd. Trinidad
Vernwell International, Inc. Texas
Windersol s.r.l. (95% Stock) Italy
13. Environmental Procedures, Inc.'s Subsidiaries:
Jurisdiction
of
Name of Subsidiaries Organization
-------------------- ------------
Environmental Procedures P.T.E. Ltd. Singapore
Environmental Procedures Inc. Texas
14. ONEA Corporation's Subsidiaries:
Jurisdiction
of
Name of Subsidiary Organization
------------------ ------------
SOFG (50% Stock) Virgin Islands
15. Wadeco Oilfield Services Ltd.'s Subsidiaries:
Jurisdiction
of
Name of Subsidiaries Organization
-------------------- ------------
Xxx'x Oilfield Hauling Ltd. Canada
Polysep Chemicals, Inc. Canada
Wadeco Inc. North Dakota
16. Tuboscope Vetco Far East Pte Ltd.'s direct Subsidiary:
Jurisdiction
of
Name of Subsidiaries Organization
-------------------- ------------
Pesaka Inspection Services SDN.BHD (49% Stock) Malaysia
Tuboscope Vetco (Italia) s.r.l. Italy
17. Tuboscope Vetco (Deutschland) GmbH's direct Subsidiaries:
Jurisdiction
of
Name of Subsidiaries Organization
-------------------- ------------
Vetco Coating GmbH Germany
Tuboscope Vetco Technology GmbH Germany
Xxxxx Joint Stock Company (40% Stock) Belarussia
Tuboscope Vetco (Brunei) SDN.BDH (49% Stock) Brunei
18. Environmental Procedure Inc.'s Subsidiaries:
Jurisdiction
of
Name of Subsidiaries Organization
-------------------- ------------
Advanced Wirecloth, Inc. Louisiana
Environmental Procedures, Inc. S.A. de CV. Mexico
SOFS (50% Stock) Virgin Islands
SCHEDULE 5.4
LIST OF LITIGATION
[TO COME FROM BORROWER]
SCHEDULE 5.13
ERISA DISCLOSURE
[TO COME FROM BORROWER]
SCHEDULE 5.15
STOCK DISCLOSURE
Shares of the following Subsidiaries are not fully paid:
1. Vetco Enterprise AG (capitalization of 50,000 Sw. Fr., paid 20,000 Sw.
Fr.)
2. Tuboscope Vetco (Thailand) Ltd. (capitalization of 1,500,000 baht, paid
450,000 baht)
3. Xxxxxx s.r.l. (capitalization of 20,000,000 Lire, paid 7,000,000 Lire)
Options and Warrants Outstanding:
1. Options and Warrants for Tuboscope Vetco International Corporation stock
(including the 1996 Equity Participation Plan) as described in the
Registration Statement of such Company filed with the Securities and
Exchange Commission on Form S-4 on March 21, 1996
2. (i) Options converted from the D.O.S. Ltd. 1993 Stock Option Plan and
(ii) options issued to employees and in connection with certain prior
acquisitions for 875,463 shares of Tuboscope Vetco International
Corporation common stock.
SCHEDULE 5.16
INTELLECTUAL PROPERTY
[TO COME FROM BORROWER]
SCHEDULE 5.19
LIST OF ENVIRONMENTAL CLAIMS
[TO COME FROM BORROWER]
SCHEDULE 5.20
LIST OF EXISTING INDEBTEDNESS
[TO COME FROM BORROWER]
SCHEDULE 6.16
LIST OF EXISTING LIENS
[TO COME FROM BORROWER]
