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EXHIBIT 10.32.2
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UNIVERSAL SEISMIC ASSOCIATES, INC.
$2,000,000
12% Senior Secured General Obligation Notes
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NOTE PURCHASE AGREEMENT
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Dated as of August 6, 1997
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NOTE PURCHASE AGREEMENT
Note Purchase Agreement dated as of August 6, 1997 among UNIVERSAL SEISMIC
ASSOCIATES, INC., a Delaware corporation (the "Company"), and RIMCO PARTNERS,
L.P., a Delaware limited partnership, RIMCO PARTNERS, L.P. 11, a Delaware
limited partnership, RIMCO PARTNERS, L.P. 111, a Delaware limited partnership,
and RIMCO PARTNERS, X.X. XX, a Delaware limited partnership (collectively, the
"Noteholders").
In consideration of the mutual covenants herein contained, the Company and
the Noteholders agree as follows:
ARTICLE I
DEFINITIONS, ETC.
Section 1.01. Certain Defined Terms. Capitalized terms used in this
Agreement and not otherwise defined herein shall have the respective meanings
set forth in Annex A attached hereto (such meanings to be equally applicable to
both singular and plural forms of the terms defined).
Section 1.02. Covenant Construction. Each covenant contained herein shall
be construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
Section 1.03. Other Rules of Construction. The words "hereof," "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement. All references herein to articles, sections, annexes, exhibits and
schedules shall, unless the context requires a different construction, be
deemed to be references to the articles and sections of this Agreement and the
annexes, exhibits and schedules attached hereto and made a part hereof. In this
Agreement, unless a clear contrary intention appears, the word "including" (and
with correlative meaning "include") means including, without limiting the
generality of any description preceding such term. The headings of the various
articles and sections of this Agreement are for convenience only and shall not
affect the meaning of the terms and conditions of this Agreement. No provision
of this Agreement shall be interpreted or construed against any party solely
because that party or its legal representative drafted such provision.
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ARTICLE II
SALE OF NOTES
Section 2.01. Notes. The Company will authorize the issue and sale of
$2,000,000 aggregate principal amount of its 12% Senior Secured General
Obligation Notes (the "Notes"). Subject to the terms and conditions of this
Agreement, at the Closing provided for in Article 111, the Company will issue
and sell to the Noteholders, and the Noteholders will purchase from the
Company, Notes in the principal amount specified opposite such Noteholder's
name in Schedule A at the purchase price of 100% of the principal amount
thereof. The Notes shall be substantially in the form set out in Exhibit 2.01,
with such changes therefrom, if any, as may be approved by the Noteholders and
the Company.
ARTICLE III
CLOSING
The sale and purchase of the Notes to be purchased by the Noteholders
shall occur at the offices of Xxxxxxx & Xxxxx, L.L.P., 000 Xxxxxx, Xxxxxxx,
Xxxxx 00000, at 1 0:00 a.m., Houston time, at a closing (the "Closing") on
August 6, 1997. At the Closing the Company will deliver to each Noteholder the
Note to be purchased by such Noteholder, registered in such Noteholder's name,
against delivery by such Noteholder to or for the account of the Company of
immediately available funds in the amount of the purchase price therefor by
wire transfer to the Company or to such other Person designated by the Company
for the account of the Company. If at the Closing the Company shall fail to
tender such Notes to the Noteholders as provided above in this Article III, or
any of the conditions specified in Article IV shall not have been fulfilled to
the Noteholders' satisfaction, the Noteholders shall, at the Noteholders'
election, be relieved of all further obligations under this Agreement, without
thereby waiving any rights the Noteholders may have by reason of such failure
or such nonfulfillment.
ARTICLE IV
CONDITIONS TO CLOSING
The Noteholders' obligation to purchase and pay for the Notes to be sold
to the Noteholders at the Closing is subject to the fulfillment to the
Noteholders' satisfaction, prior to or at the Closing, of the following
conditions:
Section 4.01. Execution of Documents. The Noteholders shall have received
the following agreements (together with this Agreement, collectively, the
"Transaction Documents"), in such number of counterparts as the Noteholders
may reasonably request, each dated the date of the Closing and duly executed
by the Persons indicated below:
(a) the Notes duly executed by the Company;
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(b) the Security Documents duly executed by the Company and Universal
Seismic Acquisition, Inc. as appropriate; and
(c) amendments to such of the Prior Transaction Documents as the
Noteholders shall deem appropriate to permit the purchase and sale of the
Notes, such amendments to be in a form reasonably satisfactory to the
Noteholders.
Section 4.02. Perfection of Liens. The Noteholders shall have received
evidence, in form and substance satisfactory to the Noteholders, that the
Liens contemplated by the Security Documents have been duly perfected in
accordance with applicable law and constitute a first priority Lien on the
Collateral, including (a) acknowledgment copies of UCC financing statements
filed with the Secretaries of State of Texas, Alabama, California, Florida,
Louisiana, Mississippi, New Mexico and Ohio and the Oklahoma County Clerk, (b)
a search of the lien records of the Secretaries of State of Texas, Alabama,
California, Florida, Louisiana, Mississippi, New Mexico and Ohio and the
Oklahoma County Clerk and (c) notation of the Noteholders' Lien on each
certificate of title pertaining to the Collateral.
Section 4.03. Certificates. The Company shall have delivered to the
Noteholders:
(a) an Officer's Certificate, dated the date of the Closing,
certifying that the conditions specified in Section 4.05 and Section 4.06
have been fulfilled; and
(b) a certificate certifying as to the resolutions attached thereto
and other corporate proceedings relating to the authorization, execution
and delivery of the Notes and the other Transaction Documents.
Section 4.04. Opinion of Counsel. The Noteholders shall have received
opinions in form and substance satisfactory to the Noteholders, dated the date
of the Closing from Xxxxx, Xxxxx & Xxxxxx, Incorporated, counsel for the
Company, covering the matters set forth in Exhibit 4.04 and covering such other
matters incident to the transactions contemplated hereby as the Noteholders or
the Noteholders' counsel may reasonably request (and the Company hereby
instructs its counsel to deliver such opinion to the Noteholders).
Section 4.05. Representations and Warranties. The representations
and warranties of the Company in this Agreement and the other Transaction
Documents shall be correct when made and at the time of the Closing.
Section 4.06. Performance; No Default. The Company shall have
performed and complied with all agreements and conditions contained in this
Agreement or the other Transaction Documents required to be performed or
complied with by it prior to or at the closing and after giving effect to the
issue and sale of the Notes (and the application of the proceeds thereof as
contemplated by Section 5.14) no Default or Event of Default shall have
occurred and be continuing.
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Section 4.07 Payment of Special Counsel Fees. Without limiting the
provisions of SECTION 13.01, the Company shall have paid on or before the
Closing the reasonable fees, charges and disbursements of the Noteholders'
special counsel to the extent reflected in a statement of such counsel rendered
to the Company at least one Business Day prior to the Closing.
Section 4.08 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
reasonably satisfactory to the Noteholders and the Noteholders' special
counsel, and the Noteholders and the Noteholders' special counsel shall have
received all such counterpart originals or certified or other copies of such
documents as the Noteholders or they may reasonably request.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Noteholders that:
Section 5.01. Organization; Power and Authority. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and is duly qualified as a foreign corporation
and is in good standing in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the failure to be
so qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Company has the
corporate power and authority to own or hold under lease the properties it
purports to own or hold under lease, to transact the business it transacts and
proposes to transact, to execute and deliver this Agreement mid the other
Transaction Documents and to perform the provisions hereof and thereof.
Section 5.02. Authorization, etc. This Agreement and the other
Transaction Documents have been duly authorized by all necessary corporate
action on the part of the Company, and this Agreement constitutes, and upon
execution and delivery thereof each other Transaction Document will constitute,
a legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
(b) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Section 5.03. Compliance With Laws, Other Instruments, etc. The
execution, delivery and performance by the Company of this Agreement and the
other Transaction Documents will not (a) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect
of any property of the Company or any Subsidiary under, any indenture, mortgage,
deed of trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other agreement or instrument to which the Company or any
Subsidiary is bound or by which the Company or any Subsidiary or any of their
respective properties may be bound or affected, (b)
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conflict with or result in a breach of any of the terms, conditions or
provisions of any order, judgment, decree, or ruling of any court, arbitrator
or Governmental Authority applicable to the Company or any Subsidiary or (c)
violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Company or any Subsidiary.
SECTION 5.04. Governmental Authorizations, Etc. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by the Company of this Agreement or the other Transaction Documents.
SECTION 5.05. Subsidiaries. Schedule 5.05 contains complete and correct
lists of the Company's Subsidiaries, showing, as to each Subsidiary, the
correct name thereof, the jurisdiction of its organization, and the percentage
of shares of each class of its capital stock or similar equity interests
outstanding owned by the Company and each other Subsidiary. No Subsidiary is a
party to, or otherwise subject to any legal restriction or any agreement (other
than this Agreement and customary limitations imposed by corporate law
statutes) restricting the ability of such Subsidiary to pay dividends out of
profits or make any other similar distributions of profits to the Company or
any of its Subsidiaries that owns outstanding shares of capital stock or
similar equity interests of such Subsidiary.
SECTION 5.06. Financial Statements. The consolidated balance sheet of the
Company and its Subsidiaries as at June 30, 1996, and the related consolidated
statements of income, retained earnings and cash flows for the 12-month period
then ended, copies of which the Company has delivered to each Noteholder,
fairly present in all material respects the consolidated financial position of
the Company and its Subsidiaries as of such date and the consolidated results
of their operations and cash flows for such period and have been prepared in
accordance with GAAP consistently applied throughout the periods involved
except as set forth in the notes thereto.
SECTION 5.07. Disclosure. This Agreement, the documents, certificates or
other writings delivered to the Noteholders by or on behalf of the Company in
connection with the transactions contemplated hereby, the financial statements
referred to in Section 5.06 and the Form 10-Qs filed by the Company with the
Securities Exchange Commission since June 30, 1996, taken as a whole, do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading. Since June 30,
1996, except as otherwise disclosed in writing to the Noteholders there has
been no change in the financial condition, operations, business, properties or
prospects of the Company or any Subsidiary except changes that individually
or in the aggregate could not reasonably be expected to have a Material Adverse
Effect. There is no fact known to the Company that could reasonably be
expected to have a Material Adverse Effect that has not been set forth herein
or in the other documents, certificates and other writings (including the
financial statements referred to in Section 5.06) delivered to the Noteholders
by or on behalf of the Company specifically for use in connection with the
transactions contemplated hereby.
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Section 5.08. Litigation. Except as disclosed in Schedule 5.08, there are
no actions, suits or proceedings pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary or any property
of the Company or any Subsidiary in any court or before any arbitrator of any
kind or before or by any Governmental Authority that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
Section 5.09. Observance of Agreements, Statutes and Orders. Neither the
Company nor any Subsidiary is in default under any term of any agreement or
instrument to which it is a party or by which it is bound, or any order,
judgment, decree or ruling of any court, arbitrator or Governmental Authority
or is in violation of any applicable law, ordinance, rule or regulation
(including without limitation Environmental Laws) of any Governmental
Authority, which default or violation, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
Section 5.10. Taxes. The Company and its Subsidiaries have filed all tax
returns that are required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (i) the
amount of which is not individually or in the aggregate Material or (ii) the
amount, applicability or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which the Company or a
Subsidiary, as the case may be, has established adequate reserves in accordance
with GAAP. The Company knows of no basis for any other tax or assessment that,
if imposed, could reasonably be expected to have a Material Adverse Effect. The
charges, accruals and reserves on the books of the Company and its Subsidiaries
in respect of Federal, state or other taxes for all fiscal periods are adequate
in all material respects. The Federal income tax liabilities of the Company and
its Subsidiaries have been determined by the Internal Revenue Service and paid
for all fiscal years up to and including the fiscal year ended June 30, 1996.
Section 5.11. Title to Property. The Company and its Subsidiaries have
good and sufficient title to their respective properties that individually or
in the aggregate are Material, including all such properties reflected in the
most recent audited balance sheet referred to in Section 5.06 or purported to
have been acquired by the Company or any Subsidiary after said date, in each
case free and clear of Liens other than those permitted by this Agreement. All
leases that individually or in the aggregate are Material are valid and
subsisting and are in full force and effect in all material respects.
Section 5.12. Licenses, Permits, etc. The Company and its subsidiaries own
or possess all licenses, permits, franchises, authorizations, patents,
copyrights, service marks, trademarks and trade names, or rights thereto, that
individually or in the aggregate are Material, without known conflict with
the rights of others. To the best knowledge of the Company, (a) no product of
the Company infringes in any material respect any license, permit, franchise,
authorization, patent, copyright, service xxxx, trademarks, trade name or other
right owned by any
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other Person; and (b) there is no Material violation by any Person of any right
of the Company or any of its Subsidiaries with respect to any patent,
copyright, service xxxx, trademark, trade name or other right owned or used by
the Company or any of its Subsidiaries.
Section 5.13. Compliance with ERISA.
(a) The Company and each ERISA Affiliate have operated and administered
each Plan, if any, in compliance with all applicable laws except for such
instances of noncompliance as have not resulted in and could not reasonably be
expected to result in a Material Adverse Effect. Neither the Company nor any
ERISA Affiliate has incurred any liability pursuant to Title I or IV or ERISA
or the penalty or excise tax provisions of the Code relating to employee
benefit plans (as defined in Section 3 of ERISA), and no event, transaction or
condition has occurred or exists that could reasonably be expected to result in
the incurrence of any such liability by the Company or any ERISA Affiliate, or
in the imposition of any Lien on any of the rights, properties or assets of the
Company or any ERISA Affiliate, in either case pursuant to Title I or IV of
ERISA or to such penalty or excise tax provisions or to Section 401(a)(29) or
412 of the Code, other than such liabilities or Liens as would not be
individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities under each of
the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities. The term "benefit liabilities" has the
meaning specified in section 4001 of ERISA and the terms "current value" and
"present value" have the meaning specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
(d) The expected post-retirement benefit obligation (determined as of the
last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is not Material.
Section 5.14. Use of Proceeds; Margin Regulations. The Company will apply
the proceeds of the sale of the Notes to pay for the settlement of that certain
lawsuit styled The Universal Seismac Associates, Inc. Stockholders' Protective
Committee, Xxxxxxx X. Xxxxxxxxxx, and Xxxxxx X. Xxxxxx vs. Xxxxxxx X. Xxxxxxx,
Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxx, Xxxx Xxxxxxx, Xxxxxx Xxxxx, Xxxx Xxxxx,
Universal Seismic Associates, Inc., RIMCO Associates, Inc.; and Resource
Investors Management Co., L.P.; CA No. 97-22 (RRM) in the United States District
Court of the District of Delaware and for legal fees and accounting fees related
thereto. No part of the proceeds from the sale
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of the Notes hereunder will be used, directly or indirectly, for the purpose of
buying or carrying any margin stock within the meaning of Regulation G of the
Board of Governors of the Federal Reserve System (12 CFR 207), or for the
purpose of buying or carrying or trading in any securities under such
circumstances as to involve the Company in a violation of Regulation X of said
Board (12 CFR 224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220).
Section 5.15. Status under Certain Statutes. Neither the Company nor any
Subsidiary is subject to regulation under the Investment Company Act of 1940,
as amended, the Public Utility Holding Company Act of 1935, as amended, the
Interstate Commerce Act, as amended, or the Federal Power Act, as amended.
Section 5.16. Capitalization. The authorized capital stock of the Company
consists solely of 20,000,000 shares of $.0001 par common stock, of which
5,234,109 shares are issued and outstanding.
Section 5.17. Securities Matters. Other than offers to Accredited
Investors, neither the Company nor anyone acting on its behalf has directly or
indirectly offered the Notes or any part thereof or any similar securities for
sale to, or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, anyone other than the
Noteholders named in Schedule A. Neither the Company nor anyone acting on its
behalf has taken or will take any action which would subject the issuance and
sale of the Notes to the registration and prospectus delivery provisions of the
Securities Act.
Section 5.18. Environmental Matters. Neither the Company nor any
Subsidiary has knowledge of any claim or has received any notice of any claim,
and no proceeding has been instituted raising any claim against the Company or
any of its Subsidiaries or any of their respective real properties now or
formerly owned, leased or operated by any of them or other assets, alleging any
damage to the environment or violation of any Environmental Laws, except, in
each case, such as could not reasonably be expected to result in a Material
Adverse Effect. Except as otherwise disclosed to the Noteholders in writing,
(a) neither the Company nor any Subsidiary has knowledge of any facts which
would give rise to any claim, public or private, of violation of Environmental
Laws or damage to the environment emanating from, occurring on or in any way
related to real properties now or formerly owned, leased or operated by any of
them or to other assets or their use, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect; (b) neither the
Company nor any of its Subsidiaries has stored any Hazardous Materials on real
properties now or formerly owned, leased or operated by any of them and has not
disposed of any Hazardous Materials in a manner contrary to any Environmental
Laws in each case in any manner that could reasonably be expected to result in
a Material Adverse Effect; and (c) all buildings on all real properties now
owned, leased or operated by the Company or any of its Subsidiaries are in
compliance with applicable Environmental Laws, except where failure to comply
could not reasonably be expected to result in a Material Adverse Effect.
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ARTICLE VI
REPRESENTATIONS OF THE PURCHASER
Section 6.01. Purchase for Investment. Each Noteholder represents that it
is acquiring its Notes for its own account or for one of its separate accounts
(or for the account of trusts for which it is trustee) for investment with no
intention of presently distributing or reselling the same, subject,
nevertheless, to its right to dispose of, in compliance with applicable
securities laws, its respective Notes, or any part of any thereof held by it,
if at some future time in its sole discretion it deems it advisable so to do.
Each Noteholder hereby agrees that it will not sell, transfer or otherwise
dispose of its Notes in violation of the Securities Act.
Section 6.02. Status; No Registration. Each Noteholder represents that it
is an Accredited Investor. Each Noteholder acknowledges that the Notes have not
been registered under the Securities Act, and that such Notes must be held
indefinitely unless they are subsequently registered under the Securities Act
or an exemption from such registration is available.
ARTICLE VII
PAYMENT OF THE NOTES
Section 7.01. Place of Payment. The Company will pay all sums becoming due
to any Noteholder under any Transaction Document by the method and at the
address specified for such purpose below such Noteholder's name in Schedule A,
or by such other method or at such other address as such Noteholder shall have
from time to time specified to the Company in writing for such purpose, without
the presentation or surrender of such Note or the making of any notation
thereon, except that upon written request of the Company made concurrently with
or reasonably promptly after payment or prepayment in full of any Note, the
Noteholders shall surrender such Note for cancellation, reasonably promptly
after any such request, to the Company at its principal executive office.
Section 7.02. Payments Due on Non-business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of
principal of or interest on any Note that is due on a date other than a
Business Day shall be made on the next succeeding Business Day without
including the additional days elapsed in the computation of the interest
payable on such next succeeding Business Day.
Section 7.03. Optional Prepayments of Notes. (a) The Company may, at its
option, without notice, penalty, premium or fee, prepay at any time all, or
from time to time any part of, the Notes, in an amount not less than $75,000 in
the case of a partial prepayment, at 100% of the principal amount so prepaid,
plus accrued interest on such principal amount.
(b) In the case of each partial prepayment of the Notes, the principal
amount of the Notes to be prepaid shall be allocated among all of the Notes at
the time of outstanding in
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proportion, as nearly as practicable, to the respective unpaid principal
amounts thereof not theretofore called for prepayment.
(c) Any Note paid or prepaid in full shall be surrendered to the Company
and canceled and shall not be reissued, and no Note shall be issued in lieu of
any prepaid principal amount of any Note.
Section 7.04. Purchase of Notes. The Company will not, and will not permit
any Affiliate to, purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except upon the payment or prepayment
of the Notes in accordance with the terms of this Agreement and the Notes. The
Company will promptly cancel all Notes acquired by it or any Affiliate pursuant
to any payment, prepayment or purchase of Notes pursuant to any provision of
this Agreement and no Notes may be issued in substitution or exchange for any
such Notes.
ARTICLE VIII
INFORMATION AS TO COMPANY
Section 8.01. Financial and Business Information. The Company shall
deliver to each of the Noteholders:
(a) Within 45 days after the end of each quarterly fiscal period in each
fiscal year of the Company, copies of (i) a consolidated balance sheet of the
Company and its Subsidiaries as at the end of such quarter, and (ii)
consolidated statements of income, changes in shareholders' equity and cash
flows of the Company and its Subsidiaries, for such quarter and for the portion
of the fiscal year ending with such quarter, setting forth in each case in
comparative form the figures for the corresponding periods in the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP
applicable to quarterly financial statements generally, and certified by a
Senior Financial Officer as fairly presenting, in all material respects, the
financial position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments.
(b) Within 90 days after the end of each fiscal year of the Company,
copies of (i) a consolidated balance sheet of the Company and its Subsidiaries,
as at the end of such year, and (ii) consolidated statements of income, changes
in shareholders' equity and cash flows of the Company and its Subsidiaries, for
such year, setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance with
GAAP, and accompanied (A) by an opinion thereon of independent certified public
accounts of recognized national standing, which opinion shall state that such
financial statements present fairly, in all material respects, the financial
position of the companies being reported upon and their results of operations
and cash flows and have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such financial statements
has been made in accordance with generally accepted auditing standards, and
that such audit provides a reasonable basis for such opinion in the
circumstances, and (B) a certificate of such accountants stating that they
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have reviewed this Agreement and stating further whether, in making their
audit, they have become aware of any condition or event that then constitutes a
Default or an Event of Default, and, if they are aware that any such condition
or event then exists, specifying the nature and period of the existence
thereof.
(c) Within 25 days after the end of each calendar month, copies of (i) a
consolidated balance sheet of the Company and its Subsidiaries as at the end of
such month, and (ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its Subsidiaries, for
such month and for the portion of the fiscal year ending with such month,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP applicable to monthly financial statements
generally, and certified by a Senior Financial Officer as fairly presenting, in
all material respects, the financial position of the companies being reported
on and their results of operations and cash flows, subject to changes resulting
from year-end adjustments.
(d) Within 60 days after the end of each calendar year, an appraisal
report, prepared by an independent appraisal firm reasonably acceptable to the
Noteholders, covering the Collateral and calculating the Collateral Liquidation
Value as of the end of such calendar year, all in form and substance
satisfactory to the Noteholders.
(e) Promptly upon their becoming available, one copy of (i) each financial
statement, report, notice or proxy statement sent by the Company or any
Subsidiary to public securities holders generally, and (ii) each regular or
periodic report, each registration statement (without exhibits except as
expressly requested by such holder), and each prospectus and all amendments
thereto filed by the Company or any Subsidiary with the Securities and Exchange
Commission and of all press releases and other statements made available
generally by the Company or any Subsidiary to the public concerning
developments that are Material.
(f) Promptly, and in any event within five days after a Responsible
Officer becoming aware of the existence of any Default or Event of Default or
that any Person has given any notice or taken any action with respect to a
claimed default hereunder or that any Person has given any notice or taken any
action with respect to a claimed default of the type referred to in Section
11.01, a written notice specifying the nature and period of existence thereof
and what action the Company is taking or proposes to take with respect thereto;
(g) Promptly, and in any event within five days after a Responsible
Officer becoming aware of the following, a written notice setting forth the
nature thereof and the action, if any, that the Company or an ERISA Affiliate
proposes to take with respect thereto: (i) with respect to any Plan, any
reportable event, as defined in section 4043(b) of ERISA and the regulations
thereunder, for which notice thereof has not been waived pursuant to such
regulations as in effect on the date hereof; or (ii) the taking by the PBGC of
steps to institute, or the threatening by the PBGC of the institution of,
proceeding under section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the receipt by the Company
or any ERISA
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Affiliate of a notice from a Multiemployer Plan that such action has been taken
by the PBGC with respect to such Multiemployer Plan; or (iii) any event,
transaction or condition that could result in the incurrence of any liability
by the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to employee benefit
plans, or in the imposition of any Lien on any of the rights, properties or
assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA
or such penalty or excise tax provisions, if such liability or Lien, taken
together with any other such liabilities or Liens then existing, could
reasonably be expected to be Material.
(h) Promptly, and in any event within 30 days of receipt thereof, copies
of any notice to the Company or any Subsidiary from any Federal or state
Governmental Authority relating to any order, ruling, statute or other law or
regulation that could reasonably be expected to have a Material Adverse Effect;
and
(i) With reasonable promptness, such other data and information relating
to the business, operations, affairs, financial condition, assets or properties
of the Company or any of its Subsidiaries or relating to the ability of the
Company to perform its obligations hereunder and under the Notes as from time
to time may be reasonably requested by any of Noteholder.
Section 8.02. Officer's Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to Section 8.01(a), Section 8.01(b) or
Section 8.01(c) shall be accompanied by a certificate of a Senior Financial
Officer setting forth: (a) the information (including detailed calculations)
required in order to establish whether the Company was in compliance with the
requirements of Section 10.03 hereof during the monthly, quarterly or annual
period covered by the statements then being furnished (including with respect
to each such Section, where applicable, the calculations of the maximum or
minimum amount, ratio or percentage, as the case may be, permissible under the
terms of such Sections, and the calculation of the amount, ratio or percentage
then in existence); and (b) a statement that such officer has reviewed the
relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Company and its
Subsidiaries from the beginning of the monthly, quarterly or annual period
covered by the statements then being furnished to the date of the certificate
and that such review shall not have disclosed the existence during such period
of any condition or event that constitutes a Default or an Event of Default or,
if any such condition or event existed or exists (including, without
limitation, any such event or condition resulting from the failure of the
Company or any Subsidiary to comply with any Environmental Law), specifying the
nature and period of existence thereof and what action the Company shall have
taken or proposes to take with respect thereto.
Section 8.03. Inspection. The Company shall permit the representatives of
each Noteholder, at the expense of the Company and upon reasonable prior notice
to the Company, to visit and inspect any of the offices or properties of the
Company or any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and
to discuss their respective affairs, finances and accounts with their
respective officers
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and independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and accounts of
the Company and its Subsidiaries), all at such times and as often as may be
requested.
ARTICLE IX
AFFIRMATIVE COVENANTS
The Company covenants that so long as any of the Notes are outstanding:
Section 9.01. Compliance with Law; Contracts. The Company will, and will
cause each of its Subsidiaries to, comply with all laws, ordinances or
governmental rules or regulations to which each of them is subject, including,
without limitation, Environmental Laws, and will obtain and maintain in effect
all licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent
necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Company will, and will cause
each of its Subsidiaries to, comply with, and perform their respective
obligations under, each contract or agreement to which each is a party, unless,
in the good faith judgment of the Company, the failure to so comply or perform
could not reasonably be expected to have a Material Adverse Effect.
Section 9.02. Insurance. The Company will, and will cause each of its
Subsidiaries to, maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated, including the insurance described in Schedule 9.02.
Section 9.03. Maintenance of Properties. The Company will, and will cause
each of its Subsidiaries to, maintain and keep, or cause to be maintained and
kept, their respective properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried on in
connection therewith may be properly conducted at all times, provided that this
Section shall not prevent the Company or any Subsidiary from discontinuing the
operation and the maintenance of any of its properties if such discontinuance
is desirable in the conduct of its business and the Company has concluded that
such discontinuance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
Section 9.04. Payment of Taxes and Claims. The Company will, and will
cause each of its Subsidiaries to, file all tax returns required to be filed in
any jurisdiction and to pay and discharge all taxes shown to be due and
payable on such returns and all other taxes, assessments,
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governmental charges, or levies imposed on them or any of their properties,
assets, income or franchises, to the extent such taxes and assessments have
become due and payable and before they have become delinquent and all claims
for which sums have become due and payable that have or might become a Lien on
properties or assets of the Company or any Subsidiary, provided that neither
the Company nor any Subsidiary need pay any such tax or assessment or claims if
(i) the amount, applicability or validity thereof is contested by the Company
or such Subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Company or a Subsidiary has established adequate reserves
therefor in accordance with GAAP on the books of the Company or such Subsidiary
or (ii) the nonpayment of all such taxes and assessments in the aggregate could
not reasonably be expected to have a Material Adverse Effect.
Section 9.05. Corporate Existence, etc. The Company will at all times
preserve and keep in full force and effect its corporate existence. The Company
will at all times preserve and keep in full force and effect the corporate
existence of each of its Subsidiaries and all rights and franchises of the
Company and its Subsidiaries unless, in the good faith judgment of the Company,
the termination of or failure to preserve and keep in full force and effect
such corporate existence, right or franchise could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
ARTICLE X
NEGATIVE COVENANTS
The Company covenants that so long as any of the Notes are outstanding:
Section 10.01. Restrictions on Indebtedness. The Company will not, and
will not permit any Subsidiary to, create, incur, assume, Guaranty or permit to
exist any Indebtedness, except:
(a) the Notes;
(b) the Existing Senior Notes and any other notes issued by the Company in
favor of any of the Noteholders pursuant to a note purchase agreement
entered into by the Company and such Noteholders in the future;
(c) the Subsidiary Notes; and
(d) Indebtedness outstanding under the Fidelity Funding Agreement.
Section 10.02. Restrictions on Liens. The Company will not, and will not
permit any Subsidiary to, create, incur, assume, or permit to exist any Lien
with respect to any asset now owned or hereafter acquired, except:
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(a) Liens in favor of the Noteholders;
(b) Liens existing on the date hereof and permitted under the Existing
Transaction Documents;
(c) encumbrances consisting of easements of ingress or egress over real
property, where the same do not materially detract from the use or enjoyment of
such property by, or the value of such property to, the Company;
(d) Liens for taxes or assessments or governmental charges or levies, if
payment shall not at the time be required to be made in accordance with the
provisions of Section 9.04;
(e) any judgment lien, unless the judgment it secures shall not, within
30 days after the entry thereof, have been discharged or execution thereof
stayed pending appeal, or shall not have been discharged within 30 days after
the expiration of any such stay;
(f) statutory liens of landlords and liens of carriers, warehousemen,
mechanics, laborers and materialmen incurred in the ordinary course of business
for sums not yet due or being contested in good faith; and
(g) Liens (other than liens created by section 4068 of ERISA) incurred on
pledges or deposits made in the ordinary course of business in connection with
workmen's compensation, unemployment insurance, social security laws or similar
legislation.
Section 10.03. Financial Covenants. The Company will not permit:
(a) its Current Assets at any time to be less than the sum of (i) its
Current Liabilities as at such date, minus (ii) any portion of such Current
Liabilities consisting of amounts under the Fidelity Funding Agreement that are
not due within one year of such date;
(b) its Tangible Net Worth at any time to be less than $7,000,000;
(c) the sum, determined as of the last day of each calendar month
beginning August 1997, of (i) its Net Income for the twelve month period then
ended, plus (i) any interest expense deducted in the calculation of Net Income
for such twelve month period, plus (iii) any depreciation and amortization
expense deducted in the calculation of Net Income for such twelve month period,
plus (v) any Federal income taxes deducted in the calculation of Net Income for
such twelve month period, to be less than $2,500,000; and
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(d) the ratio of (i) the Collateral Liquidation Value to (ii) the
aggregate outstanding principal balance of the Notes and the Existing
Senior Notes, to be less than 1.5 to 1.0 at any time.
Section 10.04. Restricted Payments. Except as contemplated by
the Transaction Documents and the Existing Transaction Documents, the Company
will not, and will not permit any Subsidiary, directly or indirectly, to make
or pay (a) any dividend or other distribution on any shares of the Company's
capital stock (including any dividends payable in shares of capital stock), (b)
any payment on account of the purchase, redemption, retirement or acquisition
of any shares of the Company's capital stock or any option, warrant or other
right to acquire such shares, or (c) any payments or other distributions to
Sierra Management, Inc.
Section 10.05. Merger, Consolidation, etc. The Company shall not
consolidate with or merge with any other Person or convey, transfer or lease
all or substantially all of its assets in a single transaction or series of
transactions to any Person.
Section 10.06. Restrictions on Asset Sales. Without the
Noteholders' prior written consent, the Company will not, and will not permit
any Subsidiary to, sell, transfer, assign, convey or otherwise dispose of an
interest in any asset now owned or hereafter acquired, except sales of assets
during each calendar year that have an aggregate Collateral Liquidation Value
of $150,000 or less.
Section 10.07. Transactions with Affiliates. The Company will
not, and will not permit any Subsidiary to, enter into directly or indirectly
any Material transaction or Material group of related transactions (including
without limitation the purchase, lease, sale or exchange of properties of any
kind or the rendering of any service) with any Affiliate (other than the
Company or another Subsidiary), except in the ordinary course and pursuant to
the reasonable requirements of the Company's or such Subsidiary's business and
upon fair and reasonable terms no less favorable to the Company or such
Subsidiary than would be obtainable in a comparable arm's-length transaction
with a Person not an Affiliate,
Section 10.08. Change in Business. Except for oil and gas
exploration and production operations to be conducted by UNEXCO, the Company
will not, and will not permit any of its Subsidiaries to, directly or
indirectly engage to a material extent in any business other than those in
which it is presently engaged or that are directly related thereto, or
discontinue any of its existing lines of business or substantially alter its
method of doing business. Without limiting the generality of the foregoing,
the Company and its Subsidiaries (other than UNEXCO) shall not engage in any
oil and gas exploration and production operations or business.
Section 10.09. Fidelity Funding Agreement. Without the prior
written consent of the Noteholders, the Company will not, and will not permit
any of its Subsidiaries to amend, modify, or extend the Fidelity Funding
Agreement.
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Section 10.10. Restriction on Investment. Other than (a) the
common stock of UNEXCO owned by the Company on the date hereof, (b) Oil and Gas
Properties transferred to UNEXCO prior to the date hereof and (c) capital
contributions to UNEXCO that are applied directly to pay the Indebtedness owing
on the Subsidiary Notes, the Company will not, and will not permit any of its
Subsidiaries to, make any Investment in UNEXCO without the Noteholders' prior
written consent.
ARTICLE XI
DEFAULT AND REMEDIES
Section 11.01. Events of Default. An "Event of Default" shall
exist if any of the following conditions or events shall occur and be
continuing:
(a) the Company defaults in the payment of any principal or
interest on any Note when the same becomes due and payable, whether at
maturity, by declaration or otherwise; or
(b) the Company defaults in the performance of or compliance with
any term contained in Article X; or
(c) the Company defaults in the performance of or compliance with
any term contained herein (other than those referred to in paragraphs
(a) and (b) of this Section 11.01) and such default is not remedied
within 30 days after the earlier of (i) a Responsible Officer obtains
actual knowledge of such default or (ii) the Company receives written
notice of such default from any holder of a Note; or
(d) any representation or warranty made in writing by or on
behalf of the Company or by any officer of the Company in this Agreement
or in any writing furnished in connection with the transactions
contemplated hereby proves to have been false or incorrect in any
Material respect on the date as of which made; or
(e) (i) the Company or any Subsidiary is in default (as principal
or as guarantor or other surety) in the payment of any principal of or
premium or interest on any Indebtedness that is outstanding in an
aggregate principal amount of at least $100,000 beyond any period of
grace provided with respect thereto, or (ii) the Company or any
Subsidiary is in default in the performance of or compliance with any
term of any evidence of any Indebtedness in an aggregate outstanding
principal amount of at least $100,000 or of any mortgage, indenture or
other agreement relating thereto or any other condition exists, and as
a consequence of such default or condition such Indebtedness has become,
or has been declared (or one or more Persons are entitled to declare
such Indebtedness to be), due and payable before its stated maturity or
before its regularly scheduled dates of payment, or (iii) as a
consequence of the occurance or continuation of any event or condition
(other than the passage of time or the right of the holder of
Indebtedness to convert such Indebtedness into
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equity interests), (x) the Company or any Subsidiary has become
obligated to purchase or repay Indebtedness before its regular maturity
or before its regularly scheduled dates of payment in an aggregate
outstanding principal amount of at least $100,000, or (y) one or more
Persons have the right to require the Company or any Subsidiary to
purchase or repay such Indebtedness; or
(f) the Company or any Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due,
(ii) files, or consents by answer or otherwise to the filing against it
of, a petition for relief or reorganization or arrangement or any other
petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law
of any jurisdiction, (iii) makes an assignment for the benefit of its
creditors, (iv) consents to the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to it or with
respect to any substantial part of its property, (v) is adjudicated as
insolvent or to be liquidated, or (vi) takes corporate action for the
purpose of any of the foregoing; or
(g) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company or any of its
Subsidiaries, a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial
part of its property, or constituting an order for relief or approving a
petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or any of its Subsidiaries, or
any such petition shall be filed against the Company or any of its
Subsidiaries and such petition shall not be dismissed within 60 days; or
(h) a final judgment or judgments for the payment of money
aggregating in excess of $250,000 are rendered against one or more of
the Company and its Subsidiaries and such judgments are not, within 60
days after entry thereof, bonded, discharged or stayed pending appeal,
or are not discharged within 60 days after the expiration of such stay;
or
(i) an "Event of Default" exists under the Existing Company Note
Agreements or the Subsidiary Note Agreement; or
(j) the Company fails to own (both beneficially and of record)
100% of the common stock and other equity securities of UNEXCO; or
(k) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under section 412 of the Code, (ii) a notice of intent
to terminate any plan shall have been or is reasonably expected to be
filed with the PBGC or the PBGC shall have instituted proceedings under
ERISA section 4042 to terminate or appoint a trustee to administer any
Plan or the PBGC shall have notified the Company or
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any ERISA Affiliate that a Plan may become a subject to any such
proceedings (iii) the aggregate "amount of unfunded benefit liabilities"
(within the meaning of section 4001 (a)(18) of ERISA) under all Plans,
determined in accordance with Title IV of ERISA, shall exceed $25,000,
(iv) the Company or any ERISA Affiliate shall have incurred or is
reasonably expected to incur any liability pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans, (v) the Company or any ERISA Affiliate withdraws
from any Multiemployer Plan, (vi) the Company or any ERISA Affiliate
fails to make any contribution due, or payment to, any employee benefit
plan, or (vii) the Company or any Subsidiary establishes or amends any
employee welfare benefit plan that provides post-employment welfare
benefits in a manner that would increase the liability of the Company or
any Subsidiary thereunder, and any such event or events described in
clauses (i) through (vii) above, either individually or together with
any other such event or events, could reasonably be expected to have a
Material Adverse Effect,
As used in this Section 11.0(j); the terms "employee benefit plan" and
"employee welfare benefit plan" shall have the respective meanings
assigned to such terms in Section 3 of ERISA.
Section 11.02. Acceleration.
(a) If an Event of Default with respect to the Company described
in paragraph (f) or (g) of Section 11.01 (other than an Event of
Default described in clause (i) of paragraph (f) or described in clause
(vi) of paragraph (f) by virtue of the fact that such clause encompasses
clause (i) of paragraph (f)) has occurred, all the Notes then
outstanding shall automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing,
the Required Holders at any time at its or their option, by notice or
notices to the Company, declare all the Notes then outstanding to be
immediately due and payable.
(c) If any Event of Default described in paragraph (a) of Section
11.01 has occurred and is continuing, any holder or holders of Notes at
the time outstanding affected by such Event of Default may at any time,
at its or their option, by notice or notices to the Company, declare all
the Notes held by it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 11.02,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus all accrued and unpaid
interest thereon, shall all be immediately due and payable, in each and every
case without presentment, demand, notice of default, notice of intent to
accelerate, notice of acceleration, protest or further notice, all of which are
hereby waived.
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Section 11.03. Other Remedies. If any Default or Event of
Default has occurred and is continuing, and irrespective of whether any Notes
have become or have been declared immediately due and payable under Section
11.02, the holder of any Note at the time outstanding may proceed to protect
and enforce the rights of such holder by an action at law, suit in equity or
other appropriate proceeding, whether for the specific performance of any
agreement contained herein or in any Note, or for an injunction against a
violation of any of the terms hereof or thereof, or in aid of the exercise of
any power granted hereby or thereby or by law or otherwise.
Section 11.04. No Waivers or Election of Remedies, Expenses,
etc. No course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power
or remedy conferred by this Agreement or by any Note upon any holder thereof
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under Section 13.01,
the Company will pay to the holder of each Note on demand such further amount
as shall be sufficient to cover all reasonable costs and expenses of such
holder incurred in any enforcement or collection under this Article XI,
including, without limitation, reasonable attorneys' fees, expenses and
disbursements, together with interest on such amounts at the Default Rate
accruing from the date of demand.
ARTICLE XII
REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
Section 12.01. Registration of Notes. The Company shall keep at
its principal executive office a register for the registration and registration
of transfers of Notes. The name and address of each holder of one or more
Notes, each transfer thereof and the name and address of each transferee of one
or more Notes shall be registered in such register. Prior to due presentment
for registration of transfer, the Person in whose name any Note shall be
registered shall be deemed and treated as the owner and holder thereof for all
purposes hereof, and the Company shall not be affected by any notice or
knowledge to the contrary. The Company shall give to any holder of a Note
promptly upon request therefor, a complete and correct copy of the names and
addresses of all registered holders of Notes.
Section 12.02. Transfer and Exchange of Notes. Subject to
compliance with all applicable securities laws, upon surrender of any Note at
the principal executive office of the Company for registration of transfer or
exchange (and in the case of a surrender for registration of transfer, duly
endorsed or accompanied by a written instrument of transfer duly executed by
the registered holder of such Note or his attorney duly authorized in writing
and accompanied by the address for notices of each transferee of such Note or
part thereof), the Company shall execute and deliver, at the Company's expense,
one or more new Notes (as requested by the holder thereof) in exchange
therefor, in an aggregate principal amount equal to the unpaid principal amount
of the surrendered Note. Each such new Note shall be payable to such Person as
such holder may request and shall be substantially in the form specified
herein. Each such new Note shall be dated and bear
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interest from the date to which interest shall have been paid on the
surrendered Note or dated the date of the surrendered Note if no interest shall
have been paid thereon.
Section 12.03. Replacement of Notes. Upon receipt by the Company
of evidence reasonably satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of any Note, and (a) in the case of loss,
theft or destruction, of indemnity reasonably satisfactory to it (provided that
if the holder of such Note is, or is a nominee for, an original Noteholder,
such Person's own unsecured agreement of indemnity shall be deemed to be
satisfactory), or (b) in the case of mutilation, upon surrender and
cancellation thereof, the Company at its own expense shall execute and deliver,
in lieu thereof, a new Note, dated and bearing interest from the date to which
interest shall have been paid on such lost, stolen, destroyed or mutilated Note
or dated the date of such lost, stolen, destroyed or mutilated Note if no
interest shall have been paid thereon.
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Transaction Expenses. Whether or not the
transactions contemplated hereby are consummated, the Company will pay all
reasonable costs and expenses (including reasonable attorneys' fees of a
special counsel and any local or other counsel) incurred by the Noteholders or
holder of a Note in connection with such transactions and in connection with
any amendments, waivers or consents under or in respect of this Agreement or
the other Transaction Documents (whether or not such amendment, waiver or
consent becomes effective), including, without limitation: (a) the reasonable
costs and expenses incurred in enforcing or defending (or determining whether
or how to enforce or defend) any rights under this Agreement or the other
Transaction Documents or in responding to any subpoena or other legal process
or informal investigative demand issued in connection with this Agreement or
the other Transaction Documents, or by reason of being a holder of any Note,
(b) the reasonable costs and expenses of negotiation, preparation and execution
of this Agreement and the other Transaction Documents, and (c) the reasonable
costs and expenses, including reasonable financial advisors' fees, incurred in
connection with the insolvency or bankruptcy of the Company or any Subsidiary
or in connection with any work-out or restructuring of the transactions
contemplated hereby and by the Notes. The Company will pay, and will save the
Noteholders and each other holder of a Note harmless from, all claims in
respect of any fees, costs or expenses if any, of brokers and finders (other
than those retained by the Noteholders). The obligations of the Company under
this Section 13.01 will survive the payment or transfer of any Note, the
enforcement, amendment or waiver of any provision of this Agreement or the
other Transaction Documents, and the termination of this Agreement.
Section 13.02. Survival of Representations and Warranties. All
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the Notes, the purchase or transfer by the
Noteholders of any Note or portion thereof or interest therein and the payment
of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of the
Noteholders or any other holder of a Note. All statements contained in any
certificate or other instrument delivered by or on behalf of
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the Company pursuant to this Agreement shall be deemed representations and
warranties of the Company under this Agreement.
Section 13.03. Amendment and Waiver. This Agreement and the
Notes may be amended, and the observance of any term hereof or of the Notes may
be waived (either retroactively or prospectively), with (and only with) the
written consent of the Company and the Required Holders, except that (a) no
amendment or waiver of any of the provisions of Articles II, III, IV or V, or
any defined term (as it is used therein), will be effective as to the
Noteholders unless consented to by all of the Noteholders in writing, and (b)
no such amendment or waiver may, without the written consent of the holder of
each Note at the time outstanding affected thereby, (i) subject to the
provisions of Article XI relating to acceleration or rescission, change the
amount or time of any prepayment or payment of principal of, or reduce the rate
or change the time of payment or method of computation of interest on, the
Notes, or (ii) change the percentage of the principal amount of the Notes the
holders of which are required to consent to any such amendment or waiver. Any
amendment or waiver consented to as provided in this Section 13.03 applies
equally to all holders of Notes and is binding upon them and upon each future
holder of any Note and upon the Company without regard to whether such Note has
been marked to indicate such amendment or waiver. No such amendment or waiver
will extend to or affect any obligation, covenant, agreement, Default or Event
of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note
nor any delay in exercising any rights hereunder or under any Note shall
operate as a waiver of any rights of any holder of such Note.
Section 13.04. Notices. All notices and communications provided
for hereunder shall be in writing and sent (a) by telecopy if the sender on the
same day sends a confirming copy of such notice by a recognized overnight
delivery service (charges prepaid), or (b) by registered or certified mail with
return receipt requested (postage prepaid), or (c) by a recognized overnight
delivery service (with charges prepaid). Any such notice must be sent (i) if
to a Noteholder, to its address specified for such communications in Schedule
A, or at such other address as it shall have specified to the Company in
writing, (ii) if to the Company, to the Company at 00000 Xxxx Xxx Xxxxx, Xxxxx
000, Xxxxxxx, Xxxxx 00000, Telecopy No.: 000-000-0000, or at such other address
as the Company shall have specified to the holder of each Note in writing.
Notices under this Section 13.04 will be deemed given only when actually
received.
Section 13.05. Limitation on Interest. Each provision in this
Agreement and each other Transaction Document is expressly limited so that in
no event whatsoever shall the amount paid, or otherwise agreed to be paid, by
the Company for the use, forbearance or detention of the money to be loaned
under this Agreement or any other Transaction Document or otherwise (including
any sums paid as required by any covenant or obligation contained herein or in
any other Transaction Document which is for the use, forbearance or detention
of such money), exceed that amount of money which would cause the effective rate
of interest thereon to exceed the Highest Lawful Rate, and all amounts owed
under this agreement and each other Transaction Document shall be held to be
subject to reduction to the effect that such amounts so paid or agreed to be
paid which are for the use, forbearance or detention of money under this
Agreement or such Transaction
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Document shall in no event exceed that amount of money which would cause the
effective rate of interest thereon to exceed the Highest Lawful Rate.
Notwithstanding the provisions of Section 13.14, to the extent that the Highest
Lawful Rate applicable to a Noteholder is at any time determined by Texas law,
such rate shall be the "indicated rate ceiling" described in Section (a)(1) of
Article 1.04 of Chapter 1, Title 79, of the Revised Civil Statutes of Texas,
1925, as amended; provided, however, to the extent permitted by such Article,
the Noteholders from time to time by notice to Company may revise the aforesaid
election of such interest rate ceiling as such ceiling affects the then-current
or future balances of the loans outstanding under the Notes. Notwithstanding
any provision in this Agreement or any other Transaction Document to the
contrary, if the maturity of the Notes or the obligations in respect of the
other Transaction Documents are accelerated for any reason, or in the event of
prepayment of all or any portion of the Notes or the obligations in respect of
the other Transaction Documents by the Company or in any other event, earned
interest on the Notes and such other obligations of the Company may never
exceed the maximum amount permitted by applicable law, and any unearned
interest otherwise payable under the Notes or the obligations in respect of the
other Transaction Documents that is in excess of the maximum amount permitted
by applicable law shall be canceled automatically as of the date of such
acceleration or prepayment or other such event and, if theretofore paid, shall
be credited on the principal of the Notes or, if the principal of the Notes has
been paid in full, refunded to the Company. In determining whether or not the
interest paid or payable, under any specific contingency, exceeds the Highest
Lawful Rate, the Company and the Noteholders shall, to the maximum extent
permitted by applicable law, amortize, prorate, allocate and spread, in equal
parts during the period of the actual term of this Agreement, all interest at
any time contracted for, charged, received or reserved in connection with the
Transaction Documents.
Section 13.06. Indemnification. The Company agrees to indemnify,
defend and hold each Noteholder, their partners and their respective officers,
employees, agents, directors, partners, affiliates and shareholders
(collectively, "Indemnified Persons") harmless from and against any and all
loss, liability, damage, judgment, claim, deficiency or reasonable expense
(including interest, penalties, reasonable attorneys' fees and amounts paid in
settlement) incurred by or asserted against any Indemnified Person arising out
of, in any way connected with, or as a result of (a) the execution and delivery
of this Agreement and the other documents contemplated hereby, the performance
by the parties hereto and thereto of their respective obligations hereunder and
thereunder and consummation of the transactions contemplated hereby and
thereby, (b) the actual or proposed use of the proceeds of the loans
contemplated hereby, (c) any violation by the Company or any of its
Subsidiaries of any requirement of law, including but not limited to
Environmental Laws, (d) any Noteholder being deemed an operator of any real or
personal property of the Company in circumstances in which no Noteholder is
generally operating or generally exercising control over such property, to the
extent such losses, liabilities, damages, judgments, claims, deficiencies or
expenses arise out of or result from any Hazardous Materials located in, on or
under such property or (e) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indemnified Person is a
party thereto; provided that such indemnity shall not apply to any such losses,
claims, damages, liabilities or related expenses that result from the gross
negligence or willful misconduct of, or willful violation of the Transaction
Documents by,
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such Indemnified Person. WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR
ANY OF THE OTHER TRANSACTION DOCUMENTS, IT IS THE EXPRESS INTENTION OF THE
PARTIES THAT EACH INDEMNIFIED PERSON SHALL BE INDEMNIFIED AND HELD HARMLESS
AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DEFICIENCIES, JUDGMENTS AND
REASONABLE EXPENSES ARISING OUT OF OR RESULTING FROM THE ORDINARY NEGLIGENCE
(WHETHER SOLE OR CONTRIBUTORY) OF SUCH INDEMNIFIED PERSON. Each Indemnified
Person will attempt to consult with the Company prior to entering into any
settlement of any lawsuit or proceeding that could give rise to a claim for
indemnity under this Section 13.06, although nothing herein shall give the
Company the right to direct, or control any such settlement negotiations or
any related lawsuit or proceeding on behalf of such Indemnified Party. The
obligations of the Company under this Section 13.06 shall survive the
termination of this Agreement and repayment of the Notes.
Section 13.07. Successors and Assigns. All covenants and other
agreements contained in this Agreement by or on behalf of any of the parties
hereto bind and inure to the benefit of their respective successors and assigns
(including, without limitation, any subsequent holder of a Note) whether so
expressed or not.
Section 13.08. 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 (to the full
extent permitted by law) not invalidate or render unenforceable such provision
in any other jurisdiction.
Section 13.09. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.
Section 13.10. Confidentiality. In connection with the
negotiation and administration of this Agreement and the other Transaction
Documents, the Company has furnished and will from time to time furnish the
Noteholders certain written information (such information, other than any such
information which (i) was publicly available, or otherwise known to the
Noteholders, at the time of disclosure,(ii)subsequently becomes publicly
available other than through any act or omission by the Noteholders or (iii)
otherwise subsequent becomes known to the Noteholders, being hereinafter
referred to as "Confidential Information"). The Noteholders will maintain the
confidentiality of any Confidential Information in accordance with such
procedures as the Noteholders apply generally to information of that nature.
Subject to the prohibitions and restrictions imposed on the Noteholders with
respect to the Confidential Information under applicable securities laws, it is
understood that the foregoing will not restrict the Noteholders' ability to
exchange such Confidential Information with their current or prospective
investors, assignees of the Notes and advisors. It is further understood that
the foregoing will not prohibit the disclosure
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of any or all Confidential Information if and to the extent that such
disclosure may be required or requested (w) by a Governmental Authority, (x)
pursuant to court order, subpoena or other legal process or in connection with
any pending or threatened litigation hereunder, (y) otherwise as required by
law, or (z) in order to protect its interests or its rights or remedies
hereunder or under the other Transaction Documents; in the event of any
required disclosure under clause (w), (x), or (y) above, the Noteholders agree
to use reasonable efforts to inform the Company as promptly as practicable.
Section 13.11. Final Agreement of the Parties. THIS AGREEMENT AND
THE OTHER TRANSACTION DOCUMENTS REPRESENT 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.
Section 13.12. Jury Waiver. THE COMPANY AND THE NOTEHOLDERS
HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 13.13. Choice of Forum. THE COMPANY AND THE NOTEHOLDERS
AGREE THAT ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE BROUGHT IN THE FEDERAL OR STATE
COURTS OF XXXXXX COUNTY, TEXAS, OTHER THAN LEGAL PROCEEDINGS INSTITUTED BY THE
NOTEHOLDERS WITH RESPECT TO THEIR RIGHTS AND REMEDIES UNDER THE SECURITY
DOCUMENTS, WHICH PROCEEDINGS MAY BE BROUGHT IN THE FEDERAL OR STATE COURTS OF
XXXXXX COUNTY, TEXAS OR THE COURTS OF ANY OTHER JURISDICTION DEEMED APPROPRIATE
BY THE NOTEHOLDERS TO ENFORCE THEIR RIGHTS AND REMEDIES UNDER THE SECURITY
DOCUMENTS.
Section 13.14. Governing Law. This Agreement and the Notes shall
be construed and enforced in accordance with, and the rights of the parties
shall be governed by, the law of the State of New York excluding choice-of-law
principles of the law of such State that would require the application of the
laws of a jurisdiction other than such State.
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IN WITNESS WHEREOF, the Company and the Noteholders have caused this
Agreement to be executed by their respective representatives thereunto duly
authorized effective as of the date first above written.
UNIVERSAL SEISMIC ASSOCIATES, INC.
BY: /s/ XXXXXX X. XXXXXXX
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer
RIMCO PARTNERS, L.P.,
RIMCO PARTNERS, X.X. XX,
RIMCO PARTNERS, L.P. III, and
RIMCO PARTNERS, X.X. XX
By: Resource Investors Management Company
Limited Partnership, their general partner
By: RIMCO Associates, Inc.,
its general partner
By: /s/ X. X. XXXXXX
--------------------------------
Name: X. X. Xxxxxx
Title: Vice President
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SCHEDULE A
INFORMATION RELATING TO NOTEHOLDERS
Principal Amount of
Name and Address of Noteholder Notes to be Purchased
------------------------------ ---------------------
RIMCO PARTNERS, L.P. $ 712,000
RIMCO PARTNERS, L.P. 11 $ 576,000
RIMCO PARTNERS, L.P. III $ 112,000
RIMCO PARTNERS, X.X. XX $ 600,000
----------
$2,000,000
==========
(1) All payments by wire transfer
of immediately available
funds to:
Fleet Bank, N.Y.
ABA No. 000000000
Account Name: Universal Seismic Associates, Inc,
Automatic Clearing Account
Account No. 9390641743
with sufficient information to identify the source and
application of such funds.
(2) All notices of payments and
written confirmations of such
wire transfers:
Resource Investors Management Company
00 Xxxxxxxxxx Xxxx
Xxxx, Xxxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx
Telecopy No.: 000-000-0000
Schedule A Page I
29
(3) All other communications:
Resource Investors Management Company
Suite 6875
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxxx
Telecopy No.: 000-000-0000
with a copy to
Resource Investors Management Company
00 Xxxxxxxxxx Xxxx
Xxxx, Xxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Telecopy No.: 000-000-0000
Schedule A Page 2
30
ANNEX A
DEFINED TERMS
"Accredited Investor" means an "accredited investor" as such term is
defined in Regulation D, Rule 501, promulgated by the Securities and Exchange
Commission.
"Affiliate" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 1O% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or
indirectly, 10% or more of any class of voting or equity interests. As used in
this definition, "Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise. Unless the context otherwise clearly requires, any reference to an
"Affiliate" is a reference to an Affiliate of the Company.
"Agreement" means this Note Purchase Agreement, as amended or modified
from time to time.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which commercial banks in Houston, Texas or New York, New York are required or
authorized to be closed.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and
the incurrence of a liability in accordance with GAAP.
"Change of Control" means any of (a) the acquisition by any Person or two
or more Persons (excluding underwriters in the course of their distribution of
voting stock in an underwritten public offering) acting in concert, of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Security Exchange Act of 1934, as amended) of 35% or more of the outstanding
shares of voting stock of the Company, (b) 50% or more of the members of the
Board of Directors of the Company on any date shall not have been (i) members
of the Board of Directors of the Company on the date 12 months prior to such
date or (ii) approved (by recommendation, nomination, election or otherwise) by
Persons who constitute at least a majority of the members of the Board of
Directors of the Company as constituted on the date 12 months prior to such
date, (c) all or substantially all of the assets of the Company are sold in a
single transaction or series or related transactions to any Person or (d) the
Company merges with or consolidates with any other Person.
"Closing" is defined in Article III.
31
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Collateral" means the equipment and other property described as
collateral under the Security Documents.
"Collateral Liquidation Value" means, at any time, while the Existing
Senior Notes or the Notes are outstanding, the value that would be received for
the Collateral in a sale of the Collateral by a seller who is compelled to sell
the Collateral on an "as is," "where is" basis with only a limited time to find
a purchaser, such value to be determined in a manner consistent with the most
recent appraisal report delivered to the Noteholders under Section 8.01(d), as
adjusted from time to time by the Noteholders, in their sole discretion, for
any Collateral that is lost, damaged, destroyed or disposed of by the Company.
"Company" is defined in the introduction to this Agreement.
"Current Assets" means, as of any date, all assets of the Company and its
Subsidiaries that would be reflected as current assets on a consolidated
balance sheet of the Company and its Subsidiaries prepared on such date in
accordance with GAAP consistently applied.
"Current Liabilities" means, as of any date, all liabilities of the
Company and its Subsidiaries that would be reflected as current liabilities on
a consolidated balance sheet of the Company and its Subsidiaries prepared on
such date in accordance with GAAP consistently applied.
"Default" means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
"Default Rate" means (i) as to any amount owing with respect to a Note,
the rate of interest stated in clause (b) of the first paragraph of such Note
and (ii) as to any other amount fifteen percent (15%) per annum, but in no
event to exceed the Highest Lawful Rate.
"Environmental Laws" means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges
to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
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32
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.
"Escrow Agreement" means that certain Escrow Agreement dated as of August
5, 1997 among Xxxxxxx X. Xxxxxxxxxx, et al. and Texas Commerce Bank National
Association as the Escrow Agent, as amended from time to time.
"Event of Default" is defined in Section 11.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Note Agreements" means that certain Note Purchase Agreement,
dated January 19, 1996, among the Company, the Noteholders, as amended or
modified from time to time, that certain Note Purchase Agreement, dated May 28,
1996, among the Company and the Noteholders (other than RIMCO Partners, L.P.
III), as amended or modified from time to time and that certain Note Purchase
Agreement, dated March 27, 1997, among the Company and the Noteholders, as
amended or modified from time to time.
"Existing Senior Notes" means the 1O% Senior Secured General Obligation
Notes, in the maximum aggregate principal amount of $12,000,000 issued by the
Company under the Existing Note Agreements.
"Existing Transaction Documents" means, collectively, (i) the Existing
Note Agreements and the other agreements and promissory notes described or
referred to therein, and (ii) the Subsidiary Note Agreement and the other
agreements and promissory notes described or referred to therein.
"Fidelity Funding Agreement" means, collectively, that certain Loan and
Security Agreement, dated as of August 31, 1995, between Universal Seismic
Acquisition, Inc. and Fidelity Funding, Inc. and that certain Loan and Security
Agreement, dated August 31, 1995, between Universal Seismic Technologies, Inc.
and Fidelity Funding, Inc.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Governmental Authority" means (a) the government of (i) the United States
of America or any State or other political subdivision thereof, or (ii) any
jurisdiction in which the Company or any Subsidiary conducts all or any part of
its business, or which asserts jurisdiction over any properties of the Company
or any Subsidiary, or (b) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or pertaining to, any such
government.
"Guaranty" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection)
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of such Person guaranteeing or in effect guaranteeing any indebtedness,
dividend or other obligation of any other Person in any manner, whether
directly or indirectly, including (without limitation) obligations incurred
through an agreement, contingent or otherwise, by such Person: (a) to purchase
such indebtedness or obligation or any property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or other
balance sheet condition or any income statement condition of any other Person
or otherwise to advance or make available funds for the purchase or payment of
such indebtedness or obligation; (c) to lease properties or to purchase
properties or services primarily for the purpose of assuring the owner of such
indebtedness or obligation of the ability of any other Person to make payment
of the indebtedness or obligation; or (d) otherwise to assure the owner of such
indebtedness or obligation against loss in respect thereof In any computation
of the indebtedness or other liabilities of the obligor under any Guaranty, the
indebtedness or other obligations that are the subject of such Guaranty shall
be assumed to be direct obligations of such obligor.
"Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety,
the removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage or filtration of which
is or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).
"Highest Lawful Rate" means with respect to any indebtedness owed to any
Noteholder under any Transaction Document, the maximum nonusurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged or received by such Noteholder with respect to such
indebtedness under law applicable to such Noteholder.
"Holder" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to
Section 12.01.
"Indebtedness" with respect to any Person means, at any time, without
duplication, (a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock; (b) its
liabilities for the deferred purchase price of property acquired by such Person
(excluding accounts payable arising in the ordinary course of business but
including all liabilities created or arising under any conditional sale or
other title retention agreement with respect to any such property); (c) all
liabilities appearing on its balance sheet in accordance with GAAP in respect
of Capital Leases; (d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it has
assumed or otherwise become liable for such liabilities); (e) all its
liabilities in respect of letters of credit or instruments serving a similar
function issued or accepted for its account by banks and other financial
institutions (whether or not representing obligations for borrowed money); (f)
Swaps of such Person; and (g) any Guaranty of such Person with respect to
liabilities of a type described in any of clauses (a) through (f) hereof
Indebtedness of any Person shall include all obligations of such Person of the
character
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described in clauses (a) through (g) to the extent such Person remains legally
liable in respect thereof notwithstanding that any such obligation is deemed to
be extinguished under GAAP.
"Indemnified Person" is defined in Section 13.06.
"Insurance Proceeds" means all insurance proceeds paid to the Company or
on its behalf by any insurance company in connection with or as a result of
that certain lawsuit styled The Universal Seismic Associates, Inc.
Stockholders' Protective Committee, Xxxxxxx X. Xxxxxxxxxx, and Xxxxxx X. Xxxxxx
vs. Xxxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxx, Xxxx Xxxxxxx, Xxxxxx
Xxxxx, Xxxx Xxxxx, Universal Seismic Associates, Inc., RIMCO Associates, Inc.,
and Resource Investors Management Co., L.P.; CA No. 97-22 (RRM) in the United
States District Court for the District of Delaware, including any such proceeds
paid as reimbursement for attorneys fees and other costs and expenses.
"Investment" means, with respect to any Person, any direct or indirect
purchase or other acquisition by such Person of stock or other securities of
any other Person, or any direct or indirect loan, advance or capital
contribution by such Person to any other Person, and any other item which would
be classified as an "investment" on a balance sheet of such Person prepared in
accordance with GAAP.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance of any kind (whether voluntary
or involuntary), or any interest or title of any vendor, lessor, lender or
other secured party to or of such Person under any conditional sale or other
title retention agreement or Capital Lease, upon or with respect to any
property or asset of such Person (including in the case of stock, stockholder
agreements, voting trust agreements and all similar arrangements).
"Material" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Company
and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the
Company to perform its obligations under this Agreement and the other
Transaction Documents, or (c) the validity or enforceability of this Agreement
or the other Transaction Documents.
"Multiemployer Plan" means any Plan that is a multiemployer plan" (as such
term is defined in section 4001(a)(3) of ERISA).
"Net Income" means, for any period, the consolidated net earnings of the
Company and its Subsidiaries for such period, determined in accordance with
GAAP.
"Noteholders"' is defined in the introduction to this Agreement.
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"Notes" is defined in Section 2.01.
"Officer's Certificate" means a certificate of a Senior Financial Officer
or of any other officer of the Company whose responsibilities extend to the
subject matter of such certificate.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any
liability.
"Preferred Stock" means any class of capital stock of a corporation that
is preferred over any other class of capital stock of such corporation as to
the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"Required Holders" means, at any time, the holder or holders of at least
51% in principal amount of the Notes at the time outstanding (exclusive of
Notes then owned by the Company or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Security Agreement" means that certain Third Amended and Restated
Security Agreement of even date herewith granting a first Lien on the
collateral described therein executed by the Company in favor of the
Noteholders, as the same may be supplemented or amended from time to time.
"Security Documents" means the Security Agreement, the Subsidiary Security
Agreement and such other security agreements, guaranties, pledges, instruments,
financing statements or other documents which may be executed to secure the
obligations of the Company with respect to the Notes and this Agreement.
"Senior Financial Officer" means any of the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.
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"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries
or such Person and one or more of its Subsidiaries owns sufficient equity or
voting interests to enable it or them (as a group) ordinarily, in the absence
of contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person
or one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of
its Subsidiaries). Unless the context otherwise clearly requires, any reference
to a "Subsidiary" is a reference to a Subsidiary of the Company.
"Subsidiary Note Agreement" means that certain Amended and Restated Note
Purchase Agreement, dated March 27, 1997, among UNEXCO and the Noteholders, as
amended or modified from time to time.
"Subsidiary Notes" means the Amended and Restated 12% Senior Secured
General Obligation Notes, in the maximum aggregate principal amount of
$5,500,000, issued by UNEXCO under the Subsidiary Note Agreement.
"Subsidiary Security Agreement" means that certain Third Amended and
Restated Security Agreement of even date herewith granting a first Lien on the
Collateral described therein executed by Universal Seismic Acquisition, Inc. in
favor of the Noteholders, as same may be supplemented or amended from time to
time.
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"Tangible Net Worth" means, as of any date, the total shareholder's equity
(including capital stock, additional paid-in capital and retained earnings
after deducting treasury stock) which would appear on a consolidated balance
sheet of the Company and its Subsidiaries prepared as of such date in
accordance with GAAP, minus (i) the amount of any assets resulting from
capitalization of goodwill, organizational expenses, research and development
expenses, trademarks, trade names, copyrights patents, patent applications,
licenses and rights in any thereof, and other similar intangibles, (ii) cash
held in a sinking or other analogous fund established for the
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purpose of redemption, retirement or prepayment of capital stock or
Indebtedness, and (iii) the amount of any other items which are treated as
intangible assets in accordance with GAAP.
"TRANSACTION DOCUMENTS" is defined in SECTION 4.01.
"UNEXCO" means UNEXCO, Inc., a Delaware corporation and wholly owned
Subsidiary of the Company.
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Exhibit 2.01
UNIVERSAL SEISMIC ASSOCIATES, INC.
12% SENIOR SECURED GENERAL OBLIGATION NOTE
No. SN-12 August 6, 1997
$____________
FOR VALUE RECEIVED, the undersigned, UNIVERSAL SEISMIC
ASSOCIATES, INC., a Delaware corporation (the "Company"), hereby promises to
pay to ______________, a Delaware limited partnership, or registered assigns,
the principal sum of _______________and NO/100 DOLLARS ($___________), together
with interest (computed on the basis of a 360-day year of twelve 30-day months)
(a) on the unpaid principal balance hereof at the rate of twelve percent (12%)
per annum from the date hereof, until the principal hereof shall have become
due and payable, and (b) on any overdue payment of principal or interest, at a
rate per annum from time to time equal to fifteen percent (15%); provided,
however, in no event shall such rate of interest ever exceed the Highest Lawful
Rate (as defined in the Note Purchase Agreement referred to below).
This Note shall be due and payable as follows:
(a) commencing on September 1, 1997, on the first day of each
month through and including November 1, 1999, a payment equal to all
accrued but unpaid interest thereon;
(b) on December 1, 1999, the entire unpaid principal balance
hereof, together with all accrued, but unpaid interest hereon, shall be
fully and finally due and payable;
(c) on each day following the receipt by the Company of any
Insurance Proceeds (as defined in the Note Purchase Agreement referred
to below), a payment equal to _____% of such Insurance Proceeds received
by the Company shall be due and payable;
(d) on each day following the receipt by the Company of any
amount distributed to the Company under Section 4(b) of the Escrow
Agreement (as defined in the Note Purchase Agreement referred to below),
a payment equal to _____% of such distributed amount shall be due and
payable; and
39
(e) if a Change of Control (as defined in the Note Purchase
Agreement referred to below) shall occur, the entire unpaid principal
balance hereof, together with all accrued, but unpaid interest hereon,
shall be fully and finally due and payable on the date one day after
such Change of Control occurs.
This Note is one of a series of 12% Senior Secured General
Obligation Notes issued pursuant to the Note Purchase Agreement dated of even
date herewith (as from time to time amended, the "Note Purchase Agreement")
between the Company and the Noteholders named therein and is entitled to the
benefits, and otherwise subject to the provisions, thereof, including, without
limitation, the limitations on interest set forth in Section 13.05 thereof. This
Note is secured by the Security Documents referred to in the Note Purchase
Agreement.
All payments made by the Company on this Note shall be applied
first, to the accrued, but unpaid interest hereon, and the remainder, if any,
shall be applied to the principal balance hereof. This Note is subject to
optional prepayment, in whole or from time to time in part, without notice,
premium, fee or penalty, at the times and on the terms specified in the Note
Purchase Agreement, but not otherwise.
Payments of principal of and interest on this Note are to be made
in lawful money of the United States of America at places designated in the
Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note
Purchase Agreement, upon surrender of this Note for registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer duly
executed, by the registered holder hereof or such holder's attorney duly
authorized in writing, a new Note for a like principal amount will be issued
to, and registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
If an Event of Default as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price and with the
effect provided in the Note Purchase Agreement.
Page 2
40
This Note shall be governed by and construed in accordance with
the laws of the State of New York, excluding the choice of law rules thereof.
UNIVERSAL SEISMIC ASSOCIATES, INC.
By:________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer
Page 3
41
SCHEDULE 5.05
To the Universal Seismic Associates, Inc.
Note Purchase Agreement
Subsidiaries
Jurisdiction Percentage
Subsidiary of Incorporation Ownership
---------- ---------------- ---------
Universal Seismic Acquisition, Inc. Texas 100%
Universal Seismic Technologies, Inc. Texas 100%
Marine Automated Surveys, Inc. Texas 100%
Unexco, Inc. Delaware 100%
42
SCHEDULE 5.08
To the Universal Seismic Associates Note Purchase Agreement
1. No. 00-00-000; The Shamrock Pipe Line Corporation vs. Xxxxxxxx Energy
Corporation, Universal Seismic Acquisition, Inc., Xxxxxx Drilling, Inc.
and Marine Automated Surveys, Inc.; In the 271st Judicial District Court
of Wise County, Texas ("Shamrock Pipe").
Universal Seismic Associates, Inc. ("USA") and Marine Automated Surveys, Inc.
("MAS") are defendants in the above action in which the plaintiffs have alleged
that one or more of the defendants caused the plaintiffs' pipe to rupture as a
result of negligent conduct of seismic testing, resulting in down time and lost
gasoline. Presently USA's insurance company has assumed the defense and has
hired counsel to represent it in the case. MAS is a wholly-owned subsidiary of
USA which was formed for the purpose of acquiring the assets, including the
tradename, of a now dissolved corporation. The asset acquisition occurred after
the alleged incident giving rise to this suit. Accordingly. plaintiff's counsel
believes that the former owner of the corporate name Marine Automated Surveys,
now known as JBX Corporation, will be joined and that all claims with respect
to MAS will be dismissed.
2. No. 00-00-000; Xxxxxx Xxxxxxxx, et al. x. Xxxxxxxx Energy Corp., et al.;
In the 271st Judicial District Court of Wise County, Texas.
This action, which arose out of the same set of facts as Shamrock Pipe, was
brought by the owners of the real property upon which the pipeline in Shamrock
Pipe lies for recovery of damages to such property.
3. Xxxxxxx X. Xxxxxxxxxx, Xxxxxx X Xxxxxx and the Universal Seismic
Associates, Inc. Shareholders' Protective Committee v. Universal Seismic
Associates, Inc., et al.; Civil Action No. 97-22 in United States
District Court for the District of Delaware.
This is a case brought by dissident shareholders which originally sought
revocation of proxies submitted in favor of existing management-sponsored
members of the Board of Directors of the Company. The Directors sponsored by
management were elected by a substantial majority of the voting shares and the
District Court declined to overturn the result. The suit was then amended to
add claims against the Company and all of its Board members sounding in
fraudulent misrepresentation and non-disclosure of financial information
relevant to the Company.
4. Universal Seismic Associates v. Xxxxxxx X. Xxxxxxxxxx and Xxxxxx X.
Xxxxxx; Cause No. 97-12684 in the 000xx Xxxxxxxx Xxxxx xx Xxxxxx Xxxxxx,
Xxxxx.
This is a case brought against the defendants jointly for breaches of fiduciary
duty, disclosure of confidential information and tortious interference
resulting from the defendants' disclosure of various confidential information
of the Company to the public. The defendants have not answered the suit at this
time.
43
5. Cause No. 90352; Xxxxx X. Xxxxxxxx v. Universal Seismic Associates
Incorporated (formerly known as Xxxxx Geophysical Incorporated); In the
000xx Xxxxxxxx Xxxxx xx Xxxx Xxxx Xxxxxx, Xxxxx
6. Cause No. 95-0119; Xxxxxx X. Xxxxx v. Universal Seismic Acquisition,
Inc.; In the Circuit Court of Xxxxx County, Mississippi.
Land damage - case transferred to Mississippi counsel.
7. No. 00-000000-00; Xxxxx Bristol and JBW Land & Minerals, Inc. v. Placid
Oil Company, et al; In the 00xx Xxxxxxxx Xxxxx xx Xxxxxxx Xxxxxx, Xxxxx
Mineral trespass
8. Xxxxxx X. Xxxx & Xxxx Xxx Xxxx
Surface trespass
9. Cabot
Mineral trespass - seismic damage
10. Xxxxxxxxx
Mineral trespass - seismic damage-$215,000.00
11. No. C97-6C; Ladshaw Explosives, Inc. v. Universal Seismic Acquisition,
Inc.; In the 274th Judicial District Court of Comal County, Texas.
Suit on a promissory note issued for a trade payable, with a current
outstanding balance of approximately $15,000.
12. Xxxxx X. Xxxxxxx, Xx. Operating Co., Inc.
Seismic trespass
13. Century Offshore Management Corp.
Breach of seismic contract claim, in response to suit by USA to collect
a receivable.
44
TO UNIVERSAL SEISMIC NOTE PURCHASE AGREEMENT
UNIVERSAL SEISMIC ACQUISITION, INC.
SCHEDULE OF INSURANCE
POLICY EFFECTIVE
COVERAGE COMPANY NUMBER DATES SUMMARIZED CONDITIONS
--------------------------------------------------------------------------------------------------------------------------
General Liability Ranger Lloyds GL0705047 4/27/97 2,000,000 Bodily Injury and Property Damage
Insurance Company to Combined Single Limit General
4/27/98 Aggregate - Per Project
2,000,000 Bodily Injury and Property Damage
Combined Single Limit Products/
Completed Operations Aggregate
1,000,000 Bodily Injury and Property Damage
Combined Single Limit - Per Occurence
1,000,000 Personal and Advertising Injury - Any One
Person or Organization
50,000 Fire Damage Liability - Any One
Occurrence
1,000,000 Employee Benefits Liability - Each
Employee
1,000,000 Employee Benefits Liability - Annual
Aggregate
Deductible:
1,000 Employee Benefits Liability - Each Claim
--------------------------------------------------------------------------------------------------------------------------
Business Automobile Ranger TBA045040 4/27/97 1,000,000 Bodily Injury and Property Damage
Insurance Company to Combined Single Limit - Each Accident
4/27/98 100,000 Bodily Injury and Property Damage
Combined Single Limit
Uninsured/Underinsured Motorist
2,500 Personal Injury Protection - Per Person
Deductible:
1,000 Comprehensive - Specified Vehicles
25 Specified Causes of Loss - Specified
Vehicles
1,000 Collision - Specified Vehicles
--------------------------------------------------------------------------------------------------------------------------
The Insurance described herein is intended to be a summary and in no way
extends, amends, or alters the polices in force.
Page 1 of 3
45
TO UNIVERSAL SEISMIC NOTE PURCHASE AGREEMENT
UNIVERSAL SEISMIC ACQUISITION, INC.
SCHEDULE OF INSURANCE
POLICY EFFECTIVE
COVERAGE COMPANY NUMBER DATES SUMMARIZED CONDITIONS
----------------------------------------------------------------------------------------------------------------------------
Workers' Compensation American Home WC888826 4/27/97 1,000,000 Bodily Injury by Accident - Each Accident
& Employer's Liability Assurance Company to 1,000,000 Bodily Injury by Disease - Policy Limit
4/27/98 1,000,000 Bodily Injury by Disease - Each Employee
1,000,000 Maritime Coverage
----------------------------------------------------------------------------------------------------------------------------
Umbrella Liability National Union Fire XX0000000 4/27/97 10,000,000 Bodily Injury and Property Combined
Insurance Company to Single Limit - Per Occurence
4/27/98 10,000,000 Bodily Injury and Property Damage
Combined Single Limit Products/Completed
Operations Aggregate
10,000,000 Bodily Injury, Property Damage Combined
Single Limit Policy Aggregate (Except
Products/Completed Operations and
Automobile which is not subject to an
aggregate)
Self Insured Relention:
10,000 Each Ocurrence, Applicable to Losses
covered in the Excess but not covered in
the Primary and when underlying aggregates
are exhausted
----------------------------------------------------------------------------------------------------------------------------
Foreign Package Cigna PFF051008 4/27/97 Foreign Commercial General Liability
Insurance Company to 2,000,000 Each Occurrence
4/28/97 2,000,000 Products/Completed Ops Aggregate
1,000,000 Personal & Advertising Injury Aggregate
1,000,000 Premises Damage Limit - Each Occurence
10,000 Medical Expense Limit
Employee Benefits Liability
1,000,000 Each Claim (Claims Made)
1,000,000 Annual Aggregate (Claims Made)
10,000 Medical Expense Limit
Contingent Auto Liability
1,000,000 Each Accident
Employers Liability
1,000,000 Bodily Injury by Accident
1,000,000 Bodily Injury by Disease (Policy Limits)
1,000,000 Bodily Injury by Disease (Each Employee)
1,000,000 Maritime Coverage
250,000 Repatriation Policy Limit
----------------------------------------------------------------------------------------------------------------------------
The Insurance described herein is intended to be a summary and in no way
extends, amends, or alters the polices in force.
Page 2 of 3
46
TO UNIVERSAL SEISMIC NOTE PURCHASE AGREEMENT
UNIVERSAL SEISMIC ACQUISITION, INC.
SCHEDULE OF INSURANCE
POLICY EFFECTIVE
COVERAGE COMPANY NUMBER DATES SUMMARIZED CONDITIONS
------------------------------------------------------------------------------------------------------------------------------------
Commercial Property Commonwealth CE6088000 11/3/96 Commercial Property Including Electronic Equipment
Insurance Company to 225,000 Office Contents - Park Ten Place
11/3/97 75,000 Extra Expense Office
10,000 Contents - Xxxx Xxxxxx
50,000 Contents - Off Premises
290,000 Equipment - Park Ten Place
50,000 Extra Expense
Deductible:
1,000 Per Occurence Except
25,000 Per Occurence as respects to Flood &
Earthquake
Contractors Equipment
22,000,000 Contractors Equipment Blanket Limit
3,500,000 Contractors Equipment Any One Item
250,000 Waterborne Equipment
6,000,000 Leased/Rented Equipment Any One Loss/
Any One Item
Deductible:
25,000 Per Occurence - Theft
10,000 Per Occurence - All Other Perils
Cargo
10,000,000 Any One Shipment as Per Schedule to be
Agreed
Deductible:
10,000 Any One Accident or Occurence
------------------------------------------------------------------------------------------------------------------------------------
Directors & Officers Executive Re 75L004659-95 9/19/96 2,000,000 Each Claim and Aggregate
Liability Indemnity Inc. to Retention:
9/19/97 0 D&O Section
50,000 Corporate Reimbursement Section
------------------------------------------------------------------------------------------------------------------------------------
Page 3 of 3
The insurance described herein is intended to be a summary and in no way
extends, amends, or alters the policies in force.
