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LOAN AND SECURITY AGREEMENT
AMONG
GRANT GEOPHYSICAL, INC.,
AS BORROWER,
THE ENTITIES NAMED HEREIN,
AS LENDERS,
AND
FOOTHILL CAPITAL CORPORATION,
AS AGENT
DATED AS OF MAY 11, 1999
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TABLE OF CONTENTS
Page(s)
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1. DEFINITIONS AND CONSTRUCTION............................................1
1.1 Definitions....................................................1
1.2 Accounting Terms..............................................20
1.3 Code..........................................................20
1.4 Construction..................................................20
1.5 Schedules and Exhibits........................................21
2. LOAN AND TERMS OF PAYMENT..............................................21
2.1 Revolving Advances............................................21
2.2 Letters of Credit.............................................23
2.3 FCC Term Loan.................................................25
2.4 EALP Term Loan................................................26
2.5 Overadvances..................................................28
2.6 Interest and Letter of Credit Fees: Rates, Payments, and
Calculations..................................................28
2.7 Collection of Accounts........................................30
2.8 Crediting Payments; Application of Collections................30
2.9 Designated Account............................................30
2.10 Maintenance of Loan Account; Statements of Obligations........31
2.11 Fees..........................................................31
3. CONDITIONS; TERM OF AGREEMENT..........................................32
3.1 Conditions Precedent to the Initial Advance, Letter of Credit,
and the FCC Term Loan.........................................32
3.2 Conditions Precedent to all Advances, all Letters of Credit,
and the FCC Term Loan.........................................34
3.3 Condition Subsequent..........................................34
3.4 Term; Automatic Renewal.......................................35
3.5 Effect of Termination.........................................35
3.6 Early Termination by Borrower.................................35
3.7 Termination Upon Event of Default.............................36
4. CREATION OF SECURITY INTEREST..........................................37
4.1 Grant of Security Interest....................................37
4.2 Negotiable Collateral.........................................37
4.3 Collection of Accounts, General Intangibles, and Negotiable
Collateral....................................................37
4.4 Delivery of Additional Documentation Required.................37
4.5 Power of Attorney.............................................37
4.6 Right to Inspect..............................................38
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5. REPRESENTATIONS AND WARRANTIES.........................................38
5.1 No Encumbrances...............................................38
5.2 Eligible Accounts.............................................38
5.3 Equipment.....................................................38
5.4 Location of Inventory and Equipment...........................39
5.5 Inventory Records.............................................39
5.6 Location of Chief Executive Office; FEIN......................39
5.7 Due Organization and Qualification; Subsidiaries..............39
5.8 Due Authorization; No Conflict................................39
5.9 Litigation....................................................40
5.10 No Material Adverse Change....................................40
5.11 Solvency......................................................41
5.12 Employee Benefits.............................................41
5.13 Environmental Condition.......................................41
6. AFFIRMATIVE COVENANTS..................................................41
6.1 Accounting System.............................................42
6.2 Collateral Reporting..........................................42
6.3 Financial Statements, Reports, Certificates...................43
6.4 Tax Returns...................................................44
6.5 Guarantor Reports.............................................44
6.6 Maintenance of Equipment......................................44
6.7 Taxes.........................................................44
6.8 Insurance.....................................................44
6.9 No Setoffs or Counterclaims...................................45
6.10 Location of Inventory and Equipment...........................45
6.11 Compliance with Laws..........................................45
6.12 Employee Benefits.............................................45
6.13 Leases........................................................46
6.14 Millennium Compliant..........................................46
6.15 Money Market Account..........................................46
7. NEGATIVE COVENANTS.....................................................47
7.1 Indebtedness..................................................47
7.2 Liens.........................................................48
7.3 Restrictions on Fundamental Changes...........................48
7.4 Disposal of Assets............................................49
7.5 Change Name...................................................50
7.6 Guarantee.....................................................50
7.7 Nature of Business............................................50
7.8 Prepayments and Amendments....................................50
7.9 Change of Control.............................................50
7.10 Distributions.................................................50
7.11 Accounting Methods............................................50
7.12 Investments...................................................51
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7.13 Transactions with Affiliates..................................51
7.14 Suspension....................................................51
7.15 Use of Proceeds...............................................51
7.16 Change in Location of Chief Executive Office; Inventory and
Equipment with Bailees........................................51
7.17 No Prohibited Transactions Under ERISA........................51
7.18 Financial Covenant............................................52
8. EVENTS OF DEFAULT......................................................52
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.................................55
9.1 Rights and Remedies...........................................55
9.2 Remedies Cumulative...........................................57
9.3 EALP's Right to Cure Certain Overadvances.....................57
9.4 EALP's Consent to Certain Remedies............................57
9.5 EALP's Right to Purchase the Foothill Obligations.............57
10. TAXES AND EXPENSES.....................................................59
11. WAIVERS; INDEMNIFICATION...............................................59
11.1 Demand; Protest; etc..........................................59
11.2 Agent's Liability for Collateral..............................60
11.3 Indemnification...............................................60
12. NOTICES................................................................60
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.............................61
14. DESTRUCTION OF BORROWER'S DOCUMENTS....................................62
15. PARTICIPATIONS; SUCCESSORS.............................................62
15.1 Participations................................................62
15.2 Successors....................................................63
16. AMENDMENTS; WAIVERS....................................................63
16.1 Amendments and Waivers........................................63
16.2 No Waivers; Cumulative Remedies...............................64
17. AGENT; LENDERS.........................................................65
17.1 Appointment and Authorization of Agent........................65
17.2 Delegation of Duties..........................................65
17.3 Liability of Agent-Related Persons............................66
17.4 Reliance by Agent.............................................66
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17.5 Notice of Default or Event of Default.........................66
17.6 Credit Decision...............................................67
17.7 Costs and Expenses; Indemnification...........................67
17.8 Agent in Individual Capacity..................................68
17.9 Successor Agent...............................................68
17.10 Withholding Tax...............................................68
17.11 Collateral Matters............................................70
17.12 Agency for Perfection.........................................70
17.13 Payments by Agent to the Lenders..............................71
17.14 Concerning the Collateral and Related Loan Documents..........71
17.15 Several Obligations; No Liability.............................71
17.16 Subordination of EALP Obligations.............................71
18. GENERAL PROVISIONS.....................................................73
18.1 Effectiveness.................................................73
18.2 Section Headings..............................................73
18.3 Interpretation................................................73
18.4 Severability of Provisions....................................73
18.5 Counterparts; Telefacsimile Execution.........................73
18.6 Revival and Reinstatement of Obligations......................73
18.7 Integration...................................................74
SCHEDULES AND EXHIBITS
Schedule C-1 Commitments
Schedule E-1 Eligible Equipment
Schedule P-1 Permitted Liens
Schedule 5.9 Litigation
Schedule 5.12 ERISA Benefit Plans
Schedule 6.8 Existing Insurance Policies
Schedule 6.10 Location of Inventory and Equipment
Exhibit A-1 Form of Assignment and Acceptance
Exhibit C-1 Form of Compliance Certificate
Exhibit 9.5 Form of Assignment and Acceptance
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "AGREEMENT"), is entered into
as of May 11, 1999, by and among GRANT GEOPHYSICAL, INC., a Delaware
corporation ("Borrower"), with its chief executive office located at 00000 Xxxx
Xxx, Xxxxxxx, Xxxxx 00000, on the one hand, and the entities listed on the
signature pages hereof (such entities, together with their respective
successors and assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), and FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent, on the other hand.
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the
following terms shall have the following definitions:
"Account Debtor" means any Person who is or who may
become obligated under, with respect to, or on account of, an Account.
"Accounts" means all currently existing and
hereafter arising accounts, contract rights, and all other forms of obligations
owing to Borrower or its Subsidiaries arising out of the sale or lease of goods
or the rendition of services by Borrower or its Subsidiaries, irrespective of
whether earned by performance, and any and all credit insurance, guaranties, or
security therefor.
"Advances" has the meaning set forth in Section
2.1(a).
"Affiliate" means, as applied to any Person, any
other Person who directly or indirectly controls, is controlled by, is under
common control with or is a director or officer of such Person. For purposes of
this definition, "control" means the possession, directly or indirectly, of the
power to vote 15% or more (or 20% or more, in the case of Nortech) of the
securities having ordinary voting power for the election of directors or the
direct or indirect power to direct the management and policies of a Person.
"Agent" means Foothill, solely in its capacity as
agent for the Lenders, and shall include any successor agent.
"Agent's Account" has the meaning set forth in
Section 2.7.
"Agent-Related Persons" means Agent, together with
its Affiliates, and the officers, directors, employees, counsel, agents, and
attorneys-in-fact of Agent and such Affiliates.
"Agreement" has the meaning set forth in the
preamble hereto.
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"Assignment and Acceptance" has the meaning set
forth in Section 9.5(b) and shall be in the form of Exhibit 9.5.
"AST" means Advanced Seismic Technology, Inc., a
Texas corporation.
"Authorized Person" means any officer or other
employee of Borrower.
"Availability" means, at any time, the lesser of (a)
the Maximum Revolving Amount, less the aggregate outstanding principal amount
of all Advances, and (b) the Borrowing Base, less the aggregate outstanding
principal amount of all Advances.
"Average Unused Portion of Maximum Revolving Amount"
means, as of any date of determination, (a) the Maximum Revolving Amount, less
(b) the sum of (i) the average Daily Balance of Advances that were outstanding
during the immediately preceding month, plus (ii) the average Daily Balance of
the undrawn Letters of Credit that were outstanding during the immediately
preceding month.
"Bankruptcy Code" means the United States Bankruptcy
Code (11 U.S.C. Section 101 et seq.), as amended, and any successor statute.
"Benefit Plan" means a "defined benefit plan" (as
defined in Section 3(35) of ERISA) for which Borrower, any Subsidiary of
Borrower, or any ERISA Affiliate has been an "employer" (as defined in Section
3(5) of ERISA) within the past six years.
"Borrower" has the meaning set forth in the preamble
to this Agreement.
"Borrower's Books" means all of Borrower's books and
records including: ledgers; records indicating, summarizing, or evidencing
Borrower's properties or assets (including the Collateral) or liabilities; all
information relating to Borrower's business operations or financial condition;
and all computer programs, disk or tape files, printouts, runs, or other
computer-prepared information comprising Borrower's books and records.
"Borrowing" means a borrowing hereunder consisting
of advances made pursuant to the terms of this Agreement.
"Borrowing Base" has the meaning set forth in
Section 2.1(a).
"Business Day" means any day that is not a Saturday,
Sunday, or other day on which national banks are authorized or required to
close.
"Canadian GST Reserve" means, as of any date of
determination, an amount sufficient to pay accrued and unpaid general sales
taxes owing by Borrower or any Designated Subsidiary under the laws of Canada.
"Capital Stock" means, with respect to any Person,
any and all shares, interests, participations, rights or other equivalents in
the equity interests (however designated) in
LOAN AGREEMENT - Page 2
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such Person, and any rights (other than debt securities convertible into an
equity interest), warrants or options exercisable for, exchangeable for or
convertible into such an equity interest in such Person.
"Cash Equivalents" means (a) any evidence of
Indebtedness with a maturity of 180 days or less issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided, that the full faith and credit of the United
States of America is pledged in support thereof); (b) demand and time deposits
and certificates of deposit or acceptances with a maturity of 180 days or less
of any financial institution that is (i) a member of the Federal Reserve System
having combined capital and surplus and undivided profits of not less than
$500,000,000 or (ii) any commercial bank organized under the laws of any other
country that is a member of the Organization for Economic Cooperation and
Development and has total assets in excess of $500,000,000; (c) commercial
paper with a maturity of 180 days or less issued by a corporation that is not
an Affiliate of the Company and is organized under the laws of any state of the
United States or the District of Columbia and rated at least A-1 by S&P or at
least P-1 by Xxxxx'x; (d) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clause (a) above
entered into with any commercial bank meeting the specifications of clause (b)
above; (e) overnight bank deposits and bankers' acceptances at any commercial
bank meeting the qualifications specified in clause (b) above; (f) deposits
available for withdrawal on demand with any commercial bank not meeting the
qualifications specified in clause (b) above, provided all such deposits do not
exceed $7,500,000 in the aggregate at any one time; (g) demand and time
deposits and certificates of deposit with any commercial bank organized in the
United States not meeting the qualifications specified in clause (b) above,
provided that such deposits and certificates support bond, letter of credit and
other similar types of obligations incurred in the ordinary course of business;
and (h) investments in money market or other mutual funds substantially all of
whose assets comprise securities of the types described in clauses (a) through
(e) above.
"Change of Control" shall be deemed to have occurred
at such time as a "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, but excluding any
"underwriter" within the definition of Section 2(11) of the Securities Act of
1933), other than Xxxxxxx Associates, L.P., Westgate International L.P., or one
or more of their respective Affiliates, becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or
indirectly, of more than 30% of the total voting power of all classes of stock
then outstanding of Borrower entitled to vote in the election of directors.
"Closing Date" means the date of the first to occur
of the making of the initial Advance, the issuance of the initial Letter of
Credit, or the funding of the FCC Term Loan.
"Code" means the Massachusetts Uniform Commercial
Code.
"Collateral" means all of Borrower's and the
Designated Subsidiaries' right, title and interest in and to each of the
following:
(a) the Accounts,
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(b) Borrower's Books,
(c) the Designated Subsidiaries' Books,
(d) the Equipment,
(e) the General Intangibles, including without
limitation, the Data Library,
(f) the Inventory,
(g) the Negotiable Collateral,
(h) any money, or other assets of Borrower or any
Designated Subsidiary that now or hereafter come into the possession, custody,
or control of the Lender Group, and
(i) the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the Collateral, and any and all Accounts, Borrower's Books,
Subsidiary's Books, Equipment, General Intangibles, Inventory, Negotiable
Collateral, money, deposit accounts, or other tangible or intangible property
resulting from the sale, exchange, collection, or other disposition of any of
the foregoing, or any portion thereof or interest therein, and the proceeds
thereof.
"Collateral Access Agreement" means a landlord
waiver, mortgagee waiver, bailee letter, or acknowledgment agreement of any
warehouseman, processor, lessor, consignee, or other Person in possession of,
having a Lien upon, or having rights or interests in the Equipment or
Inventory, in each case, in form and substance satisfactory to Agent.
"Collections" means all cash, checks, notes,
instruments, and other items of payment (including insurance proceeds, proceeds
of cash sales, rental proceeds, and tax refunds).
"Commitment" means, at any time with respect to a
Lender, the principal amount set forth beside such Lender's name under the
heading "Commitment" on Schedule C-1 or on the signature page of the Assignment
and Acceptance pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 9.5, as such Commitment may be
adjusted from time to time in accordance with the provisions of Section 9.5;
and "Commitments" means, collectively, the aggregate amount of the commitments
of all of the Lenders.
"Compliance Certificate" means a certificate
substantially in the form of Exhibit C-1 and delivered by the chief financial
officer of Borrower to Agent.
"Currency Hedge Obligations" means, at any time to
any Person, the obligations of such Person at such time which were incurred in
the ordinary course of business pursuant to any foreign currency exchange
agreement, option or futures contract or other similar agreement or
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arrangement designed to protect against or manage such Person's or any of
its Subsidiaries' exposure to fluctuations in foreign currency exchange rates.
"Daily Balance" means the amount of an Obligation
owed at the end of a given day.
"Data Library" means the presently owned and
hereafter acquired multi-client seismic data of the Borrower, which is marketed
broadly on a non-exclusive basis to Persons in the oil and gas industry.
"Default" means an event, condition, or default
that, with the giving of notice, the passage of time, or both, would be an
Event of Default.
"Defaulting Lender" has the meaning set forth in
Section 2.4(d)(ii).
"Defaulting Lenders Rate" means the Reference Rate
for the first three days from and after the date the relevant payment is due
and, thereafter, at the interest rate then applicable to Advances.
"Designated Account" means account number 121 045 of
Borrower maintained with Borrower's Designated Account Bank, or such other
deposit account of Borrower (located within the United States) which has been
designated, in writing and from time to time, by Borrower to Agent.
"Designated Account Debtor" means one of two Account
Debtors designated by the Borrower, at any time and from time to time, by
written notice to Agent, as being one of the two Account Debtors to which
clauses (h), (i) and (j) of the definition of Eligible Domestic Accounts apply.
"Designated Account Bank" means each of Southwest
Bank of Texas, N.A., whose office is located at 5 Post Oak Park, 0000 Xxxx Xxx
Xxxxxxx, Xxxxxxx, Xxxxx 00000 and whose ABA number is 113 011 258.
"Designated Subsidiary" means any one of AST, GGBL,
GGC, GGII, PTGG, or SSGI, or any other Person approved by Agent, which Person
has delivered to Agent a guaranty and security agreement in form and substance
equivalent to those delivered to Agent by the other Designated Subsidiaries on
the Closing Date, and with regard to which Agent has received a stock pledge
agreement pursuant to which Agent is granted and receives a first priority
perfected security interest in all of the issued and outstanding stock of such
Person.
"Dilution" means, in each case based upon the
experience of the immediately prior six (6) months, the result of dividing the
Dollar amount of (a) bad debt write-downs, discounts, advertising, returns,
promotions, credits, or other dilution with respect to the Accounts, by (b)
Borrower's Collections (excluding extraordinary items) plus the Dollar amount
of clause (a). Dilution may be adjusted by Foothill for items determined by
Foothill, in its reasonable judgment, to be non-dilutive.
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"Dilution Reserve" means, as of any date of
determination, an amount sufficient to reduce the Lenders' advance rate against
Eligible Accounts by one percentage point for each percentage point by which
Dilution is in excess of five percent (5%).
"Disbursement Letter" means an instructional letter
executed and delivered by Borrower to Agent regarding the extensions of credit
to be made on the Closing Date, the form and substance of which shall be
satisfactory to Agent.
"Dollars or $" means United States dollars.
"EALP" means Xxxxxxx Associates, L.P., a Delaware
limited partnership.
"EALP Advance" has the meaning set forth in Section
2.4(a).
"EALP Guaranty" means the guaranty of Borrower's
Obligations, dated as of the date of this Agreement, by EALP, in favor of
Foothill, pursuant to which EALP guaranties payment and performance of the
Obligations of Borrower (other than the EALP Term Loan).
"EALP Term Loan" has the meaning set forth in
Section 2.4.
"EALP Term Note" has the meaning set forth in
Section 2.4.
"Early Termination Premium" has the meaning set
forth in Section 3.6.
"EBITDA" of any Person for any period shall mean the
sum of:
(a) the net income (or net loss) from operations of
such Person and its Subsidiaries on a consolidated basis (determined in
accordance with GAAP) for such period, without giving effect to any
extraordinary or unusual gains (losses) or gains (losses) from the sale of
assets (other than the sale of assets in the ordinary course of business) or
unrealized currency gains (losses); plus
(b) the amount of any cash equity investment in
Borrower for such period; plus
(c) to the extent that any of the items referred to
in any of clauses (i) through (iii) below were deducted in calculating such net
income:
(i) consolidated interest expense of such Person
for such period;
(ii) income tax expense of such Person and its
Subsidiaries with respect to their operations for such
period; and
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(iii) the amount of all non-cash charges
(including, without limitation, depreciation and
amortization), if any, of such Person and its Subsidiaries
for such period.
"Eligible Accounts" means Eligible Domestic
Accounts, Eligible Domestic Extended Term Accounts and Eligible Foreign Billed
Accounts, but excluding any Account arising from the provision of services
pursuant to an agreement or arrangement for which documentation has been
disapproved by Foothill, as contemplated by Section 6.2(g).
"Eligible Domestic Accounts" means those Accounts
created by Borrower or by any Designated Subsidiary in the ordinary course of
business, that arise out of Borrower's or such Designated Subsidiary's sale of
goods or rendition of services, that strictly comply with each and all of the
representations and warranties respecting Accounts made by Borrower to the
Lender Group in the Loan Documents, and that are and at all times continue to
be reasonably acceptable to Agent in all respects; provided, however, that
standards of eligibility may be fixed and revised from time to time by Agent in
Agent's reasonable credit judgment. Eligible Domestic Accounts shall not
include the following:
(a) Accounts that the Account Debtor has failed to
pay within ninety (90) days of invoice date or Accounts with selling terms of
more than ninety (90) days;
(b) Accounts owed by an Account Debtor or its
Affiliates where fifty percent (50%) or more of all Accounts owed by that
Account Debtor (or its Affiliates) are deemed ineligible under clause (a)
above;
(c) Accounts with respect to which the Account
Debtor is an employee, Affiliate, or agent of Borrower;
(d) Accounts with respect to which goods are placed
on consignment, guaranteed sale, sale or return, sale on approval, xxxx and
hold, or other terms by reason of which the payment by the Account Debtor may
be conditional;
(e) Accounts that are not payable in either Dollars
or Canadian dollars or with respect to which the Account Debtor: (i) does not
maintain its chief executive office in either the United States or Canada, or
(ii) is not organized under the laws of the United States or any State thereof
or under the laws of Canada, or (iii) is the government of any foreign country
or sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public corporation, or other
instrumentality thereof, unless the Account is supported by an irrevocable
letter of credit reasonably satisfactory to Agent (as to form, substance, and
issuer or domestic confirming bank) that has been delivered to Agent and is
directly drawable by Agent;
(f) Accounts with respect to which the Account
Debtor is either (i) the United States or any department, agency, or
instrumentality of the United States (exclusive, however, of Accounts with
respect to which Borrower has complied, to the reasonable satisfaction of
Foothill, with the Assignment of Claims Act, 31 U.S.C. Section 3727), or (ii)
any State of the United
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States (exclusive, however, of Accounts owed by any State that does not have a
statutory counterpart to the Assignment of Claims Act);
(g) the portion of any Account with respect to which
the Account Debtor is a creditor of Borrower or has asserted a right of setoff,
has disputed its liability, or has made any claim with respect to the Account;
(h) Accounts with respect to an Account Debtor,
other than a Designated Account Debtor, whose total obligations owing to
Borrower exceed ten percent (10%) of all Eligible Domestic Accounts, to the
extent of the obligations owing by such Account Debtor in excess of such
percentage;
(i) Accounts with respect to which either of the
Designated Account Debtors is the Account Debtor, to the extent that the
Accounts owed by either of such Account Debtors exceed twenty percent (20%) of
all Eligible Accounts;
(j) Accounts with respect to which either of the
Designated Account Debtors is the Account Debtor, to the extent that the
aggregate amount of such Accounts exceeds thirty five percent (35%) of all
Eligible Accounts;
(k) Accounts with respect to which the Account
Debtor is subject to any Insolvency Proceeding, or becomes insolvent, or goes
out of business;
(l) Accounts, the collection of which Agent, in its
reasonable credit judgment, believes to be doubtful by reason of the Account
Debtor's financial condition;
(m) Accounts with respect to which the Borrower does
not have a contractual or other right to submit one or more invoices to the
Account Debtor prior to the completion of performance of the services giving
rise to such Account and with respect to which the Account Debtor does not have
a contractual obligation to pay such invoices in accordance with their terms;
(n) Accounts with respect to which the Account
Debtor is located in the states of New Jersey, Minnesota, Indiana, or West
Virginia (or any other state that requires a creditor to file a Business
Activity Report or similar document in order to bring suit or otherwise enforce
its remedies against such Account Debtor in the courts or through any judicial
process of such state), unless Borrower has qualified to do business in New
Jersey, Minnesota, Indiana, West Virginia, or such other states, or has filed a
Notice of Business Activities Report with the applicable division of taxation,
the department of revenue, or with such other state offices, as appropriate,
for the then-current year, or is exempt from such filing requirement; and
(o) Accounts (i) invoiced by Millennium Seismic,
Inc. after June 30, 1999, in respect of services provided by Borrower or its
Subsidiaries to third Persons, and (ii) for which Millennium Seismic, Inc. is
the Account Debtor with respect thereto, to the extent such Accounts arise from
original invoices dated after June 30, 1999 and relate to the Agreement
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between Millennium Seismic, Inc., Xxxxx X. Xxxxxx and Borrower, dated
September 5, 1997, or any similar arrangement.
"Eligible Domestic Extended Term Accounts" means
Accounts that would be Eligible Domestic Accounts except that the original
payment terms of such Account are more than ninety (90) days after the date of
completion of services or delivery of goods, so long as (a) Agent has given its
prior written or telephonic approval for the characterization of such Eligible
Domestic Accounts as Eligible Domestic Extended Term Accounts, such approval
not to be unreasonably withheld or delayed in Agent's reasonable credit
judgment, (b) the date that such Account is included in the Borrowing Base as
an Eligible Domestic Extended Term Account is within the period that is sixty
(60) days (but not more than 60 days) prior to the payment date specified in
the original invoice for such Account, and (c) such Account is not more than
sixty (60) days past the payment date specified in the original invoice for
such Account.
"Eligible Equipment" means all (a) Equipment
appraised by Foothill prior to the Closing Date in which Agent has a
first-priority, perfected security interest, which is described on Schedule E-1
attached hereto and made a part hereof, and (b) replacement Equipment acquired
by Borrower or its Designated Subsidiaries in accordance with Section 7.4(b),
reduced in each case by any Equipment of Debtor as to which any representation
or warranty contained in Sections 5.1, 5.3 or 5.4 is not, or does not continue
to be, true and accurate.
"Eligible Foreign Billed Accounts" means those
Accounts
(a) that fail to qualify as Eligible Domestic
Accounts solely because the Account Debtor: (i) does not maintain its chief
executive office in either the United States or Canada, and (ii) is not
organized under the laws of the United States or any State thereof or under the
laws of Canada,
(b) the payment of which Borrower has instructed the
Account Debtor thereon to remit to a Lockbox established and maintained at a
Lockbox Bank and governed by a Lockbox Agreement,
(c) Agent has approved the Account Debtor thereon,
in writing, such approval to be based on Agent's reasonable credit judgment and
which approval shall not be unreasonably withheld or delayed, and
(d) that, with respect to Accounts that are acquired
by Borrower from the Designated Subsidiaries pursuant to the Master Agreement
and are governed by the law of a jurisdiction other than one of the states of
the United States or Canada, (i) are not subject to contractual restrictions on
the assignment or transfer thereof, (ii) Borrower has obtained written consent
to its acquisition thereof from the Account Debtor and has provided a copy of
same to Foothill, or (iii) Foothill has received satisfactory legal advice that
such restrictions on assignment or transfer are unenforceable.
LOAN AGREEMENT - Page 9
15
"Eligible Transferee" means (a) a commercial bank
organized under the laws of the United States, or any state thereof, and having
total assets in excess of $5,000,000,000, or the asset based lending Affiliate
of such bank, (b) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country, and having total
assets in excess of $5,000,000,000, or the asset based lending Affiliate of
such bank; provided that such bank is acting through a branch or agency located
in the United States, (c) a finance company, insurance or other financial
institution, or fund that is engaged in making, purchasing, or otherwise
investing in commercial loans in the ordinary course of its business and having
total assets in excess of $500,000,000, (d) any Affiliate (other than
individuals) of an existing Lender, and (e) any other Person approved by Agent
and Borrower.
"Equipment" means all of Borrower's and its
Subsidiaries' present and hereafter acquired machinery, machine tools, motors,
equipment, furniture, furnishings, fixtures, tools, parts, goods (other than
consumer goods, farm products, or Inventory), wherever located, including, (a)
any interest of Borrower in any of the foregoing, and (b) all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income
Security Act of 1974, 29 U.S.C. Sections 1000 et seq., amendments thereto,
successor statutes, and regulations or guidance promulgated thereunder.
"ERISA Affiliate" means (a) any corporation subject
to ERISA whose employees are treated as employed by the same employer as the
employees of Borrower under IRC Section 414(b), (b) any trade or business
subject to ERISA whose employees are treated as employed by the same employer
as the employees of Borrower under IRC Section 414(c), (c) solely for purposes
of Section 302 of ERISA and Section 412 of the IRC, any organization subject to
ERISA that is a member of an affiliated service group of which Borrower is a
member under IRC Section 414(m), or (d) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any party subject to ERISA that is a party to
an arrangement with Borrower and whose employees are aggregated with the
employees of Borrower under IRC Section 414(o).
"ERISA Event" means (a) a Reportable Event with
respect to any Benefit Plan or Multiemployer Plan, (b) the withdrawal of
Borrower, any of its Subsidiaries or ERISA Affiliates from a Benefit Plan
during a plan year in which it was a "substantial employer" (as defined in
Section 4001(a)(2) of ERISA), (c) the providing of notice of intent to
terminate a Benefit Plan in a distress termination (as described in Section
4041(c) of ERISA), (d) the institution by the PBGC of proceedings to terminate
a Benefit Plan or Multiemployer Plan, (e) any event or condition (i) that
provides a basis under Section 4042(a)(1), (2), or (3) of ERISA for the
termination of, or the appointment of a trustee to administer, any Benefit Plan
or Multiemployer Plan, or (ii) that may result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA, (f) the partial or
complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of
Borrower, any of its Subsidiaries or ERISA Affiliates from a Multiemployer
Plan, or (g) providing any security to any Plan under Section 401(a)(29) of the
IRC by Borrower or its Subsidiaries or any of their ERISA Affiliates.
LOAN AGREEMENT - Page 10
16
"Event of Default" has the meaning set forth in
Section 8.
"Existing Lender" means Xxxxxxx Associates, L.P., a
Delaware limited partnership.
"FCC Term Loan" has the meaning set forth in Section
2.3.
"FCC Term Note" has the meaning set forth in Section
2.3.
"FEIN" means Federal Employer Identification Number.
"Foothill" means Foothill Capital Corporation, a
California corporation.
"Foothill Advance" has the meaning set forth in
Section 2.1(f).
"Foothill Obligations" has the meaning set forth in
Section 17.16(a).
"Forced Liquidation Value" means the value, as
determined by an appraiser selected by Lender, at its option, of property, to
the extent that such value would be realized at a sale of such property that
would be consummated within sixty (60) days of the valuation date.
"Foreign Account Debtor" means an Account Debtor (a)
whose Accounts are not Eligible Domestic Accounts because either (i) such
Accounts are not payable in Dollars or Canadian dollars, (ii) the Account
Debtor is not organized under the laws of the United States or any State
thereof or under the laws of Canada, or (iii) the Account Debtor does not
maintain its chief executive office in either the United States or Canada, and
(b) whose Accounts have not been approved by Foothill as Eligible Foreign
Billed Accounts.
"Funding Date" means the date on which a Borrowing
occurs.
"GAAP" means generally accepted accounting
principles as in effect from time to time in the United States, consistently
applied.
"General Intangibles" means all of Borrower's and
the Designated Subsidiaries' present and future general intangibles and other
personal property (including contract rights, rights arising under common law,
statutes, or regulations, choses or things in action, goodwill, patents, trade
names, trademarks, service marks, copyrights, blueprints, drawings, purchase
orders, customer lists, monies due or recoverable from pension funds, route
lists, rights to payment and other rights under any royalty or licensing
agreements, infringement claims, computer programs, information contained on
computer disks or tapes, literature, reports, catalogs, deposit accounts,
insurance premium rebates, tax refunds, and tax refund claims), other than
goods, Accounts, and Negotiable Collateral.
"GGBL" means Grant Geophysical do Brasil Ltda., a
corporation organized under the laws of the Republic of Brazil, South America.
LOAN AGREEMENT - Page 11
17
"GGC" means Grant Geophysical Corp., a Texas
corporation.
"GGII" means Grant Geophysical (Int'l) Inc., a Texas
corporation.
"Governing Documents" means the certificate or
articles of incorporation, by-laws, or other organizational or governing
documents of any Person.
"Hazardous Materials" means (a) substances that are
defined or listed in, or otherwise classified pursuant to, any applicable laws
or regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity,
or "EP toxicity", (b) oil, petroleum, or petroleum derived substances, natural
gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and
other wastes associated with the exploration, development, or production of
crude oil, natural gas, or geothermal resources, (c) any flammable substances
or explosives or any radioactive materials, and (d) asbestos in any form or
electrical equipment that contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of 50 parts per million.
"Indebtedness" means: (a) all obligations of
Borrower for borrowed money, (b) all obligations of Borrower evidenced by
bonds, debentures, notes, or other similar instruments and all reimbursement or
other obligations of Borrower in respect of letters of credit, bankers
acceptances, interest rate swaps, or other financial products, (c) all
obligations of Borrower under capital leases, (d) all obligations or
liabilities of others secured by a Lien on any property or asset of Borrower,
irrespective of whether such obligation or liability is assumed, and (e) any
obligation of Borrower guaranteeing or intended to guarantee (whether
guaranteed, endorsed, co-made, discounted, or sold with recourse to Borrower)
any indebtedness described in clauses (a) through (d) of this definition.
"Insolvency Proceeding" means any proceeding
commenced by or against any Person under any provision of the Bankruptcy Code
or under any other bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally
with creditors, or proceedings seeking reorganization, arrangement, or other
similar relief.
"Intangible Assets" means, with respect to any
Person, that portion of the book value of all of such Person's assets that
would be treated as intangibles under GAAP.
"Interest Rate Protection Obligations" means the
obligations of any Person pursuant to any arrangement with any other Person
whereby, directly or indirectly, such Person is entitled to receive from time
to time periodic payments calculated by applying either a floating or a fixed
rate of interest on a stated notional amount in exchange for periodic payments
made by such Person calculated by applying a fixed or a floating rate of
interest on the same notional amount and shall include, without limitation,
interest rate swaps, caps, floors, collars and similar agreements or
arrangements designed to protect against or manage such Person's or any of its
Subsidiaries' exposure to fluctuations in interest rates.
LOAN AGREEMENT - Page 12
18
"Inventory" means all present and future inventory
in which Borrower or any of the Designated Subsidiaries has any interest,
including goods held for sale, lease or license or to be furnished under a
contract of service and all of Borrower's present and future raw materials,
work in process, finished goods, and packing and shipping materials and
proprietary seismic data, wherever located.
"Investment" means, with respect to any Person, any
direct or indirect advance, loan, guarantee of Indebtedness or other extension
of credit or capital contribution to (by means of any transfer of cash or other
property to others or any payment or property or services for the account or
use of others), or any purchase or acquisition by such Person of any Capital
Stock, bonds, notes, debentures or other securities (including derivatives) or
evidences of Indebtedness issued by, any other Person. In addition, the fair
market value of the net assets of any Subsidiary at the time that such
Subsidiary is designated a Wholly-Owned Domestic Subsidiary shall be deemed to
be an "Investment" made by Borrower in such Wholly-Owned Domestic Subsidiary at
such time. "Investments" shall exclude (a) extensions of trade credit or other
advances to customers on commercially reasonable terms in accordance with
normal trade practices or otherwise in the ordinary course of business, (b)
Interest Rate Protection Obligations and Currency Hedge Obligations, but only
to the extent that the same are permitted by Section 7.1 of this Agreement, and
(c) endorsements of negotiable instruments and documents in the ordinary course
of business.
"IRC" means the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.
"L/C" has the meaning set forth in Section 2.2(a).
"L/C Guaranty" has the meaning set forth in Section
2.2(a).
"Lender" and "Lenders" means, individually and
collectively, each of Foothill and EALP, together with their respective
successors and assigns to the extent permitted under this Agreement.
"Lender Group" means, individually and collectively,
each of the individual Lenders and Agent.
"Lender Group Expenses" means all: costs or expenses
(including taxes, and insurance premiums) required to be paid by Borrower under
any of the Loan Documents that are paid or incurred by the Agent or any Lender;
fees or charges paid or incurred by the Agent or the Lenders in connection with
the Lenders' transactions with Borrower, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien, litigation, and UCC searches and including
searches with the patent and trademark office or the copyright office), filing,
recording, publication, appraisal; costs and expenses incurred by Agent in the
disbursement of funds to Borrower (by wire transfer or otherwise); charges paid
or incurred by Agent resulting from the dishonor of checks; costs and expenses
paid or incurred by Agent to correct any default or enforce any provision of
the Loan Documents, or in gaining possession of, maintaining, handling,
preserving, storing, shipping,
LOAN AGREEMENT - Page 13
19
selling, preparing for sale, or advertising to sell the Collateral or any
portion thereof, irrespective of whether a sale is consummated; costs and
expenses paid or incurred by the Agent in examining Borrower's Books or any
Subsidiary's Books; costs and expenses of third party claims or any other suit
paid or incurred by the Agent or any of the Lenders in enforcing or defending
the Loan Documents or in connection with the transactions contemplated by the
Loan Documents or the Agent's or Lenders' relationship with Borrower, any
Subsidiary of Borrower or any guarantor; and the Agent's and Lenders'
reasonable attorneys fees and expenses incurred in advising, structuring,
drafting, reviewing, administering, amending, terminating, enforcing (including
attorneys fees and expenses incurred in connection with a "workout," a
"restructuring," or an Insolvency Proceeding concerning Borrower, any
Subsidiary of Borrower or any guarantor of the Obligations), defending, or
concerning the Loan Documents, irrespective of whether suit is brought.
"Letter of Credit" means an L/C or an L/C Guaranty,
as the context requires.
"Lien" means any interest in property securing an
obligation owed to, or a claim by, any Person other than the owner of the
property, whether such interest shall be based on the common law, statute, or
contract, whether such interest shall be recorded or perfected, and whether
such interest shall be contingent upon the occurrence of some future event or
events or the existence of some future circumstance or circumstances, including
the lien or security interest arising from an encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, adverse
claim or charge, conditional sale or trust receipt, or from a lease,
consignment, or bailment for security purposes.
"Loan Account" has the meaning set forth in Section
2.10.
"Loan Documents" means this Agreement, the
Disbursement Letter, the Letters of Credit, the Lockbox Agreements, the FCC
Term Note, the EALP Term Note, any other notes executed by Borrower in
connection with this Agreement, and payable to the Lender Group, the EALP
Guaranty, the Subsidiary Guaranties, the Stock Pledge Agreement, the Stock
Pledge Agreement (GGII), and any other agreement entered into, now or in the
future, in connection with this Agreement.
"Lockbox Account" shall mean a depositary account
established pursuant to one of the Lockbox Agreements.
"Lockbox Agreements" means those certain Lockbox
Operating Procedural Agreements and those certain Depository Account
Agreements, in form and substance satisfactory to Agent, each of which is among
Borrower, Agent, and one of the Lockbox Banks.
"Lockbox Banks" means Southwest Bank of Texas, N.A.
and Hong Kong Bank of Canada.
"Lockboxes" has the meaning set forth in Section
2.7.
LOAN AGREEMENT - Page 14
20
"Master Agreement" means that certain Master
Agreement for Purchase and Sale of Accounts, dated as of the Closing Date,
among Borrower and the Designated Subsidiaries.
"Material Adverse Change" means (a) a material
adverse change in the business, operations, results of operations, assets,
liabilities or financial condition of Borrower and its Subsidiaries, taken as a
whole, which would reasonably be expected to result in a material impairment of
Borrower's ability to perform its Obligations to Foothill under the Loan
Documents to which it is a party or of Foothill to enforce the Obligations to
Foothill or realize upon the Collateral, (b) a material adverse effect on the
value of the Collateral or the amount that to Foothill would be likely to
receive (after giving consideration to delays in payment and costs of
enforcement) in the liquidation of such Collateral, or (c) a material
impairment of the priority of the Lender Group's Liens with respect to the
Collateral.
"Maximum Amount" means, as of any date of
determination, the sum of (a) the Maximum Revolving Amount, and (b) the then
outstanding principal balance of the FCC Term Loan.
"Maximum Revolving Amount" means Six Million Dollars
($6,000,000.00).
"Mobile Goods" means Equipment and Inventory as
provided in Section 9-103(3) of the Code, and including without limitation the
types of Borrower's Equipment and Inventory described in Section 6.10.
"Multiemployer Plan" means a "multiemployer plan"
(as defined in Section 4001(a)(3) of ERISA) to which Borrower, any of its
Subsidiaries, or any ERISA Affiliate has contributed, or was obligated to
contribute, within the past six years.
"Negotiable Collateral" means all of Borrower's and
any of the Designated Subsidiaries' present and future letters of credit,
notes, drafts, instruments, investment property, security entitlements,
securities (including the shares of stock of Subsidiaries of Borrower),
documents, personal property leases (wherein Borrower is the lessor), chattel
paper, and Borrower's Books relating to any of the foregoing.
"Obligations" means all loans, Advances, debts,
principal, interest (including any interest that, but for the provisions of the
Bankruptcy Code, would have accrued), contingent reimbursement obligations
under any outstanding Letters of Credit, premiums (including Early Termination
Premiums), liabilities (including all amounts charged to Borrower's Loan
Account pursuant hereto), obligations, fees, charges, costs, or Lender Group
Expenses (including any fees or expenses that, but for the provisions of the
Bankruptcy Code, would have accrued), guaranties, covenants, and duties owing
by Borrower to Agent or any Lender of any kind and description, in each case
arising under the Loan Documents whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising.
"Originating Lender" has the meaning set forth in
Section 15.1(a).
"Overadvance" has the meaning set forth in Section
2.5.
LOAN AGREEMENT - Page 15
21
"Overseas Equipment Amount" means an amount, not to
exceed Seven Million Five Hundred Thousand Dollars ($7,500,000) as determined
at any time and from time to time, equal to the Forced Liquidation Value of
Eligible Equipment that, after the Closing Date, is removed to and remains at
locations outside of the continental United States or Canada. Borrower and
Lenders agree that the Agent may approve an increase to the Overseas Equipment
Amount to a sum in excess of $7,500,000.00 upon the request of Borrower, which
approval by the Agent shall not be unreasonably withheld or delayed (taking
into consideration the terms and conditions of the underlying contract that
supports the reason for Borrower's request), and shall not be conditioned upon
payment of additional fees in connection with such approval.
"Participant" has the meaning set forth in Section
15.1(a).
"Pay-Off Letter" means a letter, in form and
substance reasonably satisfactory to Agent, from Existing Lender respecting the
amount necessary to repay in full all of the obligations of Borrower owing to
Existing Lender and obtain a termination or release of all of the Liens
existing in favor of Existing Lender in and to the properties or assets of
Borrower.
"PBGC" means the Pension Benefit Guaranty
Corporation as defined in Title IV of ERISA, or any successor thereto.
"Permitted Investments" means any of the following:
(a) Investments in Cash Equivalents;
(b) Investments by the Borrower or any Subsidiary in
any Wholly-Owned Domestic Subsidiary;
(c) Investments by the Borrower if as a result of
such Investment (i) such other Person becomes a Wholly-Owned Domestic
Subsidiary or (ii) such other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all of its assets and properties to,
the Borrower or a Wholly-Owned Domestic Subsidiary;
(d) Investments made in the ordinary course of
business in prepaid expenses, lease utility, workers' compensation, performance
and other similar deposits;
(e) Investments in stock, obligations or securities
received in settlement of debts owing to the Borrower or any Subsidiary as a
result of bankruptcy or insolvency proceedings or upon the foreclosure,
perfection or enforcement of any Lien in favor of the Borrower or any
Subsidiary, in each case as to debt owing to the Borrower or any Subsidiary
that arose in the ordinary course of business of the Borrower or any such
Subsidiary, provided that any stocks, obligations or securities received in
settlement of debts that arose in the ordinary course of business (and received
other than as a result of bankruptcy or insolvency proceedings or upon
foreclosure, perfection or enforcement of any Lien) that are, within 30 days of
receipt, converted into case or Cash Equivalents shall be treated as having
been cash or Cash Equivalents at the time received;
LOAN AGREEMENT - Page 16
22
(f) other Investments in joint ventures,
corporations, limited liability companies or partnerships formed with or
organized by third Persons, which joint ventures, corporations, limited
liability companies or partnerships engage in a business substantially similar
or related to the business conducted by the Borrower and its Subsidiaries,
provided such Investments do not, in the aggregate, exceed the sum of (A)
$3,000,000 and (B) the aggregate amount of principal repayments, interest on
Indebtedness, dividends, distributions or other return of capital received by
the Borrower or a Designated Subsidiary from any person (other than the
Borrower or any Subsidiary) in which the Borrower or any of its Designated
Subsidiaries has an ownership interest;
(g) Investments by the Borrower or any Wholly-Owned
Domestic Subsidiary in any Designated Subsidiary of the Borrower that is
organized under the laws of any jurisdiction other than the United States or
Canada in an amount not to exceed $7,000,000 at any one time outstanding;
provided, that Borrower and Lenders agree that the Agent may approve an
increase to the amount of such Investments to a sum in excess of $7,000,000.00
upon the request of Borrower, which approval by the Agent shall not be
unreasonably withheld or delayed (taking into consideration the terms and
conditions of the underlying contract that supports the reason for Borrower's
request), and such approval shall not be conditioned upon payment of additional
fees or other amounts in connection with such approval;
(h) Investments by the Borrower or any Wholly-Owned
Domestic Subsidiary in any Subsidiary (other than a Designated Subsidiary) of
Borrower that is organized under the laws of any jurisdiction other than the
United States or Canada in an amount not to exceed $1,000,000 at any one time
outstanding; provided, that Borrower and Lenders agree that the Agent may
approve an increase to the amount of such Investments to a sum in excess of
$1,000,000.00 upon the request of Borrower, which approval by the Agent shall
not be unreasonably withheld or delayed (taking into consideration the terms
and conditions of the underlying contract that supports the reason for
Borrower's request), and such approval shall not be conditioned upon payment of
additional fees or other amounts in connection with such approval; and
(i) transfers of Eligible Equipment from the
Borrower or any Subsidiary to any other Subsidiary that is organized under the
laws of any jurisdiction other than the United States or Canada in an amount
not to exceed the Overseas Equipment Amount.
"Permitted Liens" means (a) Liens held by the Agent
for the benefit of the Lenders, (b) Liens for unpaid taxes that either (i) are
not yet due and payable or (ii) are the subject of Permitted Protests, (c)
Liens set forth on Schedule P-1, (d) the interests of lessors under operating
leases and purchase money Liens under capital leases or relating to the
acquisition of assets (other than proprietary data) so long as the Lien only
attaches to the asset purchased or acquired and only secures the purchase price
of the asset, (e) Liens arising by operation of law in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred
in the ordinary course of business of Borrower and not in connection with the
borrowing of money, and which Liens either (i) are for sums not yet due and
payable, or (ii) are the subject of Permitted Protests, (f) Liens arising from
deposits made in connection with obtaining worker's compensation or other
unemployment insurance, (g) Liens or deposits to secure performance of bids,
tenders, or leases (to the extent permitted under this Agreement), incurred in
the ordinary course of business of
LOAN AGREEMENT - Page 17
23
Borrower and not in connection with the borrowing of money, (h) Liens arising
by reason of security for surety or appeal bonds in the ordinary course of
business of Borrower, (i) Liens of or resulting from any judgment or award that
would not result in a Material Adverse Change and as to which the time for the
appeal or petition for rehearing of which has not yet expired, or in respect of
which Borrower is in good faith prosecuting an appeal or proceeding for a
review, and in respect of which a stay of execution pending such appeal or
proceeding for review has been secured, (j) and with respect to any real
property, easements, rights of way, zoning and similar covenants and
restrictions, and similar encumbrances that customarily exist on properties of
Persons engaged in similar activities and similarly situated and that in any
event do not materially interfere with or impair the use or operation of the
Collateral by Borrower or materially interfere with the ordinary conduct of the
business of Borrower.
"Permitted Protest" means the right of Borrower or
its Subsidiaries to protest (a) any Lien, other than any such Lien that secures
the Obligations, (b) any tax (other than payroll taxes or taxes that are the
subject of a United States federal tax lien), (c) any rental payment or other
amount claimed to be due and owing under any real or personal property leases,
and (d) compliance with the laws, regulations, rules or orders of any
governmental authority, provided that (i) a reserve with respect to such
protested obligation is established on the books of Borrower in an amount that
is reasonably satisfactory to Agent, (ii) any such protest is instituted and
diligently prosecuted by Borrower in good faith, and (iii) Agent is satisfied
that, while any such protest is pending, there will be no material impairment
of the enforceability, validity, or priority of any of the Liens of the Agent
in and to the Collateral.
"Person" means and includes natural persons,
corporations, limited liability companies, limited partnerships, general
partnerships, limited liability partnerships, joint ventures, trusts, land
trusts, business trusts, or other organizations, irrespective of whether they
are legal entities, and governments and agencies and political subdivisions
thereof.
"Plan" means any employee benefit plan, program, or
arrangement maintained or contributed to by Borrower or with respect to which
it may incur liability.
"Pro Rata Share" means, with respect to a Lender, a
fraction (expressed as a percentage), the numerator of which is the amount of
such Lender's Commitment and the denominator of which is the aggregate amount
of the Commitments.
"PTGG" means PT. Grant Geophysical Indonesia, a
corporation organized under the laws of the Republic of Indonesia.
"Reference Rate" means the variable rate of
interest, per annum, most recently announced by Norwest Bank Minnesota,
National Association, or any successor thereto, as its "base rate,"
irrespective of whether such announced rate is the best rate available from
such financial institution.
"Release Price" means, with respect to any item of
Eligible Equipment, an amount equal to ninety-six percent (96%) of the Forced
Liquidation Value of such item of Eligible Equipment.
LOAN AGREEMENT - Page 18
24
"Renewal Date" has the meaning set forth in Section
3.4.
"Reportable Event" means any of the events described
in Section 4043(c) of ERISA or the regulations thereunder other than a
Reportable Event as to which the provision of 30 days notice to the PBGC is
waived under applicable regulations.
"Required Lenders" means, at any time, Agent
together with such other Lenders whose Pro Rata Shares together with Agent
aggregate 50.1% or more of the Commitments.
"Retiree Health Plan" means an "employee welfare
benefit plan" within the meaning of Section 3(1) of ERISA that provides
benefits to individuals after termination of their employment, other than as
required by Section 601 of ERISA.
"Revolving Facility Usage" means, as of any date of
determination, the aggregate amount of Advances and undrawn or unreimbursed
Letters of Credit outstanding.
"Solvent" means, with respect to any Person on a
particular date, that on such date (a) at fair valuations, all of the
properties and assets of such Person are greater than the sum of the debts,
including contingent liabilities, of such Person, (b) the present fair salable
value of the properties and assets of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its debts
as they become absolute and matured, (c) such Person is able to realize upon
its properties and assets and pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the normal course of
business, (d) such Person does not intend to, and does not believe that it
will, incur debts beyond such Person's ability to pay as such debts mature, and
(e) such Person is not engaged in business or a transaction, and is not about
to engage in business or a transaction, for which such Person's properties and
assets would constitute unreasonably small capital after giving due
consideration to the prevailing practices in the industry in which such Person
is engaged. In computing the amount of contingent liabilities at any time, it
is intended that such liabilities will be computed at the amount that, in light
of all the facts and circumstances existing at such time, represents the amount
that reasonably can be expected to become an actual or matured liability.
"SSGI" means Solid State Geophysical, Inc., a
corporation organized under the laws of the Province of Alberta, Canada.
"Stock Pledge Agreement" means that certain Stock
Pledge Agreement, dated as of the Closing Date, between Borrower and Agent
pursuant to which Borrower grants Agent a first priority perfected security
interest in all of the issued and outstanding shares of stock of GGC, GGII and
AST.
"Stock Pledge Agreement (GGII)" means that certain
Stock Pledge Agreement, dated as of the Closing Date, between GGII and Agent
pursuant to which GGII grants Agent a first priority perfected security
interest in all of the issued and outstanding shares of stock of GGBL, PTGG and
SSGI to secure the Obligations.
LOAN AGREEMENT - Page 19
25
"Subsidiary" of a Person means a corporation,
partnership, limited liability company, or other entity in which that Person
directly or indirectly owns or controls the shares of stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors (or appoint other comparable managers) of such corporation,
partnership, limited liability company, or other entity.
"Subsidiary Guaranties" means the unlimited,
unconditional guaranty of Borrower's Obligations, dated as of the Closing Date,
by each Designated Subsidiary of Borrower, in favor of Agent, pursuant to which
each Designated Subsidiary of Borrower guaranties payment and performance of
the Obligations of Borrower.
"Subsidiary's Books" means the books and records of
each Subsidiary of Borrower including: ledgers; records indicating,
summarizing, or evidencing such Subsidiary's properties or assets (including
all or any portion of such assets pledged as collateral for the Obligations) or
liabilities; all information relating to such Subsidiary's business operations
or financial condition; and all computer programs, disk or tape files,
printouts, runs, or other computer-prepared information comprising such
Subsidiary's books and records.
"Voidable Transfer" has the meaning set forth in
Section 18.6.
"Wholly-Owned Domestic Subsidiary" means each
Subsidiary of Borrower of which all outstanding capital stock or other
ownership interests are wholly-owned by Borrower or, Borrower and other
Wholly-Owned Domestic Subsidiaries, and which: (a) is organized under the laws
of the United States or Canada; (b) maintains its chief executive office in the
United States or Canada; (c) has executed and delivered to Agent a guaranty
agreement in form and substance acceptable to Agent pursuant to which such
Person guarantees all Obligations arising under this Agreement; and (d) has
executed and delivered to Agent a security agreement in form and substance
acceptable to Agent, pursuant to which such Person grants a Lien in
substantially all its assets (including the pledge of any capital stock or
other ownership interests of any Subsidiary owned by such Person, but excluding
real property assets owned by such Person) for the benefit of the Agent.
1.2 ACCOUNTING TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP. When
used herein, the term "financial statements" shall include the notes and
schedules thereto. Whenever the term "Borrower" is used in respect of a
financial covenant or a related definition, it shall be understood to mean
Borrower on a consolidated basis unless the context clearly requires otherwise.
1.3 CODE. Any terms used in this Agreement that are
defined in the Code shall be construed and defined as set forth in the Code
unless otherwise defined herein.
1.4 CONSTRUCTION. Unless the context of this Agreement
clearly requires otherwise, references to the plural include the singular,
references to the singular include the plural, the term "including" is not
limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement refer to
this Agreement as a whole and not to any particular provision of this
Agreement. An Event of Default shall "continue" or be "continuing"
LOAN AGREEMENT - Page 20
26
until such Event of Default has been cured or waived in writing by the
requisite members of the Lender Group. Section, subsection, clause, schedule,
and exhibit references are to this Agreement unless otherwise specified. Any
reference in this Agreement or in the Loan Documents to this Agreement or any
of the Loan Documents shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, and
supplements, thereto and thereof, as applicable.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVING ADVANCES.
(a) General. Subject to the terms and conditions of
this Agreement, Foothill agrees to make advances ("Advances") to Borrower in an
amount outstanding not to exceed at any one time the lesser of:
(i) the Maximum Revolving Amount, less the
outstanding balance of all undrawn or unreimbursed Letters of
Credit, or
(ii) the Borrowing Base, less the aggregate
amount of all undrawn or unreimbursed Letters of Credit.
For purposes of this Agreement, "Borrowing Base", as of any date of
determination, shall mean the result of:
(x) the least of:
(1) Six Million Dollars ($6,000,000.00),
or
(2) the sum of:
(A) eighty percent (80%) of Eligible
Domestic Accounts,
(B) eighty percent (80%) of Eligible
Domestic Extended Term Accounts, and
(C) the lower of (I) Three Million
Dollars ($3,000,000.00) or (II) sixty percent
(60%) of Eligible Foreign Billed Accounts;
less, for each of (A), (B) and (C) above, the
amount, if any, of the Dilution Reserve and the
Canadian GST Reserve, and
LOAN AGREEMENT - Page 21
27
(3) an amount equal to Borrower's
Collections with respect to Accounts that have been
deposited in the Lockbox Accounts during the
immediately preceding ninety (90)-day period;
minus
(y) the aggregate amount of reserves, if
any, established by Foothill under Section 2.1(b).
(b) Reserves for Material Adverse Change. Anything
to the contrary in Section 2.1(a) above notwithstanding, Foothill may create
reserves against or reduce its advance rates based upon Eligible Accounts
without declaring an Event of Default if it determines that there has occurred
a Material Adverse Change.
(c) No Obligation to Advance. Foothill shall have no
obligation to make Advances under this Section 2.1 (i) to the extent the
aggregate principal amount of all outstanding Advances under this Section 2.1
would exceed the Maximum Revolving Amount or (ii) at any time during which a
Default exists.
(d) Re-borrowing. Amounts borrowed pursuant to this
Section 2.1 may be repaid and, subject to the terms and conditions of this
Agreement, re-borrowed at any time during the term of this Agreement.
(e) Procedure for Borrowing. Each Advance shall be
made upon Borrower's irrevocable request therefor delivered to Agent (which
notice must be received by Agent no later than 10:00 a.m. (California time) on
the Funding Date) specifying (i) the amount of the Borrowing; and (ii) the
requested Funding Date, which shall be a Business Day.
(f) Foothill Advances.
(i) Foothill hereby is authorized by Borrower,
from time to time in Foothill's sole discretion, (1) after the occurrence of a
Default or an Event of Default (but without constituting a waiver of such
Default or Event of Default), or (2) at any time that any of the other
applicable conditions precedent set forth in Section 3.1 or 3.2 have not been
satisfied, to make Advances to Borrower (which Advances may be in excess of the
amount of Advances available to Borrower under Section 2.1(a)), which Foothill,
in its reasonable business judgment, deems necessary or desirable (A) to
preserve or protect the Collateral, or any portion thereof, (B) to enhance the
likelihood of, or maximize the amount of, repayment of the Obligations, or (C)
to pay any other amount chargeable to Borrower pursuant to the terms of this
Agreement, including Lender Group Expenses and the costs, fees, and expenses
described in Section 10 (any of the Advances described in this Section 2.1(f)
being hereinafter referred to as "Foothill Advances").
(ii) Foothill Advances shall be repayable on
demand and secured by the Collateral, shall constitute Advances and Obligations
hereunder, and shall bear interest at the rate applicable from time to time to
the Obligations pursuant to Section 2.6.
LOAN AGREEMENT - Page 22
28
(g) Notation. The Agent shall record on its books
the principal amount of the FCC Term Loan, the EALP Term Loan, and the Advances
owing to each Lender, including the Foothill Advances owing to Foothill and
EALP Advances owing to EALP, and the interests therein of each Lender, from
time to time. In addition, each Lender is authorized, at such Lender's option,
to note the date and amount of each payment or prepayment of principal of such
Lender's FCC Term Loan, EALP Term Loan, and Advances in its books and records,
including computer records, such books and records constituting rebuttably
presumptive evidence, absent manifest error, of the accuracy of the information
contained therein.
(h) Overadvances. Foothill may make voluntary
Overadvances without the written consent of the Required Lenders for amounts
charged to the applicable Loan Account for interest, fees or Lender Group
Expenses pursuant to Section 2.1(f)(i)(2)(C). If the conditions for borrowing
under Section 3.2(a) or (b) cannot be fulfilled, Foothill may, but is not
obligated to, knowingly and intentionally continue to make Advances to
Borrower, such failure or condition notwithstanding, so long as, at any time,
(i) either (A) the outstanding Revolving Facility Usage would not exceed the
Borrowing Base by more than $2,000,000 or (B) (y) the outstanding Revolving
Facility Usage would not exceed the Borrowing Base by more than the amount
proposed by Foothill and agreed to by the Required Lenders, and (z) such
Advances are made pursuant to a plan (proposed by Foothill and agreed to by the
Required Lenders) for the elimination of the outstanding Revolving Facility
Usage in excess of the Borrowing Base, and (ii) the outstanding Revolving
Facility Usage (except for and excluding amounts charged to the applicable Loan
Account for interest, fees, or Lender Group Expenses) does not exceed the
Maximum Amount. The foregoing provisions are for the sole and exclusive benefit
of Foothill and are not intended to benefit Borrower in any way. The Advances
that are made pursuant to this Section 2.1(h) shall be subject to the same
terms and conditions as any other Foothill Advance, as applicable, except that
the rate of interest applicable thereto shall be the rates set forth in Section
2.6(c)(i) without regard to the presence or absence of a Default or Event of
Default; provided, however, that the making of such Overadvances shall not
constitute a waiver of such Event of Default arising therefrom.
(i) Effect of Bankruptcy. If a case is commenced by
or against Borrower under the Bankruptcy Code, or other statute providing for
debtor relief, then, without the approval of Foothill, neither Foothill nor
EALP shall make additional loans or provide additional financial accommodations
under the Loan Documents to Borrower as debtor or debtor- in-possession, or to
any trustee for Borrower, nor consent to the use of cash collateral (provided
that the applicable Loan Account shall continue to be charged, to the fullest
extent permitted by law, for accruing interest, fees, and Lender Group
Expenses).
2.2 LETTERS OF CREDIT.
(a) General. Subject to the terms and conditions of
this Agreement, Foothill agrees to issue letters of credit for the account of
Borrower (each, an "L/C") or to issue guarantees of payment (each such
guaranty, an "L/C Guaranty") with respect to letters of credit issued by an
issuing bank for the account of Borrower. Foothill shall have no obligation to
issue a Letter of Credit if any of the following would result:
LOAN AGREEMENT - Page 23
29
(i) 100% of the aggregate amount of all undrawn
and unreimbursed Letters of Credit would exceed the Borrowing
Base less the amount of outstanding Advances; or
(ii) the aggregate amount of all undrawn or
unreimbursed Letters of Credit would exceed the lower of: (x)
the Maximum Revolving Amount, less the amount of outstanding
Advances, less the amount of reserves established under
Section 2.1(b); or (y) Two Million Dollars ($2,000,000.00);
or
(iii) the outstanding Obligations (other than
under the FCC Term Loan and the EALP Term Loan) would exceed
the Maximum Revolving Amount.
Borrower expressly understands and agrees that Foothill shall have no
obligation to arrange for the issuance by issuing banks of the letters of
credit that are to be the subject of L/C Guarantees. Borrower and Foothill
acknowledge and agree that certain of the letters of credit that are to be the
subject of L/C Guarantees may be outstanding on the Closing Date. Each Letter
of Credit shall have an expiry date no later than thirty (30) days prior to the
date on which this Agreement is scheduled to terminate under Section 3.4
(without regard to any potential renewal term) and all such Letters of Credit
shall be in form and substance reasonably acceptable to Foothill. If Foothill
is obligated to advance funds under a Letter of Credit, Borrower immediately
shall reimburse such amount to Foothill and, in the absence of such
reimbursement, the amount so advanced immediately and automatically shall be
deemed to be an Advance hereunder and, thereafter, shall bear interest at the
rate then applicable to Advances under Section 2.6.
(b) Indemnification. Borrower hereby agrees to
indemnify, save, defend, and hold Foothill harmless from any loss, cost,
expense, or liability, including payments made by Foothill, expenses, and
reasonable attorneys fees incurred by Foothill arising out of or in connection
with any Letter of Credit. Borrower agrees to be bound by the issuing bank's
regulations and interpretations of any Letters of Credit guarantied by Foothill
and opened to or for Borrower's account, and Borrower understands and agrees
that Foothill shall not be liable for any error, negligence, or mistake,
whether of omission or commission, in following Borrower's instructions or
those contained in the Letter of Credit or any modifications, amendments, or
supplements thereto; provided, however, that Foothill shall be liable for its
own gross negligence or willful misconduct. Borrower understands that the L/C
Guarantees may require Foothill to indemnify the issuing bank for certain costs
or liabilities arising out of claims by Borrower against such issuing bank.
Borrower hereby agrees to indemnify, save, defend, and hold Foothill harmless
with respect to any loss, cost, expense (including reasonable attorneys fees),
or liability incurred by Foothill under any L/C Guaranty as a result of
Foothill's indemnification of any such issuing bank.
(c) Authorization to Deliver Documents. Borrower
hereby authorizes and directs any bank that issues a letter of credit
guaranteed by Foothill to deliver to Foothill all instruments, documents, and
other writings and property received by the issuing bank pursuant to such
letter of credit, and to accept and rely upon Foothill's instructions and
agreements with respect to all matters arising in connection with such letter
of credit and the related application. Borrower may or may not be the
"applicant" or "account party" with respect to such letter of credit.
LOAN AGREEMENT - Page 24
30
(d) Fees and Costs. Any and all charges,
commissions, fees, and costs incurred by Foothill relating to the letters of
credit guaranteed by Foothill shall be considered Lender Group Expenses for
purposes of this Agreement and immediately shall be reimbursable by Borrower to
Foothill.
(e) Termination of Agreement. Immediately upon the
termination of this Agreement, Borrower agrees to either (i) provide cash
collateral to be held by Foothill in an amount equal to 102% of the maximum
amount of Foothill's obligations under Letters of Credit, or (ii) cause to be
delivered to Foothill releases of all of Foothill's obligations under
outstanding Letters of Credit. At Foothill's discretion, any proceeds of
Collateral received by Foothill after the occurrence and during the
continuation of an Event of Default may be held as the cash collateral required
by this Section 2.2(e).
(f) Increased Costs. If by reason of (i) any change
in any applicable law, treaty, rule, or regulation or any change in the
interpretation or application by any governmental authority of any such
applicable law, treaty, rule, or regulation, or (ii) compliance by the issuing
bank or Foothill with any direction, request, or requirement (irrespective of
whether having the force of law) of any governmental authority or monetary
authority including, without limitation, Regulation D of the Board of Governors
of the Federal Reserve System as from time to time in effect (and any successor
thereto):
(A) any reserve, deposit, or similar requirement
is or shall be imposed or modified in respect of any Letters of Credit issued
hereunder, or
(B) there shall be imposed on the issuing bank
or Foothill any other condition regarding any letter of credit, or Letter of
Credit, as applicable, issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the
cost to the issuing bank or Foothill of issuing, making, guaranteeing, or
maintaining any letter of credit, or Letter of Credit, as applicable, or to
reduce the amount receivable in respect thereof by such issuing bank or
Foothill, then, and in any such case, Foothill may, at any time within a
reasonable period after the additional cost is incurred or the amount received
is reduced, notify Borrower, and Borrower shall pay on demand such amounts as
the issuing bank or Foothill may specify to be necessary to compensate the
issuing bank or Foothill for such additional cost or reduced receipt, together
with interest on such amount from the date of such demand until payment in full
thereof at the rate set forth in Section 2.6(a)(i) or (c)(i), as applicable.
The determination by the issuing bank or Foothill, as the case may be, of any
amount due pursuant to this Section 2.2(f), as set forth in a certificate
setting forth the calculation thereof in reasonable detail, shall, in the
absence of manifest or demonstrable error, be final and conclusive and binding
on all of the parties hereto.
2.3 FCC TERM LOAN.
(a) General. Foothill has agreed to make a term loan
(the "FCC Term Loan") to Borrower in the original principal amount not to
exceed Eleven Million Five Hundred
LOAN AGREEMENT - Page 25
31
Thousand Dollars ($11,500,000.00). The FCC Term Loan shall be repaid in
thirty-five monthly installments, and one final installment, of principal in
the following amounts:
=========================================================================================================
Month Installment Amount
=========================================================================================================
July 1, 1999 through May 1, 2002 One-fortieth (1/40th) of the original
principal amount of the FCC Term Loan
---------------------------------------------------------------------------------------------------------
May 11, 2002 The outstanding principal balance of the FCC Term
Loan
=========================================================================================================
Each such installment shall be due and payable on the first day of each month
commencing July 1, 1999 and continuing on the first day of each succeeding
month until and including the date on which the unpaid balance of the FCC Term
Loan is paid in full. The outstanding principal balance and all accrued and
unpaid interest under the FCC Term Loan shall be due and payable upon the
termination of this Agreement, whether by its terms, by prepayment, by
acceleration, or otherwise. Subject to Section 3.6, the unpaid principal
balance of the FCC Term Loan may be prepaid in whole or in part at any time
during the term of this Agreement upon 30 days prior written notice by Borrower
to Foothill, all such prepaid amounts to be applied to the installments due on
the FCC Term Loan in the inverse order of their maturity. All amounts
outstanding under the FCC Term Loan shall constitute Obligations.
(b) Prepayment Upon Disposition of Eligible
Equipment. Except as otherwise expressly permitted by Section 7.4 of this
Agreement, Borrower shall prepay the FCC Term Loan in an amount equal to the
net proceeds of any disposition of Eligible Equipment, regardless of whether
such disposition is permitted under Section 7.4 of this Agreement (but without
approving any such disposition not otherwise expressly permitted under Section
7.4 of this Agreement). The mandatory prepayment shall be due and payable
immediately upon the corresponding disposition of Eligible Equipment. Mandatory
prepayments shall be applied to installments under the FCC Term Loan in inverse
order of maturity.
(c) FCC Term Note. The FCC Term Loan shall be
evidenced by a promissory note (together with any and all renewals, extensions
and modifications thereof, the "FCC Term Note"), executed by Borrower, payable
to the order of Foothill.
2.4 EALP Term Loan.
(a) General. Subject to the terms and conditions of
this Agreement, EALP agrees, in favor of Agent, Foothill and Borrower, to make
one or more advances ("EALP Advances") to Borrower in an amount outstanding not
to exceed at any one time the lesser of:
(i) Seven Million Five Hundred Thousand Dollars
($7,500,000.00), or
LOAN AGREEMENT - Page 26
32
(ii) the amount of any Overadvance, as such
Overadvance may, or is planned to, exist at any time and from
time to time, and such other, additional amounts as EALP, at
its option, may agree to advance.
(b) Restriction on Repayment. Amounts borrowed
pursuant to this Section 2.4 may not be repaid until and unless all other
Obligations owing to Foothill and Agent under this Agreement have been
indefeasibly repaid to Foothill and to Agent under the terms of this Agreement.
(c) Procedure for Borrowing. Each Borrowing shall be
made upon Borrower's irrevocable request therefor delivered to Agent and to
EALP (which notice must be received by Agent no later than 10:00 a.m.
(California time) on the requested Funding Date) specifying (i) the amount of
the Borrowing, and (ii) the requested Funding Date, which shall be a Business
Day.
(d) Making of EALP Advances.
(i) EALP shall make the amount of the requested
Borrowing available to the Agent in same day funds, to such account of the
Agent as the Agent may designate, not later than 10:00 a.m. (California time)
on the Funding Date applicable thereto. After the Agent's receipt of the
proceeds of such EALP Advances, regardless of whether Borrower has satisfied
the applicable conditions precedent set forth in Sections 3.1 and 3.2, the
Agent shall make the proceeds of such EALP Advances available to Borrower on
the applicable Funding Date by transferring same day funds equal to the
proceeds of such Advances received by the Agent to the Designated Account.
(ii) Agent may assume that EALP has made or will
make such amount available to Agent in immediately available funds on the
Funding Date and Agent may (but shall not be so required), in reliance upon
such assumption, make available to Borrower on such date a corresponding
amount. If and to the extent EALP shall not have made its full amount available
to Agent in immediately available funds and Agent in such circumstances has
made available to Borrower such amount, EALP shall within three (3) Business
Days following such Funding Date make such amount available to Agent, together
with interest at the Defaulting Lenders Rate for each day during such period. A
notice from Agent submitted to EALP with respect to amounts owing under this
subsection shall be conclusive, absent manifest error. If such amount is paid
to Agent, such payment to Agent shall constitute EALP's Advance on the date of
Borrowing for all purposes of this Agreement. If such amount is not paid to
Agent on the third (3rd) Business Day following the Funding Date, Agent will
notify Borrower of such failure to fund and, upon demand by Agent, Borrower
shall pay such amount to Agent for Agent's account, together with interest
thereon for each day elapsed since the date of such Borrowing, at a rate per
annum equal to the interest rate applicable at the time to the EALP Advances
composing such Borrowing. Neither Agent nor any other Lender shall be
responsible for the failure of EALP to make the EALP Advance to be made by EALP
on any Funding Date. If EALP fails to make any EALP Advance that it is required
to make hereunder on any Funding Date and has not cured such failure by making
such EALP Advance within three (3) Business
LOAN AGREEMENT - Page 27
33
Days after written demand upon it by Agent to do so, then EALP shall be deemed
a "Defaulting Lender" for purposes of this Agreement until such Advance is
made.
(iii) Agent shall not be obligated to transfer
to a Defaulting Lender any payments made by Borrower to Agent for the
Defaulting Lender's benefit; nor shall a Defaulting Lender be entitled to the
sharing of any payments hereunder. Amounts payable to a Defaulting Lender shall
instead be paid to or retained by Agent. Agent may hold and, in its discretion,
re-lend to Borrower the amount of all such payments received or retained by it
for the account of such Defaulting Lender. Solely for the purposes of voting or
consenting to matters with respect to the Loan Documents, such Defaulting
Lender shall be deemed not to be a "Lender" and such Defaulting Lender's
Commitment shall be deemed to be zero. This section shall remain effective with
respect to such Defaulting Lender until (A) the Obligations under this
Agreement shall have been declared or shall have become immediately due and
payable or (B) Foothill and Borrower shall have waived such Defaulting Lender's
default in writing. The operation of this section shall not be construed to
increase or otherwise affect the Commitment of any non-Defaulting Lender, or
relieve or excuse the performance by Borrower of its duties and obligations
hereunder.
(e) Termination of Agreement. The outstanding
principal balance and all accrued and unpaid interest under the EALP Term Loan
shall be due and payable upon the termination of this Agreement, whether by its
terms, by prepayment, by acceleration, or otherwise, but only if all other
Obligations owing to Foothill and to Agent have been indefeasibly paid in full.
All amounts outstanding under the EALP Term Loan shall constitute Obligations.
(f) EALP Term Note. The EALP Term Loan shall be
evidenced by a promissory note (together with any and all renewals, extensions
and modifications thereof, the "EALP Term Note"), executed by Borrower, payable
to the order of EALP.
2.5 Overadvances. If, at any time or for any reason, the
amount of Obligations owed by Borrower to Foothill pursuant to Sections 2.1 and
2.2 is greater than either the Dollar or percentage limitations set forth in
Sections 2.1 or 2.2 (an "Overadvance"), Borrower immediately shall pay to
Foothill, in cash, the amount of such excess to be used by Foothill first, to
repay Advances outstanding under Section 2.1 and, thereafter, to be held by
Foothill as cash collateral to secure Borrower's obligation to repay Foothill
for all amounts paid pursuant to Letters of Credit.
2.6 Interest and Letter of Credit Fees: Rates, Payments, and
Calculations.
(a) Interest Rate. Except as provided in clauses (c)
and (d) below, all Obligations (except for undrawn Letters of Credit) shall
bear interest at a per annum rate of one and one-half percentage points (1.5%)
above the Reference Rate.
(b) Letter of Credit Fee. Borrower shall pay
Foothill a fee (in addition to the charges, commissions, fees, and costs set
forth in Section 2.2(d)) equal to one and one-quarter percent (1.25%) per annum
times the aggregate undrawn amount of all outstanding Letters of Credit.
LOAN AGREEMENT - Page 28
34
(c) Default Rate. Upon the occurrence and during the
continuation of an Event of Default, (i) all Obligations (except as otherwise
provided in Section 2.6(c)(ii)) shall bear interest at a per annum rate equal
to 5-1/2 percentage points above the Reference Rate, and (ii) the Letter of
Credit fee provided in Section 2.6(b) shall be increased to 2-1/2% per annum
times the amount of the undrawn Letters of Credit that were outstanding during
the immediately preceding month.
(d) Minimum Interest. In no event shall the rate of
interest chargeable hereunder for any day be less than seven percent (7%) per
annum. To the extent that interest accrued hereunder at the rate set forth
herein would be less than the foregoing minimum daily rate, the interest rate
chargeable hereunder for such day automatically shall be deemed increased to
the minimum rate. To the extent that interest accrued hereunder at the rate set
forth herein (including the minimum interest rate) would yield less than the
foregoing minimum amount, the interest rate chargeable hereunder for the period
in question automatically shall be deemed increased to that rate that would
result in the minimum amount of interest being accrued and payable hereunder.
(e) Payments. Interest and Letter of Credit fees
payable hereunder shall be due and payable, in arrears, on the first day of
each month during the term hereof. Borrower hereby authorizes Agent, at its
option, without prior notice to Borrower, to charge such interest and Letter of
Credit fees, all Lender Group Expenses (as and when incurred), the charges,
commissions, fees, and costs provided for in Section 2.2(d) (as and when
accrued or incurred), the fees and charges provided for in Section 2.11 (as and
when accrued or incurred), and all installments or other payments due under the
FCC Term Loan, or any Loan Document to Borrower's Loan Account, which amounts
thereafter shall accrue interest at the rate then applicable to Advances
hereunder. Any interest not paid when due shall be compounded and shall
thereafter accrue interest at the rate then applicable to Advances hereunder.
(f) Computation. The Reference Rate as of the date
of this Agreement is 7-3/4% per annum. In the event the Reference Rate is
changed from time to time hereafter, the applicable rate of interest hereunder
automatically and immediately shall be increased or decreased by an amount
equal to such change in the Reference Rate. All interest and fees chargeable
under the Loan Documents shall be computed on the basis of a 360-day year for
the actual number of days elapsed.
(g) Intent to Limit Charges to Maximum Lawful Rate.
In no event shall the interest rate or rates payable under this Agreement, plus
any other amounts paid in connection herewith, exceed the highest rate
permissible under any law that a court of competent jurisdiction shall, in a
final determination, deem applicable. Borrower and the Lender Group, in
executing and delivering this Agreement, intend legally to agree upon the rate
or rates of interest and manner of payment stated within it; provided, however,
that, anything contained herein to the contrary notwithstanding, if said rate
or rates of interest or manner of payment exceeds the maximum allowable under
applicable law, then, ipso facto as of the date of this Agreement, Borrower is
and shall be liable only for the payment of such maximum as allowed by law, and
payment received from Borrower in excess of such legal maximum, whenever
received, shall be applied to reduce the principal balance of the Obligations
to the extent of such excess.
LOAN AGREEMENT - Page 29
35
2.7 Collection of Accounts. Borrower shall at all times
maintain lockboxes (the "Lockboxes") and, immediately after the Closing Date,
shall instruct all Account Debtors, other than Foreign Account Debtors, with
respect to the Accounts, General Intangibles, and Negotiable Collateral of
Borrower to remit all Collections in respect thereof to such Lockboxes.
Borrower, Agent, and the Lockbox Banks shall enter into the Lockbox Agreements,
which among other things shall provide for the opening of a Lockbox Account for
the deposit of Collections at a Lockbox Bank. Borrower agrees that all
Collections and other amounts received by Borrower from any Account Debtor
immediately upon receipt shall be deposited into a Lockbox Account. No Lockbox
Agreement or arrangement contemplated thereby shall be modified by Borrower
without the prior written consent of Agent. Upon the terms and subject to the
conditions set forth in the Lockbox Agreements, all amounts received in each
Lockbox Account shall be wired each Business Day into an account (the "Agent's
Account") maintained by Agent at a depositary selected by Agent.
2.8 Crediting Payments; Application of Collections. The
receipt of any Collections by Agent (whether from transfers to Agent by the
Lockbox Banks pursuant to the Lockbox Agreements or otherwise) immediately
shall be applied provisionally to reduce the Obligations outstanding under
Section 2.1, but shall not be considered a payment on account unless such
Collection item is a wire transfer of immediately available federal funds and
is made to the Agent's Account or unless and until such Collection item is
honored when presented for payment. From and after the Closing Date, Agent
shall be entitled to charge Borrower for two (2) Business Days of `clearance'
or `float' at the rate set forth in Section 2.6(a)(i) or Section 2.6(c)(i), as
applicable, on all Collections that are received by Agent (regardless of
whether forwarded by the Lockbox Banks to Agent, whether provisionally applied
to reduce the Obligations under Section 2.1, or otherwise). This
across-the-board two (2)-Business Day clearance or float charge on all
Collections is acknowledged by the parties to constitute an integral aspect of
the pricing of the Lender Group's financing of Borrower, and shall apply
irrespective of the characterization of whether receipts are owned by Borrower
or Agent, and whether or not there are any outstanding Advances, the effect of
such clearance or float charge being the equivalent of charging two (2)
Business Days of interest on such Collections. Should any Collection item not
be honored when presented for payment, then Borrower shall be deemed not to
have made such payment, and interest shall be recalculated accordingly.
Anything to the contrary contained herein notwithstanding, any Collection item
shall be deemed received by Agent only if it is received into the Agent's
Account on a Business Day on or before 11:00 a.m. California time. If any
Collection item is received into the Agent's Account on a non-Business Day or
after 11:00 a.m. California time on a Business Day, it shall be deemed to have
been received by Agent as of the opening of business on the immediately
following Business Day.
2.9 Designated Account. Foothill is authorized to make the
Advances, the Letters of Credit, and the FCC Term Loan under this Agreement
based upon telephonic or other instructions received from anyone purporting to
be an Authorized Person, or without instructions if pursuant to Section 2.6(e).
Borrower agrees to establish and maintain the Designated Account with the
Designated Account Bank for the purpose of receiving the proceeds of the
Advances requested by Borrower and made by Foothill hereunder. Unless otherwise
agreed by Foothill and Borrower, any Advance requested by Borrower and made by
Foothill hereunder shall be made to the Designated Account.
LOAN AGREEMENT - Page 30
36
2.10 Maintenance of Loan Account; Statements of Obligations.
Agent shall maintain an account on its books in the name of Borrower (the "Loan
Account") on which Borrower will be charged with all Advances, and the FCC Term
Loan made by Foothill to Borrower or for Borrower's account, including, accrued
interest, Lender Group Expenses, and any other payment Obligations of Borrower.
In accordance with Section 2.8, the Loan Account will be credited with all
payments received by Agent from Borrower or for Borrower's account, including
all amounts received in the Agent's Account from any Lockbox Bank and shall
further be credited with all amounts received into the Designated Account as
proceeds of the EALP Term Loan to the extent designated by Borrower as a
payment in respect of an Overadvance or in respect of Advances outstanding
under either Section 2.1(a) hereof or the FCC Term Loan. Agent shall render
statements regarding the Loan Account to Borrower, including principal,
interest, fees, and including an itemization of all charges and expenses
constituting Lender Group Expenses owing, and such statements shall be
conclusively presumed to be correct and accurate and constitute an account
stated between Borrower and Agent unless, within 180 days after receipt thereof
by Borrower, Borrower shall deliver to Agent written objection thereto
describing the error or errors contained in any such statements.
2.11 Fees. Borrower shall pay to Foothill the following fees:
(a) Closing Fee. On the Closing Date, a closing fee
of $131,250;
(b) Unused Line Fee. On the first day of each month
during the term of this Agreement, an unused line fee in an amount equal to
one-quarter percent (0.25%) per annum times the Average Unused Portion of the
Maximum Revolving Amount;
(c) Annual Facility Fee. On each anniversary of the
Closing Date, an annual facility fee in an amount equal to one-quarter percent
(0.25%) of the Maximum Revolving Amount;
(d) Financial Examination, Documentation, and
Appraisal Fees. Agent's customary fee of $750 per day per examiner, plus
out-of-pocket expenses for each financial analysis and examination (i.e.,
audits) of Borrower performed by personnel employed by Agent (Agent and
Borrower agree that, prior to the occurrence of a Default under any of the Loan
Documents, Borrower's obligation to pay Agent's customary fee and to reimburse
Agent's out-of-pocket expenses for audits of Borrower shall be limited to four
examinations and analyses per year); Agent's customary appraisal fee of $1,500
per day per appraiser, plus out-of-pocket expenses for each appraisal of the
Collateral performed by personnel employed by Agent in accordance with the
terms of this Agreement; and, the actual charges paid or incurred by Agent if
it elects to employ the services of one or more third Persons to perform such
financial analyses and examinations (i.e., audits) of Borrower or to appraise
the Collateral provided that such audits or appraisals are performed in
accordance with the terms of this Agreement; and
(e) Servicing Fee. In arrears, on the first day of
each month during the term of this Agreement, and thereafter so long as any
Obligations are outstanding, a servicing fee in an amount equal to $4,000.
LOAN AGREEMENT - Page 31
37
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Advance, Letter of
Credit, and the FCC Term Loan. The obligation of Foothill to make the initial
Advance, to issue the initial Letter of Credit, or to make the FCC Term Loan is
subject to the fulfillment, to the satisfaction of Foothill and its counsel, of
each of the following conditions on or before the Closing Date:
(a) the Closing Date shall occur on or before May
12, 1999;
(b) Agent shall have received searches reflecting the
filing of its financing statements and fixture filings;
(c) Agent shall have received each of the following
documents, duly executed, and each such document shall be in full force and
effect:
(i) the FCC Term Note;
(ii) the EALP Term Note;
(iii) the EALP Guaranty;
(iv) the Lockbox Agreements;
(v) the Disbursement Letter;
(vi) the Pay-Off Letter, together with UCC
termination statements and other documentation
evidencing the termination by Existing Lender of
its Liens in and to the properties and assets of
Borrower;
(vii) the Stock Pledge Agreement;
(viii) the Stock Pledge Agreement (GGII);
(ix) the Subsidiary Guaranties; and
(x) the Master Agreement.
(d) Agent shall have received a certificate from the
Secretary of Borrower attesting to the resolutions of Borrower's Board of
Directors authorizing its execution, delivery, and performance of this
Agreement and the other Loan Documents to which Borrower is a party and
authorizing specific officers of Borrower to execute the same;
(e) Agent shall have received a certificate from the
Secretary of GGII attesting to the resolutions of GGII's Board of Directors
authorizing its execution, delivery, and
LOAN AGREEMENT - Page 32
38
performance of the Subsidiary Guaranty, the Stock Pledge Agreement (GGII) and
the other Loan Documents to which GGII is a party and authorizing specific
officers of GGII to execute the same;
(f) Agent shall have received a certificate from the
Secretary of each Designated Subsidiary (other than GGII) attesting to the
resolutions of such Designated Subsidiary's Board of Directors authorizing its
execution, delivery, and performance of the Subsidiary Guaranty and the other
Loan Documents to which such Designated Subsidiary is a party and authorizing
specific officers of such Designated Subsidiary to execute the same;
(g) Agent shall have received copies of Borrower's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of Borrower;
(h) Agent shall have received copies of each Designated
Subsidiary's Governing Documents, as amended, modified, or supplemented to the
Closing Date, certified by the Secretary of such Designated Subsidiary, as
applicable;
(i) Agent shall have received a certificate of status
with respect to Borrower, dated within 45 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of Borrower, which certificate shall indicate that Borrower is in
good standing in such jurisdiction;
(j) Agent shall have received a certificate of status
with respect to each Designated Subsidiary, dated within 45 days of the Closing
Date, such certificate to be issued by the appropriate officer of the
jurisdiction of organization of each Designated Subsidiary, which certificate
shall indicate that such Designated Subsidiary is in good standing in such
jurisdiction;
(k) Agent shall have received certificates of status with
respect to Borrower, each dated within 45 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions in
which its failure to be duly qualified or licensed would constitute a Material
Adverse Change, which certificates shall indicate that Borrower is in good
standing in such jurisdictions;
(l) Agent shall have received certificates of status with
respect to each Designated Subsidiary, each dated within 45 days of the Closing
Date, such certificates to be issued by the appropriate officer of the
jurisdictions in which its failure to be duly qualified or licensed would
constitute a Material Adverse Change, which certificates shall indicate that
each such Designated Subsidiary is in good standing in such jurisdictions;
(m) Agent shall have received a certificate of insurance,
together with the endorsements thereto, as are required by Section 6.8, the
form and substance of which shall be satisfactory to Agent and its counsel;
(n) Agent shall have received such Collateral Access
Agreements from lessors, warehousemen, bailees, and other third persons as
Agent may require;
LOAN AGREEMENT - Page 33
39
(o) Agent shall have received an opinion of Borrower's
United States counsel in form and substance reasonably satisfactory to Agent;
(p) Agent shall have received satisfactory evidence that
all tax returns required to be filed by Borrower have been timely filed and all
taxes upon Borrower or its properties, assets, income, and franchises
(including real property taxes and payroll taxes) have been paid prior to
delinquency, except such taxes that are the subject of a Permitted Protest;
(q) all other documents in connection with the
transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance satisfactory to Agent
and its counsel;
(r) Availability, after giving effect to the initial
Advance hereunder, shall be at least $2,500,000.00; and
(s) Agent shall have received the fiscal year end audited
financial statements of Borrower for Borrower's fiscal year ended December 31,
1998.
3.2 Conditions Precedent to all Advances, all Letters of
Credit, and the FCC Term Loan. The following shall be conditions precedent to
all Advances, all Letters of Credit, and the FCC Term Loan hereunder:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all
respects on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);
(b) no Default or Event of Default shall have occurred
and be continuing on the date of such extension of credit, nor shall either
result from the making thereof; and
(c) no injunction, writ, restraining order, or other
order of any nature prohibiting, directly or indirectly, the extending of such
credit shall have been issued and remain in force by any governmental authority
against Borrower, the Lender Group or any of their Affiliates.
3.3 Condition Subsequent. As a condition subsequent to
initial closing hereunder, Borrower shall perform or cause to be performed the
following (the failure by Borrower to so perform or cause to be performed
constituting an Event of Default):
(a) within 30 days of the Closing Date, deliver to Agent
the certified copies of the policies of insurance or, at Agent's discretion,
certificates of insurance, together with the endorsements thereto, as are
required by Section 6.8, the form and substance of which shall be satisfactory
to Agent and its counsel; and
(b) within 45 days of the Closing Date, deliver to Agent
a mortgage executed by SSGI covering the real property of SSGI located in
Xxxxxxx, Xxxxxxx, Xxxxxx, commonly referred to as 0000 Xxxxx Xxxx S.E.,
together with a title report showing record title to be
LOAN AGREEMENT - Page 34
40
vested in SSGI (it being understood that neither Borrower nor SSGI will be
required to provide Agent with a mortgagees' policy of title insurance or a
survey).
3.4 Term; Automatic Renewal. This Agreement shall become
effective upon the execution and delivery hereof by Borrower, Agent and each
Lender and shall continue in full force and effect for a term ending on the
date (the "Renewal Date") that is three (3) years from the Closing Date and
automatically shall be renewed for successive one-year periods thereafter,
unless sooner terminated pursuant to the terms hereof. Either Borrower or the
Required Lenders may terminate this Agreement without, in the case of Borrower,
penalty or premium effective on the Renewal Date by giving the other party at
least ninety days' prior written notice. Thereafter, Borrower may terminate
this Agreement at any time without penalty or premium subject to Section 3.5
hereof, provided that the Required Lenders may only terminate this Agreement on
the annual anniversary of the Renewal Date by giving Borrower at least ninety
days' prior written notice. The foregoing notwithstanding, the Lenders shall
have the right to terminate their respective obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.5 Effect of Termination. On the date of termination of this
Agreement, all Obligations (including an amount equal 102% of the undrawn and
unreimbursed amount of the Letters of Credit) immediately shall become due and
payable without notice or demand. No termination of this Agreement, however,
shall relieve or discharge Borrower of Borrower's duties, Obligations, or
covenants hereunder, and the Lender Group's continuing security interests in
the Collateral shall remain in effect until all Obligations have been fully and
finally discharged and the Lender Group's obligation to provide additional
credit hereunder is terminated. If Borrower has sent a notice of termination
pursuant to the provisions of Section 3.4, but fails to pay the Obligations in
full on the date set forth in said notice, then Agent (on behalf of the Lender
Group) may, but shall not be required to, renew this Agreement month-to-month
until such Obligations are paid.
3.6 Early Termination by Borrower. The provisions of Section
3.4 that may prohibit termination of this Agreement by Borrower prior to the
Renewal Date notwithstanding, Borrower has the option, at any time upon 30 days
prior written notice to Agent, to terminate this Agreement prior to the Renewal
Date by paying to Agent (for the benefit of Foothill), in cash, the Obligations
(including an amount equal to 102% of the undrawn and unreimbursed amount of
the Letters of Credit that remain outstanding as of the date of termination of
this Agreement), in full, together with a premium (the "Early Termination
Premium") equal to the Maximum Amount multiplied by the percentage indicated
below that corresponds to the period during which Borrower pays the Obligations
in full, in cash:
Percentage Period
---------- ------
3% From the Closing Date, through and including
August 11, 1999;
2-3/4% After August 11, 1999, through and including
November 11, 1999;
2-1/2% After November 11, 1999, through and including
February 11, 2000;
2-1/4% After February 11, 2000, through and including
May 11, 2000;
2% After May 11, 2000, through and including August
11, 2000;
LOAN AGREEMENT - Page 35
41
1-3/4% After August 11, 2000, through and including
November 11, 2000;
1-1/2% After November 11, 2000, through and including
February 11, 2001;
1-1/4% After February 11, 2001, through and including
May 11, 2001;
1% After May 11, 2001, through and including August
11, 2001;
3/4% After August 11, 2001, through and including
November 11, 2001;
1/2% After November 11, 2001, through and including
February 11, 2002;
1/4% After February 11, 2002, and prior to the
Renewal Date; and
0% On the Renewal Date and thereafter.
Any amount paid in respect of undrawn and unreimbursed Letters of
Credit outstanding as of the termination of this Agreement shall be repaid to
Borrower on a dollar-for-dollar basis (without interest) when the outstanding
Letters of Credit expire, terminate, or are replaced, after reducing such
amount by the amount, if any, drawn by or paid to any beneficiary under such
Letters of Credit.
Borrower may prepay the FCC Term Loan in whole or in part at any time
without payment of an Early Termination Premium so long as the prepayment is
made with proceeds derived from the sale of Borrower's equity securities. The
following prepayments may be made without payment of an Early Termination
Premium: (a) mandatory prepayments of the FCC Term Loan, including, without
limitation, mandatory prepayments required under Section 2.3(b) as a result of
a disposition of Eligible Equipment otherwise permitted by Section 7.4, but
only to the extent all such Dispositions during any Fiscal Year result in
aggregate net proceeds of less than $1,000,000; and (b) prepayments of Advances
pursuant to Section 2.1 or pursuant to Section 2.5 as a result of an
Overadvance. Any prepayment on the FCC Term Loan will apply to payments due
under the FCC Term Loan in the inverse order of maturities. Borrower may not
prepay the EALP Term Loan in whole or in part unless and until all other
Obligations have been repaid in full to Foothill and to Agent.
3.7 Termination Upon Event of Default. If the Agent or the
Lender Group terminates this Agreement upon the occurrence of an Event of
Default, in view of the impracticability and extreme difficulty of ascertaining
actual damages and by mutual agreement of the parties as to a reasonable
calculation of Foothill's lost profits as a result thereof, Borrower shall pay
to Foothill upon the effective date of such termination, a premium in an amount
equal to the Early Termination Premium. The Early Termination Premium shall be
presumed to be the amount of damages sustained by Foothill as the result of the
early termination and Borrower agrees that it is reasonable under the
circumstances currently existing. The Early Termination Premium provided for in
this Section 3.7 shall be deemed included in the Obligations.
LOAN AGREEMENT - Page 36
42
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Borrower hereby grants to
Agent, for the benefit of the Lender Group, a continuing security interest in
all currently existing and hereafter acquired or arising Collateral in order to
secure prompt repayment of any and all Obligations and in order to secure
prompt performance by Borrower of each of its covenants and duties under the
Loan Documents. The security interests of Agent for the benefit of the Lender
Group in the Collateral shall attach to all Collateral without further act on
the part of Agent, the Lender Group or Borrower. Anything contained in this
Agreement or any other Loan Document to the contrary notwithstanding, except
for the sale of assets in the ordinary course of business, Borrower has no
authority, express or implied, to dispose of any item or portion of the
Collateral, except as provided in Section 7.4.
4.2 Negotiable Collateral. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral,
Borrower, immediately upon the request of Agent, shall endorse and deliver
physical possession of such Negotiable Collateral to Agent.
4.3 Collection of Accounts, General Intangibles, and
Negotiable Collateral. Subject to the provisions of Section 9.5(f), at any time
after an Event of Default, Agent or Agent's designee may (a) notify customers
or Account Debtors of Borrower that the Accounts, General Intangibles, or
Negotiable Collateral have been assigned to Agent for the benefit of the Lender
Group or that Agent for the benefit of the Lender Group has a security interest
therein, and (b) collect the Accounts, General Intangibles, and Negotiable
Collateral directly and charge the collection costs and expenses to the Loan
Account. Borrower agrees that it will hold in trust for the Lender Group, as
the Lender Group's trustee, any Collections that it receives and immediately
will deliver said Collections to Agent in their original form as received by
Borrower.
4.4 Delivery of Additional Documentation Required. At any
time upon the request of Agent, Borrower shall execute and deliver to Agent all
financing statements, continuation financing statements, fixture filings,
security agreements, pledges, assignments, affidavits, reports, notices,
schedules of accounts, letters of authority, and all other documents that Agent
reasonably may request, in form satisfactory to Agent, to perfect and continue
perfected Liens for the benefit of the Lender Group in the Collateral, and in
order to fully consummate all of the transactions contemplated hereby and under
the other the Loan Documents.
4.5 Power of Attorney. Borrower hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as Borrower's true and lawful attorney, with power
to (a) if Borrower refuses to, or fails timely to execute and deliver any of
the documents described in Section 4.4, sign the name of Borrower on any of the
documents described in Section 4.4, (b) at any time that an Event of Default
has occurred and is continuing, sign Borrower's name on any invoice or xxxx of
lading relating to any Account, drafts against Account Debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices to Account
Debtors, (c) send requests for verification of Accounts, (d) endorse Borrower's
name on any Collection item that may come into the Lender Group's possession,
(e) at any time that an Event of Default has occurred and is continuing, notify
the post office authorities to change the address for delivery of Borrower's
mail to an address designated by Agent, to receive and open all mail addressed
to Borrower, and to retain all mail relating to the Collateral and forward
LOAN AGREEMENT - Page 37
43
all other mail to Borrower, (f) at any time that an Event of Default has
occurred and is continuing, make, settle, and adjust all claims under
Borrower's policies of insurance and make all determinations and decisions with
respect to such policies of insurance, and (g) at any time that an Event of
Default has occurred and is continuing, settle and adjust disputes and claims
respecting the Accounts directly with Account Debtors, for amounts and upon
terms that Agent determines to be reasonable, and Agent may cause to be
executed and delivered any documents and releases that Agent determines to be
necessary. The appointment of Agent as Borrower's attorney, and each and every
one of Agent's rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations have been fully and finally repaid and
performed and the Lender Group's obligation to extend credit hereunder is
terminated.
4.6 Right to Inspect. Agent (through any of its officers,
employees, or agents) shall have the right, from time to time hereafter to
inspect Borrower's Books and to check, test, and appraise the Collateral, on a
semi-annual basis and more frequently if a Default or an Event of Default has
occurred and is continuing, in order to verify Borrower's financial condition
or the amount, quality, value, condition of, or any other matter relating to,
the Collateral.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce Agent and Lenders to enter into this
Agreement, Borrower makes the following representations and warranties which
shall be true, correct, and complete in all respects as of the date hereof, and
shall be true, correct, and complete in all respects as of the Closing Date,
and at and as of the date of the making of each Advance, the issuance of a
Letter of Credit, the making of the FCC Term Loan or any EALP Term Loan made
thereafter, as though made on and as of such date (except to the extent that
such representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1 No Encumbrances. Borrower has good and indefeasible title
to the Collateral, free and clear of Liens except for Permitted Liens.
5.2 Eligible Accounts. The Eligible Accounts are bona fide
existing obligations created by the sale and delivery of Inventory or the
rendition of services to Account Debtors in the ordinary course of Borrower's
and the Designated Subsidiaries' business. To the best of Borrower's knowledge,
including what Borrower would have known after the exercise of reasonable due
diligence, the Eligible Accounts are unconditionally owed to Borrower or the
Designated Subsidiaries without defenses, disputes, offsets, counterclaims, or
rights of return or cancellation; and no Account Debtor obligated on any
Eligible Account has asserted any defense, dispute, offset, counterclaim or
right of return or cancellation with respect to any Eligible Account. Borrower
has not received notice of actual or imminent bankruptcy, insolvency, or
material impairment of the financial condition of any Account Debtor regarding
any Eligible Account.
5.3 Equipment. All of the Equipment is used or held for use
in Borrower's or the Designated Subsidiaries' business and is fit for such
purposes.
LOAN AGREEMENT - Page 38
44
5.4 Location of Inventory and Equipment. The Inventory and
Equipment are not stored with a bailee, warehouseman, or similar party (without
Agent's prior written consent) and are located only at the locations identified
on Schedule 6.10 except as otherwise permitted by Section 6.10.
5.5 Inventory Records. Borrower keeps correct and accurate
records itemizing and describing the kind, type, quality, and quantity of the
Inventory, and Borrower's cost therefor.
5.6 Location of Chief Executive Office; FEIN. The chief
executive office of Borrower is located at the address indicated in the
preamble to this Agreement and Borrower's FEIN is 00-0000000.
5.7 Due Organization and Qualification; Subsidiaries.
(a) Borrower is duly organized and existing and in good
standing under the laws of the jurisdiction of its incorporation and qualified
and licensed to do business in, and in good standing in, any state where the
failure to be so licensed or qualified reasonably could be expected to have a
Material Adverse Change.
(b) Set forth on Schedule 5.7 is a complete and accurate
list of Borrower's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their incorporation; (ii) the number of shares of each class of
common and preferred stock authorized for each of such Subsidiaries; and (iii)
the number and the percentage of the outstanding shares of each such class
owned directly or indirectly by Borrower. All of the outstanding capital stock
of each such Subsidiary has been validly issued and is fully paid and
non-assessable.
(c) Except as set forth on Schedule 5.7, no capital stock
(or any securities, instruments, warrants, options, purchase rights, conversion
or exchange rights, calls, commitments or claims of any character convertible
into or exercisable for capital stock) of any direct or indirect Subsidiary of
Borrower is subject to the issuance of any security, instrument, warrant,
option, purchase right, conversion or exchange right, call, commitment or claim
of any right, title, or interest therein or thereto.
5.8 Due Authorization; No Conflict.
(a) The execution, delivery, and performance by Borrower
of this Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary corporate action.
(b) The execution, delivery, and performance by Borrower
of this Agreement and the Loan Documents to which it is a party do not and will
not (i) violate any provision of federal, state, or local law or regulation
(including Regulations G, T, U, and X of the Federal Reserve Board) applicable
to Borrower, the Governing Documents of Borrower, or any order, judgment, or
decree of any court or other Governmental Authority binding on Borrower, (ii)
conflict with, result in a breach of, or constitute (with due notice or lapse
of time or both) a default under any material contractual obligation or
material lease of Borrower, (iii) result in or
LOAN AGREEMENT - Page 39
45
require the creation or imposition of any Lien of any nature whatsoever upon
any properties or assets of Borrower, other than Permitted Liens, or (iv)
require any approval of stockholders or any approval or consent of any Person
under any material contractual obligation of Borrower.
(c) Other than the filing of appropriate financing
statements, fixture filings, and mortgages, the execution, delivery, and
performance by Borrower of this Agreement and the Loan Documents to which
Borrower is a party do not and will not require any registration with, consent,
or approval of, or notice to, or other action with or by, any federal, state,
foreign, or other Governmental Authority or other Person.
(d) This Agreement and the Loan Documents to which
Borrower is a party, and all other documents contemplated hereby and thereby,
when executed and delivered by Borrower will be the legally valid and binding
obligations of Borrower, enforceable against Borrower in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
(e) The Liens granted by Borrower to Agent (for the
benefit of the Lender Group) in and to its properties and assets located in the
United States and Canada pursuant to this Agreement and the other Loan
Documents are validly created, perfected, and first priority Liens, subject
only to Permitted Liens.
5.9 Litigation. There are no actions or proceedings pending
by or against Borrower before any court or administrative agency and Borrower
does not have knowledge of any pending, threatened, or imminent litigation,
governmental investigations, or claims, complaints, actions, or prosecutions
involving Borrower or any guarantor of the Obligations, except for: (a) ongoing
collection matters in which Borrower is the plaintiff; (b) matters disclosed on
Schedule 5.9; and (c) matters that, if decided adversely to Borrower, would not
reasonably be expected to have a Material Adverse Change.
5.10 No Material Adverse Change. All financial statements
relating to Borrower or any guarantor of the Obligations that have been
delivered by Borrower to the Lender Group have been prepared in accordance with
GAAP (except, in the case of unaudited financial statements, for the lack of
footnotes and being subject to year-end audit adjustments) and fairly present
in all material respects Borrower's (or such guarantor's, as applicable)
financial condition as of the date thereof and Borrower's results of operations
for the period then ended. Except as otherwise disclosed to Agent in writing,
there has not been a Material Adverse Change with respect to Borrower (or such
guarantor, as applicable) since the date of the latest financial statements
submitted to the Lender Group on or before the Closing Date. The Lender Group
acknowledges and agrees that certain of the financial statements delivered to
the Lender Group contain projections of revenues, income (including income
loss), earnings (including earnings loss), capital expenditures, capital
structure and other financial items (collectively, the "Forward-Looking
Statements"). With respect to the representations contained in this Section
5.10, the Lender Group acknowledges that Forward-Looking Statements are subject
to qualification to the extent such statements are based on reasonable
assumptions of Borrower and its executive officers as to future events and
conditions. Accordingly, the representations set forth in this Section 5.10
shall not be
LOAN AGREEMENT - Page 40
46
deemed to be violated by the inaccuracy of the Forward-Looking Statements to
the extent such statements are based on the reasonable assumptions of the
Borrower, are accompanied by meaningful cautionary statements identifying
important factors that could cause actual results to differ materially from
such statements, and Borrower has no actual knowledge of the inaccuracy of such
Forward-Looking Statements or any material underlying assumptions as of the
date such statements are made or deemed made hereunder.
5.11 Solvency. Borrower is Solvent. No transfer of property
is being made by Borrower and no obligation is being incurred by Borrower in
connection with the transactions contemplated by this Agreement or the other
Loan Documents with the intent to hinder, delay, or defraud either present or
future creditors of Borrower.
5.12 Employee Benefits. None of Borrower, any of its
Subsidiaries, or any of their ERISA Affiliates maintains or contributes to any
Benefit Plan, other than those listed on Schedule 5.12. Borrower, each of its
Subsidiaries and each ERISA Affiliate have satisfied the minimum funding
standards of ERISA and the IRC with respect to each Benefit Plan to which it is
obligated to contribute. No ERISA Event has occurred nor has any other event
occurred that may result in an ERISA Event that reasonably could be expected to
result in a Material Adverse Change. None of Borrower or its Subsidiaries, any
ERISA Affiliate, or any fiduciary of any Plan is subject to any direct or
indirect liability with respect to any Plan under any applicable law, treaty,
rule, regulation, or agreement. None of Borrower or its Subsidiaries or any
ERISA Affiliate is required to provide security to any Plan under Section
401(a)(29) of the IRC.
5.13 Environmental Condition. None of Borrower's properties
or assets has ever been used by Borrower or, to the best of Borrower's
knowledge, by previous owners or operators in the disposal of, or to produce,
store, handle, treat, release, or transport, any Hazardous Materials in
violation of any applicable environmental laws that reasonably could be
expected to result in a Material Adverse Change, except for explosives and
other flammable substances used by Borrower in the ordinary course of
Borrower's business, which have been stored, used and disposed of in accordance
with applicable laws. None of Borrower's real properties has ever been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, or a candidate for closure
pursuant to any environmental protection statute. No Lien arising under any
environmental protection statute has attached to any revenues or to any real or
personal property owned or operated by Borrower, except for liens arising by
reason of deposit of cash or letters of credit for surety or performance bonds
posted in the Borrower's ordinary course of business. Borrower has not received
a summons, citation, notice, or directive from the Environmental Protection
Agency or any other federal or state governmental agency concerning any action
or omission by Borrower resulting in the releasing or disposing of Hazardous
Materials into the environment.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, and unless Agent shall otherwise consent in writing, Borrower
will, and will cause each of its Subsidiaries to, do all of the following:
LOAN AGREEMENT - Page 41
47
6.1 Accounting System. Maintain a standard and modern system
of accounting that enables Borrower to produce financial statements in
accordance with GAAP, and maintain records pertaining to the Collateral in
accordance with prudent and customary industry practice and provide such
information from time to time as may be requested by Agent. Borrower also shall
keep a modern inventory reporting system that shows all additions, sales,
claims, returns, and allowances with respect to the Inventory.
6.2 Collateral Reporting. Provide Agent with the following
documents at the following times in form satisfactory to Agent:
(a) not less frequently than weekly, a sales journal,
collection journal, and credit register since the last such schedule (to the
extent activity has occurred since the last schedule),
(b) on a monthly basis and, in any event, by no later
than the 15th day of each month during the term of this Agreement, (i) a
detailed calculation of the Borrowing Base, and (ii) a detailed aging, by
total, of the Accounts, together with a reconciliation to the detailed
calculation of the Borrowing Base previously provided to Agent,
(c) on a monthly basis and, in any event, by no later
than the 15th day of each month during the term of this Agreement, a summary
aging, by vendor, of Borrower's domestic accounts payable and any book
overdraft,
(d) upon request, copies of invoices in connection with
the Accounts, customer statements, credit memos, remittance advices and
reports, deposit slips, shipping and delivery documents in connection with the
Accounts and for Inventory and Equipment acquired by Borrower, purchase orders
and invoices,
(e) on a quarterly basis, a detailed list of Borrower's
customers,
(f) on a monthly basis, a calculation of the Dilution for
the prior month,
(g) promptly following the request of Foothill, copies of
each master or supplemental seismic data acquisition agreement (or such other
agreements as may be the basis for the provision of services resulting in
Eligible Accounts), which agreements shall be subject to the approval by
Foothill (which approval shall not be unreasonably withheld or delayed in the
exercise of Foothill's reasonable credit judgment), and, if disapproved by
Foothill, the Accounts arising from such agreements shall not be included
within the Borrowing Base as Eligible Accounts, and
(h) such other reports as to the Collateral or the
financial condition of Borrower as Agent may reasonably request from time to
time, including as requested by Agent, copies of "Bid Summary Overviews"
together with schedules and exhibits thereto.
Original sales invoices evidencing daily sales shall be
mailed by Borrower to each Account Debtor and, at Agent's direction following
the occurrence of an Event of Default, the invoices shall indicate on their
face that the Account has been assigned to Agent and that all payments are to
be made directly to Agent.
LOAN AGREEMENT - Page 42
48
6.3 Financial Statements, Reports, Certificates. Deliver to
Agent:
(a) as soon as available, but in any event within 45 days
after the end of each month during each of Borrower's fiscal years: (i) a
company prepared balance sheet, income statement, and statement of cash flow
covering Borrower's operations during such period; (ii) a copy of the
then-current "Grant Geophysical, Inc. Financial Reports" or such other report
as may be generated for the management personnel of Borrower in lieu thereof
from time to time; and (iii) a report analyzing investments in, and revenue
attributable to, the Data Library; and
(b) as soon as available, but in any event within 90 days
after the end of each of Borrower's fiscal years, financial statements of
Borrower for each such fiscal year, audited by independent certified public
accountants reasonably acceptable to Agent and certified, without any
qualifications, by such accountants to have been prepared in accordance with
GAAP, together with a certificate of such accountants addressed to Agent
stating that such accountants do not have knowledge of the existence of any
Default or Event of Default.
Such audited financial statements shall include a balance
sheet, profit and loss statement, and statement of cash flow and, if prepared,
such accountants' letter to management. In addition to the financial statements
referred to above, Borrower agrees to deliver financial statements prepared on
a consolidated basis, and, beginning with the monthly financial statements
required to be provided by Borrower for the month ending August 31, 1999, on a
consolidating basis, so as to present Borrower and each such related entity
separately.
Together with the above, Borrower also shall deliver to
Agent Borrower's Form 10-Q Quarterly Reports, Form 10-K Annual Reports, and
Form 8-K Current Reports, and any other filings made by Borrower with the
Securities and Exchange Commission, if any, as soon as the same are filed, or
any other similar financial information that is provided by Borrower to its
shareholders, and any other report reasonably requested by Agent relating to
the financial condition of Borrower.
Each month, together with the financial statements
provided pursuant to Section 6.3(a), Borrower shall deliver to Agent a
certificate signed by its chief financial officer to the effect that: (i) all
financial statements delivered or caused to be delivered to Agent hereunder
have been prepared in accordance with GAAP (except, in the case of unaudited
financial statements, for the lack of footnotes and being subject to year-end
audit adjustments) and fairly present in all material respects the financial
condition of Borrower, (ii) the representations and warranties of Borrower
contained in this Agreement and the other Loan Documents are true and correct
in all material respects on and as of the date of such certificate, as though
made on and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date), (iii) for each month that also is
the date on which the financial covenant in Section 7.18 is to be tested, a
Compliance Certificate demonstrating in reasonable detail compliance at the end
of such period with the financial covenant contained in Section 7.18, and (iv)
on the date of delivery of such certificate to Agent there does not exist any
condition or event that constitutes a Default or Event of Default (or, in the
case of clauses (i), (ii), or (iii), to the extent of any non-compliance,
describing
LOAN AGREEMENT - Page 43
49
such non-compliance as to which he or she may have knowledge and what action
Borrower has taken, is taking, or proposes to take with respect thereto).
Borrower shall have issued written instructions to its
independent certified public accountants authorizing them to communicate with
Agent and to release to Agent whatever financial information concerning
Borrower that Agent may reasonably request. Borrower hereby irrevocably
authorizes and directs all auditors, accountants, or other third parties to
deliver to Agent, at Borrower's expense, copies of Borrower's financial
statements, papers related thereto, and other accounting records of any nature
in their possession, and to disclose to Agent any information they may have
regarding Borrower's business affairs and financial conditions.
6.4 TAX RETURNS. Deliver to Agent copies of each of
Borrower's future federal income tax returns, and any amendments thereto,
within 30 days of the filing thereof with the Internal Revenue Service.
6.5 GUARANTOR REPORTS. Cause EALP to deliver its annual
financial statements at the time when Borrower provides its audited financial
statements to Agent. Such financial statements shall include a balance sheet of
EALP for the immediately preceding fiscal year, together with the related
statements of income, partners' equity and cash flows and, if prepared, an
accountants' letter to management.
6.6 MAINTENANCE OF EQUIPMENT. Maintain the Equipment in good
operating condition and repair (ordinary wear and tear excepted), and make all
necessary replacements thereto so that the value and operating efficiency
thereof shall at all times be maintained and preserved. Other than those items
of Equipment that constitute fixtures on the Closing Date, Borrower shall not
permit any item of Equipment to become a fixture to real estate or an accession
to other property, and such Equipment shall at all times remain personal
property.
6.7 TAXES. Cause all assessments and taxes, whether real,
personal, or otherwise, due or payable by, or imposed, levied, or assessed
against Borrower or any of its property to be paid in full, before delinquency
or before the expiration of any extension period, except to the extent that the
validity of such assessment or tax shall be the subject of a Permitted Protest.
Borrower shall make due and timely payment or deposit of all such federal,
state, and local taxes, assessments, or contributions required of it by law,
and will execute and deliver to Agent, on demand, appropriate certificates
attesting to the payment thereof or deposit with respect thereto. Borrower will
make timely payment or deposit of all tax payments and withholding taxes
required of it by applicable laws, including those laws concerning F.I.C.A.,
F.U.T.A., state disability, and local, state, and federal income taxes, and
will, upon request, furnish Agent with proof satisfactory to Agent indicating
that Borrower has made such payments or deposits.
6.8 INSURANCE.
(a) Borrower, at its expense, shall maintain insurance
policies that are substantially the same in scope and amount of coverage as the
policies described on Schedule 6.8.
LOAN AGREEMENT - Page 44
50
(b) All such policies of insurance shall be in such form,
with such companies, and in such amounts as may be satisfactory to Agent. All
such policies of insurance (except those of public liability and property
damage) for the Collateral shall contain a 438BFU lender's loss payable
endorsement, or an equivalent endorsement in a form satisfactory to Agent,
showing Agent (for the ratable benefit of the Lenders) as sole loss payee
thereof, and shall contain a waiver of warranties, and shall specify that the
insurer must give at least ten (10) days prior written notice to Agent before
canceling its policy for any reason. Borrower shall deliver to Agent certified
copies of such policies of insurance or, at Agent's discretion, certificates of
insurance and evidence of the payment of all premiums therefor. All proceeds
payable under any such policy shall be payable to Agent (for the ratable
benefit of the Lenders) to be applied on account of the Obligations or
delivered to Borrower upon provision of evidence reasonably satisfactory to
Agent that such proceeds shall be used to acquire replacement Equipment.
6.9 NO SETOFFS OR COUNTERCLAIMS. Make payments hereunder and
under the other Loan Documents by or on behalf of Borrower without setoff or
counterclaim and free and clear of, and without deduction or withholding for or
on account of, any federal, state, or local taxes.
6.10 LOCATION OF INVENTORY AND EQUIPMENT. Keep the Inventory
and Eligible Equipment other than Mobile Goods only at the locations identified
on Schedule 6.10; provided, however, that Borrower may amend Schedule 6.10 so
long as such amendment occurs by written notice to Agent not less than 15 days
prior to the date on which the Inventory or Eligible Equipment is moved to such
new location within the United States, and so long as, at the time of such
written notification, Borrower provides any financing statements or fixture
filings necessary to perfect and continue perfected Agent's security interests
in such assets and also provides to Agent a Collateral Access Agreement or, to
the extent Mobile Goods that are Eligible Equipment are removed from the
continental United States or Canada, Borrower, upon Foothill's request, shall
use its reasonable best efforts to perfect or continue the perfection of
Agent's security interest in such Mobile Goods under the laws of the
jurisdiction to which the Mobile Goods are being moved.
6.11 COMPLIANCE WITH LAWS. Unless subject to a Permitted
Protest, comply with the requirements of all applicable laws, rules,
regulations, and orders of any governmental authority, including the Fair Labor
Standards Act and the Americans With Disabilities Act, other than laws, rules,
regulations, and orders the non-compliance with which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Change.
6.12 EMPLOYEE BENEFITS.
(a) Deliver to Agent: (i) Promptly, and in any event
within 10 Business Days after Borrower or any of its Subsidiaries knows or has
reason to know that an ERISA Event has occurred that reasonably could be
expected to result in a Material Adverse Change, a written statement of the
chief financial officer of Borrower describing such ERISA Event and any action
that is being taking with respect thereto by Borrower, any such Subsidiary or
ERISA Affiliate, and any action taken or threatened by the IRS, Department of
Labor, or PBGC. Borrower or such Subsidiary, as applicable, shall be deemed to
know all facts known by the administrator of any Benefit Plan of which it is
the plan sponsor. (ii) Promptly, and in any event within 3 Business Days after
the filing thereof with the IRS, a copy of each funding waiver request filed
with respect to any
LOAN AGREEMENT - Page 45
51
Benefit Plan and all communications received by Borrower, any of its
Subsidiaries or, to the knowledge of Borrower, any ERISA Affiliate with respect
to such request. (iii) Promptly, and in any event within 3 Business Days after
receipt by Borrower, any of its Subsidiaries or, to the knowledge of Borrower,
any ERISA Affiliate, of the PBGC's intention to terminate a Benefit Plan or to
have a trustee appointed to administer a Benefit Plan, copies of each such
notice.
(b) Cause to be delivered to Agent, upon Agent's request,
each of the following: (i) a copy of each Plan (or, where any such plan is not
in writing, complete description thereof) (and if applicable, related trust
agreements or other funding instruments) and all amendments thereto, all
written interpretations thereof and written descriptions thereof that have been
distributed to employees or former employees of Borrower or its Subsidiaries;
(ii) the most recent determination letter issued by the IRS with respect to
each Benefit Plan; (iii) for the three most recent plan years, annual reports
on Form 5500 Series required to be filed with any governmental agency for each
Benefit Plan; (iv) all actuarial reports prepared for the last three plan years
for each Benefit Plan; (v) a listing of all Multiemployer Plans, with the
aggregate amount of the most recent annual contributions required to be made by
Borrower or any ERISA Affiliate to each such plan and copies of the collective
bargaining agreements requiring such contributions; (vi) any information that
has been provided to Borrower or any ERISA Affiliate regarding withdrawal
liability under any Multiemployer Plan; and (vii) the aggregate amount of the
most recent annual payments made to former employees of Borrower or its
Subsidiaries under any Retiree Health Plan.
6.13 LEASES. Pay when due all rents and other amounts payable
under any leases to which Borrower is a party or by which Borrower's properties
and assets are bound, unless such payments are the subject of a Permitted
Protest. Unless subject to a Permitted Protest, to the extent that Borrower
fails timely to make payment of such rents and other amounts payable when due
under its leases, Agent shall be entitled, in its discretion, to reserve an
amount equal to such unpaid amounts against the Borrowing Base.
6.14 MILLENNIUM COMPLIANT.
(a) Borrower and its Subsidiaries shall be substantially
Millennium Compliant by June 30, 1999; and Borrower and its Subsidiaries shall
be Millennium Compliant not later than September 30, 1999. As set forth herein,
"Millennium Compliant" means that software, hardware, embedded microchips and
other processing capabilities utilized by, and material to, the business
operations of Borrower and its Subsidiaries function accurately and
consistently accept date input, provide date output and perform calculations on
dates before, during and after January 1, 2000, without material interruption
associated with the advent of the year 2000.
(b) Borrower shall provide to Agent, not later than June
30, 1999, Borrower's plan and time table for purposes of becoming substantially
Millennium Compliant and becoming Millennium Compliant. Each month prior to
September 30, 1999, concurrently with the submission of the financial
statements required to be submitted under Section 6.3, Borrower shall provide
to Agent status reports on the implementation of Borrower's plan to become
Millennium Compliant, or such other information which is sufficient to
demonstrate that Borrower and its Subsidiaries will be Millennium Compliant by
September 30, 1999.
LOAN AGREEMENT - Page 46
52
6.15 MONEY MARKET ACCOUNT. Borrower has previously
established a money market account (the "Money Market Account") at the
Designated Account Bank, account number 9121 045. Borrower covenants that the
only funds in the Money Market Account will be funds to cover outstanding
checks of Borrower issued in the ordinary course of Borrower's business.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrower will not, nor will Borrower permit any of its
Subsidiaries to, do any of the following without the Required Lenders prior
written consent:
7.1 INDEBTEDNESS. Create, incur, assume, permit, guarantee,
or otherwise become or remain, directly or indirectly, liable with respect to
any Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the
other Loan Documents, together with Indebtedness to issuers of letters of
credit that are the subject of L/C Guarantees;
(b) Indebtedness set forth in the latest financial
statements of Borrower submitted to Agent on or prior to the Closing Date;
(c) Indebtedness secured by Permitted Liens;
(d) Indebtedness that has been contractually subordinated
in right of payment to the Obligations and in priority of Lien (if secured) to
the Liens in favor of Agent, and on subordination terms mutually satisfactory
to Agent, Foothill, Borrower, and the payee of such subordinated Indebtedness;
(e) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b), (c) and (d) of this Section 7.1 (and continuance
or renewal of any Permitted Liens associated therewith) so long as: (i) the
terms and conditions of such refinancings, renewals, or extensions do not (A)
increase the principal amount of, or rate of interest accruing on, such
Indebtedness, (B) cause a breach of any other covenant or term of this
Agreement, or (C) otherwise be expected by the Required Lender, in the exercise
of their reasonable credit judgment, to have a material adverse effect on the
Borrower's ability to satisfy the Obligations, (ii) the net cash proceeds of
such refinancings, renewals, or extensions do not result in an increase in the
aggregate principal amount of the Indebtedness so refinanced, renewed, or
extended, (iii) such refinancings, renewals, refundings, or extensions do not
result in a shortening of the average weighted maturity of the Indebtedness so
refinanced, renewed, or extended, and (iv) to the extent that Indebtedness that
is refinanced was subordinated in right of payment to the Obligations, then the
subordination terms and conditions of the refinancing Indebtedness must be at
least as favorable to the Lender Group as those applicable to the refinanced
Indebtedness;
LOAN AGREEMENT - Page 47
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(f) Indebtedness of Borrower to any Designated Subsidiary
and of any Designated Subsidiary to Borrower or any other Designated
Subsidiary;
(g) deposits or pledges to secure the performance of
bids, leases, statutory or regulatory obligations, surety and appeal bonds,
performance bonds, standby letters of credit, and other obligations of a like
nature, in each case incurred in the ordinary course of business;
(h) Indebtedness under Currency Hedge Obligations,
provided that (i) such Currency Hedge Obligations are related to payment
obligations otherwise permitted by this Section 7.1, or to the foreign currency
cash flows reasonably expected to be generated by the Borrower and its
Subsidiaries, and (ii) the notional principal amount of such Currency Hedge
Obligations does not exceed the principal amount of such Indebtedness and the
amount of such foreign currency cash flows to which such Currency Hedge
Obligations relate;
(i) Indebtedness under Interest Rate Protection
Obligations; and
(j) Additional unsecured Indebtedness of Borrower or any
of its Subsidiaries in the aggregate principal amount (for Borrower and all
Subsidiaries) not to exceed (i) $1,500,000 at any one time outstanding, if the
unsecured Indebtedness is for insurance premiums that are due by Borrower, and
(ii) $1,000,000 at any one time outstanding, if the unsecured Indebtedness is
for Indebtedness other than insurance premiums.
7.2 LIENS. Create, incur, assume, or permit to exist,
directly or indirectly, any Lien on or with respect to any of its property or
assets, of any kind, whether now owned or hereafter acquired, or any income or
profits therefrom, except for Permitted Liens (including Liens that are
replacements of Permitted Liens to the extent that the original Indebtedness is
refinanced under Section 7.1(d) and so long as the replacement Liens only
encumber those assets or property that secured the original Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES. Enter into any
merger, consolidation, reorganization, or re-capitalization, or reclassify its
capital stock, or liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, assign, lease, transfer, or
otherwise dispose of, in one transaction or a series of transactions, all or
any substantial part of its property or assets, except that:
(a) any Subsidiary of Borrower may be merged or
consolidated with or into the Borrower (provided that Borrower shall be the
continuing or surviving corporation) or with or into any Designated Subsidiary
(provided that the Designated Subsidiary shall be the continuing or surviving
corporation); and
(b) any Subsidiary of Borrower may sell, lease, assign,
transfer, or otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Borrower or any Designated Subsidiary.
LOAN AGREEMENT - Page 48
54
7.4 DISPOSAL OF ASSETS. Sell, lease, assign, transfer, or
otherwise dispose (each, a "Disposition") of any of Borrower's or its
Subsidiaries' properties or assets other than the following:
(a) the Disposition of assets and properties (other than
Eligible Equipment) that are worn-out or obsolete,
(b) sales of items of Eligible Equipment, provided that
the net cash proceeds received by Borrower or its Subsidiaries at the
consummation of such sale exceed the Release Price of the specific items of
Eligible Equipment sold, and so long as the cash proceeds are either (i)
immediately delivered to Foothill as a mandatory prepayment of the FCC Term
Loan pursuant to Section 2.3(b), or (ii) utilized to purchase Equipment of
equal or greater value, so long as FCC shall be provided a first-priority
perfected security interest in the new Equipment (to the extent, and as long
as, such Equipment is located in the United States or Canada) being purchased,
(c) sales of properties or assets to buyers in the
ordinary course of Borrower's or its Subsidiaries' business as currently
conducted, and
(d) other Dispositions of Eligible Equipment during any
Fiscal Year in an amount not to exceed $2,000,000, provided, that Foothill may,
in the exercise of its reasonable credit judgment, give prior written approval
to the Disposition of Eligible Equipment in excess of $2,000,000 during the
Fiscal Year for which Borrower requests such approval, and then, such
disposition of Eligible Equipment shall not exceed the amount so approved by
Foothill.
The purchase of replacement Equipment pursuant to Section
7.4(b) shall take place (x) not more than five (5) Business Days after the sale
of the related Eligible Equipment, in the case where the replacement Equipment
is readily available and does not have to be specially or custom manufactured,
and (y) within forty-five (45) calendar days after the sale of the related
Eligible Equipment (or within such longer period specified by Agent prior to
the sale in its reasonable credit judgment), in the case where the replacement
Equipment must be specially or custom manufactured. The replacement Equipment
shall be deemed to be Eligible Equipment unless any representation or warranty
contained in Sections 5.1, 5.3 or 5.4 is not, or does not continue to be, true
and accurate.
Pending the actual utilization of the cash proceeds of a
Disposition of Eligible Equipment for the purchase of new, replacement
Equipment, such cash proceeds will be delivered to Foothill. Upon receipt of
such cash proceeds, Foothill will give a temporary, provisional credit to the
amount of Advances outstanding under Section 2.1(a). If Borrower subsequently
is ready, willing and able to utilize the cash proceeds to purchase replacement
Equipment, within the time limitations specified above, then, so long as no
Default or Event of Default has occurred and is continuing, Foothill will
re-advance the cash proceeds to Borrower for such purpose. If Borrower
subsequently is unwilling, unable, or not ready to utilize the cash proceeds to
purchase replacement Equipment within the time limitations specified above,
then the credit of the cash proceeds to Advances under Section 2.1(a) will be
reversed and the cash
LOAN AGREEMENT - Page 49
55
proceeds will be applied as a mandatory prepayment of the FCC Term Loan
pursuant to Section 2.3(b).
7.5 CHANGE NAME. Change its name, FEIN (or equivalent
national identification number), corporate structure (within the meaning of
Section 9-402(7) of the Code), or identity, or add any new fictitious name,
except with 45 days written notice to Agent.
7.6 GUARANTEE. Guarantee or otherwise become in any way
liable with respect to the obligations of any third Person except by
endorsement of instruments or items of payment for deposit to the account of
Borrower or its Subsidiaries or which are transmitted or turned over to Agent.
7.7 NATURE OF BUSINESS. Engage in the conduct of any business
other than the oil field services business conducted by Borrower and its
Subsidiaries prior to the date of this Agreement and such other businesses as
are reasonably necessary or desirable to facilitate the conduct and operation
of such business.
7.8 PREPAYMENTS AND AMENDMENTS.
(a) Except in connection with a refinancing permitted by
Section 7.1(e), prepay, redeem, retire, defease, purchase, or otherwise acquire
any Indebtedness owing to any third Person, other than the Obligations in
accordance with this Agreement, and
(b) Directly or indirectly, amend, modify, alter,
increase, or change any of the terms or conditions of any agreement,
instrument, document, indenture, or other writing evidencing or concerning
Indebtedness permitted under Sections 7.1(b), (c), or (d) if the effect would
(i) in the case of clause (b) and (c) of Section 7.1, increase the principal
amount of such Indebtedness, (ii) shorten the maturity of such Indebtedness,
(iii) cause a breach of any covenant or term of this Agreement, (iv) increase
the amount of principal payable prior to the maturity of such Indebtedness, or
(v) otherwise be expected by the Required Lenders, in the exercise of their
reasonable credit judgment, to have a material adverse effect on the Borrower's
ability to satisfy the Obligations.
7.9 CHANGE OF CONTROL. Cause, permit, or suffer, directly or
indirectly, any Change of Control.
7.10 DISTRIBUTIONS. Make any distribution or declare or pay
any dividends (in cash or other property, other than capital stock) on, or
purchase, acquire, redeem, or retire any of Borrower's capital stock, of any
class, whether now or hereafter outstanding.
7.11 ACCOUNTING METHODS. Materially modify or change the
manner in which its accounting records are kept or enter into, modify, or
terminate any agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau for the preparation
or storage of Borrower's accounting records without said accounting firm or
service bureau agreeing to provide Agent information regarding the Borrower's
Books or Borrower's financial condition. Borrower waives the right to assert a
confidential relationship, if any, it may
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56
have with any accounting firm or service bureau in connection with any
information requested by Agent pursuant to or in accordance with this
Agreement, and agrees that Agent may contact directly any such accounting firm
or service bureau in order to obtain such information.
7.12 INVESTMENTS. Other than Permitted Investments, directly
or indirectly: (a) make, acquire, or incur any liabilities (including
contingent obligations) for or in connection with the acquisition of the
securities (whether debt or equity) of any Person; or (b) extend credit or make
loans, advances or capital contributions to any Person.
7.13 TRANSACTIONS WITH AFFILIATES. Directly or indirectly
enter into or permit to exist any material transaction with any Affiliate of
Borrower, except for transactions that (a) are in the ordinary course of
business, (b) otherwise permitted by this Agreement; or (c) upon terms no less
favorable to Borrower or its Subsidiary than Borrower or its Subsidiary, as
applicable, could obtain in an arms-length transaction.
7.14 SUSPENSION. Suspend or go out of a substantial portion
of its business, except for suspensions of portions of the Borrower's business
which are made to respond to changes in operating risks inherent in the oil and
gas services industry, governmental regulatory requirements, world-wide
political stability and economic conditions and other risks associated with
international operations, or changes in the needs of Borrower's customers for
the Borrower's services.
7.15 USE OF PROCEEDS. Use the proceeds of the Advances and
the FCC Term Loan made hereunder for any purpose other than (i) on the Closing
Date, (y) to repay in full the outstanding principal, accrued interest, and
accrued fees and expenses owing to Existing Lender, and (z) to pay
transactional costs and expenses incurred in connection with this Agreement,
and (ii) thereafter, consistent with the terms and conditions hereof, for its
lawful and permitted corporate purposes.
7.16 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY
AND EQUIPMENT WITH BAILEES. Relocate its chief executive office to a new
location without providing 30 days prior written notification thereof to Agent
and so long as, at the time of such written notification, Borrower provides any
financing statements or fixture filings necessary to perfect and continue
perfected the Lien of the Agent (for the ratable benefit of the Lender Group)
and also provides to Agent a Collateral Access Agreement with respect to such
new location. The Inventory and Equipment shall not at any time now or
hereafter be stored with a bailee, warehouseman, or similar party without
Agent's prior written consent.
7.17 NO PROHIBITED TRANSACTIONS UNDER ERISA. Directly or
indirectly:
(a) engage in any prohibited transaction which is
reasonably likely to result in a civil penalty or excise tax described in
Sections 406 of ERISA or 4975 of the IRC for which a statutory or class
exemption is not available or a private exemption has not been previously
obtained from the Department of Labor;
LOAN AGREEMENT - Page 51
57
(b) permit to exist with respect to any Benefit Plan any
accumulated funding deficiency (as defined in Sections 302 of ERISA and 412 of
the IRC), whether or not waived;
(c) fail to pay timely required contributions or annual
installments due with respect to any waived funding deficiency to any Benefit
Plan;
(d) terminate any Benefit Plan where such event would
result in any liability of Borrower, any of its Subsidiaries or any ERISA
Affiliate under Title IV of ERISA;
(e) fail to make any required contribution or payment to
any Multiemployer Plan;
(f) fail to pay any required installment or any other
payment required under Section 412 of the IRC on or before the due date for
such installment or other payment;
(g) amend a Plan resulting in an increase in current
liability for the plan year such that either of Borrower, any Subsidiary of
Borrower or any ERISA Affiliate is required to provide security to such Plan
under Section 401(a)(29) of the IRC; or
(h) withdraw from any Multiemployer Plan where such
withdrawal is reasonably likely to result in any liability of any such entity
under Title IV of ERISA;
which, individually or in the aggregate, results in or reasonably would be
expected to result in a claim against or liability of Borrower, any of its
Subsidiaries or any ERISA Affiliate in excess of $100,000.
7.18 FINANCIAL COVENANT. Fail to achieve EBITDA of at least
Twelve Million Dollars ($12,000,000), as of the end of each calendar quarter,
for the twelve (12)-month period ending as of the end of such calendar quarter
(i.e., a rolling 12-month basis); provided, that, if this covenant is breached
on the basis of Borrower's EBITDA as of the end of any calendar quarter, then
Borrower will nevertheless have the right to cure the breach of this covenant
for a period of forty-five (45) days following the end of such calendar quarter
by obtaining a cash equity investment, which, when added to the calculation of
EBITDA as of the end of such calendar quarter, will be sufficient to cause this
covenant to be satisfied, and such beach shall not constitute an Event of
Default under Section 8 unless Borrower shall fail to cure such breach within
the aforementioned 45-day period.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an
event of default (each, an "Event of Default") under this Agreement (provided,
however, that,
(a) without the prior written consent of EALP, any
failure to pay, failure to perform or other action or inaction by Borrower that
would otherwise constitute an Event of Default under any of Sections 8.1, 8.2
or 8.11 shall nevertheless not constitute an Event of Default if
LOAN AGREEMENT - Page 52
58
such failure to pay or perform or such action or inaction constitutes the
breach of an Obligation due or owing to EALP and only to EALP; and
(b) EALP shall have the right to cure an Event of Default
under Section 8.1 caused by Overadvances, as provided in Section 9.3):
8.1 If Borrower fails to pay when due and payable or when
declared due and payable, any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the
Bankruptcy Code, would have accrued on such amounts), fees and charges due any
member of the Lender Group, reimbursement of Lender Group Expenses, or other
amounts constituting Obligations); provided, however, that in the case of
Overadvances that are caused by the charging of interest, fees, or Lender Group
Expenses to the Loan Account, such event shall not constitute an Event of
Default if, within five (5) Business Days of Borrower's receipt of telephonic
notice of such Overadvance, Borrower eliminates such Overadvance;
8.2 (a) If Borrower fails or neglects to perform, keep, or
observe any term, provision, condition, covenant, or agreement applicable to
Borrower contained in Sections 6.2 (Collateral Reporting), 6.3 (Financial
Statements, Reports, Certificates), 6.4 (Tax Returns), 6.10 (Location of
Inventory and Equipment), 6.11 (Compliance with Laws), 6.12 (Employee
Benefits), or 6.13 (Leases) of this Agreement and such failure continues for a
period of five (5) Business Days; (b) If Borrower fails or neglects to perform,
keep, or observe any term, provision, condition, covenant, or agreement
contained in Section 6.1 (Accounting System) or 6.6 (Maintenance of Equipment)
of this Agreement and such failure continues for a period of 15 Business Days;
or (c) If Borrower, EALP or any Designated Subsidiary fails or neglects to
perform, keep, or observe any other term, provision, condition, covenant, or
agreement contained in this Agreement, or in any of the other Loan Documents
(giving effect to any grace periods, cure periods, or required notices, if any,
expressly provided for in such Loan Documents); in each case, other than any
such term, provision, condition, covenant, or agreement that is the subject of
another provision of this Section 8, in which event such other provision of
this Section 8 shall govern;
8.3 If any material portion of Borrower's or any Designated
Subsidiaries' properties or assets is attached, seized, subjected to a writ or
distress warrant, or is levied upon, or comes into the possession of any third
Person;
8.4 If an Insolvency Proceeding is commenced by Borrower or
any Designated Subsidiary;
8.5 If an Insolvency Proceeding is commenced against Borrower
or any Designated Subsidiary and any of the following events occur: (a)
Borrower or such Designated Subsidiary, as applicable, consents to the
institution of the Insolvency Proceeding against it; (b) the petition
commencing the Insolvency Proceeding is not timely controverted; (c) the
petition commencing the Insolvency Proceeding is not dismissed within 60
calendar days of the date of the filing thereof; provided, however, that,
during the pendency of such period, the Lender Group shall be relieved of its
obligation to extend credit hereunder; (d) an interim trustee is appointed to
take possession of all or a substantial portion of the properties or assets of,
or to operate all or any
LOAN AGREEMENT - Page 53
59
substantial portion of the business of, Borrower or such Designated Subsidiary;
or (e) an order for relief shall have been issued or entered therein;
8.6 If Borrower or any Designated Subsidiary is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs for a period in excess of
thirty (30) days;
8.7 If (a) a notice of Lien, levy or assessment securing an
amount greater than $100,000 is filed of record with respect to any of
Borrower's or any Designated Subsidiary's properties or assets by the United
States Government, or any department, agency, or instrumentality thereof, or if
any such taxes or debts owing at any time hereafter to any one or more of such
entities becomes a Lien, whether xxxxxx or otherwise, upon any of Borrower's or
any Designated Subsidiary's properties or assets and the same is not paid on
the payment date thereof, or (b) a notice of Lien, levy or assessment securing
an amount greater than $250,000 is filed of record with respect to any of
Borrower's or any Designated Subsidiary's properties or assets by any state,
county, municipal, or governmental agency, or if any such taxes or debts owing
at any time hereafter to any one or more of such entities becomes a Lien,
whether xxxxxx or otherwise, upon any of Borrower's or any Designated
Subsidiary's properties or assets and the same is not paid on the payment date
thereof; provided, Foothill may at any time create reserves in such amounts as
Foothill may determine in its sole discretion with respect to any such Lien,
levy or assessment notwithstanding that no Event of Default shall have occurred
hereunder;
8.8 If a judgment or other claim in excess of $100,000 shall
become a Lien or encumbrance upon any material portion of Borrower's or any
Designated Subsidiary's properties or assets, taken as a whole, and such Lien
or encumbrance shall not have been terminated within fifteen (15) days after
the attachment thereof; provided, Foothill may at any time create reserves in
such amounts as Foothill may determine in its sole discretion with respect to
any such Lien, levy or assessment notwithstanding that no Event of Default
shall have occurred hereunder;
8.9 If there is a default by Borrower in any material
agreement to which Borrower is a party with one or more third Persons and such
default (a) occurs at the final maturity of the obligations thereunder, or (b)
results in a right by such third Person(s), irrespective of whether exercised,
to accelerate the maturity of Borrower's obligations thereunder;
8.10 If Borrower makes any payment on account of Indebtedness
that has been contractually subordinated in right of payment to the payment of
the Obligations, except to the extent such payment is permitted by the terms of
the subordination provisions applicable to such Indebtedness;
8.11 If any material misstatement or misrepresentation exists
on or as of the date made in any warranty, representation, statement, or report
made to the Lender Group by Borrower or any officer, employee, agent, or
director of Borrower, or if any such warranty or representation is withdrawn;
or
8.12 If the obligation of any Designated Subsidiary under its
guaranty, security agreement or other Loan Document is challenged or terminated
by action of the Borrower or any
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60
Designated Subsidiary; or if the obligation of any Wholly-Owned Domestic
Subsidiary under its guaranty, security agreement or other Loan Document is
limited or terminated by operation of law.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Subject to the provisions of Section
9.3 and Section 9.5(f), upon the occurrence, and during the continuation, of an
Event of Default Agent may, at its election, without notice of its election and
without demand, do any one or more of the following, all of which are
authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due
and payable;
(b) Cease advancing money or extending credit to or for
the benefit of Borrower under this Agreement, under any of the Loan Documents,
or under any other agreement between Borrower and the Lender Group;
(c) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of the Lender Group, but
without affecting the Lender Group's rights and security interests in the
Collateral and without affecting the Obligations;
(d) Settle or adjust disputes and claims directly with
Account Debtors for amounts and upon terms which Agent considers advisable, and
in such cases, Agent will credit Borrower's Loan Account with only the net
amounts received by Agent in payment of such disputed Accounts after deducting
all Lender Group Expenses incurred or expended in connection therewith;
(e) Cause Borrower to hold all returned Inventory in
trust for the Lender Group, segregate all returned Inventory from all other
property of Borrower or in Borrower's possession and conspicuously label said
returned Inventory as the property of the Lender Group;
(f) Without notice to or demand upon Borrower or any
guarantor, make such payments and do such acts as Agent considers necessary or
reasonable to protect its security interests in the Collateral. Borrower agrees
to assemble the Collateral if Agent so requires, and to make the Collateral
available to Agent as Agent may designate. Borrower authorizes Agent to enter
the premises where the Collateral is located, to take and maintain possession
of the Collateral, or any part of it, and to pay, purchase, contest, or
compromise any encumbrance, charge, or Lien that in Agent's determination
appears to conflict with the Liens of the Agent (for the benefit of the Lender
Group) in the Collateral and to pay all expenses incurred in connection
therewith. With respect to any of Borrower's owned or leased premises, Borrower
hereby grants Agent a license to enter into possession of such premises and to
occupy the same, without charge, for up to 120 days in order to exercise any of
the Lender Group's rights or remedies provided herein, at law, in equity, or
otherwise;
(g) Without notice to Borrower (such notice being
expressly waived), and without constituting a retention of any collateral in
satisfaction of an obligation (within the
LOAN AGREEMENT - Page 55
61
meaning of Section 9-505 of the Code), set off and apply to the Obligations
due to Foothill any and all (i) balances and deposits of Borrower held by
Foothill (including any amounts received in the Lockbox Accounts), or (ii)
indebtedness at any time owing to or for the credit or the account of Borrower
held by Foothill;
(h) Hold, as cash collateral, any and all balances and
deposits of Borrower held by Foothill, and any amounts received in the Lockbox
Accounts, to secure the full and final repayment of all of the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Collateral. Agent is hereby granted a license or other right to
use, without charge, Borrower's labels, patents, copyrights, rights of use of
any name, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to the
Collateral, in completing production of, advertising for sale, and selling any
Collateral and Borrower's rights under all licenses and all franchise
agreements shall inure to the Lender Group's benefit;
(j) Sell the Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrower's premises) as
Agent determines is commercially reasonable. It is not necessary that the
Collateral be present at any such sale;
(k) Agent shall give notice of the disposition of the
Collateral as follows:
(1) Agent shall give Borrower, each Lender, and each
holder of a security interest in the Collateral who has filed with Agent a
written request for notice, a notice in writing of the time and place of public
sale, or, if the sale is a private sale or some other disposition other than a
public sale is to be made of the Collateral, then the time on or after which
the private sale or other disposition is to be made;
(2) The notice shall be personally delivered or
mailed, postage prepaid, to Borrower as provided in Section 12, at least ten
(10) days before the date fixed for the sale, or at least ten (10) days before
the date on or after which the private sale or other disposition is to be made;
no notice needs to be given prior to the disposition of any portion of the
Collateral that is perishable or threatens to decline speedily in value or that
is of a type customarily sold on a recognized market. Notice to Persons other
than Borrower claiming an interest in the Collateral shall be sent to such
addresses as they have furnished to Agent;
(3) If the sale is to be a public sale, Agent also
shall give notice of the time and place by publishing a notice one time at
least 10 days before the date of the sale in a newspaper of general circulation
in the county in which the sale is to be held;
(l) Agent, Foothill, or, if all Obligations owing to
Foothill have been paid in full, EALP may credit bid and purchase at any public
sale; and
LOAN AGREEMENT - Page 56
62
(m) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower. Any excess
will be returned, without interest and subject to the rights of third Persons,
by Agent to Borrower.
9.2 REMEDIES CUMULATIVE. The Lender Group's rights and
remedies under this Agreement, the Loan Documents, and all other agreements
shall be cumulative. The Lender Group shall have all other rights and remedies
not inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an
election, and no waiver by Agent of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
9.3 EALP'S RIGHT TO CURE CERTAIN OVERADVANCES.
(a) General. In the case of an Event of Default under
Section 8.1, EALP shall have the right to cure such Event of Default for a
period of three (3) Business Days following the occurrence of such Event of
Default.
(b) Standstill Period. Agent and Lenders agree that, so
long as EALP continues to observe and perform the terms and conditions set
forth in Section 17.16, Agent will temporarily forbear or "standstill" from
exercising certain of the Lender Group's rights and remedies for a period (the
"3-Day Standstill Period") in order to allow EALP the opportunity to cure, as
described in Section 9.3(a). The Standstill Period will begin on the date of
the occurrence of an Event of Default and will terminate on the third (3rd)
Business Day after the occurrence of such Event of Default. During the 3-Day
Standstill Period (and only during the 3-Day Standstill Period), Agent will
"stand still" and temporarily forbear from exercising the rights and remedies
set forth in Section 9.1 of this Agreement and the other Loan Documents, except
as provided in the next following sentence. The existence of the 3-Day
Standstill Period shall not affect exercise of the rights and remedies set
forth in Section 9.1, clause (b), the first sentence of clause (f), clause (g),
and clause (h), or the charging of interest on the Foothill Obligations at the
default rate provided for in Section 2.6(c).
9.4 EALP'S CONSENT TO CERTAIN REMEDIES. Anything in this
Section 9 to the contrary notwithstanding, Agent may not, without the prior
written consent of EALP, take any one or more of the following actions: (i)
declare the EALP Term Loan due and payable, (ii) cease making EALP Advances, or
(iii) terminate this Agreement and any of the other Loan Documents insofar as
the EALP Term Loan.
9.5 EALP'S RIGHT TO PURCHASE THE FOOTHILL OBLIGATIONS.
(a) General. Upon the occurrence and during the
continuance of an Event of Default, EALP shall have the right (the "Purchase
Right") to purchase all, but not less than all, of the Foothill Obligations
from Foothill for a price (the "Purchase Price") equal to the amount of the
Foothill Obligations, except that, with regard to Foothill Obligations
constituting Letters of Credit that as of the date of EALP's payment of the
Purchase Price (the "Purchase Date") remain outstanding, that portion of the
Purchase Price shall be calculated as an amount equal to 102% of the maximum
amount of Foothill's obligations under such Letters of Credit. Any amount paid
in
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63
respect of undrawn and unreimbursed Letters of Credit outstanding as of the
Purchase Date shall be repaid to Borrower on a dollar-for-dollar basis (without
interest) when the outstanding Letters of Credit expire, terminate, or are
replaced, after reducing such amount by the amount, if any, drawn by or paid to
any beneficiary under such Letters of Credit. The Purchase Price shall be paid
in cash, by wire transfer, in accordance with instructions to be provided by
Foothill. In conjunction with EALP's purchase of the Foothill Obligations, EALP
shall deliver, and shall cause Borrower and the Designated Subsidiaries to
deliver, to Foothill (i) an acknowledgment of the purchase of the Foothill
Obligations by EALP, (ii) an acknowledgment and agreement that Foothill's
duties and obligations under this Agreement and the other Loan Documents have
been purchased by, and transferred and assigned to, EALP, (iii) an
acknowledgement and agreement that Foothill has no further duties or
obligations under this Agreement and the other Loan Documents, and (iv) a
release of Foothill, its officers, directors, employees, and agents from any
and all liability, whether past, present, and future, whether as Agent or as a
Lender, arising under or in connection with this Agreement and the other Loan
Documents. The acknowledgments, agreement and release described in the
preceding sentence (the "Release Agreement") shall be in form and substance
reasonably satisfactory to Foothill and its counsel. Upon receipt of the
Purchase Price and the Release Agreement, Foothill will deliver to EALP an
assignment of Foothill's rights, titles and interests in and to the Foothill
Obligations.
(b) Assignment and Acceptance. Foothill and EALP shall
execute and deliver an Assignment and Acceptance ("Assignment and Acceptance")
in the form of Exhibit 9.5.
(c) EALP's Rights and Obligations. From and after the
date that Foothill and EALP execute and deliver the Assignment and Acceptance
and payment of the Purchase Price, (i) EALP shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of
Foothill under the Loan Documents, and (ii) Foothill shall relinquish its
rights and be released from its obligations under this Agreement (and Foothill
shall cease to be a party hereto and thereto).
(d) Certain Agreements. By executing and delivering an
Assignment and Acceptance, Foothill and EALP confirm to and agree with each
other as follows: (i) other than as provided in such Assignment and Acceptance,
Foothill makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties, or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency, or value of this Agreement or any
other Loan Document furnished pursuant hereto; (ii) Foothill makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of Borrower or any guarantor or the performance or
observance by Borrower or any guarantor of any of its obligations under this
Agreement or any other Loan Document furnished pursuant hereto; (iii) EALP
confirms that it has received copies of such documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (iv) EALP will, independently and without
reliance upon Foothill and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) EALP shall become Agent
under this Agreement; and (vi) EALP agrees that it will perform in accordance
with their terms all of the obligations which by the terms of this Agreement
are required to be performed by it as a Lender and as Agent.
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64
(e) Release of EALP Guaranty. Upon consummation of EALP's
purchase of the Foothill Obligations, as described above, EALP will be released
from all liability to Foothill and Agent under the EALP Guaranty; and Foothill
and Agent agree to deliver to EALP a release of the EALP Guaranty.
(f) Standstill Period. Agent and Lenders agree that, so
long as EALP continues to observe and perform the terms and conditions set
forth in Section 17.16, Agent will temporarily forbear or "standstill" from
exercising certain of the Lender Group's rights and remedies for a period (the
"Standstill Period") in order to allow EALP to exercise the Purchase Right. The
Standstill Period will begin on the date of the occurrence of an Event of
Default and will terminate on the fifteen (15th) calendar day after the
occurrence of such Event of Default. During the Standstill Period (and only
during the Standstill Period), Agent will "stand still" and temporarily forbear
from exercising the rights and remedies set forth in Section 9.1 of this
Agreement and under the other Loan Documents, except as provided in the next
following sentence. The existence of the Standstill Period shall not affect
exercise of the rights and remedies set forth in Section 9.1, clause (b), the
first sentence of clause (f), clause (g), and clause (h), or the charging of
interest on the Foothill Obligations at the default rate provided for in
Section 2.6(c).
10. TAXES AND EXPENSES.
If Borrower fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or
assets, rents or other amounts payable under such leases) due to third Persons,
or fails to make any deposits or furnish any required proof of payment or
deposit, all as required under the terms of this Agreement, then, to the extent
that Agent reasonably determines that such failure by Borrower could result in
a Material Adverse Change, Agent may do any or all of the following: (a) make
payment of the same or any part thereof; (b) set up such reserves in Borrower's
Loan Account as Agent deems necessary to protect the Lender Group from the
exposure created by such failure; or (c) obtain and maintain insurance policies
of the type described in Section 6.8, and take any action with respect to such
policies as Agent deems prudent. Any such amounts paid by Agent shall
constitute Lender Group Expenses. Any such payments made by Agent shall not
constitute an agreement by the Lender Group to make similar payments in the
future or a waiver by the Lender Group of any Event of Default under this
Agreement. Agent need not inquire as to, or contest the validity of, any such
expense, tax, or Lien and the receipt of the usual official notice for the
payment thereof shall be conclusive evidence that the same was validly due and
owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST; ETC. Except as otherwise provided
herein, Borrower waives demand, protest, notice of protest, notice of default
or dishonor, notice of payment and nonpayment, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees at any time held by the Lender Group
on which Borrower may in any way be liable.
LOAN AGREEMENT - Page 59
65
11.2 AGENT'S LIABILITY FOR COLLATERAL. So long as the Lender
Group complies with its obligations, if any, under Section 9-207 of the Code,
the Lender Group shall not in any way or manner be liable or responsible for:
(a) the safekeeping of the Collateral; (b) any loss or damage thereto occurring
or arising in any manner or fashion from any cause; (c) any diminution in the
value thereof; or (d) any act or default of any carrier, warehouseman, bailee,
forwarding agency, or other Person. All risk of loss, damage, or destruction of
the Collateral shall be borne by Borrower.
11.3 INDEMNIFICATION. Borrower shall pay, indemnify, defend,
and hold Agent and each Lender, and each of their respective officers,
directors, employees, counsel, agents, and attorneys-in-fact (each, an
"Indemnified Person") harmless (to the fullest extent permitted by law) from
and against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees and disbursements
and other costs and expenses actually incurred in connection therewith (as and
when they are incurred and irrespective of whether suit is brought), asserted
against, imposed upon, or incurred by any of them in connection with or as a
result of or related to the execution, delivery, enforcement, performance, and
administration of this Agreement and any other Loan Documents or the
transactions contemplated herein to the extent arising prior to the date one
year after termination of this Agreement and payment in full of the Obligations
(collectively, the "Indemnified Liabilities"). The indemnity herein provided
shall include all Indemnified Liabilities incurred in connection with any
investigation, litigation, or proceeding related to this Agreement, any other
Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any
act, omission, event or circumstance in any manner related thereto. Borrower
shall have no obligation to any Indemnified Person under this Section 11.3 with
respect to any Indemnified Liability that a court of competent jurisdiction
finally determines to have resulted from the gross negligence or willful
misconduct of such Indemnified Person.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other Loan Document
shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, or telefacsimile to
Borrower, Agent, Foothill or EALP, as the case may be, at its address set forth
below:
IF TO BORROWER: GRANT GEOPHYSICAL, INC.
00000 Xxxx Xxx
Xxxxxxx, Xxxxx 00000
Attn: Xxx X. Xxxxxxx
Fax No.: (000) 000-0000
LOAN AGREEMENT - Page 60
66
WITH COPIES TO: JONES, WALKER, WAECHTER, POITEVENT,
CARRERE & XXXXXXX, L.L.P.
000 Xx. Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000-0000
Attn: Xxxxxxx Xxxxxxx
Fax No.: (000) 000-0000
IF TO FOOTHILL OR AGENT: FOOTHILL CAPITAL CORPORATION
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Business Finance Division Manager
Fax No.: (000) 000-0000
WITH COPIES TO: XXXXXX & XXXX, L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
IF TO EALP: XXXXXXX ASSOCIATES, L.P.
000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Latina
Fax No.: (000) 000-0000
The parties hereto may change the address at which they are
to receive notices hereunder, by notice in writing in the foregoing manner
given to the other. All notices or demands sent in accordance with this Section
12, other than notices by Agent in connection with Sections 9-504 or 9-505 of
the Code, shall be deemed received on the earlier of the date of actual receipt
or 3 days after the deposit thereof in the mail. Borrower acknowledges and
agrees that notices sent by Agent in connection with Sections 9-504 or 9-505 of
the Code shall be deemed sent when deposited in the mail or personally
delivered, or, where permitted by law, transmitted telefacsimile or other
similar method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN AN ANOTHER LOAN DOCUMENT), THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE
RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING
HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER,
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH
LOAN AGREEMENT - Page 61
67
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY
IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF SUFFOLK, COMMONWEALTH
OF MASSACHUSETTS OR, AT THE SOLE OPTION OF FOOTHILL, IN ANY OTHER COURT IN
WHICH FOOTHILL SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS
SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. BORROWER, AGENT AND
EACH LENDER WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH
MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE
TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13.
BORROWER, AGENT AND EACH LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE
LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
OR STATUTORY CLAIMS. BORROWER, AGENT AND EACH LENDER REPRESENTS THAT THEY HAVE
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
14. DESTRUCTION OF BORROWER'S DOCUMENTS.
All documents, schedules, invoices, agings, or other papers
delivered to Agent or Foothill may be destroyed or otherwise disposed of by
Foothill 4 months after they are delivered to or received by Agent or Foothill,
as applicable, unless Borrower requests, in writing, the return of said
documents, schedules, or other papers and makes arrangements, at Borrower's
expense, for their return.
15. PARTICIPATIONS; SUCCESSORS.
15.1 PARTICIPATIONS.
(a) Any Lender may at any time, with the written
consent of Agent, which consent shall not be unreasonably withheld, sell to one
or more Persons (a "Participant") participating interests in the Obligations,
the Commitment, and the other rights and interests of that Lender (the
"Originating Lender") hereunder and under the other Loan Documents; provided,
however, that (i) the Originating Lender's obligations under this Agreement
shall remain unchanged, (ii) the Originating Lender shall remain solely
responsible for the performance of such obligations, (iii) Borrower and Agent
shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender's rights and obligations under this
Agreement and the other Loan Documents, (iv) no Originating Lender shall
transfer or grant any participating interest under which the Participant has
the sole and exclusive right to approve any amendment to, or any consent or
LOAN AGREEMENT - Page 62
68
waiver with respect to, this Agreement or any other Loan Document, except to
the extent such amendment to, or consent or waiver with respect to this
Agreement or of any other Loan Document would (A) extend the final maturity
date of the Obligations hereunder in which such participant is participating;
(B) reduce the interest rate applicable to the Obligations hereunder in which
such Participant is participating; (C) release all or a material portion of the
Collateral (except to the extent expressly provided herein or in any of the
Loan Documents) supporting the Obligations hereunder in which such Participant
is participating; (D) postpone the payment of, or reduce the amount of, the
interest or fees hereunder in which such Participant is participating; or (E)
change the amount or due dates of scheduled principal repayments or prepayments
or premiums in respect of the Obligations hereunder in which such Participant
is participating; and (v) all amounts payable by Borrower hereunder shall be
determined as if such Originating Lender had not sold such participation. The
rights of any Participant shall only be derivative through the Originating
Lender with whom such Participant participates and no Participant shall have
any direct rights as to the other Lenders, Agent, Borrower, the Collections,
the Collateral, or otherwise in respect of the Advances, the Letters of Credit,
the FCC Term Loan, or the EALP Term Loan. No Participant shall have the right
to participate directly in the making of decisions by the Lenders among
themselves. The provisions of this Section 15.1(a) are solely for the benefit
of the Agent and the Lenders, and Borrower shall have no rights as a third
party beneficiary of any of such provisions.
(b) In connection with any such participation or
proposed participation, a Lender may disclose to a third party all documents
and information which it now or hereafter may have relating to Borrower or
Borrower's business.
15.2 SUCCESSORS. This Agreement shall bind and inure to
the benefit of the respective successors and permitted assigns of each of the
parties; provided, however, that Borrower may not assign this Agreement or any
rights or duties hereunder without the Lenders' prior written consent and any
prohibited assignment shall be absolutely void. No consent to assignment by the
Lenders shall release Borrower from its Obligations. A Lender may assign this
Agreement and its rights and duties hereunder pursuant to Section 15.1 and,
except as expressly required pursuant to Section 15.1, no consent or approval
by Borrower is required in connection with any such assignment.
16. AMENDMENTS; WAIVERS.
16.1 AMENDMENTS AND WAIVERS. No amendment or waiver of
any provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by Borrower therefrom, shall be effective unless the
same shall be in writing and signed by the Required Lenders (or by Agent at the
written request of the Required Lenders) and Borrower and then any such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all the Lenders
and Borrower and acknowledged by Agent, do any of the following:
(a) increase or extend the Commitment of any Lender;
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(b) postpone or delay any date fixed by this
Agreement or any other Loan Document for any payment of principal, interest,
fees, or other amounts due to the Lenders (or any of them) hereunder or under
any other Loan Document;
(c) reduce the principal of, or the rate of interest
specified herein on, any Loan, or any fees or other amounts payable hereunder
or under any other Loan Document;
(d) change the percentage of the Commitments or of
the aggregate unpaid principal amount of the Advances and FCC Term Loan, which
is required for the Lenders or any of them to take any action hereunder;
(e) increase the advance rate with respect to
Advances (except for the restoration of an advance rate after the prior
reduction thereof), or change Section 2.1(b);
(f) amend this Section or any provision of the
Agreement providing for consent or other action by all Lenders;
(g) release Collateral other than as permitted by
Section 17.11;
(h) change the definition of "Required Lenders";
(i) release Borrower from any Obligation for the
payment of money; or
(j) amend any of the provisions of Article 17.
and, provided further, that no amendment, waiver or consent shall, unless in
writing and signed by Agent, affect the rights or duties of Agent under this
Agreement or any other Loan Document; and, provided further, that the
limitation contained in clause (e) above shall not be deemed to limit the
ability of Agent to make Advances, as applicable, in accordance with the
provisions of Sections 2.1(g), (h), or (l). The foregoing notwithstanding, any
amendment, modification, waiver, consent, termination, or release of or with
respect to any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Agent and Lenders among themselves, and
that does not affect the rights or obligations of Borrower, shall not require
consent by or the agreement of Borrower.
16.2 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent
or any Lender to exercise any right, remedy, or option under this Agreement,
any other Loan Document, or any present or future supplement hereto or thereto,
or in any other agreement between or among Borrower and Agent and/or any
Lender, or delay by Agent or any Lender in exercising the same, will operate as
a waiver thereof. No waiver by Agent or any Lender will be effective unless it
is in writing, and then only to the extent specifically stated. No waiver by
Agent or the Lenders on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrower of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy which Agent or any Lender may have.
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17. AGENT; LENDERS.
17.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender
hereby designates and appoints Foothill as its Agent under this Agreement and
the other Loan Documents and each Lender hereby irrevocably authorizes Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this Article 17.
The provisions of this Article 17 are solely for the benefit of Agent and the
Lenders, and Borrower shall not have any rights as a third party beneficiary of
any of the provisions contained herein; provided, however, that the provisions
of Sections 17.10 and 17.11 also shall be for the benefit of Borrower. Any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document notwithstanding, Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall Agent have
or be deemed to have any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations, or liabilities
shall be read into this Agreement or any other Loan Document or otherwise exist
against Agent. Except as expressly otherwise provided in this Agreement, Agent
shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining
from taking any actions which Agent is expressly entitled to take or assert
under or pursuant to this Agreement and the other Loan Documents, including
making the determinations contemplated by Section 2.1(b). Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have
the right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Advances, the FCC Term Loan,
the EALP Term Loan, the Collateral, the Collections, and related matters; (b)
execute and/or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim for
Lenders, notices and other written agreements with respect to the Loan
Documents; (c) make Advances for itself or on behalf of Lenders as provided in
the Loan Documents; (d) exclusively receive, apply, and distribute the
Collections as provided in the Loan Documents; (e) open and maintain such bank
accounts and lock boxes as Agent deems necessary and appropriate in accordance
with the Loan Documents for the foregoing purposes with respect to the
Collateral and the Collections; (f) perform, exercise, and enforce any and all
other rights and remedies of the Lender Group with respect to Borrower, the
Advances, the FCC Term Loan, the EALP Term Loan, the Collateral, the
Collections, or otherwise related to any of same as provided in the Loan
Documents; and (g) incur and pay such Lender Group Expenses as Agent may deem
necessary or appropriate for the performance and fulfillment of its functions
and powers pursuant to the Loan Documents.
17.2 DELEGATION OF DUTIES. Except as otherwise provided
in this Section, Agent may execute any of its duties under this Agreement or
any other Loan Document by or through agents, employees, or attorneys-in-fact
and shall be entitled to advice of counsel concerning all matters pertaining to
such duties. Agent shall not be responsible for the negligence or misconduct of
any agent or attorney-in-fact that it selects as long as such selection
LOAN AGREEMENT - Page 65
71
was made in compliance with this Section and without gross negligence or
willful misconduct. The foregoing notwithstanding, Agent shall not make any
material delegation of duties to subagents or non-employee delegees without the
prior written consent of Required Lenders (it being understood that routine
delegation of such administrative matters as filing financing statements, or
conducting appraisals or audits, is not viewed as a material delegation that
requires prior Required Lender approval).
17.3 LIABILITY OF AGENT-RELATED PERSONS. None of the
Agent-Related Persons shall (i) be liable for any action taken or omitted to be
taken by any of them under or in connection with this Agreement or any other
Loan Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or, (ii) be responsible in any manner to any
of the Lenders for any recital, statement, representation or warranty made by
Borrower, or any Subsidiary or Affiliate of Borrower, or any officer or
director thereof, contained in this Agreement or in any other Loan Document, or
in any certificate, report, statement, or other document referred to or
provided for in, or received by Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of Borrower or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Lender to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books, or records of Borrower, or any of Borrower's Subsidiaries or
Affiliates.
17.4 RELIANCE BY AGENT. Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex, or
telephone message, statement or other document or conversation believed by it
to be genuine and correct and to have been signed, sent, or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to Borrower or counsel to any Lender), independent accountants, and
other experts selected by Agent. Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the Required
Lenders or all Lenders, as applicable, and until such instructions are
received, Agent shall act, or refrain from acting, as it deems advisable so
long as it is not grossly negligent or guilty of willful misconduct. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Required Lenders or all Lenders, as applicable, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all of the Lenders.
17.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall
not be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default, except with respect to defaults in the payment of principal,
interest, fees, and expenses required to be paid to Agent for the account of
Agent or the Lenders, except with respect to actual knowledge of the existence
of an Overadvance, and except with respect to Defaults and Events of Default of
which Agent has actual knowledge, unless Agent shall have received written
notice from a Lender or Borrower referring to this Agreement, describing such
Default or Event of Default, and stating that such notice is a "notice of
default." Agent promptly will notify the Lenders of its receipt of
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any such notice or of any Event of Default of which Agent has, or is deemed to
have, actual knowledge. If any Lender obtains actual knowledge of any Event of
Default, such Lender promptly shall notify the other Lenders and Agent of such
Event of Default. Each Lender shall be solely responsible for giving any
notices to its Participants, if any. Subject to Section 17.4, Agent shall take
such action with respect to such Default or Event of Default as may be
requested by the Required Lenders; provided, however, that:
(a) At all times, Agent may propose and, with the
consent of Required Lenders (which shall not be unreasonably withheld and which
shall be deemed to have been given by a Lender unless such Lender has notified
Agent to the contrary in writing within three days of notification of such
proposed actions by Agent) exercise, any remedies on behalf of the Lender
Group; and
(b) At all times, once Required Lenders or all
Lenders, as the case may be, have approved the exercise of a particular remedy
or pursuit of a course of action, Agent may, but shall not be obligated to,
make all administrative decisions in connection therewith or take all other
actions reasonably incidental thereto (for example, if the Required Lenders
approve the foreclosure of certain Collateral, Agent shall not be required to
seek consent for the administrative aspects of conducting such sale or handling
of such Collateral).
17.6 CREDIT DECISION. Each Lender acknowledges that none
of the Agent-Related Persons has made any representation or warranty to it, and
that no act by Agent hereinafter taken, including any review of the affairs of
Borrower and its Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition, and
creditworthiness of Borrower and any other Person (other than the Agent and the
Lenders) party to a Loan Document, and all applicable bank regulatory laws
relating to the transactions contemplated hereby, and made its own decision to
enter into this Agreement and to extend credit to Borrower. Each Lender also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals, and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations, property,
financial and other condition, and creditworthiness of Borrower, and any other
Person (other than the Agent and the Lenders) party to a Loan Document. Except
for notices, reports, and other documents expressly herein required to be
furnished to the Lenders by Agent, Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition, or creditworthiness of Borrower, and any other Person party to a
Loan Document that may come into the possession of any of the Agent-Related
Persons.
17.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur
and pay Lender Group Expenses to the extent Agent deems reasonably necessary or
appropriate for the
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performance and fulfillment of its functions, powers, and obligations pursuant
to the Loan Documents, including without limiting the generality of the
foregoing, but subject to any requirements of the Loan Documents that it obtain
any applicable consents or engage in any required consultation, court costs,
reasonable attorneys fees and expenses, costs of collection by outside
collection agencies and auctioneer fees and costs of security guards or
insurance premiums paid to maintain the Collateral, whether or not Borrower is
obligated to reimburse Agent or Lenders for such expenses pursuant to the Loan
Agreement or otherwise. Agent is authorized and directed to deduct and retain
sufficient amounts from Collections to reimburse Agent for such out-of-pocket
costs and expenses prior to the distribution of any amounts to Lenders.
17.8 AGENT IN INDIVIDUAL CAPACITY. Foothill and its
Affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests, in and generally engage in any
kind of banking, trust, financial advisory, underwriting, or other business
with Borrower and its Subsidiaries and Affiliates and any other Person party to
any Loan Documents as though Foothill were not Agent hereunder without notice
to or consent of the Lenders. The Lenders acknowledge that, pursuant to such
activities, Foothill and its Affiliates may receive information regarding
Borrower or their Affiliates and any other Person party to any Loan Documents
that is subject to confidentiality obligations in favor of Borrower or such
other Person and that prohibit the disclosure of such information to the
Lenders, and the Lenders acknowledge that, in such circumstances (and in the
absence of a waiver of such confidentiality obligations, which waiver Agent
will use its reasonable best efforts to obtain), Agent shall be under no
obligation to provide such information to them. With respect to the Foothill
Advances, Foothill shall have the same rights and powers under this Agreement
as any other Lender and may exercise the same as though it were not Agent, and
the terms "Lender" and "Lenders" include Foothill in its individual capacity.
17.9 SUCCESSOR AGENT. After the Foothill Obligations have
been indefeasibly paid in full and the Commitments of Foothill and Letters of
Credit hereunder shall have expired or been terminated, unless the context
otherwise requires, then all references herein to the "Agent" shall be deemed
to be references to EALP, and EALP shall be entitled to all of the rights and
remedies of the Agent under this Agreement and the other Loan Documents.
17.10 WITHHOLDING TAX.
(a) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the IRC and such Lender claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the IRC, such Lender agrees with and in favor of Agent and Borrower, to
deliver to Agent and Borrower:
(i) if such Lender claims an exemption from, or
a reduction of, withholding tax under a United States tax treaty, properly
completed IRS Forms 1001 and W-8 before the payment of any interest in the
first calendar year and before the payment of any interest in each third
succeeding calendar year during which interest may be paid under this
Agreement;
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(ii) if such Lender claims that interest paid
under this Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such Lender,
two properly completed and executed copies of IRS Form 4224 before the payment
of any interest is due in the first taxable year of such Lender and in each
succeeding taxable year of such Lender during which interest may be paid under
this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be
required under the IRC or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding tax.
Such Lender agrees to promptly notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or
reduction of, withholding tax under a United States tax treaty by providing IRS
Form 1001 and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of Borrower, such Lender
agrees to notify Agent and Borrower of the percentage amount in which it is no
longer the beneficial owner of Obligations of Borrower to such Lender. To the
extent of such percentage amount, Agent and Borrower will treat such Lender's
IRS Form 1001 as no longer valid.
(c) If any Lender claiming exemption from United
States withholding tax by filing IRS Form 4224 with Agent sells, assigns,
grants a participation in, or otherwise transfers all or part of the
Obligations of Borrower to such Lender, such Lender agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed by
Sections 1441 and 1442 of the IRC.
(d) If any Lender is entitled to a reduction in the
applicable withholding tax, Agent may withhold from any interest payment to
such Lender an amount equivalent to the applicable withholding tax after taking
into account such reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to Agent, then Agent may
withhold from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority
of the United States or other jurisdiction asserts a claim that Agent or
Borrower did not properly withhold tax from amounts paid to or for the account
of any Lender (because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify Agent and Borrower of a
change in circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such Lender shall
indemnify Agent and Borrower fully for all amounts paid, directly or
indirectly, by Agent or Borrower as tax or otherwise, including penalties and
interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent or Borrower under this Section, together with all costs and
expenses (including attorneys fees and expenses). The obligation of the Lenders
under this subsection shall survive the payment of all Obligations and the
resignation of Agent.
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17.11 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent,
to release any Lien on any Collateral (i) upon the termination of the
Commitments and payment and satisfaction in full by Borrower of all
Obligations; and upon such termination and payment Agent shall deliver to
Borrower, at Borrower's sole cost and expense, all UCC termination statements
and any other documents necessary to terminate the Loan Documents and release
the Liens with respect to the Collateral; (ii) constituting property being sold
or disposed of if a release is required or desirable in connection therewith
and if Borrower certifies to Agent that the sale or disposition is permitted
under Section 7.4 of this Agreement or the other Loan Documents (and Agent may
rely conclusively on any such certificate, without further inquiry); (iii)
constituting property in which Borrower owned no interest at the time the Lien
was granted or at any time thereafter; or (iv) constituting property leased to
Borrower under a lease that has expired or been terminated in a transaction
permitted under this Agreement. Except as provided above, Agent will not
release any Lien on any Collateral without the prior written authorization of
the Lenders. Upon request by Agent or Borrower at any time, the Lenders will
confirm in writing Agent's authority to release any such Liens on particular
types or items of Collateral pursuant to this Section 17.11; provided, however,
that (i) Agent shall not be required to execute any document necessary to
evidence such release on terms that, in Agent's opinion, would expose Agent to
liability or create any obligation or entail any consequence other than the
release of such Lien without recourse, representation, or warranty, and (ii)
such release shall not in any manner discharge, affect or impair the
Obligations or any Liens (other than those expressly being released), upon (or
obligations of Borrower in respect of) all interests retained by Borrower,
including, the proceeds of any sale, all of which shall continue to constitute
part of the Collateral.
(b) Agent shall have no obligation whatsoever to any
of the Lenders to assure that the Collateral exists or is owned by Borrower, is
cared for, protected, or insured or has been encumbered, or that the Liens of
the Agent (for the benefit of the Agent and the Lenders) have been properly or
sufficiently or lawfully created, perfected, protected, or enforced or are
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure, or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
Agent pursuant to any of the Loan Documents, it being understood and agreed
that in respect of the Collateral, or any act, omission or event related
thereto, subject to the terms and conditions contained herein, Agent may act in
any manner it may deem appropriate, in its sole discretion given Agent's own
interest in the Collateral in its capacity as one of the Lenders and that Agent
shall have no other duty or liability whatsoever to any Lender as to any of the
foregoing, except as otherwise provided herein.
17.12 AGENCY FOR PERFECTION. Agent and each Lender hereby
appoints each other Lender as agent for the purpose of perfecting the Liens of
the Agent and the Lenders in assets which, in accordance with Division 9 of the
UCC can be perfected only by possession. Should any Lender obtain possession of
any such Collateral, such Lender shall notify Agent thereof, and, promptly upon
Agent's request therefor shall deliver such Collateral to Agent or in
accordance with Agent's instructions.
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17.13 PAYMENTS BY AGENT TO THE LENDERS. All payments to be
made by Agent to the Lenders shall be made by bank wire transfer or internal
transfer of immediately available funds pursuant to the instructions set forth
on Schedule C-1, or pursuant to such other wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium or interest on revolving advances or
otherwise.
17.14 CONCERNING THE COLLATERAL AND RELATED LOAN
DOCUMENTS. Each Lender authorizes and directs Agent to enter into this
Agreement and the other Loan Documents relating to the Collateral, for the
ratable benefit (subject to Sections 2.3(b) and 4.1) of the Agent and the
Lenders. Each member of the Lenders agrees that any action taken by Agent,
Required Lenders, or all Lenders, as applicable, in accordance with the terms
of this Agreement or the other Loan Documents relating to the Collateral and
the exercise by Agent, Required Lenders, or all Lenders, as applicable, of
their respective powers set forth therein or herein, together with such other
powers that are reasonably incidental thereto, shall be binding upon all of the
Lenders.
17.15 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding
that certain of the Loan Documents now or hereafter may have been or will be
executed only by or in favor of Agent in its capacity as such, and not by or in
favor of the Lenders, any and all obligations on the part of Agent (if any) to
make any Advances shall constitute the several (and not joint) obligations of
the respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such Advances not to exceed, in principal
amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 17.7, none of the Lenders shall have any
liability for the acts of any other Lender, and the Agent shall have no
liability for the acts of any Lender. No Lender shall be responsible to
Borrower or any other Person for any failure by any other Lender to fulfill its
obligations to make Advances, nor to advance for it or on its behalf in
connection with its Commitment, nor to take any other action on its behalf
hereunder or in connection with the financing contemplated herein.
17.16 SUBORDINATION OF EALP OBLIGATIONS. EALP agrees in
favor of Foothill as set forth below in this Section 17.16, such agreement to
be valid and binding against EALP until Foothill has been indefeasibly paid in
full all of the Foothill Obligations (as hereinafter defined), Foothill has no
further commitment to make Advances, and Foothill is no longer a party to this
Agreement.
(a) EALP hereby agrees to subordinate and does hereby
subordinate payment by Borrower of all or any part of the Obligations
consisting of the EALP Term Loan, together with any and all other indebtedness
of Borrower to EALP now or hereafter incurred, created or evidenced, howsoever
such indebtedness may be hereafter extended, renewed or evidenced (all such
indebtedness hereinafter referred to as the "EALP Obligations"), together with
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all collateral, mortgage(s) and security, if any, for the payment of the EALP
Obligations, to the payment in full, in cash to Foothill, Agent, and their
respective successors and assigns, of any and all of the Obligations (other
than the EALP Term Loan) for which Borrower may now or hereafter be obligated
to either Foothill or Agent, including, without limitation, interest at the
rate(s) provided for in this Agreement which, but for the commencement of any
bankruptcy, insolvency or receivership proceeding relating to Borrower, would
have accrued and been payable with respect to such indebtedness (the "Foothill
Obligations") and any collateral, mortgage(s) and security granted to either
Foothill or Agent therefor, and in furtherance thereof does hereby agree not to
ask for, demand, xxx for, take or receive all or any part of the EALP
Obligations or enforce EALP's rights to any security therefor, nor ask for,
demand, take or receive any security therefor, unless and until the Foothill
Obligations have been paid in full in cash and Foothill's financing
arrangements with Borrower terminated. EALP also hereby agrees that Foothill
shall be subrogated for EALP with respect to EALP's claims against Borrower and
EALP's rights, liens and security interests, if any, in any of Borrower's
assets and the proceeds thereof, in each case, to the extent arising under this
Agreement and the other Loan Documents, until the Foothill Obligations have
been paid in full, in cash and Foothill's financing arrangements with Borrower
terminated.
(b) EALP further agrees that, upon any distribution
of the assets or readjustment of the indebtedness of Borrower, whether by
reason of liquidation, composition, bankruptcy, arrangement, receivership,
assignment for the benefit of creditors or any other action or proceeding
involving the readjustment of all or any of the EALP Obligations, or the
application of the assets of Borrower to the payment or liquidation thereof,
Foothill shall be entitled to receive payment in full in cash of the Foothill
Obligations prior to the payment of all or any part of the EALP Obligations,
and in order to enable Foothill to enforce its rights hereunder in any such
action or proceeding, Foothill is hereby irrevocably authorized and empowered
in its sole discretion to make and present for and on behalf of EALP such
proofs of claim against Borrower on account of the EALP Obligations in the name
of EALP or Foothill as Foothill may deem expedient or proper and to vote such
proofs of claim in any such proceeding and to receive and collect any and all
dividends or other payments or disbursements made thereon in whatever form the
same may be paid or issued and to apply the same on account of any of the
Foothill Obligations.
(c) EALP further agrees to execute and deliver to
Foothill such assignments, endorsements, or other instruments as may be
required by Foothill in order to enable Foothill to enforce any and all such
claims and to collect any and all dividends or other payments or disbursements
which may be made at any time on account of all or any of the EALP Obligations.
(d) If any money or other property (except for
payments of interest on the EALP Term Note, as such interest accrues and
becomes due and payable prior to the occurrence of a Default) is received by
EALP for application on the EALP Obligations before the Foothill Obligations
are paid in full, in cash, EALP will hold such money and other property in
trust for Foothill and, promptly after receipt, deliver such money and other
property to Foothill. After the occurrence and during the continuance of a
Default, then the exception for payments of interest of the EALP Term Note,
which is set forth parenthetically in the preceding sentence, shall not apply.
(e) EALP hereby also agrees not to assign or transfer
at any time while this Subordination Agreement remains in effect any rights,
claim or interest of any kind in or to any
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of the EALP Obligations, either principal or interest, without (1) first
notifying Foothill and (2) making such assignment expressly subject to this
Subordination Agreement in form and substance satisfactory to Foothill. EALP
will, upon request from Foothill, deliver any note or other evidence of the
EALP Obligations to Foothill, and Foothill may (or EALP, upon request from
Foothill, will) add a legend to such note or other evidence of the EALP
Obligations stating that payment thereof is subject to the provisions of this
Agreement.
18. GENERAL PROVISIONS.
18.1 EFFECTIVENESS. This Agreement shall be binding and
deemed effective when executed by Borrower, Agent and each Lender.
18.2 SECTION HEADINGS. Headings and numbers have been set
forth herein for convenience only. Unless the contrary is compelled by the
context, everything contained in each section applies equally to this entire
Agreement.
18.3 INTERPRETATION. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against the
Lender Group or Borrower, whether under any rule of construction or otherwise.
On the contrary, this Agreement has been reviewed by all parties and shall be
construed and interpreted according to the ordinary meaning of the words used
so as to fairly accomplish the purposes and intentions of all parties hereto.
18.4 SEVERABILITY OF PROVISIONS. Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.
18.5 COUNTERPARTS; TELEFACSIMILE EXECUTION. This
Agreement may be executed in any number of counterparts and by different
parties on separate counterparts, each of which, when executed and delivered,
shall be deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Agreement. Delivery of an executed counterpart
of this Agreement by telefacsimile shall be equally as effective as delivery of
an original executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telefacsimile also shall deliver an
original executed counterpart of this Agreement but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability,
and binding effect of this Agreement.
18.6 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the
incurrence or payment of the Obligations by Borrower or any guarantor of the
Obligations or the transfer by either or both of such parties to the Agent or
any Lender of any property of either or both of such parties should for any
reason subsequently be declared to be void or voidable under any state or
federal law relating to creditors' rights, including provisions of the
Bankruptcy Code relating to fraudulent conveyances, preferences, and other
voidable or recoverable payments of money or transfers of property
(collectively, a "Voidable Transfer"), and if Agent or any Lender is required
to repay or restore, in whole or in part, any such Voidable Transfer, then, as
to any such Voidable Transfer, or the amount thereof that Agent or such Lender
is required to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of Agent and Lenders related thereto, the liability of Borrower
or
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such guarantor automatically shall be revived, reinstated, and restored and
shall exist as though such Voidable Transfer had never been made.
18.7 INTEGRATION. This Agreement, together with the other
Loan Documents, reflects the entire understanding of the parties with respect
to the transactions contemplated hereby and shall not be contradicted or
qualified by any other agreement, oral or written, before the date hereof.
[THIS SPACE IS INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in Boston, Massachusetts.
GRANT GEOPHYSICAL, INC.,
a Delaware corporation
By: /s/ Xxx X. Xxxxxxx
--------------------------------------
Xxx X. Xxxxxxx, Vice President
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent and as
a Lender
By: /s/ Xxxxx Xxxxxx
--------------------------------------
Xxxxx Xxxxxx, Vice President
XXXXXXX ASSOCIATES, L.P.,
a Delaware limited partnership
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Xxxx X. Xxxxxx, General Partner
