Exhibit 4
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EXECUTION COPY
SENIOR SUBORDINATED LOAN AGREEMENT
dated as of
September 8, 2006,
among
GEOKINETICS INC.,
as the Borrower
and
THE LENDERS PARTY HERETO
TABLE OF CONTENTS
PAGE
ARTICLE I Definitions...................................................1
Section 1.01. Defined Terms...........................................1
Section 1.02. Terms Generally........................................21
Section 1.03. Classification of Loans................................22
Section 1.04. Rounding...............................................22
Section 1.05. References to Agreements and Laws......................22
Section 1.06. Times of Day...........................................22
Section 1.07. Timing of Payment or Performance.......................22
ARTICLE II The Credits..................................................22
Section 2.01. Commitments............................................22
Section 2.02. Loans..................................................22
Section 2.03. Borrowing Procedure....................................23
Section 2.04. Evidence of Debt; Repayment of Loans...................23
Section 2.05. Fees...................................................24
Section 2.06. Interest on Loans......................................25
Section 2.07. Default Interest.......................................25
Section 2.08. Alternate Rate of Interest.............................25
Section 2.09. Repayment..............................................26
Section 2.10. Conversion and Continuation of Borrowings..............26
Section 2.11. Termination of Commitments.............................27
Section 2.12. Optional Prepayment....................................27
Section 2.13. Mandatory Prepayments..................................28
Section 2.14. Reserve Requirements; Change in Circumstances..........28
Section 2.15. Change in Legality.....................................29
Section 2.16. Indemnity..............................................30
Section 2.17. Pro Rata Treatment.....................................30
Section 2.18. Sharing of Setoffs.....................................31
Section 2.19. Payments...............................................31
Section 2.20. Taxes..................................................31
Section 2.21. Assignment of Commitments Under Certain
Circumstances; Duty to Mitigation......................34
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE III Representations and Warranties...............................35
Section 3.01. Organization; Powers...................................35
Section 3.02. Authorization..........................................35
Section 3.03. Enforceability.........................................35
Section 3.04. Governmental Approvals.................................35
Section 3.05. Financial Statements...................................36
Section 3.06. No Material Adverse Change.............................36
Section 3.07. Title to Properties; Possession Under Leases...........36
Section 3.08. Subsidiaries...........................................37
Section 3.09. Litigation; Compliance with Laws.......................37
Section 3.10. Agreements.............................................37
Section 3.11. Federal Reserve Regulations............................37
Section 3.12. Investment Company Act.................................37
Section 3.13. Tax Returns............................................38
Section 3.14. No Material Misstatements..............................38
Section 3.15. Employee Benefit Plans.................................38
Section 3.16. Environmental Matters..................................38
Section 3.17. Location of Real Property and Leased Premises..........39
Section 3.18. Labor Matters..........................................39
Section 3.19. Solvency...............................................39
ARTICLE IV Conditions of Lending........................................39
ARTICLE V Affirmative Covenants........................................42
Section 5.01. Existence; Compliance with Laws and Contractual
Obligations; Businesses and Properties.................42
Section 5.02. Insurance..............................................43
Section 5.03. Taxes..................................................43
Section 5.04. Financial Statements, Reports, etc.....................43
Section 5.05. Litigation and Other Notices...........................45
Section 5.06. Maintaining Records; Access to Properties and
Inspections; Maintenance of Ratings....................45
Section 5.07. Use of Proceeds........................................46
ARTICLE VI Negative Covenants...........................................46
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 6.01. Indebtedness...........................................46
Section 6.02. Liens..................................................47
Section 6.03. Sale and Lease-Back Transactions.......................49
Section 6.04. Investments, Loans and Advances........................49
Section 6.05. Mergers, Consolidations, and Sales of Assets...........50
Section 6.06. Restricted Payments; Restrictive Agreements............51
Section 6.07. Transactions with Affiliates...........................52
Section 6.08. Change in Nature of Business...........................52
Section 6.09. Other Indebtedness and Agreements......................52
Section 6.10. Subsidiaries...........................................52
Section 6.11. Partnership, etc.......................................52
Section 6.12. Accounting Changes; Fiscal Year........................53
Section 6.13. Capital Expenditures...................................53
Section 6.14. Net Worth..............................................53
Section 6.15. Fixed Charge Coverage Ratio............................53
Section 6.16. Leverage Ratio.........................................53
ARTICLE VII Events of Default............................................53
ARTICLE VIII Subordination................................................55
Section 8.01. Agreement of Subordination.............................55
Section 8.02. Payments to Lenders....................................56
Section 8.03. Subrogation of Loans...................................58
Section 8.04. Notice to Lenders......................................59
Section 8.05. No Impairment of Subordination.........................59
Section 8.06. Article VIII Not to Prevent Events of Default..........59
Section 8.07. Continuing Effect......................................59
Section 8.08. Bankruptcy Avoidance...................................59
Section 8.09. Individual Rights of Senior Lenders....................59
Section 8.10. Instrument Legend and Notation.........................59
ARTICLE IX Miscellaneous................................................60
Section 9.01. Notices................................................60
Section 9.02. Survival of Agreement..................................60
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 9.03. Binding Effect.........................................61
Section 9.04. Successors and Assigns.................................61
Section 9.05. Expenses; Indemnity....................................64
Section 9.06. Right of Setoff........................................65
Section 9.07. Applicable Law.........................................65
Section 9.08. Waivers; Amendment.....................................65
Section 9.09. Interest Rate Limitation...............................66
Section 9.10. Entire Agreement.......................................66
Section 9.11. WAIVER OF JURY TRIAL...................................66
Section 9.12. Severability...........................................67
Section 9.13. Counterparts...........................................67
Section 9.14. Headings...............................................67
Section 9.15. Jurisdiction; Consent to Service of Process............67
Section 9.16. Confidentiality........................................68
Section 9.17. USA PATRIOT Act Notice.................................68
SCHEDULES
Schedule 1.01 - Existing Debt to be Repaid
Schedule 2.01 - Lenders and Commitments
Schedule 3.08 - Subsidiaries
Schedule 3.09 Litigation
Schedule 3.17(a) - Owned Real Property
Schedule 3.17(b) - Leased Real Property
Schedule 6.01 - Existing Indebtedness
Schedule 6.02 - Existing Liens
Schedule 6.04 Existing Investments
EXHIBITS
Exhibit A - Form of Borrowing Request
Exhibit B - Form of Non-Bank Certificate
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SENIOR SUBORDINATED LOAN AGREEMENT dated as of September 8, 2006 (this
"AGREEMENT"), among GEOKINETICS INC., a Delaware corporation ("BORROWER") and
the LENDERS (as defined herein).
RECITALS
A. Pursuant to the Stock Purchase Agreement (such term and each other
capitalized term used but not defined in these recitals having the meaning set
forth in Article I), the Borrower intends to acquire all of the Equity Interests
of Grant Geophysical Inc. and its subsidiaries (the "ACQUISITION").(1)
B. The Borrower has requested the Lenders to extend credit in the form
of Loans on the Closing Date, in an aggregate principal amount not in excess of
$55,000,000.
C. The Lenders are willing to extend such credit to the Borrower on the
terms and subject to the conditions set forth herein. Accordingly, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following
terms shall have the meanings specified below:
"ABR", when used in reference to any Loan, refers to whether such Loan is
bearing interest at a rate determined by reference to the Alternate Base Rate.
"ACQUIRED BUSINESS" shall mean Grant Geophysical Inc. and its
subsidiaries.
"ACQUISITION" shall have the meaning assigned to such term in the
recitals.
"ADJUSTED LIBO RATE" shall mean, with respect to any Eurodollar Loan for
any Interest Period, an interest rate per annum equal to the product of (a) the
LIBO Rate in effect for such Interest Period and (b) Statutory Reserves.
"AGENTS" shall mean RBC and PNC and "AGENT" shall mean any of them.
"AFFILIATE" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified; provided, however, that, (a) for purposes of Section 6.07, the term
"Affiliate" shall also include any person that directly or indirectly owns 10%
or more of any class of Equity Interests of the person specified or that is an
officer or director of the person specified and (b) the term "Affiliate" shall
specifically exclude each Lender, in its capacity as Lender, and any of its
Affiliates.
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(1) Subject to further review of underlying documentation.
"AGREEMENT" shall have the meaning assigned to such term in the preamble.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum equal to
the greater of (a) the Base Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. If the Required Lenders
shall have determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Federal Funds Effective Rate for any
reason, including the inability or failure of the Required Lenders to obtain
sufficient quotations in accordance with the terms of the definition thereof,
the Alternate Base Rate shall be determined without regard to clause (b) of the
preceding sentence until the circumstances giving rise to such inability no
longer exist. Any change in the Alternate Base Rate due to a change in the Base
Rate or the Federal Funds Effective Rate shall be effective on the effective
date of such change in the Base Rate or the Federal Funds Effective Rate, as the
case may be.
"APPLICABLE PERCENTAGE" shall mean, for any day, (a) with respect to any
Eurodollar Loan, (i) on the Closing Date to, but excluding, December 1, 2006,
7.50% per annum and (ii) thereafter, the applicable percentage set forth below
under the caption "Applicable Percentage" opposite such period:
--------------------------------------------------------------
PERIOD | EURODOLLAR APPLICABLE
| PERCENTAGE
-----------------------------------|--------------------------
December 1, 2006 through and | 8.50%
including February 28, 2007 |
-----------------------------------|--------------------------
March 1, 2007 through and | 9.50%
including May 30, 2007 |
-----------------------------------|--------------------------
June 1, 2007 | 10.50%
and thereafter |
--------------------------------------------------------------
and (b) with respect to any ABR Loan, (i) on the Closing Date to, but excluding,
December 1, 2006, 6.00% per annum and (ii) thereafter, the applicable percentage
set forth below under the caption "Applicable Percentage" opposite such period:
---------------------------------------------------------------
PERIOD | ABR APPLICABLE PERCENTAGE
-----------------------------------|---------------------------
December 1, 2006 through and | 7.00%
including February 28, 2007 |
-----------------------------------|---------------------------
March 1, 2007 through and | 8.00%
including May 30, 2007 |
-----------------------------------|---------------------------
June 1, 2007 | 9.00%
and thereafter |
---------------------------------------------------------------
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"ASSET SALE" shall mean the sale, transfer or other disposition (by way of
merger, casualty, condemnation or otherwise) by the Borrower or any of the
Subsidiaries to any person other than the Borrower or any Subsidiary of (a) any
Equity Interests of any of the Subsidiaries or (b) any other assets of the
Borrower or any of its Subsidiaries.
"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and acceptance
entered into by a Lender and an assignee, in such form as shall be reasonably
approved by the Lenders.
"BASE RATE" shall mean corporate base rate of interest publicly announced
by such generally available and recognizable source as the Required Lenders may
select from time to time for borrowings made in the United States of America in
dollars, changing effective on the date specified in each such announcement of a
change in the corporate base rate. The Base Rate is a reference rate and does
not necessarily represent the lowest or best rate actually available.
"BOARD" shall mean the Board of Governors of the Federal Reserve System of
the United States of America.
"BORROWER" shall have the meaning assigned to such term in the preamble.
"BORROWING REQUEST" shall mean a request by the Borrower in accordance
with the terms of Section 2.03 and substantially in the form of Exhibit B, or
such other form as shall be approved by the Lender.
"BREAKAGE EVENT" shall have the meaning assigned to such term in Section
2.14.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or day on
which banks in New York City are generally authorized or required by law to
close; provided, however, that when used in connection with a Eurodollar Loan
(including with respect to all notices and determinations in connection
therewith and any payments of principal, interest or other amounts thereon), the
term "BUSINESS DAY" shall also exclude any day on which banks are generally not
open for dealings in dollar deposits in the London interbank market.
"CAPITAL EXPENDITURES" shall mean, for any period, (a) the aggregate
amount of additions to property, plant and equipment and other capital
expenditures of the Borrower and its Subsidiaries that are (or should be) set
forth in a consolidated statement of cash flows of the Borrower for such period
prepared in accordance with GAAP, and (b) Capital Lease Obligations or Synthetic
Lease Obligations incurred by the Borrower and its consolidated Subsidiaries
during such period, but excluding in each case any such expenditure made to
restore, replace or rebuild property to the condition of such property
immediately prior to any damage, loss, destruction or condemnation of such
property, to the extent such expenditure is made with insurance proceeds,
condemnation awards or damage recovery proceeds relating to any such damage,
loss, destruction or condemnation.
"CAPITAL LEASE OBLIGATIONS" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
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and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"CASUALTY EVENT" shall mean any involuntary loss of title, any involuntary
loss of, damage to or any destruction of, or any condemnation or other taking
(including by any Governmental Authority) of, any property of the Borrower or
any of its Subsidiaries. "Casualty Event" shall include but not be limited to
any taking of all or any part of any real property of any person or any part
thereof, in or by condemnation or other eminent domain proceedings as required
by law, or by reason of the temporary requisition of the use or occupancy of all
or any part of any real property of any person or any part thereof by any
Governmental Authority, civil or military, or any settlement in lieu thereof.
A "CHANGE IN CONTROL" shall be deemed to have occurred if:
(a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934 as in effect on the date hereof, but
excluding any employee benefit plan of such person and its Subsidiaries, and any
person or entity acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan) shall become the "beneficial owner" (as defined
in Rules 13(d)-3 and 13(d)-5 under such Act), directly or indirectly, of more
than 35% of outstanding Equity Interests of the Borrower having ordinary voting
power;
(b) a majority of the seats (other than vacant seats) on the board of directors
of the Borrower shall at any time be occupied by persons who were not (i)
nominated by the board of directors of the Borrower or (ii) appointed by
directors so nominated; or
(c) any change in control (or similar event, however denominated) with respect
to the Borrower or any Subsidiary shall occur under and as defined in the Senior
Credit Agreement or in respect of Material Indebtedness of the Borrower or any
Subsidiary.
"CHANGE IN LAW" shall mean (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender (or, for
purposes of Section 2.12, by any lending office of such Lender or by such
Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"CHARGES" shall have the meaning assigned to such term in Section 9.09.
"CLOSING DATE" shall mean September 8, 2006.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time, or any legislation successor thereto.
"COMMITMENT" shall mean, with respect to each Lender, the commitment of
such Lender to make Loans hereunder as set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender assumed its Commitment,
as applicable, as the same may be (a) reduced from time to time pursuant to
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Section 2.09 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04.
"CONSOLIDATED" refers to the consolidation of accounts in accordance with
GAAP.
"CONSOLIDATED EBITDA" shall mean, for any period, Consolidated Net Income
for such period plus
(a) without duplication and to the extent deducted in determining such
Consolidated Net Income, the sum of
(i) consolidated interest expense for such period,
(ii) consolidated income tax expense for such period,
(iii) foreign currency translation gain or loss,
(iv) all amounts attributable to depreciation and amortization for
such period,
(v) non-recurring fees and expenses incurred in connection with
the Transactions,
(vi) any non-cash charges (other than the write-down of current
assets) for such period,
minus (b) without duplication all cash payments made during such period on
account of non-cash charges added to Consolidated Net Income pursuant to clause
(a)(vi) above in a previous period.
Consolidated EBITDA shall be calculated on a Pro Forma Basis to give
effect to the Acquisition, any Permitted Acquisition and Asset Sales (other than
any dispositions in the ordinary course of business) consummated at any time on
or after the first day of the respective Test Period as if the Acquisition and
each such Permitted Acquisition had been effected on the first day of such
period and as if each such Asset Sale had been consummated on the day prior to
the first day of such period.
"CONSOLIDATED NET INCOME" shall mean, for any period with respect to any
person, the net income or loss of such person for such period determined on a
consolidated basis in accordance with GAAP; provided, that there shall be
excluded (without duplication):
(a) the income of any Subsidiary to the extent that the declaration or
payment of dividends or similar distributions by such Subsidiary of that income
is not at the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, statute, rule or governmental
regulation applicable to such Subsidiary,
(b) the income or loss of any person accrued prior to the date (i) it
becomes a Subsidiary or is merged into or consolidated with such person or (ii)
its assets are acquired by such person or its Subsidiaries,
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(c) the income or loss in respect of any Investment in a joint venture
(other than a Subsidiary) except to the extent of the amount of dividends or
other distributions actually paid to such person during such period,
(d) after-tax gains and losses realized upon the sale or other
disposition of any property that is sold or otherwise disposed of other than in
the ordinary course of business, and
(e) extraordinary gains, losses or charges.
"CONSTITUENT DOCUMENTS" means, with respect to any person, (a) the
articles of incorporation, certificate of incorporation, constitution or
certificate of formation (or the equivalent organizational documents) of such
person, (b) the by-laws or operating agreement (or the equivalent governing
documents) of such person and (c) any document setting forth the manner of
election or duties of the directors or managing members of such person (if any)
and the designation, amount or relative rights, limitations and preferences of
any class or series of such person's Equity Interests.
"CONTROL" shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a person,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "CONTROLLING" and "CONTROLLED" shall have meanings correlative
thereto.
"CONVERSION DATE" shall mean the date each Lender converts all or any of
its portion of the outstanding principal amount of the Loans as an offset of the
"Purchase Price" (as defined in the Securities Purchase Agreement) upon the
consummation of the sale and purchase of the Series B Preferred Stock in
accordance with the Securities Purchase Agreement.
"CURRENT ASSETS" of any Person means all assets of such Person that would,
in accordance with GAAP, be classified as current assets of a company conducting
a business the same as or similar to that of such Person, after deducting
adequate reserves in each case in which a reserve is proper in accordance with
GAAP.
"CURRENT LIABILITIES" of any Person means all Indebtedness of such Person
that by its terms is payable on demand or matures within one year after the date
of determination (excluding any Indebtedness renewable or extendible, at the
option of such Person, to a date more than one year from such date or arising
under a revolving credit or similar agreement that obligates the lender or
lenders to extend credit during a period of more than one year from such date).
"DEBT FOR BORROWED MONEY" of any Person means, at any date of
determination, the sum of, without duplication, (a) all items that, in
accordance with GAAP, would be classified as indebtedness on a consolidated
balance sheet of such Person at such date and (b) Indebtedness of the types
described in clauses (h) and (i) (excluding undrawn amounts in respect thereof)
of the definition of "Indebtedness" hereunder to the extent functioning as
indebtedness for borrowed money.
"DEFAULT" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
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"DISQUALIFIED STOCK" shall mean any Equity Interest that, by its terms (or
by the terms of any security or other Equity Interest into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, (a) matures (excluding any maturity as the result of an optional
redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part, or requires the payment of any cash
dividend or any other scheduled payment constituting a return of capital, in
each case at any time on or prior to the date which is the first anniversary of
the Maturity Date, or (b) is convertible into or exchangeable (unless at the
sole option of the issuer thereof) for (i) Indebtedness or (ii) any Equity
Interest referred to in clause (a) above, in each case at any time prior to the
date which is the first anniversary of the Maturity Date.
"DOLLARS" or "$" shall mean lawful money of the United States of America.
"DOMESTIC SUBSIDIARIES" shall mean all Subsidiaries incorporated or
organized under the laws of the United States of America, any State thereof or
the District of Columbia.
"ENVIRONMENTAL LAWS" shall mean all applicable Federal, state, local and
foreign laws (including common law), treaties, regulations, rules, ordinances,
codes, decrees, judgments, directives, orders (including consent orders), and
agreements having the force and effect of law in each case, relating to
protection of the environment or natural resources, or to protection of human
health and safety as it relates to Hazardous Materials exposure, the presence or
Release of Hazardous Materials in the environment, or the generation,
manufacture, processing, distribution, use, treatment, storage, transport,
recycling or handling of, or the arrangement for such activities with respect
to, Hazardous Materials.
"ENVIRONMENTAL LIABILITY" shall mean all liabilities, obligations,
damages, losses, claims, actions, suits, judgments, orders, fines, penalties,
fees, expenses and costs (including administrative oversight costs, natural
resource damages and remediation costs), whether contingent or otherwise,
arising out of or relating to (a) compliance or non compliance with any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the Release of any Hazardous Materials or (e) any contract,
agreement or other consensual arrangement pursuant to which liability is assumed
or imposed with respect to any of the foregoing.
"EQUITY INTERESTS" shall mean shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity interests in any person.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.
"ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) that, together with such Person, is treated as a single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA EVENT" shall mean (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder, with respect to a Plan
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(other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower, any of its Subsidiaries
or any of its ERISA Affiliates of any liability under Title IV of ERISA with
respect to the termination of any Plan or the withdrawal or partial withdrawal
of the Borrower, any of its Subsidiaries or any of its ERISA Affiliates from any
Plan or Multiemployer Plan; (e) the receipt by the Borrower, any of its
Subsidiaries or any of its ERISA Affiliates from the PBGC or a plan
administrator of any notice relating to the intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the adoption of any
amendment to a Plan that would require the provision of security pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA; (g) the receipt by the
Borrower, any of its Subsidiaries or any of its ERISA Affiliates of any notice,
or the receipt by any Multiemployer Plan from the Borrower, any of its
Subsidiaries or any of its ERISA Affiliates of any notice, concerning the
imposition of Withdrawal Liability or a determination that a Multiemployer Plan
is, or is expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA; (h) the occurrence of a "prohibited transaction" (within the
meaning of Section 4975 of the Code) with respect to which the Borrower or any
of the Subsidiaries is a "disqualified person" (within the meaning of Section
4975 of the Code) or with respect to which the Borrower or any such Subsidiary
could otherwise be liable; or (i) any other extraordinary event or condition
with respect to a Plan or Multiemployer Plan (other than liabilities arising
under clauses (a) through (h) above and any liabilities for routine plan
contributions and claims for benefits) that could result in liability of the
Borrower or any Subsidiary.
"EURODOLLAR", when used in reference to any Loan, refers to whether such
Loan is bearing interest at a rate determined by reference to the Adjusted LIBO
Rate.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in Article
VII.
"EXCESS CASH FLOW" shall mean, for any period,
(a) the sum of:
(i) Consolidated Net Income (or loss) of the Borrower and its
Subsidiaries for such period plus
(ii) the aggregate amount of all non cash charges deducted in
arriving at such Consolidated Net Income (or loss) plus
(iii) if there was a net increase in Consolidated Current
Liabilities of the Borrower and its Subsidiaries during such period, the
amount of such net increase plus
(iv) if there was a net decrease in Consolidated Current Assets
(excluding cash and Permitted Investments) of the Borrower and its
Subsidiaries during such period, the amount of such net decrease less
(b) the sum of:
8
(i) the aggregate amount of all non cash credits included in
arriving at such Consolidated Net Income (or loss) plus
(ii) if there was a net decrease in Consolidated Current
Liabilities of the Borrower and its Subsidiaries during such period, the
amount of such net decrease plus
(iii) if there was a net increase in Consolidated Current Assets
(excluding cash and Permitted Investments) of the Borrower and its
Subsidiaries during such period, the amount of such net increase plus
(iv) the aggregate amount of Capital Expenditures of the Borrower
and its Subsidiaries paid in cash during such period solely to the extent
permitted by this Agreement plus
(v) the aggregate amount of all regularly required and other
mandatory principal payments of Funded Debt made during such period (other
than pursuant to Section 2.06) plus
(vi) the aggregate principal amount of all optional prepayments of
Funded Debt (other than Funded Debt that is revolving in nature unless
accompanied by a permanent commitment reduction in a corresponding amount)
made during such period pursuant to Section 2.06(a) plus
(vii) the aggregate principal amount of all mandatory prepayments of
Funded Debt made during such period pursuant to Section 2.13 in respect of
Net Cash Proceeds to the extent that such Net Cash Proceeds were taken
into account in calculating such Consolidated Net Income (or loss) for
such period.
"EXCLUDED TAXES" shall mean, with respect to any Lender or any other
recipient of any payment to be made by or on account of any obligation of the
Borrower hereunder, (a) income or franchise taxes imposed on (or measured by)
its net income by the United States of America, or by the jurisdiction under the
laws of which such recipient is organized or in which its principal office is
located or, in the case of any Lender, in which its applicable lending office is
located, (b) any branch profits taxes imposed by the United States of America or
any similar tax imposed by any other jurisdiction described in clause (a) above
and (c) in the case of a Foreign Lender (other than an assignee pursuant to a
request by the Borrower under Section 2.21(a)), any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office) or
is attributable to such Foreign Lender's failure to comply with Section 2.20(e),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from the Borrower with respect to such withholding
tax pursuant to Section 2.20(a).
"EXISTING DEBT" shall mean all Indebtedness listed on Schedule 1.01.
"EXISTING CREDIT AGREEMENT" shall mean the Revolving Credit, Term Loan and
Security Agreement, dated as of June 12, 2006, among the Borrower, Geophysical
9
Development Corporation, Quantum Geophysical, Inc., Trace Energy Services Ltd.,
Trace Energy Services, Inc., the financial institutions which are a party
thereto and PNC.
"EXISTING CREDIT DOCUMENTS" shall mean the "Other Documents", as such term
is defined in the Existing Credit Agreement.
"EXISTING SENIOR DEBT" means the "Obligations" (as defined in the Existing
Credit Agreement) of the Borrower or any other obligations payable by the
Borrower under or in respect of the Existing Credit Agreement.
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, a fluctuating rate
of interest per annum equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average of the quotations for the day for
such transactions received by the Required Lenders from three Federal funds
brokers of recognized standing selected by it.
"FEES" shall have the meaning assigned to such term in Section 2.05.
"FINANCIAL OFFICER" of any person shall mean the chief financial officer,
principal accounting officer, treasurer, assistant treasurer or controller of
such person.
"FISCAL YEAR" shall mean the fiscal year of the Borrower and its
Subsidiaries ending on December 31 of each calendar year.
"FIXED CHARGE COVERAGE RATIO" shall mean the ratio of (a) Consolidated
EBITDA minus the sum of (i) all unfinanced Capital Expenditures made during such
period and (ii) all cash taxes paid during such period to (b) the sum of all
Senior Debt Payments during such period.
"FOREIGN LENDER" shall mean any Lender that is organized under the laws of
a jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"FOREIGN SUBSIDIARY" shall mean any Subsidiary that is not a Domestic
Subsidiary.
"FUNDED DEBT" of any Person means Indebtedness in respect of the Loans, in
the case of the Borrower, and all other Indebtedness of such Person that by its
terms matures more than one year after the date of determination or matures
within one year from such date but is renewable or extendible, at the option of
such Person, to a date more than one year after such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders to
extend credit during a period of more than one year after such date.
"GAAP" shall mean United States generally accepted accounting principles.
"GOVERNMENTAL AUTHORITY" shall mean the government of the United States of
America or any other nation, any political subdivision thereof, whether state or
10
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"GRANTING LENDER" shall have the meaning assigned to such term in Section
9.04(h).
"GUARANTEE" of or by any person shall mean any obligation, contingent or
otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other person (the
"PRIMARY OBLIGOR") in any manner, whether directly or indirectly, and including
any obligation of such person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment of such Indebtedness or other obligation, (b)
to purchase or lease (including pursuant to Synthetic Lease Obligations, if
applicable) property, securities or services for the purpose of assuring the
owner of such Indebtedness or other obligation of the payment of such
Indebtedness or other obligation, (c) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation or (d) as an account party in respect of any letter of credit or
letter of guaranty issued to support such Indebtedness or other obligation;
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business or customary and
reasonable indemnity obligations in effect on the Closing Date or entered into
in connection with any acquisition or disposition of assets permitted under this
Agreement. The amount of any Guarantee shall be deemed to be an amount equal to
the stated or determinable amount of the primary obligation, or portion thereof,
in respect of which such Guarantee is made or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof as determined by
the guaranteeing person in good faith.
"HAZARDOUS MATERIALS" shall mean any petroleum (including crude oil or
fraction thereof) or petroleum products or byproducts, or any pollutant or
contaminant, or any forces, noise, form of energy, substance, material or waste
characterized, defined, or regulated as hazardous, toxic, explosive,
radioactive, dangerous or words of similar meaning and effect by, or pursuant
to, any Environmental Law, or which require removal, remediation or reporting
under any Environmental Law, including asbestos, or asbestos containing
material, radioactive material, polychlorinated biphenyls.
"HEDGING AGREEMENT" shall mean any agreement with respect to any swap,
forward, future, cap, collar, floor or derivative transaction or option or
similar agreement involving, or settled by reference to, one or more rates,
currencies, fuel or other commodities, equity or debt instruments or securities,
or economic, financial or pricing indices or measures of economic, financial or
pricing risk or value or any similar transaction or any combination of these
transactions; provided, however, that no phantom stock or similar plan providing
for payments and on account of services provided by current or former directors,
officers, members of management, employees or consultants of the Borrower or any
Subsidiary shall be a Hedging Agreement.
"INDEBTEDNESS" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
11
debentures, notes or similar instruments, (c) all obligations of such person
upon which interest charges are customarily paid, (d) all obligations of such
person under conditional sale or other title retention agreements relating to
property or assets purchased by such person, (e) all obligations of such person
issued or assumed as the deferred purchase price of property or services
(excluding trade accounts payable and accrued obligations incurred in the
ordinary course of business), (f) all Indebtedness of others secured by any Lien
on property owned or acquired by such person, whether or not the obligations
secured thereby have been assumed, (g) all Guarantees by such person of
Indebtedness of others, (h) all Capital Lease Obligations and Synthetic Lease
Obligations of such person, (i) all obligations of such person as an account
party in respect of letters of credit or letters of guaranty and (j) all
obligations of such person in respect of bankers' acceptances. The Indebtedness
of any person shall include the Indebtedness of any other person (including any
partnership in which such person is a general partner) to the extent such person
is liable therefor as a result of such person's ownership interest in, or other
relationship with, such other person, except to the extent the terms of such
Indebtedness provide that such person is not liable therefor.
"INDEMNIFIED TAXES" shall mean Taxes other than Excluded Taxes and Other
Taxes.
"INDEMNITEE" shall have the meaning assigned to such term in Section
9.05(b).
"INTEREST PAYMENT DATE" shall mean (a) with respect to any ABR Loan, the
last Business Day of each March, June, September and December and (b) with
respect to any Eurodollar Loan, the last day of the Interest Period applicable
to such Loan and, in the case of a Eurodollar Loan with an Interest Period of
more than three months' duration, each day that would have been an Interest
Payment Date had successive Interest Periods of three months' duration been
applicable to such Loan.
"INTEREST PERIOD" shall mean, for each Eurodollar Loan comprising part of
the same borrowing, the period commencing on the date of such borrowing and
ending on the numerically corresponding day (or, if there is no numerically
corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6
months or 9 or 12 months, if agreed to or available to all of the participating
Lenders, as the Borrower may elect; provided, however, that if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and provided, further, that
whenever the first day of any Interest Period occurs on a day of an initial
calendar month for which there is no numerically corresponding day in the
calendar month that succeeds such initial calendar month by the numbers of
months equal to the number of months in such Interest Period shall end on the
last Business Day of such succeeding calendar month. Interest shall accrue from
and including the first day of an Interest Period to but excluding the last day
of such Interest Period.
"INVESTMENTS" shall have the meaning assigned to such term in Section
6.04.
"IRS" shall have the meaning assigned to such term in Section 2.20(e).
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"LENDERS" shall mean (a) the persons listed on Schedule 2.01 (other than
any such person that has ceased to be a party hereto pursuant to an Assignment
and Acceptance) and (b) any person that has become a party hereto pursuant to an
Assignment and Acceptance.
"LEVERAGE RATIO" means, at any date of determination, the ratio of (a)
Debt for Borrowed Money as of the last day of such Test Period to (b)
Consolidated EBITDA for such Test Period, in each case as determined for the
Borrower and its Subsidiaries on a Consolidated basis.
"LIBO RATE" shall mean for any Interest Period with respect to any
Eurodollar Loan:
(a) the rate per annum equal to the rate determined by the Required
Lenders to be the offered rate that appears on the page of the LIBOR 01 screen
(or any successor thereto) that displays an average British Bankers Association
Interest Settlement Rate for deposits in U.S. dollars (for delivery on the first
day of such Interest Period) with a term equivalent to such Interest Period,
determined as of approximately 11:00 a.m. (London time) two Business Days prior
to the first day of such Interest Period, or
(b) if the rate referenced in the preceding subsection (a) does not
appear on such page or service or such page or service shall cease to be
available, the rate per annum equal to the rate determined by the Required
Lenders to be the offered rate on such other page or other service that displays
an average British Bankers Association Interest Settlement Rate for deposits in
dollars (for delivery on the first day of such Interest Period) with a term
equivalent to such Interest Period, determined as of approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period,
or
(c) if the rates referenced in the preceding subsections (a) and (b) are
not available, the rate per annum determined by the Required Lenders equal to
the average (rounded upward to the next 1/100th of 1%) of the respective rates
notified to the Required Lenders by major financial institutions reasonably
acceptable to the Required Lenders, as the rate of interest at which deposits in
dollars for delivery on the first day of such Interest Period in same day funds
in the approximate amount of the Eurodollar Loan being made, continued or
converted by the Lenders and with a term equivalent to such Interest Period
would be offered by such banks in the London interbank market at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period.
"LIEN" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien (statutory or otherwise), pledge, hypothecation, encumbrance,
collateral assignment, charge or security interest in, on or of such asset, (b)
the interest of a vendor or a lessor under any conditional sale agreement,
capital lease or title retention agreement (or any financing lease having
substantially the same economic effect as any of the foregoing) relating to such
asset and (c) in the case of securities, any purchase option, call or similar
right of a third party with respect to such securities.
"LOAN DOCUMENTS" shall mean this Agreement, the promissory notes, if any,
executed and delivered pursuant to Section 2.04(d) and each document executed by
a Loan Party and delivered to the Lender in connection with or pursuant to any
of the foregoing or the Obligations, together with any modification of any term
of any of the foregoing.
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"LOAN PARTIES" shall mean the Borrower and such other person that is or
becomes a party to this Agreement.
"LOANS" shall mean the term loans made by the Lenders to the Borrower
pursuant to Section 2.01, together with any PIK Interest Amounts which have been
added thereto.
"MARGIN STOCK" shall have the meaning assigned to such term in Regulation
U.
"MATERIAL ADVERSE EFFECT" shall mean (a) a material adverse effect on the
business, assets, liabilities, operations, prospects or condition (financial or
otherwise) or operating results of the Borrower and its Subsidiaries, taken as a
whole, (b) a material impairment of the ability of any Loan Party to perform any
of its obligations under any Loan Document to which it is or will be a party or
(c) a material impairment of any rights of or benefits available to the Lenders
under any Loan Document.
"MATERIAL INDEBTEDNESS" shall mean Indebtedness (other than the Loans), or
obligations in respect of one or more Hedging Agreements, of any one or more of
the Borrower and its Subsidiaries in an aggregate principal amount exceeding
$1,000,000. For purposes of determining Material Indebtedness, the "principal
amount" of the obligations of the Borrower or any Subsidiary in respect of any
Hedging Agreement at any time shall be the maximum aggregate amount (giving
effect to any netting agreements) that the Borrower, or such Subsidiary would be
required to pay if such Hedging Agreement were terminated at such time.
"MATURITY DATE" shall mean September 8, 2007.
"MAXIMUM RATE" shall have the meaning assigned to such term in Section
9.09.
"MOODY'S" shall mean Xxxxx'x Investors Service, Inc., or any successor
thereto.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"NET CASH PROCEEDS" shall mean (a) with respect to any Asset Sale, the
proceeds thereof in the form of cash and Permitted Investments (including any
such proceeds subsequently received (as and when received) in respect of noncash
consideration initially received), net of (i) expenses (including reasonable and
customary broker's fees or commissions, investment banking fees, consultant
fees, legal fees, survey costs, title insurance premiums, and related search and
recording charges, transfer, recording and similar taxes incurred by the
Borrower and the Subsidiaries in connection therewith and the Borrower's good
faith estimate of income taxes paid or payable in connection with such sale)
incurred in connection with such Asset Sale, (ii) amounts provided as a reserve,
in accordance with GAAP, against any liabilities under any indemnification
obligations or purchase price adjustment associated with such Asset Sale
(provided, that to the extent and at the time any such amounts are released from
such reserve, such amounts shall constitute Net Cash Proceeds), (iii) the
principal amount, premium or penalty, if any, interest and other amounts on any
Indebtedness for borrowed money which is secured by the asset sold in such Asset
Sale and which is repaid (other than any such Indebtedness assumed or repaid by
the purchaser); (b) with respect to any Casualty Event, the cash insurance
proceeds, condemnation awards and other compensation received in respect
14
thereof, net of all reasonable costs and expenses incurred in connection with
the collection of such proceeds, awards or other compensation in respect of such
Casualty Event; and (c) with respect to any incurrence of Indebtedness or
issuance of any Equity Interests, the cash proceeds thereof, net of all taxes
and customary fees, commissions, costs and other expenses incurred by the
Borrower and the Subsidiaries in connection therewith.
"NET WORTH" shall mean, at a particular date, (a) the aggregate amount of
all assets of the Borrower and its consolidated Subsidiaries as may be properly
classified as such in accordance with GAAP consistently applied, less (b) the
aggregate amount of all liabilities of the Borrower and its consolidated
Subsidiaries.
"OBLIGATIONS" shall mean (a) obligations of the Borrower and the other
Loan Parties from time to time arising under or in respect of the due and
punctual payment of (i) the principal of and premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, and (ii) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), of the Borrower and the other
Loan Parties under this Agreement and the other Loan Documents, and (b) the due
and punctual performance of all covenants, agreements, obligations and
liabilities of the Borrower and the other Loan Parties under or pursuant to this
Agreement and the other Loan Documents.
"OTHER TAXES" shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
"PARTICIPANT REGISTER" shall have the meaning described to such term in
Section 9.04(f).
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.
"PERMITTED ACQUISITION" shall mean any acquisition by the Borrower or any
Subsidiary of all or substantially all the assets of, or all the Equity
Interests in, a Person or division or line of business of a Person if,
immediately after giving effect thereto, (a) no Default or Event of Default has
occurred and is continuing or would result therefrom, (b) each Subsidiary formed
for purposes of or resulting from such acquisition shall be a Domestic
Subsidiary, (c) all of the Equity Interests of each Subsidiary formed for the
purpose of or resulting from such acquisition shall be owned directly by the
Borrower or a Subsidiary, (d) the Borrower and the Subsidiaries are in
compliance, on a Pro Forma Basis after giving effect to such acquisition with
the covenants contained in Sections 6.14 and 6.15 recomputed as at the last day
of the most recently ended fiscal quarter of the Borrower for which financial
statements are available, as if such acquisition had occurred on the first day
of each relevant period for testing such compliance and (e) the Borrower has
delivered to each Lender a certificate of a Responsible Officer to the effect
15
set forth in clauses (a), (b), (c) and (d) above, together with all relevant
financial information for the Person or assets to be acquired and reasonably
detailed calculations demonstrating satisfaction of the requirement set forth in
clause (d) above.
"PERMITTED INVESTMENTS" shall mean:
(a) direct obligations of, or obligations the principal of and interest
on which are unconditionally guaranteed by, the United States of America (or by
any agency thereof to the extent such obligations are backed by the full faith
and credit of the United States of America), in each case maturing within one
year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the highest
credit rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within one year from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, any domestic office of any commercial bank organized under the
laws of the United States of America or any State thereof that has a combined
capital and surplus and undivided profits of not less than $500,000,000;
(d) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into with
a financial institution satisfying the criteria of clause (c) above;
(e) investments in "money market funds" within the meaning of Rule 2a-7
of the Investment Company Act of 1940, as amended, substantially all of whose
assets are invested in investments of the type described in clauses (a) through
(d) above;
(f) investments in so-called "auction rate" securities rated AAA or
higher by S&P or Aaa or higher by Moody's and which have a reset date not more
than 90 days from the date of acquisition thereof; and
(g) other short-term investments utilized by Foreign Subsidiaries in
accordance with normal investment practices for cash management in investments
of a type analogous to the foregoing.
"PERMITTED REFINANCING" shall mean Indebtedness of the Borrower or any
Subsidiary issued or incurred (including by means of the extension or renewal of
existing Indebtedness) to refinance, refund, extend, renew or replace existing
Indebtedness ("REFINANCED INDEBTEDNESS"); provided, that (a) the principal
amount (or, if incurred with original issue discount, the aggregate accreted
value) of such refinancing, refunding, extending, renewing or replacing
Indebtedness (the "NEW INDEBTEDNESS") is not greater than the principal amount
of such Refinanced Indebtedness, (b) if such Refinanced Indebtedness is the
Indebtedness arising under the Existing Credit Agreement or other Indebtedness
that is Material Indebtedness (or a Permitted Refinancing thereof), such New
Indebtedness has a final maturity that is no sooner than the final maturity of,
a weighted average life to maturity that is not earlier than the remaining
weighted average life of, such Refinanced Indebtedness and an interest rate that
16
is not higher than the interest rate applicable to such Refinanced Indebtedness,
(c) if such Refinanced Indebtedness or any Guarantees thereof are subordinated
to the Obligations, such New Indebtedness and any Guarantees thereof remain so
subordinated on terms no less favorable to the Lenders, (d) the obligors in
respect of such Refinanced Indebtedness immediately prior to such refinancing,
refunding, extending, renewing or replacing are the only obligors on such New
Indebtedness, and (e) if such Refinanced Indebtedness is the Indebtedness
arising under the Existing Credit Agreement or other Indebtedness that is
Material Indebtedness or (a Permitted Refinancing thereof), such New
Indebtedness contains mandatory redemption (or similar provisions), covenants
and events of default which, taken as a whole, are no less favorable to the
Borrower or the applicable Subsidiary and the Lenders than the mandatory
redemption (or similar provisions), covenants and events of default or
Guarantees, if any, in respect of such Refinanced Indebtedness; provided,
further, however, that Permitted Refinancing shall not include (i) Indebtedness
of a Subsidiary that refinances Indebtedness of the Borrower or (ii)
Indebtedness of the Borrower that refinances, refunds or replaces any other
Indebtedness of a Subsidiary.
"PERSON" shall mean any natural person, corporation, business trust, joint
venture, association, company, limited liability company, partnership,
Governmental Authority or other entity.
"PIK INTEREST AMOUNT" shall mean the amount of interest accrued on a Loan
that, in accordance with Section 2.06(c), increases the principal amount of such
Loan.
"PLAN" shall mean any employee pension benefit plan as defined in Section
3(2) of ERISA (other than a Multiemployer Plan) subject to the provisions of
Title IV of ERISA or Section 412 of the Code or Section 307 of ERISA, and in
respect of which the Borrower, any of its Subsidiaries or any ERISA Affiliate is
(or, if such plan were terminated, would under Section 4069 of ERISA be deemed
to be) an "employer" as defined in Section 3(5) of ERISA.
"PNC" shall mean PNC Bank, National Association, as agent to the Existing
Credit Agreement.
"PRO FORMA BASIS" and "PRO FORMA COMPLIANCE" mean, with respect to
compliance with any test or covenant hereunder in respect of any Specified
Transactions, the following adjustments in connection therewith shall be deemed
to have occurred as of the first day of the applicable period of measurement in
such test or covenant: (a) income statement items (whether positive or negative)
attributable to the property or Person subject to such Specified Transaction,
(i) in the case of an Asset Sale of all or substantially all of the Equity
Interests in any Subsidiary or of any division, product line, or facility used
for operations of the Borrower or any of its Subsidiaries, shall be excluded,
and (ii) in the case of a Permitted Acquisition or investment described in the
definition of "Specified Transaction", shall be included, (b) any retirement of
Indebtedness, and (c) any Indebtedness incurred or assumed by the Borrower or
any of its Subsidiaries in connection therewith and if such Indebtedness has a
floating or formula rate, shall have an implied rate of interest for the
applicable period for purposes of this definition determined by utilizing the
rate which is or would be in effect with respect to such Indebtedness as at the
relevant date of determination; provided, that, the foregoing pro forma
adjustments may be applied to any such test or covenant solely to the extent
that such adjustments are consistent with the definition of "Consolidated
EBITDA" and may take into account reasonably identifiable and factually
17
supportable cost savings for which the necessary steps have been implemented or
are reasonably expected to be implemented within 18 months after the closing of
the relevant Specified Transaction.
"RBC" shall mean Royal Bank of Canada, as administrative agent to the
Senior Credit Agreement.
"REGISTER" shall have the meaning assigned to such term in Section
2.04(e).
"REGULATION U" shall mean Regulation U of the Board as from time to time
in effect and all official rulings and interpretations thereunder or thereof.
"REGULATION X" shall mean Regulation X of the Board as from time to time
in effect and all official rulings and interpretations thereunder or thereof.
"RELATED DOCUMENTS" means the Existing Credit Agreement, the Existing
Credit Documents, the Senior Credit Agreement, the Senior Credit Documents, the
Stock Purchase Agreement and each other document and instrument executed with
respect thereof.
"RELATED FUND" shall mean, with respect to any Lender that is a fund or
commingled investment vehicle that invests in bank loans, any other fund that
invests in bank loans and is managed or advised by the same investment advisor
as such Lender or by an Affiliate of such investment advisor.
"RELATED PARTIES" shall mean, with respect to any specified person, such
person's Affiliates and the respective directors, officers, employees, agents
and advisors of such person and such person's Affiliates.
"RELEASE" shall mean any release, spill, emission, leaking, dumping,
injection, pouring, deposit, disposal, discharge, dispersal, leaching or
migration into or through the environment or within or upon any building,
structure, facility or fixture.
"REQUIRED LENDERS" shall mean, at any time, Lenders having Loans and
Commitments representing more than 50% of the sum of all Loans outstanding and
Commitments at such time.
"RESPONSIBLE OFFICER" of any person shall mean any executive officer or
Financial Officer of such person and any other officer or similar official
thereof responsible for the administration of the obligations of such person in
respect of this Agreement.
"RESTRICTED PAYMENT" shall mean any dividend or other distribution
(whether in cash, securities or other property) with respect to any Equity
Interests in the Borrower or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any Equity Interests in the Borrower or any Subsidiary or any
option, warrant or other right to acquire any such Equity Interests in the
Borrower or any Subsidiary.
"S&P" shall mean Standard & Poor's Ratings Group, Inc. or any successor
thereto.
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"SECURITIES PURCHASE AGREEMENT" shall mean that certain Securities
Purchase Agreement, dated as of September 8, 2006, among the Borrower and the
purchasers party thereto.
"SENIOR CREDIT AGREEMENT" shall mean that certain Credit Agreement, dated
as of September 8, 2006, among Geokinetics Holdings, Inc., the Borrower and the
Subsidiaries of the Borrower party thereto as guarantors, RBC and the lenders
party thereto.
"SENIOR CREDIT DOCUMENTS" shall mean the "Loan Documents," as such term is
defined in the Senior Credit Agreement.
"SENIOR DEBT" means the "Obligations" (as defined in the Senior Credit
Agreement) or any other obligations payable under or in respect of the Senior
Credit Agreement and shall also include any amount payable by the Borrower under
its guaranty of any such Senior Debt (the "SENIOR DEBT GUARANTY" and all
obligations pursuant to the Senior Debt Guaranty, "SENIOR DEBT GUARANTY
OBLIGATIONS").
"SENIOR DEBT PAYMENTS" shall mean and include all cash actually expended
by the Borrower and its Subsidiaries to make (a) interest payments on
Indebtedness, plus (b) scheduled principal payments of Indebtedness required to
be paid, plus (c) payments for all fees, commissions and charges set forth
herein and with respect to any Indebtedness, plus (d) capitalized lease
payments; provided that for the first four fiscal quarters ending after the
Closing Date, interest expense shall be determined on an annualized basis.
"SENIOR LENDERS" shall mean (i) the several banks and other lenders from
time to time party to the Senior Credit Agreement and (ii) the several banks and
other lenders from time to time party to the Existing Credit Agreement.
"SERIES B PREFERRED STOCK" means the Series B senior convertible preferred
stock, par value $10.00 per share, of the Borrower.
"SOLVENT" means, with respect to any person, (a) the consolidated fair
value of the assets of such person and its Subsidiaries, at a fair valuation,
will exceed their consolidated debts and liabilities, subordinated, contingent
or otherwise; (b) the consolidated present fair saleable value of the property
of such person and its Subsidiaries will be greater than the amount that will be
required to pay the probable liability of their consolidated debts and other
liabilities, subordinated, contingent or otherwise, as such debts and other
liabilities become absolute and matured; (c) such person and its Subsidiaries
will be able to pay their consolidated debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; and (d) such person and its Subsidiaries, taken as a whole, will not
have unreasonably small capital with which to conduct the business in which they
are engaged.
"SPC" shall have the meaning assigned to such term in Section 9.04(i).
"SPECIFIED TRANSACTION" means, with respect to any period, any Investment,
Asset Sale, incurrence or repayment of Indebtedness or Restricted Payment that
by the terms of this Agreement requires "Pro Forma Compliance" with a test or
covenant hereunder or requires such test or covenant to be calculated on a "Pro
Forma Basis".
19
"STATUTORY RESERVES" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic or foreign,
to which any Lender (including any branch, Affiliate, or other fronting office
making or holding a Loan) is subject for Eurocurrency Liabilities (as defined in
Regulation D of the Board). Eurodollar Loans shall be deemed to constitute
Eurocurrency Liabilities as defined in Regulation D of the Board) and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D. Statutory Reserves shall be adjusted automatically on
and as of the effective date of any change in any reserve percentage.
"STOCK PURCHASE AGREEMENT" shall mean that certain Stock Purchase
Agreement, dated as of September 8, 2006, among the Borrower, Xxxxxxx
Associates, L.P. and Xxxxxxx International, L.P. in form and substance
satisfactory to the Lenders.
"SUBSIDIARY" shall mean, with respect to any person (herein referred to as
the "BORROWER"), any corporation, partnership, limited liability company,
association or other business entity of which securities or other ownership
interests representing more than 50% of the ordinary voting power or more than
50% of the general partnership interests are, at the time any determination is
being made, owned, Controlled or held by the Borrower, one or more subsidiaries
of the Borrower or a combination thereof.
"SYNTHETIC LEASE OBLIGATIONS" shall mean all monetary obligations of a
person under (a) a so-called synthetic, off-balance sheet or tax retention lease
or (b) an agreement for the use or possession of any property (whether real,
personal or mixed) creating obligations which do not appear on the balance sheet
of such person, but which, upon the insolvency or bankruptcy of such person,
would be characterized as Indebtedness of such person (without regard to
accounting treatment).
"TAXES" shall mean any and all present or future taxes, levies, imposts,
duties, deductions, charges, liabilities or withholdings imposed by any
Governmental Authority.
"TEST PERIOD" shall mean, at any time, the four consecutive fiscal
quarters of the Borrower most recently ended (in each case taken as one
accounting period) for which financial statements have been or are required to
be delivered pursuant to Section 5.04(a) or (b).
"TRANSACTIONS" shall mean, collectively, (a) the execution, delivery and
performance by the parties thereto of the Stock Purchase Agreement and the
consummation of the transactions contemplated thereby, including the Acquisition
and the repayment of the Existing Debt and the term loan facility under the
Existing Credit Agreement, (b) the execution, delivery and performance by the
Loan Parties of the Loan Documents to which they are a party and the execution,
delivery and performance by the Loan Parties of the Senior Credit Agreement (and
the "Loan Documents" as defined therein) and the making of the Loans hereunder
and the borrowings thereunder and use of the proceeds thereof, and (c) the
payment of related fees and expenses.
20
"UNIFORM COMMERCIAL CODE" or "UCC" means the Uniform Commercial Code as in
effect in any applicable jurisdiction from time to time.
"USA PATRIOT ACT" shall mean The Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing: (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; by (ii) the then outstanding principal
amount of such Indebtedness.
"WITHDRAWAL LIABILITY" shall mean liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. TERMS GENERALLY. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The word "will" shall be construed to have the same meaning and effect as the
word "shall"; and the words "asset" and "property" shall be construed as having
the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights.
The words "herein", "hereof" and "hereunder", and words of similar import, shall
be construed to refer to this Agreement in its entirety and not to any
particular provision of this Agreement unless the context shall otherwise
require. All references herein to Articles, Sections, Exhibits and Schedules
shall be deemed references to Articles and Sections of, and Exhibits and
Schedules to, this Agreement unless the context shall otherwise require. Except
as otherwise expressly provided herein, (a) any reference in this Agreement to
any Loan Document or any other agreement, instrument or document shall mean such
document as amended, restated, amended and restated, supplemented or otherwise
modified from time to time and (b) all terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect from time to
time; provided, however, that if the Borrower notifies the Lenders that the
Borrower wishes to amend any covenant in Article VI or any related definition to
eliminate the effect of any change in GAAP or the application thereof occurring
after the date of this Agreement on the operation of such covenant (or if the
Required Lenders notify the Borrower that the Required Lenders wish to amend
Article VI or any related definition for such purpose), then the Borrower and
the Required Lenders shall negotiate in good faith to amend such covenant and
related definitions (subject to the approval of the Required Lenders) to
preserve the original intent thereof in light of such changes in GAAP; provided,
that the Borrower's compliance with such covenant shall be determined on the
basis of GAAP as applied and in effect immediately before the relevant change in
GAAP or the application thereof became effective, until such covenant is
amended.
21
SECTION 1.03. CLASSIFICATION OF LOANS. For purposes of this Agreement,
Loans may be classified and referred to by type (e.g., a "EURODOLLAR LOAN").
SECTION 1.04. ROUNDING. Any financial ratios required to be maintained
by the Borrower pursuant to this Agreement (or required to be satisfied in order
for a specific action to be permitted under this Agreement) shall be calculated
by dividing the appropriate component by the other component, carrying the
result to one place more than the number of places by which such ratio is
expressed herein and rounding the result up or down to the nearest number (with
a rounding-up if there is no nearest number).
SECTION 1.05. REFERENCES TO AGREEMENTS AND LAWS. Unless otherwise
expressly provided herein, (a) references to organization documents, agreements
(including the Loan Documents) and other contractual instruments shall be deemed
to include all subsequent amendments, amendments and restatements, restatements,
supplements and other modifications thereto, but only to the extent that such
amendments, amendments and restatements, restatements, supplements and other
modifications are not prohibited by any Loan Document; and (b) references to any
law, statute, rule or regulation shall include all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting
such Law.
SECTION 1.06. TIMES OF DAY. Unless otherwise specified, all references
herein to times of day shall be references to Eastern time (daylight or
standard, as applicable).
SECTION 1.07. TIMING OF PAYMENT OR PERFORMANCE. When the payment of
any obligation or the performance of any covenant, duty or obligation is stated
to be due or performance required on a day which is not a Business Day, the date
of such payment or performance shall extend to the immediately succeeding
Business Day and such extension of time shall be reflected in computing interest
or fees, as the case may be; provided, that with respect to any payment of
interest on or principal of Eurodollar Rate Loans, if such extension would cause
any such payment to be made in the next succeeding calendar month, such payment
shall be made on the immediately preceding Business Day.
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS. Subject to the terms and conditions herein
set forth, each Lender agrees, severally and not jointly, to make a Loan to the
Borrower on the Closing Date in a principal amount not to exceed its Commitment.
Amounts paid or prepaid in respect of Loans may not be reborrowed.
SECTION 2.02. LOANS. (a) Each Loan shall be made as part of a
borrowing consisting of Loans made by the Lenders ratably in accordance with
their Commitments; provided, however, that the failure of any Lender to make any
Loan shall not in itself relieve any other Lender of its obligation to lend
hereunder (it being understood, however, that no Lender shall be responsible for
the failure of any other Lender to make any Loan required to be made by such
other Lender).
22
(b) Subject to Sections 2.08 and 2.15, each borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrower may request pursuant
to Section 2.03. Each Lender may at its option make any Eurodollar Loan by
causing any domestic or foreign branch or Affiliate of such Lender to make such
Loan; provided, that any exercise of such option shall not affect the obligation
of the Borrower to repay such Loan in accordance with the terms of this
Agreement. The Borrower may make only one borrowing under the Commitment which
shall be on the Closing Date.
(c) Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds to such
account designated by the Borrower in the applicable Borrowing Request as the
Borrower may designate not later than 1:00 p.m., New York City time.
(d) Subject to and in accordance with the terms and conditions contained
in the Securities Purchase Agreement, the Lenders shall have the right to
convert the Loan into Series B Preferred Stock.
SECTION 2.03. BORROWING PROCEDURE. In order to request a Loan, the
Borrower shall notify the Lenders of such request by telephone (a) in the case
of a Eurodollar Loan, not later than 11:00 a.m., New York City time, three
Business Days before a proposed Loan, and (b) in the case of an ABR Loan not
later than 11:00 a.m., New York City time, one Business Day before a proposed
borrowing. Each such telephonic Borrowing Request shall be irrevocable, and
shall be confirmed promptly by hand delivery or fax to the Lenders of a written
Borrowing Request and shall specify the following information: (i) whether such
borrowing is to be a Eurodollar Loan or an ABR loan, (ii) the date of such
borrowing (which shall be a Business Day); (iii) the number and location of the
account to which funds are to be disbursed; (iv) the amount of such borrowing;
and (v) if such borrowing is to be a Eurodollar Loan, the Interest Period with
respect thereto; provided, however, that notwithstanding any contrary
specification in any Borrowing Request, each requested borrowing shall comply
with the requirements set forth in Section 2.02. If no Interest Period with
respect to any Eurodollar Loan is specified in any such notice, then the
Borrower shall be deemed to have selected an Interest Period of one month's
duration.
SECTION 2.04. EVIDENCE OF DEBT; REPAYMENT OF LOANS. (a) The Borrower
hereby unconditionally promises to pay to each Lender the principal amount of
each Loan of such Lender on the Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The entries made in the account maintained pursuant to paragraph (b)
above shall be prima facie evidence of the existence and amounts of the
obligations therein recorded; provided, however, that the failure of any Lender
to maintain such accounts or any error therein shall not in any manner affect
the obligations of the Borrower to repay the Loans in accordance with the terms
of this Agreement.
23
(d) Any Lender may request that Loans made by it hereunder be evidenced
by a promissory note. In such event, the Borrower shall execute and deliver to
such Lender a promissory note payable to such Lender and its permitted
registered assigns in form and substance reasonably acceptable to the Lenders.
Notwithstanding any other provision of this Agreement, in the event any Lender
shall request and receive such a promissory note, the interests represented by
such note shall at all times (including after any assignment of all or part of
such interests pursuant to Section 9.04) be represented by one or more
promissory notes payable to the payee named therein or its registered assigns.
(e) Loan Register.
(i) This Agreement is a registered agreement, and any Note
issued hereunder shall be a registered instrument. A manually signed copy
of this Agreement and any promissory note issued hereunder to a Lender
shall be evidence of such Lender's rights hereunder and thereunder and
shall not be a bearer instrument. Avista Capital Partners, L.P., acting as
agent for the Borrower for the purpose of this Section 2.04(e) (the
"REGISTRATION AGENT") will establish and maintain at its office a record
of ownership (the "REGISTER") in which the Registration Agent hereby
covenants and agrees to register by book entry each Lender's interest in
the Loans, this Agreement and any promissory note issued to such Lender,
and in the right to receive any payments hereunder or thereunder and any
transfer of any such interest or rights.
(ii) (b) No transfer by a Lender of any interest in the Loans, this
Agreement or any promissory note or in the rights to receive any payments
hereunder or thereunder shall be effective unless a book entry of such
transfer is made upon the Register and such transfer is effected in
compliance with the terms of this Agreement. The Borrower agrees that the
Registration Agent may provide any transferee of such interest with a
counterpart or true copy of this Agreement. No such transfer shall be
effective until, and such transferee shall succeed to the rights of the
transferor Lender only upon, final acceptance and entry into the Register
of the transfer pursuant hereto.
(iii) (c) Prior to the entry into the Register of any transfer by
the transferring Lender, the Borrower and each other Person shall deem and
treat each Person reflected in the Register as owner of a portion of the
Loan, this Agreement or any Note, or the right to receive any payments
hereunder or thereunder, as the owner thereof for all purposes. The
Borrower agrees that the Register referred to in this Section 2.04(e)
shall be conclusive and binding on the Borrower absent manifest error. The
Borrower irrevocably instructs the Registration Agent to enter into the
Register any such transfer if all of the requirements set forth in this
Agreement for an effective transfer by the Lender of any interest in the
Loans shall then have been satisfied. The Registration Agent shall, upon
the request of the Borrower, provide the Borrower with a confirmation
notice upon the making of any such entry. Any such entry by the
Registration Agent shall be effective for the purposes of determining the
effectiveness of any transfer notwithstanding any revocation of the agency
granted and appointed herein.
SECTION 2.05. FEES. (a) The Borrower agrees to pay the fees set forth
below at the times and in the amounts specified therein (the "FEES").
24
(i) the Fees payable to Avista Capital Partners, L.P. ("AVISTA"),
for its own account, in the amounts and at the times separately agreed
upon between the Borrower and Avista; and
(ii) on the Closing Date, a funding fee of $825,000 to the Lenders
ratably in accordance with their Commitments.
(b) The Fees shall be paid, in immediately available funds, to the
Lenders. Once paid, none of the Fees shall be refundable under any
circumstances; provided, however, that in the event the Borrower shall repay in
full the Loans on or before the three-month anniversary of the Lenders shall
refund to the Borrower fifty percent (50%) of the funding fee received by it on
the Closing Date.
SECTION 2.06. INTEREST ON LOANS. (a) Subject to the provisions of
Section 2.07, the ABR Loans shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days, as the case may
be, when the Alternate Base Rate is determined by reference to the Base Rate and
over a year of 360 days at all other times and calculated from and including the
date of such Borrowing to but excluding the date of repayment thereof) at a rate
per annum equal to the Alternate Base Rate plus the Applicable Percentage.
(b) Subject to the provisions of Section 2.07, the Eurodollar Loans
shall bear interest (computed on the basis of the actual number of days elapsed
over a year of 360 days) from the Closing Date (or, in the case of any PIK
Interest Amount that is added to the Loans, from the date such PIK Interest
Amount increases the principal amount of the Loans as contemplated by clause (c)
below) until the date of repayment in full or the Conversion Date at a rate per
annum equal to the Adjusted LIBO Rate for the Interest Period in effect for such
Loan plus the Applicable Percentage.
(c) Interest on each Loan shall automatically be paid through an
increase of the principal amount of the Loan on the Interest Payment Date
applicable to such Loan. The Adjusted LIBO Rate for each Interest Period or day
within an Interest Period, as the case may be, shall be determined by the
Required Lenders, and such determination shall be conclusive absent manifest
error.
SECTION 2.07. DEFAULT INTEREST. Upon the occurrence and during the
continuance of an Event of Default, then, until such defaulted amount shall have
been paid in full, to the extent permitted by law, such overdue amount shall
bear interest (including post-petition interest in any proceeding under any
bankruptcy or insolvency laws), payable on demand, (a) in the case of principal
of a Loan, at the rate otherwise applicable to such Loan pursuant to Section
2.06 plus the Applicable Percentage plus 2.00% per annum and (b) in all other
cases, at a rate per annum (computed on the basis of the actual number of days
elapsed over a year of 365 or 366 days, as the case may be, when determined by
reference to the Base Rate and over a year of 360 days at all other times) equal
to the rate that would be applicable to an ABR Loan plus Applicable Percentage
plus 2.00% per annum.
SECTION 2.08. ALTERNATE RATE OF INTEREST. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Loan the Lenders shall have reasonably
25
determined that dollar deposits in the principal amounts of the Loans comprising
such Loan are not generally available in the London interbank market, or that
the rates at which dollar deposits are being offered in the London interbank
market will not adequately and fairly reflect the cost to any participating
Lender of making or maintaining its Eurodollar Loan during such Interest Period,
or that reasonable means do not exist for ascertaining the Adjusted LIBO Rate
for such Interest Period, the Lenders shall, as soon as practicable thereafter,
give written or fax notice of such determination to the Borrower. In the event
of any such determination, until the Lenders shall have advised the Borrower
that the circumstances giving rise to such notice no longer exist, any request
by the Borrower for a Eurodollar Loan pursuant to Section 2.03 or 2.10 shall be
deemed to be a request for an ABR Loan. Each determination by the Lenders under
this Section 2.08 shall be conclusive absent manifest error.
SECTION 2.09. REPAYMENT. The principal amount of the Loan shall be due
and payable on the Maturity Date, together with accrued and unpaid interest,
unless accelerated sooner pursuant to Article VII.
SECTION 2.10. CONVERSION AND CONTINUATION OF BORROWINGS. The Borrower
shall have the right at any time upon prior written or fax notice (or telephone
notice promptly confirmed by written or fax notice) to the Lenders (a) not later
than 11:00 a.m., New York City time, one Business Day prior to conversion, to
convert any Eurodollar Loan into an ABR Loan, (b) not later than 11:00 a.m., New
York City time, three Business Days prior to conversion or continuation, to
convert any ABR Loan into a Eurodollar Loan or to continue any Eurodollar Loan
as a Eurodollar Loan for an additional Interest Period, and (c) not later than
11:00 a.m., New York City time, three Business Days prior to conversion, to
convert the Interest Period with respect to any Eurodollar Loan to another
permissible Interest Period, subject in each case to the following:
(i) each conversion or continuation shall be made pro rata among
the Lenders in accordance with the respective principal amounts of the
Loans comprising the converted or continued Loan;
(ii) if less than all the outstanding principal amount of any Loan
shall be converted or continued, then each resulting Loan shall satisfy
the limitations specified in Section 2.02(b) regarding the maximum number
of Borrowings of the relevant Type;
(iii) each conversion shall be effected by each Lender by recording
for the account of such Lender the new Loan of such Lender resulting from
such conversion and reducing the Loan (or portion thereof) of such Lender
being converted by an equivalent principal amount; accrued interest on any
Eurodollar Loan (or portion thereof) being converted shall be paid by the
Borrower at the time of conversion;
(iv) if any Eurodollar Loan is converted at a time other than the
end of the Interest Period applicable thereto, the Borrower shall pay,
upon demand, any amounts due to the Lenders pursuant to Section 2.16;
26
(v) any Loan maturing or required to be repaid in less than one
month may not be converted into or continued as a Eurodollar Loan;
(vi) any Eurodollar Loan that cannot be converted into or continued
as a Eurodollar Loan by reason of the immediately preceding clause shall
be automatically converted at the end of the Interest Period in effect for
such Loan into an ABR Loan; and
(vii) after the occurrence and during the continuance of a Default
or Event of Default, no outstanding Loan may be converted into, or
continued as, a Eurodollar Loan.
Each notice pursuant to this Section 2.10 shall be irrevocable and shall
refer to this Agreement and specify (i) the identity and amount of the Borrowing
that the Borrower requests be converted or continued, (ii) whether such
Borrowing is to be converted to or continued as a Eurodollar Loan or an ABR
Loan, (iii) if such notice requests a conversion, the date of such conversion
(which shall be a Business Day) and (iv) if such Borrowing is to be converted to
or continued as a Eurodollar Loan, the Interest Period with respect thereto. If
no Interest Period is specified in any such notice with respect to any
conversion to or continuation as a Eurodollar Loan, the Borrower shall be deemed
to have selected an Interest Period of one month's duration. If the Borrower
shall not have given notice in accordance with this Section 2.10 to continue any
Borrowing into a subsequent Interest Period (and shall not otherwise have given
notice in accordance with this Section 2.10 to convert such borrowing), such
borrowing shall, at the end of the Interest Period applicable thereto (unless
repaid pursuant to the terms hereof), automatically be continued into a
Eurodollar Loan with an Interest Period of one month's duration.
SECTION 2.11. TERMINATION OF COMMITMENTS. The Commitments shall
automatically terminate upon the making of the Loans on the Closing Date.
Notwithstanding the foregoing, the Commitments shall automatically terminate at
5:00 p.m., New York City time, on September 8, 2006, if the funding of the Loans
shall not have been made by such time.
SECTION 2.12. OPTIONAL PREPAYMENT. (a) The Borrower shall have the
right at any time and from time to time to prepay any Loan, in whole or in part,
upon at least five Business Days' prior written or fax notice (or telephone
notice promptly confirmed by written or fax notice) in the case of Eurodollar
Loans, or prior written or fax notice (or telephone notice promptly confirmed by
written or fax notice) at least one Business Day prior to the date of prepayment
in the case of ABR Loans, to the Lenders before 11:00 a.m., New York City time;
provided, that each partial prepayment shall be in an amount that is an integral
multiple of $1,000,000 and not less than $1,000,000.
(b) Each notice of prepayment shall specify the prepayment date and the
principal amount of each Loan (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Borrower to prepay such Loan by the amount
stated therein on the date stated therein; provided, that any such notice
delivered by the Borrower may state that such notice is conditioned upon the
effectiveness of other financing arrangements, in which case, such notice may be
revoked by the Borrower (by notice to the Lenders on or prior to the specified
effective date) if such condition is not satisfied.. All prepayments under this
Section 2.12 shall be subject to Section 2.16 but otherwise without premium or
penalty. All prepayments under this Section 2.12 shall be accompanied by accrued
27
and unpaid interest on the principal amount to be prepaid to but excluding the
date of payment.
SECTION 2.13. MANDATORY PREPAYMENTS. (a) The Borrower shall, on the
125th day following the end of each Fiscal Year, without duplication, prepay an
aggregate principal amount of the Loans in an amount equal to 75% of Excess Cash
Flow for such Fiscal Year. For purposes of determining Excess Cash Flow for the
fiscal year ending December 31, 2006, Excess Cash Flow shall be determined on a
pro-rated basis for the period commencing on the Closing Date through December
31, 2006, as determined by the Borrower in a manner reasonably satisfactory to
the Lenders; provided that the Borrower shall not be required to make any
portion of such prepayment to the extent such portion is required to be applied
to prepay loans and/or cash collateralize obligations under the Existing Credit
Agreement and the Senior Credit Agreement.
(b) No later than the fifth Business Day following the receipt by the
Borrower or any of its Subsidiaries of Net Cash Proceeds in respect of (i) any
Asset Sale or (ii) a Casualty Event, the Borrower shall apply an amount equal to
100% of the Net Cash Proceeds received by the Borrower or any of its
Subsidiaries with respect thereto to prepay outstanding Loans in accordance with
Section 2.13(d).
(c) In the event that the Borrower or any of its Subsidiaries shall
receive Net Cash Proceeds from (i) the issuance or sale of Equity Interests
(other than issuances of (A) the Series B Preferred Stock or (B) common Equity
Interests of the Borrower upon conversion of the Series B Preferred Stock) or
(ii) the issuance or incurrence of Indebtedness, the Borrower shall,
simultaneously with the receipt of such Net Cash Proceeds, apply an amount equal
to 100% of such Net Cash Proceeds to prepay outstanding Loans in accordance with
Section 2.13(d).
(d) All mandatory prepayments of outstanding Loans under this Agreement
shall be allocated ratably among the Lenders. All prepayments under this Section
2.13 shall be subject to Section 2.19.
(e) The Borrower shall deliver to the Lenders, at or prior to the time
of each prepayment required under this Section 2.13, (i) a certificate signed by
a Financial Officer of the Borrower setting forth in reasonable detail the
calculation of the amount of such prepayment and (ii) to the extent practicable,
at least five Business Days prior written notice of such prepayment. Each notice
of prepayment shall specify the prepayment date and the principal amount of each
Loan (or portion thereof) to be prepaid. All prepayments of Loans under this
Section 2.13 shall be subject to Section 2.16, but shall otherwise be without
premium or penalty, and shall be accompanied by accrued and unpaid interest on
the principal amount to be prepaid to but excluding the date of payment.
SECTION 2.14. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES.
(a)Notwithstanding any other provision of this Agreement, if any Change in Law
shall impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of or credit
extended by any Lender (except any such reserve requirement which is reflected
in the Adjusted LIBO Rate) or shall impose on such Lender or the London
interbank market any other condition affecting this Agreement or Eurodollar
28
Loans made by such Lender, and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Eurodollar Loan or
to reduce the amount of any sum received or receivable by such Lender hereunder
(whether of principal, interest or otherwise) by an amount deemed by such Lender
to be material, then the Borrower will pay to such Lender upon demand such
additional amount or amounts as will compensate such Lender for such additional
costs incurred or reduction suffered.
(b) If any Lender shall have determined that any Change in Law regarding
capital adequacy has or would have the effect of reducing the rate of return on
such Lender's capital or on the capital of such Lender's holding company, if
any, as a consequence of this Agreement or the Loans made to a level below that
which such Lender or such Lender's holding company could have achieved but for
such Change in Law (taking into consideration such Lender's policies and the
policies of such Lender's holding company with respect to capital adequacy) by
an amount deemed by such Lender to be material, then from time to time the
Borrower shall pay to such Lender such additional amount or amounts as will
compensate such Lender or such Lender's holding company for any such reduction
suffered.
(c) A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or its holding company, as applicable, as
specified in paragraph (a) or (b) above shall be delivered to the Borrower,
shall describe the applicable Change in Law, the resulting costs incurred or
reduction suffered and shall be conclusive absent manifest error. The Borrower
shall pay such Lender the amount shown as due on any such certificate delivered
by it within 10 Business Days after its receipt of the same.
(d) Failure or delay on the part of any Lender to demand compensation
for any increased costs or reduction in amounts received or receivable or
reduction in return on capital shall not constitute a waiver of such Lender's
right to demand such compensation; provided, that the Borrower shall not be
under any obligation to compensate any Lender under paragraph (a) or (b) above
with respect to increased costs or reductions with respect to any period prior
to the date that is 120 days prior to such request; provided, further, that the
foregoing limitation shall not apply to any increased costs or reductions
arising out of the retroactive application of any Change in Law within such
120-day period. The protection of this Section shall be available to each Lender
regardless of any possible contention of the invalidity or inapplicability of
the Change in Law that shall have occurred or been imposed.
SECTION 2.15. CHANGE IN LEGALITY. (a) Notwithstanding any other
provision of this Agreement, if any Change in Law shall make it unlawful for any
Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan, then, by
written notice to the Borrower:
(i) such Lender may declare that Eurodollar Loans will not
thereafter (for the duration of such unlawfulness) be made by such Lender
hereunder (or be continued for additional Interest Periods) and ABR Loans
will not thereafter (for such duration) be converted into Eurodollar
Loans, whereupon any request for a Eurodollar Loan (or to convert an ABR
Loan to a Eurodollar Loan or to continue a Eurodollar Loan for an
additional Interest Period) shall, as to such Lender only, be deemed a
request for an ABR Loan (or a request to continue an ABR Loan as such for
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an additional Interest Period or to convert a Eurodollar Loan into an ABR
Loan, as the case may be), unless such declaration shall be subsequently
withdrawn; and
(ii) such Lender may require that all outstanding Eurodollar Loans
made by it be converted to ABR Loans, in which event all such Eurodollar
Loans shall be automatically converted to ABR Loans as of the effective
date of such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under clause (i) or (ii)
above, all payments and prepayments of principal that would otherwise have been
applied to repay the Eurodollar Loans that would have been made by such Lender
or the converted Eurodollar Loans of such Lender shall instead be applied to
repay the ABR Loans made by such Lender in lieu of, or resulting from the
conversion of, such Eurodollar Loans.
(b) For purposes of this Section 2.15, a notice to the Borrower by any
Lender shall be effective as to each Eurodollar Loan made by such Lender, if
lawful, on the last day of the Interest Period then applicable to such
Eurodollar Loan; in all other cases such notice shall be effective on the date
of receipt by the Borrower.
SECTION 2.16. INDEMNITY. The Borrower shall indemnify each Lender
against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by such Lender in the
performance of its obligations hereunder, which results in (i) such Lender
receiving or being deemed to receive any amount on account of the principal of
any Eurodollar Loan prior to the end of the Interest Period in effect therefor,
(ii) the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of
the Interest Period with respect to any Eurodollar Loan, in each case other than
on the last day of the Interest Period in effect therefor, or (iii) any
Eurodollar Loan to be made by such Lender not being made after notice of such
Loan shall have been given by the Borrower hereunder (any of the events referred
to in this clause (a) being called a "BREAKAGE EVENT") or (b) any default in the
making of any payment or prepayment required to be made hereunder. In the case
of any Breakage Event, such loss shall include an amount equal to the excess, as
reasonably determined by such Lender, of (i) its cost of obtaining funds for the
Eurodollar Loan that is the subject of such Breakage Event for the period from
the date of such Breakage Event to the last day of the Interest Period in effect
(or that would have been in effect) for such Loan over (ii) the amount of
interest likely to be realized by such Lender in redeploying the funds released
or not utilized by reason of such Breakage Event for such period. A certificate
of any Lender setting forth any amount or amounts which such Lender is entitled
to receive pursuant to this Section 2.16 shall be delivered to the Borrower and
shall be conclusive absent manifest error.
SECTION 2.17. PRO RATA TREATMENT. Except as required under Section
2.13, 2.14, 2.20 or 2.21, each Loan, each payment or prepayment of principal of
any Loan, each payment of interest on the Loans, each reduction of the
Commitments and each conversion of any Loan to or continuation of any Loan shall
be allocated pro rata among the Lenders in accordance with their respective
applicable Commitments (or, if such Commitments shall have expired or been
terminated, in accordance with the respective principal amounts of their
outstanding Loans).
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SECTION 2.18. SHARING OF SETOFFS. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower or any other Loan Party, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, obtain payment (voluntary or involuntary) in respect of any
Loan as a result of which the unpaid principal portion of its Loans shall be
proportionately less than the unpaid principal portion of the Loans of any other
Lender, it shall be deemed simultaneously to have purchased from such other
Lender at face value, and shall promptly pay to such other Lender the purchase
price for, a participation in the Loans of such other Lender, so that the
aggregate unpaid principal amount of the Loans held by each Lender shall be in
the same proportion to the aggregate unpaid principal amount of all Loans then
outstanding as the principal amount of its Loans prior to such exercise of
banker's lien, setoff or counterclaim or other event was to the principal amount
of all Loans outstanding prior to such exercise of banker's lien, setoff or
counterclaim or other event; provided, however, that if any such purchase or
purchases or adjustments shall be made pursuant to this Section 2.18 and the
payment giving rise thereto shall thereafter be recovered, such purchase or
purchases or adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustment restored without interest. The
Borrower expressly consents to the foregoing arrangements and agrees that any
Lender holding a participation in a Loan deemed to have been so purchased may
exercise any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys owing by the Borrower to such Lender by reason
thereof as fully as if such Lender had made a Loan directly to the Borrower in
the amount of such participation.
SECTION 2.19. PAYMENTS. (a) The Borrower shall make each payment
(including principal of or interest on any Loan or any Fees or other amounts)
hereunder and under any other Loan Document not later than 11:00 a.m., New York
City time, on the date when due in immediately available dollars, without
setoff, defense or counterclaim. Each such payment shall be made to the ratable
account of the Lenders at the address for payment specified in the signature
page hereto (or such other address as the Lenders may from time to time specify
in accordance with Section 9.01). All payments hereunder and under the other
Loan Documents shall be made in dollars.
(b) Except as otherwise expressly provided herein, whenever any payment
(including principal of or interest on any Loan or any Fees or other amounts)
hereunder or under any other Loan Document shall become due, or otherwise would
occur, on a day that is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest or Fees, if applicable.
SECTION 2.20. TAXES. (a) Any and all payments by or on account of any
obligation of the Borrower or any other Loan Party hereunder or under any other
Loan Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided, that if any Indemnified Taxes or
Other Taxes are required to be withheld or deducted from such payments, then (i)
the sum payable shall be increased as necessary so that after making all
required deductions or withholdings (including deductions or withholdings
applicable to additional sums payable under this Section) the Lender receives an
amount equal to the sum it would have received had no such deductions or
withholdings been made, (ii) the Borrower or such Loan Party shall make such
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deductions or withholdings and (iii) the Borrower or such Loan Party shall pay
the full amount deducted or withheld to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify each Lender within 30 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid by the Lender on or with respect to any payment by or on account of
any obligation of the Borrower or any other Loan Party hereunder or under any
other Loan Document (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower or any other Loan Party to a Governmental Authority,
the Borrower shall deliver to the Lenders the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Lenders.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower, on or
prior to the date a payment is to be made to such Lender under this Agreement or
promptly upon learning that any such documentation expired or became obsolete,
at the reasonable request of the Borrower, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate of withholding; provided, that such Lender is legally entitled to
complete, execute and deliver such documentation. Such completion, execution or
delivery will not be required if, in such Lender's judgment, it would materially
prejudice the legal position of such Lender. In addition, each Foreign Lender
shall (a) furnish on or before the date it becomes a party to the Agreement
either (i) two accurate and complete originally executed copies of U.S. Internal
Revenue Service ("IRS") Form W-8BEN (or successor form) or (ii) two accurate and
complete originally executed copies of IRS Form W-8ECI (or successor form),
certifying, in either case, to such Foreign Lender's legal entitlement to an
exemption or reduction from U.S. federal withholding tax with respect to all
interest payments hereunder, and (b) provide a new Form W-8BEN (or successor
form) or Form W-8ECI (or successor form) upon the expiration or obsolescence of
any previously delivered form to reconfirm any complete exemption from, or any
entitlement to a reduction in, U.S. federal withholding tax with respect to any
interest payment hereunder; provided, that any Foreign Lender that is not a
"bank" within the meaning of Section 881(c)(3)(A) of the Code and is relying on
the so-called "portfolio interest exemption" shall also furnish a "Non-Bank
Certificate" in the form of Exhibit D together with a Form W-8BEN.
Notwithstanding any other provision of this paragraph, a Foreign Lender shall
32
not be required to deliver any form pursuant to this paragraph that such Foreign
Lender is not legally able to deliver.
(f) Any Lender that is a United States person, as defined in Section
7701(a)(30) of the Code, and is not an exempt recipient within the meaning of
Treasury Regulations Section 1.6049-4(c) shall deliver to the Borrower two
accurate and complete original signed copies of IRS Form W-9, or any successor
form that such person is entitled to provide at such time in order to comply
with United States back-up withholding requirements.
(g) Any Foreign Lender, to the extent it does not act or ceases to act
for its own account with respect to any portion of any sums paid or payable to
such Foreign Lender under any of the Loan Documents (for example, in the case of
a grant of a participation by such Foreign Lender), shall deliver to the
Borrower on the date when such Foreign Lender ceases to act for its own account
with respect to any portion of any such sums paid or payable, (A) two duly
signed completed copies of the forms or statements required to be provided by
such Foreign Lender as set forth above in Section 2.20(e), to establish the
portion of any such sums paid or payable with respect to which such Foreign
Lender acts for its own account that is not subject to U.S. withholding tax, and
(B) two duly signed completed copies of IRS Form W-81MY (or any successor
thereto), together with any information such Foreign Lender chooses to transmit
with such form, and any other certificate or statement of exemption required
under the Code, to establish that such Foreign Lender is not acting for its own
account with respect to a portion of any such sums payable to such Lender.
(h) If a Lender determines, in its sole discretion, that it has received
a refund of any Indemnified Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section, it shall pay to the Borrower an
amount equal to such refund (but only to the extent of indemnity payments made,
or additional amounts paid, by the Borrower under this Section with respect to
the Indemnified Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of such Lender, as the case may be, and without interest
(other than any interest paid by the relevant Governmental Authority with
respect to such refund), provided, that the Borrower, upon the request of such
Lender, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to such Lender in the event such Lender is required to repay such
refund to such Governmental Authority. This paragraph shall not be construed to
require any Lender to make available its tax returns (or any other information
relating to its taxes that it deems confidential) to the Borrower or any other
person.
(i) Failure or delay on the part of any Lender to demand compensation
for any Indemnified Taxes or Other Taxes shall not constitute a waiver of such
Lender's right to demand such compensation; provided, that the Borrower shall
not be under any obligation to compensate any Lender under paragraph (a), (b) or
(c) above with respect to Indemnified Taxes or Other Taxes with respect to any
period prior to the date that is 120 days prior to such request; provided,
further, that the foregoing limitation shall not apply to any increased costs or
reductions arising out of the retroactive application of any Indemnified Taxes
or Other Taxes within such 120-day period. The protection of this Section shall
be available to each Lender regardless of any possible contention of the
33
invalidity or inapplicability of the Indemnified Taxes or Other Taxes that shall
have occurred or been imposed.
SECTION 2.21. ASSIGNMENT OF COMMITMENTS UNDER CERTAIN CIRCUMSTANCES;
DUTY TO MITIGATION. (a) In the event (i) any Lender delivers a certificate
requesting compensation pursuant to Section 2.14, (ii) any Lender delivers a
notice described in Section 2.15 or (iii) the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority on account of any
Lender pursuant to Section 2.20, the Borrower may, upon notice to such Lender,
require such Lender to transfer and assign (in accordance with and subject to
the restrictions contained in Section 9.04, other than 10.04(b)(ii)(B)), all of
its interests, rights and obligations under this Agreement to an assignee that
shall assume such assigned obligations (which assignee may be another Lender, if
a Lender accepts such assignment); provided, that such assignee (or the
Borrower, in the case of amounts then due and payable by it) shall have paid to
the affected Lender in immediately available funds an amount equal to the sum of
the principal of and interest accrued to the date of such payment on the
outstanding Loans of such Lender plus all Fees and other amounts accrued for the
account of such Lender hereunder with respect thereto (including any amounts
under Sections 2.14 and 2.16); provided, further, that if prior to receipt of
notice of any such transfer and assignment the circumstances or event that
resulted in such Lender's claim for compensation under Section 2.14, notice
under Section 2.15 or the amounts paid pursuant to Section 2.20, as the case may
be, cease to cause such Lender to suffer increased costs or reductions in
amounts received or receivable or reduction in return on capital, or cease to
have the consequences specified in Section 2.15, or cease to result in amounts
being payable under Section 2.20, as the case may be (including as a result of
any action taken by such Lender pursuant to paragraph (b) below), or if such
Lender shall waive its right to claim further compensation under Section 2.14 in
respect of such circumstances or event or shall withdraw its notice under
Section 2.15 or shall waive its right to further payments under Section 2.20 in
respect of such circumstances or event or shall consent to the proposed
amendment, waiver, consent or other modification, as the case may be, then such
Lender shall not thereafter be required to make any such transfer and assignment
hereunder.
(b) If (i) any Lender shall request compensation under Section 2.14,
(ii) any Lender delivers a notice described in Section 2.15 or (iii) the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority on account of any Lender, pursuant to Section 2.20, then
such Lender shall use reasonable efforts (which shall not require such Lender to
incur an unreimbursed loss or unreimbursed cost or expense or otherwise take any
action inconsistent with its internal policies or legal or regulatory
restrictions or suffer any disadvantage or burden deemed by it to be
significant) (x) to file any certificate or document reasonably requested by the
Borrower or (y) to assign its rights and delegate and transfer its obligations
hereunder to another of its offices, branches or affiliates, if such filing or
assignment would reduce its claims for compensation under Section 2.14 or enable
it to withdraw its notice pursuant to Section 2.15 or would reduce amounts
payable pursuant to Section 2.20, as the case may be, in the future. The
Borrower hereby agrees to pay all reasonable out-of-pocket costs and expenses
incurred by any Lender in connection with any such filing or assignment,
delegation and transfer.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Loan Party represents and warrants (it being understood that for
purposes of the representations and warranties made in the Loan Documents on the
Closing Date, such representations and warranties shall be construed as though
the Transactions have been consummated) to each of the Lenders that:
SECTION 3.01. ORGANIZATION; POWERS. The Borrower and each of its
Subsidiaries (a) is duly organized or formed, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has all
requisite power and authority to own its property and assets and to carry on its
business as now conducted and as proposed to be conducted, (c) is qualified to
do business in, and is in good standing in, every jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification, except where the failure to so qualify or be in
good standing, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, and (d) has the requisite power
and authority to execute, deliver and perform its obligations under each of the
Loan Documents and each other agreement or instrument contemplated thereby to
which it is a party.
SECTION 3.02. AUTHORIZATION. The Transactions to be entered into by
each Loan Party are within such Loan Party's powers and have been duly
authorized by all necessary action on the party of such Loan Party. The
execution, delivery and performance of the Loan Documents, including borrowing
of Loans and the use of the proceeds therefrom, (a) have been duly authorized by
all requisite corporate or limited liability company and, if required,
stockholder or member action and (b) will not (i) violate (A) any provision of
any applicable law, statute, rule or regulation, or of the certificate or
articles of incorporation or other constitutive documents or by-laws or
operating agreement of any Loan Party, (B) any applicable order of any
Governmental Authority or (C) any provision of any indenture, agreement or other
instrument to which the Borrower or any of its Subsidiaries is a party or by
which any of them or any of their property is bound, (ii) be in conflict with,
result in a breach of or constitute (alone or with notice or lapse of time or
both) a default under, or give rise to any right to accelerate or to require the
prepayment, repurchase or redemption of any obligation under any such indenture,
agreement or other instrument or (iii) result in the creation or imposition of
any Lien upon or with respect to any property or assets now owned or hereafter
acquired by the Borrower or any Subsidiary.
SECTION 3.03. ENFORCEABILITY. This Agreement has been duly executed
and delivered by each Loan Party and constitutes, and each other Loan Document
when executed and delivered by each Loan Party thereto will constitute, a legal,
valid and binding obligation of such Loan Party enforceable against such Loan
Party in accordance with its terms, except as may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, receivership, moratorium or
similar laws of general applicability relating to or limiting creditors' rights
generally or by general equity principles.
SECTION 3.04. GOVERNMENTAL APPROVALS. No action, consent or approval
of, registration or filing with or any other action by any Governmental
Authority is necessary or will be required in connection with the Loan
35
Documents, except for such as have been made or obtained and are in full force
and effect.
SECTION 3.05. FINANCIAL STATEMENTS. (a) The Borrower has heretofore
furnished to each of the Lenders its consolidated balance sheets and related
statements of income, stockholders' equity and cash flows (i) as of and for the
fiscal year ended December 31, 2005, audited by and accompanied by the report of
Xxxxx Xxxxxxx & Co., P.C., independent public accountants, and (ii) as of and
for the fiscal quarters ended March 31, 2006 and June 30, 2006, and each fiscal
month ended after June 30, 2006, and at least 30 days before the Closing Date,
each certified by its chief financial officer. Such financial statements present
fairly in all material respects the financial condition and results of
operations and cash flows of the Borrower and its consolidated subsidiaries as
of such dates and for such periods. Such balance sheets and the notes thereto
disclose all material liabilities, direct or contingent, of the Borrower and its
consolidated subsidiaries as of the dates thereof. Such financial statements
were prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise noted therein and, subject, in the case of
unaudited financial statements, to year-end audit adjustments and the absence of
footnotes.
(b) The Borrower has heretofore delivered to each Lender an unaudited
pro forma consolidated balance sheet and related pro forma statements of income,
stockholders' equity and cash flows of the Borrower as of and for the fiscal
year ended December 31, 2005, the fiscal quarter ended June 30, 2006 and the
twelve month period ended June 30, 2006, prepared giving effect to the
Transactions as if they had occurred, with respect to such balance sheet, on
such date and, with respect to such other financial statements, on the first day
of the four-fiscal quarter period ending on such date. Such pro forma financial
statements have been prepared in good faith by the Borrower, based on the
assumptions believed by the Borrower on the Closing Date to be reasonable, are
based in all material respects on the information reasonably available to the
Borrower as of the date of delivery thereof, reflect in all material respects
the adjustments required to be made to give effect to the Transactions and
present fairly in all material respects on a pro forma basis the estimated
consolidated financial position of the Borrower and its consolidated
Subsidiaries as of such date and for such period, assuming that the Transactions
had actually occurred at such date or at the beginning of such period, as the
case may be.
SECTION 3.06. NO MATERIAL ADVERSE CHANGE. Since December 31, 2005, no
event, change or condition has occurred that (individually or in the aggregate)
has had, or could reasonably be expected to have, a Material Adverse Effect.
SECTION 3.07. TITLE TO PROPERTIES; POSSESSION UNDER LEASES. (a) Each
of the Borrower and the Subsidiaries has good and indefeasible title in fee
simple to, or valid leasehold interests in, all its material properties and
assets (including, without limitation, all of its intellectual property and
licenses). Other than minor defects in title that do not materially interfere
with its ability to conduct its business or to utilize such assets for their
intended purposes, all such material properties and assets are free and clear of
Liens.
(b) None of the Borrower or the Subsidiaries has knowledge of the
continuance of any default under any material lease to which it is a party and,
to each of their knowledge, all such leases are in full force and effect.
36
(c) The Borrower has not received any notice of, nor has any knowledge
of, any pending or contemplated condemnation proceeding affecting any material
property or any sale or disposition thereof in lieu of condemnation.
(d) Immediately following the consummation of the Transactions, none of
the Borrower or any of the Subsidiaries is obligated under any right of first
refusal, option or other contractual right to sell, assign or otherwise dispose
of any material property or any interest therein.
SECTION 3.08. SUBSIDIARIES. The Borrower does not have any
Subsidiaries other than the Subsidiaries of the Borrower. Schedule 3.08 sets
forth as of the Closing Date a list of all Subsidiaries of the Borrower and the
percentage ownership interest of the Borrower therein. The shares of capital
stock or other ownership interests so indicated on Schedule 3.08 are fully paid
and non-assessable and are owned by the Borrower, directly or indirectly, free
and clear of all Liens.
SECTION 3.09. LITIGATION; COMPLIANCE WITH LAWS. (a) There are no
actions, suits or proceedings at law or in equity or by or before any
Governmental Authority now pending or, to the knowledge of the Borrower,
threatened against the Borrower or any Subsidiary or any business, property or
rights of any such person (i) that purport to affect or pertain to any Loan
Document or the Transactions or (ii) except as set forth on Schedule 3.09, as to
which there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.
(b) None of the Borrower or any of the Subsidiaries or any of their
respective material properties is in violation of, nor will the continued
operation of their material properties as currently operated violate, any
applicable law, rule or regulation (including any zoning, building, ordinance,
code or approval or any building permits) or any restrictions of record or
agreements affecting the properties, or is in default with respect to any
judgment, writ, injunction, decree or order of any Governmental Authority.
SECTION 3.10. AGREEMENTS. Other than as could not reasonably be
expected to result in a Material Adverse Effect, none of the Borrower or any of
the Subsidiaries is in default under any indenture or other agreement or
instrument evidencing Indebtedness, or any other material agreement or
instrument to which it is a party or by which it or any of its properties or
assets are bound.
SECTION 3.11. FEDERAL RESERVE REGULATIONS. (a) None of the Borrower or
any of the Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of buying or
carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used to purchase or
carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock in violation of Regulation U or
Regulation X issued by the Board.
SECTION 3.12. INVESTMENT COMPANY ACT. None of the Borrower or any
Subsidiary is an "investment company" as defined in, or subject to regulation
under, the Investment Company Act of 1940.
37
SECTION 3.13. TAX RETURNS. Each of the Borrower and the Subsidiaries
has filed or caused to be filed all Federal, state and other tax returns
required to have been filed by it and has paid, caused to be paid, or made
provisions for the payment of all taxes due and payable by it and all material
assessments received by it, except such taxes and assessments that are being
contested in good faith by appropriate proceedings and for which the Borrower or
such Subsidiary, as applicable, shall have set aside on its books, in accordance
with GAAP, adequate reserves.
SECTION 3.14. NO MATERIAL MISSTATEMENTS. The information, reports,
financial statements, exhibits, certificates and schedules (other than
projections and other forward looking information) furnished by or on behalf of
the Borrower to the Lenders in connection with the transactions contemplated
hereby or the negotiation of any Loan Document or included therein or delivered
pursuant thereto (taken as a whole) did not and do not contain any material
misstatement of fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that to the extent any such information, report,
financial statement, exhibit, certificate or schedule was based upon or
constitutes a forecast or projection, the Borrower represents only that such
information was prepared in good faith on the basis of reasonable assumptions in
light of the conditions existing at the time of delivery of such projections,
and represented, at the time of delivery thereof, a reasonable good faith
estimate of future financial performance by the Borrower. SECTION 3.15. EMPLOYEE
BENEFIT PLANS. Each of the Borrower and its ERISA Affiliates is in material
compliance, with respect to each benefit plan or arrangement, with the
applicable provisions of ERISA and the Code and the regulations and published
interpretations thereunder. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events,
could reasonably be expected to result in a Material Adverse Effect. The present
value of all benefit liabilities under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the last annual valuation date applicable thereto, exceed the fair market
value of the assets of such Plan, and the present value of all benefit
liabilities of all underfunded Plans (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the last
annual valuation dates applicable thereto, exceed the fair market value of the
assets of all such underfunded Plans.
SECTION 3.16. ENVIRONMENTAL MATTERS. (a) Except as would not
reasonably be expected to result, individually or in the aggregate, in the
Borrower, any Subsidiary or the Acquired Business incurring material
Environmental Liabilities:
(i) the operations of the Borrower, any Subsidiary, and the
Acquired Business have not failed to comply with Environmental Laws,
including by obtaining, maintaining and complying with all permits,
licenses or other approvals required under any Environmental Law;
(ii) none of the Borrower, any Subsidiary, or the Acquired Business
is a party to and no real property currently or, to the knowledge of the
Borrower, previously owned, leased, operated or otherwise occupied by the
Borrower, any Subsidiary or the Acquired Business is subject to or the
38
subject of a contractual obligation or a pending or, to the knowledge of
the Borrower, threatened claim, suit, proceeding, demand, investigation,
order, notice of violation or notice of potential liability pursuant to
any Environmental Law; and
(iii) none of the Borrower, any Subsidiary, or the Acquired Business
has caused or suffered to occur a release of Hazardous Materials.
(b) None of the Borrower, any Subsidiary, or the Acquired Business knows
of any facts, circumstances of conditions with respect to past or present
operations of the Borrower, any Subsidiary, or the Acquired Business, including
receipt of any information request or notice of potential responsibility under
the Comprehensive Environmental Response, Compensation and Liability Act or
similar Environmental Laws, reasonably likely to result, individually or in the
aggregate, in the Borrower, any Subsidiary or the Acquired Business incurring
material Environmental Liabilities.
SECTION 3.17. LOCATION OF REAL PROPERTY AND LEASED PREMISES. (a)
Schedule 3.17(a) lists completely and correctly as of the Closing Date all real
property owned by the Borrower and the Subsidiaries and the addresses thereof.
The Borrower and the Subsidiaries own in fee all the real property set forth on
such schedule.
(b) Schedule 3.17(b) lists completely and correctly as of the Closing
Date all real property leased by the Borrower and the Subsidiaries and the
addresses thereof. Except as otherwise provided on Schedule 3.17(b), the
Borrower and the Subsidiaries have valid leasehold interests in all the real
property set forth on such schedule.
SECTION 3.18. LABOR MATTERS. As of the Closing Date, (a) there are no
strikes, lockouts or slowdowns against the Borrower or any Subsidiary pending
or, to the knowledge of the Borrower, threatened, (b) the hours worked by and
payments made to employees of the Borrower and the Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable Federal,
state, local or foreign law dealing with such matters, (c) all payments due from
the Borrower or any Subsidiary, or for which any claim may be made against the
Borrower or any Subsidiary, on account of wages and employee health and welfare
insurance and other benefits, have been paid or accrued as a liability on the
books of the Borrower or such Subsidiary and (d) the consummation of the
Transactions will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which the Borrower or any Subsidiary is bound.
SECTION 3.19. SOLVENCY. On the Closing Date after giving effect to the
Transactions, the Loan Parties, taken as a whole, are Solvent.
ARTICLE IV
CONDITIONS OF LENDING
The obligations of the Lenders to make Loans hereunder are subject to the
satisfaction of the following conditions on the Closing Date:
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(a) The Lenders shall have received a notice of such Loan as required by
Section 2.03.
(b) The representations and warranties set forth in Article III and in
each other Loan Document shall be true and correct in all material respects on
and as of the Closing Date with the same effect as though made on and as of such
date, except to the extent such representations and warranties expressly relate
to an earlier date, in which case they shall be true and correct in all material
respects as of such earlier date.
(c) At the time of and immediately after the making of such Loans, no
Default or Event of Default shall have occurred and be continuing.
(d) The Lenders shall have received an opinion of Chamberlain, Hrdlicka,
White & Xxxxxx, counsel for the Loan Parties, (A) dated the Closing Date, (B)
addressed to the Lenders, and (C) in form and substance reasonably satisfactory
to the Lenders.
(e) The Lenders shall have received (i) a copy of the certificate or
articles of incorporation or organization, including all amendments thereto, of
each Loan Party, certified as of a recent date by the Secretary of State of the
state of its organization, and a certificate as to the good standing of each
Loan Party as of a recent date, from such Secretary of State; (ii) a certificate
of the Secretary or Assistant Secretary of each Loan Party dated the Closing
Date and certifying (A) that attached thereto is a true and complete copy of the
by-laws or operating (or limited liability company) agreement of such Loan Party
as in effect on the Closing Date and at all times since a date prior to the date
of the resolutions described in clause (B) below, (B) that attached thereto is a
true and complete copy of resolutions duly adopted by the Board of Directors (or
equivalent body) of such Loan Party authorizing the execution, delivery and
performance of the Loan Documents to which such person is a party and, in the
case of the Borrower, the borrowings hereunder, and that such resolutions have
not been modified, rescinded or amended and are in full force and effect, (C)
that the certificate or articles of incorporation or organization of such Loan
Party have not been amended since the date of the last amendment thereto shown
on the certificate of good standing furnished pursuant to clause (i) above, and
(D) as to the incumbency and specimen signature of each officer executing any
Loan Document or any other document delivered in connection herewith on behalf
of such Loan Party; and (iii) a certificate of another officer as to the
incumbency and specimen signature of the Secretary or Assistant Secretary
executing the certificate pursuant to clause (ii) above.
(f) The Lenders shall have received a certificate, dated the Closing
Date and signed by a Financial Officer of the Borrower, confirming compliance
with the conditions precedent set forth in paragraphs (b) and (c) of this
Article IV.
(g) The Lenders shall have received all Fees and other amounts due and
payable on or prior to the Closing Date, including reimbursement or payment of
all out of pocket expenses required to be reimbursed or paid by the Borrower
hereunder or under any other Loan Document.
(h) The results of the Lenders legal, financial, tax and accounting due
diligence relating to the Borrower, its Subsidiaries, the Acquired Business and
the Transactions shall be satisfactory to the Lenders.
40
(i) The Lenders shall, have received the results of searches of the
Uniform Commercial Code, United States Patent and Trademark Office and United
States Copyright Office, tax, judgment, bankruptcy and pending lawsuit filings
(or equivalent filings) made with respect to the Borrower and its Subsidiaries,
together with copies of the financing statements (or similar documents)
disclosed by such search, and accompanied by evidence satisfactory to the
Lenders that the Liens indicated in any such financing statement (or similar
document) would be permitted under Section 6.02 or have been or will be
contemporaneously released or terminated.
(j) The Lenders shall have received evidence satisfactory to it that all
insurance required to be maintained by Section 5.02 is in full force and effect.
(k) The Acquisition shall be consummated substantially simultaneously
with the initial funding of Loans on the Closing Date in accordance with and on
the terms described in the Stock Purchase Agreement, and no provision or
condition of the Stock Purchase Agreement shall have been waived, amended,
supplemented or otherwise modified in a manner that is adverse in any material
respect to the interests of the Lenders without the prior written consent of the
Lenders. The Lenders shall have received copies of the Stock Purchase Agreement
and all certificates, opinions and other documents delivered thereunder,
certified by a Financial Officer as being complete and correct.
(l) The Senior Credit Agreement shall have been executed and delivered
by the parties thereto, the conditions thereunder shall be satisfied and the
Borrower shall have received gross cash proceeds of not less than $100,000,000
from the borrowing of loans under the Senior Credit Agreement.
(m) All amounts due or outstanding with respect of the Existing Debt and
the term loan facility under the Existing Credit Agreement shall have been (or
substantially simultaneously with the initial funding of the Loans on the
Closing Date shall be) paid in full, all commitments (if any) in respect thereof
terminated and all guarantees (if any) thereof and security (if any) therefore
discharged and released. After giving effect to the Transactions, the Borrower
and its Subsidiaries shall have outstanding no indebtedness or Disqualified
Stock other than (i) Indebtedness under the Loan Documents, (ii) Indebtedness
listed on Schedule 6.01 and (iii) the revolving credit facility under the
Existing Credit Agreement.
(n) The Lenders shall have been satisfied with the amendment to the
Existing Credit Agreement permitting the transactions contemplated hereunder and
a copy of such amendment shall be certified on behalf of the Borrower by a
Responsible Officer.
(o) The Lenders shall have received a certificate from the chief
financial officer (or officer with reasonably equivalent responsibilities) of
the Borrower certifying that the Borrower and its Subsidiaries, on a
consolidated basis after giving effect to the Transactions, are Solvent as of
the Closing Date.
(p) The Lenders shall have received from the Loan Parties, to the extent
requested, all documentation and other information required by regulatory
authorities under applicable "know your customer" and anti-money laundering
rules and regulations, including the USA PATRIOT Act.
41
(q) The Lenders shall have received audited consolidated balance sheets
and related statements of income, stockholders' equity and cash flows (i) as of
and for the fiscal year ended December 31, 2005 and (ii) unaudited consolidated
balance sheets and related statements of income, stockholders' equity and cash
flows of the Borrower as of and for the fiscal quarters ended after March 31,
2006 and June 30, 2006, and each fiscal month ended after June 30, 2006 and at
least 30 days prior to the Closing Date, all certified by one of the Borrower's
Financial Officers as fairly presenting in all material respects the financial
condition and results of operations of the Borrower and its consolidated
subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject, in the case of unaudited financial statements, to normal
year-end audit adjustments and the absence of footnotes.
(r) The Lenders shall have received an unaudited pro forma consolidated
balance sheet and related pro forma consolidated statement of income,
stockholders' equity and cash flows of the Borrower as of and for the fiscal
year ended December 31, 2005, the fiscal quarter ended June 30, 2006 and the
twelve month period ended June 30, 2006, prepared after giving effect to the
Transactions as if the Transactions had occurred, with respect to such balance
sheet, as of such date and, with respect to such other financial statements, at
the beginning of such period.
(s) All material governmental and third party approvals necessary in
connection with the Transactions shall have been obtained and be in full force
and effect.
(t) There shall not be any pending or threatened litigation or other
proceedings (private or governmental) with respect to any of the Transactions.
(u) The board of directors of the Borrower shall include at least one
member designated by Avista Capital Partners, L.P.
ARTICLE V
AFFIRMATIVE COVENANTS
Each Loan Party covenants and agrees with each Lender that until the
Commitments have been terminated and the principal of and interest on each Loan,
all Fees and all other expenses or amounts payable under any Loan Document shall
have been paid in full, each Loan Party will, and will cause each of its
Subsidiaries to:
SECTION 5.01. EXISTENCE; COMPLIANCE WITH LAWS AND CONTRACTUAL
OBLIGATIONS; BUSINESSES AND PROPERTIES. (a) Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence under the laws of its jurisdiction of organization, except as
otherwise expressly permitted under Section 6.05.
(b) (i) Do or cause to be done all things necessary to obtain,
preserve, renew, extend and keep in full force and effect the rights, licenses,
permits, franchises, authorizations, patents, copyrights, trademarks and trade
names necessary or desirable to the conduct of its business, (ii) maintain and
operate such business in substantially the manner in which it is presently
conducted and operated, (iii) comply with (A) applicable laws, rules,
regulations and decrees and orders of any Governmental Authority (including
42
Environmental Laws and ERISA), whether now in effect or hereafter enacted and
(B) the obligations, covenants and conditions contained in any material
indenture, agreement or other agreement and (iv) maintain and preserve all
property necessary or desirable to the conduct of such business and keep such
property in good repair, working order and condition and from time to time make,
or cause to be made, all repairs, renewals, additions, improvements and
replacements thereto necessary or desirable to the conduct of its business.
SECTION 5.02. INSURANCE. (a) Keep its insurable properties adequately
insured at all times by financially sound and reputable insurers to such extent
and against such risks, including fire and other risks insured against by
extended coverage, as is customary with companies in the same or similar
businesses operating in the same or similar locations.
(b) Deliver original or certified copies of all such policies to the
Lenders promptly upon request therefor; deliver to the Lenders, prior to the
cancellation, modification or nonrenewal of any such policy of insurance, a copy
of a renewal or replacement policy (or other evidence of renewal of a policy
previously delivered to the Lenders) together with evidence reasonably
satisfactory to the Lenders of payment of the premium therefor.
SECTION 5.03. TAXES. (a) Pay and discharge promptly when due all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or in respect of its property, before the same shall
become delinquent or in default; provided, however, that such payment and
discharge shall not be required with respect to any such tax, assessment, charge
or levy so long as the validity or amount thereof is (a) being contested in good
faith, (b) by appropriate proceedings diligently conducted and (c) with respect
to which adequate reserves in accordance with GAAP have been established.
(b) Use its best efforts to comply with all information reporting
requirements of the Code and the regulations promulgated thereunder with respect
to the issuance of the Indebtedness hereunder and all payments of principal and
interest thereon, including the issuance of a Form 1099-OID to each Lender
hereunder in accordance with applicable law.
SECTION 5.04. FINANCIAL STATEMENTS, REPORTS, ETC. In the case of the
Borrower, furnish to each Lender:
(a) within 90 days after the end of each Fiscal Year, its consolidated
balance sheet and related statements of income, stockholders' equity and cash
flows showing the financial condition of the Borrower and its consolidated
Subsidiaries as of the close of such Fiscal Year and the results of its
operations and the operations of such persons during such year, together with
comparative figures for the immediately preceding Fiscal Year, all in reasonable
detail and prepared in accordance with GAAP, all audited by Xxxxx Xxxxxxx & Co.,
P.C. or other independent public accountants of recognized national standing and
accompanied by an opinion of such accountants (which opinion shall be without a
"going concern" or like qualification or exception and without any qualification
or exception as to the scope of such audit) to the effect that such consolidated
financial statements fairly present the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP;
43
(b) within 45 days after the end of each of the first three fiscal
quarters of each Fiscal Year, its consolidated balance sheet and related
statements of income, stockholders' equity and cash flows showing the financial
condition of the Borrower and its consolidated Subsidiaries as of the close of
such fiscal quarter and the results of its operations and the operations of such
persons during such fiscal quarter and the then elapsed portion of the Fiscal
Year, and comparative figures for the same periods in the immediately preceding
Fiscal Year, all certified by one of its Financial Officers as fairly presenting
in all material respects the financial condition and results of operations of
the Borrower and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP, subject to normal year-end audit adjustments and the
absence of footnotes;
(c) within 30 days after the end of each fiscal month in each Fiscal
Year, its consolidated balance sheet and related statements of income,
stockholders' equity and cash flows showing the financial condition of the
Borrower and its consolidated Subsidiaries as of the close of such fiscal month
and the results of its operations and the operations of such persons during such
fiscal month and the then elapsed portion of the Fiscal Year, and comparative
figures for the same periods in the preceding Fiscal Year, all certified by one
of its Financial Officers as fairly presenting in all material respects the
financial condition and results of operation of the Borrower and its
Subsidiaries on a consolidated basis in accordance with GAAP, subject to normal
year-end audit adjustments and the absence of footnotes;
(d) concurrently with any delivery of financial statements under
paragraph (a) or (b) above, a certificate of a Financial Officer of the Borrower
(i) certifying that no Event of Default or Default has occurred or, if such an
Event of Default or Default has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to be taken with respect
thereto and (ii) setting forth computations in reasonable detail satisfactory to
the Lenders demonstrating compliance with the covenants contained in Section
6.14 and 6.15; and concurrently with any delivery of financial statements under
paragraph (a) above, a certificate of the accounting firm certifying that such
accounting firm did not become aware of any Event of Default or Default having
occurred or, if such accounting firm shall have become aware than and Event of
Default or Default has occurred, specifying the nature thereof;
(e) within 30 days after the commencement of each Fiscal Year of the
Borrower, a detailed consolidated budget for such Fiscal Year (including a
projected consolidated balance sheet and related statements of projected
operations and cash flows as of the end of and for such Fiscal Year and setting
forth the material assumptions used for purposes of preparing such budget) and,
promptly when available, any material revisions of such budget;
(f) promptly after the same become publicly available, copies of all
periodic filings and other reports, proxy statements and other materials filed
by the Borrower with the Securities and Exchange Commission, or any Governmental
Authority succeeding to any or all of the functions of said Commission, or with
any national securities exchange, or distributed to its shareholders or other
creditors;
(g) promptly after the request by any Lender, all documentation and
other information that such Lender reasonably requests in order to comply with
44
its ongoing obligations under applicable "know your customer" and anti-money
laundering rules and regulations, including the USA PATRIOT Act;
(h) promptly after the receipt thereof by the Borrower or any of its
Subsidiaries, a copy of any "management letter" received by any such person from
its certified public accountants and management's response thereto;
(i) concurrently with the delivery of the certificate delivered pursuant
to clause (a) above with respect to the end of a Fiscal Year, a certificate of a
Financial Officer of the Borrower setting forth the amount of Capital
Expenditures during the relevant Fiscal Year and the base amount for the next
succeeding Fiscal Year; and
(j) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of the Borrower or any
Subsidiary, or compliance with the terms of any Loan Document, as the Lender may
reasonably request.
SECTION 5.05. LITIGATION AND OTHER NOTICES. Promptly upon any
Responsible Officer of the Borrower or any Subsidiary becoming aware thereof,
furnish to each Lender written notice of the following:
(a) (i) the occurrence of any Event of Default or Default,
specifying the nature and extent thereof and the corrective action (if any)
taken or proposed to be taken with respect thereto and (ii) the occurrence of
any "Default" or "Event of Default" under the Existing Credit Agreement and the
Senior Credit Agreement;
(b) the filing or commencement of, or any written threat or notice of
intention of any person to file or commence, any action, suit or proceeding,
whether at law or in equity or by or before any Governmental Authority, against
the Borrower or any Affiliate thereof that could reasonably be expected to
result in liability of the Borrower and its Subsidiaries in an aggregate amount
exceeding $500,000;
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, has resulted in liability of the Borrower
and its Subsidiaries in an aggregate amount exceeding $500,000;
(d) the receipt by the Borrower, any Subsidiary or the Acquired Business
of written notice of violation of or potential liability under or pursuant to
Environmental Laws that is reasonably expected to result in the Borrower, any
Subsidiary or the Acquired Business incurring fines or penalties pursuant to
Environmental Laws in amounts equal to $100,000 or other Environmental
Liabilities in an aggregate amount exceeding $500,000; and
(e) the occurrence of any other event that has resulted in, or could
reasonably be expected to result in, a Material Adverse Effect.
SECTION 5.06. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND
INSPECTIONS; MAINTENANCE OF RATINGS. (a) Keep proper books of record and account
in which full, true and correct entries in conformity with GAAP are made. Permit
any representatives designated by any Lender to visit and inspect the financial
records and the properties of the Borrower or the Subsidiaries upon reasonable
45
times and as often as reasonably requested, and to make extracts from and copies
of such financial records and permit any representatives designated by any
Lender to discuss the affairs, finances and condition of such person with the
officers thereof and independent accountants therefor.
SECTION 5.07. USE OF PROCEEDS. The proceeds of the Loans, together
with the loans under the Senior Credit Agreement, shall be used solely to pay
the cash purchase price of the Acquisition, to repay the Existing Debt and the
term loan facility under the Existing Credit Agreement and to pay related fees
and expenses.
ARTICLE VI
NEGATIVE COVENANTS
Each Loan Party covenants and agrees that, until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document have been paid in
full, each Loan Party will not, nor will it cause or permit any of its
Subsidiaries to:
SECTION 6.01. INDEBTEDNESS. Incur, create, assume or permit to exist
any Indebtedness, except:
(a) Indebtedness existing on the Closing Date and set forth in Schedule
6.01 and any Permitted Refinancing thereof;
(b) Indebtedness created hereunder and under the other Loan Documents;
(c) Indebtedness in respect of loans made under the Senior Credit
Agreement in an aggregate principal amount not to exceed $100,000,000 and any
refinancing, substitution, extension, replacement or restructuring of the
foregoing that is not prohibited by hereunder;
(d) intercompany Indebtedness of the Borrower and its Subsidiaries to
extent permitted by Section 6.04;
(e) Indebtedness of the Borrower or any Subsidiary incurred to finance
the acquisition, construction or improvement of any asset, and any Permitted
Refinancing thereof; provided, that (i) such Indebtedness (other than Permitted
Refinancing) is incurred in one or more separate transactions prior to or within
90 days after such acquisition or the completion of such construction or
improvement and (ii) the aggregate principal amount of Indebtedness permitted by
this Section 6.01(e), when combined with the aggregate principal amount of all
Capital Lease Obligations incurred pursuant to Section 6.01(f), shall not exceed
$2,500,000 at any time outstanding; provided further that, the aggregate amount
of such Indebtedness, together with all Indebtedness incurred under Sections
6.01(f) and (h) shall not exceed $12,000,000;
(f) Capital Lease Obligations in an aggregate principal amount, when
combined with the aggregate principal amount of all Indebtedness incurred
pursuant to Sections 6.01(e), not in excess of $2,500,000 at any time
outstanding; provided further that, the aggregate amount of such Indebtedness,
46
together with all Indebtedness incurred under Sections 6.01(e) and (h) shall not
exceed $12,000,000;
(g) Indebtedness of (i) any Person acquired after the Closing Date
pursuant to a Permitted Acquisition or (ii) the Borrower and its Subsidiaries
assumed in connection with any Permitted Acquisition (so long as such
Indebtedness is not incurred in contemplation of such Permitted Acquisition) and
any Permitted Refinancing in respect of the foregoing; provided, that (i) such
Indebtedness is unsecured, (ii) both immediately prior and after giving effect
thereto, (1) no Default shall exist or result therefrom and (2) the Borrower and
its Subsidiaries will be in Pro Forma Compliance with the covenants set forth in
Section 6.14 and 6.15;
(h) Indebtedness under the Existing Credit Documents and any Permitted
Refinancing thereof; provided that, the aggregate amount of such Indebtedness,
together with all Indebtedness incurred under Sections 6.01(e) and (f) shall not
exceed $12,000,000;
(i) Hedging Agreements permitted pursuant to Section 6.04(d);
(j) Guarantees by the Borrower or any of their Subsidiaries of
Indebtedness of the Borrower or any other Subsidiary otherwise permitted
hereunder; provided, that if the Indebtedness being Guaranteed is subordinated
to the Obligations, such Guarantee shall be subordinated to the Guarantee of the
Obligations on terms at least as favorable to the Lenders as those contained in
the subordination of such Indebtedness;
(k) cash management obligations and Indebtedness incurred by the
Borrower or any of its Subsidiaries in respect of netting services, overdraft
protections and similar arrangements in each case in connection with cash
management and deposit accounts; and
(l) obligations in respect of surety, stay, customs and appeal bonds,
performance bonds, performance and completion guarantees and other obligations
of a like nature provided by the Borrower or any of its Subsidiaries, in each
case in the ordinary course of business.
SECTION 6.02. LIENS. Create, incur, assume or permit to exist any Lien
on any property or any income or revenues or rights in respect of any thereof
now owned or hereafter acquired by it, except:
(a) Liens on property of the Borrower and the Subsidiaries existing on
the Closing Date and set forth in Schedule 6.02; provided that (i) the Lien does
not extend to any additional property; and (ii) the modification, refinancing,
extension, renewal and replacement thereof of the obligations secured or
benefited by such Liens (if such obligations constitute Indebtedness) is
permitted by Section 6.01;
(b) Liens securing the obligations of the Borrower and its Subsidiaries
under the Existing Credit Documents;
(c) any Lien existing on any property acquired by the Borrower or any of
its Subsidiaries after the Closing Date (if such Lien existed prior to the
acquisition of such asset) or existing on any property or assets of any person
that becomes a Subsidiary after the Closing Date prior to the time such person
becomes a Subsidiary, as the case may be and any modification, refinancing,
47
extension, renewal and replacement thereof; provided, that (i) such Lien is not
created in contemplation of or in connection with such acquisition or such
person becoming a Subsidiary, (ii) such Lien does not apply to any other
property or assets of the Borrower or any Subsidiary and (iii) the Indebtedness
secured thereby is permitted by Section 6.01;
(d) Liens for taxes not yet due and payable so long as adequate reserves
in accordance with GAAP have been established or, to the extent such taxes are
due and payable, the validity or amount thereof is being contested in good faith
by appropriate proceedings diligently conducted for which adequate reserves in
accordance with GAAP have been established;
(e) carriers', warehousemen's, mechanics', materialmen's, repairmen's,
landlords, construction contractors or other like Liens arising in the ordinary
course of business provided that such Liens are for amounts not yet due and
payable or delinquent so long as adequate reserves in accordance with GAAP have
been established or, to the extent such amounts are so due and payable, such
amounts are being contested in good faith by appropriate proceedings for which
adequate reserves in accordance with GAAP have been established;
(f) Liens incurred in the ordinary course of business in compliance with
workmen's compensation, unemployment insurance and other social security laws or
regulations; provided that such Liens are for amounts not yet due and payable or
delinquent so long as adequate reserves in accordance with GAAP have been
established or, to the extent such amounts are so due and payable, such amounts
are being contested in good faith by appropriate proceedings for which adequate
reserves in accordance with GAAP have been established;
(g) deposits to secure the performance of bids, trade contracts (other
than Indebtedness for borrowed money), leases, statutory obligations, surety,
stay, customs and appeal bonds, performance bonds, performance and completion
guarantees and other obligations of a like nature incurred in the ordinary
course of business;
(h) zoning restrictions, easements, rights-of-way, restrictions on use
of real property and other similar encumbrances incurred in the ordinary course
of business which, in the aggregate, are not substantial in amount and do not
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the business of the Borrower or any of its
Subsidiaries;
(i) purchase money security interests in property acquired (or, in the
case of improvements, constructed) by the Borrower or any Subsidiary; provided,
that (i) such security interests secure Indebtedness permitted by Section
6.01(e), (ii) such security interests are incurred, and the Indebtedness secured
thereby is created, within 90 days after such acquisition (or construction), and
(iii) such security interests apply only to the property acquired and not to any
other property or assets of the Borrower or any Subsidiary;
(j) judgment Liens securing judgments not constituting an Event of
Default under Article VII;
48
(k) any interest or title of a lessor or sublessor under any lease
entered into by the Borrower or any of its Subsidiaries in the ordinary course
of business and covering only the assets so leased and any Liens of such
lessor's or sublessor's interest or title;
(l) Liens (i) on cash deposits and other funds maintained with a
depositary institution, in each case arising in the ordinary course of business
by virtue of any statutory or common law provision relating to banker's liens,
(ii) attaching to commodity trading accounts or other brokerage accounts
incurred in the ordinary course of business, (iii) in favor of a banking
institution arising as a matter of law encumbering deposits (including the right
of set-off) and which are within the general parameters customary in the banking
industry, (iv) relating to a pooled deposit or sweep accounts of the Borrower or
any of its Subsidiaries to permit satisfaction of overdraft or similar
obligations incurred in the ordinary course of business of such person or (v)
relating to purchase orders and other similar agreements entered into in the
ordinary course of business; provided that such Liens are non-consensual and
arise by operation of law;
(m) leases or subleases granted to any other person in the ordinary
course of business;
(n) Liens arising from precautionary UCC financing statement filings (or
similar filings under applicable Law) regarding leases entered into by the
Borrower or any of its Subsidiaries in the ordinary course of business; and
(o) other Liens securing Indebtedness or other obligations outstanding
in an aggregate principal amount not to exceed $550,000.
SECTION 6.03. SALE AND LEASE-BACK TRANSACTIONS. Enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred unless (a) the sale or
transfer of such property is permitted by Section 6.05 and (b) any Capital Lease
Obligations, Guarantees or Liens arising in connection therewith are permitted
by Sections 6.01 and 6.02, as applicable.
SECTION 6.04. INVESTMENTS, LOANS AND ADVANCES. Purchase, hold or
acquire any Equity Interests or evidences of indebtedness of, make or permit to
exist any loans or advances to, or make or permit to exist any investment in any
other person, or purchase or otherwise acquire all or substantially all the
assets or business of any other person or assets constituting a business unit,
line of business or division of another person (collectively, an "INVESTMENT"),
except:
(a) (i) Investments by the Borrower and any Subsidiary in any
Domestic Subsidiary of the Borrower shall not exceed $2,500,000 at any time
outstanding and (ii) Investments by Borrower and any Subsidiary in Foreign
Subsidiaries of the Borrower not to exceed $550,000;
(b) Investment in assets that were Permitted Investments at the time
made;
(c) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts or other disputes with,
any person, in each case in the ordinary course of business and upon foreclosure
49
with respect to any secured Investment or other transfer of title with respect
to any secured Investment;
(d) the Borrower and the Subsidiaries may enter into Hedging Agreements
that are not speculative in nature and are entered into to hedge or mitigate
risks to which the Borrower or a Subsidiary is exposed in the conduct of its
business;
(e) Permitted Acquisitions;
(f) Investments existing or contemplated on the date hereof and set
forth on Schedule 6.04 and any modification, replacement, renewal or extension
thereof; provided, that the amount of the original Investment is not increased
except by the terms of such Investment or as otherwise permitted by this Section
6.04;
(g) Investments in the ordinary course consisting of endorsements for
collection or deposit;
(h) the Acquisition; and
(i) additional Investments not to exceed $550,000 at any time
outstanding.
SECTION 6.05. MERGERS, CONSOLIDATIONS, AND SALES OF ASSETS. (a) Wind
up, liquidate or dissolve its affairs or merge into or consolidate with any
other person, or permit any other person to merge into or consolidate with it,
except any Subsidiary may merge or consolidate into (A) the Borrower in a
transaction in which the Borrower is the surviving corporation or (B) any
Subsidiary Guarantor so long as such Subsidiary Guarantor is the surviving
corporation.
(b) Make any Asset Sale except:
(i) Asset Sales of obsolete, used, surplus or worn out property,
whether now owned or hereafter acquired, or of property no longer used or
useful in the conduct of business of the Borrower and the Subsidiaries, in
each case in the ordinary course of business;
(ii) Asset Sales of inventory in the ordinary course of business;
(iii) Asset Sales by the Borrower or any of its Subsidiaries to the
Borrower or any of its Subsidiaries (in each case including any such Asset
Sales effected pursuant to a merger, liquidation or dissolution);
provided, that if the transferor of such property is a Loan Party (x) the
transferee thereof must either be the Borrower or a Subsidiary Guarantor
or (y) to the extent such transaction constitutes an Investment, such
transaction is permitted under Section 6.04;
(iv) Asset Sales of Permitted Investments;
50
(v) leases or subleases of property in the ordinary course of
business and which do not materially interfere with the business of the
Borrower and the Subsidiaries; and
(vi) Asset Sales in the ordinary course of business consisting of
the abandonment of intellectual property rights which, in the reasonable
good faith determination of the Borrower, are not material to the conduct
of the business of the Borrower and the Subsidiaries.
SECTION 6.06. RESTRICTED PAYMENTS; RESTRICTIVE AGREEMENTS. (a) Declare
or make, or agree to declare or make, directly or indirectly, any Restricted
Payment, or incur any obligation (contingent or otherwise) to do so except:
(i) any Subsidiary may declare and make Restricted Payments
ratably to its equity holders;
(ii) the Borrower and its Subsidiaries may declare and make
Restricted Payments payable solely in the Equity Interests of such person;
(iii) on the Closing Date, the Borrower and its Subsidiaries may
consummate the Transaction;
(iv) to the extent constituting Restricted Payments, the Borrower
and its Subsidiaries may enter into transactions expressly permitted by
Section 6.05 or 6.07; and
(v) repurchases of Equity Interests of the Borrower deemed to
occur upon exercise of stock options or warrants if such Equity Interests
represent a portion of the exercise price of such options or warrants;
(b) Enter into, incur or permit to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon:
(i) the ability of the Borrower or any Subsidiary to create, incur
or permit to exist any Lien upon any of its property or assets to secure
the Obligations, or
(ii) the ability of any Subsidiary to pay dividends or other
distributions with respect to any of its Equity Interests or to make or
repay loans or advances to the Borrower or any other Subsidiary or to
Guarantee Indebtedness of the Borrower or any other Subsidiary; provided,
that
(A) the foregoing shall not apply to
(1) restrictions and conditions imposed by law or by
any Loan Document, the Senior Credit Agreement or the Existing
Credit Agreement,
(2) customary restrictions and conditions contained in
agreements relating to an Asset Sale of a Subsidiary or any
51
property pending such sale, provided such restrictions and
conditions apply only to the Subsidiary or property that is to
be sold,
(3) restrictions or conditions imposed by any
agreement relating to secured Indebtedness permitted by this
Agreement if such restrictions or conditions apply only to the
property or assets securing such Indebtedness, and
(B) clause (i) of the foregoing shall not apply to customary
provisions in leases, subleases, licenses, sublicenses and other
contracts restricting the assignment thereof.
SECTION 6.07. TRANSACTIONS WITH AFFILIATES. Except for transactions by
or among Loan Parties, sell or transfer any property or assets to, or purchase
or acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except:
(a) the Borrower or any Subsidiary may engage in any of the foregoing
transactions at prices and on terms and conditions not less favorable to the
Borrower or such Subsidiary that could be obtained on an arm's-length
transaction with a person other than an Affiliate;
(b) Restricted Payments may be made to the extent provided by Section
6.06; and
(c) Investments may be made to the extent provided by Section 6.04.
SECTION 6.08. CHANGE IN NATURE OF BUSINESS. Engage at any time in any
business or business activity other than the business conducted by it on the
Closing Date (after giving effect to the Transactions) and business activities
reasonably incidental, ancillary or related thereto.
SECTION 6.09. OTHER INDEBTEDNESS AND AGREEMENTS. (a) Except as
permitted in Section 9.02(f), permit any waiver, supplement, modification,
amendment, termination, release, refinancing or refunding of any Related
Document (except to the extent such waiver, supplement, modification, amendment,
termination, release, refinancing or refunding do not materially affect the
rights and privileges of the Borrower or any Subsidiary under such Related
Document and that do not materially affect the interests of the Lenders under
the Loan Documents).
(b) Change its capital structure (including in the terms of its
outstanding Equity Interests) or otherwise amend its Constituent Documents,
except for changes and amendments that do not materially affect the rights and
privileges of the Borrower or any Subsidiary of the Borrower and do not
materially affect the interests of the Lenders under the Loan Documents.
SECTION 6.10. SUBSIDIARIES. Directly or indirectly, establish, create
or acquire any new Subsidiary, except in connection with a Permitted
Acquisition.
SECTION 6.11. PARTNERSHIP, ETC. Become a general partner in any
limited partnership or permit any of its Subsidiaries to do so except through a
special purpose entity.
52
SECTION 6.12. ACCOUNTING CHANGES; FISCAL YEAR. Change its (a)
accounting treatment and reporting practices or tax reporting treatment, except
as required by GAAP and disclosed to the Lenders or (b) fiscal year.
SECTION 6.13. CAPITAL EXPENDITURES. Permit the aggregate amount of
Capital Expenditures made by the Borrower and its Subsidiaries in any fiscal
year set forth below to exceed the amount set forth below for such fiscal year:
Fiscal Year Amount
----------- ------
2006 $30,000,000
2007 until Maturity $30,000,000
SECTION 6.14. NET WORTH. Maintain at all times a Net Worth in an
amount not less than $35,000,000.
SECTION 6.15. FIXED CHARGE COVERAGE RATIO. Cause to be maintained as
of the end of each Test Period, a Fixed Charge Coverage Ratio of not less than
1.20 to 1.0.
SECTION 6.16. LEVERAGE RATIO. Maintain as at the last day of each Test
Period a Leverage Ratio of not more than 3.50:1.00.
ARTICLE VII
EVENTS OF DEFAULT
In case of the happening of any of the following events ("EVENTS OF
DEFAULT"):
(a) any representation or warranty made or deemed made in any Loan
Document or any representation, warranty, statement or information contained in
any report, certificate, financial statement or other instrument furnished
pursuant to any Loan Document, shall prove to have been false or misleading in
any material respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of any Loan
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration thereof or
otherwise;
(c) default shall be made in the payment of interest on any Loan or any
Fee or other amount (other than an amount referred to in (b) above) due under
any Loan Document, when and as the same shall become due and payable, and such
default shall continue unremedied for a period of three Business Days;
(d) default shall be made in the due observance or performance by the
Borrower or any Subsidiary of any covenant, condition or agreement contained in
Section 5.01(a), 5.04, 5.05 or 5.07 or in Article VI;
53
(e) default shall be made in the due observance or performance by the
Borrower or any Subsidiary of any covenant, condition or agreement contained in
any Loan Document (other than those specified in clause (b), (c) or (d) above)
and such default shall continue unremedied for a period of 30 days after the
earlier of (i) written notice thereof from the Required Lenders to the Borrower
or (ii) the Borrower's knowledge of such default;
(f) (i) the Borrower or any Subsidiary shall fail to pay any principal
or interest, regardless of amount, due in respect of any Material Indebtedness
(other than the Senior Debt and the Existing Senior Debt), when and as the same
shall become due and payable (after giving effect to an applicable grace
period), or (ii) any other event or condition occurs that results in any
Material Indebtedness becoming due prior to its scheduled maturity or that
enables or permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of such Material Indebtedness or any trustee or
agent on its or their behalf to cause any Material Indebtedness to become due,
or to require the prepayment, repurchase, redemption or defeasance thereof,
prior to its scheduled maturity; provided, that clause (ii) shall not apply to
secured Material Indebtedness that becomes due as a result of the voluntary sale
or transfer of the property or assets securing such Material Indebtedness;
(g) the Senior Debt or the Existing Senior Debt shall have been
accelerated;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of the Borrower or any Subsidiary, or of a substantial part of the
property or assets of the Borrower or a Subsidiary, under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Subsidiary or for a substantial part of
the property or assets of the Borrower or a Subsidiary or (iii) the winding-up
or liquidation of the Borrower or any Subsidiary; and such proceeding or
petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered;
(i) the Borrower or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or similar law, (ii)
consent to the institution of any proceeding or the filing of any petition
described in (h) above, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
the Borrower or any Subsidiary or for a substantial part of the property or
assets of the Borrower or any Subsidiary, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding, (v)
make a general assignment for the benefit of creditors, (vi) become unable,
admit in writing its general inability or fail generally to pay its debts as
they become due or (vii) take any action for the purpose of effecting any of the
foregoing;
(j) one or more judgments for the payment of money in an aggregate
amount exceeding $1,100,000 (except to the extent fully covered by insurance
pursuant to which the insurer has accepted liability therefor in writing) shall
be rendered against the Borrower, any Subsidiary or any combination thereof and
the same shall remain undischarged for a period of 30 consecutive days during
54
which execution shall not be effectively stayed, or any action shall be legally
taken by a judgment creditor to levy upon assets or properties of the Borrower
or any Subsidiary to enforce any such judgment;
(k) an ERISA Event shall have occurred that, when taken together with
all other ERISA Events, could reasonably be expected to result in liability of
the Borrower and its ERISA Affiliates in an aggregate amount exceeding
$1,100,000;
(l) Any Loan Document or any material provisions thereof shall at any
time and for any reason case to be valid and binding on the Borrower or any
Guarantor, or any the Borrower or any Guarantor shall so claim in writing to any
Lender;
(m) any Change in Control shall occur; or
(n) the Borrower or any Guarantor or any creditor of the Borrower or any
of its Subsidiaries shall fail to comply with the terms of any subordination or
intercreditor agreement or any subordination provisions (including without
limitation Article VIII) of any note or other document running to the benefit of
the Lenders, or if such document becomes null and void or any party denies
further liability under any such document or provides notice to that effect;
then, and in every such event (other than an event with respect to the Borrower
described in paragraph (h) or (i) above), and at any time thereafter during the
continuance of such event, the Required Lenders may by notice to the Borrower,
take either or both of the following actions, at the same or different times,
(A) if there shall no longer be any Senior Debt or Existing Senior Debt,
immediately or (B) so long as the Senior Debt or Existing Senior Debt shall not
have been paid in cash or terminated, not earlier than five (5) Business Days
after an Agent's receipt of written notice of such Lender's intention to take
any such enforcement action, provided that such notice shall not be required in
the event that the Senior Debt or Existing Senior Debt shall have been
accelerated at the time that such Lender intends to take such enforcement
action: (i) terminate forthwith the Commitments and (ii) declare the Loans then
outstanding to be forthwith due and payable in whole or in part, whereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunder and under any other Loan Document, shall become
forthwith due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by the Borrower,
anything contained herein or in any other Loan Document to the contrary
notwithstanding. Notwithstanding the foregoing, if an Event of Default with
respect to the Borrower described in paragraph (h) or (i) above occurs, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and any unpaid accrued Fees
and all other liabilities of the Borrower accrued hereunder and under any other
Loan Document, shall automatically become due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Borrower, anything contained herein or in any other Loan
Document to the contrary notwithstanding.
55
ARTICLE VIII
SUBORDINATION
SECTION 8.01. AGREEMENT OF SUBORDINATION. (a) The Borrower covenants
and agrees, and each Lender likewise covenants and agrees, that the Loans shall
be subject to the provisions of this Article VIII.
(b) The payment of the principal of and interest and any other amount
due on all the Loans, to the extent and in the manner hereinafter set forth,
shall be subordinated and subject in right of payment to the prior payment in
full in cash or termination of all commitments to lend or otherwise advance
credit of (i) all Senior Debt Guaranty Obligations and (ii) all Existing Senior
Debt (including, in each case, post-petition interest in any proceeding under
any bankruptcy or insolvency laws, whether or not allowed as a claim), whether
outstanding at the date hereof or hereafter incurred.
SECTION 8.02. PAYMENTS TO LENDERS.
(a) Until the prior payment in full in cash or termination of all
commitments to lend or otherwise advance credit of all Senior Debt Guaranty
Obligations and all Existing Senior Debt, the Borrower shall not make any
optional prepayment (other than the conversion of the Loans into Equity
Interests) to any Lender upon or in respect of the Loans.
(b) In the event and during the continuation of any default in the
payment of principal of, premium, if any, or interest on or any other payment
due under Senior Debt Guaranty Obligations or the Existing Senior Debt, then,
unless and until such default shall have been cured or waived, no payment or
distribution shall be made by or on behalf of the Borrower with respect to the
principal of or interest or any other payment due on or with respect to the
Loans.
(c) In the event and during the continuation of any default (other than
a default of any payment due) with respect to Senior Debt Guaranty Obligations
or Existing Senior Debt, then, unless and until such default shall have been
cured or waived, no payment or distribution shall be made by or on behalf of the
Borrower with respect to the principal of or premium, if any, interest or any
other payment due on or with respect to the Loans, if written notice of such
default shall have been given to the Borrower by an Agent, during the period
commencing on the date on which such notice is received by the Borrower and
ending on the earlier to occur of (a) the 179th day thereafter or (b) the day on
which such default is cured or waived; provided, however, that this sentence
shall not prohibit any payment due on the Loans for more than 179 days in any
365-day period and provided, further, that no default that once formed the basis
for any such notice by an Agent shall form the basis of any subsequent notice
under this paragraph. For purposes of the preceding sentence, "default" shall
mean any default or failure to observe or perform any provision of the Senior
Debt Guaranty, other Senior Debt Guaranty Obligations or the Existing Senior
Debt after the giving of notice, the expiration of any grace periods, or both,
so that the Senior Lenders are entitled to accelerate the maturity thereof.
(d) Upon any payment by the Borrower, or distribution of assets or
securities of the Borrower of any kind or character, whether in cash, property
56
or securities, to creditors upon any dissolution, winding-up, total or partial
liquidation or reorganization of the Borrower or its property, whether voluntary
or involuntary, or any assignment for the benefit of creditors or any marshaling
of assets and liabilities, or in bankruptcy, insolvency, receivership or other
proceedings, all amounts due or to become due with respect to all Senior Debt
Guaranty Obligations and all Existing Senior Debt first shall be paid in full in
cash, or payment thereof provided for in cash in accordance with its terms,
before any payment is made on account of the principal of or interest or any
other amount due on or with respect to the Loans; and upon any such dissolution,
winding-up, liquidation, reorganization, assignment, marshaling or proceedings:
(i) the Senior Lenders shall be entitled to receive payment in
full in cash of all Senior Debt Guaranty Obligations and all Existing
Senior Debt before the Lenders and the Lenders shall be entitled to
receive any payment of principal or interest on or other amounts payable
with respect to the Loans; and
(ii) any payment by the Borrower, or distribution of assets or
securities of the Borrower of any kind or character, whether in cash,
property or securities, to which the Lenders would be entitled except for
the provisions of this Article VIII, shall be paid by the Borrower or by
any custodian, agent or other Person making such payment or distribution,
or by any Lender, any paying agent or any depositary if received by it,
directly to the Senior Lenders or their representative or representatives,
as their respective interests may appear, to the extent necessary to pay
all such Senior Debt Guaranty Obligations or Existing Senior Debt, as the
case may be, in full in cash, after giving effect to any concurrent
payment or distribution to or for the Senior Lenders.
(e) In the event that, notwithstanding the foregoing, any payment by or
distribution of assets or securities of the Borrower of any kind or character,
whether in cash, property or securities, prohibited by the foregoing, shall be
received by the Lenders before all such Senior Debt Guaranty Obligations or
Existing Senior Debt, as the case may be, is paid in full in cash, such payment
or distribution shall be held in trust for the benefit of and shall be paid over
or delivered to the Senior Lenders or their representative or representatives,
as their respective interests may appear, for application to the payment of all
such Senior Debt Guaranty Obligations or Existing Senior Debt remaining unpaid
to the extent necessary to pay all such Senior Debt Guaranty Obligations or
Existing Senior Debt in full in cash in accordance with its terms, after giving
effect to any concurrent payment or distribution to or for the benefit of the
Senior Lenders.
(f) The consolidation of the Borrower with or the merger of the Borrower
into another corporation, or the liquidation or dissolution of the Borrower
following the conveyance or transfer of its property or assets as an entirety or
substantially as an entirety to another corporation shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 8.02 if such other corporation, as a part of such consolidation, merger,
conveyance or transfer, shall comply with the following conditions stated below:
(i) the Borrower is the surviving entity or the Person formed by
or surviving any such consolidation or merger (if other than the Borrower)
or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is an entity organized or existing under
57
the laws of the United States, any state thereof or the District of
Columbia;
(ii) the Person formed by or surviving any such consolidation or
merger (if other than the Borrower) or the Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have
been made assumes all the obligations of the Borrower under the Loans; and
(iii) immediately after such transaction no Event of Default exists.
(g) The Senior Lenders, at any time and from time to time, without the
consent of or notice to the Lenders, without incurring responsibility to the
Lenders and without impairing or releasing the obligations of the Lenders
hereunder to the Senior Lenders, may: (i) change the manner, place or terms of
payment or change or extend the time of payment of, or renew or alter, the
Senior Debt Guaranty Obligations or the Existing Senior Debt, or otherwise amend
in any manner Senior Debt Guaranty Obligations, the Existing Senior Debt or any
instrument evidencing the same or any agreement under which the Senior Debt
Guaranty Obligations are outstanding; provided, however, that (A) Senior Debt
Guaranty Obligations for the purposes of this Agreement shall not exceed the
principal amount of $100 million in the aggregate, which cap shall be decreased
by an amount equal to the aggregate re-payments of term loans and the permanent
reduction in other loans or commitments under the Senior Credit Agreement and
(B) the Existing Senior Debt for the purposes of this Agreement shall not exceed
the principal amount of $12 million in the aggregate, which cap shall be
decreased by an amount equal to the permanent reduction in other loans or
commitments under the Existing Credit Agreement; (ii) release any Person liable
in any manner for the collection or payment of the Senior Debt Guaranty
Obligations or Existing Senior Debt; and (iii) exercise or refrain from
exercising any rights against the Borrower or any other Person.
(h) For purposes of this Article VIII, "payment" of or with respect to
the Loans includes any payment, redemption, acquisition, deposit, segregation,
retirement, sinking fund payment and defeasance of or with respect to the Loans.
SECTION 8.03. THIRD-PARTY BENEFICIARIES; SUBROGATION OF LOANS. (a)
This Article VIII is not intended to benefit or confer any rights upon any
Person other than the parties hereto, the Senior Lenders and their respective
successors and assigns, as specified herein.
(b) Subject to the payment in full in cash and termination of all
commitments to lend or otherwise advance credit of all Senior Debt Guaranty
Obligations or the Existing Senior Debt at the time outstanding, the Lenders
shall be subrogated to the rights of the Senior Lenders to receive payments or
distributions of cash, property or securities of the Borrower applicable to the
Senior Debt Guaranty Obligations and the Existing Senior Debt until the
principal of and interest on the Loans shall be paid in full in cash; and, for
the purposes of such subrogation, no payments or distributions to the Senior
Lenders of any cash, property or securities to which the Lenders would be
entitled except for the provisions of this Article VIII, and no payment over
pursuant to the provisions of this Article VIII to or for the benefit of the
Senior Lenders by the Lenders, shall, as between the Borrower, its creditors
other than the Senior Lenders and the Lenders, be deemed to be a payment by the
Borrower to or on account of the Loans. It is understood that the provisions of
58
this Article VIII are and are intended solely for the purpose of defining the
relative rights of the Lenders on the one hand and the Senior Lenders, on the
other hand.
(c) Nothing contained in this Article VIII or elsewhere herein is
intended to or shall impair, as between the Borrower, its creditors other than
the Senior Lenders and the Lenders, the obligation of the Borrower, which is
absolute and unconditional, to pay to the Lenders the principal of and interest
on the Loans as and when the same shall become due and payable in accordance
with their terms, or is intended to or shall affect the relative rights of the
Lenders and creditors of the Borrower other than the Senior Lenders, nor shall
anything herein or therein prevent any Lender from exercising all remedies
otherwise permitted by applicable law upon default under any Loan, subject to
the rights, if any, under this Article VIII of the Senior Lenders in respect of
cash, property or securities of the Borrower received upon the exercise of any
such remedy.
(d) Upon any payment or distribution of assets or securities of the
Borrower referred to in this Article VIII, the Lenders shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction in which
such dissolution, winding-up, liquidation, reorganization, assignment,
marshaling or proceedings are pending, or a certificate of any custodian, agent
or other Person making such payment or distribution, delivered to the Lenders,
for the purpose of ascertaining the Persons entitled to participate in such
payment or distribution, the Senior Lenders and the holders of other
indebtedness of the Borrower, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article VIII.
SECTION 8.04. NOTICE TO LENDERS. The Borrower shall give prompt
written notice to the Lenders of any fact known to the Borrower that would
prohibit the making of any payment or distribution in respect of the Lenders
pursuant to the provisions of this Article VIII.
SECTION 8.05. NO IMPAIRMENT OF SUBORDINATION. No right of any present
or future Senior Lender to enforce subordination as herein provided at any time
in any way shall be prejudiced or impaired by any act or failure to act on the
part of the Borrower or by any act or failure to act, in good faith, by any such
Senior Lender, or by any noncompliance by the Borrower with the terms,
provisions and covenants of any Loan, regardless of any knowledge thereof which
any such Senior Lender may have or otherwise be charged with.
SECTION 8.06. ARTICLE VIII NOT TO PREVENT EVENTS OF DEFAULT. The
failure to make a payment on account of principal, interest or any other amount
due hereunder by reason of any provision in this Article VIII shall not be
construed as preventing the occurrence of an Event of Default under Article VII
hereof but the remedies in respect thereof are limited as set forth in Article
VII hereof and any amounts realized through the exercise of such remedies shall
be subject to the provisions of this Article VIII.
SECTION 8.07. CONTINUING EFFECT. The foregoing provisions constitute a
continuing offer to all Persons who become, or continue to be, Senior Lenders;
and such provisions are made for the benefit of the Senior Lenders, and such
Senior Lenders are hereby made obligees hereunder the same as if their names
were written herein as such, and they and/or each of them may proceed to enforce
such provisions and need not prove reliance thereon.
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SECTION 8.08. BANKRUPTCY AVOIDANCE. To the extent that Senior Lenders
receive payments on Senior Debt Guaranty Obligations or the Existing Senior Debt
which are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law, or equitable cause,
then, to the extent of such payment invalidated, declared to be fraudulent of
preferential, set aside or required to be repaid, the Senior Debt Guaranty
Obligations, the Existing Senior Debt, or any part thereof, intended to be
satisfied shall be revived and continue in full force and effect as if such
payments or proceeds had not been received by Senior Lenders.
SECTION 8.09. INDIVIDUAL RIGHTS OF SENIOR LENDERS. A Senior Lender in
its individual or any other capacity may become the owner or pledgee of the
Loans and may otherwise deal with the Borrower or any Subsidiary or Affiliate of
the Borrower with the same rights as if it were not a Senior Lender.
SECTION 8.10. AMENDMENT TO ARTICLE VIII. Until the prior payment in
full in cash or termination of all commitments to lend or otherwise advance
credit of all Senior Debt Guaranty Obligations and all Existing Senior Debt, no
amendment, modification, or waiver of any provision of this Article VIII shall
in any event be effective without the prior written consent of the Agents.
Without the prior consent of PNC, the Lenders shall not request, take or retain
any liens, security interests, mortgages or any other form of collateral
security from the Borrower to secure all or any portion of the Loans.
SECTION 8.11. INSTRUMENT LEGEND AND NOTATION. Any instrument at any
time evidencing the Loans, or any portion thereof, shall be permanently marked
on its face with a legend conspicuously indicating that payment thereof is
subordinate in right of payment to the Senior Debt Guaranty Obligations and the
Existing Senior Debt and subject to the terms and conditions of this Article
VIII, and after being so marked certified copies thereof shall be delivered to
the Agents. No specific legend, further assignment or endorsement or delivery of
notes, guarantees or instruments shall be necessary to subject the Loans to the
subordination thereof contained in this Article VIII.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICES. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by fax, as follows:
(a) if to the Borrower, to it at Geokinetics Inc., Xxx Xxxxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxx 00000, Attention of: President (Fax No. 000-000-0000), cc:
Xxxxx X. Spring, III, Chamberlain, Hrdlicka, White, Xxxxxxxx & Xxxxxx, 0000
Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx , Xxxxx 00000 (Fax No. 000-000-0000); and
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(b) if to a Lender, to it at its address (or fax number) set forth on
Schedule 2.01 or in the Assignment and Acceptance pursuant to which such Lender
shall have become a party hereto.
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt if delivered by hand or overnight courier service
or sent by fax or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01. As agreed to among the Borrower and the applicable Lenders from
time to time in writing, notices and other communications may also be delivered
or furnished by e-mail; provided, that the foregoing shall not apply to notices
pursuant to Article II or to compliance and no Event of Default certificates
delivered pursuant to Section 5.04(d) unless otherwise agreed by the Lenders;
provided, further, that approval of such procedures may be limited to particular
notices or communications. All such notices and other communications sent to an
e-mail address shall be deemed received upon the sender's receipt of an
acknowledgement from the intended recipient (such as by the "return receipt
requested" function, as available, return e-mail or other written
acknowledgement); provided, that if not given during the normal business hours
of the recipient, such notice or communication shall be deemed to have been
given at the opening of business on the next Business Day for the recipient.
SECTION 9.02. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Loan Parties herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document, shall be considered to
have been relied upon by the Lenders and shall survive the making by the Lenders
of the Loans, regardless of any investigation made by the Lenders or on their
behalf, and shall continue in full force and effect as long as the principal of
or any accrued interest on any Loan or any Fee or any other amount payable under
this Agreement or any other Loan Document is outstanding and unpaid and so long
as the Commitments have not been terminated. The provisions of Sections 2.14,
2.16, 2.20 and 9.05 shall remain operative and in full force and effect
regardless of the expiration of the term of this Agreement, the consummation of
the transactions contemplated hereby, the repayment of any of the Loans, the
expiration of the Commitments, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of any Lender.
SECTION 9.03. BINDING EFFECT. This Agreement shall become effective
when it shall have been executed by the Borrower and the Lenders and when the
Lenders shall have received counterparts hereof which, when taken together, bear
the signatures of each of the other parties hereto.
SECTION 9.04. SUCCESSORS AND ASSIGNS. (a) Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the permitted successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Borrower or the Lenders that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
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(b) Any Lender may assign to one or more assignees all or a portion of
its interests, rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided,
however, that (i) the Borrower must give its prior written consent to such
assignment (which consent shall not be unreasonably withheld or delayed),
provided, that the consent of the Borrower shall not be required to any such
assignment (A) made to a Lender or an Affiliate or Related Fund of a Lender, or
(B) during the continuance of any Default or Event of Default, (ii) (A) in the
case of any assignment, other than assignments to any Lender or any Affiliate or
Related Fund thereof, the amount of the Commitment or Loans of the assigning
Lender subject to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment is delivered to the
Lender) shall not be less than $1,000,000 (or if less, the entire remaining
amount of such Lender's Commitment or Loans) and shall be in an amount that is
an integral multiple of $1,000,000 (or the entire remaining amount of such
Lender's Commitment), provided, however, that simultaneous assignments to two or
more Related Funds shall be combined for purposes of determining whether the
minimum assignment requirement is met, and (B) in the case of any assignment to
a Lender or any Affiliate or Related Fund thereof, after giving effect to such
assignment, the aggregate Commitments or Loans of the assigning Lender and its
Affiliates and Related Funds shall be zero or not less than $1,000,000 and the
aggregate Commitments or Loans of the assignee Lenders and their Affiliates and
Related Funds shall be not less than $1,000,000 and (iii) the parties to each
such assignment shall execute and deliver to the assigning Lender and the
Borrower an Assignment and Acceptance. Upon delivery and acceptance and
recording pursuant to paragraph (d) of this Section 9.04, from and after the
effective date specified in each Assignment and Acceptance, (A) the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement and (B) the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.16,
2.20 and 9.05, as well as to any Fees accrued for its account and not yet
paid).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Commitment, and the outstanding balances of its Loans, in each case without
giving effect to assignments thereof which have not become effective, are as set
forth in such Assignment and Acceptance, (ii) except as set forth in (i) above,
such assigning Lender 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,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrower or any Subsidiary or the
performance or observance by the Borrower or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
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Agreement, together with copies of the most recent financial statements referred
to in Section 3.05(a) or delivered pursuant to Section 5.04 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon such assigning Lender or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; and (vi) such assignee agrees that it
will perform in accordance with their terms all the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.
(d) The Registration Agent, shall maintain at its offices a copy of each
Assignment and Acceptance delivered to it and shall record each such assignment
in the Register in accordance with Section 2.04(e). The Lenders may treat each
person whose name is recorded in the Register pursuant to the terms of Section
2.04(e) as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.
(e) Each Lender may without the consent of the Borrower sell
participations to one or more banks or other persons in all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) the participating banks or other persons shall be
entitled to the benefit of the cost protection provisions contained in Sections
2.14, 2.16 and 2.20 to the same extent as if they were Lenders (but, with
respect to any particular participant, to no greater extent than the Lender that
sold the participation to such participant), (iv) such Lender shall maintain a
Register substantially in the form described in Section 9.04(d) (the
"PARTICIPANT REGISTER"), (v) if such Lender is a Foreign Lender, such Lender
shall collect from each participating bank or other persons, prior to the time
such participating bank or other persons receive payments with respect to such
participation, the appropriate forms, certificates and statements described in
Section 2.20 as if such participating banks or other persons were a Lender under
Section 2.20, and (vi) the Borrower, the Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower relating to the Loans and to approve any
amendment, modification or waiver of any provision of this Agreement (other than
amendments, modifications or waivers decreasing any fees payable to such
participating bank or person hereunder or the amount of principal of or the rate
at which interest is payable on the Loans in which such participating bank or
person has an interest, extending any scheduled principal payment date or date
fixed for the payment of interest on the Loans in which such participating bank
or person has an interest, increasing or extending the Commitments in which such
participating bank or person has an interest or releasing any Guarantor (other
than in connection with the sale of such Guarantor in a transaction permitted by
Section 6.05)).
(f) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower furnished to such Lender by
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or on behalf of the Borrower; provided that, prior to any such disclosure of
information designated by the Borrower as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of such confidential information on
terms no less restrictive than those applicable to the Lenders pursuant to
Section 9.16.
(g) Any Lender may at any time assign all or any portion of its rights
under this Agreement to secure extensions of credit to such Lender or in support
of obligations owed by such Lender; provided that no such assignment shall
release a Lender from any of its obligations hereunder or substitute any such
assignee for such Lender as a party hereto.
(h) Notwithstanding anything to the contrary contained herein, any
Lender (a "GRANTING LENDER") may grant to a special purpose funding vehicle (an
"SPC"), identified as such in writing from time to time by the Granting Lender
to the Borrower, the option to provide to the Borrower all or any part of any
Loan that such Granting Lender would otherwise be obligated to make to the
Borrower pursuant to this Agreement; provided that (i) nothing herein shall
constitute a commitment by any SPC to make any Loan and (ii) if an SPC elects
not to exercise such option or otherwise fails to provide all or any part of
such Loan, the Granting Lender shall be obligated to make such Loan pursuant to
the terms hereof. The making of a Loan by an SPC hereunder shall utilize the
Commitment of the Granting Lender to the same extent, and as if, such Loan were
made by such Granting Lender. Each party hereto hereby agrees that no SPC shall
be liable for any indemnity or similar payment obligation under this Agreement
(all liability for which shall remain with the Granting Lender). In furtherance
of the foregoing, each party hereto hereby agrees (which agreement shall survive
the termination of this Agreement) that, prior to the date that is one year and
one day after the payment in full of all outstanding commercial paper or other
senior indebtedness of any SPC, it will not institute against, or join any other
person in instituting against, such SPC any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under the laws of the United
States or any State thereof. In addition, notwithstanding anything to the
contrary contained in this Section 9.04, any SPC may (i) with notice to, but
without the prior written consent of, the Borrower and without paying any
processing fee therefor, assign all or a portion of its interests in any Loans
to the Granting Lender or to any financial institutions (consented to by the
Borrower) providing liquidity and/or credit support to or for the account of
such SPC to support the funding or maintenance of Loans and (ii) disclose on a
confidential basis any non-public information relating to its Loans to any
rating agency, commercial paper dealer or provider of any surety, guarantee or
credit or liquidity enhancement to such SPC.
(i) The Borrower shall not assign or delegate any of its rights or
duties hereunder without the prior written consent of each Lender, and any
attempted assignment without such consent shall be null and void.
SECTION 9.05. EXPENSES; INDEMNITY. (a) The Borrower agrees to pay all
out-of-pocket expenses incurred by the Lender in connection with the preparation
and administration of this Agreement and the other Loan Documents or in
connection with any amendments, modifications or waivers of the provisions
hereof or thereof (whether or not the transactions hereby or thereby
contemplated shall be consummated) or incurred by any Lender in connection with
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the enforcement or protection of its rights in connection with this Agreement
and the other Loan Documents or in connection with the Loans made hereunder,
including fees, disbursements and other charges of counsel for the Lenders, and,
in connection with any such enforcement or protection, fees, disbursements and
other charges of counsel as any Lender determines to be reasonably necessary.
(b) The Borrower agrees to indemnify each Lender and each Related Party
of any of the foregoing persons and their successors and assigns (each such
person being called an "INDEMNITEE") against, and to hold each Indemnitee
harmless from, any and all costs, expenses (including reasonable fees,
disbursements and other charges of counsel and liabilities of such Indemnitee
arising out of or in connection with (i) the execution or delivery of this
Agreement or any other Loan Document or any agreement or instrument contemplated
thereby, the performance by the parties thereto of their respective obligations
thereunder or the consummation of the Transactions and the other transactions
contemplated thereby, (ii) the use of the proceeds of the Loans, (iii) any
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto (and regardless of whether such
matter is initiated by a third party or by the Borrower, any other Loan Party or
any of their respective Affiliates), or (iv) any actual or alleged presence or
Release of Hazardous Materials on any property currently or formerly owned or
operated by the Borrower or any of the Subsidiaries, or any Environmental
Liability related in any way to the Borrower or the Subsidiaries; provided, that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such costs, expenses or liabilities resulted from the gross negligence or
willful misconduct of such Indemnitee (or its Related Parties).
(c) To the extent permitted by applicable law, the Loan Parties shall
not assert, and each Loan Party hereby waives, any claim against any Indemnitee,
on any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement or any agreement or instrument
contemplated hereby, the Transactions, any Loan or the use of the proceeds
thereof.
(d) The provisions of this Section 9.05 shall survive the expiration of
the term of this Agreement, the consummation of the transactions contemplated
hereby, the repayment of any of the Loans, the expiration of the Commitments,
the invalidity or unenforceability of any term or provision of this Agreement or
any other Loan Document, or any investigation made by or on behalf of the
Lender. All amounts due under this Section 9.05 shall be payable on written
demand therefor.
SECTION 9.06. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, except to the extent prohibited by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this Agreement and
other Loan Documents held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement or such other Loan
Document and although such obligations may be unmatured. The rights of each
Lender under this Section 9.06 are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
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SECTION 9.07. APPLICABLE LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.08. WAIVERS; AMENDMENT. (a) No failure or delay of any
Lender in exercising any power or right hereunder or under any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Lenders hereunder and under the other Loan Documents are cumulative and are
not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or any other Loan Document or consent
to any departure by the Borrower or any other Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) below,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No notice or demand on the Borrower in any
case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances.
(b) Neither this Agreement nor any other Loan Document nor any provision
hereof or thereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Required Lenders and the
Loan Parties that are party thereto and are affected by such waiver, amendment
or modification; provided, however, that no such agreement shall (i) decrease
the principal amount of, or extend the maturity of or any scheduled principal
payment date or date for the payment of any interest on any Loan, or waive or
forgive any such payment or any part thereof, or the rate of interest on any
Loan, without the prior written consent of each Lender directly adversely
affected thereby, (ii) increase or extend the Commitment or decrease or extend
the date for payment of any Fees of any Lender without the prior written consent
of such Lender, (iii) amend or modify the pro rata requirements of Section 2.16,
without the prior written consent of each Lender, (iv) modify the protections
afforded to an SPC pursuant to the provisions of Section 8.04(i) without the
written consent of such SPC or (v) reduce the percentage contained in the
definition of the term "Required Lenders" without the prior written consent of
each Lender (it being understood that with the consent of the Required Lenders,
additional extensions of credit pursuant to this Agreement may be included in
the determination of the Required Lenders on substantially the same basis as the
Commitments and extensions of credit thereunder on the date hereof).
SECTION 9.09. INTEREST RATE LIMITATION. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "CHARGES"), shall exceed the
maximum lawful rate (the "MAXIMUM RATE") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section 9.09 shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
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(but not above the Maximum Rate therefor) until such cumulated amount shall have
been received by such Lender.
SECTION 9.10. ENTIRE AGREEMENT. This Agreement and the other Loan
Documents constitute the entire contract between the parties relative to the
subject matter hereof. Any other previous agreement among the parties with
respect to the subject matter hereof is superseded by this Agreement and the
other Loan Documents. Nothing in this Agreement or in the other Loan Documents,
expressed or implied, is intended to confer upon any person (other than the
parties hereto and thereto, their respective successors and assigns permitted
hereunder and, to the extent expressly contemplated hereby, the Indemnitees, the
Related Parties of each of the Lenders) any rights, remedies, obligations or
liabilities under or by reason of this Agreement or the other Loan Documents.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.11.
SECTION 9.12. SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 9.13. COUNTERPARTS. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract, and shall become effective as provided in Section
9.03. Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 9.14. HEADINGS. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
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SECTION 9.15. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) The
Loan Parties hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Lender may otherwise have to bring any action or proceeding relating to this
Agreement or the other Loan Documents against the Loan Parties or their
respective properties in the courts of any jurisdiction.
(b) Each Loan Party hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any New York State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.16. CONFIDENTIALITY. The Lenders agree to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates' officers, directors, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority or quasi-regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
in connection with the exercise of any remedies hereunder or under the other
Loan Documents or any suit, action or proceeding relating to the enforcement of
its rights hereunder or thereunder, (e) subject to an agreement containing
provisions substantially the same as those of this Section 9.16, to (i) any
actual or prospective assignee of or participant in any of its rights or
obligations under this Agreement and the other Loan Documents, (f) with the
consent of the Borrower or (g) to the extent such Information becomes publicly
available other than as a result of a breach of this Section 9.16. For the
purposes of this Section, "Information" shall mean all information received from
the Borrower and related to the Borrower or its business, other than any such
information that was available to any Lender on a nonconfidential basis prior to
its disclosure by the Borrower; provided that, in the case of Information
received from the Borrower after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any person required to
maintain the confidentiality of Information as provided in this Section 9.16
shall be considered to have complied with its obligation to do so if such person
68
has exercised the same degree of care to maintain the confidentiality of such
Information as such person would accord its own confidential information.
SECTION 9.17. USA PATRIOT ACT NOTICE. Each Lender hereby notifies the
Borrower that pursuant to the requirements of the USA PATRIOT Act, it is
required to obtain, verify and record information that identifies the Borrower,
which information includes the name and address of the Borrower and other
information that will allow such Lender, as applicable, to identify the Borrower
in accordance with the USA PATRIOT Act.
[Remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
GEOKINETICS, INC.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chief Executive Officer and
President
i
AVISTA CAPITAL PARTNERS, L.P.,
as Lender
By: /s/ Xxx Xxxxxxx
-----------------------------------------
Name: Xxx Xxxxxxx
Title: General Counsel
AVISTA CAPITAL PARTNERS (OFFSHORE), L.P.,
as Lender
By: /s/ Xxx Xxxxxxx
-----------------------------------------
Name: Xxx Xxxxxxx
Title: General Counsel
ii
