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EXHIBIT 4.1
FORM OF SUBORDINATED PROMISSORY NOTE AGREEMENT
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FORM OF SUBORDINATED PROMISSORY NOTE
$100,000,000 Houston, Texas ____________, 1999
1. FOR VALUE RECEIVED, the undersigned, GRANT PRIDECO, INC., a Delaware
corporation ("Maker"), hereby promises to pay to the order of XXXXXXXXXXX
INTERNATIONAL, INC., a Delaware corporation (the "Payee"), in Houston, Xxxxxx
County, Texas, at 000 Xxxx Xxx Xxxx., Xxxxx 000, on or before December 31, 2001
(the "Maturity Date"), in lawful money of the United States of America, the
principal amount of ONE HUNDRED MILLION DOLLARS, together with interest on the
unpaid balance of said principal amount from time to time remaining outstanding,
from the date hereof until maturity (howsoever such maturity shall occur), in
like money, at said office, at a rate per annum equal to the lesser of (a) the
Note Rate and (b) the Maximum Rate.
2. All past due principal of and interest on this Note shall bear
interest from the due date thereof (whether by acceleration or otherwise) until
paid at a per annum rate equal to the lesser of (a) the Note Rate plus 2% and
(b) the Maximum Rate.
3. Subject to the provisions of the Subordination Agreement, accrued
unpaid interest on the outstanding principal balance hereof shall be due and
payable by Maker to Payee on the last Business Day (as hereinafter defined) of
each March, June, September and December, commencing __________, _____. The
outstanding principal balance of this Note shall be due and payable on the
Maturity Date; provided that all unpaid accrued interest on this Note, and the
outstanding unpaid principal balance hereof, shall be immediately due and
payable in full upon the maturity of the principal of this Note, whether by
acceleration or otherwise.
4. Maker shall have the right and privilege of prepaying this Note, in
whole or in part, at any time or from time to time without premium or penalty or
notice to the holder hereof. Maker shall notify Payee upon the execution by
Maker of any agreement relating to a proposed Financing. At the closing of any
Financing, Maker shall remit to Payee, by wire transfer of immediately available
funds on the same Business Day as the closing of such Financing, an amount (to
be applied as a prepayment with respect hereto) equal to the lesser of (a) the
sum of the outstanding unpaid principal balance hereof and all accrued unpaid
interest thereon, and (b) the net cash proceeds from the Financing. All amounts
repaid or prepaid (including on acceleration of maturity resulting from a
Financing) shall be applied first to earned, accrued and unpaid interest hereon
and the balance, if any, shall be applied to the outstanding principal.
5. The terms set forth below shall have the meanings assigned to such
terms as used in this Note:
"Applicable Law" shall mean the law in effect from time to
time and applicable to the transactions between Payee and Maker
pursuant to this Note which lawfully permits the charging and
collection of the highest permissible lawful
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non-usurious rate of interest on such transactions, including laws of
the State of Texas, and to the extent controlling and providing for a
higher lawful rate of interest, laws of the United States of America.
It is intended that Chapter 1D, Subtitle 1, Title 79, Revised Civil
Statutes of Texas, 1925, as amended, shall be included in the laws of
the State of Texas in determining Applicable Law; and for the purpose
of applying said Chapter 1D, the interest ceiling applicable to such
transactions under said Chapter 1D shall be the indicated (weekly) rate
ceiling from time to time in effect.
"Business Day" shall mean any day on which banks are open for
general banking business in the State of Texas, other than on Saturday,
Sunday, a legal holiday or any other day on which banks in the State of
Texas are required or authorized by law or executive order to close.
"Credit Facility" shall mean that Credit Agreement, dated
________________, among Maker and ________________________.
"Financing" shall mean any transaction or series of related
transactions (whether by means of the issuance and sale of debt or
equity securities or a sale of assets or equity interests in another
entity) pursuant to which Maker receives cash proceeds, net of
underwriting fees and discounts and transaction expenses, of not less
than five million dollars ($5,000,000); provided that none of the
following transactions shall be deemed to be a "Financing": (a) any
sale of assets in the ordinary course of Maker's business, (b) any
borrowings or advances under the Credit Facility, or (c) any issuances
of securities pursuant to employee benefit plans or options granted
thereunder.
"Maximum Rate" shall mean the maximum lawful non-usurious rate
of interest, if any, which under Applicable Law Payee is permitted to
charge Maker on the loan evidenced by this Note from time to time. If,
however, during any period interest accruing on this Note is not
limited to any maximum lawful non-usurious rate of interest under
Applicable Law, then during each such period the "Maximum Rate" shall
be equal to a per annum rate of 4% plus the Note Rate.
"Note Rate" shall mean a per annum rate of interest (computed
on the basis of the actual number of days elapsed (including the first
but excluding the last day) over a year of 365 or 366 days, as the case
may be) equal to 10%.
"Subordination Agreement" shall mean that Subordination
Agreement, dated ________________, among Maker, Payee and
_____________________, as agent for _____________________ under the
Credit Facility.
6. If any one of the following events shall occur and be continuing (an
"Event of Default"):
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(a) Maker shall fail to pay timely when due, the principal of,
or accrued unpaid interest on, this Note or any other of the
obligations hereunder; or
(b) Maker shall breach any representation or warranty made by
Maker in any statement furnished concurrently herewith or hereafter to
Payee by or on behalf of Maker; or
(c) Maker shall (1) dissolve or terminate its existence, (2)
merge with or into any other entity (other than a wholly-owned
subsidiary of Maker) after the date hereof, (3) discontinue its usual
business, (4) sell all or substantially all of its business or assets,
or (5) apply for or consent to the appointment of a receiver, trustee,
custodian or liquidator of it or of all or a substantial part of its
property, or (6) generally fail to pay its debts as they come due in
the ordinary course of business, or (7) commence, or file an answer
admitting the material allegations of or consenting to, or default in a
petition filed against it in, any case, proceeding or other action
under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief
of debtors, or seeking to have an order for relief entered with respect
to it under the federal Bankruptcy Code 11 USC Section 101 et. seq., or
seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or the similar relief with
respect to it or its debt; or
(d) Any person or group becomes the beneficial owner (as such
terms are defined in the rules promulgated under the Securities
Exchange Act of 1934) of 30% or more of the voting power of the Maker's
capital stock or shall otherwise have the right to cast 30% or more of
the votes cast in any election of Maker's directors (excluding votes
cast by or at the direction of directors of the Company by means of
proxies solicited in accordance with the Securities Exchange Act of
1934); or
(e) A receiver, conservator, liquidator, custodian or trustee
of Maker or any of its property is appointed by the order or decree of
any court or agency or supervisory authority having jurisdiction; or
Maker obtains an order for relief under the federal Bankruptcy Code 11
USC Section 101 et. seq.; or any of the property of Maker is
sequestered by court order; or a petition is filed or a proceeding is
commenced against Maker under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in
effect; or
(f)(1) Any event or condition occurs which results in, or
permits the forfeiture by Maker of its material rights, benefits or
privileges under any indenture, mortgage, deed of trust, promissory
note, loan agreement, note agreement or any other material agreement or
undertaking (including the Credit Facility), which continues unremedied
for any applicable cure period; or (2) the occurrence of any event,
circumstance, or condition which, after any applicable cure or notice
period or lapse of time, or both, would constitute a default under any
material agreement, contract, promissory note, loan agreement,
indenture, lien instrument or the like to which Maker is a party or by
which any of its property is subject (including the
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Credit Facility), which continues unremedied for any applicable cure
period, whether or not a party thereto exercises any of its rights and
remedies with respect to such default; or
(g) The levy or execution of any attachment, execution or
other process against any material property or interest in property of
Maker, which is not timely and completely stayed by appropriate
proceedings and/or bonding requirements; or
(h) Any court shall find or rule, or Maker shall assert or
claim, that this Note does not or will not constitute the legal, valid,
binding and enforceable obligations of the party or parties hereto; or
(i) The rendering of any judgment or judgments against Maker
for the payment of money in excess of one million dollars ($1,000,000),
in the aggregate, which remains unsatisfied and in effect for any
period of 15 consecutive days without a stay of execution; or
(j) Maker shall have concealed, removed, or permitted to be
concealed or removed, any part of its property, with intent to hinder,
delay or defraud its creditors or any of them, or made or suffered a
transfer of any of its property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law; or shall have made
any transfer of its property to or for the benefit of a creditor at a
time when other creditors similarly situated have not been paid; or
shall have suffered or permitted, while insolvent, any creditor to
obtain a lien upon any of its property through legal proceedings or
distraint or other process which is not vacated within 15 days from the
date thereof; or
(k) Any material adverse change shall occur in the business,
assets or condition (financial or otherwise) of Maker; or
(l) Payee at any time shall, in Payee's sole and absolute
discretion, consider the payment of this Note to be insecure; or
(m) Maker shall declare, set aside or pay any dividend or
distribution of any kind (in cash, property, securities or otherwise)
on any class or series of its capital stock; or
(n) Maker shall breach any provision of the Subordination
Agreement;
then the Payee, at its option, subject to the Subordination Agreement, may
declare the unpaid principal portion of this Note to be forthwith due and
payable, whereupon the said portion of this Note and all accrued, earned and
unpaid interest shall become immediately due and payable by Maker without
demand, presentment for payment, notice of non-payment, protest, notice of
protest, notice of intent to accelerate maturity, notice of acceleration of
maturity or any other notice of any kind to Maker, or any other person liable
hereon or with respect hereto, all of which are hereby expressly waived by Maker
and each other person liable hereon or with respect hereto, anything
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contained herein or in any other documents or instruments to the contrary
notwithstanding; and upon the happening of any Event of Default referred to in
paragraphs (c), (d) or (e), the unpaid principal portion of this Note and all
other interest on this Note then accrued, earned and unpaid shall become
automatically due and payable by Maker without demand, presentment for payment,
notice of nonpayment, protest, notice of protest, notice of intent to accelerate
maturity, notice of acceleration of maturity or any other notice of any kind to
Maker or any other person liable hereon or with respect hereto, all of which are
expressly waived by Maker and each other Person liable hereon or with respect
hereto, anything contained herein or in any document or instrument to the
contrary notwithstanding. Further, upon any default or event of default, subject
to the Subordination Agreement, Payee shall have all other rights and remedies
as set forth herein and as otherwise provided at law or in equity, all such
rights and remedies being cumulative, including, but without limitation, the
right, without prior notice to Maker or any other person liable with respect
hereto, to set-off and apply any indebtedness at any time owing by Payee to, or
for the credit or account of, Maker against any indebtedness owed to Payee by
Maker, irrespective of whether or not Payee shall have made demand under this
Note or any other instrument securing this Note, and although this Note may not
then be matured; provided, that any exercise of said set-off by Payee shall be
subsequently followed by notice from Payee to Maker of such right exercised, but
the failure to give such notice shall in no manner affect the right of Payee in
respect to set-offs and corresponding applications of funds.
7. Maker shall, upon demand by Payee, promptly pay to Payee any and all
costs and expenses, including legal expenses, collections costs and attorneys'
fees (whether or not legal proceedings are instituted including, without
limitation, legal expenses and reasonable attorneys' fees in connection with any
bankruptcy proceedings), incurred or paid by Payee in protecting or enforcing
Payee's rights hereunder. Without limiting the generality of the foregoing, if
this Note is collected by suit or through the Bankruptcy Court, or any judicial
proceeding, or if this Note is not paid at maturity, however such maturity may
be brought about, and it is placed in the hands of an attorney for collection
(whether or not legal proceedings are instituted), then Maker agrees to pay, in
addition to all other amounts owing hereunder, the collection costs and
reasonable attorneys' fees of the holder hereof.
8. The records of Payee shall constitute rebuttably presumptive
evidence of the principal and earned, accrued and unpaid interest remaining
outstanding on this Note.
9. It is the intent of Payee and Maker in the execution and performance
of this Note to remain in strict compliance with Applicable Law from time to
time in effect. In furtherance thereof, Payee and Maker stipulate and agree that
none of the terms and provisions contained in this Note shall ever be construed
to create a contract to pay for the use, forbearance or detention of money with
interest at a rate or in an amount in excess of the Maximum Rate or amount of
interest permitted to be charged under Applicable Law. For purposes of this Note
"interest" shall include the aggregate of all charges which constitute interest
under Applicable Law that are contracted for, charged, reserved, received or
paid under this Note. Maker shall never be required to pay unearned interest and
shall never be required to pay interest at a rate or in an amount in excess of
the Maximum Rate or amount of interest that may be lawfully charged under
Applicable Law, and the provisions of this paragraph shall control over all
other provisions of this Note, and of any other instrument pertaining to or
securing this Note, which may be in actual or apparent conflict herewith. If
this Note is
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prepaid, or if the maturity of this Note is accelerated for any reason, or if
under any other contingency the effective rate or amount of interest which would
otherwise be payable under this Note would exceed the Maximum Rate or amount of
interest Payee or any other holder of this Note is allowed by Applicable Law to
charge, contract for, take, reserve or receive, or in the event Payee or any
holder of this Note shall charge, contract for, take, reserve or receive monies
that are deemed to constitute interest which would, in the absence of this
provision, increase the effective rate or amount of interest payable under this
Note to a rate or amount in excess of that permitted to be charged, contracted
for, taken, reserved or received under Applicable Law then in effect, then the
principal amount of this Note or the amount of interest which would otherwise be
payable under this Note or both shall be reduced to the amount allowed under
Applicable Law as now or hereinafter construed by the courts having
jurisdiction, and all such moneys so charged, contracted for, taken, reserved or
received that are deemed to constitute interest in excess of the Maximum Rate or
amount of interest permitted by Applicable Law shall immediately be returned to
or credited to the account of Maker upon such determination. Payee and Maker
further stipulate and agree that, without limitation of the foregoing, all
calculations of the rate or amount of interest contracted for, charged, taken,
reserved or received under this Note which are made for the purpose of
determining whether such rate or amount exceeds the Maximum Rate or amount,
shall be made to the extent not prohibited by Applicable Law, by amortizing,
prorating, allocating and spreading during the period of the full stated term of
this Note, all interest at any time contracted for, charged, taken, reserved or
received from Maker or otherwise by Payee or any other holder of this Note.
10. Maker and all sureties, endorsers and guarantors (if any) of this
Note waive demand, presentment for payment, notice of non-payment, protest,
notice of protest, notice of intent to accelerate maturity, notice of
acceleration of maturity and all other notice, filing of suit and diligence in
collecting this Note or enforcing any security herefor, and agree to any
substitution, exchange or release of any such security, the release of any party
primarily or secondarily liable hereon and further agree that it will not be
necessary for any holder hereof, in order to enforce payment of this Note, to
first institute suit or exhaust its remedies against any security herefor, and
consent to any one or more extensions or postponements of time of payment of
this Note on any terms or any other indulgences with respect hereto, without
notice thereof to any of them.
11. This Note shall be governed by and construed in accordance with the
internal laws of the State of Texas and applicable federal laws of the United
States of America. This Note has been delivered and accepted and is payable at
Houston, Xxxxxx County, Texas. There are no unwritten or oral agreements between
the Maker and the Payee. Payee has no commitment to make any additional loans or
extend financial accommodations to Maker beyond the indebtedness evidenced
hereby.
12. This Note shall be subject to the terms and provisions of the
Subordination Agreement, and shall be subordinated to indebtedness under the
Credit Facility as provided therein.
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EXECUTED AND EFFECTIVE as of the day and year first above written.
MAKER:
GRANT PRIDECO, INC.
By:
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Name:
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Title:
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