SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
/ / TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No.
0-3919
PRODUCTION OPERATORS CORP
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
59-0827174
(IRS Employer Identification No.)
11302 Tanner Road
Houston, Texas 77041
(Address of principal executive offices)
(713) 466-0980
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve
months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
YES X
NO
On July 27, 1995 there were 10,122,329 shares of the
Company's common stock, $l.00 par value, outstanding (exclusive
of treasury shares).
The index to Exhibits is on page 11.
<PAGE> 2
PART I. FINANCIAL INFORMATION
FINANCIAL STATEMENTS
PRODUCTION OPERATORS CORP AND SUBSIDIARY
The condensed consolidated financial statements included herein
have been prepared by Production Operators Corp, without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission. The term "Company" as used herein refers to
Production Operators Corp and its operating subsidiary,
Production Operators, Inc., together with its subsidiaries,
unless the context otherwise indicates. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules
and regulations, although the Company believes that the
disclosures are adequate to make the information presented not
misleading. It is suggested that these condensed consolidated
financial statements be read in conjunction with the consolidated
financial statements and the notes thereto included in the
Company's latest annual report on Form l0-K. In the opinion of
the Company all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the financial position
of the Company as of June 30, 1995, and the results of their
operations for the nine months ended June 30, 1995 and 1994 and
their cash flows for the nine months ended June 30, 1995 and 1994
have been included. The results of operations for such interim
periods are not necessarily indicative of the results for the
full year.
<PAGE> 3
<TABLE>
PRODUCTION OPERATORS CORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1995 AND SEPTEMBER 30, 1994
(000'S OMITTED)
<CAPTION>
June 30, September 30,
1995 1994
----------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . $ 739 $ 1,037
Marketable securities . . . . . . . . . . 803 2,589
Receivables, net of reserve of $153 at
June 30, 1995 and $135 at
September 30, 1994:
Sales and services . . . . . . . . . . 16,512 15,137
Construction work in progress. . . . . 8,020 1,142
Inventories - at cost:
Compressor parts and supplies . . . . . 4,954 4,171
Construction work in progress . . . . . 2,550 3,524
-------- --------
Total current assets . . . . . . . . 33,578 27,600
Property and equipment, at cost, net of
accumulated depreciation, depletion and
amortization of $141,231 at June 30,
1995 and $133,037 at September 30, 1994. . 173,515 134,466
Long-term receivable and other assets . . . 7,367 6,051
-------- --------
$214,460 $168,117
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Accounts payable. . . . . . . . . . . . . $ 7,776 $ 6,327
Accrued liabilities . . . . . . . . . . . 3,724 5,712
Income taxes payable. . . . . . . . . . . 213 279
-------- --------
Total current liabilities. . . . . . 11,713 12,318
Senior term notes . . . . . . . . . . . . . 43,000 6,000
Deferred income taxes . . . . . . . . . . . 17,918 16,093
Stockholders' investment:
Common stock. . . . . . . . . . . . . . . 10,259 10,259
Additional paid-in capital. . . . . . . . 71,112 70,988
Retained earnings . . . . . . . . . . . . 65,122 57,362
Deferred compensation - ESOP. . . . . . . (3,456) (3,289)
Treasury stock. . . . . . . . . . . . . . (1,208) (1,614)
-------- --------
Total stockholders' investment . . . . 141,829 133,706
-------- --------
$214,460 $168,117
</TABLE>
<PAGE> 4
<TABLE>
PRODUCTION OPERATORS CORP AND SUBSIDIARY
CONSOLIDATED INCOME STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED-000'S OMITTED EXCEPT PER SHARE AMOUNTS)
<CAPTION>
Quarter Ended Nine Months Ended
June 30, June 30,
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net revenues from sales and
services and other income . . . . $20,970 $18,968 $60,264 $57,060
Costs and expenses:
Cost of sales and services . . . 9,579 8,800 28,712 27,704
Depreciation, depletion and
amortization. . . . . . . . . . 3,771 3,861 10,734 10,923
General and administrative
expenses. . . . . . . . . . . . 1,707 1,686 5,038 4,869
Interest and debt expenses . . . 545 87 990 184
------- ------- ------- -------
15,602 14,434 45,474 43,680
Income before income taxes and
cumulative effect of change in
accounting principle. . . . . . . 5,368 4,534 14,790 13,380
Provision for income taxes . . . . 1,834 1,505 5,141 4,658
Income before cumulative effect
of change in accounting
principle . . . . . . . . . . . . 3,534 3,029 9,649 8,722
Cumulative effect of change in
accounting principle (SFAS
No. 109). . . . . . . . . . . . . -- -- -- 200
------- ------- ------- -------
Net income . . . . . . . . . . . . $ 3,534 $ 3,029 $ 9,649 $ 8,922
Net income per share:
Primary and fully diluted:
Income before cumulative
effect of change in
accounting principle. . . . . . $ .35 $ .30 $ .95 $ .86
Cumulative effect of change in
accounting principle. . . . . . -- -- -- .02
Net income . . . . . . . . . . . $ .35 $ .30 $ .95 $ .88
Weighted average shares
outstanding . . . . . . . . . . . 10,231 10,179 10,189 10,180
Dividends per share. . . . . . . . $ .07 $ .06 $ .19 $ .18
Average shares outstanding upon
which dividends were accrued. . . 10,122 10,071 10,094 10,071
</TABLE>
<PAGE> 5
<TABLE>
PRODUCTION OPERATORS CORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED-000'S OMITTED)
<CAPTION>
Nine Months Ended
June 30,
1995 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers. . . . . . . . . . $ 52,357 $ 53,477
Cash paid to suppliers and employees. . . . . . (34,245) (39,946)
Income tax paid . . . . . . . . . . . . . . . . (2,998) (2,146)
Interest paid . . . . . . . . . . . . . . . . . (869) (184)
Interest and dividends received . . . . . . . . 551 732
Other income. . . . . . . . . . . . . . . . . . 542 408
-------- --------
15,338 12,341
Cash flows from investing activities:
Net additions to property and equipment . . . . (51,121) (34,094)
Proceeds from sale of securities. . . . . . . . 2,537 10,099
Proceeds from sale of property and equipment. . 1,371 2,177
Purchase of securities. . . . . . . . . . . . . (677) (640)
Additions to other assets . . . . . . . . . . . (2,762) (83)
-------- --------
(50,652) (22,541)
Cash flows from financing activities:
Additions to net borrowings on long-term senior
notes. . . . . . . . . . . . . . . . . . . . . 37,000 9,000
Dividends paid. . . . . . . . . . . . . . . . . (1,918) (1,813)
(Additions to) reduction of deferred
compensation under Company's ESOP Plan . . . . (167) 464
Reduction of Company's ESOP bank loan . . . . . -- (395)
Cash received upon exercise of stock options. . 413 169
Cash bonus paid upon exercise of stock options. (293) (88)
Repurchases of stock awards . . . . . . . . . . (19) (19)
-------- -------
35,016 7,318
Decrease in cash and cash equivalents . . . . . . (298) (2,882)
Cash and cash equivalents at beginning of year. . 1,037 3,453
-------- --------
Cash and cash equivalents at end of quarter . . . $ 739 $ 571
</TABLE>
<PAGE> 6
<TABLE>
PRODUCTION OPERATORS CORP AND SUBSIDIARY
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
FOR THE NINE MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED-000'S OMITTED)
<CAPTION>
Nine Months Ended
June 30,
1995 1994
------- -------
<S> <C> <C>
Net income. . . . . . . . . . . . . . . . . . . . . $ 9,649 $ 8,922
------- -------
Adjustments:
Depreciation, depletion and amortization. . . . . 10,734 10,923
Provision for deferred income tax . . . . . . . . 1,825 1,002
Provision for tax benefits on stock option
exercises and ESOP dividends . . . . . . . . . . 384 137
Issuance of stock awards. . . . . . . . . . . . . 74 85
Provision for bad debts . . . . . . . . . . . . . 18 --
Gain on sale of property and equipment. . . . . . (530) (998)
Gain on sale of marketable securities,
net of reserve . . . . . . . . . . . . . . . . . (74) (184)
Increase in receivables . . . . . . . . . . . . . (8,271) (2,843)
Decrease in inventories . . . . . . . . . . . . . 647 3,522
(Increase) decrease in long-term receivable . . . 1,487 (5,279)
Increase (decrease) in accounts payable . . . . . 1,449 (3,589)
Decrease in accrued liabilities . . . . . . . . . (1,988) (530)
SFAS No. 109 adjustment . . . . . . . . . . . . . -- (200)
Increase (decrease) in income taxes payable . . . (66) 813
Decrease in refundable taxes. . . . . . . . . . . -- 560
------- -------
5,689 3,419
------- -------
Net cash provided by operating activities . . . . . $15,338 $12,341
</TABLE>
<PAGE> 7
MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations - Net revenues for the three and six months
ended March 31, 1995 were $19.9 million and $39.3 million,
respectively, reflecting increases of $971,000 (5%) and $1.2 million
(3%) over the same periods in the prior year.
Revenues from contract gas handling services increased $1,932,000
(13%) and $3,342,000 (11%), respectively, during the second quarter
and six months ended March 31, 1995 as compared to the year ago
periods. The Company's revenue producing compression fleet, including
contract operated units, averaged 314,000 and 305,000 horsepower,
respectively, during the second quarter and six months of the current
fiscal year as compared to 274,000 and 265,000 horsepower last year,
increases of 15% for both comparative periods. The increased revenue
reflected the growth in revenue producing compression equipment which
was at a record 329,000 horsepower with an order backlog of owned
equipment totaling 53,000 horsepower as of March 31, 1995.
Construction, installation, demobilization, enhanced oil recovery and
associated asset sales were essentially unchanged from the preceding
year. Subsequent to quarter end, 18,000 horsepower started up in
Argentina and Venezuela resulting in revenue producing horsepower of
347,000 and a backlog of 43,000. Average realized price per
horsepower remained virtually unchanged from the prior year.
Revenues from oil and gas operations declined $1,282,000 (37%) and
$2,101,000 (32%) for the three and six months of the current fiscal
year, respectively, compared to the preceding year. Oil production
for the second quarter was 107,164 barrels at an average price of
$16.01 per barrel versus 150,434 barrels at $12.59 per barrel during
the fiscal 1994 second quarter. Gas production for the three months
ended March 31, 1995 was 337,457 Mcf at an average price of $1.41 per
Mcf compared to 730,595 Mcf at $2.16 a year ago. For the six months
ended March 31, 1995 oil production totaled 220,623 barrels at an
average price of $15.78 per barrel as compared to 299,721 barrels at
$13.27 during the same period last year. Gas production during the
first six months of the current year was 720,638 Mcf at $1.49 as
compared to 1,246,083 Mcf at $2.15 a year ago. As noted in the
Company's fiscal 1995 first quarter report, the decline in production
is related to a combination of lower gas well development efforts in
light of unfavorable market conditions, natural production decline
rates and the sale of a producing property at yearend fiscal 1994.
Other revenues, comprised principally of rents, interest, dividends
and net gains on the sales of equipment and marketable securities
totaled $572,000 and $801,000, respectively, for the three and six
months ended March 31, 1995 as compared to $251,000 and $840,000 for
the comparable periods last year.
Total operating income from sales and services (revenues less cost of
sales and services and depreciation, depletion and amortization) for
the three and six month periods ended March 31, 1995 increased
<PAGE> 8
$403,000 (7%) and $1,111,000 (10%), respectively, compared to the year
ago periods.
Operating income from contract gas handling services increased
$901,000 (17%) and $1,892,000 (18%), respectively, for the second
quarter and first half of the current fiscal year versus the same
periods a year ago. During the second quarter, the Company began
engineering and design work in connection with a 16,000 horsepower
compression facility in Argentina. In April the construction of eight
sites and the shipment of equipment and materials commenced with
operations currently scheduled to begin gradual phase in during the
fourth quarter. In addition, the Company's Venezuelan subsidiary
substantially completed construction and installation of a large water
injection plant which began operations in April. Management believes
prospects continue to be favorable for additional expansion in both
the United States and South America for our primary business segment
as the large integrated petroleum and pipeline companies seek
outsourcing solutions to their gas handling requirements.
Oil and gas operating income declined $498,000 (93%) and $781,000
(89%) for the second quarter and first six months ended March 31,
1995, respectively, as compared to the prior year periods. The
erosion of profits in this operating segment are due to the continued
negative impact of the various factors mentioned in the preceding
discussion of revenues.
Interest expense for the second quarter and six months ended March 31,
1995 was $337,000 and $445,000, respectively, compared to $64,000 and
$97,000 a year ago. These changes are the result of higher bank
borrowings to fund increased capital spending as further discussed in
the following section on liquidity and capital resources.
The provision for depreciation, depletion and amortization declined
$153,000 (4%) and $99,000 (1%), respectively, for the second quarter
and six months ended March 31, 1995 reflecting a reduction in oil and
gas depletion expense as a result of substantially lower production
volumes. Depreciation expense related to compression equipment
increased significantly primarily due to the increase in revenue
producing horsepower.
Liquidity and Capital Resources - As of March 31, 1995 the Company had
cash and cash equivalents in the amount of $1,618,000
versus $1,037,000 at September 30, 1994, the end of its preceding
fiscal year. The principal sources of cash during the current year's
first six months were $15,043,000 from operations, $22,737,000 in bank
borrowings and $1,764,000 on sales of property, equipment and
marketable securities. The chief uses of cash were $35,813,000 in
capital additions and $1,209,000 for dividend payments. Accounts
receivable increased $4,423,000 during the first six months of fiscal
1995 to $20,702,000 primarily related to two construction projects.
The inventory balance during the same period declined $2,280,000
principally due to the start up of a project which included equipment
fabrication and construction work that had been carried in the
construction-work in progress inventory account. Property, plant and
equipment, net of accumulated depreciation, depletion and
amortization, showed an increase of $26,952,000 in the first half of
<PAGE> 9
the year as capital spending in the Company's core contract gas
handling services segment remained at record levels. Capital
expenditures for the six months totaled $35,813,000 with $33,805,000
applied to contract gas handling services; $910,000 for our oil and
gas production segment and $1,098,000 for additions to all other
areas. During the first six months of 1995, the Company mobilized a
very large amount of horsepower. The additional capital expenditures
required to mobilize our present backlog are estimated at $10,000,000
to $12,000,000.
During the most recent quarter, the Company renegotiated its revolving
credit agreement with two banks increasing the available line from
$20,000,000 to $50,000,000. Additionally, a credit facility with
another bank was increased from $5,000,000 to $10,000,000. The
Company's liquidity requirements for the remainder of its current
fiscal year are expected to be satisfied principally from operating
cash flows and additional bank borrowings.
Other Items
On April 26, 1995 Production Operators Corp announced that Production
Operators, Inc. (POI) and Amoco Production Company's U.S. operating
group (Amoco) have agreed to form an alliance for domestic field
compression operations. Under the alliance Amoco and Production
Operators will work together to maximize efficiency for Amoco's field
compression assets and operations covering units up to 2,500
horsepower. The goal of this strategic alliance is to make Amoco and
POI more competitive and profitable, while building a unique
infrastructure to meet Amoco's compression needs for the future.
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The exhibits filed as part of this report are listed in the
Exhibits Index submitted as a separate section to this
report.
(b) The Registrant made no filing on Form 8-K during the period
April 1, 1995 and June 30, 1995.
All other items are inapplicable or have negative answers and
are therefore omitted from this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
PRODUCTION OPERATORS CORP
(Registrant)
/s/ D. John Ogren
D. John Ogren
President
/s/ William S. Robinson, Jr.
William S. Robinson, Jr.
Treasurer
Chief Financial Officer
Date: August 10, 1995
<PAGE> 11
Index to Exhibits
Exhibit
No. Description
(4)(d) Loan Agreement dated June 2, 1995 and the Second Amended
and Restated Credit Agreement with the Bank of New York
individually and as agent for the First National Bank of
Chicago.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 739
<SECURITIES> 803
<RECEIVABLES> 24,685
<ALLOWANCES> 153
<INVENTORY> 7,504
<CURRENT-ASSETS> 33,578
<PP&E> 314,746
<DEPRECIATION> 141,231
<TOTAL-ASSETS> 214,460
<CURRENT-LIABILITIES> 11,713
<BONDS> 43,000
<COMMON> 10,259
0
0
<OTHER-SE> 131,570
<TOTAL-LIABILITY-AND-EQUITY> 214,460
<SALES> 59,091
<TOTAL-REVENUES> 60,264
<CGS> 28,712
<TOTAL-COSTS> 28,712
<OTHER-EXPENSES> 15,772
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 990
<INCOME-PRETAX> 14,790
<INCOME-TAX> 5,141
<INCOME-CONTINUING> 9,649
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,649
<EPS-PRIMARY> .95
<EPS-DILUTED> .95
</TABLE>
AGREEMENT TO AMEND AND RESTATE
AGREEMENT TO AMEND AND RESTATE (this "Agreement"), dated as of
June 2, 1995, by and among Production Operators, Inc., a Florida
Corporation (the "Company"), the signatory Banks hereto (each a
"Bank" and, collectively, the "Banks") and The Bank of New York
("BNY"), as agent for the Banks (in such capacity, the "Agent"),
to amend and restate the Amended and Restated Credit Agreement,
dated as of January 14, 1991, by and among the Company, the Banks
and the Agent, as amended (as so amended, the "Existing Credit
Agreement").
RECITALS
A. Capitalized terms used herein that are not defined herein
and that are defined in the Existing Credit Agreement shall have
the meanings therein set forth.
B. Pursuant to the Existing Credit Agreement, the Banks made
Loans to the Company which Loans are, immediately prior to the
Effective Date (as defined below), in an aggregate unpaid
principal amount equal to $20,000,000 (the "Existing Loans").
C. Upon the Effective Date (as defined below), the Company
will borrow Loans under the Amended Agreement (as defined below)
in an amount equal to the Existing Loans and will prepay the
Existing Loans in full.
D. The Amended Agreement (as defined below) provides, among
other things, for the extension by the Banks of additional credit
to the Company.
In consideration of the Recitals and the covenants, conditions
and agreements herein contained, and other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Amended Agreement. On the date hereof, the Company, the
Banks and the Agent shall each execute and deliver to the other an
amendment to, and restatement of, the Existing Credit Agreement in
the form annexed hereto as Attachment A (as so amended and
restated, the "Amended Agreement").
2. Conditions Precedent. Once executed and delivered pursuant
to paragraph 1 hereof, the Amended Agreement shall not become
effective (and the Existing Credit Agreement shall continue to be
effective), until such time (the "Effective Date") as all of the
following conditions precedent shall have been fulfilled or waived
in writing by the Agent and the Banks in their sole discretion:
(a) The Agent shall have received, with sufficient copies
for each of the Banks, a certificate, dated as of the Effective
Date, of the Secretary or an Assistant Secretary of the Company
(i) attaching a true and complete copy of the resolutions of its
Board of Directors and of all documents evidencing other necessary
corporate action (in form and substance satisfactory to the Agent
and to Special Counsel) taken by the Company to authorize this
Agreement, the Amended Agreement and the Notes (as defined below)
and the borrowings thereunder (collectively, the "Amendment
Documents"), (ii) attaching a true and complete copy of the
Certificate of Incorporation and the By-Laws of the Company, (iii)
setting forth the incumbency of the officer or officers of the
Company who may sign the Amendment Documents, including therein a
signature specimen of such officer or officers, and (iv) attaching
a certificate of the Secretary of State of the State of Florida as
to the good standing of, and the payment of franchise taxes by,
the Company.
(b) The Agent shall have received one original promissory
note for each Bank, duly executed by an authorized officer of the
Company, substantially in the form of Exhibit B to the Amended
Agreement (collectively, the "Notes").
(c) The Agent shall have received from Special Counsel an
opinion addressed to the Banks and to the Agent, dated the
Effective Date, substantially in the form of Exhibit A to this
Agreement.
(d) The Agent shall have received an opinion of Alsup,
Bevis & Petty, counsel to the Company, addressed to the Banks and
to the Agent, dated the Effective Date, substantially in the form
of Exhibit B to this Agreement.
(e) The Agent shall have received payment of a closing
fee, for the pro rata account of the Banks according to the
Aggregate Commitments (as defined in the Amended Agreement), in
the amount of $50,000.
(f) The Agent shall have received payment of its fee, for
its services under the Amended Agreement, in an amount previously
agreed to in writing between the Company and the Agent.
(g) The fees and disbursements of Special Counsel
incurred in connection with the preparation, negotiation and
closing of the Amendment Documents, and in connection with all
legal matters incident thereto, shall have been paid in full.
(h) The Agent shall have received a Borrowing Request,
dated the Effective Date, substantially in the form of Exhibit D
to the Amended Agreement.
(i) The Agent shall have received payment of all accrued
interest and fees owed under the Existing Agreement.
(j) The Intercompany Debt (as defined in the Amended
Agreement) shall be subordinated to the obligations of the Company
under the Amended Agreement and under the Notes, and such
subordination shall be satisfactory in form and substance to the
Agent, the Required Banks and Special Counsel.
(k) All legal matters incident to the Amendment Documents
and the transactions contemplated thereby shall be satisfactory to
Special Counsel and counsel for each Bank.
3. Loans. On the Effective Date, the Company shall
borrow Loans under the Amended Agreement in an amount sufficient
to enable the Company to prepay the Existing Loans in full, and
the Company shall prepay the Existing Loans in full in compliance
with paragraph 2.4 of the Existing Credit Agreement (the
"Prepayment"). Notwithstanding anything contained to the contrary
in paragraph 4.4 of the Existing Credit Agreement, the Banks waive
their rights under such paragraph to be indemnified for any
breakage costs solely in connection with the Prepayment.
4. Commitments. The Banks hereby acknowledge that the
Amended Agreement increases each Bank's Commitment as set forth on
Exhibit A to the Amended Agreement.
5. Reaffirmation. The Company hereby (a) reaffirms and
admits the validity and enforceability of the Existing Credit
Agreement and the Notes (as defined therein), and all of its
obligations thereunder, (b) agrees and admits that it has no
claims against, or defenses to or offsets against any of its
obligations to, the Agent or any Bank under the Existing Credit
Agreement and the Notes (as defined therein), and (c) represents
and warrants that there exists no Event of Default (as defined
therein).
6. Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original and all of which
shall constitute one Agreement. It shall not be necessary in
making proof of this Agreement to produce or account for more than
one counterpart signed by the party against which enforcement is
sought.
7. Governing Law. This Agreement shall be construed and
enforceable in accordance with, and be governed by, the internal
laws of the State of New York without regard to principles of
conflict of laws.
The parties hereto have caused this Agreement to Amend and
Restate to be duly executed and delivered by their proper and duly
authorized officers as of the day and year first above written.
PRODUCTION OPERATORS, INC.
By: /s/ William S. Robinson, Jr.
Name: William S. Robinson, Jr.
Title: Treasurer and CFO
THE BANK OF NEW YORK,
individually and as Agent
By: /s/ Raymond J. Palmer
Name: Raymond J. Palmer
Title: Vice President
THE FIRST NATIONAL BANK
OF CHICAGO
By: /s/ Helen A. Carr
Name: Helen A. Carr
Title: Attorney-in-Fact
Production Operators Corp ("POC") hereby acknowledges the foregoing
Agreement, and reaffirms and admits the validity and enforceability of
the Subordination Agreement, dated as of January 14, 1991, by and
among POC, the Company and the Agent, as amended.
PRODUCTION OPERATORS CORP.
By: /s/ William S. Robinson, Jr.
Name: William S. Robinson, Jr.
Title: Treasurer and CFO
ATTACHMENT A
TO THE AGREEMENT TO AMEND AND RESTATE
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
by and among
PRODUCTION OPERATORS, INC.,
the signatory BANKS hereto
and
THE BANK OF NEW YORK,
as AGENT
$50,000,000
Dated as of June 2, 1995
THIS ATTACHMENT A IS THE SAME AS THE FOLLOWING DOCUMENT, THE SECOND
AMENDED AND RESTATED CREDIT AGREEMENT, AND IS ONLY BEING FILED ONCE IN
THIS EXHIBIT.
EXHIBIT A
TO THE AGREEMENT TO AMEND AND RESTATE
FORM OF OPINION OF SPECIAL COUNSEL
[Effective Date]
TO THE PARTIES LISTED IN SCHEDULE A ATTACHED HERETO
Re: Second Amended and Restated Credit Agreement, dated as of June
2, 1995, by and among Production Operators, Inc., the
signatory Banks thereto and The Bank of New York, as Agent
(the "Credit Agreement").
We have acted as Special Counsel in connection with the Credit
Agreement. Capitalized terms used herein that are defined in the
Credit Agreement shall have the same meanings as therein defined,
unless the context hereof otherwise requires.
We have examined originals or copies certified to our satisfaction
of the documents required to be delivered pursuant to the provisions
of paragraph 2 of the Agreement to Amend and Restate and paragraphs 7
and 8 of the Credit Agreement. In conducting such examination, we
have assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals, and the conformity to
originals of all documents submitted to us as copies.
Based upon the foregoing examination and relying, with your
permission, upon the opinion of Alsup, Bevis & Petty, counsel to the
Company, dated the date hereof and without making any independent
investigation with respect thereto and upon the representations and
warranties of the Company contained in the Credit Agreement as to
factual matters, and, in the case of the Loans made under the Credit
Agreement, subject to the statements of the Company required by the
Credit Agreement as to the purpose of such Loans, we are of the
opinion that:
1. All legal conditions precedent to the making of the first
Loans under the Credit Agreement have been satisfactorily met.
2. Assuming the due authorization, execution and delivery
thereof by the respective parties thereto, the Agreement to Amend and
Restate and the Credit Agreement constitute, and upon the due
execution and delivery thereof pursuant to the Credit Agreement for
value received, and based upon existing law, the Notes will
constitute, the valid and legally binding obligations of the parties
thereto enforceable in accordance with their respective terms, except
as such enforceability may be limited by equitable principles and by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally.
In rendering the foregoing opinion, we express no opinion as to
laws other than the laws of the State of New York and the federal laws
of the United States of America.
Very truly yours,
EMMET, MARVIN & MARTIN, LLP
SCHEDULE A
The Bank of New York, individually and as Agent
The First National Bank of Chicago
EXHIBIT B
TO THE AGREEMENT TO AMEND AND RESTATE
Form of Opinion of Counsel to the Company
(Effective Date)
The Bank of New York, individually
and as Agent
The First National Bank of Chicago
c/o The Bank of New York
1 Wall Street
New York, NY 10286
Gentlemen:
This opinion is being delivered to you pursuant to paragraph 2(d)
of that certain Agreement to Amend and Restate (the "Agreement to
Amend"), dated as of June 2, 1995, among Production Operators, Inc., a
Florida corporation ("POI"), the banks named above (the "Banks"), and
The Bank of New York, as Agent for the Banks. Terms defined in the
Credit Agreement (as herein defined) are used herein as therein
defined unless otherwise defined herein.
We have acted as special counsel to POI in connection with the
Agreement to Amend and the Second Amended and Restated Credit
Agreement, dated as of June 2, 1995, among POI, the Banks and the
Agent (the "Credit Agreement"). In that connection, we have examined
originals, or copies certified or otherwise identified to our
satisfaction, of the following:
(1) A draft of the Credit Agreement and the form of Note annexed
thereto as Exhibit B (the "Note") and a draft of the Agreement
to Amend;
(2) The Certificate of Incorporation, as amended, of POI;
(3) The bylaws, as amended, of POI;
(4) Resolutions adopted by the Board of Directors of POI
authorizing the execution and delivery of the Agreement to
Amend, the Credit Agreement and the Notes and the borrowings
under the Credit Agreement and the Notes;
(5) Certificates issued by the appropriate officials of the State
of Florida as to the good standing of POI in its jurisdiction
of incorporation and certificates of various state officials
as to the qualification of POI to do business and the good
standing of POI in such states;
(6) Such indentures, agreements, judgments, orders and other
documents of POI as were certified to us by an officer of POI
as being material; and
(7) Such other documents, agreements and certificates as we have
deemed necessary for purposes hereof.
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as
originals and the conformity with the original documents of all
documents submitted to us as copies. In addition, we have assumed
that the Agreement to Amend, the Credit Agreement and the Notes as
executed and delivered by POI will conform in all material respects to
the drafts thereof reviewed by us. As to any facts material to this
opinion, we have relied, to the extent we have deemed reliance proper,
upon the representations made by POI in the Credit Agreement,
certificates of public officials and certificates, and oaths and
declarations of officers or other representatives of POI, and have not
examined any public records other than the certificates issued by
state officials referred to above.
The opinions expressed below are subject to the qualifications that
(i) we have assumed the due corporate existence of each of the Banks
and the power and legal right and authority of each of the Banks to
authorize the Agent to enter into, execute and perform the Agreement
to Amend and the Credit Agreement and of the Banks to make the Loans
under the Credit Agreement and that each of the Agreement to Amend and
the Credit Agreement has been duly and validly authorized, executed
and delivered by the Agent and, accordingly, constitutes the valid and
binding obligation of the Banks enforceable in accordance with its
terms; and (ii) the enforceability of the Agreement to Amend, the
Credit Agreement and the Notes are subject to limitations imposed by
(A) applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting the rights of creditors generally and (B)
generally applicable rules of law and principles of equity with
respect to the availability of particular remedies.
In giving the opinions set forth below, we express no opinion with
respect to the laws of any jurisdiction other than the United States
of America, the corporate laws of the State of Florida and the laws of
the State of Texas. We note for your information that the Agreement
to Amend, the Credit Agreement and the Notes provide that they are to
be governed by the laws of the State of New York.
Based upon the foregoing, and subject in all respects to the
qualifications herein set forth, we are of the opinion that:
1. POI is a corporation validly existing and in good standing
under the laws of the State of Florida and has all requisite corporate
power and authority to own its Property and to carry on its business
as now conducted. POI is in good standing and duly qualified to do
business in each jurisdiction in which the failure to so qualify would
have a material adverse effect on the business, Property, operations
or condition, financial or otherwise, of POI.
2. POI has full power and authority to enter into, execute,
deliver and carry out the terms of the Agreement to Amend and the
Credit Agreement, to make the borrowings contemplated by the Credit
Agreement, to execute, deliver and carry out the terms of the Notes
and to incur the obligations provided for therein, all of which have
been fully authorized by all proper and necessary corporate action and
is in full compliance with its Certificate of Incorporation and
bylaws. No consent or approval of, or exemption by, the shareholders
of POI, any Governmental Body or any other Person (except for those
which have been obtained, made or given prior to the making of the
Loans) is required to authorize or is required in connection with the
execution, delivery and performance of the Agreement to Amend, the
Credit Agreement or the Notes, or is required as a condition to the
validity or enforceability of the Agreement to Amend, the Credit
Agreement or the Notes.
3. Each of the Agreement to Amend and the Credit Agreement
constitutes, and the Notes, when issued and delivered by duly
authorized officers of POI for value received, will constitute, the
valid and legally binding obligations of POI, enforceable against POI
in accordance with their respective terms; provided, however, we
express no opinion as to the choice of law provisions contained
therein.
4. Insofar as we know after due inquiry, with the exception of
those matters, if any, set forth in the annual financial statements of
POI as at September 30, 1994 and for the period then ended, or as may
be disclosed in writing to you, there are no actions, suits or
arbitration proceedings pending, or threatened, against POI or
maintained by POI at law or in equity before any Governmental Body
which might result in a material adverse change in the financial
condition, operations or Property of POI. Insofar as we know after
due inquiry, there are no proceedings pending or threatened against
POI or POC which call into question the validity or enforceability of
the Agreement to Amend, the Credit Agreement or the Notes.
5. No provision of the Certificate of Incorporation, bylaws or
preferred stock of POI or any of its Subsidiaries, and no provision of
any existing statute (including, without limitation, any applicable
usury law), rule or regulation known to us, or mortgage, indenture,
contract, agreement, judgment, decree or order binding on POI or any
of its Subsidiaries and identified to us as material by POI or any of
its Subsidiaries, would in any way prevent the execution, delivery or
carrying out of the terms of the Agreement to Amend, the Credit
Agreement and the Notes and the taking of any such action will not
constitute a default under, or result in the creation or imposition
of, or obligation to create, any Lien not permitted by paragraph 10.3
of the Credit Agreement upon the Property of POI pursuant to the terms
of any such mortgage, indenture, contract or agreement. Based solely
on the representations of officers of POI, POI is in compliance with
the financial tests contained in the covenants and restrictions in
agreements and instruments applicable to them.
6. Insofar as we know after due inquiry, neither POI nor any
Subsidiary is in default with respect to any judgment, order, writ,
injunction, decree or decision of any Governmental Body applicable to
POI or any of its Subsidiaries which default would have a material
adverse effect on the financial condition, operations or Property of
POI or any Subsidiary. Insofar as we know after due inquiry, POI and
each Subsidiary are complying in all material respects with all
applicable material statutes and regulations known to us of all
Governmental Bodies, including ERISA, if applicable, a violation of
which would have a material adverse effect on the financial condition,
operations or Property of POI or any Subsidiary.
7. Insofar as we know after due inquiry, neither POI nor any of
its Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of
purchasing or carrying any margin stock within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System,
as amended or supplemented, and if used in accordance with paragraph
2.6 of the Credit Agreement, no part of the proceeds of the Loans will
be used directly or indirectly (i) to purchase or carry any such
margin stock, (ii) to extend credit to others for the purpose of
purchasing or carrying any such margin stock, (iii) for a purpose
which violates or is inconsistent with the provisions of Regulations
G, T, U and X of the Board of Governors of the Federal Reserve System,
as amended, or (iv) for a purpose which violates any other applicable,
material law, rule or regulation of any Governmental Body.
8. Insofar as we know after due inquiry, each Plan, including
each Multiemployer Plan, established or maintained by POI, any of its
Subsidiaries or POC is in material compliance with the applicable
provisions of ERISA and the Code, and POI, each Subsidiary and POC
have filed all reports required to be filed with respect to each such
Plan by ERISA and the Code. Insofar as we know after due inquiry,
POI, each Subsidiary and POC have met all requirements with respect to
funding the Plans, including each Multiemployer Plan, imposed by ERISA
or the Code. Insofar as we know after due inquiry, neither POI, its
Subsidiaries nor POC has any Plan under which the actuarial value of
the Plan's benefits exceeds the value of the Plan's assets allocable
to such benefits as of September 30, 1994. Insofar as we know after
due inquiry, since the effective date of ERISA, there have not been,
nor are there now existing, any events or conditions which would
permit any Plan or Multiemployer Plan to be terminated under
circumstances which would cause the Lien provided under Section 4068
of ERISA to attach to the Property of POI, any of its Subsidiaries or
POC, and, since the effective date of ERISA, no Reportable Event which
may constitute grounds for the termination of any Plan or
Multiemployer Plan has occurred and no Plan or Multiemployer Plan has
been terminated in whole or in part.
9. Neither POI nor any Subsidiary is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act
or the Investment Company Act of 1940, and neither POI nor any
Subsidiary is subject to any statute or regulation which prohibits or
restricts the incurrence of Indebtedness under the Credit Agreement
and the Notes, including, without limitation, statutes or regulations
relative to common or contract carriers or to the sale of electricity,
gas, steam, water, telephone, telegraph or other public utility
services.
10. Insofar as we know after due inquiry, except as disclosed in
writing to the Agent and the Banks, neither POI nor any Subsidiary (i)
has received written notice or otherwise learned of any claim, demand,
action, event, condition, report or investigation indicating or
concerning any potential or actual liability which individually or in
the aggregate could reasonably be expected to have a material adverse
effect on the business, Property, operations or conditions (financial
or otherwise) of POI or any Subsidiary (for purposes of this opinion
only, a "Material Adverse Effect") arising in connection with: (a) any
noncompliance with or violation of the requirements of any applicable
federal, state or local environmental health and safety statutes and
regulations or (b) the release or threatened release of any toxic or
hazardous waste, substance or constituent or other substance into the
environment, (ii) has any threatened or actual liability in connection
with the release or threatened release of any toxic or hazardous
waste, substance or constituent or other substance into the
environment which individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect, (iii) has received notice
of any federal or state investigation evaluating whether any remedial
action is needed to respond to a release or threatened release of any
toxic or hazardous waste, substance or constituent or other substance
into the environment for which POI or any Subsidiary is or may be
liable which individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect, or (iv) has received
notice that POI or any Subsidiary is or may be liable to any Person
under the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C. Section 9601 et seq. (CERCLA") or
any analogous state law for which POI or any Subsidiary is or may be
liable which individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect. Insofar as we know after
due inquiry, POI and each Subsidiary is in compliance in all material
respects with the financial responsibility requirements of federal and
state environmental laws to the extent applicable, including, without
limitation, those contained in 40 C.F.R., parts 264 and 265, subpart
H, and any analogous state law.
This opinion is delivered to you solely in connection with the
execution and delivery of the Agreement to Amend,, the Credit
Agreement and the Notes and is to be relied upon only by you in such
connection and by no one else nor by you for any other purpose.
Very truly yours,
ALSUP, BEVIS & PETTY
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
by and among
PRODUCTION OPERATORS, INC.,
the signatory BANKS hereto
and
THE BANK OF NEW YORK,
as AGENT
$50,000,000
Dated as of June 2, 1995
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 2,
1995 (as the same may be amended, modified or supplemented from time
to time, the "Agreement") by and among PRODUCTION OPERATORS, INC., a
Florida corporation (the "Company"), the signatory BANKS thereto (each
a "Bank" and, collectively, the "Banks") and THE BANK OF NEW YORK, as
AGENT for the Banks (in such capacity, the "Agent").
RECITALS
I. The Company, the Banks and the Agent are parties to the
Amended and Restated Credit Agreement, dated as of January 14, 1991
(as amended, the "Existing Credit Agreement").
II. The Company, the Banks and the Agent desire to amend and
restate the Existing Credit Agreement in its entirety, to, among other
things, increase the Aggregate Commitments (defined below). For
convenience, this Agreement is dated as of June 2, 1995, and refer-
ences to certain matters relating to the period prior to the date
hereof have been deleted.
1. DEFINITIONS.
As used in this Agreement and in any exhibits annexed hereto the
terms defined in the preamble shall have the meanings therein defined
and the following terms shall have the following meanings unless the
context otherwise requires:
"Accountants" shall mean Arthur Andersen & Co. or such other firm
of certified public accountants of recognized national standing
selected by the Company.
"After Maturity Rate" shall have the meaning set forth in paragraph
2.2(c).
"Aggregate Commitments" shall mean the total of the Commitments set
forth in Exhibit A, as the same may be adjusted pursuant to the
provisions of paragraphs 2.3 and 2.5.
"Aggregate Net Commitments" shall mean the Aggregate Commitments
minus the Letter of Credit Exposure with respect to the Letters of
Credit issued pursuant to Paragraph 3.
"Agreement to Amend and Restate" shall mean the Agreement to Amend
and Restate, dated as of the date hereof, by and among the Company,
the Banks and the Agent.
"Applicable Margin" shall mean .4375% per annum with respect to any
portion of the outstanding principal balance of the Notes bearing
interest based on the LIBOR Rate.
"Agent's Prime Rate" shall mean the prime lending rate per annum of
BNY as publicly announced in New York City to be in effect from time
to time.
"Base Rate" shall mean, on any date, a rate of interest per annum
equal to the higher of (i) the Agent's Prime Rate in effect on such
date or (ii) the Federal Funds Rate in effect on such date plus 1/2 of
1%. All interest based on the Base Rate shall be calculated on the
basis of a 365/366 day year for the actual number of days elapsed,
including the first day but excluding the last day. Whenever interest
hereunder and under the Notes is expressed as a rate per annum
calculated with reference to the Base Rate, such rate per annum shall
be adjusted on the effective date of any change in such Base Rate.
"Base Rate Loans" shall mean Loans (or any portions thereof) at
such time as they (or such portions) are being made or maintained at a
rate of interest based upon the Base Rate.
"BNY" shall mean The Bank of New York.
"Borrowing Date" shall mean any date on which the Banks shall make
Loans or BNY shall issue Letters of Credit hereunder.
"Borrowing Request" shall mean a request to borrow funds in the
form of Exhibit D.
"Business Day" shall mean (i) any day on which all of the Banks
shall be open to the public for the transaction of their normal
banking business, or (ii) in respect of a LIBOR Interest Period, any
day on which all of the Banks shall be open for domestic and foreign
exchange business in London, Chicago and New York City.
"Cash Flow" shall mean net income computed in accordance with GAAP
plus depreciation, amortization of good will and other similar
non-cash expenses, and deferred taxes.
"Closing Date" shall mean the Effective Date as defined in the
Agreement to Amend and Restate.
"Code" shall mean the Internal Revenue Code of 1986, as the same
may be amended from time to time, or any successor thereto, and the
rules and regulations issued thereunder, as from time to time in
effect.
"Commitment" shall mean, in respect of any Bank, such Bank's
undertaking to make Loans to the Company subject to the terms and
conditions hereof in an aggregate principal amount not to exceed the
amount set forth next to the name of such Bank in Exhibit A, as the
same may be adjusted pursuant to the provisions of paragraphs 2.3 and
2.5.
"Commitment Fee" shall have the meaning set forth in paragraph 2.7.
"Commitment Period" shall mean the period from and including the
Closing Date to but excluding the earlier of Maturity or the
Termination Date.
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with the Company within
the meaning of Section 414(b) or 414(c) of the Code.
"Compliance Costs" (related to LIBOR Pricing Options) shall mean
costs or reduction in amount received not otherwise specifically
provided for herein incurred in connection with or resulting from
compliance by any Bank during the term of this Agreement with all
present and future laws, executive orders, treaties, directives and
regulations or any change therein or in the interpretation thereof by
any Governmental Body charged with the administration thereof or which
impose, modify or deem applicable any reserve, asset maintenance,
special deposit or other similar requirement on deposits obtained in
the interbank eurodollar market or extensions of credit, or other
assets, deposits or liabilities of such Bank, or which subject any
Bank to any tax with respect to this Agreement or the Notes or change
the basis of taxation of payments to any Bank of principal, interest
or fees payable under this Agreement or the Notes (except for changes
in the rate of tax imposed on such Bank's overall net income), or
which impose any other similar conditions with respect to the Loans.
"Consolidated" shall mean the Company and its Subsidiaries which
are consolidated for financial reporting purposes in accordance with
GAAP.
"Current Assets" shall mean current assets as determined in
accordance with GAAP.
"Current Liabilities" shall mean current liabilities as determined
in accordance with GAAP.
"Dollars" and "$" shall mean lawful currency of the United States
of America.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor statute thereto,
and the rules and regulations issued thereunder, as from time to time
in effect.
"ERISA Liabilities" shall mean, without duplication, the aggregate,
if any, of all unfunded vested benefits under all Plans and all
potential withdrawal liabilities under all Multiemployer Plans, if
any.
"Event of Default" shall have the meaning set forth in Paragraph 11
and, with respect to all paragraphs other than those in Paragraphs 11
and 14, shall also include any event which with the giving of notice
or the lapse of time, or both, would constitute an Event of Default as
set forth in Paragraph 11.
"Federal Funds Rate" shall mean for any day, the rate of interest
per annum (rounded to the nearest 1/100 of 1% or, if there is no
nearest 1/100 of 1%, then to the next higher 1/100 of 1%) equal to the
weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds
brokers on such day, as published by the Federal Reserve Bank of New
York on the Business Day next succeeding such day, provided that (i)
if the day for which such rate is to be determined is not a Business
Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the
next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be
the average rate charged to BNY on such day on such transactions as
determined by BNY and reported to the Agent.
"Financial Statements" shall have the meaning set forth in
paragraph 5.8.
"GAAP" shall mean generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board or in such other statement by such other entity as may be
approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of the date of determination,
consistently applied.
"Governmental Body" shall mean any nation or government or other
political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions
pertaining to government or any court or arbitrator.
"Indebtedness" shall mean all liabilities, obligations and
reserves, contingent or otherwise, which, in accordance with GAAP,
would be reflected as a liability on a balance sheet, and shall also
include, without duplication: (i) all Indebtedness for Borrowed Money
or for the deferred purchase price of Property, (ii) all obligations
secured by any Lien upon Property, (iii) all guaranties and other
contingent obligations, including without limitation, liabilities in
respect of letters of credit, (iv) all subordinated indebtedness, and
(v) all ERISA Liabilities, if any.
"Indebtedness for Borrowed Money" shall mean, without duplication,
all Indebtedness (i) in respect of money borrowed, (ii) evidenced by a
note (including, without limitation, the Notes), bond, debenture or
other like written obligation to pay money, (iii) in respect of rent
or hire of Property under leases or lease arrangements which under
GAAP are required to be capitalized, (iv) in respect of obligations
under conditional sales or other title retention agreements, and (v)
in respect of ERISA Liabilities, if any, and shall also include all
guaranties of any of the foregoing.
"Intercompany Debt" shall mean the indebtedness of the Company to
POC evidenced by a note, dated April 1, 1992, in the original
principal amount of $50,500,000, as the same may be reduced from time
to time, which indebtedness shall be subordinated, in form and
substance satisfactory to the Agent, the Banks and Special Counsel, to
the Indebtedness of the Company to the Banks hereunder and under the
Notes.
"Investments" shall have the meaning set forth in paragraph 10.4.
"L/C Application" shall mean BNY's standard form of application for
a commercial letter of credit from time to time in effect, or in the
case of a standby Letter of Credit, such other standard form of
application as BNY may require.
"Letter of Credit" shall have the meaning specified in paragraph
3.1.
"Letter of Credit Exposure" shall mean, on any date, the sum of (i)
the aggregate undrawn face amount of the Letter of Credit plus (ii)
the aggregate unpaid reimbursement obligations in respect of Letters
of Credit on such date (after giving effect to any Loans made on such
date to pay any such reimbursement obligations).
"LIBOR Interest Payment Date" shall mean, in respect of any LIBOR
Pricing Option, the last day of each LIBOR Interest Period selected by
the Company under paragraph 4.3.
"LIBOR Interest Period" shall mean any one, two or three month
period selected by the Company and notified to the Agent, commencing
on any Business Day, provided that no LIBOR Interest Period beginning
prior to the maturity date of the Notes shall end later than the
maturity date thereof. If a LIBOR Interest Period so selected would
otherwise end on a date which is not a Business Day, such Interest
Period shall instead end on the next succeeding Business Day provided
that (i) if such next Business Day falls in the next calendar month,
such LIBOR Interest Period shall end on the next preceding Business
Day and (ii) if such LIBOR Interest Period begins on a day for which
there is no numerically corresponding day in the calendar month at the
end of such LIBOR Interest Period, then such LIBOR Interest Period
shall end on the last Business Day of such calendar month.
"LIBOR Loans" shall mean Loans (or any portions thereof) at such
time as they (or such portions) are made or maintained at a rate of
interest based upon the LIBOR Rate.
"LIBOR Pricing Option" shall mean the option granted to the Company
pursuant to paragraph 4.3 to have interest on all or a portion of the
principal balance of the Notes computed with reference to a LIBOR Rate.
"LIBOR Rate" shall mean, with respect to any LIBOR Interest Period
applicable to any LIBOR Loan, the rate of interest per annum, as
determined by the Agent, obtained by dividing (and then rounding to
the nearest 1/100 of 1% or, if there is no nearest 1/100 of 1%, then
to the next higher 1/100 of 1%):
(a) the rate, as reported by BNY to the Agent, quoted by BNY
to leading banks in the interbank eurodollar market as the rate at
which BNY is offering Dollar deposits in an amount equal approximately
to the LIBOR Loan of BNY to which such LIBOR Interest Period shall
apply for a period equal to such LIBOR Interest Period, as quoted at
approximately 11:00 a.m. (New York City time) two Business Days prior
to the first day of such LIBOR Interest Period, by
(b) a number equal to 1.00 minus the aggregate of the then
stated maximum rates during such Interest Period of all reserve
requirements (including, without limitation, marginal, emergency,
supplemental and special reserves), expressed as a decimal,
established by the Board of Governors of the Federal Reserve System
and any other banking authority to which BNY and other major United
States money center banks are subject, in respect of eurodollar
funding (currently referred to as "Eurocurrency liabilities" in
Regulation D of the Board of Governors of the Federal Reserve System).
Such reserve requirements shall include, without limitation, those
imposed under such Regulation D. LIBOR Loans shall be deemed to
constitute Eurocurrency liabilities and as such shall be deemed to be
subject to such reserve requirements without benefit of credits for
proration, exceptions or offsets which may be available from time to
time to any Bank under such Regulation D. The LIBOR Rate shall be
adjusted automatically on and as of the effective date of any change
in any such reserve requirement, provided, however, the LIBOR Rate
shall not change with respect to all or any portion of the Notes that
are then subject to a LIBOR Pricing Option. Each determination by the
Bank of the LIBOR Rate shall be conclusive in the absence of manifest
error. All interest based on the LIBOR Rate shall be calculated on
the basis of a 360-day year for the actual number of days elapsed.
"Lien" shall mean any mortgage, pledge, assignment, lien (statutory
or otherwise), charge, encumbrance or security interest of any kind,
including, without limitation, the interest of a vendor or lessor
under any conditional sale agreement, capitalized lease or other title
retention agreement.
"Loan" and "Loans" shall have the meaning set forth in paragraph 2.1.
"Maturity" shall mean, in respect of any Note, the date on which
such Note shall become due and payable, whether at stated maturity, by
acceleration, by notice of intention to prepay or otherwise.
"Money Market Indebtedness" shall mean overnight Indebtedness for
Borrowed Money to any bank or other financial institution.
"Multiemployer Plan" shall mean any Plan which is a "multiemployer
plan" as defined in Section 4001(a)(3) of ERISA.
"Net Income" shall mean, for any period, net income for such
period, computed in accordance with GAAP, excluding extraordinary
gains and losses.
"Net Worth" shall mean the value of the assets of the Company in
excess of the liabilities of the Company, as determined in accordance
with GAAP.
"Note" and "Notes" shall have the meaning set forth in paragraph
2.2(b).
"POC" shall mean Production Operators Corp.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
Governmental Body succeeding to the functions thereof.
"Person" shall mean any individual, firm, partnership, joint
venture, corporation, association, business enterprise, Governmental
Body or any other entity of whatever nature, whether acting in an
individual, fiduciary or other capacity.
"Plan" shall mean any pension plan which is covered by Title IV of
ERISA and which is maintained by or to which contributions are made by
the Company, a Subsidiary or a Commonly Controlled Entity or in
respect of which the Company, a Subsidiary or a Commonly Controlled
Entity has or may have any liability.
"Property" shall mean all types of real, personal, tangible,
intangible or mixed property, including fixtures.
"Reportable Event" shall mean any event described in Section
4043(b) of ERISA or the regulations thereunder, a withdrawal from a
Plan described in Section 4063 of ERISA, or a cessation of operations
described in Section 4062(f) of ERISA.
"Required Banks" shall mean, at any time when no Loans are
outstanding, Banks having Commitments equal to at least 66-2/3% of the
Aggregate Commitments and at any time when Loans are outstanding,
Banks holding Notes having an unpaid principal balance equal to at
least 66-2/3% of the aggregate Loans outstanding.
"Special Counsel" shall mean Emmet, Marvin & Martin, LLP.
"Stock" shall mean any and all shares, interests, participations or
other equivalents (however designated) of corporate stock.
"Subsidiary" shall mean any corporation, association, partnership,
joint venture or other business entity of which the Company or any
Subsidiary of the Company, directly or indirectly, either (a) in
respect of a corporation, owns or controls more than 50% of the
outstanding Stock having ordinary voting power to elect a majority of
the board of directors or similar managing body, irrespective of
whether or not at the time the Stock of any class or classes shall or
might have voting power by reason of the happening of any contingency,
or (b) in respect of an association, partnership, joint venture or
other business entity, is entitled to share in more than 50% of the
profits and losses, however determined.
"Tangible Net Worth" shall mean Net Worth less goodwill, patents,
trademarks, trade names, copyrights, design rights, franchises, bond
discounts, underwriting and debt issue expenses, treasury Stock,
organization expenses and other such assets classified as "intangible
assets" on a balance sheet of the Company prepared as of the date of
computation in accordance with GAAP.
"Termination Date" shall mean December 31, 1999.
2. LOANS.
2.1. Amounts.
Subject to the terms and conditions hereof, each Bank
severally agrees to make loans (each a "Loan" and, collectively, the
"Loans") to the Company on and after the Closing Date to the
Termination Date. During the Commitment Period, the Company may
borrow, prepay, and reborrow Loans in accordance with the provisions
hereof, provided that the aggregate unpaid principal balance of all
Loans of the Banks at any one time outstanding shall not exceed the
Aggregate Net Commitments, and provided, further, that the aggregate
unpaid principal balance of each Bank's Loans at any one time
outstanding shall at no time exceed an amount equal to such Bank's
Commitment less such Bank's Letter of Credit Exposure with respect to
Letters of Credit issued by BNY pursuant to Paragraph 3. Loans shall
be Base Rate Loans, subject to the provisions of paragraph 2.2, LIBOR
Rate Loans, subject to the provisions of paragraph 4.3, or any
combination thereof. The principal amount of each Bank's Loan made on
a Borrowing Date shall be an amount equal to its pro rata share
according to the Aggregate Commitments of all Loans made on such
Borrowing Date.
2.2. (a) Borrowing Procedure.
The Company agrees to give to the Agent telephonic notice
at least two Business Days prior to a Borrowing Date with respect to
Loans to be made at the Base Rate and at least three Business Days
prior to a Borrowing Date with respect to Loans to be made subject to
a LIBOR Pricing Option, which Borrowing Date shall be a Business Day.
Each such telephonic notice shall be confirmed by the Company in
writing by the delivery of a Borrowing Request on or before the
Borrowing Date. The Agent shall promptly notify each Bank (by
telephone or otherwise, such notice to be confirmed by telecopy or
other writing) of the contents of each Borrowing Request. Each Bank
shall make immediately available funds available to the Agent for
credit to an account designated by the Agent not later than 12:00
noon, New York City time, on each Borrowing Date in an amount equal
to such Bank's pro rata share, according to the Aggregate Commitments,
of the Loans requested by the Company on such date. The principal
amount of each Loan to be made at the Base Rate on a Borrowing Date
shall equal (i) $200,000 or integral multiples of $100,000 in excess
thereof or (ii) the remaining unused portion of the Aggregate
Commitments. The principal amount of each Loan to be made subject to
a LIBOR Pricing Option on a Borrowing Date shall be equal to
$1,000,000 or integral multiples of $500,000 in excess thereof. All
Loans shall be disbursed by the Agent at its office designated in
paragraph 13.1 by crediting to the Company's general deposit account
with the Agent the funds received from each Bank, unless the Agent
shall determine that any condition precedent set forth in Paragraphs 6
or 8 has not been fulfilled. Unless the Agent shall have received
prior notice from a Bank (by telephone or otherwise, such notice to be
confirmed by telecopy or other writing) that such Bank will not make
available to the Agent the amount of such Bank's Loan, the Agent may
assume that such Bank has made such amount available to the Agent on
the Borrowing Date in accordance with this paragraph 2.2, and the
Agent may, in reliance upon such assumption, make available to the
Company on such Borrowing Date a corresponding amount. If and to the
extent a Bank shall not have so made such amount available to the
Agent, such Bank and the Company severally agree to repay to the Agent
on demand such corresponding amount, together with interest thereon,
for each day from the Borrowing Date until the date such amount is re-
paid to the Agent, at the applicable interest rate for such Loan as
set forth in paragraph 2.2(c). Such payment by the Company, however,
shall be without prejudice to its rights against such Bank. If such
Bank shall repay to the Agent such corresponding amount, such amount
so repaid shall constitute such Bank's Loan for purposes of this
Agreement, which Loan shall be deemed to have been made on the
Borrowing Date.
(b) The Notes.
On the first Borrowing Date, the Company shall duly issue
and deliver to the Agent a series of notes in the form of Exhibit B,
with appropriate insertions therein (each a "Note" and, collectively,
the "Notes"), payable to the order of each Bank, dated the first
Borrowing Date and representing the obligation of the Company to pay
to such Bank the lesser of (i) the Commitment of such Bank or (ii) the
outstanding principal balance of all Loans made by such Bank, in each
case with interest as prescribed in paragraph 2.2(c). Each Note shall
mature on the Termination Date, on which date all sums remaining due
thereon and hereunder shall be due and payable. In all events, the
principal balance owing by the Company in respect of each Bank's Note
shall be the aggregate amount of all Loans, including, without
limitation, Loans with respect to unreimbursed obligations of the
Company to BNY in connection with drafts drawn under Letters of Credit
issued by BNY, made by such Bank less all payments of principal
thereon made by the Company. Each Bank is hereby irrevocably
authorized by the Company to enter on the schedule attached to its
Note the amount of each Loan made by it hereunder, each payment
thereon, and the other information provided for on such schedule,
provided, however, that the failure to make any such entry with
respect to any Loan shall not limit or otherwise affect the obligation
of the Company hereunder or under any such Note. In the event that
such schedule shall be filled up, such Bank may attach one or more
continuations to such schedule as and when required. The aggregate
principal balance of the Loans set forth in such schedule shall be
presumptive evidence of the principal balance owing and unpaid thereon.
(c) Interest Rate on the Notes.
Each Note shall bear interest from the date thereof until
Maturity on each portion of the unpaid principal thereof (i) subject
to the Base Rate Pricing Option payable quarterly in arrears on the
last day of each March, June, September and December, commencing on
the first such day following the date of such Note, and at Maturity,
at a rate per annum equal to the Base Rate, (ii) subject to a LIBOR
Pricing Option, payable for each LIBOR Interest Period selected by the
Company on the LIBOR Interest Payment Date applicable thereto and at
Maturity, at a rate per annum equal to the LIBOR Rate plus the
Applicable Margin. After Maturity, each Note shall bear interest
(computed and adjusted in the same manner, and with the same effect,
as interest on the Notes prior to Maturity), payable on demand, on the
unpaid principal balance thereof at a rate per annum (the "After
Maturity Rate") equal to the Base Rate plus 2%, provided that any
portion of the unpaid principal balance thereof subject to a LIBOR
Pricing Option shall bear interest at a rate per annum equal to the
applicable LIBOR Rate plus 2% until the end of the then existing LIBOR
Interest Period and, thereafter, at a rate per annum equal to the Base
Rate plus 2% until paid, in each case, whether before or after the
entry of any judgment thereon.
2.3. Reduction of Commitments.
(a) Voluntary Reductions.
Upon at least three Business Days' irrevocable prior
telephonic (to be promptly confirmed in writing) or telecopy notice to
the Agent, the Company may permanently reduce the Aggregate
Commitments, in whole at any time, or in part from time to time,
without premium or penalty, provided that each partial reduction of
the Aggregate Commitments shall be in an aggregate amount equal to at
least $1,000,000 or integral multiples of $1,000,000 in excess
thereof. The Agent shall give at least two Business Days' prior
notice to each Bank of the contents of each such notice of reduction.
(b) [Intentionally Omitted].
(c) In General.
(i) Each reduction pursuant to this paragraph 2.3 shall
be accompanied by payment of the Commitment Fee accrued on the amount
of the Aggregate Commitments so reduced through the date of such
reduction and (ii) the Company shall pay the amount, if any, by which
the aggregate unpaid principal balance of the Notes exceeds the amount
of the Aggregate Commitments as so reduced, together with accrued
interest on the amount being prepaid to the date of such prepayment.
If any prepayment is made under this paragraph 2.3 with respect to a
LIBOR Loan, in whole or in part, prior to the last day of the
applicable LIBOR Interest Period, the Company agrees that it shall
indemnify the Banks in accordance with paragraph 4.4. Reductions of
the Aggregate Commitments shall be applied according to each Bank's
pro rata share of the Aggregate Commitments and any repayments
accompanying such reductions shall be applied to the repayment of
Loans pro rata according to the aggregate outstanding Loans of each
Bank.
2.4. Voluntary Prepayments of Notes.
Upon at least one Business Day's irrevocable prior notice to
the Agent, specifying the amount and the date of prepayment, the
Company shall have the right to prepay the Notes in whole at any time,
or in part from time to time, in aggregate principal amounts equal to
at least $100,000 or integral multiples of $100,000 in excess thereof,
without premium or penalty, but with accrued interest on the amount
being prepaid to the date of such prepayment, provided that if any
prepayment is made under this paragraph 2.4 with respect to a LIBOR
Loan prior to the last day of the LIBOR Interest Period applicable
thereto, the Company agrees that it shall indemnify the Banks in
accordance with paragraph 4.4. The Agent shall give prompt telephonic
or telecopy notice to each Bank of the contents of each such notice of
prepayment. Each notice of prepayment shall specify which portion of
the outstanding principal balance of the Notes is being prepaid, in
the absence of which each such prepayment of principal shall reduce,
first, that portion of the unpaid principal balance of the Notes which
is not subject to a LIBOR Pricing Option, and, second, those portions
of the outstanding principal balance of the Notes which are subject to
a LIBOR Pricing Option. Each prepayment under this paragraph 2.4
shall be made to the Agent and, promptly upon receipt thereof, the
Agent shall remit to each Bank its pro rata share thereof according to
the aggregate outstanding principal balance of the Notes.
2.5. Mandatory Payments and Prepayment of Notes.
(a) Cash Flow Coverage.
If at any time any Bank or the Company knows or becomes
aware that the sum of the aggregate outstanding principal balance of
all Indebtedness for Borrowed Money and liabilities with respect to
letters of credit (including, without limitation, the Letters of
Credit) of the Company and its Subsidiaries exceeds the difference
between (i) 200% of the total Consolidated Cash Flow of the Company
for the preceding four quarters minus (ii) the sum of all payments
made by the Company with respect to the Intercompany Debt during such
preceding four quarters, such Bank shall notify the Company thereof,
if applicable, or the Company shall notify the Agent thereof and
shall, within seven days after receipt of such notice or acquisition
of such knowledge, prepay the Notes by an amount equal to such dif-
ference.
(b) Upon the Termination Date.
The aggregate principal balance of the Loans outstanding on
the Termination Date shall be payable in full on the Termination Date.
(c) In General.
Each prepayment under paragraph 2.5(a) shall be applied
to the remaining installments of principal outstanding under the Notes
in the inverse order of the maturity thereof. If a payment or
prepayment is made under this paragraph 2.5 with respect to any LIBOR
Loan, in whole or in part, prior to the last day of LIBOR Interest
Period applicable thereto, the Company agrees that it shall indemnify
the Banks in accordance with paragraph 4.4
2.6. Use of Proceeds.
The proceeds of the Loans shall be used exclusively for the
working capital and general corporate purposes of the Company,
including capital expenditures. All Loans and the use to which the
proceeds thereof are put shall conform with the provisions of
paragraph 5.11.
2.7. Commitment Fee.
The Company agrees to pay to the Agent, for the pro rata
account of the Banks, a fee (the "Commitment Fee") equal to .175% per
annum (computed on the basis of a 365/366-day year for the actual
number of days elapsed) on the unused average daily amount of the
Aggregate Commitments during the Commitment Period. The Commitment
Fee shall be payable quarterly in arrears on the last day of each
March, June, September and December, commencing on the first such day
following the Closing Date.
2.8. [Intentionally Omitted].
2.9. [Intentionally Omitted].
2.10. Late Payments.
Any payment of principal or interest on the Notes and any
payment of the Commitment Fee or any other fee or payment payable by
the Company hereunder which is not paid on the date when due shall
bear interest at the After Maturity Rate, computed and adjusted in the
same manner as provided in paragraph 2.3(c), from the due date thereof
until the date such payment is made.
3. LETTERS OF CREDIT
3.1. Letters of Credit.
Subject to the terms and conditions hereof, BNY agrees to
issue from time to time during the Commitment Period letters of credit
(each a "Letter of Credit") for the Company's account and for any of
the purposes specified in paragraph 2.6, provided that immediately
after the issuance of each Letter of Credit, the sum of (a) the
aggregate undrawn amount at any one time outstanding under all Letters
of Credit, and (b) the aggregate principal balance of the Loans then
outstanding, will not exceed the Aggregate Commitments. Each Letter
of Credit shall be in a minimum face amount of $100,000 and shall be
satisfactory in form and substance to the Required Banks and BNY. The
L/C Applications and the Letters of Credit shall be subject to the
Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500, and shall, as
to matters not governed thereby, be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.
The expiration date of any Letter of Credit shall not extend beyond
the Termination Date. The Banks agree to participate in each Letter
of Credit in proportion to their participation in the Aggregate
Commitments.
3.2. Procedure for Issuance of Letters of Credit.
The Company may request the issuance of one or more Letters of
Credit on any Business Day, provided that the Company delivers an L/C
Application to BNY and (if different) the Agent with respect to each
such Letter of Credit at least five Business Days before the requested
issuance date specified therein. On receipt of such L/C Application,
the Agent shall promptly notify the Banks thereof. Upon the issuance
of any Letter of Credit, BNY shall send the original of such Letter of
Credit to the beneficiary thereof and copies thereof to the Company
and the other Banks.
3.3. Payment of Letter of Credit Drafts.
The Company agrees to reimburse BNY forthwith in an amount
equal to the amount paid by BNY on any draft honored under any Letter
of Credit. BNY agrees to notify the Company of any drawings under any
Letter of Credit. If the Company has not otherwise provided to BNY
immediately available funds to reimburse BNY as required by the
preceding sentence, the Company's obligations to make such
reimbursement shall be satisfied by the automatic making of a Base
Rate Loan by each Bank under its Note in the principal amount equal to
its pro rata share according to the Aggregate Commitments of the
amount of such draft paid by BNY. BNY agrees to notify the Agent (if
different), each other Bank and the Company of the making of any such
Base Rate Loan. The Company irrevocably agrees that its obligation
under this paragraph 3.3 to reimburse BNY for the payment of the
amount of any draft honored under any Letter of Credit shall be
absolute and unconditional and shall not be discharged in any way
except by the payment in full of such obligations.
3.4. Letter of Credit Participation and Funding Commitments.
(a) Each Bank hereby unconditionally and irrevocably,
severally for itself only and without any notice to or the taking of
any action by such Bank, takes an undivided participating interest in
the obligations of BNY under and in connection with each Letter of
Credit in an amount equal to its pro rata (according to the Aggregate
Commitments) portion of each such Letter of Credit. Each Bank shall
be liable to BNY for its pro rata (according to the Aggregate
Commitments) portion of the unreimbursed amount of any draft drawn and
honored under each Letter of Credit. Each Bank shall also be liable
for an amount equal to the product of its Commitment Percentage and
any amounts paid by the Company pursuant to paragraph 3.5 that are
subsequently rescinded or avoided, or must otherwise be restored or
returned. Such liabilities shall be unconditional and without regard
to the occurrence of any Event of Default or the compliance by the
Company with any of its obligations under this Agreement. Each
payment by a Bank of such pro rata (according to the Aggregate
Commitments) portion or of any amounts so rescinded, avoided, restored
or returned shall be treated as the making by such Bank of an
automatic Base Rate Loan.
(b) BNY will promptly notify each other Bank (which notice
shall be promptly confirmed in writing) of the date and the amount of
any draft presented under any Letter of Credit with respect to which
full reimbursement of payment is not made by the Company, and
forthwith upon receipt of such notice, such Bank (other than BNY)
shall make available to the Agent for the account of BNY its pro rata
share (according to the Aggregate Commitments) of the amount of such
unreimbursed draft (which shall constitute such Bank's Base Rate Loan)
at the office of the Agent specified in paragraph 13.1, in lawful
money of the United States and in immediately available funds, before
4:00 P.M., New York City time, on the day such notice was given by
BNY, if the relevant notice was given by BNY at or prior to 1:00 P.M.,
New York City time, on such day, and before 12:00 noon, New York City
time, on the next succeeding Business Day, if the relevant notice was
given by BNY after 1:00 P.M., New York City time, on such day. The
Agent shall distribute the payments made by each Bank (other than BNY)
pursuant to the immediately preceding sentence to BNY promptly upon
receipt thereof in like funds as received. Each Bank shall indemnify
and hold harmless the Agent and BNY from and against any and all
losses, liabilities (including liabilities for penalties), actions,
suits, judgments, demands, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) resulting from
any failure on the part of such Bank to provide, or from any delay in
providing, the Agent with such Bank's pro rata share (according to the
Aggregate Commitments) of the amount of any payment made by BNY under
a Letter of Credit in accordance with this clause (b) (except in
respect of losses, liabilities or other obligations suffered by the
Agent or BNY resulting from the gross negligence or willful misconduct
of the Agent or BNY). If a Bank does not make available to the Agent
when due such Bank's pro rata share (according to the Aggregate
Commitments) of any unreimbursed payment made by BNY under a Letter of
Credit (other than payments made by BNY by reason of its gross
negligence or willful misconduct), such Bank shall be required to pay
interest to the Agent for the account of BNY on such Bank's pro rata
share (according to the Aggregate Commitments) of such payment at a
rate of interest per annum equal to the Federal Funds Rate from the
date such Bank's payment is due until the date it is received by the
Agent. The Agent shall distribute such interest payments to BNY upon
receipt thereof in like funds as received. If the Agent receives a
Bank's pro rata share (according to the Aggregate Commitments) of any
unreimbursed payment under a Letter of Credit after the date when due
and the Agent receives interest on any late payment from such Bank in
accordance with the provisions of the preceding sentence, such Bank's
Base Rate Loan shall be deemed to have been made to the Company on the
date BNY made payment under such Letter of Credit.
(c) Whenever the Agent is reimbursed by the Company for any
payment under a Letter of Credit and such payment relates to an amount
for which the Agent has received for the account of BNY from a Bank
such Bank's pro rata share (according to the Aggregate Commitments) of
such Letter of Credit pursuant to this Agreement, the Agent will pay
to such Bank in immediately available funds such Bank's pro rata share
of such payment (i) before the close of business on the day such
payment from the Company is received, if such payment is received at
or prior to 1:00 P.M., New York City time, on such day, or (ii) before
12:00 Noon, New York City time, on the next succeeding Business Day,
if such payment from the Company is received after 1:00 P.M., New York
City time, on such day.
(d) Each Bank hereby irrevocably authorizes BNY to issue
Letters of Credit and to pay the amount of any draft presented under a
Letter of Credit upon presentation of documents which, upon their
face, conform to the terms of such Letter of Credit, and each Bank
authorizes the Agent to receive from the Company reimbursement for
payments under such Letter of Credit, to receive from the Company
payment of all fees, charges and interest in respect of the Letters of
Credit, and to take such action on its behalf under the provisions of
this Agreement and to exercise such powers and to perform such duties
hereunder as are specifically delegated to or required of the Agent
and BNY by the terms hereof, together with such powers as are
reasonably incidental thereto.
3.5. Unconditional Obligations.
In order to induce BNY to issue the Letters of Credit, the
Company agrees with BNY, the Agent and the Banks that neither BNY, the
Agent nor any Bank shall be responsible or liable (except as provided
in the following sentence) for, and the Company's unconditional
obligation to reimburse BNY for amounts paid by BNY on account of
drafts honored under the Letters of Credit shall not be affected by
any set-off, counterclaim or defense to payment which the Company may
have or have had against the beneficiary of such Letter of Credit, BNY
(as Agent or as issuer of such Letter of Credit), any Bank or any
other Person including, without limitation, any defense based on (a)
the validity or genuineness of documents or of any indorsements
thereon, even if such documents should in fact prove to be in any or
all respects invalid, insufficient, fraudulent or forged, (b) any
breach of contract or other dispute between the Company and any third
party, (c) failure of any draft to bear any reference or adequate
reference to a Letter of Credit, (d) failure of any drawing to be used
for the purpose set forth in a Letter of Credit, (e) failure of any
Person to note the amount of any draft on the reverse side of a Letter
of Credit or to surrender or take up a Letter of Credit even if such
Letter of Credit contains such requirement, (f) errors, omissions,
interruptions or delays in transmission or delivery of any messages by
mail, cable, telegraph, wireless or otherwise, whether or not in
cipher (so long as BNY has acted in good faith) or (g) any error,
neglect or default of any of the Banks' correspondents. The Company
agrees that any action taken or omitted to be taken by BNY, the Agent
or any Bank under or in connection with any Letter of Credit or any
related draft, document or property, if done without gross negligence
or willful misconduct on BNY's, the Agent's or such Bank's part, shall
be binding on the Company and shall not put BNY, the Agent or any Bank
under any resulting liability to the Company. The Company hereby
waives presentment for payment (except the presentment required by the
terms of any Letter of Credit) and notice of dishonor, protest and
notice of protest with respect to drafts honored under the Letters of
Credit. BNY agrees to promptly notify the Company whenever a draft is
presented under any Letter of Credit, but failure so to notify the
Company shall not in any way affect the Company's obligations
hereunder. If while any Letter of Credit is outstanding, any law,
executive order or regulation is enforced, adopted, modified or
interpreted by any public body, governmental agency or court of
competent jurisdiction so as to in any way affect any of the Company's
obligations or the compensation owed to BNY, the Agent or any Bank in
respect of the Letters of Credit or the cost or profitability to BNY
of establishing and/or maintaining the Letters of Credit or the Loans
made with respect thereto pursuant to paragraph 3.3, BNY, the Agent or
such Bank, as applicable, shall promptly notify the Company thereof in
writing and the Company shall, promptly upon receipt of such request,
reimburse or indemnify BNY, the Agent or such Bank with respect
thereto so that BNY, the Agent or such Bank shall be in the same
position as if there had been no such enforcement, adoption,
modification or interpretation. The foregoing agreement of the
Company to reimburse or indemnify BNY, the Agent and each Bank shall
apply in (but shall not be limited to) the following situations: an
imposition of or change in reserve, capital maintenance or other
similar requirements or in United States of America interest
equalization taxes or other excise or similar taxes or monetary
restraints, except a change in tax on the net income of the Banks. A
statement as to such costs incurred by BNY, the Agent or any Bank as a
result of any of the foregoing, submitted by BNY, the Agent or such
Bank to the Company, shall be conclusive, absent manifest error, as to
the amount thereof.
3.6. Expenses.
The Company shall pay on demand, regardless of whether any
Event of Default shall have occurred or whether any proceeding to
enforce this Agreement or any other Document has been commenced, all
usual and customary out-of-pocket expenses incurred by the Agent in
connection with the issuance of Letters of Credit hereunder.
3.7. Fees.
The Company agrees to pay to the Agent with respect to each
Letter of Credit issued by BNY a letter of credit fee, for the pro
rata account of the Banks, equal to .4375% per annum of the face
amount of such Letter of Credit, such fee to be payable in arrears on
each March 31, June 30, September 30 and December 31 of each year,
commencing on the first such date following such issuance and at the
earlier of the Termination Date or the date a Loan is made with
respect to such Letter of Credit pursuant to paragraph 3.3
4. THE LOANS IN GENERAL; PRICING OPTIONS AND RELATED MATTERS.
4.1. Pro Rata Treatment and Payments.
Each payment, including each prepayment, of principal and
interest on the Notes, of all amounts due with respect to any Letter
of Credit, and of the Commitment Fee and any other fees or expenses
payable hereunder shall be made by the Company to the Agent at its
office set forth in paragraph 13.1 in funds immediately available in
New York City by 12:00 noon, New York City time, on the due date for
such payment, and upon receipt thereof, shall be promptly remitted by
the Agent to the Banks pro rata according to the Aggregate
Commitments, in the case of the Commitment Fee and with respect to the
Letters of Credit and pro rata according to the aggregate outstanding
principal balance of the Notes, in the case of principal and interest
due thereon. The failure of the Company to make any such payment by
such time shall not constitute a default hereunder, provided that such
payment is made on such due date, but any such payment made after 2:00
P.M., New York City time, on such due date shall be deemed to have
been made on the next Business Day for the purpose of calculating
interest on amounts outstanding on the Notes. If any payment here-
under or under the Notes shall be due and payable on a day which is
not a Business Day, the due date thereof (except as otherwise provided
in the definition of LIBOR Interest Period) shall be extended to the
next Business Day and interest shall be payable at the applicable rate
specified herein during such extension. If any payment is made with
respect to any portion of the unpaid principal balance of the Notes
then subject to a LIBOR Pricing Option prior to the last Business Day
of the applicable Interest Period, the Company shall indemnify each
Bank against any loss, cost or expense suffered by such Bank as a
result of such payment in accordance with paragraph 4.4. All payments
(including prepayments) to be made by the Company under this Agreement
or the Notes shall be made without set-off or counterclaim and free
and clear of, and without reduction for or on account of, any present
or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any country (or by any
political subdivision or taxing authority thereof or therein),
excluding income and franchise taxes of the United States of America
or any political subdivision or taxing authority thereof or therein.
The Company irrevocably authorizes the Agent from time to time to
debit its general deposit account with the Agent for all sums due in
respect of the principal and interest on the Notes, as well as the
Commitment Fee and any other amounts payable hereunder, on the
respective due dates thereof. The Agent agrees to use its best
efforts to notify the Company (by telephone or otherwise) prior to
debiting its general deposit account for sums due hereunder, provided,
however, that the failure to so notify the Company shall not obligate
the Agent to reverse any such debit or limit or otherwise affect the
obligations of the Company hereunder or under the Notes.
4.2. Notification of Rates.
The Agent shall notify the Company and each Bank of the amount
and the effective date of each adjustment in the interest rate or
rates applicable to the Notes, provided that no failure or delay in
giving any such notice shall affect or delay the making of any such
adjustments or the obligation of the Company to pay in a timely manner
the interest due on the Notes.
4.3. LIBOR Pricing Option.
As an alternative method of determining interest due on the
Notes, the Company may, in the absence of an Event of Default, by
giving telephonic notice to the Agent at least three Business Days
prior to the commencement of a LIBOR Interest Period of a duration
specified in such notice, elect to have all or any portion (but in no
event less than $1,000,000 or integral multiples of $1,000,000 in
excess thereof) of the outstanding principal balance of the Notes bear
interest at the applicable LIBOR Rate plus the Applicable Margin for
such LIBOR Interest Period. The Company agrees to confirm such
telephonic notice in writing on or before the commencement of such
LIBOR Interest Period. The total number of LIBOR Pricing Options
outstanding at any one time under this paragraph 4.3 shall not exceed
five. Any such election shall be terminated automatically if, on or
prior to the commencement of such LIBOR Interest Period, the Agent
shall notify, by telephone or otherwise, the Company and the Banks
that (i) Eurodollar deposits which have a maturity corresponding to
the proposed LIBOR Interest Period, in an amount approximately equal
to that portion of the outstanding principal balance of the Notes
proposed to be subject to a LIBOR Pricing Option, are not readily
available in the interbank eurodollar market, or (ii) by reason of
circumstances affecting such market, adequate and reasonable methods
do not exist for ascertaining the interest rate applicable to such
deposits for the proposed LIBOR Interest Period, or (iii) any Bank
shall have advised the Agent that the rate at which Eurodollar
deposits are being offered in such market will not adequately and
fairly reflect the cost to such Bank of making or maintaining its
respective portion of the outstanding principal balance of the Notes
proposed to be subject to such LIBOR Pricing Option during the
proposed LIBOR Interest Period. Upon such termination, that portion
of the outstanding principal balance of the Notes proposed to be
subject to a LIBOR Pricing Option will thenceforth bear interest at
the applicable interest rate based on the Base Rate as provided in
paragraph 2.2(c), unless a LIBOR Pricing Option shall thereafter be
exercised in accordance with the provisions of this paragraph 4.3. If
for any reason the Company shall fail to borrow after it shall have
elected a LIBOR Pricing Option, it shall be deemed to have elected
such LIBOR Pricing Option for purposes of determining its liability to
the Agent and the Banks under paragraphs 4.4, 4.5, 4.6 and 4.8.
4.4. Indemnification for Loss.
Notwithstanding anything contained herein to the contrary, if
for any reason while a LIBOR Pricing Option is in effect, any
repayment of the Notes is made for any reason (other than as
contemplated in the last sentence of the definition of LIBOR Interest
Period) on a date which is prior to the last Business Day of the then
effective LIBOR Interest Period, or payment of the Notes is
accelerated, the Company agrees to indemnify each Bank against, and to
pay on demand directly to such Bank, any loss, cost or expense
suffered by such Bank as a result of such repayment or acceleration,
including, without limitation, (i) any loss, cost or expense suffered
by such Bank during the period from the date of receipt of such
repayment to the last Business Day of the LIBOR Interest Period in
question if the rate of interest obtainable by such Bank upon the
redeployment of an amount of funds equal to such Bank's pro rata
share of such repayment is less than the applicable LIBOR Rate plus
the Applicable Margin for such LIBOR Interest Period, or (ii) any
loss, cost or expense suffered by such Bank in liquidating deposits
prior to maturity in amounts which correspond to such Bank's pro rata
share of such repayment. The Company further agrees to indemnify each
Bank against any loss, cost or expense suffered by such Bank under
paragraphs 4.3, 4.5, 4.6 and 4.8 as a result of the Company's failure
to borrow on a Borrowing Date after it shall have elected one or more
LIBOR Pricing Options in respect of all or a portion of the principal
balance of the Loans to be made on such Borrowing Date. The
determination by each such Bank of the amount of any such loss, cost
or expense shall be conclusive in the absence of manifest error.
4.5. Reimbursement for Costs.
The Company acknowledges that the cost to each Bank of making
or maintaining any of its Loans may change as a result of the
imposition of, or changes in, Compliance Costs. The Company agrees to
pay to each Bank on demand by such Bank such additional sums as will
compensate such Bank for the effect of such imposition of or change in
such Compliance Costs. The Company hereby agrees to reimburse each
Bank on demand for such Bank's Compliance Costs.
4.6. Calculation of Compliance Costs.
Compliance Costs shall be computed by determining the amount
by which such requirements effectively increase each Bank's cost of
making and maintaining that portion of the outstanding balance of its
Note subject to a LIBOR Pricing Option and by computing the additional
interest which would have been owing to such Bank hereunder if such
effective increase had been added to the LIBOR Rate for purposes of
determining the applicable LIBOR Rate during the period or applicable
portion thereof in question. Each Bank shall bill amounts, providing
details thereof, owed under this paragraph 4.6 which are applicable to
all or any of the Banks, and the payment by the Company of such
amounts shall fulfill the Company's obligations under this paragraph
4.6 with respect to the amounts so billed and paid. No failure on the
part of any Bank to demand compensation for any increased costs in any
LIBOR Interest Period shall constitute a waiver of such Bank's right
to demand such compensation at any time. Each Bank's determination of
the amount of such costs shall be conclusive in the absence of
manifest error.
4.7. Option to Fund.
Each Bank has indicated that, if the Company elects a LIBOR
Pricing Option, such Bank may wish to purchase one or more deposits
in order to fund or maintain its funding of its pro rata share of the
principal balance of the Notes to which such LIBOR Pricing Option is
applicable during the LIBOR Interest Period in question; it being
understood that the provisions of this Agreement relating to such
funding are included only for the purpose of determining the rate of
interest to be paid under such LIBOR Pricing Option and any amounts
owing under paragraphs 4.4, 4.5, 4.6 and 4.8. Each Bank shall be
entitled to fund and maintain its funding of all or any part of that
portion of the principal balance of its Notes in any manner it sees
fit, but all such determinations hereunder shall be made as if each
Bank had actually funded and maintained that portion of the principal
balance of the Notes to which a LIBOR Pricing Option is applicable
during such LIBOR Interest Period through the purchase of deposits in
an amount equal to its pro rata share of the principal balance of the
Notes to which a LIBOR Pricing Option is applicable and having a
maturity corresponding to such LIBOR Interest Period. The obligations
of the Company under paragraphs 4.4, 4.5, 4.6 and 4.8 shall survive
the termination of the Commitments, the payment of the Notes, the
reimbursement obligations in respect of drawings under the Letters of
Credit, and the payment of any other amounts due hereunder.
4.8. Illegality of Funding.
Notwithstanding anything herein contained to the contrary, if,
prior to or during any LIBOR Interest Period with respect to which a
LIBOR Pricing Option is in effect, any law, regulation, treaty or
official directive, or any change in or in the interpretation or
application thereof by any Governmental Body charged with the
administration thereof, shall make it unlawful for any Bank to fund
or maintain any portion of the principal balance of its Note subject
to such LIBOR Pricing Option or otherwise to give effect to such
Bank's obligations as contemplated hereby, (i) the Agent may by
telecopy or other written notice thereof to the Company declare that
the Banks' obligations in respect of any LIBOR Pricing Option
hereunder be terminated forthwith, (ii) such LIBOR Pricing Option
shall forthwith cease to be in effect, and interest on that portion of
the outstanding principal balance of the Notes theretofore subject to
such LIBOR Pricing Option shall from and after such date be calculated
at the interest rate based on the Base Rate as set forth in paragraph
2.2(c), and (iii) the Company hereby agrees to indemnify each Bank
against any loss, cost or expense suffered by it in connection with
the foregoing, including, without limitation, any loss, cost and
expense incurred in liquidating prior to maturity eurodollar deposits
which correspond to its pro rata share of the outstanding principal
balance of the Notes subject to such LIBOR Pricing Option during the
LIBOR Interest Period in question. The determination by each such
Bank of the amount of any such loss, cost or expense shall be
conclusive in the absence of manifest error.
4.9. Capital Adequacy.
If (i) the introduction of, or any change or phasing in or
implementation or effectiveness of, any law or regulation, or in the
interpretation thereof by any Governmental Body charged with the ad-
ministration thereof, (ii) compliance with any directive, guideline or
request from any central bank or Governmental Body (whether or not
having the force of law), or (iii) compliance with the Risk-Based
Capital Guidelines of the Federal Reserve System as set forth in 12
C.F.R. Parts 208 and 225, or the Risk-Based Capital Guidelines of the
Comptroller of the Currency, Department of the Treasury, as set forth
in 12 C.F.R. Part 3, affects or would affect the amount of capital
required or expected to be maintained by a Bank (or any lending office
of such Bank) or any corporation directly or indirectly owning or
controlling such Bank and such Bank shall have determined that such
final change, phasing in, effectiveness or compliance has or would
have the effect of reducing the rate of return on such Bank's capital
or the asset value to such Bank of any Loan made by such Bank as a
consequence, direct or indirect, of its obligations to make and
maintain the funding of Loans to a level below that which such Bank
could have achieved but for such final change, phasing in,
effectiveness or compliance (after taking into account such Bank's
policies regarding capital adequacy) by an amount deemed by such Bank
to be material, then, upon demand by such Bank, provided, however,
that such demand shall be made within one year from the date on which
such Bank shall have made such determination hereunder in its sole
discretion, the Company shall promptly, but in no case within more
than five Business Days, pay to such Bank such additional amount or
amounts as shall be sufficient to compensate such Bank for such
reduction on the rate of return or asset value. Each Bank's
determination of such amount or amounts that will so compensate such
Bank for such reductions shall be conclusive absent manifest error.
4.10. Sharing of Payments.
If any Bank shall obtain payment (whether voluntarily,
involuntarily, through the exercise of any right of set-off, or
otherwise) on account of the Loan made by it in excess of its pro rata
share of payments on account of the Loans received by all the Banks,
such Bank shall forthwith purchase, without recourse, for cash, from
the other Banks such participations in the Loans made by them as shall
be necessary to cause such purchasing Bank to share the excess payment
ratably with each of them, provided, however, that if all or any
portion of such excess payment is thereafter recovered from such
purchasing Bank, such purchase from each Bank shall be rescinded and
each such Bank shall repay to the purchasing Bank the purchase price
to the extent of such recovery together with an amount equal to such
Bank's pro rata share (according to the proportion of (i) the amount
of such Bank's required repayment to (ii) the total amount so recov-
ered from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so
recovered. The Company agrees that any Bank so purchasing a
participation from another Bank pursuant to this paragraph 4.10 may,
to the fullest extent enforceable at law, exercise all its rights of
payment (including the right of set-off) with respect to such
participation as fully as if such Bank were the direct creditor of the
Company in the amount of such participation.
If an amount to be set off is to be applied to indebtedness of
the Company to a Bank, other than indebtedness of such Bank hereunder,
such amount shall be applied ratably to such other indebtedness and
the indebtedness of such Bank hereunder.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Agent and the Banks to enter into this
Agreement and to make the Loans and issue the Letters of Credit, the
Company hereby represents and warrants to the Agent and to each Bank that:
5.1. Subsidiaries.
The Company has only the Subsidiaries set forth in Exhibit E.
5.2. Corporate Existence and Power.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to
own its Property and to carry on its business as now conducted. The
Company and each Subsidiary is in good standing and duly qualified to
do business in each jurisdiction in which the failure to so qualify
would have a material adverse effect on the business, Property,
operations or condition, financial or otherwise, of the Company and
its Subsidiaries taken as a whole.
5.3. Corporate Authority.
The Company has full power and authority to enter into,
execute, deliver and carry out that terms of this Agreement, to make
the borrowings contemplated hereby, to execute, deliver and carry out
the terms of the Notes and to incur the obligations provided for
herein and therein, all of which have been duly authorized by all
proper and necessary corporate action and is in full compliance with
its Certificate of Incorporation and By-Laws. No consent or approval
of, or exemption by, shareholders or any Governmental Body is required
to authorize, or is required in connection with the execution,
delivery and performance of this Agreement or the Notes, or is
required as a condition to the validity or enforceability of this
Agreement and the Notes.
5.4. Binding Agreement.
This Agreement constitutes, and the Notes, when issued and
delivered pursuant hereto for value received, will constitute, the
valid and legally binding obligations of the Company enforceable
against the Company in accordance with their respective terms, except
as such enforceability may be limited by equitable principles and by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally.
5.5. Litigation.
Except for the matters set forth in the Consolidated annual
financial statement of the Company for the period ending September 30,
1994, and those arising thereafter as set forth in Exhibit C or as
disclosed in writing to the Agent and Banks pursuant to paragraph
5.16, there are no actions, suits or arbitration proceedings pending
or to the knowledge of the management of the Company threatened
against the Company or any of its Subsidiaries, or maintained by the
Company or any of its Subsidiaries in law or in equity before any
Governmental Body which might result in a material adverse change in
the financial condition, Property or operations of the Company or
POC. There are no proceedings pending or threatened against the
Company or any of its Subsidiaries which call into question the
validity and enforceability of this Agreement or the Notes.
5.6. No Conflicting Agreements.
Neither the Company nor any of its Subsidiaries is in default
under any material agreement to which it is a party or by which it or
any of its Property is bound the effect of which might have a material
adverse effect on the financial condition, Property or operations of
the Company or POC. No provision of the Certificate of Incorporation,
By-Laws or preferred Stock of the Company or any of its Subsidiaries,
and no provision of any existing mortgage, indenture, contract,
agreement, statute (including, without limitation, any applicable
usury or similar law), rule, regulation, judgment, decree or order
binding on the Company or any of its Subsidiaries would in any way
prevent the execution, delivery or carrying out of the terms of this
Agreement and the Notes, and the taking of any such action will not
constitute a default under, or result in the creation or imposition
of, or obligation to create, any Lien not permitted by paragraph 10.3
upon the Property of the Company pursuant to the terms of any such
mortgage, indenture, contract or agreement.
5.7. Taxes.
The Company and each of its Subsidiaries has filed or caused
to be filed all tax returns material to the Company and required to be
filed, and has paid, or has made adequate provision for the payment
of, all taxes shown to be due and payable on said returns or in any
assessments made against it. No tax liens have been filed and no
claims are being asserted with respect to such taxes which are
required by GAAP to be reflected in the Financial Statements except
such thereof as are being contested in good faith and by appropriate
proceedings diligently conducted and for which adequate reserves have
been set aside in accordance with GAAP. The charges, accruals and
reserves on the books of the Company with respect to all taxes are
considered by the management of the Company to be adequate, and the
Company knows of no unpaid assessment which is due and payable against
the Company or any of its Subsidiaries which would have a material
adverse effect on the financial condition, Property or operations of
the Company or POC, except such thereof as are being contested in good
faith and by appropriate proceedings diligently conducted and for
which adequate reserves have been set aside in accordance with GAAP.
5.8. Financial Statements.
The Company and POC have heretofore delivered to each Bank (i)
copies of the balance sheets of the Company and POC and the related
Statements of Income and Stockholders' Equity and Changes in Financial
Position for the year ended September 30, 1994 and (ii) copies of the
Consolidated quarterly report of POC as of March 31, 1995 containing
the financial information required in Form 10-Q (the statements in (i)
and (ii) above being sometimes referred to herein as the "Financial
Statements"). The Financial Statements set forth in (i) above were
audited and reported on by the Accountants and the Financial
Statements set forth in (ii) above were prepared by POC. The
Financial Statements fairly present the financial condition and the
results of operations of the Company as of the dates and for the
periods indicated therein, and have been prepared in conformity with
GAAP. Except (a) as reflected in the financial statements specified
in (i) above or in the footnotes thereto, or (b) as otherwise
disclosed to the Banks on or before the Effective Date in a writing
specifically referring to this paragraph 5.8, the Company has no
obligation or liability of any kind (whether fixed, accrued,
contingent, unmatured or otherwise) which is material to the Company
and which, in accordance with GAAP, should have been shown on such
financial statements and were not other than those incurred in the
ordinary course of its business since September 30, 1994. Since
September 30, 1994, the Company has conducted its business only in the
ordinary course, and there has been no adverse change in the financial
condition, Property or operations of the Company or POC which is
material to the Company or POC except as otherwise disclosed to the
Banks in writing on or before the Effective Date.
5.9. Compliance with Applicable Laws.
Neither the Company nor any of its Subsidiaries is in default
with respect to any judgment, order, writ, injunction, decree or
decision of any Governmental Body applicable to the Company or any of
its Subsidiaries which default would have a material adverse effect on
the financial condition, Property or operations of the Company or
POC. The Company or POC are complying in all material respects with
all applicable material statutes and regulations of all Governmental
Bodies, including ERISA, if applicable, a violation of which would
have a material adverse effect on the financial condition, Property or
operations of the Company or POC.
5.10. Property.
The Company and each of its Subsidiaries has good and
marketable title to all of its Property, title to which is material to
the Company, subject to no Lien, except as permitted by the terms of
this Agreement.
5.11. Federal Reserve Regulations; Use of Loan Proceeds.
Neither the Company nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any margin
stock within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System, as amended or supplemented from time to
time. No part of the proceeds of the Loans will be used, directly or
indirectly, (i) to purchase or carry any such margin stock, (ii) to
extend credit to others for the purpose of purchasing or carrying any
margin stock, (iii) for a purpose which violates or is inconsistent
with the provisions of Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System, as amended, or (iv) for a
purpose which violates any other law, rule or regulation of any Gov-
ernmental Body.
5.12. No Misrepresentation.
No representation or warranty contained herein and no
certificate or report furnished or to be furnished by the Company or
POC in connection with the transactions contemplated hereby, contains
or will contain a misstatement of material fact, or omits or will omit
to state a material fact required to be stated in order to make the
statements herein or therein contained not misleading in the light of
the circumstances under which made.
5.13. Plans.
Each Plan, including each Multiemployer Plan, established or
maintained by the Company, any of its Subsidiaries, or POC, is in
material compliance with the applicable provisions of ERISA and the
Code, and the Company, its Subsidiaries, and POC have filed all
reports required to be filed with respect to each such Plan by ERISA
and the Code. The Company, its Subsidiaries, and POC have met all
requirements with respect to funding the Plans, including each
Multiemployer Plan, imposed by ERISA and the Code. The Company, its
Subsidiaries, or POC do not have any Plan under which the actuarial
value of the Plan's benefits exceeds the value of the Plan's assets
allocable to such benefits as of September 30, 1994. Since the ef-
fective date of ERISA, there have not been, nor are there now
existing, any events or conditions which would permit any Plan or
Multiemployer Plan to be terminated under circumstances which would
cause the Lien provided under Section 4068 of ERISA to attach to the
Property of the Company, any of its Subsidiaries or POC. Since the
effective date of ERISA, no Reportable Event which may constitute
grounds for the termination of any Plan or Multiemployer Plan, has
occurred and no Plan or Multiemployer Plan has been terminated in
whole or in part.
5.14. Governmental Body Approvals.
No consent, authorization or approval of, filing with, notice
to, or exemption by, stockholders, any Governmental Body or any other
Person (except for those which have been obtained, made or given and
those which will be obtained, made or given prior to the making of the
Loans) is required to authorize, or is required in connection with the
execution, delivery and performance of this Agreement and the Notes or
is required as a condition to the validity or enforceability of this
Agreement or the Notes. No provision of any applicable statute, law
(including, without limitation, any applicable usury or similar law),
rule or regulation of any Governmental Body will prevent the
execution, delivery or performance of, or affect the validity of, this
Agreement or the Notes.
5.15. Governmental Regulations.
Neither the Company nor any Subsidiary is subject to
regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act or the Investment Company Act of 1940, and neither
the Company nor any Subsidiary is subject to any statute or regulation
which prohibits or restricts the incurrence of Indebtedness under
this Agreement and the Notes, including, without limitation, statutes
or regulations relative to common or contract carriers or to the sale
of electricity, gas, steam, water, telephone, telegraph or other
public utility services.
5.16. Environmental Matters.
Except as disclosed in writing to the Agent and the Banks,
neither the Company nor any Subsidiary (i) has received written notice
or otherwise learned of any claim, demand, action, event, condition,
report or investigation indicating or concerning any potential or
actual liability which individually or in the aggregate could
reasonably be expected to have a material adverse effect on the
business, Property, operations or condition (financial or otherwise)
of the Company or any Subsidiary (as used in this paragraph 5.16 only,
a "Material Adverse Effect") arising in connection with: (a) any
non-compliance with or violation of the requirements of any applicable
federal, state or local environmental health and safety statutes and
regulations or (b) the release or threatened release of any toxic or
hazardous waste, substance or constituent, or other substance into the
environment, (ii) to the best knowledge of the Company, has any
threatened or actual liability in connection with the release or
threatened release of any toxic or hazardous waste, substance or
constituent, or other substance into the environment which
individually or in the aggregate could reasonably be expected to have
a Material Adverse Effect, (iii) has received notice of any federal or
state investigation evaluating whether any remedial action is needed
to respond to a release or threatened release of any toxic or
hazardous waste, substance or constituent or other substance into the
environment for which the Company or any Subsidiary is or may be li-
able which individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect, or (iv) has received
notice that the Company or any Subsidiary is or may be liable to any
Person under the Comprehensive Environmental Response, Compensation
and Liability Act, as amended, 42 U.S.C. Section 9601 et seq.
("CERCLA") or any analogous state law for which the Company or any
Subsidiary is or may be liable which individually or in the aggregate
could reasonably be expected to have a Material Adverse Effect. The
Company and each Subsidiary is in compliance in all material respects
with the financial responsibility requirements of federal and state
environmental laws to the extent applicable, including, without
limitation, those contained in 40 C.F.R., parts 264 and 265, subpart
H, and any analogous state law.
6. [Intentionally Omitted].
7. CONDITIONS OF LENDING - LETTERS OF CREDIT.
The obligation of BNY to issue any Letter of Credit is subject to
the satisfaction of the condition precedent that BNY shall have
received, on or before the date of issuance of such Letter of Credit,
the following items in form and substance satisfactory to BNY and its
counsel and each Bank and its counsel:
7.1. L/C Application.
An L/C Application requesting the issuance of such Letter of
Credit and a related letter of credit agreement, each executed by a
duly authorized officer of the Company;
7.2. Fees.
Payment of the fees payable under paragraph 3.7.
8. CONDITIONS OF LENDING - ALL LOANS AND LETTERS OF CREDIT.
The obligations of the Banks to make all Loans and of BNY to issue
Letters of Credit are subject to the fulfillment of the following
conditions precedent:
8.1. Compliance.
On each Borrowing Date after giving effect to the Loans to be
made or the Letters of Credit to be issued, as the case may be, on
such date (a) the Company shall be in compliance with all of the
terms, covenants and conditions of this Agreement, (b) there shall
exist no Event of Default, and (c) the representations and warranties
contained in this Agreement or otherwise in writing made by the
Company in connection herewith shall be true and correct with the same
effect as though such representations and warranties had been made on
such Borrowing Date and the Agent shall have received a certificate,
dated such Borrowing Date and signed on behalf of the Company by a
duly authorized officer of the Company, to the same effect as all of
the foregoing matters, except for such matters relating thereto as are
expressly requested by the Company in the Borrowing Request and agreed
to by the Agent and the Required Banks.
8.2. Loan Closings.
All documents required by Paragraphs 7 and 8 of this Agreement
to be executed and/or delivered to the Agent on or before the
applicable Borrowing Date shall have been executed and delivered at
the office of the Agent set forth in paragraph 13.1 on or before such
Borrowing Date.
8.3. Approval of Counsel.
All legal matters in connection with the making of each Loan
shall be satisfactory to such counsel with whom the Agent and the
Required Banks may deem it necessary to consult.
8.4. Representations.
The representations and warranties made by the Company in any
document or in any certificate, document or financial or other state-
ment furnished at any time under or in connection therewith shall, to
the best of the Company's knowledge after due inquiry, be true and
correct on and as of the Borrowing Date for such Loan or the date of
such issuance of such Letter of Credit, as the case may be, as if made
on and as of such date.
8.5. No Event of Default.
To the best of the Company's knowledge after due inquiry, no
Event of Default shall have occurred and be continuing on the
Borrowing Date of such Loan or the date of issuance of such Letter of
Credit, as the case may be, or after giving effect to the Loan or
Loans made on such Borrowing Date or the Letter of Credit issued on
such date.
8.6. Borrowing Request.
The Agent shall have received telephonic notice from the
Company in accordance with paragraph 2.2(a), which notice shall have
been confirmed in writing by the delivery by the Company to the Agent
of a Borrowing Request.
8.7. Other Documents.
The Agent shall have received such other documents as the
Agent or any Bank shall reasonably require.
Each borrowing by the Company hereunder or request for the
issuance of a Letter of Credit shall constitute a representation and
warranty by the Company hereunder as of the date of such borrowing or
request that the conditions in paragraphs 8.4 and 8.5 have been
satisfied.
9. AFFIRMATIVE COVENANTS
The Company covenants and agrees that on and after the Closing Date
until the later of the termination of the Aggregate Commitments or the
payment in full of the Notes and the performance by the Company of all
other obligations of the Company hereunder, unless the Agent shall
otherwise consent in writing as provided in Paragraph 14, the Company
will:
9.1. Corporate Existence.
Maintain and cause its Subsidiaries to maintain their
corporate or non-corporate existence, as the case may be, in good
standing in the jurisdiction of its incorporation or organization and
in each other jurisdiction in which the character of the Property
owned or leased by it therein or the transaction of its business makes
such qualification necessary, except in the case of any Subsidiary
where the failure so to maintain or qualify would not have a material
adverse effect on the financial condition, Property or operations of
the Company or POC.
9.2. Taxes.
Pay and discharge, and cause its Subsidiaries to pay and
discharge, when due all taxes, assessments and governmental charges
and levies upon the Company and its Subsidiaries, and upon the income,
profits and Property of the Company and its Subsidiaries, which if
unpaid might have a material adverse effect on the financial condi-
tion, Property or operations of the Company or become a Lien not per-
mitted under paragraph 10.3, unless and to the extent only that such
taxes, assessments, charges and levies (a) shall be contested in good
faith and by appropriate proceedings diligently conducted by the
Company or POC, provided that such reserve or other appropriate
provision, if any, as shall be required in accordance with GAAP shall
have been made therefor, or (b) are not in the aggregate material to
the financial condition, Property or operations of the Company or POC.
9.3. Insurance.
Maintain, and cause its Subsidiaries to maintain, insurance
on its Property against such risks and in such amounts as is
customarily maintained by similar businesses, including, without
limitation, public liability, workers' compensation and employee
fidelity insurance, and file with the Agent within a reasonable time
after its request therefor a detailed list of such insurance then in
effect, stating the names of the carriers thereof, the policy numbers,
the insured thereunder, the amounts and rates of insurance, the dates
of expiration thereof and risks covered thereby, together with a
certificate of a duly authorized officer of the Company certifying
that, in the opinion of the management of the Company such insurance
is in full force and effect, is adequate in nature and amount, and
complies with the obligations of the Company under this paragraph 9.3.
9.4. Payment of Indebtedness and Performance of Obligations.
Pay and discharge promptly and cause its Subsidiaries to pay
and discharge promptly all lawful Indebtedness, obligations and claims
for labor, materials and supplies or otherwise which, if unpaid, might
(a) have a material adverse effect on the financial condition,
Property or operations of the Company, or (b) become a Lien not
permitted by paragraph 10.3, provided that the Company shall not be
required to pay and discharge or cause to be paid and discharged any
such Indebtedness, obligation or claim so long as the validity thereof
shall be contested in good faith and by appropriate proceedings
diligently and prudently conducted by the Company or any of its
Subsidiaries, and further provided that such reserve or other
appropriate provision as shall be required in accordance with GAAP
shall have been made therefor.
9.5. Condition of Property.
At all times, maintain, protect and keep in good repair,
working order and condition, and cause its Subsidiaries to maintain,
protect and keep in good repair, working order and condition all
Property material to the business of the Company and its Subsidiaries.
9.6. Observance of Legal Requirements.
Observe and comply in all material respects and cause its
Subsidiaries to observe and comply in all material respects with all
applicable laws (including ERISA, if applicable), ordinances, orders,
judgments, rules, regulations, certifications, franchises, permits,
licenses, directions and requirements of all Governmental Bodies,
which now or at any time hereafter may be applicable to the Company, a
violation of which might have a material adverse effect on the
financial condition, Property or operations of the Company and POC,
except such thereof as shall be contested in good faith and by
appropriate proceedings diligently conducted by the Company or any of
its Subsidiaries, provided that such reserve or other appropriate
provision as shall be required in accordance with GAAP shall have been
made therefor.
9.7. Working Capital.
At all times maintain a ratio of (a) Consolidated Current
Assets to (b) Consolidated Current Liabilities minus Indebtedness for
Borrowed Money of the Company incurred pursuant to this Agreement and
minus Money Market Indebtedness of the Company, of not less than
1.0:1.0.
9.8. Financial Statements and Other Information.
Furnish to the Agent and the Banks:
(a) as soon as available, but in no event more than 120 days
after the close of each fiscal year of the Company, audited financial
statements of the Company and POC, prepared in accordance with GAAP
and accompanied by an opinion with respect thereto of the Accountants;
(b) as soon as available, but in no event more than 60 days
after the close of each quarter (except the last quarter) of each
fiscal year of the Company and POC quarterly unaudited consolidated
statements of the Company and POC, statements of changes in the
financial position of the Company and POC and Subsidiaries as of and
through the end of such quarter, together with a certificate signed on
behalf of the Company by a senior financial officer of the Company to
the effect that having read this Agreement, and based upon an
examination which in the opinion of such officer was sufficient to
enable such officer to make an informed statement, (i) such statements
fairly present the financial position and results of the operations of
the Company and POC to the best of such officer's knowledge, and (ii)
nothing came to such officer's attention which caused such officer to
believe that an Event of Default has occurred, or if an Event of
Default has occurred, stating the facts with respect thereto and
whether the same has been cured prior to the date of such certificate,
and, if not, what action is proposed to be taken with respect thereto;
(c) as soon as available, but in no event more than 60 days
after the close of each of the three interim fiscal quarters and
within 120 days of the close of each fiscal year of the Company and
POC, quarterly compliance reports which shall set forth such
information and computations as shall be necessary to show continuing
compliance or lack thereof with the provisions of paragraphs 9.7,
10.1, 10.2, 10.4, 10.6, 10.10, 10.12, 10.14 and 10.15;
(d) Upon the request of the Required Banks, with the delivery
of the Consolidated financial statements required by (a) above, a
written statement of the Accountants to the effect that they have read
this Agreement and the Notes, and that in making the audit necessary
to give its opinion with respect to said financial statements, they
have obtained no knowledge of the occurrence of an Event of Default,
or if so, stating the facts with respect thereto and whether the same
has been cured prior to the date of such written statement;
(e) prompt notice if: (i) any obligation of the Company
(other than its obligations under this Agreement or the Notes) for the
payment of any Indebtedness for Borrowed Money in excess of $100,000
is not paid when due or within any grace period for the payment
thereof or is declared or shall become due and payable prior to its
stated maturity, or (ii) in the case of Indebtedness for Borrowed
Money of the Company exceeding $100,000 in the aggregate, the holder
of any note (other than the Notes) or other evidence of Indebtedness
of the Company, or certificate or security evidencing any such
obligation has the right to declare such Indebtedness for Borrowed
Money due and payable prior to its stated maturity, or (iii) to the
knowledge of the officers of the Company or POC there shall occur and
be continuing an event which constitutes, or which with the giving of
notice or the lapse of time, or both, would constitute, an event of
default under any such agreement (including this Agreement);
(f) prompt written notice of: (i) any citation, summons,
subpoena, order to show cause or other order naming the Company or POC
a party to any proceeding before any Governmental Body which might
have a material adverse effect on the financial condition, Property or
operations of the Company or POC, including with such notice a copy of
such citation, summons, subpoena, order to show cause or other order,
(ii) any lapse or other termination of any license, permit or other
authorization issued to the Company or POC by any Governmental Body,
which lapse or other termination might have a material adverse effect
on the financial condition, Property or operations of the Company or
POC, (iii) any refusal by any Governmental Body to renew or extend any
such material license, permit or authorization, and (iv) any claim or
demand on the Company or any Subsidiary by any Governmental Body or
Person which might have a material adverse effect on the financial
condition, Property or operations of the Company or POC;
(g) prompt written notice in the event, if applicable, that
(i) the Company or POC shall fail to make any payments when due and
payable under any Plan or Multiemployer Plan, or (ii) the Company or
POC shall receive notice from the Internal Revenue Service or the
Department of Labor that the Company or POC shall have failed to meet
the minimum funding requirements of any Plan or Multiemployer Plan,
including therewith a copy of such notice;
(h) if applicable, copies of any request for a waiver of the
funding standards or an extension of the amortization periods required
by Sections 303 and 304 of ERISA, or Section 412 of the Code, promptly
after any such request is submitted to the Department of Labor or the
Internal Revenue Service;
(i) promptly upon becoming available, copies of all financial
statements, reports, notices and proxy statements sent by the Company
and POC to its shareholders, and all regular, periodic or special
reports or other material filed with or delivered by the Company and
POC to any securities exchange or the Securities and Exchange
Commission, or any other Governmental Body succeeding to the functions
thereof, including but not limited to, all Form 10-K and 10-Q Reports;
and
(j) such other information and reports relating to the
present or future financial condition, operations, plans and
projections of the Company or POC as the Agent or any Bank at any time
or from time to time may reasonably request.
9.9. Inspection.
Permit representatives of the Agent or any Bank to visit the
offices of the Company accompanied by an officer of the Company, to
examine the books and records thereof and to make copies or extracts
therefrom, and to discuss the affairs of the Company and POC with the
officers, including the financial officers, thereof, at reasonable
times and at reasonable intervals.
10. NEGATIVE COVENANTS.
The Company covenants and agrees that from the Closing Date until
the payment in full of the Notes and the performance by the Company of
all other obligations of the Company hereunder, unless the Agent shall
otherwise consent in writing as provided in Paragraph 14, the Company
and its Subsidiaries on a Consolidated basis will not:
10.1. [Intentionally Omitted].
10.2. Subsidiary Indebtedness.
Permit any Subsidiary to create, incur, assume or become
liable in any manner for any Indebtedness, except (a) Indebtedness for
Borrowed Money of such Subsidiary owed to the Company, (b)
Indebtedness of such Subsidiary secured by a Lien permitted under
paragraph 10.3(d), and (c) Indebtedness of such Subsidiary incurred
in connection with projects undertaken by such Subsidiary in the
ordinary course of its business, provided that recourse in respect of
such Indebtedness is limited solely to the assets consisting of such
projects and the revenues generated thereby and approved by the Banks.
10.3. Liens.
Create, incur, assume or suffer to exist any Lien upon any of
its Property now owned or hereafter acquired, or permit any Subsidiary
so to do, except (a) Liens in connection with workers' compensation,
unemployment insurance or other social security obligations incurred
in the ordinary course of business (which phrase shall not be
construed to refer to ERISA), provided that the obligations secured
thereby, to the extent past due, are being contested in good faith and
by appropriate proceedings diligently and prudently conducted, (b)
deposits or pledges to secure bids, tenders, contracts (other than
contracts for the payment of borrowed money), leases, statutory
obligations, surety and appeal bonds and other obligations of like
nature arising in the ordinary course of business, (c) mechanics',
workmen's, materialman's or other like Liens arising in the ordinary
course of business with respect to obligations which are not due or,
to the extent past due, which are being contested in good faith and by
appropriate proceedings diligently and prudently conducted, (d) Liens
on any Property hereafter acquired existing at the time of such
acquisition or created contemporaneously with such acquisition to
secure or provide for the payment or financing of any part of the pur-
chase price thereof, provided that each such Lien shall attach only to
the Property so acquired and the fixed improvements thereon, (e) Liens
for taxes, assessments or similar charges incurred in the ordinary
course of business not delinquent or being contested in accordance
with paragraph 9.2, (f) Liens in respect of judgments or awards in
respect of which an appeal or proceeding for review shall be pending
or a stay of execution shall have been obtained, and in respect of
which adequate reserves shall have been established on the books of
the Company, (g) statutory Liens in favor of lessors arising in con-
nection with Property leased to the Company, (h) Liens created by or
arising under this Agreement, (i) Liens in respect of attachments
which are discharged within 60 days after entry, or which have been
bonded and are being contested in good faith and by appropriate
proceedings diligently and prudently conducted, provided that no such
Lien exceeds $2,000,000, extensions or renewals of any Liens permitted
by this paragraph 10.3 in respect of all or a part of the Property
theretofore subject thereto.
10.4. Investments, Loans, etc.
At any time, purchase or otherwise acquire, hold or invest in
the Stock of, or any other interest in, any Person, or make any loan
or advance to, or enter into any arrangement for the purpose of
providing funds or credit (other than credit extended in connection
with the sale of insurance and services) to, or make any other in-
vestment, whether by way of capital contribution or otherwise, in or
with any Person (all of which are sometimes hereinafter referred to as
"Investments"), except (a) Investments in the capital Stock of
Subsidiaries, (b) Investments permitted under paragraph 10.2, (c)
Investments in short-term cash equivalents, (d) Investments in Persons
which, immediately after giving effect thereto, would become
Subsidiaries, and (e) Investments (other than those permitted under
clauses (a), (b), (c) and (d) above) in Persons in an aggregate amount
not to exceed at any one time outstanding $5,000,000 for all such
Persons, provided that immediately before and after giving effect to
any Investment permitted under clauses (b), (d) and (e) above, no
Event of Default has occurred or will occur.
10.5. Mergers, Acquisitions, etc.
Make any Investment (other than Investments permitted under
paragraph 10.4) or merge or consolidate with, or acquire all or
substantially all of the Property of, any Person, or permit any
Subsidiary so to do, unless:
(a)(i) in connection with any such merger or
consolidation with a Subsidiary of the Company or POC, (ii) the
Company is the surviving corporation to such merger or consolidation
and (iii) after giving effect to such merger or consolidation no Event
of Default exists; or
(b)(i) in connection with any such merger or
consolidation with any other Person, (ii) the Company is the
surviving corporation to such merger or consolidation, and (iii) after
giving effect to such merger or consolidation no Event of Default
exists.
10.6. Contingent Liabilities.
Directly or indirectly, contingently or otherwise, assume,
guarantee, indorse with recourse, agree to purchase or otherwise
become or remain liable with respect to any Indebtedness, obligation,
or performance of any Person, except for (i) the indorsement of
negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business, (ii) Indebtedness
with respect to the Letters of Credit and (iii) interest rate swap,
cap or other forms of interest rate hedging arrangements, in a
notional amount not greater than $25,000,000.
10.7. Sale of Assets.
Sell, lease or otherwise dispose of any of its assets, or
permit any of its Subsidiaries so to do, having an aggregate book
value in excess of $25,000,000 for any 12 month period.
10.8. Fundamental Business Changes.
Engage in any material adverse change or fundamental business
change, or permit any of its Subsidiaries so to do, not reasonably
related to the scope of the business of the Company or POC or such
Subsidiary as of the Closing Date.
10.9. Compliance with ERISA.
If applicable, (i) terminate, or permit any member of a
Commonly Controlled Entity to terminate, any Plan which would result
in any liability of the Company or POC, or any member of a Commonly
Controlled Entity to the PBGC, or (ii) permit the occurrence of any
Reportable Event or any other event or condition which presents a
risk of such a termination by the PBGC of any Plan, or (iii) withdraw
or effect a partial withdrawal from a Multiemployer Plan, or permit
any member of a Commonly Controlled Entity which is an employer under
such a Multiemployer Plan so to do, if such withdrawal would result in
such withdrawing employer incurring any withdrawal liability.
10.10. Capital Expenditures.
Permit aggregate capital expenditures of the Company and its
Subsidiaries relating to assets included under the heading "Oil and
Gas Operations" on the Financial Statements to exceed $15,000,000 for
any fiscal year of the Company.
10.11. Payments on the Intercompany Debt and Amendments with
Respect Thereto.
Make any payments in respect of the Intercompany Debt except
that the Company may pay interest when due thereon in accordance with
the original terms thereof and principal payments thereon, which
principal payments are not in excess of $2,500,000 per annum, provided
that, immediately prior and after giving effect thereto, no Event of
Default would exist.
10.12. Dividends and Purchase of Stock.
Declare or pay any dividends (payable in cash or otherwise
other than dividends payable in Stock) or apply any of its Property to
the purchase, redemption or other retirement of, or set apart any sum
for the payment of any dividends on, or make any other distribution by
reduction of capital or otherwise in respect of, any shares of its
Stock, except for dividends the aggregate amount of which, per fiscal
year, are not in excess of 50% of the Company's Consolidated Net
Income for the immediately preceding fiscal year, provided that at the
time of the payment of such dividends no Event of Default would exist.
10.13. Cash Flow Coverage.
Permit at any time, the aggregate outstanding principal
balance of all Indebtedness for Borrowed Money and liabilities with
respect to letters of credit (including, without limitation, the
Letters of Credit) of the Company and its Subsidiaries to exceed the
difference between (x) 200% of the Consolidated Cash Flow of the
Company for the preceding four fiscal quarters and (y) the sum of all
payments made by the Company with respect to the Intercompany Debt
during such preceding four fiscal quarters, unless the Company shall
have prepaid the Notes in accordance with paragraph 2.5(a).
10.14. Long Term Debt to Tangible Net Worth.
Permit the ratio of its Consolidated Indebtedness for Borrowed
Money (excluding Intercompany Debt) plus Consolidated deferred taxes
to Consolidated Tangible Net Worth plus Intercompany Debt to exceed
0.70:1.00.
10.15. [Intentionally Omitted].
11. EVENTS OF DEFAULT.
The following shall each constitute an Event of Default hereunder:
(a) the Company shall fail to pay the principal balance on
any of the Notes at Maturity; or
(b) the Company shall fail to make payment of interest on
any of the Notes or of the Commitment Fee when due and payable and
such failure shall continue unremedied for a period of three Business
Days after the same shall become due; or
(c) the Company shall fail to make any other payment
hereunder within three Business Days after receipt by the Company of
written notice from any Bank that such payment is due and payable; or
(d) the Company shall fail to observe or perform any
covenant or agreement contained in paragraph 9.7 or Paragraph 10
(other than paragraph 10.13); or
(e) the Company shall fail to observe or perform any
covenant or agreement contained in paragraph 10.13 and such failure
shall have continued unremedied for a period of 10 days after the
earlier of discovery by the Company or written notice, specifying such
failure and requiring it to be remedied, shall have been given to the
Company by the Agent or any Bank; or
(f) the Company shall fail to observe or perform any other
term, covenant, or agreement contained in this Agreement and such
failure shall have continued unremedied for a period of 30 days after
the earlier of discovery by the Company or written notice, specifying
such failure and requiring it to be remedied, shall have been given to
the Company by the Agent; or
(g) any representation or warranty made herein or in any
certificate, report, or notice delivered or to be delivered by the
Company or POC pursuant hereto, shall prove to have been incorrect in
any material respect when made; or
(h) any obligation of the Company (other than its obligations
under this Agreement, the Notes, and any Letter of Credit) whether as
principal, guarantor, surety or other obligor, for the payment of any
Indebtedness for Borrowed Money in excess of $500,000, including any
cross-defaults with respect to Indebtedness for Borrowed Money of the
Company or POC or any Subsidiary (i) shall become or shall be declared
to be due and payable prior to its stated maturity, or (ii) shall not
be paid when due or within any grace period for the payment thereof,
or, in the case of Indebtedness for Borrowed Money exceeding
$2,500,000 in the aggregate, the holder of such obligation shall have
the right to declare the Indebtedness for Borrowed Money evidenced
thereby due and payable prior to its stated maturity; or
(i) the Company, any material Subsidiary of the Company, or
POC shall (i) make an assignment for the benefit of creditors, (ii)
admit in writing its inability to pay its debts as they become due or
generally fail to pay its debts as they become due, (iii) file a
voluntary petition in bankruptcy, (iv) become insolvent (however such
insolvency shall be evidenced), (v) file any petition or answer
seeking for itself any reorganization, arrangement, composition, re-
adjustment of debt, liquidation or dissolution or similar relief under
any present or future statute, law or regulation of any jurisdiction,
(vi) petition or apply to any tribunal for any trustee, receiver,
custodian, liquidator or fiscal agent for any substantial part of its
Property, (vii) be the subject of any such proceeding filed against it
which remains undismissed for a period of 60 days, (viii) file any
answer admitting or not contesting the material allegations of any
such petition filed against it or of any order, judgment or decree
approving such petition in any such proceeding, (ix) seek, approve,
consent to, or acquiesce in any such proceeding, or in the appointment
of any trustee, receiver, custodian, liquidator, or fiscal agent for
it, or any substantial part of its Property, or an order is entered
appointing any such trustee, receiver, custodian, liquidator or fiscal
agent and such order remains in effect for 60 days, (x) take any
formal action for the purpose of effecting any of the foregoing or
looking to the liquidation or dissolution of the Company, any material
Subsidiary, or POC or (xi) suspend or discontinue its business (except
as otherwise expressly permitted herein); or
(j) an order for relief is entered under the United States
bankruptcy laws or any other decree or order is entered by a court
having jurisdiction (i) adjudging the Company, any material Subsidiary
of the Company, or POC a bankrupt or insolvent, or (ii) approving as
properly filed a petition seeking reorganization, liquidation,
arrangement, adjustment or composition of or in respect of the
Company, any material Subsidiary of the Company, or POC under the
United States bankruptcy laws or any other applicable Federal or state
law, or (iii) appointing a trustee, receiver, custodian, liquidator,
or fiscal agent (or other similar official) of the Company, any
material Subsidiary of the Company, or POC or of any substantial part
of the Property of any thereof, or (iv) ordering the winding up or
liquidation of the affairs of the Company, any material Subsidiary of
the Company, or POC; or
(k) any judgment or decree against the Company or any
Subsidiary for an amount in excess of $3,000,000 shall remain unpaid,
unstayed on appeal, undischarged, unbonded or undismissed for a period
of 60 days; or
(l) any fact or circumstance, including, without limitation,
any Reportable Event, which constitutes grounds for the termination
of any Plan by the PBGC or for the appointment of a trustee to
administer any Plan, if any, shall have occurred and be continuing for
a period of 30 days; or
(m) the failure of POC to own 100% of the Company.
Upon the occurrence and during the continuance of an Event of
Default under this Paragraph 11, the Agent, upon the request of the
Banks, shall notify the Company that the Aggregate Commitments have
been terminated and that the unpaid principal balance of the Notes,
all accrued interest thereon and all other amounts owing under this
Agreement are immediately due and payable, provided that upon the
occurrence of an event specified in paragraphs 11(i) or 11(j), the
Aggregate Commitments shall automatically terminate and the Notes
(with accrued interest thereon) and all other amounts owing under this
Agreement shall become immediately due and payable without notice to
the Company. Except for any notice expressly provided for in this
Paragraph 11, the Company hereby expressly waives any presentment,
demand, protest, notice of protest or other notice of any kind. The
Company hereby further expressly waives and covenants not to assert
any appraisement, valuation, stay, extension, redemption or similar
laws, now or at any time hereafter in force, which might delay,
prevent or otherwise impede the performance or enforcement of this
Agreement or the Notes.
In the event that the Aggregate Commitments shall have been
terminated and the Notes, all accrued interest thereon and all other
amounts owing under this Agreement shall have been declared due and
payable pursuant to the provisions of Paragraph 11, the Banks agree,
by and among themselves, that any funds received after such
declaration from or on behalf of the Company by the Agent or any of
the Banks shall be remitted to the Agent if received by any Bank, and
shall be applied by the Agent in payment of the Loans in the following
manner and order: (i) First, to reimburse the Agent and the Banks for
any expenses due from the Company pursuant to the provisions of
paragraph 16.1; (ii) Second, to the payment, pro rata according to
the Aggregate Commitments, of the Commitment Fee accrued pursuant to
the provisions of paragraph 2.7; (iii) Third, to the payment, pro
rata according to the aggregate outstanding principal balance of the
Notes, of interest due on the Notes; (iv) Fourth, to the payment, pro
rata according to the aggregate outstanding principal balance of the
Notes, of principal outstanding on the Notes; and (v) Fifth, to the
payment of all other amounts due hereunder.
In the event that the unpaid principal balance of the Notes, all
accrued interest thereon and all other amounts owing under this
Agreement shall have been declared due and payable pursuant to the
provisions of this Paragraph 11, the Agent may, and, upon (i) the
request of the Required Banks and (ii) the providing by all of the
Banks to the Agent of an indemnity in form and substance satisfactory
to the Agent in accordance with paragraph 12.3 against all expenses
and liabilities, shall, proceed to enforce the rights of the holders
of the Notes by suit in equity, action at law and/or other appropri-
ate proceedings, whether for payment or the specific performance of
any covenant or agreement contained in this Agreement or the Notes.
The Agent shall be justified in failing or refusing to take any action
hereunder and under the Notes unless it shall be indemnified to its
satisfaction by the Banks pro rata according to the aggregate
outstanding principal balance of the Notes against any and all
liabilities and expenses which may be incurred by it by reason of
taking or continuing to take any such action. In the event that the
Agent, having been so indemnified or not being indemnified to its
satisfaction, shall fail or refuse so to proceed, any Bank shall be
entitled to take such action as it shall deem appropriate to enforce
its rights hereunder and under its Notes, with the consent of the
Banks, it being understood and intended that no one or more of the
holders of the Notes shall have any right to enforce payment thereof
except as provided in Paragraphs 11 and 14.
12. THE AGENT.
The Banks and the Agent agree by and among themselves that:
12.1. Appointment.
BNY is hereby irrevocably designated the Agent by each of the
other Banks to perform such duties on behalf of the other Banks and
itself, and to have such powers, as are set forth herein and as are
reasonably incidental thereto.
12.2. Delegation of Duties, etc.
The Agent may execute any of its duties and perform any of its
powers hereunder by or through agents or employees, and shall be
entitled to consult with legal counsel and any accountant or other
professional selected by them. Any action taken or omitted to be
taken or suffered in good faith by the Agent in accordance with the
opinion of such counsel or accountant or other professional shall be
full justification and protection to it.
12.3. Indemnification.
The Banks agree to indemnify the Agent in its capacity as
such, to the extent not reimbursed by the Company, pro rata according
to the Aggregate Commitments as of the Closing Date, from and against
any and all claims, liabilities, obligations, losses, damages, penal-
ties, actions, judgments, suits, costs, expenses or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against such Agent in any way relating to or arising out of
this Agreement or the Notes or any action taken or omitted to be taken
or suffered in good faith by such Agent hereunder or thereunder,
provided that no Bank shall be liable for any portion of any of the
foregoing items resulting from the gross negligence or willful mis-
conduct of the Agent. Without limitation of the foregoing, each Bank
agrees to reimburse each Agent promptly for its pro-rata share of any
reasonable out-of-pocket expenses (including counsel fees) incurred by
such Agent in connection with the preparation, execution,
administration or enforcement of, or legal advice in respect of rights
or responsibilities under, this Agreement and the Notes, to the extent
that such Agent, having sought reimbursement for such expenses from
the Company, is not promptly reimbursed by the Company. Any reference
in any document executed in connection herewith to the Banks providing
an indemnity in form and substance satisfactory to the Agent prior to
such Agent taking any action thereunder shall be satisfied by the
Banks executing an agreement confirming their agreement to promptly
indemnify such Agent in accordance with this paragraph.
12.4. Exculpatory Provisions.
Neither the Agent, nor any of its officers, directors,
employees or agents, shall be liable for any action taken or omitted
to be taken or suffered by it or them hereunder or under the Notes or
in connection herewith or therewith, except that the Agent shall be
liable for its own gross negligence or wilful misconduct. The Agent
shall not be liable in any manner for the effectiveness, en-
forceability, collectability, genuineness, validity or the due
execution of this Agreement or the Notes, or for the due au-
thorization, authenticity or accuracy of the representations and
warranties contained herein or in any other certificate, report,
notice, consent, opinion, statement, or other document furnished or to
be furnished hereunder, and the Agent shall be entitled to rely upon
any of the foregoing believed by it to be genuine and correct and to
have been signed and sent or made by the proper Person. The Agent
shall not be under any duty or responsibility to any Bank to ascertain
or to inquire into the performance or observance by the Company of any
of the provisions hereof or of the Notes or of any document executed
and delivered in connection herewith or therewith. Each Bank
expressly acknowledges that the Agent has not made any representations
or warranties to it and that no act taken by the Agent shall be deemed
to constitute any representation or warranty of such Agent to any such
Bank. Each Bank acknowledges that it has taken and will continue to
take such action and has made and will continue to make such
investigation as it deems necessary to inform itself of the affairs of
the Company and each Bank acknowledges that it has made and will
continue to make its own independent investigation of the credit
worthiness and the business and operations of the Company and that, in
entering into this Agreement, and in agreeing to make its Loans, it
has not relied and will not rely upon any information or
representations furnished or given by the Agent or any other Bank.
12.5. Agent in its Individual Capacity.
With respect to its Loans and any renewals, extensions or
deferrals of the payment thereof and any Note issued to or held by it,
the Agent shall have the same rights and powers hereunder as any Bank,
and may exercise the same as though it were not an Agent, and the term
"Bank" or "Banks" shall, unless the context otherwise requires,
include the Agent in its individual capacity.
12.6. Knowledge of Event of Default.
It is expressly understood and agreed that the Agent shall be
entitled to assume that no Event of Default has occurred and is
continuing unless the officers of such Agent who are responsible for
matters concerning this Agreement shall have actual knowledge of such
occurrence or shall have been notified in writing by a Bank that such
Bank considers that an Event of Default has occurred and is continuing
and specifying the nature thereof. In the event that the Agent shall
have acquired actual knowledge of any Event of Default, it shall
promptly give notice thereof to the Banks.
12.7. Resignation of Agent.
If at any time the Agent deems it advisable, in its sole
discretion, it may submit to each of the Banks a written notification
of its resignation as Agent under this Agreement, such resignation to
be effective on the thirtieth day after the date of such notice. If
the Agent shall have resigned hereunder, the Banks shall have the
right to appoint a successor Agent who shall also be the Agent
hereunder. If no successor Agent shall have been so appointed by the
Banks and accepted such appointment within 30 days after the retiring
Agent's giving of notice of resignation, then such retiring Agent may,
on behalf of the Banks, appoint a successor Agent approved by the
Company, which successor Agent shall be a commercial bank organized
under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $100,000,000.
Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations under this Agreement. The Company and
the Banks agree to execute such documents as shall be necessary to
effect such appointment. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Paragraph 12 shall
inure to its benefit as to any actions taken or omitted to be taken by
it while an Agent (including the Agent) under this Agreement. If at
any time hereunder there shall not be a duly appointed and acting
Agent hereunder, the Company agrees to make each payment due hereunder
and under the Notes directly to the Banks entitled thereto during such
time.
12.8. Requests to the Agent.
Whenever the Agent is authorized and empowered hereunder on
behalf of the Banks to give any approval or consent, or to make any
request, or to take any other action on behalf of the Banks, the Agent
shall be required to give such approval or consent, or to make such
request or to take such other action only when so requested in writing
by the Banks subject, however, to the provisions of Paragraph 14.
13. NOTICES.
13.1. Manner of Delivery.
Except as otherwise specifically provided herein, all notices
and demands shall be in writing and shall be mailed by certified mail
return receipt requested or sent by telegram or delivered in person,
and all statements, reports, documents, consents, waivers,
certificates and other papers required to be delivered hereunder shall
be mailed by first-class mail or delivered in person, in each case to
the respective parties to this Agreement as follows:
the Company:
Production Operators, Inc.
11302 Tanner Road
Houston, Texas 77240
Attention: William S. Robinson, Jr.,
Treasurer
Telephone: (713) 466-0980
Telecopy: (713) 896-2528
the Agent:
The Bank of New York, as Agent
One Wall Street
New York, New York 10286
Attention: Raymond J. Palmer,
Vice President
Telephone: (212) 635-7834
Telecopy: (212) 635-7923
with a copy to:
The Bank of New York, as Agent
One Wall Street
New York, New York 10286
Attention: Kalyani Bose,
Agency Function Administrator
Telephone: (212) 635-4693
Telecopy: (212) 635-6365
the Banks:
The Bank of New York
One Wall Street
New York, New York 10286
Attention: Raymond J. Palmer,
Vice President
Telephone: (212) 635-7834
Telecopy: (212) 635-7923
with a copy to:
The Bank of New York
One Wall Street
New York, New York 10286
Attention: Kalyani Bose,
Agency Function Administrator
Telephone: (212) 635-4693
Telecopy: (212) 635-6365
The First National Bank of Chicago
1100 Louisiana, Suite 3200
Houston, Texas 77002
Attention: Helen A. Carr,
Vice President
Telephone: (713) 654-7335
Telecopy: (713) 658-7370
with a copy to:
First National Bank of Chicago
One First National Plaza
Suite 0363, 10th Floor
Chicago, Illinois 60670
Attention: Michelle Alberico,
Loan Administrator
Telephone: (312) 732-2651
Telecopy: (312) 732-3055
or to such other Person or address as a party hereto shall designate
to the other parties hereto from time to time in writing forwarded in
like manner. Any notice or demand given in accordance with the
provisions of this paragraph 13.1 shall be effective when received and
any consent, waiver or other communication given in accordance with
the provisions of this paragraph 13.1 shall be conclusively deemed to
have been received by a party hereto and to be effective on the day on
which delivered to such party at its address specified above or, if
sent by first class mail, on the third Business Day after the day when
deposited in the mail, postage prepaid, and addressed to such party at
such address, provided that a notice of change of address shall be
deemed to be effective when actually received.
13.2. Distribution of Copies.
Whenever the Company is required to deliver any statement,
report, document, certificate or other paper to the Agent, the Company
shall simultaneously deliver a copy thereof to each Bank.
13.3. Notices by the Agent or a Bank.
In the event that the Agent or any Bank takes any action or
gives any consent or notice provided for by this Agreement, notice of
such action, consent or notice shall be given forthwith to all the
Banks by such Agent or the Bank taking such action or giving such
consent or notice, provided that the failure to give any such notice
shall not invalidate any such action, consent or notice in respect of
the Company.
14. AMENDMENTS REQUIRED, WAIVERS AND CONSENTS.
With the written consent of the Required Banks, the Agent shall,
subject to the provisions of this Paragraph 14, from time to time
enter into agreements amendatory or supplemental hereto with the
Company for the purpose of changing any provisions of this Agreement
or the Notes, or changing in any manner the rights of the Banks, the
Agent or the Company hereunder and thereunder, or waiving compliance
with any provision of this Agreement or consenting to the
non-compliance thereof, provided, however, that no such amendment,
supplement, modification, waiver or consent shall (i) increase the
Commitments of any Bank, (ii) change the maturity date of any Note,
(iii) change the rate of interest of, extend the time or manner of
payment of, or increase or forgive the principal amount of any Note,
(iv) decrease the Commitment Fee or Letter of Credit Fee or extend
the time of payment thereof or (v) change the provisions of this
Paragraph 14 or the definition of Required Banks without the consent
of all of the Banks; and provided further that no such amendment,
supplement, modification, waiver or consent shall amend, modify or
waive any provision of Paragraph 12 or otherwise change any of the
rights or obligations of the Agent under this Agreement and the Notes
without the written consent of the Agent. Any such amendatory or
supplemental agreement, waiver or consent shall apply equally to each
of the Banks and shall be binding on the Company and all of the Banks
and the Agent. Any waiver or consent shall be for such period and
subject to such conditions or limitations as shall be specified
therein, but no waiver or consent shall extend to any subsequent or
other Event of Default, or impair any right or remedy consequent
thereupon. In the case of any waiver or consent, the rights of the
Company, the Banks and the Agent under this Agreement and the Notes
shall be otherwise unaffected. The Company shall be entitled to rely
upon the provisions of any such amendatory or supplemental agreement,
waiver or consent if it shall have obtained any of the same in writing
from the Agent who therein shall have represented that such agreement,
waiver or consent has been authorized in accordance with the provi-
sions of this Paragraph 14.
15. OTHER PROVISIONS.
15.1. No Waiver of Rights by the Banks.
No failure on the part of the Agent or of any Bank to
exercise, and no delay in exercising, any right or remedy hereunder or
under the Notes shall operate as a waiver thereof, except as provided
in Paragraph 14, nor shall any single or partial exercise by the Agent
or any Bank of any right, remedy or power hereunder or under the Notes
shall preclude any other or future exercise thereof, or the exercise
of any other right, remedy or power. The rights, remedies and powers
provided herein and in the Notes are cumulative and not exclusive of
any other rights, remedies or powers which the Agent or the Banks or
any holder of a Note would otherwise have. Notice to or demand on the
Company in any circumstance in which the terms of this Agreement or
the Notes do not require notice or demand to be given shall not
entitle the Company to any other or further notice or demand in simi-
lar or other circumstances or constitute a waiver of the rights of
either the Agent or any Bank or the holder of any Note to take any
other or further action in any circumstances without notice or demand.
15.2. Headings, Plurals.
Paragraph and subparagraph headings have been inserted herein
for convenience only and shall not be construed to be a part of this
Agreement. Unless the context otherwise requires, words in the
singular number include the plural, and words in the plural include
the singular.
15.3. Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be an original and all of which shall constitute
one agreement. It shall not be necessary in making proof of this
Agreement or of any document required to be executed and delivered in
connection herewith or therewith to produce or account for more than
one counterpart.
15.4. Severability.
Every provision of this Agreement and the Notes is intended to
be severable, and if any term or provision hereof or thereof shall be
invalid, illegal or unenforceable for any reason, the validity,
legality and enforceability of the remaining provisions hereof or
thereof shall not be affected or impaired thereby, and any invalidity,
illegality or unenforceability in any jurisdiction shall not affect
the validity, legality or enforceability of any such term or provision
in any other jurisdiction.
15.5. Integration.
All exhibits to this Agreement shall be deemed to be a part of
this Agreement. This Agreement, the exhibits hereto, the Notes, the
Agreement to Amend and Restate and the fee letter, dated June 2, 1995,
between BNY and the Borrower, embody the entire agreement and
understanding between the Company, the Agent and the Banks with
respect to the subject matter hereof and thereof and supersede all
prior agreements and understandings between the Company, the Agent and
the Banks with respect to the subject matter hereof and thereof.
15.6. Successors and Assigns; Assignments and Participations;
Survival of Representations and Warranties.
This Agreement shall be binding upon and inure to the benefit
of the Banks, the Agent and the Company and their respective
successors and assigns, provided, however, that the Company may not
assign or otherwise dispose of any of its rights hereunder. No Bank
shall sell, assign, pledge (other than a pledge in the ordinary course
of its banking business), grant participation interests in (other than
participations granted to banks or other financial institutions,
provided that the rights of any holder of any such participation shall
be limited to the right to consent to any action taken or omitted to
be taken by such Bank under this Agreement which would increase the
Commitment of such Bank, reduce the Commitment Fee or the interest
rate payable on the Notes, extend the maturity date of the Notes or
postpone the payment or scheduled due dates for payments of principal,
interest, Commitment Fees and Letter of Credit Fees) or otherwise
dispose of its Note or any portion thereof, or any of its rights or
obligations hereunder, without the consent of the other Banks and the
Company, which consent shall not be unreasonably withheld, or seek to
enforce its rights hereunder and under its Note without the consent of
the Required Banks. All covenants, agreements, warranties and repre-
sentations made herein, and in all certificates or other documents
delivered in connection with this Agreement by or on behalf of the
Company shall survive the execution and delivery hereof and thereof,
and all such covenants, agreements, representations and warranties
shall inure to the respective successors and assigns of the Banks and
the Agent whether or not so expressed.
15.7. GOVERNING LAW.
THIS AGREEMENT AND THE NOTES ARE BEING DELIVERED IN AND ARE
INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK AND SHALL BE
CONSTRUED AND ENFORCEABLE IN ACCORDANCE WITH, AND BE GOVERNED BY, THE
INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS.
15.8. Interest.
At no time shall the interest rate payable on the Notes,
together with the Commitment Fee and other amounts, and to the extent
the Commitment Fee and such other amounts are construed to constitute
interest, exceed the maximum rate of interest permitted by law, and in
the event the Banks ever receive, collect, or apply as interest any
amount which would be excessive interest, such amount shall be deemed
a partial prepayment of principal under the Notes and treated as such;
and, if the principal under the Notes has been paid in full, any
remaining excess shall forthwith be paid to the Company. The Company
acknowledges that to the extent interest payable on the Notes is based
on the Agents' Prime Rate, such Rate is only one of the bases for
computing interest on loans made by the Banks, and by basing interest
payable on the Notes on the Agent's Prime Rate, the Banks have not
committed to charge, and the Company has not in any way bargained for,
interest based on a lower or the lowest rate at which the Banks may
now or in the future make loans to other borrowers.
15.9. Accounting Terms and Principles.
All accounting terms not herein defined by being capitalized
shall be interpreted in accordance with GAAP, unless the context
otherwise expressly requires.
15.10. Service of Process.
Process may be served in any action by mailing copies thereof
by registered or certified mail, postage prepaid, return receipt
requested, to the address of the Company set forth in paragraph 13.1,
or to any other address of which the Company shall have given written
notice to the Agent. The Company hereby agrees that such service (a)
shall be deemed in every respect effective service of process upon it
in any such action and (b) shall to the fullest extent enforceable by
law, be taken and held to be valid personal service upon and personal
delivery to it.
15.11. No Limitation on Service or Suit.
Nothing in this Agreement or any other document delivered in
connection herewith shall affect the right of the Agent or any Bank to
serve process in any manner permitted by law or limit the right of the
Agent or any Bank to bring any such action against the Company, in the
courts of any jurisdiction or jurisdictions.
16. OTHER OBLIGATIONS OF THE COMPANY.
16.1. Expenses of the Agent; Indemnification.
Expenses. Upon the Closing Date, the Company agrees to pay
the reasonable out-of-pocket expenses of the Agent (including the
reasonable fees and expenses of counsel to the Agent and, without
limitation, Special Counsel) in connection with the preparation,
negotiation, reproduction, execution, and delivery of this Agreement,
and the Notes and the other exhibits annexed hereto and any modifica-
tions, waivers, consents or amendments hereto and thereto, and the
Company further agrees to pay the reasonable out-of-pocket expenses of
the Agent and each Bank (including the reasonable fees and expenses of
their respective counsel) incurred in connection with the administra-
tion, interpretation or enforcement of any provision of this Agreement
or collection under the Notes whether or not suit is instituted.
Indemnification. The Company agrees to indemnify and hold
harmless the Agent and each Bank and their respective affiliates,
directors, officers, employees, attorneys and agents (each an
"Indemnified Person") from and against any loss, cost, liability, dam-
age or expense (including the reasonable fees and out-of-pocket
expenses of counsel of such Indemnified Person, including all local
counsel hired by any such counsel) incurred by such Indemnified Person
in investigating, preparing for, defending against, or providing evi-
dence, producing documents or taking any other action in respect of,
any commenced or threatened litigation, administrative proceeding or
investigation under any federal securities law or any other statute of
any jurisdiction, or any regulation, or at common law or otherwise,
which is alleged to arise out of or is based upon (a) any untrue
statement or alleged untrue statement of any material fact of the
Company or any Subsidiary in any document or schedule executed or
filed with the Securities and Exchange Commission or any other
Governmental Body by or on behalf of the Company or any Subsidiary ;
(b) any omission or alleged omission to state any material fact
required to be stated in such document or schedule, or necessary to
make the statements made therein, in light of the circumstances under
which made, not misleading; (c) any acts, practices or omissions or
alleged acts, practices or omissions of the Company or any Subsidiary
or its agents relating to the use of the proceeds of any or all bor-
rowings made by the Company which are alleged to be in violation of
paragraph 2.6, or in violation of any federal securities law or of any
other statute, regulation or other law of any jurisdiction applicable
thereto; or (d) any acquisition or proposed acquisition by the Company
or any Subsidiary of all or a portion of the Stock, or all or a por-
tion of the assets, of any Person whether or not such Indemnified
Person is a party thereto. The indemnity set forth herein shall be in
addition to any other obligations or liabilities of the Company to
each Indemnified Person hereunder or at common law or otherwise, and
shall survive any termination of this Agreement, the expiration of the
Commitments and the payment of all indebtedness of the Company
hereunder and under the Notes, provided that the Company shall have no
obligation under this paragraph to an Indemnified Person with respect
to any of the foregoing to the extent found in a final judgment of a
court to have resulted primarily from the gross negligence or wilful
misconduct of such Indemnified Person or arising solely from claims
between one such Indemnified Person and another such Indemnified
Person.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first written above.
PRODUCTION OPERATORS, INC.
By: /s/ William S. Robinson, Jr.
Title: Treasurer and CFO
THE BANK OF NEW YORK,
Individually and as Agent
By: /s/ Raymond J. Palmer
Title: Vice President
THE FIRST NATIONAL BANK
OF CHICAGO
By: Helen A. Carr
Title: Attorney-in-Fact
<TABLE>
EXHIBIT A
COMMITMENTS
BANK COMMITMENT PERCENTAGE
<S> <C> <C>
THE BANK OF NEW YORK $30,000,000 60%
THE FIRST NATIONAL BANK
OF CHICAGO $20,000,000 40%
AGGREGATE COMMITMENTS $50,000,000 100%
</TABLE>
EXHIBIT B
FORM OF NOTE
$____________
New York, New York
______________
For value received, on the Termination Date, PRODUCTION OPERATORS,
INC., a Florida corporation (the "Company"), hereby promises to pay to
the order of ___________________ (the "Bank") at the office of The
Bank of New York (the "Agent"), One Wall Street, New York, New York,
in lawful money of the United States of America, the principal sum of
$__________, or such lesser unpaid principal balance as shall be
outstanding hereunder, together with interest from the date hereof on
the unpaid principal balance of this Note payable on the dates and at
the rate or rates provided for in the Second Amended and Restated
Credit Agreement, dated as of June 2, 1995, by and among the Company,
the signatory Banks thereto and the Agent, as the same may be amended
from time to time (the "Agreement"). In no event shall the interest
rate payable hereon exceed the maximum rate of interest permitted by
law. Capitalized terms used herein which are defined in the Agreement
shall have the meanings therein defined.
The principal amount of each Loan made by the Bank and the amount
of each prepayment made by the Company shall be recorded by the Bank
on the schedule attached hereto. The aggregate unpaid principal
balance of all Loans made by the Bank and set forth in such schedule
shall be presumptive evidence of the principal balance owing and
unpaid on this Note. The Bank may attach one or more continuations to
such schedule as and when required.
This Note is one of the Notes referred to in the Agreement and is
entitled to the benefits, and is subject to the terms, set forth in
the Agreement. The principal of this Note is prepayable in the
amounts and under the circumstances, and its Maturity is subject to
acceleration upon the terms, set forth in the Agreement. All payments
on this Note shall be made in funds immediately available in New York
City, by 12:00 noon, New York City time, on the due date for such
payment. Except as otherwise expressly provided in the Agreement, if
any payment on this Note becomes due and payable on a day which is not
a Business Day the Maturity thereof shall be extended to the next
Business Day and interest shall be payable at the rate or rates
specified in the Agreement during such extension period.
Presentment for payment, demand, notice of dishonor, protest,
notice of protest and all other demands and notices in connection with
the delivery, performance and enforcement of this Note are hereby
waived, except as specifically otherwise provided in Paragraph 11 of
the Agreement.
This Note is being delivered in, is intended to be performed in,
shall be construed and enforceable in accordance with, and be governed
by the internal laws of, the State of New York without regard to
principles of conflict of laws.
This Note may be amended only by an instrument in writing executed
pursuant to the provisions of Paragraph 14 of the Agreement.
PRODUCTION OPERATORS, INC.
By:
Title:
LOANS AND PAYMENTS OF PRINCIPAL
Amount of Unpaid
Amount of Principal Paid Principal Notation
Date Loan or Prepaid Amount Made by
EXHIBIT C
LIST OF LITIGATION
NONE
EXHIBIT D
FORM OF BORROWING REQUEST
___________, 199_
The Bank of New York,
individually and as Agent
One Wall Street
New York, New York 10286
Attention: Raymond J. Palmer,
Vice President
The First National Bank of Chicago
1100 Louisiana, Suite 3200
Houston, Texas 77002
Attention: Helen A. Carr,
Vice President
Re: Second Amended and Restated Credit Agreement, dated as of June
2, 1995, by and among Production Operators, Inc., the
signatory Banks thereto and The Bank of New York, as Agent
(as the same may be amended, supplemented or modified from
time to time, the "Agreement")
Capitalized terms used herein which are defined in the Agreement
shall have the meanings therein defined.
Pursuant to paragraph 2.2(a) of the Agreement, the Company hereby
gives notice of its intention to borrow funds in the amount of
$___________ on _________________.
Pursuant to paragraph 4.3 of the Agreement, the Company has elected
to have the following portions of such borrowing subject to the
Pricing Option(s) and Interest Period(s) set forth below:
Pricing Interest
Option Amount Period
1.
2.
3.
4.
5.
The Company hereby certifies that on the date hereof and on the
Borrowing Date set forth above, and after giving effect to the Loans
requested hereby:
(a) The Company is and shall be in compliance with all of the
terms, covenants and conditions of the Agreement.
(b) There exists and there shall exist no Event of Default
under the Agreement.
(c) The Company represents, warrants and covenants that the
proceeds of such Loans will be used in accordance with paragraph 2.6.
(d) The Company represents and warrants that each of the
representations and warranties contained in the Agreement is and shall
be true and correct in all material respects with the same force and
effect as if made on and as of the date hereof.
IN WITNESS WHEREOF, the undersigned has caused this Borrowing
Request and certification to be executed as of the date and year first
written above.
PRODUCTION OPERATORS, INC.
By:
Title:
EXHIBIT E
LIST OF SUBSIDIARIES
STATE OR COUNTRY OF
NAME INCORPORATION
Kamlok Oil & Gas, Inc. Delaware
Transmission Systems, Inc. Delaware
TTV, Inc. Texas
Xtra Energy Corporation Texas
POI Canada, Ltd. (Inactive) Canada
Servicios Production Operators, C.A. Venezuela
Production Operators Argentina, S.A. Argentina
Production Operators Canada, Ltd. Canada
POI International, Inc. U.S. Virgin Islands
SPOCA COLOMBIA Colombia
