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EXHIBIT 10.12
CREDIT SUISSE FIRST BOSTON
Eleven Madison Avenue
New York, NY 10010
October 11, 2000
Oil States International, Inc.
Three Allen Center
333 Clay Street, Suite 3460
Houston, TX 77002
Attention of Cindy B. Taylor
Oil States International, Inc.
$150,000,000 Senior Secured Credit Facility
Commitment Letter
Ladies and Gentlemen:
You have advised Credit Suisse First Boston ("CSFB") that, in
connection with its proposed initial public offering of common stock (the
"IPO"), Oil States International, Inc. ("you" or the "Borrower") intends to
combine (the "Combination"), through a series of mergers and acquisitions, its
business with the businesses of Sooner Inc., HWC Energy Services, Inc., PTI
Group Inc. and their respective subsidiaries. Capitalized terms used but not
defined herein have the meanings assigned in the Summary of Principal Terms and
Conditions attached hereto as Exhibit A (the "Term Sheet"). Unless otherwise
specifically provided, all references herein and in the Term Sheet to "$" or
"dollars" refer to US dollars.
You have further advised us that, in connection with the Combination
and the IPO, the Borrower will obtain the senior secured credit facility (the
"Facility") described in the Term Sheet, in an aggregate principal amount of up
to $150,000,000.
In connection with the foregoing, you have requested that CSFB (a)
agree to structure, arrange and syndicate the Facility and (b) commit to provide
the Facility and to serve as administrative agent, sole book manager and sole
lead arranger therefor.
CSFB is pleased to advise you of its commitment to provide the entire
principal amount of the Facility, upon the terms and subject to the conditions
set forth or referred to in this commitment letter (the "Commitment Letter") and
in the Term Sheet.
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It is agreed that CSFB will act as the sole and exclusive
administrative agent, sole book manager and sole lead arranger for the Facility,
and that it will, in such capacities, perform the duties and exercise the
authority customarily performed and exercised by it in such roles. You agree
that no other titles will be awarded and no compensation (other than that
expressly contemplated by the Term Sheet and the Fee Letter referred to below)
will be paid in connection with the Facility unless you and we shall so agree.
We intend to syndicate the Facility to a group of financial
institutions (together with CSFB, the "Lenders") identified by us in
consultation with you. We intend to commence syndication efforts promptly upon
the execution of this Commitment Letter, and you agree actively to assist us in
our syndication efforts. Such assistance shall include (a) your using
commercially reasonable efforts to ensure that the syndication efforts benefit
materially from your existing lending relationships, (b) direct contact between
senior management, representatives and advisors of the Borrower and the proposed
Lenders, (c) assistance by the Borrower in the preparation of a Confidential
Information Memorandum for the Facility and other marketing materials to be used
in connection with the syndication and (d) the hosting, with CSFB, of one or
more meetings of prospective Lenders.
CSFB will manage all aspects of the syndication, including decisions as
to the selection of institutions to be approached and when they will be
approached, when their commitments will be accepted, which institutions will
participate, the allocation of the commitments among the Lenders and the amount
and distribution of fees among the Lenders. To assist CSFB in its syndication
efforts, you agree promptly to prepare and provide to CSFB all information with
respect to the Borrower and its subsidiaries, the Transactions and the other
transactions contemplated hereby, including all financial information and
projections (the "Projections"), as we may reasonably request. You hereby
represent and covenant that (a) all information other than the Projections (the
"Information") that has been or will be made available to CSFB by you or any of
your representatives is or will be, when furnished, complete and correct in all
material respects and does not or will not, when furnished, contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein not materially misleading in light of
the circumstances under which such statements are made and (b) the Projections
that have been or will be made available to CSFB by you or any of your
representatives have been or will be prepared in good faith based upon
assumptions that are reasonable at the time made and at the time the related
Projections are made available to CSFB. You agree that if at any time prior to
the closing of the Facility any of the representations in the preceding sentence
would be incorrect if the Information and Projections were being furnished, and
such representations were being made, at such time, then you will promptly
supplement the Information and the Projections so that such representations will
be correct under those circumstances. In arranging and syndicating the Facility,
we will be entitled to use and rely primarily on the
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Information and the Projections without responsibility for independent
verification thereof.
As consideration for CSFB's commitment hereunder and agreement to
perform the services described herein, you agree to pay to CSFB the
nonrefundable fees set forth in the Term Sheet and in the Fee Letter dated the
date hereof and delivered herewith with respect to the Facility (the "Fee
Letter").
CSFB shall be entitled, after consultation with you, to change the
amount, pricing, terms and structure of the Facility if the syndication has not
been completed and if CSFB determines that such changes are advisable in order
to ensure a syndication of the Facility that results in CSFB's commitment in
respect thereof being reduced to $20,000,000 or less; provided that the
aggregate amount of the Facility remains sufficient to consummate the
Transactions. CSFB's commitment hereunder is subject to your agreement set forth
in this paragraph.
CSFB's commitment hereunder and agreement to perform the services
described herein are further subject to (a) our not having discovered or
otherwise become aware of any information not previously disclosed to us that we
believe to be inconsistent in a material and adverse manner with our
understanding, based on the information provided to us prior to the date hereof,
of the business, assets, operations, condition (financial or otherwise), or
prospects of the Borrower and its subsidiaries on a consolidated basis after
giving effect to the Combination, (b) there not having occurred any material
adverse change or material adverse condition in the business, assets,
operations, condition (financial or otherwise) or prospects of the Borrower and
its subsidiaries (after giving effect to the Combination), taken as a whole,
since December 31, 1999, (c) there not having occurred after the date hereof a
material disruption of or material adverse change in financial, banking or
capital market conditions that, in CSFB's judgment, could adversely affect the
syndication of the Facility, (d) our satisfaction that, prior to and during the
syndication of the Facility, there shall be no competing issues of debt
securities or commercial bank or other credit facilities of the Borrower or its
subsidiaries being offered, placed or arranged, (e) the negotiation, execution
and delivery of definitive documentation with respect to the Facility reasonably
satisfactory to CSFB and its counsel, (f) CSFB's having been afforded a period
of at least 30 days following the date the Confidential Information Memorandum
for the Facility is distributed to potential syndicate members to syndicate the
Facility and (g) the other conditions set forth in the Term Sheet. The terms and
conditions of CSFB's commitment hereunder and of the Facility are not limited to
those set forth herein and in the Term Sheet. Those matters that are not covered
by or made clear under the provisions hereof and of the Term Sheet are subject
to the approval and agreement of CSFB and the Borrower.
You agree (a) to indemnify and hold harmless CSFB and its affiliates
and their respective officers, directors, employees, agents and controlling
persons from and against
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any and all losses, claims, damages, liabilities and related expenses, joint or
several, to which any such persons may become subject arising out of or in
connection with this Commitment Letter, the Fee Letter, the Term Sheet, the
Transactions, the Facility or any related transaction or any claim, litigation,
investigation or proceeding relating to any of the foregoing, regardless of
whether any of such indemnified persons is a party thereto, and to reimburse
each of such indemnified persons upon demand for any reasonable legal or other
expenses incurred in connection with investigating or defending any of the
foregoing, provided that the foregoing indemnity will not, as to any indemnified
person, apply to losses, claims, damages, liabilities or related expenses to the
extent they are found in a final judgment of a court to have resulted from the
willful misconduct or gross negligence of such indemnified person, and (b) to
reimburse CSFB from time to time, upon presentation of a reasonably detailed
summary statement, for all reasonable out-of-pocket expenses (including but not
limited to expenses of CSFB's due diligence investigation, consultants' fees,
syndication expenses, travel expenses and reasonable fees, disbursements and
other charges of counsel), in each case incurred in connection with the Facility
and the preparation of this Commitment Letter, the Term Sheet, the Fee Letter,
the definitive documentation for the Facility and any security arrangements in
connection therewith. Notwithstanding any other provision of this Commitment
Letter, no indemnified person shall be liable for any indirect or consequential
damages in connection with its activities related to the Facility.
You acknowledge that CSFB may be providing debt financing, equity
capital or other services (including financial advisory services) to other
companies in respect of which you may have conflicting interests regarding the
transactions described herein and otherwise. CSFB will not use confidential
information obtained from you by virtue of the transactions contemplated by this
Commitment Letter or its other relationships with you in connection with the
performance by CSFB of services for other companies, and CSFB will not furnish
any such information to other companies. You also acknowledge that CSFB has no
obligation to use in connection with the transactions contemplated by this
Commitment Letter, or to furnish to you, confidential information obtained by
CSFB from other companies.
This Commitment Letter and CSFB's commitment hereunder shall not be
assignable by you without the prior written consent of CSFB (and any attempted
assignment without such consent shall be null and void), is intended to be
solely for the benefit of the parties hereto (and indemnified persons), is not
intended to confer any benefits upon, or create any rights in favor of, any
person other than the parties hereto (and indemnified persons) and is not
intended to create a fiduciary relationship between the parties hereto. CSFB may
assign its commitment hereunder to any of its affiliates or any Lender. Any such
assignment to an affiliate will not relieve CSFB from any of its obligations
hereunder unless and until such affiliate shall have funded the portion of the
commitment so assigned. Any assignment to a Lender shall be by novation and
shall release CSFB from the portion of its commitment hereunder so assigned.
This
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Commitment Letter may not be amended or any provision hereof waived or modified
except by an instrument in writing signed by CSFB and you. This Commitment
Letter may be executed in any number of counterparts, each of which shall be an
original and all of which, when taken together, shall constitute one agreement.
Delivery of an executed counterpart of a signature page of this Commitment
Letter by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof. This Commitment Letter and the Fee Letter are the
only agreements that have been entered into between us with respect to the
Facility and set forth the entire understanding of the parties with respect
thereto. THIS COMMITMENT LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF
ANY PARTY RELATED TO OR ARISING OUT OF THIS COMMITMENT LETTER OR THE PERFORMANCE
OF SERVICES HEREUNDER.
This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter, the Term Sheet or the Fee Letter nor any of
their terms or substance shall be disclosed, directly or indirectly, to any
other person except (a) to your officers, employees, attorneys, accountants and
advisors on a confidential and need-to-know basis, or (b) as required by
applicable law or compulsory legal process (in which case you agree to inform us
promptly thereof); provided that, after your acceptance of this Commitment
Letter and the Fee Letter, this Commitment Letter and the Term Sheet and the
contents hereof and thereof (but not the Fee Letter or the contents thereof) may
be disclosed in any public filing relating to the IPO.
The compensation, reimbursement, indemnification and confidentiality
provisions contained herein and in the Fee Letter shall remain in full force and
effect regardless of whether definitive financing documentation shall be
executed and delivered and notwith standing the termination of this Commitment
Letter or CSFB's commitment hereunder.
If the foregoing correctly sets forth our agreement, please indicate
your acceptance of the terms hereof and of the Term Sheet and the Fee Letter by
returning to us executed counterparts hereof and of the Fee Letter not later
than 5:00 p.m., New York City time, on October 12, 2000. CSFB's commitment
hereunder and agreements contained herein will expire at such time in the event
that CSFB has not received such executed counterparts in accordance with the
immediately preceding sentence. In the event that the initial borrowing in
respect of the Facility does not occur on or before November 30, 2000, then this
Commitment Letter and CSFB's commitment and undertakings hereunder shall
automatically terminate unless CSFB shall, in its discretion, agree to an
extension. Before such date, CSFB may terminate this Commitment Letter if any
event occurs or
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information becomes available that, in its judgment, results or is likely to
result in the failure to satisfy any condition precedent set forth herein or in
the Term Sheet; provided that such failure could not reasonably be expected to
be cured prior to the expiration of this Commitment Letter.
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CSFB is pleased to have been given the opportunity to assist you in
connection with this important financing.
Very truly yours,
CREDIT SUISSE FIRST BOSTON,
by /s/ JAMES S. FINCH
-----------------------
Name: James S. Finch
Title: Director
by /s/ JAMES P. MORGAN
-----------------------
Name: James P. Morgan
Title: Director
Accepted and agreed to as of
the date first above written:
OIL STATES INTERNATIONAL, INC.,
by /s/ CINDY B. TAYLOR
---------------------------
Name: Cindy B. Taylor
Title: Senior Vice President - CFO
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CONFIDENTIAL
October 11, 2000 EXHIBIT A
Oil States International, Inc.
$150,000,000 Senior Secured Credit Facility
Summary of Principal Terms and Conditions
Borrower: Oil States International, Inc., a Delaware
corporation (the "Borrower").
Transactions: The Borrower intends to consummate a series
of transactions (the "Combination") pursuant
to which (a) Sooner Inc. ("Sooner"), HWC
Energy Services, Inc. ("HWC") and PTI Group
Inc. ("PTI" and, together with Sooner and
HWC, the "Acquired Companies") will merge
with and into wholly owned subsidiaries of
the Borrower and (b) the existing minority
interests in each of the Acquired Companies
will be acquired, with the result that each
Acquired Company will become a wholly owned
subsidiary of the Borrower. Concurrent with
the consummation of the Combination, the
Borrower intends to issue common stock in an
initial public offering (the "IPO") and to
receive therefrom not less than $120,000,000
in gross cash proceeds. In connection with
the Combination and the IPO, (a) the
Borrower and the Acquired Companies will
repay all amounts outstanding under their
existing bank credit agreements (the
"Existing Credit Agreements") and certain
other indebtedness and preferred stock, (b)
the Borrower will obtain the senior secured
credit facility described below under the
caption "Facility" and (c) fees and expenses
incurred in connection with the foregoing
will be paid. The transactions described in
this paragraph, together with the
Combination and the IPO, are collectively
referred to herein as the "Transactions".
Sources and Uses: The approximate sources and uses of the
funds necessary to consummate the
Transactions are set forth in Annex II
hereto.
Agent: Credit Suisse First Boston ("CSFB") will act
as sole and exclusive administrative agent
and collateral agent (collectively, the
"Agent") for a syndicate of financial
institutions (together with CSFB, the
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"Lenders"), and will perform the duties
customarily associated with such roles.
Sole Book Manager and Sole CSFB will act as sole book manager and sole
Lead Arranger: lead arranger for the Facility (the
"Arranger"), and will perform the duties
customarily associated with such roles.
Co-Arrangers, Syndication Agent
and Documentation Agent: To be determined by CSFB and the Borrower.
Facility: A Senior Secured Revolving Credit Facility
in an aggregate principal amount of up to
$150,000,000 (the "Facility"), of which up
to an amount to be agreed upon will be
available in the form of letters of credit.
Purpose: The proceeds of loans under the Facility
will be used by the Borrower solely (a) to
refinance the Existing Credit Agreements and
certain other outstanding indebtedness and
preferred stock of the Borrower and the
Acquired Companies, (b) to pay fees and
expenses relating to the Transactions and
the Facility and (c) for general corporate
purposes, including Permitted Acquisitions
(to be defined).
Availability: Loans under the Facility will be available
on a revolving basis on and after the date
of execution and delivery of the definitive
credit agreement for the Facility (the
"Closing Date") and at any time prior to the
final maturity of the Facility, in minimum
principal amounts to be agreed upon.
Up to the Canadian dollar equivalent of
$45,000,000 of the Facility will be made
available in the form of loans denominated
in Canadian dollars ("Canadian Loans").
Canadian Loans may be made by all the
Lenders under the Facility to the Borrower
or, if requested by the Borrower and agreed
to by the Agent, Canadian Loans may be made
to the Borrower's principal Canadian
operating subsidiary (the "Canadian
Borrower") by a subset of Lenders (the
"Canadian Lenders") that
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are not non-residents of Canada within the
meaning of the Income Tax Act (Canada). The
commitments, if any, of the Canadian Lenders
to provide Canadian Loans to the Canadian
Borrower (the "Canadian Facility") will be
documented under the same definitive credit
agreement (the "Credit Agreement") as the
Facility, and the commitments to make US
dollar denominated loans to the Borrower
under the Facility. To the extent the
Canadian Lenders are also able to make loans
to the Borrower in US dollars without
attracting withholding tax, the portion of
the Canadian Facility not used to make
Canadian Loans to the Canadian Borrower may
be used to make loans denominated in US
dollars to the Borrower.
Interest Rates and Fees: As set forth on Annex I hereto.
Default Rate: Defaulted amounts will bear interest at the
applicable interest rate plus 2% per annum.
Letters of Credit: Letters of credit under the Facility will be
issued by CSFB or another Lender (the
"Issuing Bank"). Each letter of credit shall
expire not later than the earlier of (a) 12
months after its date of issuance and (b)
the fifth business day prior to the final
maturity of the Facility.
Drawings under any letter of credit shall be
reimbursed by the Borrower on the same
business day. To the extent that the
Borrower does not reimburse the Issuing Bank
on the same business day, the Lenders shall
be irrevocably obligated to reimburse the
Issuing Bank pro rata based upon their
respective Facility commitments.
The issuance of all letters of credit shall
be subject to the customary procedures of
the Issuing Bank.
Final Maturity: The Facility will mature on the third
anniversary of the Closing Date; provided,
however, that, with the consent of each
Lender, the final maturity of the
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Facility may be extended for up to two
additional one-year periods upon the
Borrower's request.
Guarantees: All obligations of the Borrower (the
"Borrower Obligations") under the Facility
and under any interest rate protection or
other hedging arrangements entered into with
a Lender or any affiliate thereof ("Hedging
Arrangements") will be unconditionally
guaranteed by each existing and subsequently
acquired or organized domestic and, to the
extent no adverse tax consequences to the
Borrower would result therefrom, foreign
subsidiary of the Borrower, other than
Inactive Subsidiaries (to be defined) (the
"US Guarantors"). All obligations of the
Canadian Borrower (the "Canadian Borrower
Obligations") under the Canadian Facility,
if any, will be unconditionally guaranteed
(together with the guarantees referred to in
the preceding sentence (the "Guarantees"))
by each existing and subsequently acquired
or organized subsidiary (other than Inactive
Subsidiaries) of the Canadian Borrower (the
"Canadian Guarantors") and by the Borrower
and the US Guarantors.
Security: The Borrower Obligations will be secured by
a first-priority perfected lien on all
currently owned or hereafter acquired
inventory, accounts receivable and other
material tangible and intangible assets of
the Borrower and the US Guarantors; provided
that not more than 65% of the voting stock
of any foreign subsidiary shall be required
to be pledged to the extent the pledge of
any greater percentage would result in
adverse tax consequences to the Borrower.
The Canadian Borrower Obligations will be
secured by a first-priority perfected lien
on all currently owned or hereafter acquired
inventory, accounts receivable and other
material tangible and intangible assets of
the Canadian Borrower and the Canadian
Guarantors (collectively, with the
collateral described in the preceding
sentence, the "Collateral").
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All the above-described liens shall be
created on terms, and pursuant to
documentation, reasonably satisfactory to
the Lenders.
The Credit Agreement will provide that, to
the extent the proceeds of the Collateral
are insufficient to pay all the obligations
intended to be secured thereby, the Agent
will be authorized to allocate and
reallocate such proceeds among the Lenders
under the Facility and the Lenders under the
Canadian Facility to ensure a ratable
recovery by each such class of Lenders.
Mandatory Reductions in Commitments under the Facility will be
Commitments: permanently reduced, and loans thereunder
prepaid, by an amount equal to 100% of the
net cash proceeds of (a) all non-ordinary
course asset sales, (b) the issuance of
additional debt and (c) 75% of the issuance
of equity securities, in each case subject
to exceptions (including, in the case of
certain asset sales, reinvestment
provisions) to be agreed upon. Mandatory
commitment reductions shall be allocated pro
rata between the Facility and the Canadian
Facility, if any.
Voluntary Reductions in Voluntary reductions of the unutilized
Commitments: portion of the Facility commitments and
prepayments of borrowings will be permitted
at any time, in minimum principal amounts to
be agreed upon, without premium or penalty,
subject to reimbursement of the Lenders'
redeployment costs in the case of a
prepayment of Adjusted LIBOR borrowings
other than on the last day of the relevant
interest period.
Representations and Warranties: Usual for facilities and transactions of
this type and others to be reasonably
specified by the Agent, including, without
limitation, accuracy of financial statements
and other information; no material adverse
change; absence of material litigation; no
violation of agreements or instruments;
compliance with laws (including ERISA,
margin regulations and environmental laws);
payment of taxes; ownership
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of properties; inapplicability of the
Investment Company Act and the Public
Utility Holding Company Act; solvency;
effectiveness of governmental approvals;
labor matters; environ mental matters; and
validity, priority and perfection of
security interests in the Collateral.
Conditions Precedent to Initial Usual for facilities and transactions of
Borrowing: this type, those specified below and others
to be reasonably specified by the Agent,
including, without limitation, delivery of
satisfactory legal opinions, audited
financial statements and other financial
information; first-priority perfected
security interests in the Collateral
(subject to customary qualifications);
execution of the Guarantees, which shall be
in full force and effect; accuracy of
representations and warranties; absence of
defaults, prepayment events or creation of
liens under debt instruments or other
agreements; evidence of authority; absence
of material adverse change; payment of fees
and expenses; and obtaining of satisfactory
insurance.
The Combination and the IPO shall be
consummated prior to or contemporaneously
with the closing under the Facility in
accordance with applicable law and on the
terms described herein; and the Lenders
shall be satisfied with the capitalization,
structure and equity ownership of the
Borrower and its Subsidiaries after giving
effect to the Transactions.
All principal, interest, fees and other
amounts due or outstanding under the
Existing Credit Agreements shall have been
paid in full with the proceeds of the IPO
and the initial loans under the Facility,
the commitments thereunder shall be
terminated and, contemporaneously with the
closing under the Facility, all guarantees
(if any) thereof and security (if any)
therefor shall be released and discharged,
and the Agent shall have received reasonably
satisfactory evidence thereof.
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After giving effect to the Transactions and
the other transactions contemplated hereby,
the Borrower and its subsidiaries shall have
outstanding no indebtedness or preferred
stock other than (a) the loans and other
extensions of credit under the Facility and
(b) other limited indebtedness to be agreed
upon.
The Lenders shall have received unaudited
combined pro forma balance sheets and
related statements of income, stockholders'
equity and cash flows of the Borrower and
the Acquired Companies as of and for the
12-month period ending December 31, 1999 and
the 9-month period ending September 30,
2000, which financial statements shall not
be materially inconsistent with the
financial statements or forecasts previously
provided to the Lenders.
The Lenders shall have received a pro forma
consolidated balance sheet of the Borrower
as of the Closing Date, after giving effect
to the Transactions and the other
transactions contemplated hereby, which
balance sheet shall not be materially
inconsistent with the forecasts previously
provided to the Lenders.
The Lenders shall be reasonably satisfied as
to the amount and nature of any
environmental and employee health and safety
exposures to which the Borrower and its
subsidiaries may be subject after giving
effect to the Transactions, and with the
plans of the Borrower or such subsidiaries
with respect thereto.
The Lenders shall be reasonably satisfied in
all respects with the tax position and the
contingent tax and other liabilities of, and
with any tax sharing arrangements among, the
Borrower and its subsidiaries after giving
effect to the Transactions.
The Lenders shall have received a detailed
business plan of the Borrower and its
subsidiaries for the
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years 2001 through 2005 in form and
substance reasonably satisfactory to the
Agent.
All requisite governmental authorities and
third parties shall have approved or
consented to the Transactions and the other
transactions contemplated hereby to the
extent required, all applicable appeal
periods shall have expired and there shall
be no litigation, governmental,
administrative or judicial action, actual or
threatened, that could reasonably be
expected to restrain, prevent or impose
burdensome conditions on the Transactions or
the other transactions contemplated hereby.
Conditions Precedent to all Delivery of notice, accuracy of
Borrowings: representations and warranties and absence
of defaults.
Affirmative Covenants: Usual for facilities and transactions of
this type and others to be reasonably
specified by the Agent (to be applicable to
the Borrower and its subsidiaries),
including, without limitation, maintenance
of corporate existence and rights;
performance of obligations; delivery of
financial statements and other financial
information; delivery of notices of default,
litigation and material adverse change;
maintenance of properties in good working
order; maintenance of satisfactory
insurance; compliance with laws; inspection
of books and properties; further assurances;
and payment of taxes.
Negative Covenants: Usual for facilities and transactions of
this type and others to be reasonably
specified by the Agent (to be applicable to
the Borrower and its subsidiaries),
including, without limitation, limitations
on dividends on, and redemptions and
repurchases of, capital stock; limitations
on prepayments, redemptions and repurchases
of debt (other than loans under the
Facility); limitations on liens and
sale-leaseback transactions; limitations on
loans and investments; limitations on debt
and hedging arrangements; limitations on
mergers, acquisitions (other than Permitted
Acquisitions) and asset sales;
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limitations on transactions with affiliates;
limitations on changes in business conducted
by the Borrower and its subsidiaries;
limitations on amendments of debt and other
material agreements.
Selected Financial Covenants: Usual for facilities and transactions of
this type (with financial definitions and
levels to be agreed upon), including,
without limitation, (a) maximum ratios of
Total Debt to EBITDA, (b) minimum interest
coverage ratios and (c) minimum net worth.
Events of Default: Usual for facilities and transactions of
this type and others to be reasonably
specified by the Agent, including, without
limitation, nonpayment of principal or
interest, violation of covenants,
incorrectness of representations and
warranties in any material respect, cross
default and cross acceleration, bankruptcy,
material judgments, ERISA, actual or
asserted invalidity of guarantees or
security documents and Change in Control (to
be defined).
Voting: Amendments and waivers of the definitive
credit documentation will require the
approval of Lenders holding more than 50% of
the aggregate amount of the loans and
commitments under the Facility, except that
the consent of each Lender adversely
affected thereby shall be required with
respect to, among other things, (a)
increases in the commitment of such Lender,
(b) reductions of principal, interest or
fees, (c) extensions of final maturity and
(d) releases of guarantors or all or any
substantial part of the Collateral (other
than in connection with any sale of
Collateral permitted by the definitive
credit documentation).
Cost and Yield Protection: Usual for facilities and transactions of
this type.
Assignments and Participations: The Lenders will be permitted to assign
loans and commitments to other Lenders (or
their affiliates) without restriction, or to
other financial institutions with the
consent of the Borrower and the Agent, in
each case not to be unreasonably withheld.
Each
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assignment (except to other Lenders or their
affiliates) will be in a minimum amount of
$5,000,000. The Agent will receive a
processing and recordation fee of $3,500,
payable by the assignor and/or the assignee,
with each assignment. Assignments will be by
novation.
The Lenders will be permitted to participate
loans and commitments without restriction to
other financial institutions. Voting rights
of participants shall be limited to matters
in respect of (a) increases in commitments,
(b) reductions of principal, interest or
fees, (c) extensions of final maturity and
(d) releases of guarantors or all or any
substantial part of the Collateral (other
than in connection with any sale or
collateral permitted by the definitive
credit documentation).
Expenses and Indemnification: The Borrower will indemnify the Arranger,
the Agent and the other Lenders and hold
them harmless from and against all costs,
expenses (including reasonable fees,
disbursements and other charges of counsel)
and liabilities of the Arranger, the Agent
and the other Lenders arising out of or
relating to any claim or any litigation or
other proceeding (regardless of whether the
Arranger, the Agent or any other Lender is a
party thereto but excluding any such claim,
litigation or proceeding brought by a Lender
against any other Lender (other than an
agent or arranger in its capacity as such))
that relates to the Transactions, including
the financing contemplated hereby, the
Combination, the IPO or any transactions
connected therewith, provided that none of
the Arranger, the Agent or any other Lender
will be indemnified for any cost, expense or
liability to the extent determined in the
final judgment of a court of competent
jurisdiction to have resulted from its gross
negligence or willful misconduct. In
addition, all reasonable out-of-pocket
expenses of the Lenders for enforcement
costs and all documentary taxes associated
with the Facility are to be paid by the
Borrower.
<PAGE> 18
11
Governing Law and Forum: New York.
Counsel to Agent and Arranger: Cravath, Swaine & Moore.
<PAGE> 19
ANNEX I
Interest Rates: The interest rates under the Facility will
be, at the Borrower's option, the Alternate
Base Rate or LIBOR (or, in the case of
Canadian Loans under the Canadian Facility,
the Canadian Prime Rate or the Bankers'
Acceptance discount rate) plus the
indicative Applicable Margin set forth
below, in each case based upon the
Borrower's ratio of Total Debt to EBITDA, as
set forth in the table below:
<TABLE>
<CAPTION>
ABR/ Canadian
Total Debt/ LIBOR/BA + Prime Rate + Commitment
LEVEL EBITDA (BPS) (BPS) Fee (BPS)
----- -------------------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
1 <1.5x 150 50 25
2 > or = 1.5 - <2.0x 175 75 37.5
3 > or = 2.0 - <2.75x 200 100 50
4 > or = 2.75 - <3.5x 225 125 50
5 > or = 3.5x 250 150 50
</TABLE>
; PROVIDED that until delivery of the
Borrower's financial statements for the
period ended September 30, 2001, the
Borrower's ratio of Total Debt to EBITDA
shall be deemed to be greater than 2x.
The Borrower may elect interest periods of
1, 2, 3 or 6 months for Adjusted LIBOR
borrowings. The Canadian Borrower may elect
interest periods of 30, 60 or 90 days for
Bankers Acceptances.
Calculation of interest shall be on the
basis of the actual days elapsed in a year
of 360 days (or 365 or 366 days, as the case
may be, in the case of Canadian Prime Rate
loans or ABR loans based on the Prime Rate)
and interest shall be payable at the end of
each interest period and, in any event, at
least every 3 months.
ABR is the Alternate Base Rate, which is the
higher of CSFB's Prime Rate and the Federal
Funds Effective Rate plus 1/2 of 1%.
<PAGE> 20
2
Adjusted LIBOR will at all times include
statutory reserves.
Canadian Prime Rate is the higher of (i) the
Agent's reference rate from time to time in
effect for determining interest rates on
commercial loans in Canadian dollars made in
Canada and (ii) the CDOR Rate for one month
plus 1%.
The discount rate for Bankers' Acceptances
shall be the rate determined by the Agent in
accordance with its normal banking practices
at or around 10:00 a.m., Toronto time, on
the date of issue and acceptance of the
Bankers' Acceptances as the percentage
discount rate at which the principal Toronto
office of the Agent would be prepared to
purchase bankers' acceptances having a face
amount and term comparable to such Bankers'
Acceptances.
Letter of Credit Fee: A per annum fee equal to the spread over
Adjusted LIBOR under the Facility will
accrue on the aggregate face amount of
outstanding letters of credit under the
Facility, payable in arrears at the end of
each quarter and upon the termination of the
Facility, in each case for the actual number
of days elapsed over a 360-day year. Such
fees shall be distributed to the Lenders
participating in the Facility pro rata in
accordance with the amount of each such
Lender's commitment. In addition, the
Borrower shall pay to the Issuing Bank, for
its own account, (a) a fronting fee to be
agreed upon by the Borrower and the Issuing
Bank and (b) customary issuance and
administration fees.
Commitment Fees: 0.50% per annum on the undrawn portion of
the commitments in respect of the Facility,
commencing to accrue upon the execution and
delivery of the Credit Agreement and payable
quarterly in arrears thereafter and upon the
termination of the commitments, calculated
based on the number of days elapsed in a
360-day year, subject to change based upon
the Borrower's ratio of Total Debt to
EBITDA, as set forth in the table above.
<PAGE> 21
ANNEX II
Sources and Uses of Funds
(in millions of US dollars)
(all figures are approximate)
<TABLE>
<S> <C>
SOURCES OF FUNDS
Facility 1/ $ 70.7
Net IPO Proceeds 136.8
------
TOTAL SOURCES $207.5
======
USES OF FUNDS
Refinance Existing $201.1
Debt and Accrued
Interest
Repurchase Shares of
Unaccredited Investors 3.4
Transaction Costs 3.0
------
TOTAL USES $207.5
======
</TABLE>
----------
1/ Represents amount to be drawn under the $150,000,000 Facility on the
Closing Date.
