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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 15, 1998
KEY ENERGY GROUP, INC.
(Exact Name of Registrant as Specified in Charter)
Maryland 1-8038 04-2648081
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
Two Tower Center, 20th Floor, East Brunswick, New Jersey 08816
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (732) 247-4822
N/A
(Former Name or Former Address, if Changed Since Last Report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) On September 15, 1998, Midland Acquisition Corp. (the "Purchaser"), a
New Jersey corporation and a wholly-owned subsidiary of Key Energy Group, Inc.
("Key"), completed its cash tender offer (the "Offer") for all outstanding
shares of common stock, par value $0.01 per share (the "Shares"), including the
associated common stock purchase rights, of Dawson Production Services, Inc.
("Dawson") at a price of $17.50 per Share. The Offer expired at 8:30 a.m., New
York City Time, on Tuesday, September 15, 1998. The Purchaser accepted for
payment 10,021,601 Shares for a total purchase price of approximately $175.37
million. The acceptance
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of validly tendered Shares, together with Shares previously owned by the
Purchaser and Key prior to the commencement of the Offer resulted in the
Purchaser and Key acquiring approximately 97.0% of the outstanding Shares. The
purchase price for Shares pursuant to the Offer and the Merger Agreement was
determined pursuant to arms-length negotiations between the parties and was
based on a variety of factors, including, without limitation, the anticipated
earnings and cash flows of Dawson.
The Offer was made pursuant to an Agreement and Plan of Merger (the
"Merger Agreement"), dated as of August 11, 1998, by and among, the Purchaser,
Key and Dawson. On September 18, 1998, pursuant to the terms of the Merger
Agreement, the Purchaser was merged with and into Dawson (the "First Merger")
under the laws of the States of New Jersey and Texas and all Shares not owned by
the Purchaser were cancelled and retired and converted into the right to receive
$17.50 in cash. On September 21, 1998, Dawson was merged with and into Key (the
"Second Merger") pursuant to the laws of the States of Maryland and Texas.
The total consideration paid for the Shares pursuant to the Offer and the
First Merger was approximately $181.68 million. Key's source of funds to pay
such amount, certain outstanding debt of Dawson and Key and related fees and
expenses was (i) a Bridge Loan Agreement in the amount of $150,000,000, dated
as of September 14, 1998, among Key, Lehman Brothers Inc., as Arranger, and
Lehman Commercial Paper Inc., as Administrative Agent and the other lenders
party thereto (the "Bridge Loan Agreement") and (ii) a $550,000,000 Second
Amended and Restated Credit Agreement, dated as of June 6, 1997 as amended and
restated through September 14, 1998, among Key, PNC Bank, National Association,
as Administrative Agent, Norwest Bank Texas, N.A., as Collateral Agent, PNC
Capital Markets, Inc., as Arranger and the other lenders named from time to
time parties thereto (the "Credit Agreement"). In connection with the Bridge
Loan Agreement, Key entered into Registration Rights Agreements (the
"Registration Rights Agreements") with Lehman Brothers Inc. and Lehman
Commercial Paper Inc. pursuant to which Key agreed to file with the Securities
and Exchange Commission (the "Commission") within a certain time period a
registration statement with respect to (i) an offer to exchange borrowings
under the Bridge Loan Agreement for a new issue of debt securities of Key, and
(ii) the resale of warrants (and shares of common stock of Key to be issued
upon the exercise of such warrants) to purchase shares of common stock of Key
issued to Lehman Brothers Inc. in connection with the Bridge Loan Agreement.
Loans outstanding after one year pursuant to the Bridge Loan Agreement will
convert into term loans which may be exchanged by the holders thereof for
exchange notes issued pursuant to an Indenture dated as of September 14, 1998
(the "Indenture"), between Key and The Bank of New York, trustee. The Bridge
Loan Agreement, the Registration Rights Agreements, the Indenture and
2
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related documents and agreements are filed herewith as exhibits 99.1 through
99.6 and are incorporated herein by reference. The Credit Agreement and related
agreements are filed herewith as exhibits 99.7 through 99.9 and are
incorporated herein by reference.
At the time the Second Merger was consummated, Key, its subsidiaries and
U.S. Trust Company of Texas, N.A., trustee ("U.S. Trust"), entered into a
Supplemental Indenture dated September 21, 1998 (the "Supplemental Indenture"),
pursuant to which Key assumed the obligations of Dawson under the Indenture
dated February 20, 1997 (the "Dawson Indenture") between Dawson and U.S. Trust,
Key's subsidiaries guaranteed such obligations and the notes issued pursuant to
the Dawson Indenture were equally and ratably secured with the obligations under
the Credit Agreement. Under the terms of the Dawson Indenture, the Company is
required to commence a cash tender offer to purchase at 101% of the aggregate
principal amount of the outstanding notes (which the outstanding amount is $140
million) by mid-October 1998, the source of funds for which will be borrowings
under the Second Amended and Restated Credit Agreement. The Dawson Indenture and
the Supplemental Indenture are filed herewith as exhibits 99.10 and 99.11.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
To be filed within sixty (60) days of the date of filing of this Current
Report on Form 8-K, as permitted by Item 7(a)(4) of Form 8-K.
(b) Pro Forma Financial Information.
To be filed within sixty (60) days of the date of filing of this Current
Report on Form 8-K, as permitted by Item 7(b)(2) of Form 8-K.
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated as of August 11, 1998, by and
among Key Energy Group, Inc., Midland Acquisition Corp. and
Dawson Production Services, Inc.
99.1 $150,000,000 Bridge Loan Agreement, dated as of September 14, 1998
among Key Energy Group, Inc., Lehman Brothers Inc., Lehman
Commercial Paper Inc., and the lenders and guarantors named therein.
99.2 Indenture for the Key Energy Group, Inc. Exchange Notes due 2008,
dated as of September 14, 1998.
3
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99.3 Warrant Agreement among Key Energy Group, Inc. and The Bank of
New York as Trustee, dated as of September 14, 1998.
99.4 Debt Registration Rights Agreement, among Key Energy Group, Inc.,
Lehman Commercial Paper Inc. and the guarantors set forth therein,
dated as of September 14, 1998.
99.5 Equity Registration Rights Agreement, between Key Energy Group,
Inc. and Lehman Brothers Inc., dated as of September 14, 1998.
99.6 Escrow Agreement among Key Energy Group, Inc., Lehman Brothers
Inc., Lehman Commercial Paper Inc. and The Bank of New York,
dated as of September 14, 1998.
99.7 $550,000,000 Second Amended and Restated Credit Agreement, among Key
Energy Group, Inc., PNC Bank, National Association, Norwest Bank
Texas, N.A., PNC Capital Markets, Inc. and the several lenders from
time to time parties thereto, dated as of June 6, 1997, as amended
and restated through September 14, 1998.
99.8 Amended and Restated Master Guarantee and Collateral Agreement made
by Key Energy Group, Inc. and certain of its Subsidiaries in favor
of Norwest Bank Texas, N.A., dated as of June 6, 1997, as amended
and restated through September 14, 1998.
99.9 Intercreditor and Collateral Agency Agreement, dated as of September
14, 1998.
99.10 Indenture dated February 20, 1997 between Dawson Production
Services, Inc. and U.S. Trust Company of Texas, N.A.
99.11 Supplemental Indenture dated September 21, 1998, among Key Energy
Group, Inc., its Subsidiaries and U.S. Trust Company of Texas, N.A.
4
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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 hereunto duly authorized.
KEY ENERGY GROUP, INC.
Date: September 28, 1998 By: /s/ FRANCIS D. JOHN
----------------------------
Francis D. John
Chairman, President and
Chief Executive Officer
5
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EXHIBIT INDEX
2.1 Agreement and Plan of Merger, dated as of August 11, 1998, by and among
Key Energy Group, Inc., Midland Acquisition Corp. and Dawson Production
Services, Inc. (incorporated by reference to Exhibit J to Amendment No.
4 to the Schedule 13D of Key Energy Group, Inc. and Midland Acquisition
Corp., filed with the Commission on or about August 12, 1998).
99.1* $150,000,000 Bridge Loan Agreement, dated as of September 14, 1998
among Key Energy Group, Inc., Lehman Brothers Inc., Lehman Commercial
Paper Inc. and the lenders and guarantors named therein.
99.2* Indenture for the Key Energy Group, Inc. Exchange Notes due 2008, dated
as of September 14, 1998.
99.3* Warrant Agreement among Key Energy Group, Inc. and The Bank of New York
as Trustee, dated as of September 14, 1998.
99.4* Debt Registration Rights Agreement, among Key Energy Group, Inc.,
Lehman Commercial Paper Inc. and the guarantors set forth therein,
dated as of September 14, 1998.
99.5* Equity Registration Rights Agreement, between Key Energy Group, Inc.
and Lehman Brothers Inc., dated as of September 14, 1998.
99.6* Escrow Agreement among Key Energy Group, Inc., Lehman Brothers Inc.,
Lehman Commercial Paper Inc. and The Bank of New York, dated as of
September 14, 1998.
99.7* $550,000,000 Second Amended and Restated Credit Agreement, among Key
Energy Group, Inc., PNC Bank, National Association, Norwest Bank Texas,
N.A., PNC Capital Markets, Inc. and the several lenders from time to
time parties thereto, dated as of June 6, 1997 as amended and restated
through September 14, 1998.
99.8* Amended and Restated Master Guarantee and Collateral Agreement made by
Key Energy Group, Inc. and certain of its Subsidiaries in
6
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favor of Norwest Bank Texas, N.A., dated as of June 6, 1997, as amended
and restated through September 14, 1998.
99.9* Intercreditor and Collateral Agency Agreement, dated as of September
14, 1998.
99.10 Indenture dated February 20, 1997 between Dawson Production Services,
Inc. and U.S. Trust Company of Texas, N.A. (incorporated by reference
to Exhibit 4.3 to the Annual Report on Form 10-K for the fiscal year
ended March 31, 1997 of Dawson Production Services, Inc. (No.
000-27732)).
99.11* Supplemental Indenture dated September 21, 1998, among Key Energy
Group, Inc., its Subsidiaries and U.S. Trust Company of Texas, N.A.
- ----------
* Filed herewith.
7
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EXHIBIT 99.1
BRIDGE LOAN AGREEMENT
dated as of
September 14, 1998
among
KEY ENERGY GROUP, INC.,as Borrower
The Guarantors listed on the signature pages
hereto, as Guarantors
THE LENDERS named herein,
LEHMAN BROTHERS INC., as Arranger
and
LEHMAN COMMERCIAL PAPER INC., as Administrative Agent
-----------------------------------
$150,000,000
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.....................................................................................................1
SECTION 1.1 DEFINED TERMS.........................................................................................1
SECTION 1.2 INTERPRETATION.......................................................................................21
ARTICLE II THE BRIDGE FACILITY...........................................................................................22
SECTION 2.1 COMMITMENTS TO MAKE BRIDGE LOANS.....................................................................22
SECTION 2.2 CONVERSION TO TERM LOANS.............................................................................22
SECTION 2.3 OPTION TO EXCHANGE TERM LOANS FOR EXCHANGE NOTES.....................................................23
SECTION 2.4 INTEREST; PAYMENT IN KIND OPTION; AND DEFAULT INTEREST...............................................23
SECTION 2.5 MANDATORY PREPAYMENT.................................................................................24
SECTION 2.6 OPTIONAL PREPAYMENT..................................................................................25
SECTION 2.7 BREAKAGE COSTS; INDEMNITY............................................................................25
SECTION 2.8 EFFECT OF NOTICE OF PREPAYMENT.......................................................................26
SECTION 2.9 PAYMENTS.............................................................................................26
SECTION 2.11 RIGHT OF SET OFF; SHARING OF PAYMENTS, ETC...........................................................30
SECTION 2.12 CERTAIN FEES.........................................................................................31
ARTICLE III REPRESENTATIONS AND WARRANTIES...............................................................................31
SECTION 3.1 REPRESENTATIONS AND WARRANTIES IN THE CREDIT FACILITY AND IN THE ACQUISITION AGREEMENT...............31
SECTION 3.2 ORGANIZATION; POWERS.................................................................................31
SECTION 3.3 DUE AUTHORIZATION AND ENFORCEABILITY.................................................................32
SECTION 3.4 NO CONFLICTS.........................................................................................33
SECTION 3.5 NO VIOLATIONS........................................................................................33
SECTION 3.6 CAPITAL STOCK; SUBSIDIARIES..........................................................................33
SECTION 3.7 LIENS................................................................................................34
SECTION 3.8 NO VIOLATION OF REGULATIONS OF BOARD OF GOVERNORS OF FEDERAL RESERVE SYSTEM..........................34
SECTION 3.9 GOVERNMENTAL REGULATIONS.............................................................................34
SECTION 3.10 FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES.....................................................34
SECTION 3.11 FULL DISCLOSURE......................................................................................36
SECTION 3.13 ABSENCE OF PROCEEDINGS...............................................................................37
SECTION 3.14 TAXES................................................................................................37
SECTION 3.15 FINANCIAL CONDITION; SOLVENCY........................................................................37
SECTION 3.16 NO MATERIAL ADVERSE CHANGE...........................................................................37
SECTION 3.17 YEAR 2000 COMPLIANCE.................................................................................37
SECTION 3.18 USE OF PROCEEDS......................................................................................38
SECTION 3.19 SENIOR SECURED NOTES.................................................................................38
ARTICLE IV COVENANTS.....................................................................................................38
SECTION 4.1 FINANCIAL STATEMENTS.................................................................................38
SECTION 4.2 CERTIFICATES; OTHER INFORMATION......................................................................39
SECTION 4.3 PAYMENT OF OBLIGATIONS...............................................................................40
SECTION 4.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE, ETC................................................40
SECTION 4.5 MAINTENANCE OF PROPERTY; INSURANCE...................................................................40
SECTION 4.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS...............................................40
SECTION 4.7 NOTICES..............................................................................................41
SECTION 4.8 ENVIRONMENTAL LAWS...................................................................................41
SECTION 4.9 FURTHER ASSURANCES...................................................................................42
SECTION 4.10 ADDITIONAL COLLATERAL................................................................................43
SECTION 4.11 CONSUMMATION OF MERGER...............................................................................45
SECTION 4.12 FINANCIAL CONDITION COVENANTS........................................................................45
SECTION 4.14 LIMITATION ON LIENS..................................................................................50
SECTION 4.15 LIMITATION ON GUARANTEE OBLIGATIONS..................................................................52
SECTION 4.16 LIMITATION ON FUNDAMENTAL CHANGES....................................................................52
SECTION 4.17 LIMITATION ON SALE OF ASSETS.........................................................................53
SECTION 4.18 LIMITATION ON RESTRICTED PAYMENTS....................................................................54
SECTION 4.19 LIMITATION ON CAPITAL EXPENDITURES...................................................................55
SECTION 4.20 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES........................................................55
SECTION 4.21 LIMITATION ON OPTIONAL PAYMENTS AND MODIFICATIONS OF DEBT INSTRUMENTS AND ORGANIZATIONAL
DOCUMENTATION, ETC...................................................................................57
SECTION 4.22 LIMITATION ON TRANSACTIONS WITH AFFILIATES...........................................................57
SECTION 4.23 LIMITATION ON SALES AND LEASEBACKS...................................................................58
SECTION 4.24 LIMITATION ON NEGATIVE PLEDGE CLAUSES................................................................58
SECTION 4.25 LIMITATION ON LINES OF BUSINESS......................................................................58
SECTION 4.26 LIMITATION ON CONSOLIDATED LEASE EXPENSE.............................................................58
SECTION 4.28 POST-CLOSING ACTIONS.................................................................................59
SECTION 4.29 LIMITATION ON CHANGE OF FISCAL YEAR..................................................................60
ARTICLE V CONDITIONS.....................................................................................................60
SECTION 5.1 CORPORATE AND OTHER PROCEEDINGS......................................................................60
SECTION 5.2 CONCURRENT TRANSACTIONS..............................................................................61
SECTION 5.3 NO MATERIAL LOSS.....................................................................................62
SECTION 5.4 NO EVENT OF DEFAULT..................................................................................62
SECTION 5.5 NO CHANGES IN FINANCIAL MARKETS......................................................................62
SECTION 5.7 ESCROW AGREEMENT.....................................................................................63
SECTION 5.8 EXCHANGE NOTES.......................................................................................63
SECTION 5.9 ESCROW OF SECURITIES.................................................................................63
SECTION 5.10 DELIVERY OF OPINIONS.................................................................................63
SECTION 5.11 SOLVENCY.............................................................................................63
SECTION 5.12 PAYMENT OF FEES......................................................................................64
SECTION 5.13 NO BREACH UNDER ENGAGEMENT LETTER, COMMITMENT LETTER OR FEE LETTER...................................64
SECTION 5.14 CONSENTS AND APPROVALS...............................................................................64
SECTION 5.15 MARGIN REGULATIONS...................................................................................64
SECTION 5.16 SATISFACTORY FINANCIAL STATEMENTS....................................................................64
SECTION 5.17 REPAYMENT OF INDEBTEDNESS............................................................................64
SECTION 5.18 CONCURRENCE WITH ASSUMPTIONS.........................................................................64
SECTION 5.19 ABSENCE OF CERTAIN CHANGES...........................................................................65
SECTION 5.20 NET CAPITAL..........................................................................................65
SECTION 5.22 TERMINATION OF ENGAGEMENT LETTER.....................................................................65
SECTION 5.23 FILINGS, REGISTRATIONS AND RECORDINGS................................................................65
ARTICLE VI TRANSFER OF THE LOANS.........................................................................................66
SECTION 6.1 TRANSFER OF THE NOTES................................................................................66
SECTION 6.2 REGISTRATION OF TRANSFER OR EXCHANGE.................................................................67
SECTION 6.3 REGISTER.............................................................................................67
ARTICLE VII EVENTS OF DEFAULT............................................................................................67
SECTION 7.1 EVENTS OF DEFAULT....................................................................................67
SECTION 7.2 RIGHTS AND REMEDIES CUMULATIVE.......................................................................70
SECTION 7.3 DELAY OR OMISSION NOT WAIVER.........................................................................70
SECTION 7.4 WAIVER OF PAST DEFAULTS..............................................................................70
SECTION 7.5 RIGHTS OF LENDERS TO RECEIVE PAYMENT.................................................................70
ARTICLE VIII PERMANENT SECURITIES........................................................................................70
SECTION 8.1 PERMANENT SECURITIES.................................................................................70
SECTION 8.2 ESCROWED WARRANTS....................................................................................71
ARTICLE IX TERMINATION...................................................................................................71
SECTION 9.1 TERMINATION..........................................................................................71
SECTION 9.2 SURVIVAL OF CERTAIN PROVISIONS.......................................................................71
ARTICLE X SUBORDINATION..................................................................................................72
SECTION 10.1 AGREEMENT TO SUBORDINATE.............................................................................72
SECTION 10.2 CERTAIN DEFINITIONS..................................................................................72
SECTION 10.3 LIQUIDATION; DISSOLUTION; BANKRUPTCY.................................................................73
SECTION 10.4 DEFAULT ON DESIGNATED SENIOR DEBT....................................................................73
SECTION 10.5 ACCELERATION OF LOANS................................................................................74
SECTION 10.6 WHEN DISTRIBUTION MUST BE PAID OVER..................................................................74
SECTION 10.7 NOTICE BY THE BORROWER...............................................................................74
SECTION 10.8 SUBROGATION..........................................................................................75
SECTION 10.9 RELATIVE RIGHTS......................................................................................75
SECTION 10.10 SUBORDINATION MAY NOT BE IMPAIRED BY THE BORROWER AND THE GUARANTORS.................................75
SECTION 10.11 DISTRIBUTION OR NOTICE TO REPRESENTATIVE.............................................................75
SECTION 10.12 RIGHTS OF ADMINISTRATIVE AGENT.......................................................................76
SECTION 10.13 AUTHORIZATION TO EFFECT SUBORDINATION................................................................76
SECTION 10.14 AMENDMENTS...........................................................................................76
ARTICLE XI GUARANTEE.....................................................................................................76
SECTION 11.1 THE GUARANTEE........................................................................................76
SECTION 11.2 SUBORDINATION OF GUARANTEE...........................................................................78
SECTION 11.3 LIMITATION ON LIABILITY..............................................................................78
SECTION 11.4 STAY OF ACCELERATION.................................................................................78
SECTION 11.5 RELEASE OF GUARANTORS................................................................................78
SECTION 11.6 LIMITATION ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS................................................79
ARTICLE XII INDEMNITY....................................................................................................79
SECTION 12.1 INDEMNIFICATION......................................................................................79
SECTION 12.2 INDEMNITY NOT AVAILABLE..............................................................................79
SECTION 12.3 SETTLEMENT OF CLAIMS.................................................................................80
SECTION 12.4 APPEARANCE EXPENSES..................................................................................80
SECTION 12.5 INDEMNITY FOR TAXES, RESERVES AND EXPENSES...........................................................80
SECTION 12.6 SURVIVAL OF INDEMNIFICATION..........................................................................81
SECTION 12.7 LIABILITY NOT EXCLUSIVE; PAYMENTS....................................................................81
ARTICLE XIII THE ADMINISTRATIVE AGENT....................................................................................81
SECTION 13.1 APPOINTMENT..........................................................................................81
SECTION 13.2 DELEGATION OF DUTIES.................................................................................82
SECTION 13.3 EXCULPATORY PROVISIONS...............................................................................82
SECTION 13.4 RELIANCE BY THE ADMINISTRATIVE AGENT.................................................................82
SECTION 13.5 NOTICE OF DEFAULT....................................................................................82
SECTION 13.6 NON-RELIANCE ON THE ADMINISTRATIVE AGENT AND OTHER LENDERS...........................................83
SECTION 13.7 INDEMNIFICATION......................................................................................83
SECTION 13.8 ADMINISTRATIVE AGENT, IN ITS INDIVIDUAL CAPACITIES...................................................84
SECTION 13.9 SUCCESSOR ADMINISTRATIVE AGENT.......................................................................84
SECTION 13.10 LIMITATION OF DUTIES.................................................................................84
SECTION 13.11 ADMINISTRATIVE AGENT FEE.............................................................................84
ARTICLE XIV MISCELLANEOUS................................................................................................84
SECTION 14.1 EXPENSES; DOCUMENTARY TAXES..........................................................................84
SECTION 14.2 NOTICES..............................................................................................85
SECTION 14.3 CONSENT TO AMENDMENTS AND WAIVERS....................................................................86
SECTION 14.4 PARTIES..............................................................................................86
SECTION 14.5 NEW YORK LAW; SUBMISSION TO JURISDICTION; WAIVER JURY TRIAL..........................................86
SECTION 14.6 REPLACEMENT NOTES....................................................................................87
SECTION 14.7 MARSHALLING; RECAPTURE...............................................................................87
SECTION 14.8 LIMITATION OF LIABILITY..............................................................................87
SECTION 14.9 INDEPENDENCE OF COVENANTS............................................................................87
SECTION 14.10 CURRENCY INDEMNITY...................................................................................88
SECTION 14.11 WAIVER OF IMMUNITY...................................................................................88
SECTION 14.12 FREEDOM OF CHOICE....................................................................................88
SECTION 14.13 SUCCESSORS AND ASSIGNS...............................................................................88
SECTION 14.14 MERGER...............................................................................................88
SECTION 14.15 SEVERABILITY CLAUSE..................................................................................89
SECTION 14.16 REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.......................................89
SECTION 14.17 CONFIDENTIALITY......................................................................................89
SECTION 14.18 INTERCREDITOR AGREEMENT..............................................................................89
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EXHIBITS
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EXHIBIT A FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT B FORM OF NOTES
EXHIBIT C WARRANT AGREEMENT
EXHIBIT E FORM OF ESCROW AGREEMENT
EXHIBIT F FORM OF EXCHANGE NOTE INDENTURE
EXHIBIT G OPINION OF COUNSEL FOR THE BORROWER AND THE GUARANTORS
EXHIBIT H FORM OF DEBT REGISTRATION RIGHTS AGREEMENT
EXHIBIT I FORM OF EQUITY REGISTRATION RIGHTS AGREEMENT
EXHIBIT J FORM OF MASTER GUARANTEE AND COLLATERAL DOCUMENT
EXHIBIT K FORM OF EXEMPTION CERTIFICATE
EXHIBIT L FORM OF PRO FORMA EBITDA STATEMENT
EXHIBIT M FORM OF INTERCREDITOR AGREEMENT
SCHEDULES
SCHEDULE 1.1B MORTGAGED PROPERTY
SCHEDULE 1.1C EXISTING OIL AND GAS MORTGAGES
SCHEDULE 3.6 SUBSIDIARIES; WARRANTS
SCHEDULE 3.10 FINANCIAL STATEMENTS
SCHEDULE 4.13 OUTSTANDING INDEBTEDNESS
SCHEDULE 4.14(H) LIENS
SCHEDULE 4.20(C) ACQUISITIONS
SCHEDULE 4.28(A)(I) UNPERFECTED VEHICLES
SCHEDULE 4.28(A)(II) NEWLY ACQUIRED VEHICLES
SCHEDULE 5.18 INDEBTEDNESS TO BE REPAID
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v
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THIS BRIDGE LOAN AGREEMENT, dated as of September 14, 1998 (as
amended, restated and/or otherwise modified from time to time, this
"AGREEMENT"), is by and among:
(a) Key Energy Group, Inc., a Maryland corporation (the
"BORROWER"),
(b) the Guarantors listed on the signature pages hereto as
Guarantors (each a "GUARANTOR" and, collectively, the "GUARANTORS"),
(c) the Lenders (as defined in Article I),
(d) Lehman Commercial Paper Inc., as Administrative Agent, and
(e) Lehman Brothers Inc., as Arranger.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINED TERMS. As used in this Agreement, the
following terms shall have the meanings specified below:
"ACQUIRED DEBT" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into, or became a Subsidiary of, such specified Person including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person's merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"ACQUISITION" means the transactions contemplated by the
Acquisition Agreement.
"ACQUISITION AGREEMENT" means the Agreement and Plan of Merger
dated as of August 11, 1998, entered into by the Borrower, Midland Acquisition
Corp. and Dawson.
"ACQUISITION DOCUMENTATION" means collectively, the Tender
Offer Documents and the Acquisition Agreement and all exhibits and annexes
thereto in each case as amended, supplemented or otherwise modified from time to
time in accordance with Section 4.21.
"ACTION" has the meaning specified in Section 12.2.
"ADMINISTRATIVE AGENT" means Lehman Commercial Paper, Inc.,
acting as agent pursuant to Article XIII or any successor or replacement
Administrative Agent, acting in such capacity.
"AFFECTED PARTY" means any Lender, any beneficial owner of any
Lender, and their respective successors and assigns.
"AFFILIATE" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition as it applies to
Articles IV and VII and Section 3.1, "control" of a Person means the power,
directly or indirectly, either to (a) vote 10% or more of the securities having
ordinary voting power for the election of directors of such Person or (b) direct
or cause the direction of the management and policies of such Person, whether by
contract or otherwise. For purposes of this definition as it applies to the
remaining provisions of this Agreement, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting securities,
by agreement or otherwise; provided that for purposes of Section 4.22,
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control. Neither the Lenders, the Arranger, the Administrative
Agent nor any of their Affiliates will be treated as an Affiliate of the
Borrower or any of its Subsidiaries for purposes of this Agreement or any other
Loan Document.
"AGREEMENT" has the meaning specified in the preamble to this
Agreement.
"APPLICABLE MARGIN" means, 650 basis points at all times
through and including the date that is 269 days subsequent to the Closing Date,
increasing by an additional 50 basis points on the 270th day subsequent to the
Closing Date, and increasing by an additional 100 basis points on the date that
is 360 days subsequent to the Closing Date and on the last day of each 90-day
period thereafter for so long as any Bridge Loans are outstanding.
"ARRANGER" means Lehman Brothers Inc.
"ASSET SALE" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than sales of inventory in the ordinary course of
business consistent with past practices, and (ii) the issue or sale by the
Borrower or any of its Subsidiaries of Capital Stock of any of the Borrower's
Subsidiaries, in the case of either clause (i) or (ii), whether in a single
transaction or a series of related transactions (a) that have a fair market
value in excess of $2,000,000 or (b) for net proceeds in excess of $2,000,000.
Notwithstanding the foregoing, the following items shall not be deemed to be
Asset Sales: (i) a transfer of assets by the Borrower to a Guarantor or by a
Guarantor to the Borrower or to another Guarantor, (ii) an issuance of Capital
Stock by a Guarantor to the Borrower or to another Guarantor, and (iii) a
Restricted Payment that is permitted by Section 4.18.
"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and
acceptance entered into by a Lender and an assignee, and accepted by the
Administrative Agent, in the form of EXHIBIT A or such other form as shall be
approved by the Administrative Agent.
"BANKRUPTCY LAW" means (i) Title 11 of the U.S. Code or (ii)
any other law of the United States, any political subdivision thereof or any
other jurisdiction relating to bankruptcy, insolvency, winding up, liquidation,
reorganization or relief of debtors.
"BASE RATE" means, with respect to any Interest Period, (i)
One Month LIBOR or Three Month LIBOR, as specified by the Borrower in the Rate
Selection Notice delivered in accordance with Section 2.4(a) for such Interest
Period, or (ii) One Month LIBOR, if the Borrower fails to deliver such Rate
Selection Notice for such Interest Period.
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"beneficial owner" and "beneficial ownership" each has the
meaning as defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act.
"BOARD" means the Board of Governors of the Federal Reserve
System of the United States or any successor.
"BORROWER" has the meaning specified in the preamble to this
Agreement.
"BRIDGE LOAN" means a loan made by any Lender to the Borrower
pursuant to Section 2.1.
"BUSINESS DAY" means each day other than a Saturday, a Sunday
or any other day on which banking institutions in the City of New York or at a
place of payment are authorized by law, regulation or executive order to remain
closed.
"CAPITAL EXPENDITURES" means for any period, with respect to
any Person, the aggregate of all expenditures by such Person and its
Subsidiaries for the acquisition or leasing (pursuant to a Financing Lease) of
fixed or capital assets or additions to equipment (including replacements and
improvements during such period) which should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries; provided that
"Capital Expenditures" shall not include (i) expenditures for Permitted
Acquisitions or (ii) expenditures by any Person prior to the time such Person
was acquired by the Borrower or any Subsidiary in a Permitted Acquisition.
"CAPITAL LEASE OBLIGATIONS" means as to any Person, the
obligations of such Person to pay rent or other amounts under any Financing
Lease and, for the purposes of this Agreement, the amount of such obligations at
any time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"CAPITAL MARKETS TRANSACTION" has the meaning specified in
Section 2.5(a).
"CAPITAL STOCK" means any and all shares of capital stock of a
corporation, and any and all equivalent ownership interests in a Person (other
than a corporation).
"CASH EQUIVALENTS" means (a) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition; (b) demand deposits, certificates of deposit, time deposits,
eurodollar time deposits or overnight bank deposits having maturities of twelve
months or less from the date of acquisition issued by any Lender or by any
commercial bank organized under the laws of the United States or any state
thereof having combined capital and surplus of not less than $250,000,000; (c)
commercial paper of (i) an issuer rated at least A-1 by Standard & Poor's
Ratings Services or P-1 by Moody's Investors Service, Inc., or carrying an
equivalent rating by a nationally recognized rating agency, if both of the two
named rating agencies cease publishing ratings of commercial paper issuers
generally or (ii) the holding company of any Lender, and, in either case,
maturing within twelve months from the date of acquisition; and (d) money market
funds the assets of which consist primarily of obligations of the types referred
to in clauses (a) through (c) above.
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"CHANGE OF CONTROL" means a "Change of Control" as defined in
the 1997 Indenture or, if the 1997 Indenture shall have been terminated, as
defined in the 1997 Indenture immediately prior to such termination.
"CHANGE OF CONTROL OFFER" has the meaning specified in Section
4.27(a).
"CHANGE OF CONTROL PAYMENT" has the meaning specified in
Section 4.27(a).
"CHANGE OF CONTROL PAYMENT DATE" has the meaning specified in
Section 4.27(a).
"CLOSING DATE" means the date on which the Bridge Loans are
funded and the conditions set forth in Article V are satisfied or waived in
accordance with Section 14.3.
"CODE" means the Internal Revenue Code of 1986, as amended,
and any regulation promulgated thereunder.
"COLLATERAL" means all assets of the Loan Parties, now owned
or hereafter acquired, upon which a Lien is purported to be created by any
Collateral Document.
"COLLATERAL AGENT" means Norwest Bank Texas, N.A.
"COLLATERAL DOCUMENTS" means the collective reference to each
Mortgage, each Oil and Gas Mortgage, the Master Guarantee and Collateral
Document and all other security documents hereafter delivered to the Collateral
Agent granting a Lien on any asset or assets of any Person to secure the
obligations and liabilities of the Borrower hereunder and/or under any of the
other Loan Documents or to secure any guarantee of any such obligations and
liabilities.
"COMMITMENT" means, with respect to any Lender, the amount set
forth opposite such Lender's signature on the signature pages of this Agreement.
"COMMITMENT LETTER" means the Commitment Letter (including the
exhibits thereto and incorporated by reference therein), dated August 25, 1998,
by and among the Borrower, Administrative Agent and Arranger.
"COMMONLY CONTROLLED ENTITY" means an entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
"CONSOLIDATED" OR "consolidated" means when used in respect of
any Subsidiary or any financial statements or financial term relating to the
Borrower and its Subsidiaries, refers to the Borrower and the Subsidiaries of
the Borrower (including Excluded Subsidiaries) whose accounts are consolidated
with the Borrower's accounts in accordance with GAAP.
"CONSOLIDATED CURRENT ASSETS" means at any date, all amounts
(other than cash and Cash Equivalents) that would, in conformity with GAAP, be
set forth opposite the caption "total current assets" (or any like caption) on a
consolidated balance sheet of the Borrower and its Subsidiaries at such date.
"CONSOLIDATED CURRENT LIABILITIES" means at any date, all
amounts that would, in conformity with GAAP, be set forth opposite the caption
"total current liabilities" (or any like caption) on a consolidated
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<PAGE> 7
balance sheet of the Borrower and its Subsidiaries at such date, but excluding
(a) the current portion of any Funded Debt of the Borrower and its Subsidiaries
and (b) without duplication of clause (a) above, all Indebtedness consisting of
revolving credit Indebtedness under the Credit Facility to the extent otherwise
included therein.
"CONSOLIDATED EBITDA" means with respect to any Person for any
period, Consolidated Net Income of such Person for such period plus, without
duplication and to the extent reflected as a charge in the statement of such
Consolidated Net Income for such period, the sum of (a) total income tax
expense, (b) interest expense, (c) depreciation and amortization expense, (d)
amortization of intangibles (including, but not limited to, goodwill) and
organization costs, (e) any extraordinary expenses or losses (including, whether
or not otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, losses on sales of assets outside of
the ordinary course of business), (f) any other noncash charges, (g) if
applicable, non-recurring transaction expenses incurred in connection with the
consummation of the Acquisition and related financings, restructuring charges,
write-off of goodwill and licensing agreements, and (h) for the fiscal year
ending June 30, 1999 only, minority interest adjustments related to Dawson, and
minus, to the extent included in the statement of such Consolidated Net Income
for such period, the sum of (a) interest income, (b) any extraordinary income or
gains (including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, gains on the sales of
assets outside of the ordinary course of business) and (c) any other noncash
income (other than any income represented by a receivable that in the ordinary
course would be expected to be paid in cash), all as determined on a
consolidated basis.
"CONSOLIDATED INTEREST COVERAGE RATIO" means for any period,
the ratio of (a) Consolidated EBITDA of the Borrower and its Subsidiaries for
such period to (b) Consolidated Interest Expense for such period; provided that
for purposes of calculating Consolidated EBITDA of the Borrower and its
Subsidiaries for any period of four full fiscal quarters, the Consolidated
EBITDA of any Person acquired by the Borrower or its Subsidiaries which upon
such acquisition becomes a Consolidated Subsidiary or is merged into the
Borrower or a Subsidiary (including, without limitation, Dawson and its
Subsidiaries) during such period shall be included on a pro forma basis for such
period of four full fiscal quarters (assuming the consummation of each such
acquisition and the incurrence or assumption of any Indebtedness in connection
therewith occurred on the first day of such period of four full fiscal quarters
and assuming only such cost reductions as are related to such acquisition and
are realizable on or before the date of calculation) if the consolidated balance
sheet of such acquired Person and its consolidated Subsidiaries as at the end of
the period preceding the acquisition of such Person and the related consolidated
statements of income and stockholders' equity and of cash flows for such period
(i) have been previously provided to the Administrative Agent and the Lenders
and (ii) either (A) have been reported on without a qualification arising out of
the scope of the audit (other than a "going concern" or like qualification or
exception) by independent certified public accountants of nationally recognized
standing or (B) have been found acceptable by the Administrative Agent.
"CONSOLIDATED INTEREST EXPENSE" means for any period, total
interest expense (including that attributable to Capital Lease Obligations),
both expensed and capitalized, of the Borrower and its Subsidiaries for such
period with respect to all outstanding Indebtedness of the Borrower and its
Subsidiaries (including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Protection Agreements and
excluding fees owed with respect to the Existing Credit Agreement and imputed
interest attributable to Senior Subordinated Notes that are original issue
discount notes to the extent such net costs are allocable to such period in
accordance with GAAP), determined on a consolidated basis in accordance with
GAAP, net of interest income of the Borrowers and its Subsidiaries for such
period (determined on a consolidated basis in accordance with GAAP).
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<PAGE> 8
"CONSOLIDATED LEASE EXPENSE" means for any period, the
aggregate amount of fixed and contingent rentals payable by the Borrower and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP, for
such period with respect to leases of real and personal property; provided that
amounts payable under Financing Leases and oil and gas leases shall be excluded
from Consolidated Lease Expense.
"CONSOLIDATED LEVERAGE RATIO" means on the date of any
determination thereof, the ratio of (a) Consolidated Total Debt on such date,
less the amount of cash and Cash Equivalents in excess of $5,000,000 held by the
Borrower and its Subsidiaries on such date to (b) Consolidated EBITDA of the
Borrower and its Subsidiaries for the four full fiscal quarters ending on such
date; provided that for purposes of calculating Consolidated EBITDA of the
Borrower and its Subsidiaries for any period of four full fiscal quarters, the
Consolidated EBITDA of any Person acquired by the Borrower or its Subsidiaries
which upon such acquisition becomes a Consolidated Subsidiary or is merged into
the Borrower or a Subsidiary (including, without limitation, Dawson and its
Subsidiaries) during such period shall be included on a pro forma basis for such
period of four full fiscal quarters (assuming the consummation of each such
acquisition and the incurrence or assumption of any Indebtedness in connection
therewith occurred on the first day of such period of four full fiscal quarters
and assuming only such cost reductions as are related to such acquisition and
are realizable on or before the date of calculation) if the consolidated balance
sheet of such acquired Person and its consolidated Subsidiaries as at the end of
the period preceding the acquisition of such Person and the related consolidated
statements of income and stockholders' equity and of cash flows for such period
(i) have been previously provided to the Administrative Agent and the Lenders
and (ii) either (A) have been reported on without a qualification arising out of
the scope of the audit (other than a "going concern" or like qualification or
exception) by independent certified public accountants of nationally recognized
standing or (B) have been found acceptable by the Administrative Agent.
"CONSOLIDATED NET INCOME" means with respect to any Person for
any period, the consolidated net income (or loss) of such Person for such
period, determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED NET WORTH" means at a particular date, as to any
Person, the amount which would be included under stockholders' equity on a
consolidated balance sheet of such Person and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED SENIOR DEBT" means with respect to the Borrower
and its Subsidiaries, consolidated Indebtedness of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with GAAP other
than Subordinated Indebtedness.
"CONSOLIDATED SENIOR LEVERAGE RATIO" means on the date of any
determination thereof, the ratio of (a) Consolidated Senior Debt on such date,
less the amount of cash and Cash Equivalents in excess of $5,000,000 held by the
Borrower and its Subsidiaries on such date to (b) Consolidated EBITDA of the
Borrower and its Subsidiaries for the four full fiscal quarters ending on such
date; provided that for purposes of calculating Consolidated EBITDA of the
Borrower and its Subsidiaries for any period of four full fiscal quarters, the
Consolidated EBITDA of any Person acquired by the Borrower or its Subsidiaries
which upon such acquisition becomes a Consolidated Subsidiary or is merged into
the Borrower or a Subsidiary (including, without limitation, Dawson and its
Subsidiaries) during such period shall be included on a pro forma basis for such
period of four full fiscal quarters (assuming the consummation of each such
acquisition and the incurrence or assumption of any Indebtedness in connection
therewith occurred on the first day of such period of four full fiscal quarters
and assuming only such cost reductions as are related to such
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<PAGE> 9
acquisition and are realizable on or before the date of calculation) if the
consolidated balance sheet of such acquired Person and its consolidated
Subsidiaries as at the end of the period preceding the acquisition of such
Person and the related consolidated statements of income and stockholders'
equity and of cash flows for such period (i) have been previously provided to
the Administrative Agent and the Lenders and (ii) either (A) have been reported
on without a qualification arising out of the scope of the audit (other than a
"going concern" or like qualification or exception) by independent certified
public accountants of nationally recognized standing or (B) have been found
acceptable by the Administrative Agent.
"CONSOLIDATED TOTAL DEBT" means at any date, the aggregate
principal amount of all Indebtedness of the Borrower and its Subsidiaries at
such date, which on a consolidated basis in accordance with GAAP would be
required to be reflected on a consolidated balance sheet of the Borrower and its
Subsidiaries as a liability.
"CONSOLIDATED WORKING CAPITAL" means at any date, the excess
of Consolidated Current Assets on such date over Consolidated Current
Liabilities on such date.
"CONTRACTUAL OBLIGATION" means as to any Person, any provision
of any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CONVERSION DATE" means the date, if any, on which the Bridge
Loans convert to Term Loans in accordance with Section 2.2.
"CONVERSION DEFAULT" means the occurrence of any one or more
of the following: (i) any Default or Event of Default under Section 7 hereof or
any other Loan Document, (ii) any Payment Default under the Credit Facility,
(iii) any failure by the Borrower to pay all accrued and unpaid interest with
respect to the Bridge Loans and all fees due and owing in accordance with the
Loan Documents, or (iv) the Shelf Registration Statement (as defined in the Debt
Registration Rights Agreement) shall not have been filed with the SEC.
"CONVERSION RATE" means, as of any date, the sum of (i) the
then applicable Conversion Spread, and (ii) the Interest Rate applicable to the
Bridge Loans on the day preceding the Conversion Date.
"CONVERSION SPREAD" means zero basis points during the 90-day
period commencing on September 14, 1999 (whether or not the Conversion Date has
occurred on such date), increasing by 100 basis points at the beginning of each
subsequent 90-day period.
"CONVERTIBLE SUBORDINATED DEBENTURES" means the 7% Convertible
Subordinated Debentures due 2003 issued by the Borrower pursuant to the
Indenture.
"CREDIT FACILITY" means that certain Second Amended and
Restated Credit Agreement, dated as of the date hereof, by and among the
Borrower, the lenders party thereto, PNC Bank, National Association, as
administrative agent and other parties thereto, including any related notes,
guarantees, collateral documents, instruments and other agreements executed by
the Borrower or any of its Subsidiaries in connection therewith, and in each
case as amended, restated, supplemented, modified, renewed, refunded, replaced
or refinanced from time to time.
"CUSTODIAN" means any receiver, interim receiver, receiver and
manager, trustee, assignee, liquidator, sequestrator, custodian or similar
official under any Bankruptcy Law.
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"DAWSON" means Dawson Production Services, Inc., a Texas
corporation.
"DAWSON CHANGE OF CONTROL" means a "change of control" as
defined in the Dawson Indenture which occurs in connection with the Acquisition.
"DAWSON INDENTURE" means the indenture, dated as of February
20, 1997, among Dawson, certain Subsidiaries of Dawson and U.S. Trust Company of
Texas, N.A., as trustee.
"DAWSON NOTES" means the 9-3/8% Senior Notes due 2007 issued
by Dawson pursuant to the Dawson Indenture.
"DEBT REGISTRATION RIGHTS AGREEMENT" means the registration
rights agreement, dated as of September 14, 1998, among the Borrower, the
Guarantors and the Administrative Agent pursuant to which the Exchange Notes are
required to be registered for public sale, in the form attached as EXHIBIT H.
"DEFAULT" means any event that, with the passage of time, the
giving of notice or both, would constitute an Event of Default.
"DESIGNATED NONCASH CONSIDERATION" means the fair market value
of noncash consideration received by the Borrower or one of its Subsidiaries in
connection with an Asset Sale that is so designated as Designated Noncash
Consideration pursuant to an Officers' Certificate, setting forth the basis of
such valuation, executed by the chief financial officer of the Borrower, less
the amount of cash or Cash Equivalents received in connection with a sale of
such Designated Noncash Consideration.
"DESIGNATED SENIOR DEBT" has the meaning specified in Section
10.2.
"DISQUALIFIED STOCK" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or in part, on or prior
to September 16, 2005.
"dollars" or "$" shall mean lawful money of the United States
of America.
"DOMESTIC SUBSIDIARY" means any Subsidiary of the Borrower
organized under the laws of any jurisdiction within the United States.
"ENGAGEMENT LETTER" means the engagement letter, dated as of
August 25, 1998, by and among the Borrower, the Administrative Agent, and the
Arranger.
"environment" shall mean ambient air, surface water and
groundwater (including potable water, navigable water and wetlands), the land
surface or subsurface strata, the workplace or as otherwise defined in any
Environmental Law.
"ENVIRONMENTAL LAWS" means any and all laws, rules, orders,
regulations, statutes, ordinances, codes, decrees, or other legally enforceable
requirements (including, without limitation, common law) of any foreign
government, the United States, or any state, local, municipal or other
Governmental Entity, regulating, relating to or imposing liability or standards
of conduct concerning protection of the environment, natural resources, or
health and safety matters, as has been, is now, or at any time hereafter is,
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in effect. Environmental Laws shall include, but not be limited to, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, the Toxic Substances Control Act, as amended, the Hazardous Materials
Transportation Act, as amended, the Occupational Health and Safety Act, as
amended, the Resource Conservation and Recovery Act, as amended, the Federal
Water Pollution Control Act, as amended, the Safe Drinking Water Act, as
amended, and the Clean Air Act, as amended.
"ENVIRONMENTAL PERMITS" means any and all permits, licenses,
registrations, approvals, notifications, exemptions and any other authorization
required under any Environmental Law.
"ENVIRONMENTAL PROGRAM" has the meaning specified in Section
5.6.
"EQUITY REGISTRATION RIGHTS AGREEMENT" means the registration
rights agreement, dated as of September 14, 1998, between the Borrower and the
Administrative Agent pursuant to which the Escrowed Warrants and the shares of
Capital Stock of the Company issuable upon exercise of the Escrowed Warrants are
required to be registered for public sale, in the form attached as EXHIBIT I.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any regulation promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that, together with the Borrower or any of its Subsidiaries is
treated as a single employer under Section 414(b) or (c) of the Code, or solely
for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as
a single employer under Section 414 of the Code.
"ERISA EVENT" means (a) any "reportable event," as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan except a reportable event for which the requirement of notice to the PBGC
had been waived; (b) the adoption of any amendment to a Plan that would require
the provision of security pursuant to Section 401(a)(29) of the Code or Section
307 of ERISA; (c) the existence with respect to any Plan of an "accumulated
funding deficiency" (as defined in Section 412 of the Code or Section 302 of
ERISA), whether or not waived; (d) the filing pursuant to Section 412(d) of the
Code or Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (e) the incurrence of any liability
in excess of $1,000,000 under Title IV of ERISA with respect to the termination
of any Plan or the withdrawal or partial withdrawal of the Borrower or any of
its Subsidiaries or any of their ERISA Affiliates from any Plan or Multiemployer
Plan; (f) the receipt by the Borrower or any of its Subsidiaries or any ERISA
Affiliate from the PBGC or a plan administrator of a Multiemployer Plan of any
notice relating to the intention to terminate any Plan or Plans or to appoint a
trustee to administer any Plan; (g) the receipt by the Borrower or any of its
Subsidiaries or any ERISA Affiliate of any notice concerning the imposition of
Withdrawal Liability in excess of $1,000,000 or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA; (h) the occurrence of a "prohibited
transaction" with respect to which the Borrower or any of its Subsidiaries is a
party to the prohibited transaction and is a "disqualified person" (within the
meaning of Section 4975 of the Code) or with respect to which the Borrower or
any of its Subsidiaries could otherwise be liable; and (i) any other event or
condition with respect to a Plan or Multiemployer Plan that could reasonably be
expected to result in liability of the Borrower or any of its Subsidiaries.
"ESCROW AGENT" means The Bank of New York, a New York banking
corporation, in its capacity as escrow agent pursuant to the Escrow Agreement.
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"ESCROW AGREEMENT" means the escrow agreement, dated as of
September 14, 1998, among the Borrower, the Administrative Agent, the Arranger
and the Escrow Agent, in the form attached as EXHIBIT E.
"ESCROWED WARRANTS" means the warrants of the Borrower
deposited with the Escrow Agent pursuant to the Escrow Agreement on the date
hereof.
"EVENT OF DEFAULT" means any of the events specified in
Section 7.1, provided, that any requirement for the giving of notice, the lapse
of time. or both, has been satisfied.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCHANGE NOTE INDENTURE" means the indenture relating to the
Exchange Notes, among the Borrower, as issuer, the Guarantors, as guarantors and
the Exchange Note Trustee, in the form attached as EXHIBIT F.
"EXCHANGE NOTE TRUSTEE" means, on any date of determination,
the trustee under the Exchange Note Indenture.
"EXCHANGE NOTES" means those certain Notes of the Borrower,
guaranteed by the Guarantors, placed into escrow on the Closing Date, to be
issued in exchange for certain Term Loans pursuant to Section 2.3, in the form
attached as an exhibit to the Exchange Note Indenture.
"EXCHANGE NOTICE" has the meaning specified in Section 2.3(a).
"EXCLUDED SUBSIDIARY" or "EXCLUDED SUBSIDIARIES" means (a)
Production Systems, Inc., WellTech, Inc. (California), WellTech, Inc., WellTech
Oilfield Services (Canada), Ltd., WellTech Oilfield Services Limited, WellTech
(Overseas) Limited, and Bronson Transport, Inc., (b) Thunderbird Tool Company,
(c) KEG Canal Properties, Inc., KEG Villa Ashley, Inc., KEG Pearl Acres, Inc.,
KEG Anna Heights, Inc., KEG Orleans Place, Inc., and Pyramid Land Corporation,
(d) Dawson Production Services de Mexico, S.A. de C.V. and Ubicadora de
Tecnicos, S.A. de C.V. and (e) any other entity which becomes a Subsidiary of
Borrower after the date of this Agreement if such entity has assets with a book
value of $1,000,000 or less and annual revenues of $1,000,000 or less; provided
that all entities deemed to be Excluded Subsidiaries under this clause (e) may
not have, in the aggregate, assets with a book value exceeding $5,000,000 or
annual revenues exceeding $5,000,000.
"EXISTING CREDIT AGREEMENT" means the Amended and Restated
Credit Agreement, dated as of June 6, 1997 (as amended and restated through
November 6, 1997, as further amended prior to the date hereof) among the
Borrower, the lenders party thereto, PNC Bank, National Association and the
Collateral Agent.
"EXISTING MORTGAGES" means the Mortgages listed on Schedule
1.1B.
"EXISTING OIL AND GAS MORTGAGES" means the Oil and Gas
Mortgages listed on Schedule 1.1C.
"FEE LETTER" means that certain Amended and Restated Fee
Letter, dated September 14, 1998, among the Borrower, the Administrative Agent,
and the Arranger.
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"FINANCING LEASE" means any lease (or other similar
arrangement conveying the right to use) of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"FOREIGN SUBSIDIARY" means any Subsidiary of the Borrower
organized under the laws of any jurisdiction outside the United States.
"FUNDED DEBT" means, as to any Person, all Indebtedness of
such Person that matures more than one year from the date of its creation or
matures within one year from such date but is renewable or extendible, at the
option of such Person, to a date more than one year from such date or arises
under a revolving credit or similar agreement that obligates the lender or
lenders to extend credit during a period of more than one year from such date,
including all current maturities and current sinking fund payments in respect of
such Indebtedness whether or not required to be paid within one year from the
date of its creation and, in the case of the Borrower, Indebtedness in respect
of the Loans.
"GAAP" means with respect to the financial statements or other
financial information of any Person, generally accepted accounting principles in
the United States which are in effect from time to time.
"GOVERNMENTAL ENTITY" means any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality thereof, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic.
"guarantee" means the guarantee by each of the Guarantors
pursuant to Article XI hereof.
"guarantee" of or by any Person means any obligation,
contingent or otherwise, of such Person guaranteeing (the "primary obligor") or
having the economic effect of guaranteeing any Indebtedness or other obligation
of any other Person in any manner, whether directly or indirectly, and including
any obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment of such Indebtedness or other obligation, (b)
to purchase or lease property, securities or services for the purpose of
assuring the owner of such Indebtedness or other obligation of the payment of
such Indebtedness or other obligation or (c) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation; provided, however, that the term "guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business.
"GUARANTEED OBLIGATIONS" has the meaning specified in Section
11.1.
"GUARANTORS" has the meaning specified in the preamble to this
Agreement.
"HEDGING OBLIGATIONS" means, with respect to any Person, the
obligations of such Person under (i) currency exchange, interest rate or
commodity swap agreements, currency exchange, interest rate or commodity cap
agreements and currency exchange, interest rate or commodity collar agreements
and (ii) other agreements or arrangements designed to protect such Person
against fluctuations in currency exchange, interest rates or commodity prices,
in each case for the purpose of risk management and not for speculation.
"INDEBTEDNESS" means of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money, (b) all
obligations of such Person for the deferred purchase price of property or
services (other than trade payables and accrued expenses incurred in the
ordinary course of such
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Person's business not more than 150 days past due or being contested in good
faith), (c) all obligations of such Person evidenced by notes, bonds, debentures
or other similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person, (e) all Capital Lease Obligations of such Person, (f)
all obligations, contingent or otherwise, of such Person as an account party
under acceptance, letter of credit or similar facilities (other than obligations
in respect of undrawn letters of credit securing trade payables or performance
obligations incurred in the ordinary course of business not more than 150 days
past due or being contested in good faith), (g) all obligations of such Person
to purchase, redeem, retire or otherwise acquire for value any Capital Stock of
such Person, (h) all guarantees by such Person in respect of Indebtedness of
others and (i) all obligations of the kind referred to in clauses (a) through
(h) above secured by any Lien on property (including, without limitation,
accounts and contract rights) owned by such Person, whether or not such Person
has assumed or become liable for the payment of such obligation (but if not so
assumed, the amount of such obligation shall be deemed not to exceed the fair
market value of the property subject to the Lien).
"INDEMNIFIED PARTY" has the meaning specified in Section 12.1.
"INDEMNIFYING PARTY" has the meaning specified in Section
12.1.
"INDENTURE" means the Indenture, dated as of July 3, 1996,
between the Borrower and American Stock Transfer & Trust Company, as trustee.
"INSOLVENCY" means, with respect to any Multiemployer Plan,
the condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"INTERCREDITOR AGREEMENT" means the Intercreditor and
Collateral Agency Agreement, substantially in the form of Exhibit M, as the same
may be amended, supplemented or otherwise modified from time to time.
"INTEREST PAYMENT DATE" means (i) a Scheduled Interest Payment
Date and (ii) the date of any prepayment of all or any portion of the principal
of the Loans.
"INTEREST PERIOD" means:
(a) in respect of any Bridge Loan if the Base Rate is calculated using
One Month LIBOR, the period commencing on and including the Closing Date or the
last day of the prior Interest Period, as the case may be, and ending on the
numerically corresponding date in the month thereafter provided, however, that
if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended until the next succeeding Business Day unless
the next Business Day would fall in the next calendar month, in which case such
Interest Period shall end on the next preceding Business Day. Notwithstanding
the foregoing, no Interest Period in respect of the Bridge Loans may extend
beyond the Maturity Date and each Interest Period that would otherwise commence
before and end after the Maturity Date shall end on the Maturity Date, or
(b) in respect of any Bridge Loan if the Base Rate is calculated using
Three Month LIBOR the period commencing on and including the Closing Date or the
last day of the prior Interest Period, as the case may be, and ending on the
numerically corresponding date in the third month thereafter, provided, however,
that if any interest period would end on a day other than a Business Day, such
Interest Period shall be extended until the next succeeding Business Day unless
the next Business Day would fall in the next quarterly period, in which case
such Interest Period shall end on the next preceding Business Day.
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Notwithstanding the foregoing, no Interest Period in respect of the Bridge Loans
may extend beyond the Maturity Date and each Interest Period that would
otherwise commence before and end after the Maturity Date shall end on the
Maturity Date.
"INTEREST RATE" means, the sum of (i) the Base Rate and (ii)
the Applicable Margin.
"INTEREST RATE PROTECTION AGREEMENT" means any interest rate
protection agreement, interest rate futures contract, interest rate option,
interest rate cap or other interest rate hedge arrangement, to or under which
the Borrower or any Subsidiary is a party or a beneficiary on the date hereof or
becomes a party or a beneficiary after the date hereof.
"LENDERS" shall mean (a) each financial institution that has
executed a counterpart to this Agreement (other than any such financial
institution that has ceased to be a party hereto pursuant to an Assignment and
Acceptance) and (b) any financial institution that has become a party hereto
pursuant to an Assignment and Acceptance.
"LIEN" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
capital lease having substantially the same economic effect as any of the
foregoing) and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"LIQUIDATED DAMAGES" means any and all liquidated damages then
owing pursuant to any of the Loan Documents.
"LOAN" means a Bridge Loan or a Term Loan.
"LOAN DOCUMENTS" means this Agreement, the Notes and the
Related Documents.
"LOAN LIABILITIES" means all direct or indirect debts,
liabilities and other obligations of the Borrower or any Guarantor of any and
every type and description at any time arising under or in connection with this
Agreement, or any other Loan Document to the Administrative Agent, Arranger, to
any Lender or to any Indemnified Party or their respective successors,
transferees or assigns, whether or not the right of such Person to payment in
respect of such obligations and liabilities is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured and whether or not such claim is
discharged, stayed or otherwise affected by any bankruptcy case or insolvency or
liquidation proceeding, and shall include all liabilities for principal of and
interest on the Loans and all other liabilities of the Borrower or any Guarantor
under the Loan Documents for any fees, costs, taxes, expenses, indemnification
and other amounts payable thereunder.
"LOAN REGISTER" means the register maintained by the
Administrative Agent on behalf of the Borrower pursuant to Section 6.3.
"MAJORITY LENDERS" means, at any time, Lenders holding at
least a majority of the then aggregate unpaid principal balance of the Loans,
or, if no such principal amount is then outstanding, Lenders having at least a
majority of the total Commitments; provided that, for purposes hereof, neither
the Borrower
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nor any of its Affiliates shall be included in (i) the Lenders holding such
amount of the Loans or having such amount of the Commitments or (ii) determining
the aggregate unpaid principal amount of the Loans or the total Commitments.
"MARGIN STOCK" has the meaning assigned in Regulation U.
"MASTER GUARANTEE AND COLLATERAL AGREEMENT" means the Second
Amended and Restated Master Guarantee and Collateral Agreement executed and
delivered by the Borrower and each of its Domestic Subsidiaries (including the
Subsidiaries of Dawson after the Merger Date), substantially in the form of
Exhibit J, as the same may be amended, supplemented or otherwise modified from
time to time.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(a) the Acquisition, (b) the business, assets, property, condition (financial or
otherwise) or prospects of the Borrower, Dawson, and their respective
Subsidiaries and Excluded Subsidiaries taken as a whole or (c) the validity or
enforceability of this Agreement or any of the other Transaction Documents or
the rights or remedies of the Administrative Agent, the Collateral Agent or the
Lenders hereunder or thereunder.
"MATERIAL CONTRACTS" has the meaning specified in Section
3.4(a).
"MATERIAL ENVIRONMENTAL AMOUNT" means an amount payable by the
Borrower and/or its Subsidiaries under any Environmental Law in excess of
$5,000,000 for remedial costs, compliance costs, compensatory damages, punitive
damages, fines, penalties or any combination thereof.
"MATERIALS OF ENVIRONMENTAL CONCERN" means any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, urea-formaldehyde insulation, asbestos, pollutants,
contaminants, radioactive materials, and any other substances of any kind,
whether or not any such substance is defined as hazardous or toxic under any
Environmental Law, that is regulated pursuant to an Environmental Law or that
could give rise to liability under any Environmental Law.
"MATURITY DATE" means September 14, 1999 unless such date is
extended in accordance with Section 2.2.
"MERGER" means the merger of Dawson with and into the Borrower
such that substantially all of the assets of Dawson and the Borrower as and of
the date of this Agreement are in the same entity.
"MERGER DATE" means the date the certificates and/or articles
of merger are filed with and accepted by the appropriate secretaries of state as
are necessary to be filed and accepted in order to effectuate the merger of
Dawson (including any of its successors or assigns) into the Borrower.
"MIDLAND" means Midland Acquisition Corp., a New Jersey
corporation and a direct wholly owned subsidiary of the Borrower.
"MINIMUM EQUITY EVENT" means either (i) the receipt by the
Borrower of Net Cash Proceeds of at least $75,000,000 from the issuance of
Capital Stock of the Borrower after the Closing Date or (ii) one or more
issuances by the Borrower of its Capital Stock with a market value at the time
of issuance of a least $75,000,000 in the aggregate in connection with the
acquisition of one or more Persons or the assets of one or more Persons;
provided, no Default or Event of Default shall have occurred and be in existence
and provided, further, that with respect to the issuance of Capital Stock of the
type referred to in clause (ii) above a Minimum Equity Event shall not be deemed
to occur unless and until the ratio of (a) Consolidated Total
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<PAGE> 17
Debt to (b) the sum of Consolidated Total Debt plus Consolidated Net Worth of
the Borrower and its Subsidiaries is equal to or less than 75%.
"MORTGAGE" means the collective reference to the Existing
Mortgages as amended by the Mortgage Amendments and any mortgage or deed of
trust to be made by the appropriate the Borrower or any Guarantor in favor of,
or for the benefit of, the Collateral Agent, as provided for in the Credit
Facility and the relevant Collateral Documents, as the same may be amended,
supplemented or otherwise modified from time to time.
"MORTGAGE AMENDMENT" means each Mortgage Amendment to be
entered into on or prior to the Closing Date.
"MORTGAGED PROPERTY" means the real property as to which the
Collateral Agent has been granted a Lien pursuant to the Mortgages and the real
property as to which the Collateral Agent shall be granted a Lien in accordance
with Section 4.10.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"NET CASH PROCEEDS" means the aggregate cash proceeds received
(including any cash and Cash Equivalents and cash payments received by way of
deferred payment of principal pursuant to a note, an installment receivable or
otherwise, but only as and when received), from any Capital Markets Transaction,
net, (i) in the case of an Asset Sale, of attorneys' fees, accountants' fees,
investment banking fees, brokers' and underwriters' commissions paid to third
parties, amounts required to be applied to the repayment of Indebtedness secured
by a Lien expressly permitted hereunder on any asset which is the subject of the
Asset Sale (other than any Lien in favor of the Collateral Agent for the benefit
of the Lenders or the lenders under the Credit Facility), the aggregate amount
of reserves required in the reasonable judgment of the Borrower to pay
contingent liabilities with respect to the Asset Sale (provided that amounts
deducted from aggregate proceeds pursuant to this clause and not actually paid
by the Borrower or any of its Subsidiaries in liquidation of such contingent
liabilities shall be deemed to be Net Cash Proceeds and shall be applied in
accordance with Section 2.5(a) at such time as the Borrower shall reasonably
determine that such amounts are not required to pay contingent liabilities with
respect to the Asset Sale) and other customary fees and expenses actually
incurred in connection therewith and net of taxes paid or reasonably estimated
to be payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements with any Person other
than the Borrower and its Subsidiaries) and (ii) in connection with any issuance
or sale of Capital Stock or debt securities or instruments or the incurrence of
Indebtedness, the cash proceeds received from such issuance or incurrence, net
of attorneys' fees, investment banking fees, accountants' fees, underwriting
discounts and commissions and other customary fees and expenses actually
incurred in connection therewith.
"1997 CONVERTIBLE SUBORDINATED NOTES" means the 5% Convertible
Subordinated Notes due 2004 issued by the Borrower pursuant to the 1997
Indenture.
"1997 INDENTURE" means the Indenture, dated as of September
25, 1997, between the Borrower and American Stock Transfer & Trust Company, as
trustee.
"NON-U.S. LENDER" has the meaning specified in Section
2.10(g).
"NOTES" means a promissory note of the Borrower in the form
attached as EXHIBIT B hereto
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evidencing the Bridge Loan and Term Loan of any Lender.
"OBLIGATIONS" means all now existing and hereafter arising
obligations and liabilities of any of the Borrower and the Guarantors to any and
all of the Lenders arising under or in connection with the Loan Documents,
whether absolute or contingent, and whether for principal, interest, penalties,
premium, fees, indemnifications, reimbursements, damages (including, if
applicable, Liquidated Damages), or otherwise and specifically including
post-petition interest (whether or not an allowable claim).
"ODESSA" means Odessa Exploration Incorporated, a subsidiary
of the Borrower.
"OFFERING DOCUMENTS" means an offering memorandum or
prospectus together with such other documents, instruments and agreements as the
Arranger may request pursuant to the terms of the Engagement Letter and Fee
Letter in connection with the issuance of the Permanent Securities.
"OFFICER" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary or any Vice President of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf
of either the Borrower or any Guarantor by an Officer of the Borrower or any
Guarantor, as the case may be, who must be the principal executive officer, a
vice chairman, the principal financial officer, the treasurer or the principal
accounting officer of the Borrower or any Guarantor, as the case may be.
"OIL AND GAS MORTGAGES" means the collective reference to the
Existing Oil and Gas Mortgages as amended by the Oil and Gas Mortgage Amendments
and any mortgages in favor of the Collateral Agent, as provided for in the
Credit Facility and the applicable Collateral Documents, covering the Oil and
Gas Properties.
"OIL AND GAS MORTGAGE AMENDMENT" means each Oil and Gas
Mortgage Amendment entered into on or prior to the Closing Date.
"OIL AND GAS PROPERTIES" means the oil and gas properties
described in Schedule 1.1C which are mortgaged pursuant to the Credit Facility
and the applicable Collateral Documents and the oil and gas properties as to
which the Collateral Agent shall be granted a Lien in accordance therewith.
"ONE-MONTH LIBOR" means, the rate per annum appearing on Page
3750 of the Telerate Service (or on any successor or substitute page of such
Service, or any successor to or substitute for such Service, providing rate
quotations comparable to those currently provided on such page of such Service,
as determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of the applicable Interest Period, as the rate
for dollar deposits with a one-month maturity period.
"OTHER TAXES" has the meaning specified in Section 2.10(b).
"PARTICIPANT" has the meaning specified in Section 6.1(b).
"PARTICIPATIONS" has the meaning specified in Section 6.1(b).
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"PAYMENT BLOCKAGE NOTICE" has the meaning specified in Section
10.4.
"PAYMENT DEFAULT" means any matured or unmatured default under
the provisions of the Credit Facility which are analogous to Section 7.1(a), or
(e) hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any of its functions under ERISA.
"PERMANENT SECURITIES" means (1) the Senior Subordinated
Notes, or (2) any equity securities of the Borrower issued after the Closing
Date other than (i) any issuance or sale of common stock (or common stock
equivalents) of the Borrower to officers and employees under employee benefit or
compensation plans and (ii) Disqualified Stock.
"PERMITTED ACQUISITIONS" means the acquisition by the Borrower
and its Subsidiaries of (a) rigs and other well service equipment, (b) well
service companies and (c) oil and gas properties and related equipment, provided
that (i) the aggregate amount of such cash consideration paid with respect to
such acquisitions does not exceed $15,000,000, or (ii) after giving effect to
such acquisitions and any borrowings hereunder in connection therewith, (x) the
Consolidated Leverage Ratio shall not be more than the lesser of 3.75 to 1.00
or, prior to the Stepdown Date, the ratio set forth in subsection 4.12(a)
applicable to the Borrower at the time of such acquisition and (y) the sum of
(l) the Borrower's cash and Cash Equivalents on hand and (2) the aggregate
amount of revolving loans available to be borrowed by the Borrower under the
Credit Facility shall be at least $20,000,000 or (iii) after giving effect to
such acquisition the Consolidated Leverage Ratio is not increased and such
acquisition is funded solely with the Borrower's Capital Stock.
"PERMITTED INDEBTEDNESS" means Indebtedness permitted to be
incurred by the Borrower or any Subsidiary of the Borrower pursuant to Section
4.13.
"PERMITTED INVESTMENTS" means investments permitted to be made
by the Borrower or any Subsidiary of the Borrower pursuant to Section 4.20.
"PERMITTED LIENS" means liens permitted to exist or be
incurred by the Borrower or any Subsidiary of the Borrower pursuant to Section
4.14.
"PERSON" means any individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or government or any agency or political subdivision thereof or any
other entity.
"PLAN" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Borrower or
any of its Subsidiaries or any ERISA Affiliate is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"PREPAYMENT DATE" has the meaning specified in Section 2.8.
"PRO FORMA BALANCE SHEET" has the meaning specified in Section
3.10(a).
"PRO FORMA EBITDA STATEMENT" means an unaudited pro forma
statement of Consolidated EBITDA of the Borrower for any period of four full
fiscal quarters (including the notes thereto) substantially in the form of
Exhibit L hereto.
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"PROJECTIONS" has the meaning specified in Section 4.2(c).
"PROVED RESERVES" means the estimated quantities of crude oil,
condensate, natural gas and natural gas liquids that adequate geological and
engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions (i.e., prices and costs as of the date the estimate is made).
"RATE SELECTION NOTICE" has the meaning specified in Section
2.4(a).
"REGULATION D" means Regulation D of the Board as the same may
be amended or supplemented from time to time.
"RELATED DOCUMENTS" means the Escrow Agreement; the Warrant
Agreement; the Debt Registration Rights Agreement; the Equity Registration
Rights Agreement; the Fee Letter; prior to the Merger Date, the Collateral
Documents; after the issuance of the Exchange Notes, the Exchange Notes and the
Exchange Note Indenture; and any and all other related agreements and documents
issued or delivered hereunder or thereunder or pursuant hereto or thereto.
"REORGANIZATION" means, with respect to any Multiemployer
Plan, the condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"REPORTABLE EVENT" means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the thirty day
notice period is waived under subsection .13, .14, .16., .18 .19 or .20 of PBGC
Reg. Section 2615.
"REPRESENTATIVE" has the meaning specified in Section 10.2.
"REQUEST" has the meaning specified in Section 8.1(b).
"REQUIREMENT OF LAW" means as to any Person, the Certificate
of Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Entity, in each case applicable to
or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"RESPONSIBLE OFFICER" of any corporation shall mean any
executive officer or financial officer of such corporation and any other officer
or similar official thereof responsible for the administration of the
obligations of such corporation in respect of this Agreement.
"RESTRICTED INVESTMENT" means any Investment other than a
Permitted Investment.
"RESTRICTED PAYMENTS" has the meaning specified in Section
4.18.
"SCHEDULED INTEREST PAYMENT DATE" means the last day of an
Interest Period.
"SEC" means the Securities and Exchange Commission.
"SECURITIES" means, collectively, the Exchange Notes and the
Escrowed Warrants.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
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"SENIOR DEBT" has the meaning specified in Section 10.2.
"SENIOR SUBORDINATED NOTES" means either (a) senior
subordinated notes, provided that such notes shall:
(i) be unsecured, provided that such notes may provide for a
covenant requiring equal and ratable security in the event that any
Indebtedness that is pari passu with or subordinated to such notes is
secured;
(ii) except as otherwise provided in clause (vi) below, not
amortize, or otherwise be subject to scheduled redemptions, repurchase
or other payments of principal, prior to September 16, 2005;
(iii) bear interest (x) at a rate per annum not in excess of
17% and (y) payable in cash at a rate per annum not in excess of 14%
and may be accompanied by warrants to purchase common stock of the
Borrower;
(iv) be subordinated to the Credit Facility in a manner no
less favorable to the lenders under the Credit Facility than the
Exchange Notes are to be subordinated to the Credit Facility (as
provided on the date hereof) on and after the Merger Date;
(v) provide for covenants, events of default and remedies not
materially less favorable (in each case taken as a whole) to the
Borrower than those applicable to the Exchange Notes or contained in
the Exchange Note Indenture on the date hereof, subject to modification
where necessary to reflect prevailing market terms at the time of
issuance of such senior subordinated notes for "high-yield" securities
issued by companies of comparable size, credit rating and
capitalization (including, without limitation, having in place a senior
secured credit facility) to the Borrower, provided, in any event, that
such covenants, events of default and remedies shall be no more
restrictive of the conduct of business by the Borrower than those in
effect on the Stepdown Date (if being understood, in any event, that
(x) there shall be no financial maintenance covenants, (y) the
indebtedness limitation covenant shall be based only upon an
"incurrence test" and (z) there shall be a cross-payment
default/cross-acceleration default provision, rather than a simple
cross-default provision); and
(vi) not require prepayments or mandatory redemption of such
senior subordinated notes, except (A) in the event of a "change of
control" of the Borrower, subject to terms not materially less
favorable (taken as a whole) to the Borrower than those contained in
the Exchange Notes or the Exchange Note Indenture on the date hereof,
and (B) in the event of an asset sale, so long as the proceeds thereof
are not required by the Credit Facility to be used to prepay the
Indebtedness thereunder or reduce the commitments thereunder or for
reinvestment in the Borrower's business; or
(b) other Subordinated Indebtedness (as defined in the Credit Facility
on the date hereof) the terms and conditions of which are reasonably
satisfactory to the administrative agent under the Credit Facility and the
Required Lenders (as defined therein on the date hereof).
"SERVICIOS" means Servicios WellTech, S.A., an Argentine
corporation.
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"SINGLE EMPLOYER PLAN" means any Plan which is covered by
Title IV of ERISA, but is not a Multiemployer Plan.
"SOLVENT" means, when used with respect to any Person, means
that, as of any date of determination, (a) the amount of the "present fair
saleable value" of the assets of such Person will, as of such date, exceed the
amount of all "liabilities of such Person, contingent or otherwise", as of such
date, as such quoted terms are determined in accordance with applicable federal
and state laws governing determinations of the insolvency of debtors, (b) the
present fair saleable value of the assets of such Person will, as of such date,
be greater than the amount that will be required to pay the liability of such
Person on its debts as such debts become absolute and matured, (c) such Person
will not have, as of such date, an unreasonably small amount of capital with
which to conduct its business, and (d) such Person will be able to pay its debts
as they mature. For purposes of this definition, (i) "debt" means liability on a
"claim", and (ii) "claim" means any (x) right to payment, whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured
or (y) right to an equitable remedy for breach of performance if such breach
gives rise to a right to payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured or unmatured,
disputed, undisputed, secured or unsecured.
"STATED MATURITY" means, with respect to any installment of
interest or principal on any series of Indebtedness, the date on which such
payment of interest or principal was scheduled to be paid in the original
documentation governing such Indebtedness, and shall not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.
"STEPDOWN DATE" means the first date on which the Merger Date
and the Conversion Date shall each have occurred.
"SUBORDINATED INDEBTEDNESS" means the Convertible Subordinated
Debentures, the 1997 Convertible Subordinated Notes and any other Indebtedness
of the Borrower subordinated to the prior payment in full of the Obligations to
at least the extent the 1997 Convertible Subordinated Notes are subordinated to
the Obligations or otherwise in a manner acceptable to the Majority Lenders as
evidenced by their written approval.
"SUBSIDIARY" means, with respect to any Person (herein
referred to as the "parent") at any date, a corporation, partnership or other
entity of which, at such date, shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more intermediaries,
or both, by such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary
or Subsidiaries of the Borrower (including on and after the Closing Date, Dawson
and its Subsidiaries), but such references shall not include any Excluded
Subsidiary and references to Subsidiaries of Dawson shall not include any
Excluded Subsidiary.
"TAXES" has the meaning specified in Section 2.10(a).
"TENDER OFFER" means the offer to purchase the outstanding
common stock of Dawson pursuant to the Acquisition Agreement.
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"TENDER OFFER DOCUMENTS" means the collective reference to the
Offer to Purchase, dated August 17, 1998 by Midland and all associated documents
filed by the Borrower and/or Midland with the SEC in connection with the Tender
Offer prior to the Closing Date.
"TERM LOAN" means a loan made on the Conversion Date, if any,
by a Lender to the Borrower pursuant to Section 2.2 to refinance a Bridge Loan.
"THREE-MONTH LIBOR" means, the rate per annum appearing on
Page 3750 of the Telerate Service (or on any successor or substitute page of
such Service, or any successor to or substitute for such Service, providing rate
quotations comparable to those currently provided on such page of such Service,
as determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of the applicable Interest Period, as the rate
for dollar deposits with a three-month maturity period.
"TRANSACTIONS" means, collectively, the Acquisition, the
related financing transactions and each of the other transactions contemplated
by the Transaction Documents.
"TRANSACTION DOCUMENTS" means the Loan Documents, the Credit
Facility and the Acquisition Agreement, and prior to the Merger Date, the
Collateral Documents.
"TRANSFEREE" has the meaning specified in Section 14.17.
"TRANSPORTES" means Transportes Dimopulos Sociedad de
Responsibilidad Limitada, an Argentine limited partnership.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939,
as amended.
"VOTING STOCK" means, with respect to any Person at any time,
the Capital Stock of such Person that is at such time entitled to vote in the
election of the board of directors of such Person.
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of
such Person, 100% of the Capital Stock and other Equity Interests of which is
owned directly or indirectly by such Person (other than directors or qualifying
shares).
"WITHDRAWAL LIABILITIES" means liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such Multiemployer
Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
"YEAR 2000 COMPLIANT" has the meaning specified in Section
3.17.
"YEAR 2000 PROBLEM" has the meaning specified in Section 3.17.
SECTION 1.2 INTERPRETATION. In this Agreement, the singular
includes the plural and the plural includes the singular; words implying any
gender include the other genders; references to any section, exhibit or schedule
are to sections, exhibits or schedules hereto unless otherwise indicated;
references to statutes are to be construed as including all statutory provisions
consolidating, amending or replacing the statute referred to; references to
"writing" include printing, typing, lithography and other means of
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reproducing words in a visible form; "including" following a word or phrase
shall not be construed to limit the generality of such word or phrase; and an
accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP.
ARTICLE II
THE BRIDGE FACILITY
SECTION 2.1 COMMITMENTS TO MAKE BRIDGE LOANS. In reliance
upon the representations and warranties of the Borrower set forth herein and
subject to the terms and conditions herein set forth, each of the Lenders
severally agrees to make a Bridge Loan to the Borrower on the Closing Date in
the amount of such Lender's Commitment. The proceeds of each Bridge Loan shall
be disbursed by wire transfer on the Closing Date as provided in written
instructions delivered by the Borrower to the Administrative Agent on the
Business Day prior to the Closing Date. The Administrative Agent shall give
each Lender prompt notice by telephone or facsimile transmission of the
Borrower's instructions with respect to each Bridge Loan. The Commitment of
each Lender shall be reduced to zero immediately after the making of a Bridge
Loan by such Lender on the Closing Date. Each Bridge Loan will mature on the
Maturity Date. The unpaid principal balance of the Bridge Loans, together with
all accrued and unpaid interest thereon, shall become due and payable on the
Maturity Date unless the Conversion Date occurs, in which case the unpaid
principal balance of the Term Loans, together with all accrued and unpaid
interest thereon, shall become due and payable on the date that is ten years
after the Closing Date.
SECTION 2.2 CONVERSION TO TERM LOANS.
(a). If, on the Maturity Date: (i) no Conversion Default
exists and is continuing, and (ii) the Administrative Agent receives an
Officers' Certificate from the Borrower certifying to the foregoing and
requesting a conversion of the Bridge Loans to Term Loans, each of the Lenders
hereby commits that, on the Maturity Date, such Lender will convert its
outstanding amount of Bridge Loans (including, without limitation, any Bridge
Loans resulting from the capitalization of interest pursuant to Section 2.4(e)
below), to a Term Loan maturing on September 14, 2008 (and the Maturity Date
shall be deemed to have been automatically extended to September 14, 2008).
(b). If, on the Maturity Date a Conversion Default exists as
to which a cure period is applicable under Section 7.1 but has not then
expired, the Maturity Date shall be automatically deemed extended until the
earlier to occur of:
(A) the expiration of such cure period without cure of such
Conversion Default (in which case all Obligations shall become
immediately due and payable on the last day of such cure period), or
(B) the cure of such Conversion Default on or before the last
day of the applicable cure period and delivery by the Borrower to the
Administrative Agent on or prior to such day of an Officers'
Certificate certifying that no Conversion Default exists and is
continuing and requesting a conversion of the Bridge Loans to Term
Loans (in which case the Conversion Date shall be deemed to have
occurred).
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SECTION 2.3 OPTION TO EXCHANGE TERM LOANS FOR EXCHANGE NOTES.
(a) On any Business Day on or after the Conversion Date (if
any), subject to the prior written consent of the Administrative Agent, any
Lender may elect to exchange all or any portion of its Notes for Exchange Notes
for the purpose of transferring such Exchange Notes to a Person other than a
Person who was a Lender on the Maturity Date by giving not less than three
Business Days' prior irrevocable written notice of such election to the
Borrower, the Escrow Agent, the Administrative Agent and the Exchange Note
Trustee specifying the principal amount of its Notes to be transferred (which
shall be integral multiples of $1,000) and subject to Section 6.1, the name of
the proposed registered holder, the fixed rate of interest (which shall not
exceed the rate per annum then in effect on the Term Loans), the first date
that the Exchange Notes may be optionally redeemed (if any), all other terms of
the Exchange Note not specified in the form of the Global Note attached as an
exhibit to the Exchange Indenture and, subject to the terms of the Exchange
Note Indenture, the amount of each Exchange Note requested (each such notice,
an "EXCHANGE NOTICE"); provided, that in no event shall the aggregate principal
amount of the Notes initially exchanged pursuant to this Section 2.3(a) be less
than $25,000,000 or such smaller amount approved by the Administrative Agent.
The Exchange Note shall be guaranteed by all of the Guarantors. Any such
transferring Lender shall deliver its Notes to the Administrative Agent
together with its delivery of an Exchange Notice. Notes exchanged for Exchange
Notes pursuant to this Section 2.3 shall be deemed repaid and canceled and the
Exchange Notes so issued shall be governed by and construed in accordance with
the provisions of the Exchange Note Indenture.
(b) Not later than the third Business Day after delivery of
an Exchange Notice with respect to a transfer of all or any portion of a Term
Loan for one or more Exchange Notes to which the Administrative Agent has
given its prior written consent:
(i) the Administrative Agent shall deliver to the Escrow Agent
the original Notes delivered to it by the transferring Lender pursuant
to Section 2.3(a);
(ii) the Escrow Agent shall cancel each Note so delivered to
it and, if applicable, the Borrower shall issue a replacement Note to
such Lender in an amount equal to the principal amount of such Lender's
Term Loan that is not being exchanged, or the Escrow Agent shall make a
notation on the surrendered Note to the effect that a portion of the
Term Loan represented thereby has been repaid; and
(iii) the Escrow Agent shall deliver the applicable Exchange
Note(s) to the Exchange Note Trustee for authentication and delivery to
the holder or holders thereof specified in the Exchange Notice.
(c) Each Exchange Note issued pursuant to this Section 2.3
shall bear interest at a fixed rate no greater than the rate per annum borne by
the Term Loan on the date of the Exchange Notice. Accrued interest on Term Loans
so exchanged shall be canceled and the Exchange Notes received in such transfer
shall bear interest from and including the most recent date to which interest
has been paid on the Term Loans so exchanged.
SECTION 2.4 INTEREST; PAYMENT IN KIND OPTION; AND DEFAULT
INTEREST.
(a) INTEREST RATE APPLICABLE TO BRIDGE LOANS. Not later than
three Business Days prior to the Closing Date and prior to each Interest Period
thereafter, the Borrower shall irrevocably specify in a written notice (a "RATE
SELECTION NOTICE") delivered to the Administrative Agent whether the Interest
Rate applicable
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to the Bridge Loans will be calculated with the One Month LIBOR Rate or Three
Month LIBOR Rate. If the Borrower fails to deliver a Rate Selection Notice in
accordance with the preceding sentence, the applicable Interest Rate shall be
calculated using the One Month LIBOR Rate. Subject to Sections 2.4(d), (e) and
(f) below, the unpaid principal balance of the Bridge Loans shall bear interest
until paid at a rate per annum equal to the sum of the Base Rate plus the
Applicable Margin, changing when and as the Base Rate and/or the Applicable
Margin changes.
(b) INTEREST ON TERM LOANS. Subject to Sections 2.4(d), (e)
and (f) below, interest on the unpaid principal balance of the Term Loans of
each Lender will accrue at a rate per annum equal to the Conversion Rate,
changing when and as the Conversion Spread changes.
(c) BASIS OF COMPUTATION OF INTEREST; PAYMENT OF INTEREST.
All interest shall be calculated for actual days elapsed on the basis of a
360-day year and shall be payable in arrears by the Borrower not later than
12:00 noon (New York City time) on each Interest Payment Date by wire transfer
of immediately available funds in accordance with Section 2.9.
(d) MAXIMUM INTEREST RATE. Notwithstanding anything
contained in Section 2.4(a) or 2.4(b), but subject to Section 2.4(f), in no
event shall the interest rate on the Loans for any Interest Period exceed an
annual rate equal to the lesser of (i) 17% and (ii) the maximum interest rate
permitted by law.
(e) OPTION TO PAY INTEREST IN KIND. Subject to Section
2.4(f), to the extent that the interest rate on the Bridge Loans or the Term
Loans for any Interest Period exceeds a rate equal to 14% per annum, the
Borrower shall have the option to pay all or a portion of the interest payable
for such Interest Period in excess of 14% per annum by adding such excess
amount to the principal amount outstanding under such Notes. The Borrower shall
give the Administrative Agent an irrevocable notice that it will exercise such
right at least three Business Days prior to any Interest Payment Date as to
which such right is to be exercised.
(f) DEFAULT INTEREST. (i) If the Borrower shall default in
the payment of the principal of or interest on any Loan by acceleration or
otherwise, the Borrower shall on demand from time to time pay interest, to the
extent permitted by law, on such defaulted amount to but excluding the date of
actual payment (after as well as before judgment) to the extent lawful, at a
rate per annum equal to 200 basis points in excess of the otherwise applicable
interest rate on the Loans. The Borrower shall pay such default interest and
all interest accruing on any overdue Obligation in cash on demand from time to
time.
SECTION 2.5 MANDATORY PREPAYMENT.
(a) The Borrower shall prepay the Loans ratably in
accordance with the aggregate outstanding principal balances thereof, with the
Net Cash Proceeds of: (i) any direct or indirect public offering or private
placement of the Permanent Securities, and (ii) any Asset Sale by the Borrower
or any Subsidiary of the Borrower after the Closing Date (each of the
transactions in the foregoing clauses (i) and (ii), a "CAPITAL MARKETS
TRANSACTION"). Notwithstanding the foregoing sentence, (x) the Borrower shall
not be required to prepay the Loans pursuant to clause (ii) above with respect
to Net Cash Proceeds received by the Borrower or any Subsidiary on or after the
Merger Date if the Borrower is required to apply such Net Cash Proceeds to
prepay loans or permanently reduce commitments pursuant to the Credit Facility
and (y) any prepayment of the Loans pursuant to clause (ii) above with respect
to Net Cash Proceeds received prior to the Merger Date shall be shared pro rata
by the Lenders and lenders under the Credit Facility based upon the aggregate
outstanding principal amount of the Loans relative to the Indebtedness and
letters of credit outstanding under the Credit Facility (with letters of credit
being deemed to have a principal amount equal to the maximum potential
liability thereunder). In the event that, prior to the Merger Date, any other
prepayment is to be made
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under the Credit Facility (other than prepayments of revolving loans under the
Credit Facility to the extent such prepayments are not a permanent reduction of
the revolving commitments and are not made with the proceeds of a Capital
Markets Transaction), the Company shall simultaneously make a prepayment of the
Loans in the amount equal to the product obtained by multiplying the amount of
such prepayment under the Credit Facility by a fraction the numerator of which
is the outstanding principal amount of the Loans at the time of such prepayment
and whose denominator is the Indebtedness and letters of credit outstanding
under the Credit Facility (with letters of credit being deemed to have a
principal amount equal to the maximum potential liability thereunder). The
Borrower shall, not later than the third day following the receipt of Net Cash
Proceeds with respect to any Capital Markets Transaction, apply such Net Cash
Proceeds to prepay the Loans pursuant to this Section 2.5, without premium or
penalty, by paying to each Lender an amount equal to 100% of such Lender's pro
rata share of the aggregate principal amount of the Loans to be prepaid, plus
accrued and unpaid interest thereon to the Prepayment Date; provided, that the
Loans shall be prepaid pari passu with any prepayment required under the
Exchange Note Indenture in an amount pro rata with the principal amount paid
under the Exchange Note Indenture (pro rata in accordance with the principal
amount then outstanding on the Loans and the Exchange Notes).
(b) Subject to and in accordance with Section 4.27, in the
event of any Change of Control, the Borrower shall offer to prepay the Loans
pursuant to Section 4.27. From and after the Merger Date, the Borrower will
either repay all obligations under the Credit Facility or obtain the requisite
consent to prepay the Loans, prior to complying with the preceding sentence, but
in any event within 90 days of such Change of Control.
(c) On the date the Dawson Notes are purchased as a result of
the Dawson Change of Control, the Borrower shall repay the Loans in an amount
equal to the amount by which the sum of the principal amount of the Loans plus
the principal amount of the Dawson Notes outstanding immediately after the
Dawson Notes are purchased as a result of the Dawson Change of Control exceeds
$150,000,000, together with accrued and unpaid interest on the Loans so repaid;
provided, however, that if the principal amount of Dawson Notes outstanding
immediately after the Dawson Notes are so purchased exceeds $135,000,000, the
Borrower shall repay all outstanding Loans, together with accrued and unpaid
interest thereon.
(d) Notwithstanding any provision contained in this Agreement
to the contrary, the Borrower shall not issue or sell any equity securities of
the Borrower (other than (i) any issuance or sale of common stock (or common
stock equivalents) of the Borrower to officers and employees under employee
benefit or compensation plans and (ii) Disqualified Stock) if an Event of
Default has occurred or is continuing pursuant to Section 8(a), 8(e)(i),
8(e)(ii), 8(f) or 8(k) of the Credit Facility, unless prior to such sale or
issuance the Borrower has obtained the requisite consent under the Credit
Facility to apply the proceeds thereof to prepay the Loans pursuant to this
Section 2.5.
SECTION 2.6 OPTIONAL PREPAYMENT. The Borrower may, upon three
Business Days' prior written notice to the Administrative Agent, prepay the
Loans at any time, in whole or in part, on a pro rata basis, by paying to each
applicable Lender an amount equal to 100% of such Lender's pro rata share of the
aggregate principal amount of Loans to be prepaid, plus accrued and unpaid
interest thereon to the Prepayment Date.
SECTION 2.7 BREAKAGE COSTS; INDEMNITY. The Borrower agrees to
indemnify and hold each Affected Party harmless from and against any loss or
expense which such Affected Party sustains or incurs as a consequence of:
(a) the failure by the Borrower to borrow Loans on the Closing
Date after the Borrower has
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given a notice with respect thereof in accordance with Section 2.4,
(b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of Section
2.5 or 2.6, as applicable, or
(c) the mandatory or optional prepayment of Loans on a day
that is not the last day of an Interest Period.
Such indemnification may include an amount equal to the greater of (i) such
Affected Party's actual loss and expenses incurred (excluding lost profits) in
connection with, or by reason of, any of the foregoing events and (ii) the
excess, if any of (A) the amount of interest that would have accrued on the
principal amount of Bridge Loans not so made or the principal amount of Loans so
prepaid from the date of such proposed issuance, in the case of a failure by the
Borrower to borrow Loans on the Closing Date, or a default by the Borrower in
making any such prepayment, to and including the last day of the Interest Period
that would have commenced on the proposed date of funding, or, in the case of
any such prepayment, to the last of the Interest Period in which such prepayment
occurred, in each case at the applicable rate of interest for such Loans
provided for herein (excluding, however, the Applicable Margin included therein,
if any) over (B) the amount of interest (as reasonably determined by such
Affected Party) which would have accrued to such Affected Party on such amount
by placing such amount on deposit for a period comparable to such Interest
Period with leading banks in the interbank Eurodollar market. A certificate as
to any amounts payable pursuant to this Section 2.7 submitted to the Borrower by
any Affected Party shall be conclusive in the absence of manifest error. This
covenant shall survive the termination of this Agreement and the payment of the
Obligations.
SECTION 2.8 EFFECT OF NOTICE OF PREPAYMENT. The Borrower shall
notify the Administrative Agent in writing of any date set for prepayment (each
such day, a "PREPAYMENT DATE") of Loans. Once such notice is sent or mailed, the
Loans to be prepaid shall become due and payable on the Prepayment Date set
forth in such notice. Such notice may not be conditional.
SECTION 2.9 PAYMENTS.
(a) WIRE TRANSFER. Except as provided in Section 2.4(e) with
respect to the payment of certain interest by capitalizing it and adding it to
the principal of outstanding Loans, the principal of, fees, premium, if any, and
interest on each Loan and all other Obligations arising under the Loan Documents
shall be payable by wire transfer in immediately available funds (in United
States dollars) to the Administrative Agent for the respective accounts of the
Lenders set forth below their signatures on the signature pages of this
Agreement or otherwise designated in the Loan Register from time to time to the
Borrower by the Administrative Agent at least three Business Days prior to the
due date therefor.
(b) PAYMENTS ON BUSINESS DAYS. If any payment to be made here
under or under any Loan shall be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day (and such extension of
time shall be included in computing interest in connection with such payment);
provided, however, that if such succeeding Business Day falls in the next
calendar month or quarter, as applicable, such payment shall be made on the next
preceding Business Day.
(c) PARTIAL PREPAYMENTS AND REDEMPTIONS. All partial
prepayments and redemptions of the outstanding principal balance of the Loans
shall be made ratably amongst the applicable Lenders in accordance with their
respective shares of the aggregate outstanding principal balance of the Loans
eligible for prepayment or redemption.
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(d) NO DEFENSE. To the fullest extent permitted by law, the
Borrower and the Guarantors shall make all payments hereunder and under the
Notes regardless of any defense (other than the defense of payment) or
counterclaim.
(e) ALLOCATION. Any money paid to, received by, or collected
by the Administrative Agent or any Lender pursuant to this Agreement or any
other Loan Document, shall be applied in the following order, at the date or
dates fixed by the Administrative Agent:
FIRST: to any unpaid fees and reimbursement or unpaid expenses
of the Administrative Agent hereunder and under the Fee Letter;
SECOND: to the payment of all costs, expenses, other fees,
commissions and taxes owing to any Lender hereunder;
THIRD: to the indefeasible payment of all accrued interest to
the date of such payment or collection;
FOURTH: to the indefeasible payment of the amounts then due
and unpaid under this Agreement, the Notes or any other Loan Document
for principal, in respect of which or for the benefit of which such
money has been paid or collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Notes for principal; and
FIFTH: the balance, if any, to the Person lawfully entitled
thereto.
(f) INTEREST, FEES AND PREMIUM. Any prepayment of principal on
the Loans shall be accompanied by the payment of accrued and unpaid interest and
any applicable premium and fees with respect to such principal.
SECTION 2.10 TAXES.
(a) TAXES. Any and all payments by the Borrower and each
Guarantor hereunder or under the Notes, or any other Loan Document shall be
made, in accordance with Section 2.9 or the other applicable provision of the
applicable Loan Document, free and clear of and without deduction or withholding
for or on account of any and all present or future taxes, levies, imports,
deductions, charges or withholdings additions to tax, interest, penalties and
all other liabilities with respect thereto, excluding income, franchise or
similar taxes imposed or levied on the Administrative Agent or the Lenders as a
result of a present or former connection between the Administrative Agent or the
Lenders and the jurisdiction of the governmental authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lenders
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement) (all such non-excluded taxes, levies,
imports, deductions, charges, withholdings and liabilities being hereinafter
referred to as "TAXES"). If the Borrower or any Guarantor shall be required by
law to deduct or withhold any Taxes from, or in respect of, any sum payable
hereunder or under the Notes, or any other Loan Document to the Administrative
Agent or the Lenders or any of their respective Affiliates who may become a
Lender: (i) the sum payable thereunder shall be increased as may be necessary so
that after making all required deductions or withholdings (including deductions
or withholdings applicable to additional sums payable under this Section 2.10)
the Administrative Agent or the Lenders or any of their respective Affiliates
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made; (ii) the Borrower or such Guarantor, as
the case may be, shall make such deductions or withholdings; and (iii) the
Borrower
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or such Guarantor, as the case may be, shall pay the full amount deducted to the
relevant tax authority or other authority in accordance with applicable laws;
provided, that the Borrower and the Guarantors shall not be required to increase
such payments, make such deductions or withholdings or pay such amounts to any
non-U.S. Lender that fails to comply with Section 2.10(g).
(b) OTHER TAXES. In addition, the Borrower and each of the
Guarantors agrees to pay any present or future stamp, mortgage recording or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under a Notes or other
Loan Document or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement or the other Loan Documents (hereinafter
referred to as "OTHER TAXES") and hold the Administrative Agent and each Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to such
Lender) to pay such Other Taxes. Each Lender represents that, to the best of its
knowledge, except for any such Other Taxes that may be imposed under the
federal, state or local laws of the United States (or any political subdivision
thereof), it is not aware of any such stamp, mortgage recording or documentary
taxes or any other excise or property taxes, charges or similar levies.
(c) INDEMNITY. The Borrower and the Guarantors will indemnify
the Administrative Agent and any Lender for the full amount of Taxes or Other
Taxes arising in connection with payments made under this Agreement or any other
Loan Document (including, without limitation, any Taxes or Other Taxes imposed
by any jurisdiction on amounts payable under this Section 2.10) paid by the
Administrative Agent or any Lender or any of their respective Affiliates and any
liability (including penalties, additions to tax interest and expenses) arising
therefrom or with respect thereto. Payment under this indemnification shall be
made within fifteen days from the date the Administrative Agent or any Lender or
any of their respective Affiliates makes written demand therefor; provided,
however, that the Borrower and the Guarantors shall not be obligated to make
payment to the Lender or the Administrative Agent (as the case may be) pursuant
to this Section 2.10(c) in respect of penalties, interest and other liabilities
attributable to any Taxes or Other Taxes, if (i) written demand therefor has not
been made by such Lender or the Administrative Agent within 60 days from the
date on which such Lender or the Administrative Agent received written notice of
the imposition of Taxes or Other Taxes by the relevant taxing or governmental
authority, but only to the extent such penalties, interest and other similar
liabilities are attributable to such failure or delay by the Administrative
Agent or the Lender in making such written demand, (ii) such penalties, interest
and other liabilities have accrued after the Borrower had indemnified or paid an
additional amount due as of the date of such payment pursuant to this Section
2.10(c) or (iii) such penalties, interest and other liabilities are attributable
to the gross negligence or willful misconduct of the Lender or the
Administrative Agent or such Affiliates; provided, further, that the Borrower
and the Guarantors shall not be required to indemnity pursuant to this Section
2.10(c) any non-U.S. Lender that fails to comply with Section 2.10(g). After the
Lender or the Administrative Agent (as the case may be) received written notice
of the imposition of the Taxes or Other Taxes which are subject to this Section
2.10(c), such Lender and Administrative Agent will act in good faith to promptly
notify the Borrower and the Guarantors of their obligations hereunder; provided,
however, that the failure to so act shall not, standing alone, affect the rights
of the Administrative Agent or the Lenders under this Section 2.10(c).
(d) FURNISH EVIDENCE TO ADMINISTRATIVE AGENT. The Borrower
will make reasonable efforts to obtain certified copies of tax receipts
evidencing the payment of any Taxes deducted or withheld from each taxing
authority imposing such Taxes. The Borrower will furnish to the Administrative
Agent, within 60 days after the date the payment of any Taxes so deducted or
withheld is due pursuant to applicable law, original or certified copies of tax
receipts evidencing such payment by the Borrower or, if such receipts are not
obtainable, other evidence of such payments by the Borrower reasonably
satisfactory to the Administrative Agent.
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(e) SURVIVAL. Without prejudice to the survival of any other
agreement of the Borrower or any Guarantor hereunder, the agreements and
obligations of the Borrower and the Guarantors contained in this Section 2.10
shall survive the payment in full of all amounts due hereunder and under the
Notes.
(f) MITIGATION. If the Borrower or any Guarantor (as the
case may be) is required to pay additional amounts to or for the account of any
Lender pursuant to this Section 2.10 as a result of a change in law or treaty
occurring after such Lender first became a party to this Agreement, then such
Lender will, at the request of the Borrower or such Guarantor, change the
jurisdiction in which its Loans are maintained if such change (i) will
eliminate or reduce any such additional payment which may thereafter accrue and
(ii) is, in such Lender's sole, reasonable discretion, determined not to be
disadvantageous or cause hardship to such Lender.
(g) NON-U.S. LENDERS. Each Lender (or Transferee) that is
not a corporation or partnership created or organized in or under the laws of
the United States, any estate that is subject to federal income taxation
regardless of the source of its income or any trust which is subject to the
supervision of a court within the United States and the control of a United
States fiduciary as described in section 7701(a)(30) of the Code (a "NON-U.S.
LENDER") shall deliver to the Borrower and the Administrative Agent (or, in the
case of a Participant, to the Lender from which the related Participation shall
have been purchased) on or before the date on which it becomes a party to this
Agreement (or, in the case of a Participant, on or before the date on which
such Participant purchases the related Participation) either:
(A)(x) two duly completed and signed copies of either Internal
Revenue Service Form 1001 (relating to such Non-U.S. Lender and
entitling it to a complete exemption from withholding of United States
Taxes on all amounts to be received by such Non-U.S. Lender pursuant to
this Agreement and the other Loan Documents) or Form 4224 (relating to
all amounts to be received by such Non-U.S. Lender pursuant to this
Agreement and the other Loan Documents), or successor and related
applicable forms, as the case may be, and (y) two duly completed and
signed copies of Internal Revenue Service Form W-8 or W-9, or successor
and related applicable forms, as the case may be; or
(B) in the case of a Non-U.S. Lender that is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code and that does
not comply with the requirements of clause (A) hereof, (x) a statement
in the form of Exhibit K (or such other form of statement as shall be
reasonably requested by the Borrower or the Administrative Agent from
time to time) to the effect that such Non-U.S. Lender is eligible for a
complete exemption from withholding of U.S. Taxes under Code Section
871(h) or 881(c), and (y) two duly completed and signed copies of
Internal Revenue Service Form W-8 or successor and related applicable
form.
Further, each Non-U.S. Lender agrees to deliver to the Borrower and the
Administrative Agent, and if applicable, the assigning Lender (or, in the case
of a Participant, to the Lender from which the related participation shall have
been purchased) two further duly completed and signed copies of such Forms 1001,
4224, W-8 or W-9, as the case may be, or successor and related applicable forms,
on or before the date that any such form expires or becomes obsolete and
promptly after the occurrence of any event requiring a change from the most
recent form(s) previously delivered by it to the Borrower or the Administrative
Agent (or, in the case of a Participant, to the Lender from which the related
participation shall have been purchased) in accordance with applicable United
States laws and regulations; unless, in any such case, any change in law or
regulation has occurred subsequent to the date such Lender became a party to
this Agreement (or in the case of a Participant, the date on which such
Participant purchased the related Participation) which renders
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all such forms inapplicable or which would prevent such Lender (or Participant)
from properly completing and executing any such form with respect to it and such
Lender promptly notifies the Borrower and the Administrative Agent (or, in the
case of a Participant, the Lender from which the related participation shall
have been purchased) if it is no longer able to deliver, or if it is required to
withdraw or cancel, any form or statement previously delivered by it pursuant to
this Section 2.10(g). A Non-U.S. Lender shall not be required to deliver any
form or statement pursuant to the immediately preceding sentences in this
Section 2.10(g) that such Non-U.S. Lender is not legally able to deliver (it
being understood and agreed that the Borrower shall withhold or deduct such
amounts from any payments made to such Non-U.S. Lender that the Borrower
reasonably determines are required by law and that payments resulting from a
failure to comply with this paragraph (b) shall not be subject to payment or
indemnity by the Borrower pursuant to this Section 2.10).
Nothing in this Section 2.10 shall oblige any Lender to
disclose to the Borrower or any other person any information regarding its tax
affairs or tax computations or interfere with the right of any Lender to arrange
its tax affairs in whatever manner it thinks fit and, in particular, no Lender
shall be under any obligation to claim relief from its corporate profits or
similar tax liability in credits or deductions available to it and, if it does
claim, the extent, order and manner in which it does so shall be at its absolute
discretion.
SECTION 2.11 RIGHT OF SET OFF; SHARING OF PAYMENTS, ETC.
(a) RIGHT OF SET-OFF. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance
of any Event of Default or if the Borrower becomes insolvent, however
evidenced, the Borrower authorizes each Lender at any time or from time to
time, without presentment, demand, protest or other notice of any kind to the
Borrower or to any other Person, any such notice being hereby expressly waived,
to set off and to appropriate and apply any and all deposits (general or
special, time or demand, provisional or final, whether or not collected or
available) in any currency and any other indebtedness at any time held or owing
by such Lender or any of its Affiliates (including, without limitation, by
branches and agencies of such Lender wherever located) to or for the credit or
the account of the Borrower against and on account of the Obligations of the
Borrower to such Lender under this Agreement or under any of the other Loan
Documents, including, without limitation, all interests in or participation in
the Obligations purchased by such Lender, and all other claims of any nature or
description arising out of or in connection with this Agreement or any other
Loan Document, irrespective of whether or not such Lender shall have made any
demand hereunder and although the Obligations, liabilities or claims, or any of
them, shall be contingent or unmatured. A Lender may exercise such rights
notwithstanding that the amounts concerned may be expressed in different
currencies and each Lender is authorized to effect any necessary conversions at
a market rate of exchange selected by it. A Lender exercising its rights under
this Section 2.11(a) shall provide prompt notice to the Borrower following such
exercise.
(b) SHARING. If any Lender shall obtain from the Borrower
payment of any principal of or interest on any Loan owing to it or payment of
any other amount under this Agreement, a Loan Document or any Notes held by it
though the exercise of any right of set-off, banker's lien or counterclaim or
similar right or otherwise (other than from the Administrative Agent as
provided herein) and, as a result of such payment, such Lender shall have
received a greater percentage of the principal of or interest on the Loans or
such other amounts then due to such Lender by the Borrower than the percentage
received by any other Lenders, it shall promptly purchase from such other
Lenders participation in (or, if and to the extent specified by such Lender,
direct interests in) the Loans or such other amounts, respectively, owing to
such other Lenders (or any interest due thereon, as the case may be) in such
amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all the Lenders shall share the benefit of such
excess payment (net of any expenses which may be incurred by such Lender in
obtaining or preserving such excess
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payment) pro rata in accordance with the unpaid principal of and/or interest on
the Loans or such other amounts, respectively, owing to each of the Lenders. To
such end all the Lenders shall make appropriate adjustments among themselves (by
the resale of participation sold or otherwise) if such payment is rescinded or
must otherwise be restored.
(c) NO REQUIREMENT. Nothing in this Agreement shall require
any Lender to exercise any such right or shall affect the right of any Lender
to exercise, and retain the benefits of exercising, any such right with respect
to any other indebtedness or obligation of the Borrower. If, under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a set-off to which this Section 2.11 applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in manner consistent with the rights of the Lenders entitled
under this Section 2.11 to share in the benefits of any recovery on such
secured claim.
SECTION 2.12 CERTAIN FEES. The Borrower agrees to pay to the
Administrative Agent, for its own account, the fees specified in the Fee Letter
with respect to the Bridge Loans and Term Loans, amounts for its expenses
incurred hereunder and all other amounts owing under this Agreement and the
other Loan Documents.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
As of the date hereof and as of the Closing Date, the Borrower
and each Guarantor hereby jointly and severally agrees with, and represents and
warrants to, the Lenders, the Arranger and the Administrative Agent that each of
the following representations and warranties is true and will be true after
giving pro forma effect to the Transactions (provided that any representation or
warranty made with respect to Dawson and its Subsidiaries which relates to
matters which occurred prior to the Closing Date shall be deemed to be made to
the best of the knowledge of the Borrower):
SECTION 3.1 REPRESENTATIONS AND WARRANTIES IN THE CREDIT
FACILITY AND IN THE ACQUISITION AGREEMENT. The representations and warranties of
the Borrower contained in the Credit Facility and the Acquisition Agreement are
hereby incorporated herein by reference for the benefit of the Lenders, the
Arranger and the Administrative Agent (without giving effect to any waivers
thereof or amendment thereto subsequent to the date hereof) and are true and
correct in all material respects.
SECTION 3.2 ORGANIZATION; POWERS. The Borrower and each of its
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, except (in the case of any
Subsidiary) where the failure to do so could not reasonably be expected to have
a Material Adverse Effect, (b) has all requisite power and authority to own its
property and assets and to carry on its business as now conducted and as
proposed to be conducted, except where the failure to do so could not reasonably
be expected to have a Material Adverse Effect, (c) is qualified to do business
in, and is in good standing in, every jurisdiction where such qualification is
required, except where the failure so to qualify could not reasonably be
expected to result in a Material Adverse Effect and (d) if a party thereto, has
the power and authority to execute, deliver and perform its obligations under
each of the Transaction Documents and each other agreement or instrument
contemplated hereby to which it is or will be a party and, in the case of the
Borrower, to borrow hereunder.
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SECTION 3.3 DUE AUTHORIZATION AND ENFORCEABILITY.
(a) Each of the Transaction Documents: (i) has been duly
authorized, executed and delivered by Borrower and each of its Subsidiaries (to
the extent each is a party thereto), and (ii) constitutes a valid and binding
obligation of Borrower and each of its Subsidiaries (to the extent each is a
party thereto) enforceable against each such Person in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
enforceability of creditors' rights generally and by general principles of
equity (whether arising under a proceeding at law or in equity). The Exchange
Indenture has been duly authorized, executed and delivered by the Borrower and
each of the Subsidiaries which are parties thereto to the Escrow Agent, and
when delivered out of escrow pursuant to the terms of the Escrow Agent and this
Agreement, will be a valid and binding obligation of the Borrower and each of
its Subsidiaries (to the extent each is a party thereto) enforceable against
each such Person in accordance with its terms, except as enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the enforceability of creditors' rights generally
and by general principles of equity (whether arising under a proceeding at law
or in equity).
(b) The Loans, the Notes and the Exchange Notes have been duly
authorized by the Borrower and each of the Guarantees and the guarantees by the
Guarantors of the Borrower's obligations under the Exchange Notes have been duly
authorized by the Borrower and each Guarantor, as applicable. When the Notes
have been executed and delivered pursuant to the terms of this Agreement, each
of the Loans, the Notes, and the Guarantees will be valid and binding
obligations of the Borrower and each Guarantor, as applicable, enforceable
against it in accordance with their terms, except as enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the enforceability of creditors' rights generally
and by general principles of equity (whether arising under a proceeding at law
or in equity). When the Exchange Notes have been executed, delivered out of
escrow and authenticated pursuant to the terms of the Escrow Agreement and this
Agreement, each of the Exchange Notes and the guarantees by the Guarantors of
the Borrower's obligations under the Exchange Notes will be valid and binding
obligations of the Borrower and each Guarantor, as applicable, enforceable
against it in accordance with their terms, except as enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the enforceability of creditors' rights generally
and by general principles of equity (whether arising under a proceeding at law
or in equity).
(c) The Escrowed Warrants have been duly authorized and
validly issued, and upon release by the Escrow Agent in accordance with the
terms of the Escrow Agreement, will be fully paid and nonassessable.
(d) Prior to the Merger Date, the Loans constitute
obligations that are secured pursuant to and in accordance with the Collateral
Documents. The principal of and interest on the Notes and the Loans and
indebtedness evidenced thereby and all other Loan Liabilities are and shall be
secured pari passu with the obligations under the Credit Facility by all
security interests and liens upon all Collateral granted the Collateral Agent
pursuant to the Collateral Documents, on the terms and conditions therein set
forth.
(e) Neither the Borrower nor any of its Subsidiaries has
agreed to secure, or has granted or become subject to any Lien securing, any
indebtedness under the Credit Facility, except pursuant to the Collateral
Documents. All actions required under the Collateral Documents to extend the
benefit of the collateral security thereunder to the Loan Liabilities at all
times prior to the Merger Date have been duly and effectually taken and
completed except for the filing of the financing statements executed by the
Borrower and the Guarantors and delivered to the Collateral Agent on the date
hereof.
(f) No Indebtedness or other liabilities owed by the Borrower
or its Subsidiaries to one or more
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of the others of them has been contractually subordinated to the payment of any
Indebtedness under the Credit Facility, except Indebtedness and other
liabilities that are subordinated, to at least the same extent, to the payment
of the Loans.
SECTION 3.4 NO CONFLICTS.
(a) Neither the execution and delivery of any of the
Transaction Documents nor the consummation of any of the transactions
contemplated hereby or thereby nor compliance with the terms and provisions
hereof or thereof (i) violates or will violate any material Requirement of Law
applicable to the Borrower or any of its Subsidiaries or by which any of their
respective properties or assets may be bound, or (ii) conflicts with or will
result in the breach of, or constitutes a default under, any material contract,
lease, indenture, loan agreement (including, without limitation, the Credit
Facility), mortgage, deed of trust or other material agreement or instrument
(each, a "MATERIAL CONTRACT") to which the Borrower, Dawson or any of their
respective Subsidiaries is a party or to which any of them may be subject or by
which any of them or any of their respective assets is or may be bound.
(b) No consent, approval, authorization or order of, or any
registration or filing with, any Governmental Entity is or will be required in
connection with (i) the execution and delivery of any of the Transaction
Documents by the Borrower or any of its Subsidiaries (to the extent each is a
party thereto) or the consummation of the transactions contemplated hereby or
thereby, or (ii) the issuance and delivery of the Securities by the Borrower,
other than (A) such authorizations, approvals, consents, exemptions,
registrations or filings as shall have been made or secured by the date hereof,
(B) such actions as may be required under the Registration Rights Agreements
after the date hereof in connection with any transfer of the Securities, (C) the
filings required to be made to perfect the Liens granted in the Collateral
Documents, (D) prior to the Merger Date, the approval of the Merger by the
Dawson shareholders and the approval by the Subsidiaries of Dawson of the
transactions to be undertaken by them pursuant to Section 4.10.
SECTION 3.5 NO VIOLATIONS.
(a) There does not exist (i) any violation of any Requirement
of Law applicable to the Borrower or any of its Subsidiaries or Excluded
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect.
(b) Neither the Borrower nor any of its Subsidiaries or
Excluded Subsidiaries is a party to any agreement or instrument or subject to
any corporate or other restriction that, individually or in the aggregate, has
had or could reasonably be expected to have a Material Adverse Effect.
SECTION 3.6 CAPITAL STOCK; SUBSIDIARIES.
(a) All outstanding shares of Capital Stock and other Equity
Interests of the Borrower are duly authorized, validly issued, fully paid and
non-assessable. All outstanding shares of Capital Stock and other Equity
Interests of each Subsidiary of the Borrower are duly authorized, validly
issued, fully paid and non-assessable and owned directly or indirectly by the
Borrower beneficially and of record, free and clear of any Lien other than the
Liens to be created under the Collateral Documents. SCHEDULE 3.6 sets forth a
complete list of all direct and indirect Subsidiaries of the Borrower and the
percentage ownership (direct and indirect) of the Borrower therein as of the
Closing Date (after giving effect to the Transactions) and, as to each such
Subsidiary, its jurisdiction of incorporation, its authorized capitalization
and the ownership of Capital Stock of such Subsidiary. All such outstanding
shares of Capital Stock or other ownership interest are duly authorized,
validly issued, fully paid and non-assessable and owned by the Borrower or each
Guarantor, as
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the case may be, free and clear of all Liens.
(b) Other than as set forth in SCHEDULE 3.6, there are (i) no
outstanding subscriptions, warrants, options, calls or commitments of any
character related to or entitling any Person to purchase or otherwise acquire
any shares of the Capital Stock or other Equity Interests of the Borrower or any
of its Subsidiaries other than the Escrowed Warrants, (ii) no obligations or
securities convertible into or exchangeable for shares of any Capital Stock or
other Equity Interests of the Borrower or any of its Subsidiaries or any
commitments of any character relating to or entitling any Person to purchase or
otherwise acquire any such obligations or securities other than the Escrowed
Warrants, and (iii) no preemptive or similar rights to subscribe for or to
purchase any Capital Stock or other Equity Interests of the Borrower or any of
its Subsidiaries.
SECTION 3.7 LIENS. There are no Liens on any assets of the
Borrower or any of its Subsidiaries except Permitted Liens.
SECTION 3.8 NO VIOLATION OF REGULATIONS OF BOARD OF GOVERNORS
OF FEDERAL RESERVE SYSTEM. None of the transactions contemplated by this
Agreement (including without limitation the use of the proceeds from the Loans
and Permanent Securities) will violate or result in a violation of Section 7 of
the Exchange Act, or any rule or regulation issued pursuant thereto, including,
without limitation, Regulations T, U and X of the Board.
SECTION 3.9 GOVERNMENTAL REGULATIONS. None of the Borrower or
any of its Subsidiaries is or will be subject to regulation under the Investment
Company Act of 1940, as amended. None of the Borrower or any of its Subsidiaries
is subject to regulation under any Requirement of Law (other than Regulation X
of the Board) which limits its ability to incur Indebtedness for borrowed money.
SECTION 3.10 FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES.
(a) The unaudited pro forma consolidated balance sheet of
the Borrower as at June 30, 1998 (including the notes thereto) (the "PRO FORMA
BALANCE SHEET"), copies of which have heretofore been furnished to each Lender,
has been prepared giving effect (as if such events had occurred on such date)
to (i) the consummation of the Acquisition, (ii) the consummation of the
acquisitions listed on Schedule 4.20(c), (iii) the issuance of notes or
borrowing of loans under the Credit Facility to occur on or prior to the Merger
Date and the use of proceeds thereof, (iv) the Loans to be made on or prior to
the Merger Date and the use of the proceeds thereof and (v) the payment of
estimated fees and expenses in connection with the foregoing. The Pro Forma
Balance Sheet has been prepared based on the best information available to the
Borrower as of the date of delivery thereof and, based upon such information,
presents fairly in all material respects on a pro forma basis the estimated
consolidated financial position of the Borrower as of June 30, 1998, assuming
that the events specified in the preceding sentence had actually occurred at
such date. The Pro Forma EBITDA Statements for the fiscal year ending June 30,
1998, a copy of which has heretofore been furnished to each Lender, has been
prepared giving effect (as if such events had occurred on July 1, 1997) to the
consummation of the Acquisition and the acquisitions listed on SCHEDULE
4.20(c). Such Pro Forma EBITDA Statement has been prepared based on the best
information available to the Borrower as of the date of delivery thereof and,
based on such information, presents fairly in all material respects on a pro
forma basis the Consolidated EBITDA of the Borrower for the one-year period
ended June 30, 1998.
(b) The audited consolidated balance sheets of the Borrower
as at June 30, 1997 and the related audited consolidated statements of income
and of cash flows for the fiscal year then ended, reported on by KPMG Peat
Marwick LLP, copies of which have heretofore been furnished to each Lender, are
complete and correct and present fairly in all material respects the
consolidated financial condition of the Borrower as at
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such dates, and the consolidated results of operations and consolidated cash
flows for the fiscal years then ended.
(c) The unaudited consolidated balance sheet of the Borrower
as at June 30, 1998 and the related unaudited consolidated statements of income
and of cash flows for the fiscal year then ended, copies of which have
heretofore been furnished to each Lender, is complete and correct and present
fairly in all material respects the consolidated financial condition of the
Borrower as at such date, and the consolidated results of operations and
consolidated cash flows for the fiscal year then ended and shall not differ in
any material respect from the audited consolidated balance sheet of the
Borrower as at June 30, 1998 and the related unaudited consolidated statements
of income and of cash flows for the fiscal year then ended to be delivered
pursuant to Section 4.2.
(d) All financial statements described in Section 3.10(b) and
(c), including the related schedules and notes thereto, if any, have been
prepared in accordance with GAAP applied consistently throughout the periods
involved (except as approved by such accountants and as disclosed therein) and
consistent with rules, regulations, policies and pronouncements of the SEC.
Except for contingent obligations incurred in the ordinary course of business,
the Borrower had at the date of the most recent audited balance sheet referred
to above no material undisclosed liabilities, material guarantees, material
contingent liability or material liability for taxes, nor any material
long-term lease or material unusual forward or long-term commitment, including,
without limitation, any interest rate or foreign currency swap or exchange
transaction, which is not reflected in such balance sheet or in the notes
thereto. During the period from June 30, 1997 to and including the date hereof
there has been no sale, transfer or other disposition by the Borrower or any of
its Consolidated Subsidiaries of any material part of their business or
property.
(e) The audited consolidated balance sheet of Dawson and its
Subsidiaries as at March 31, 1998 and the related consolidated statements of
income and of cash flows for the fiscal year ended on such date, reported on by
and accompanied by an unqualified report from KPMG Peat Marwick LLP contained in
the annual report of Dawson on Form 10-K filed with the SEC, present fairly the
consolidated financial condition of Dawson as at such date, and the consolidated
results of its operations and its consolidated cash flows for the fiscal year
then ended. The unaudited consolidated balance sheet of Dawson and its
Subsidiaries as at June 30, 1998, and the related statements of income and cash
flows for the three month period ended on such date contained in the quarterly
report of Dawson on Form 10-Q filed with the SEC, present fairly the
consolidated financial condition of Dawson as at such date, and the consolidated
results of its operations and its consolidated cash flows for the three-month
period then ended (subject to normal year-end audit adjustments). Except for
contingent obligations incurred in the ordinary course of business, to the best
of the Borrower's knowledge, all such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by the
aforementioned accountants and disclosed therein). Except for contingent
obligations incurred in the ordinary course of business to the best of the
Borrower's knowledge, the balance sheets referred to above reflect any material
guarantees, material contingent liabilities and material liabilities for taxes,
and any material long-term leases and material unusual forward or long-term
commitments, including, without limitation, any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, in each case as of the date of such balance sheets. During the
period from March 31, 1998 to and including the date hereof, there has been no
disposition by Dawson or any of its Subsidiaries of any material part of its
business or property.
SECTION 3.11 FULL DISCLOSURE. No information, report,
financial statement or certificate delivered or to be delivered to the Lenders
in connection with the Transactions, with all such information, reports,
financial statements and certificates taken as a whole, contains or will contain
as of the date delivered
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any untrue statement of material fact or omitted or omits or will omit to state
a material fact necessary to make such statements, taken as a whole, not
misleading in light of the circumstances in which such statements were made;
provided that to the extent any such information, report, financial statement,
exhibit or schedule was based upon or constitutes a forecast or projection, the
Borrower represents only that it acted in good faith and utilized assumptions
believed to be reasonable at the time of preparation and due care in the
preparation of such information, report, financial statement, exhibit or
schedule.
SECTION 3.12 PRIVATE OFFERING; RULE 144A MATTERS.
(a) Based in part on the accuracy of the representations and
warranties of, and compliance with the covenants and agreements by, the Lenders
in Section 6.1, and by the Administrative Agent in writing to the Borrower, the
making of the Loans hereunder and the issuance of the instruments evidencing
such Loans and the Securities are and will be exempt from the registration and
prospectus delivery requirements of the Securities Act. Neither the Borrower
nor any Guarantor has issued or sold Loans, the instruments evidencing such
Loans or the Securities to anyone other than the Lenders. No securities of the
same class as the Loans, the instruments evidencing such Loans or the
Securities have been issued or sold by the Borrower or any Guarantor within the
six-month period immediately prior to the date hereof. The Borrower and each
Guarantor agrees that neither it, nor anyone acting on its behalf, will (i)
offer the Loans, the instruments evidencing such Loans or the Securities so as
to subject the making, issuance and/or sale of the Loans, the instruments
evidencing such Loans or the Securities, to the registration or prospectus
delivery requirements of the Securities Act or (ii) offer any similar
securities for issuance or sale to, or solicit any offer to acquire any of the
same from, or otherwise approach or negotiate with respect to the same with,
anyone if the issuance or sale of the Loans, the instruments evidencing such
Loans, the Securities and any such securities would be integrated as a single
offering for the purposes of the Securities Act, including without limitation,
Regulation D thereunder, in such a manner as would require registration under
the Securities Act thereof. Each Note, and (subject to the terms of the
Exchange Note Indenture and the Escrow Agreement) each of the Exchange Notes
and the Securities shall have a legend setting forth the restrictions on the
transferability thereof imposed by the Securities Act for so long as such
restrictions apply.
(b) In the case of each offer, sale or issuance of the Loans
or the Securities no form of general solicitation or general advertising was or
will be used by the Borrower or any Guarantor or their representatives,
including, but not limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
(c) The Exchange Notes will be eligible for resale pursuant
to Rule 144A under the Securities Act. When the Exchange Notes are issued and
delivered pursuant to the Transaction Documents, they will not be of the same
class (within the meaning of Rule 144A(d) (3) under the Securities Act) as any
other security of the Borrower or any Guarantor that is listed on a national
securities exchange registered under Section 6 of the Exchange Act or that is
quoted in a United States automated interdealer quotation system. Neither the
issuance of the Exchange Notes nor the execution, delivery and performance of
the Transaction Documents will require the qualification of an indenture under
the Trust Indenture Act.
SECTION 3.13 ABSENCE OF PROCEEDINGS. Except for Midland
Acquisition Corp. v. Dawson Production Services, Inc. et al. (W.D. Tex.
Midland/Odessa), which suit shall be promptly dismissed by the Borrower without
prejudice, there is not pending or threatened any action, suit or proceeding to
which the Borrower or any of its Subsidiaries is a party, before or by any court
or other Governmental Entity or body (domestic or foreign), that could
reasonably be expected to cause a Material Adverse Effect.
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SECTION 3.14 TAXES. The Borrower and its Subsidiaries have
duly and timely filed all material tax returns and reports and paid prior to
delinquency all taxes, assessments, and governmental levies except those being
contested in good faith and by appropriate proceedings or where the failure to
pay could not reasonably be expected to result in a Material Adverse Effect.
SECTION 3.15 FINANCIAL CONDITION; SOLVENCY.
(a) The Borrower and its Subsidiaries and the Excluded
Subsidiaries, taken as a whole, are, and after giving effect to the
consummation of the Transactions and all acquisitions to be made by the
Borrower, any Subsidiary of the Borrower or any Excluded Subsidiaries and
scheduled to close on or prior to October 31, 1998 will be, Solvent.
(b) Neither the Borrower nor any Guarantor intends to incur
debts beyond its ability to pay such debts as they mature, taking into account
the timing and amounts of cash to be received by it and the timing and amounts
of cash to be payable on or in respect of its Indebtedness.
SECTION 3.16 NO MATERIAL ADVERSE CHANGE. There has been no
material adverse change in the consolidated financial condition, business,
operations, assets, liabilities, management, prospects or value of any of the
Borrower and its Subsidiaries, taken as a whole since June 30, 1998.
SECTION 3.17 YEAR 2000 COMPLIANCE. The Borrower has (i)
initiated a review and assessment of all areas within its and each of its
Subsidiaries' business and operations (including those affected by suppliers,
vendors and customers) that could be adversely affected by the "YEAR 2000
PROBLEM" (that is, the risk that computer applications used by the Borrower or
any of its Subsidiaries (or suppliers, vendors and customers) may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999), (ii) developed a plan and
timeline for addressing the Year 2000 Problem on a timely basis, and (iii) to
date, implemented that plan in accordance with that timetable. Based on the
foregoing, the Borrower believes that all computer applications (including those
of its suppliers, vendors and customers) that are material to its or any of its
Subsidiaries' business and operations are reasonably expected on a timely basis
to be able to perform properly date-sensitive functions for all dates before and
after January 1, 2000 (that is, be "YEAR 2000 COMPLIANT"), except to the extent
that a failure to do so could not reasonably be expected to have Material
Adverse Effect.
SECTION 3.18 USE OF PROCEEDS. The Borrower shall use the
proceeds of the Loans to fund (in part) the Acquisition and pay related fees and
expenses.
SECTION 3.19 SENIOR SECURED NOTES. On the Closing Date and
until the Merger Date, the Notes and the Guarantees are and will be senior
secured obligations of the Borrower and the Guarantors, respectively, senior in
right of payment to the Subordinated Indebtedness outstanding on the date
hereof; provided, however, that the Notes and the Guarantees shall be
subordinated to the guarantees of the Convertible Subordinated Debentures.
ARTICLE IV
COVENANTS
So long as any Commitment shall remain outstanding or any
Obligation shall remain unpaid, the Borrower and each Guarantor covenants and
agrees with the Lenders, the Arranger and the
37
<PAGE> 40
Administrative Agent as set forth below for so long as any of the Loans are
outstanding.
SECTION 4.1 FINANCIAL STATEMENTS. The Borrower shall, and
shall cause each of its Subsidiaries to, furnish to the Administrative Agent for
distribution to each Lender:
(a) as soon as available, but in any event within 95 days
after the end of each fiscal year of the Borrower, a copy of the audited
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as
at the end of such year and the related audited consolidated statements of
income and retained earnings and of cash flows for such year, setting forth in
each case in comparative form the figures for the previous year, reported on
without a "going concern" or like qualification or exception, or qualification
arising out of the scope of the audit, by KPMG Peat Marwick LLP or other
independent certified public accountants of nationally recognized standing; and
(b) as soon as available, but in any event not later than 50
days after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and retained earnings and of cash
flows of the Borrower and its Consolidated Subsidiaries for such quarter and
the portion of the fiscal year through the end of such quarter, setting forth
in each case in comparative form the figures for the previous year, certified
by a Responsible Officer of the Borrower as being fairly stated in all material
respects (subject to normal year-end audit adjustments); all such financial
statements referred to in this Section 4.1(b) shall be complete and correct in
all material respects and shall be prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods reflected
therein and with prior periods, subject to normal year-end adjustments.
SECTION 4.2 CERTIFICATES; OTHER INFORMATION. The Borrower
shall, and shall cause each of its Subsidiaries to, furnish to the
Administrative Agent for distribution to each Lender:
(a) concurrently with the delivery of the financial
statements referred to in Section 4.1(a), (i) a certificate of the independent
certified public accountants reporting on such financial statements stating
that in making the examination necessary therefor no knowledge was obtained of
any Default or Event of Default, except as specified in such certificate and
(ii) copies of all reports or written communications providing advice,
recommendations or analysis to the management of the Borrower from such
independent certified public accountants with regard to their audit of the
financial statements referred to in Section 4.1(a) or the internal financial
controls and systems of the Borrower;
(b) concurrently with the delivery of any financial
statement pursuant to Section 4.1, (x) a certificate of a Responsible Officer
of the Borrower stating that, to the best of each such Responsible Officer's
knowledge, during such period (i) no Subsidiary has been formed or acquired
(or, if any such Subsidiary has been formed or acquired, the Guarantors have
complied with the requirements of Section 4.10 with respect thereto), (ii)
prior to the Merger Date, neither the Borrower nor any of its Subsidiaries has
changed its name, its principal place of business, its chief executive office,
its principal place of business, the location where records concerning the
Collateral are kept or the location of any material item of tangible Collateral
without complying with the requirements of this Agreement and the Collateral
Documents with respect thereto and (iii) each Guarantor has observed or
performed all of its covenants and other agreements, and satisfied every
condition, contained in this Agreement and the other Loan Documents to which it
is a party to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of
Default except as specified in such certificate, and (y) in the case of
quarterly or annual financial statements, (i) a Compliance Certificate
containing all information and calculations reasonably necessary for
determining compliance by the Borrower and its Subsidiaries with the
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<PAGE> 41
provisions of this Agreement as of the last day of such fiscal quarter or fiscal
year of the Borrower and (ii) a Pro Forma EBITDA Statement for the four fiscal
quarters ended on the last day of such four quarters or fiscal year of the
Borrower if during such fiscal quarter period a Person acquired by the Borrower
or a Subsidiary becomes a Consolidated Subsidiary or is merged into the Borrower
or a Subsidiary;
(c) as soon as available, and in any event no later than the
end of each fiscal year of the Borrower, a projected consolidated balance sheet
of the Borrower as of the end of the following fiscal year, and the related
consolidated statements of projected cash flow, projected retained earnings and
projected income for the following fiscal year, together with an operating
budget with respect to the following fiscal year, and, as soon as available,
significant revisions, if any, of such projections with respect to such fiscal
year (collectively, the "PROJECTIONS"), which Projections shall in each case be
accompanied by a certificate of a Responsible Officer of the Borrower stating
that such Projections are based on estimates, information and assumptions
believed by such Responsible Officer to be reasonable and that such Responsible
Officer has no reason to believe that such Projections are incorrect or
misleading in any material respect;
(d) within 50 days after the end of each fiscal quarter of
each fiscal year of the Borrower, a narrative discussion and analysis of the
consolidated financial condition and results of operations of the Borrower and
its Subsidiaries for such fiscal quarter and for the period from the beginning
of the then current fiscal year to the end of such fiscal quarter, as compared
to the portion of the Projections, as applicable, covering such periods and to
the comparable periods of the previous year;
(e) within five days after the same are filed, copies of all
financial statements and reports which the Borrower or any of its Subsidiaries
may make to, or file with, the SEC or any successor or analogous Governmental
Entity of the United States; and
(f) promptly, such additional financial and other information
as any Lender may from time to time reasonably request.
SECTION 4.3 PAYMENT OF OBLIGATIONS. The Borrower shall, and
shall cause each of its Subsidiaries to, pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent or (in the case of trade
payables and obligations other than for borrowed money) within 150 days after
the due date, as the case may be, all its material obligations of whatever
nature, except where the amount or validity thereof is currently being contested
in good faith by appropriate proceedings and reserves in conformity with GAAP
with respect thereto have been provided on the books of the Borrower or its
Subsidiaries, as the case may be.
SECTION 4.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE,
ETC. The Borrower shall, and shall cause each of its Subsidiaries to, (a)
continue to engage in business of the same general type as now conducted by it,
(b) preserve, renew and keep in full force and effect its existence and (c) take
all commercially reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its business, except,
in each case in clauses (a), (b) and (c) above, as otherwise permitted pursuant
to Section 4.16 and except, in the case of clause (c) above, to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect; and (d) comply with all Contractual Obligations and Requirements of Law
except to the extent that failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 4.5 MAINTENANCE OF PROPERTY; INSURANCE. The Borrower
shall, and shall cause each of its Subsidiaries to, (a) keep all material
property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted; (b) maintain with financially sound
and reputable insurance companies insurance on all its property in at least such
amounts and against at least such risks (but
39
<PAGE> 42
including in any event general liability) as are usually insured against in the
same general area by companies engaged in the same or a similar business and
otherwise comply with Section 5.3 of the Master Guarantee and Collateral
Agreement; and (c) furnish to each Lender, upon written request, full
information as to the insurance carried.
SECTION 4.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS;
DISCUSSIONS. The Borrower shall, and shall cause each of its Subsidiaries to,
keep proper books of records and account in which full, true and correct entries
in conformity with GAAP or, in the case of a Foreign Subsidiary, in conformity
with generally accepted accounting principles in effect in the jurisdiction
where such Foreign Subsidiary is located at such time and, in the case of the
Borrower and its Domestic Subsidiaries, all Requirements of Law, shall be made
of all dealings and transactions in relation to its business and activities; and
upon reasonable notice permit representatives of any Lender to visit and inspect
any of its properties and examine and make abstracts from any of its books and
records at any reasonable time and as often as may reasonably be desired and to
discuss the business, operations, properties and financial and other condition
of the Borrower and its Subsidiaries with senior officers of the Borrower and
its Subsidiaries and with its independent certified public accountants.
SECTION 4.7 NOTICES. The Borrower shall, and shall cause each
of its Subsidiaries to, promptly give notice to the Administrative Agent of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the Borrower or
any of its Subsidiaries and any Governmental Entity, which in either case, if
not cured or if adversely determined, as the case may be, could reasonably be
expected to have a Material Adverse Effect;
(c) the following events, as soon as possible and in any
event within 30 days after the Borrower or any of its Subsidiaries knows or has
reason to know thereof: (i) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan, a failure to make any required
contribution in a material amount to a Plan, the creation of any Lien in a
material amount in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii)
the institution of proceedings or the taking of any other action by the PBGC or
the Borrower or any Commonly Controlled Entity or any Multiemployer Plan with
respect to the withdrawal from, or the terminating, Reorganization or
Insolvency of, any Plan;
(d) (i) any release or discharge by the Borrower or any
Subsidiary of any Materials of Environmental Concern required to be reported
under Environmental Laws to any Governmental Entity which could reasonably be
expected to result in the assessment or payment of a Material Environmental
Amount; (ii) any condition, circumstance, occurrence or event that could
reasonably be expected to result in the assessment or payment of a Material
Environmental Amount, or, prior to the Merger Date, could result in the
imposition of any Lien or other restriction on the title, ownership or
transferability of any Mortgaged Property; and (iii) any action to be taken by
the Borrower or any Subsidiary that could reasonably be expected to subject the
Borrower or any Subsidiary to the assessment or payment of a Material
Environmental Amount; and
(e) any development or event which could reasonably be
expected to have a Material Adverse Effect.
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<PAGE> 43
Each notice pursuant to this Section 4.7 shall be accompanied by a statement of
a Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower or the applicable
Subsidiary proposes to take with respect thereto.
SECTION 4.8 ENVIRONMENTAL LAWS. The Borrower shall, and shall
cause each of its Subsidiaries (including each of the Excluded Subsidiaries) to
(a) (i) Comply with all Environmental Laws applicable to it,
and obtain, comply with and maintain any and all Environmental Permits
necessary for its operations as conducted and as planned; and (ii) take all
reasonable efforts to ensure that all of its tenants, subtenants, contractors,
subcontractors, and invitees comply with all applicable Environmental Laws, and
obtain, comply with and maintain any and all Environmental Permits, applicable
to any of them insofar as any failure to so comply, obtain or maintain
reasonably could be expected to adversely affect the Borrower or any of its
Subsidiaries. For purposes of this Section 4.8(a), noncompliance by the
Borrower with any applicable Environmental Law or Environmental Permit shall be
deemed not to constitute a breach of this covenant provided that, upon learning
of any actual or suspected noncompliance, the Borrower shall undertake
reasonable efforts to achieve compliance, and provided, further, that, in any
case, such noncompliance, and any other noncompliance with applicable
Environmental Law, individually or in the aggregate, could not reasonably be
expected to give rise to a Material Adverse Effect.
(b) Promptly comply in all material respects with all orders
and directives of all Governmental Entities directed to the Borrower or any of
its Domestic Subsidiaries regarding Environmental Laws, other than such orders
and directives or parts thereof as are being contested in good faith and by
appropriate proceedings.
(c) Maintain the Environmental Program, except where the
failure to do so would not have a Material Adverse Effect.
(d) Prior to acquiring any ownership or leasehold interest
in real property, or other interest in any real property which in the Borrower's
reasonable judgment could give rise to significant liability under any
Environmental Law, obtain a written environmental assessment report regarding
the environmental condition of such real property by a reputable independent
environmental consulting firm. Upon the request of the Administrative Agent, a
copy of each such environmental assessment report shall be delivered to the
Administrative Agent by the end of the calendar quarter in which the acquisition
closed, together with a list of all acquisitions of interests in real property
by the Borrower and the Subsidiaries in such quarter. Pursuant to this Section
4.8(d), the Administrative Agent shall have the right, but shall not have any
duty, to obtain, review or discuss any such report.
(e) Promptly upon the Administrative Agent's request if
there has been an Event of Default which has not been fully and timely cured,
permit an Environmental Consultant whom the Administrative Agent in its
discretion designates to perform an environmental assessment (including, without
limitation, reviewing documents; interviewing knowledgeable persons; and
sampling and analyzing soil, air, surface water, groundwater, and/or other media
in or about property owned or leased by the Borrower, or on which operations of
the Borrower otherwise take place). Such environmental assessment shall be in
form, scope, and substance reasonably satisfactory to the Administrative Agent.
The Borrower shall cooperate fully in the conduct of such environmental
assessment, and shall pay the costs of such environmental assessment immediately
upon written demand by the Administrative Agent. Pursuant to this Section
4.8(e), the Administrative Agent shall have the right, but shall not have any
duty, to request and/or obtain such environmental assessment.
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<PAGE> 44
SECTION 4.9 FURTHER ASSURANCES.
(a) Prior to the Merger Date, upon the request of the
Collateral Agent, the Borrower shall, and shall cause each of its Subsidiaries
to, promptly perform or cause to be performed any and all acts and execute or
cause to be executed any and all documents (including, without limitation,
financing statements and continuation statements) for filing under the
provisions of the Uniform Commercial Code or any other Requirement of Law
which are necessary or advisable in the reasonable judgment of the Collateral
Agent to maintain in favor of the Collateral Agent, for the benefit of the
Lenders, Liens on the Collateral that are duly perfected in accordance with
all applicable Requirements of Law.
(b) Notwithstanding any other provision herein, the Borrower
shall not be deemed to have failed to satisfy the conditions of Section 5.23
or to be in violation of Section 4.10 or 4.28 for failure to have caused a
duly perfected Lien to be placed on any Vehicles (other than Excluded Vehicles)
covered by a certificate of title of any State if (i) the aggregate fair market
value of such unperfected Vehicles (the "Unperfected Amount") is less than
$5,000,000 and (ii) the Collateral Agent either has a duly perfected first
priority security interest in or has in its possession each document
(including, without limitation, certificates of title) in proper form for
filing, registration or recordation to give the Collateral Agent such duly
perfected first priority security interest in Excluded Vehicles having an
aggregate fair market value equal to or greater than the Unperfected Amount.
SECTION 4.10 ADDITIONAL COLLATERAL.
(a) Prior to the Merger date, the Borrower shall, and shall
cause each of its Subsidiaries to: with respect to any assets acquired after
the Closing Date by the Borrower or any of its Domestic Subsidiaries that are
intended to be subject to the Lien created by any of the Collateral Documents
but which are not so subject (other than any assets described in paragraph (b),
(c), (d) or (e) of this Section 4.10), promptly (and in any event within 30
days after the acquisition or creation thereof): (i) execute and deliver to the
Collateral Agent such amendments to the Master Guarantee and Collateral
Document or such other documents as the Collateral Agent shall reasonably deem
necessary or advisable to grant to the Collateral Agent a Lien on such assets,
(ii) take all actions reasonably necessary or advisable to cause such Lien to
be duly perfected in accordance with all applicable Requirements of Law,
including, without limitation, the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be reasonably requested by the
Collateral Agent (provided that for any Vehicles that are covered by a
certificate of title, the Borrower shall cause such Lien to be duly perfected
in accordance with all applicable Requirements of Law within 90 days after the
acquisition thereof), and (iii) if requested by the Collateral Agent, deliver
to the Collateral Agent within 30 days of such request legal opinions relating
to the matters described in clauses (i) and (ii) immediately preceding, which
opinions shall be in form and substance and from counsel reasonably
satisfactory to the Collateral Agent.
(b) With respect to any Person (other than Dawson or any
existing Subsidiary of Dawson) that, subsequent to the Closing Date and prior
to the Merger Date, becomes a Domestic Subsidiary of the Borrower (including,
without limitation, any Person which had previously been an Excluded
Subsidiary), promptly (and in any event within 30 days after the acquisition or
creation thereof): (i) execute and deliver to the Collateral Agent such
amendments to the Master Guarantee and Collateral Agent Agreement as the
Collateral Agent shall deem reasonably necessary or advisable to grant to the
Collateral Agent a Lien on the Capital Stock of such Subsidiary which is owned
by the Borrower or any of its Subsidiaries, (ii) deliver to the Collateral
Agent the certificates representing such Capital Stock, together with undated
stock powers duly executed and delivered in blank, (iii) cause such new
Domestic Subsidiary (A) to become a party to the
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<PAGE> 45
Master Guarantee and Collateral Agreement, pursuant to documentation which is in
form and substance reasonably satisfactory to the Collateral Agent, and (B) to
take all actions necessary or advisable to cause the Lien created by such
security agreement to be duly perfected in accordance with all applicable
Requirements of Law, including, without limitation, the filing of Uniform
Commercial Code financing statements in such jurisdictions as may be reasonably
requested by the Collateral Agent (provided that for any Vehicles that are
covered by a certificate of title, the Borrower shall cause such Lien to be duly
perfected in accordance with all applicable Requirements of Law within 90 days
after the acquisition thereof unless the Merger Date occurs prior thereto, and
(iv) if requested by the Collateral Agent, deliver to the Collateral Agent
within 30 days of such request legal opinions relating to the matters described
in clauses (i), (ii) and (iii) immediately preceding, which opinions shall be in
form and substance and from counsel reasonably satisfactory to the Collateral
Agent.
(c) With respect to any fee interest in any real property
acquired after the Closing Date and prior to the Merger Date by the Borrower or
any of its Domestic Subsidiaries (including any such property owned by Dawson
or any of its Domestic Subsidiaries) having a purchase price (or, if acquired
through a merger or stock acquisition, a fair market value) in excess of
$1,000,000, promptly (i) execute and deliver a first priority mortgage or deed
of trust, as the case may be (subordinate only to such mortgages or deeds of
trust as are necessary to permit the Borrower or such Domestic Subsidiary to
purchase such real property but subject to such easements, rights of way,
restrictions and other similar encumbrances as such property may be subject at
the time of acquisition), in favor of the Collateral Agent, covering such real
property, in form and substance reasonably satisfactory to the Collateral
Agent, (ii) provide to the Collateral Agent all necessary documents reasonably
requested by the Collateral Agent to confirm the Borrower's or its
Subsidiaries' ownership of such real property, (iii) if requested by the
Collateral Agent, provide the Lenders with any consents or estoppels deemed
necessary or advisable by the Collateral Agent in connection with such mortgage
or deed of trust, each of the foregoing in form and substance reasonably
satisfactory to the Collateral Agent and (iv) if requested by the Collateral
Agent, deliver to the Collateral Agent legal opinions relating to the matters
described in the preceding clauses (i) and (iii), which opinions shall be in
form and substance and from counsel reasonably satisfactory to the Collateral
Agent. Notwithstanding the foregoing, compliance shall not be required with the
foregoing provision of this paragraph (c) in respect of any interest in real
property which, at the time of acquisition thereof by the Borrower or its
Subsidiary, is subject to a legal or contractual restriction that would
prohibit the granting of a mortgage thereon to the Collateral Agent; provided,
that the aggregate book valued of real property owned by the Borrower and its
Subsidiaries so subject may not exceed $7,500,000 at any time.
(d) With respect to any Foreign Subsidiary created or
acquired after the Closing Date and prior to the Merger Date by the Borrower or
any of its Domestic Subsidiaries, promptly (and in any event within 150 days
after the acquisition or creation thereof) (i) execute and deliver to the
Collateral Agent such amendments to the Master Guarantee and Collateral
Agreement (or comparable documentation) as the Collateral Agent deems
reasonably necessary or advisable in order to grant to the Collateral Agent a
perfected first priority security interest in the Capital Stock (except for
Liens permitted under Section 4.14) of such new Foreign Subsidiary which is
owned by the Borrower or any of its Domestic Subsidiaries (provided that in no
event shall more than 65% of the Capital Stock of any such new Subsidiary be
required to be so pledged), (ii) deliver to the Collateral Agent the
certificates representing such Capital Stock, together with undated stock
powers, in blank, executed and delivered by a duly authorized office of the
Borrower or such Subsidiary, as the case may be, and (iii) if requested by the
Collateral Agent, deliver to the Collateral Agent legal opinions relating to
the matters described in the preceding clauses (i) and (ii), which opinions
shall be in form and substance and from counsel reasonably satisfactory to the
Collateral Agent.
(e) With respect to any oil and gas property acquired after
the Closing Date and prior to the
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<PAGE> 46
Merger Date by the Borrower or any of its Domestic Subsidiaries having a
purchase price (or, if acquired through a merger or stock acquisition, a fair
market value) in excess of $1,000,000 and which, after giving effect to such
acquisition and assuming that a perfected first priority Lien thereon were not
granted to the Collateral Agent would result in the Collateral Agent having a
perfected first priority Lien on less than 80% in value of the reserves
contained in all of the oil and gas properties of the Borrower and its Domestic
Subsidiaries, promptly (and in any event within 30 days after the acquisition
thereof) (i) execute and deliver a first priority oil and gas mortgage
(subordinate only to such oil and gas mortgages as are necessary to permit the
Borrower or such Domestic Subsidiary to purchase such property but subject to
such restrictions and other similar encumbrances as such property may be subject
at the time of acquisition), in favor of the Collateral Agent covering such
property, in form and substance reasonably satisfactory to the Collateral Agent,
and (ii) if requested by the Collateral Agent, deliver to the Collateral Agent
within 180 days of such request title opinions relating to the matters described
in the preceding clause reasonably satisfactory to the Collateral Agent.
SECTION 4.11 CONSUMMATION OF MERGER. The Borrower shall, and
shall cause each of its Subsidiaries to:
(a) Use its best efforts to consummate the merger of Midland
and Dawson in accordance with the Acquisition Documentation and the Merger as
promptly as practical.
(b) Unless Section 4.11(c) is applicable, (i) within 10
Business Days after the Closing Date, in accordance with applicable
Requirements of Law, cause Dawson to prepare and file with the SEC a
preliminary proxy or information statement relating to the Merger and the
Merger Agreement. Thereafter, cause Dawson to use its best efforts to (i)
respond promptly to any comments made by the SEC with respect to such
preliminary proxy statement or information statement so that a definitive proxy
statement or information statement can be promptly mailed to its shareholders
to obtain the necessary approvals of the Merger and the Merger Agreement within
the minimum time period permitted by applicable Requirements of Law and (ii)
duly call and give notice of, or convene and hold, a special meeting of its
shareholders for the purpose of approving the Merger Agreement.
(c) To the extent that the Borrower and its Subsidiaries have
acquired at least 90% of the outstanding shares of each class of the Capital
Stock of Dawson pursuant to the Tender Offer or otherwise, cause Dawson to take
all necessary and appropriate action to cause the Merger to become effective
within 10 Business Days of such acquisition, without the meeting of the
shareholders of the Borrower, in accordance with applicable Requirements of
Law.
SECTION 4.12 FINANCIAL CONDITION COVENANTS. The Borrower shall
not, and shall not permit any of its Subsidiaries to:
(a) CONSOLIDATED LEVERAGE RATIO. Prior to the Stepdown Date,
permit the Consolidated Leverage Ratio as of any date set forth below to exceed
the ratio set forth below opposite such date:
<TABLE>
<CAPTION>
Date Consolidated Leverage
Ratio
<S> <C>
September 30, 1998 5.25 to 1.0
December 31, 1998 5.00 to 1.0
March 31, 1999 5.00 to 1.0
June 30, 1999 4.75 to 1.0
</TABLE>
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<PAGE> 47
<TABLE>
<CAPTION>
Date Consolidated Leverage
Ratio
<S> <C>
September 30, 1999 4.75 to 1.0
December 31, 1999 4.50 to 1.0
March 31, 2000 4.25 to 1.0
June 30, 2000 4.25 to 1.0
September 30, 2000 4.25 to 1.0
December 31, 2000 4.00 to 1.0
March 31, 2001 3.50 to 1.0
June 30, 2001 3.50 to 1.0
September 30, 2001 3.50 to 1.0
December 31, 2001 3.50 to 1.0
March 31, 2002 3.50 to 1.0
June 30, 2002 3.00 to 1.0
September 30, 2002 3.00 to 1.0
December 31, 2002 3.00 to 1.0
March 31, 2003 3.00 to 1.0
June 30, 2003 3.00 to 1.0
September 30, 2003 3.00 to 1.0
December 31, 2003 3.00 to 1.0
March 31, 2004 2.50 to 1.0
June 30, 2004 2.50 to 1.0
September 30, 2004, and on 2.50 to 1.0
the last day of each
December, March, June and
September thereafter
</TABLE>
; provided, that on and after the Merger Date and prior to the Stepdown Date,
each of the foregoing ratios shall be increased by 0.25 (for example, if the
Merger Date occurs on September 1, 1999, the Consolidated Leverage Ratio as of
September 30, 1999 shall not exceed 5.00 to 1, the Consolidated Leverage Ratio
as of December 31, 1999 shall not exceed 4.75 to 1, and so on); provided,
however, that if any Default shall have occurred and shall be continuing on the
Merger Date, the foregoing ratios shall not be increased until such time as all
Defaults shall have been cured.
(b) CONSOLIDATED INTEREST COVERAGE RATIO. Prior to the Stepdown Date,
permit the Consolidated Interest Coverage Ratio for any period of four
consecutive fiscal quarters of the Borrower ending as of any date set forth
below to be less than the ratio set forth below opposite such date:
<TABLE>
<CAPTION>
Date Consolidated Interest
Coverage Ratio
<S> <C>
December 31, 1998 2.00 to 1.00
March 31, 1999 2.25 to 1.00
June 30, 1999 2.25 to 1.00
</TABLE>
45
<PAGE> 48
<TABLE>
<CAPTION>
Date Consolidated
Interest Coverage
Ratio
-----
<S> <C>
September 30, 1999 2.50 to 1.00
December 31, 1999 2.75 to 1.00
March 31, 2000 2.75 to 1.00
June 30, 2000 3.00 to 1.00
September 30, 2000 3.00 to 1.00
December 31, 2000 3.50 to 1.00
March 31, 2001 3.50 to 1.00
June 30, 2001 4.00 to 1.00
September 30, 2001 4.00 to 1.00
December 31, 2001 4.00 to 1.00
March 31, 2002 4.00 to 1.00
June 30, 2002 4.00 to 1.00
September 30, 2002 4.00 to 1.00
March 31, 2003 4.00 to 1.00
June 30, 2003 4.00 to 1.00
September 30, 2003 4.00 to 1.00
December 31, 2003 4.00 to 1.00
March 31, 2004 4.00 to 1.00
June 30, 2004 4.00 to 1.00
September 30, 2004, and on the last 4.00 to 1.00
day of each December, March, June
and September thereafter
</TABLE>
; provided, that for the purposes of determining the ratio described above for
the fiscal quarters of the Borrower ending December 31, 1998, March 31, 1999 and
June 30, 1999, Consolidated Interest Expense for the relevant period shall be
deemed to equal Consolidated Interest Expense for such fiscal quarter (and, in
the case of the latter two such determinations each previous fiscal quarter
commencing after September 31, 1998) multiplied by 4, 2, and 4/3, respectively;
provided, further, that on and after the Merger Date and prior to the Stepdown
Date, each of the foregoing ratios shall be decreased by 0.25 (for example, if
the Merger Date occurs on September 1, 1999, the Consolidated Interest Coverage
Ratio as of September 30, 1999 shall not exceed 2.25 to 1, the Consolidated
Interest Coverage Ratio as of December 31, 1999 shall not exceed 2.50 to 1, and
so on); provided, however, that if any Default shall have occurred and shall be
continuing on the Merger Date, the foregoing ratios shall not be decreased until
such time as all Defaults shall have been cured.
(c) CONSOLIDATED SENIOR LEVERAGE RATIO. (i) Prior to the Stepdown
Date, permit the Consolidated Senior Leverage Ratio as of any date set forth
below to exceed the ratio set forth below opposite such date:
<TABLE>
<CAPTION>
Date Consolidated
Senior Leverage
Ratio
-----
<S> <C>
September 30, 1998 3.75 to 1.00
December 31, 1998 3.75 to 1.00
</TABLE>
46
<PAGE> 49
<TABLE>
<CAPTION>
Date Consolidated
Senior Leverage
Ratio
-----
<S> <C>
March 31, 1999 3.75 to 1.00
June 30, 1999 3.50 to 1.00
September 30, 1999 3.50 to 1.00
December 31, 1999 3.25 to 1.00
March 31, 2000 3.25 to 1.00
June 30, 2000 3.25 to 1.00
September 30, 2000 3.25 to 1.00
December 31, 2000 2.75 to 1.00
March 31, 2001 2.75 to 1.00
June 30, 2001 2.50 to 1.00
September 30, 2001 2.50 to 1.00
December 31, 2001 2.50 to 1.00
March 31, 2002 2.50 to 1.00
June 30, 2002 2.50 to 1.00
September 30, 2002 2.50 to 1.00
December 31, 2002 2.00 to 1.00
March 31, 2003 2.00 to 1.00
June 30, 2003 2.00 to 1.00
September 30, 2003 2.00 to 1.00
December 31, 2003 2.00 to 1.00
March 31, 2004 2.00 to 1.00
June 30, 2004 2.00 to 1.00
September 30, 2004, and on the last day 2.00 to 1.00
of each December, March, June and
September thereafter
</TABLE>
; provided, that on and after the Merger Date and prior to the Stepdown Date,
each of the foregoing ratios shall be increased by 0.25 (for example, if the
Stepdown Date occurs on September 1, 1999, the Consolidated Senior Leverage
Ratio as of September 30, 1999 shall not exceed 3.75 to 1, the Consolidated
Senior Leverage Ratio as of December 31, 1999 shall not exceed 3.50 to 1, and so
on); provided, however, that if any Default shall have occurred and shall be
continuing on the Merger Date, the foregoing ratios shall not be increased until
such time as all Defaults shall have been cured; provided, further, that each of
the foregoing Consolidated Senior Leverage Ratios shall be reduced by .05 for
each $10,000,000 of the Dawson Notes put and paid in connection with the Dawson
Change of Control; provided, however, that in no event shall the Consolidated
Senior Leverage Ratio be reduced to lower than 2.00 to 1.00 (or 2.25 to 1.00
after the Merger Date and prior to the Stepdown Date).
(d) CONSOLIDATED NET WORTH. (1) Prior to the Merger Date, permit the
Consolidated Net Worth of the Borrower and its Subsidiaries to be less than the
sum of (i) 90% of the Consolidated Net Worth of the Borrower and its
Subsidiaries on the Closing Date, plus (ii) 75% of Consolidated Net Income of
the Borrower and its Subsidiaries (to the extent a positive number) for each
fiscal quarter completed after the Closing Date commencing with the fiscal
quarter ending December 31, 1998, plus (iii) 75% of the Net Cash Proceeds of
47
<PAGE> 50
any offerings or issuances of Capital Stock of the Borrower or any of its
Subsidiaries after the Closing Date, plus (iv) 75% of the increase in the
Consolidated Net Worth of the Borrower and its Subsidiaries resulting from any
conversion of the 1997 Convertible Subordinated Notes or any future convertible
indebtedness of the Borrower and its Subsidiaries, and (2) on and after the
Merger Date and prior to the Stepdown Date, permit the Consolidated Net Worth of
the Borrower and its Subsidiaries to be less than the sum of (i) 90% of the
Consolidated Net Worth of the Borrower and its Subsidiaries on the Closing Date,
plus (ii) 50% of Consolidated Net Income of the Borrower and its Subsidiaries
(to the extent a positive number) for each fiscal quarter completed after the
Closing Date commencing with the fiscal quarter ending December 31, 1998, plus
(iii) 50% of the Net Cash Proceeds of any offerings or issuances of Capital
Stock of the Borrower or any of its Subsidiaries after the Closing Date, plus
(iv) 50% of the increase in the Consolidated Net Worth of the Borrower and its
Subsidiaries resulting from any conversion of the 1997 Convertible Subordinated
Notes or any future convertible indebtedness of the Borrower and its
Subsidiaries; provided, however, that if any Default shall have occurred and
shall be continuing on the Merger Date, the clause (2) above shall not become
effective until such time as all Defaults shall have been cured.
(e) Notwithstanding anything contained herein to the
contrary, the provisions of subsections (a), (b), (c) and (d) of this Section
4.12 shall be of no force and effect on and after the Stepdown Date; provided,
however, that if any Default shall have occurred and shall be continuing on the
Stepdown Date, such provisions shall remain in full force and effect until such
time as all Defaults shall have been cured.
SECTION 4.13 LIMITATION ON INDEBTEDNESS. The Borrower shall
not, and shall not permit any of its Subsidiaries to, create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness of the Borrower under the Loan Documents;
(b) the incurrence by the Borrower of Indebtedness and
letters of credit under the Credit Facility; provided that the aggregate
principal amount of all Indebtedness and letters of credit of the Borrower and
its Subsidiaries outstanding under the Credit Facility after giving effect to
such incurrence (with letters of credit being deemed to have a principal amount
equal to the maximum potential liability of the Borrower and its Subsidiaries
thereunder) does not exceed an amount equal to $600,000,000 less (i) the
aggregate amount of all repayments, optional or mandatory, of the principal of
any term Indebtedness under the Credit Facility (other than repayments that are
immediately reborrowed) that have been made by the Borrower or any of its
Subsidiaries since the date of this Agreement and (ii) without duplication, the
aggregate amount of all Net Cash Proceeds of Asset Sales applied by the
Borrower or any of its Subsidiaries to permanently reduce the Indebtedness or
commitments under the Credit Facility;
(c) Indebtedness (i) of the Borrower to a Wholly Owned
Subsidiary, (ii) of a Domestic Wholly Owned Subsidiary to the Borrower or any
other Subsidiary, (iii) of Servicios to the Borrower or any Subsidiary in an
aggregate principal amount at any time outstanding not to exceed $5,000,000 in
excess of the amount of such Indebtedness outstanding on the date of this
Agreement and (iv) of any Foreign Subsidiary (other than Servicios) to the
Borrower or any Subsidiary in an aggregate principal amount at any time
outstanding (with respect to all such Foreign Subsidiaries of the Borrower) not
to exceed $1,000,000, provided that such Indebtedness referred to in clauses
(iii) and (iv) hereof, if to the Borrower or any Domestic Subsidiary, is
evidenced by a promissory note or promissory notes which has or have been
pledged to the Collateral Agent on terms and conditions reasonably satisfactory
to the Administrative Agent; provided, further, that any such Indebtedness
referred to in this clause (c) provided to Odessa shall be for capital
expenditure purposes only;
(d) Indebtedness of the Borrower or any Subsidiary of the
Borrower incurred to finance the
48
<PAGE> 51
acquisition or construction of fixed or capital assets (whether pursuant to a
loan, a Financing Lease or otherwise) in an aggregate principal amount not
exceeding as to the Borrower and its Subsidiaries (i) $15,000,000 at any time
outstanding minus (ii) the amount of Indebtedness outstanding under clauses (g)
and (j) of this Section 4.13 and the amount of indebtedness attributable to sale
and leaseback transactions permitted pursuant to Section 4.23;
(e) Indebtedness of the Borrower and its Subsidiaries
under the Convertible Subordinated Debentures and the 1997 Convertible
Subordinated Notes;
(f) Indebtedness outstanding on the date hereof, or
incurred hereafter pursuant to existing commitments or agreements, and, in each
case, listed on Schedule 4.13 and any refinancings, refundings, renewals or
extensions thereof not increasing the principal amount thereof;
(g) Indebtedness of a Person which becomes a Subsidiary of
the Borrower after the date hereof in an aggregate principal amount at any time
outstanding not exceeding (i) $15,000,000, minus (ii) the sum of (A) the amount
of Indebtedness outstanding under clauses (d) and (j) of this Section 4.13 and
(B) the amount of indebtedness attributable to sale and leaseback transactions
permitted pursuant to Section 4.23, provided that (x) such Indebtedness existed
at the time such corporation became a Subsidiary and was not created in
anticipation thereof and (y) immediately after giving effect to the acquisition
of such corporation by the Borrower no Default or Event of Default shall have
occurred and be continuing, and any refinancings, refundings, renewals or
extensions thereof not increasing the principal amount thereof.
(h) Indebtedness constituting deposits to secure the
performance of bids, trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds and performance bonds and other
obligations of a like nature that are incurred in the ordinary course of
business, not to exceed $5,000,000 in the aggregate at any time outstanding;
(i) Indebtedness under Interest Rate Protection Agreements
and Hedge Obligations entered into the ordinary course of business for hedging
purposes and not for speculative purposes including, without limitation, the
agreement entered into for purposes of this Section 4.13;
(j) Seller Indebtedness in an aggregate principal amount
at any time outstanding not exceeding (i) $15,000,000 minus (ii) the sum of (A)
the amount of Indebtedness outstanding under clauses (d) and (g) of this
Section 4.13, and any refinancings, refundings, renewals or extensions thereof
not increasing the principal amount thereof and (B) the amount of indebtedness
attributable to sale and leaseback transactions permitted pursuant to Section
4.23;
(k) Indebtedness in the form of Guarantee Obligations
permitted by Section 4.4;
(l) Indebtedness of Dawson under the Dawson Notes until
the Merger Date and thereafter Indebtedness of the Borrower under the Dawson
Notes;
(m) Indebtedness incurred after the Merger Date not
otherwise permitted by the foregoing clauses (a) through (l) in an aggregate
principal amount at any time outstanding not to exceed $5,000,000;
(n) on and after the Stepdown Date, Indebtedness not
otherwise permitted by the foregoing clauses (a) through (m) in an aggregate
principal amount at any time outstanding not to exceed $50,000,000; and
49
<PAGE> 52
(o) Indebtedness of the Borrower or any Subsidiary of the
Borrower incurred to repay, in whole or in part, the Loans, together with
accrued and unpaid interest on the Loans so repaid; provided, that the terms
and conditions of any such Indebtedness used to prepay the Loans in part are
acceptable to the Administrative Agent in its sole discretion.
SECTION 4.14 LIMITATION ON LIENS. The Borrower shall not,
and shall not permit any of its Subsidiaries to, create, incur, assume or suffer
to exist any Lien upon any of its property, assets or revenues, whether now
owned or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being
contested in good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of the Borrower or
its Subsidiaries in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, landlord's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 180 days or which are
being contested in good faith by appropriate proceedings and which, in any case,
do not encumber a material amount of the assets of the Borrower and its
Subsidiaries;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the Borrower or any
Subsidiary;
(f) Liens securing Indebtedness of the Borrower or any
Subsidiary incurred to finance the acquisition or construction of fixed or
capital assets, provided that (i) such Liens shall be created within 180 days
after the acquisition or construction of such fixed or capital assets, (ii)
such Liens do not at any time encumber any property other than the property
financed by such Indebtedness and the proceeds and products thereof; (iii) the
principal amount of Indebtedness secured thereby is not increased and (iv) the
proceeds of the Indebtedness secured by any such Lien shall at no time exceed
100% of the original purchase price of such property;
(g) Liens created pursuant to the Collateral Documents
(including Liens securing the Loans until the Merger Date and Liens securing
the Dawson Notes on and after the Merger Date);
(h) Liens (i) in existence on the date hereof listed on
Schedule 4.14(h) securing Indebtedness permitted by Section 4.13(f) provided
that no such Lien is spread to cover any additional property after the Closing
Date and that the principal amount of Indebtedness secured thereby is not
increased or (ii) securing Indebtedness which is being repaid on the Closing
Date, provided that such Liens shall be released promptly following the Closing
Date;
(i) Liens on the property or assets of a corporation which
becomes a Subsidiary after the date hereof securing Indebtedness permitted by
Section 4.13(g), provided that (i) such Liens existed at the time
50
<PAGE> 53
such corporation became a Subsidiary and were not created in anticipation
thereof; (ii) any such Lien is not spread to cover any property or assets of
such corporation after the time such corporation becomes a Subsidiary, and (iii)
the principal amount of Indebtedness secured thereby is not increased;
(j) Liens on assets acquired in a Permitted Acquisition
securing Seller Indebtedness incurred in connection with such Permitted
Acquisition;
(k) the Permitted Exceptions (as defined in the Mortgages);
(l) Liens in favor of lessees on assets leased to such
lessees pursuant to Section 4.17(a); and
(m) on and after the Stepdown Date, Liens securing
Indebtedness permitted by Section 4.13(n) and Section 4.13(o).
Notwithstanding the foregoing, until the Merger Date, the foregoing limitations
shall not apply to Capital Stock owned by the Borrower or its Subsidiaries which
is Margin Stock to the extent the value of such Margin Stock exceeds 25% of the
value of the assets of the Borrower and its Subsidiaries.
SECTION 4.15 LIMITATION ON GUARANTEE OBLIGATIONS. The
Borrower shall not, and shall not permit any of its Subsidiaries to, create,
incur, assume or suffer to exist any guarantee except:
(a) guarantees made in the ordinary course of its business
by the Borrower or any Subsidiary in respect of Indebtedness and other
obligations of any of the Borrower or any of its Subsidiaries which
Indebtedness or other obligations are otherwise not prohibited under this
Agreement;
(b) the guarantee of the Guarantors pursuant to the Master
Guarantee and Collateral Document;
(c) the guarantee of the Subsidiaries of the Borrower
under the Indenture and the 1997 Indenture;
(d) the guarantee of the Subsidiaries under the Dawson
Indenture;
(e) guarantees of the Subsidiaries of the Borrower in
respect of the Credit Facility;
(f) guarantee (in respect of obligations not constituting
Indebtedness) arising under agreements entered into by the Borrower or any
Subsidiary in the ordinary course of business;
(g) guarantees of the Borrower or its Subsidiaries in
respect of Indebtedness of its officers, directors and employees in an
aggregate principal amount not to exceed, at any time outstanding, $5,000,000
minus the amount of loans or advances outstanding under Section 4.20(i);
(h) the guarantees of the Guarantors; and
(i) the guarantees of any Subsidiary of the Borrower which
arises by operation of Section 11.6.
SECTION 4.16 LIMITATION ON FUNDAMENTAL CHANGES. The
Borrower shall not, and shall not permit any of its Subsidiaries to, enter into
any merger, consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), or convey, sell, lease,
assign, transfer or otherwise dispose of; all or substantially all of its
property, business or assets, or make any material change
51
<PAGE> 54
in its present method of conducting business, except:
(a) any Subsidiary of the Borrower may be merged or
combined with or into the Borrower (provided that the Borrower shall be the
continuing or surviving corporation) or with or into any one or more
Subsidiaries of the Borrower provided that in the case of any such transaction
involving a Wholly Owned Subsidiary, such Wholly Owned Subsidiary shall be the
continuing or surviving corporation;
(b) any Subsidiary may be dissolved, liquidated or wound
up or may sell, lease, assign, transfer or otherwise dispose of any or all of
its assets (upon voluntary liquidation or otherwise) to Borrower or any
Domestic Wholly Owned Subsidiary of the Borrower, and the Borrower may sell,
lease, assign, transfer or otherwise dispose of any or all of its assets to any
wholly owned Subsidiary of the Borrower which is a party to the Master
Guarantee and Collateral Document;
(c) any Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets so long as (i) such transaction does not
violate Section 4.17 and (ii) the Borrower complies with the provisions of
Section 2.5 with respect to such transaction;
(d) the merger of Midland Acquisition Corp. into Dawson
in accordance with the Acquisition Agreement; and
(e) the Merger may be consummated.
SECTION 4.17 LIMITATION ON SALE OF ASSETS.
(a) Prior to the Merger Date, the Borrower shall not, and
shall not permit any of its Subsidiaries to, convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Subsidiary of the
Borrower, issue or sell any shares of such Subsidiary's Capital Stock to any
Person other than the Borrower or any Domestic Wholly Owned Subsidiary of the
Borrower, except:
(i) the sale, lease or other disposition of any property in
the ordinary course of business, including immaterial real property
or equipment and obsolete or worn out property, provided that (other
than inventory and light vehicles) the aggregate proceeds received
from all assets so sold, leased or disposed of in any fiscal year
shall not exceed 5% of the Borrower's Consolidated Net Worth as of
the end of the immediately preceding fiscal year;
(ii) the sale of inventory and light vehicles in the
ordinary course of business;
(iii) as permitted by Section 4.16(b); and
(iv) the sale of Odessa.
To the extent the Majority Lenders waive the provisions of this Section 4.17
with respect to the sale of any Collateral, or any Collateral is sold as
permitted by this Section 4.17, such Collateral in each case shall be sold free
and clear of the Liens in favor of the Collateral Agent created by the
Collateral Documents, and the Collateral Agent shall take such actions as it
deems appropriate in connection therewith or may be reasonably requested by the
Borrower to evidence such Lien release, in each case at the Borrower's expense.
Notwithstanding the foregoing, until the Merger Date the foregoing limitations
shall not apply to Capital Stock owned by the Borrower or its Subsidiaries which
is Margin Stock to the extent the value of such Margin Stock exceeds 25% of the
value of the assets of the Borrower and its Subsidiaries.
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<PAGE> 55
(b) On and after the Merger Date, the Borrower shall not,
and shall not permit any of its Subsidiaries to conduct any Asset Sale unless
(x) the Borrower (or the Subsidiary, as the case may be) receives consideration
at the time of such Asset Sale at least equal to the fair market value
(evidenced by a resolution of the Board of Directors set forth in an Officers'
Certificate delivered to the Administrative Agent) of the assets sold or
otherwise disposed of and (y) at least 75% of the consideration received
therefor by the Borrower or such Subsidiary is in the form of cash; provided,
however, that the amount of (A) any liabilities (as shown on the Borrower's or
such Subsidiary's most recent balance sheet or in the notes thereto) of the
Borrower or any Subsidiary (other than liabilities that are by their terms
subordinated to the Notes or any guarantee thereof) that are assumed by the
transferee of any such assets, (B) any notes or other obligations received by
the Borrower or any such Subsidiary from such transferee that are immediately
converted by the Borrower or such Subsidiary into cash (to the extent of the
cash received), (C) any assets received in exchange for assets pursuant to a
like-kind exchange and (D) any Designated Noncash Consideration (which shall
not at any time exceed, in the aggregate $25,000,000 outstanding), in each
case, shall be deemed to be cash for purposes of this provision.
Within 10 days after the receipt of Net Cash Proceeds of
any Asset Sale, the Borrower (or such Subsidiary) shall apply an amount equal to
the Net Cash Proceeds from such Asset Sale in accordance with Section 2.5(a) to
the extent required thereby; provided, that if the Stepdown Date has occurred,
an amount equal to such Net Cash Proceeds may also be applied, at the Borrower's
option, to an investment in another business, the making of a capital
expenditures or the acquisition of other long-term assets, in each case, in the
same or similar line of business as the Borrower was engaged in on the date of
this Agreement.
SECTION 4.18 LIMITATION ON RESTRICTED PAYMENTS. The
Borrower shall not, and shall not permit any of its Subsidiaries to, declare or
pay any dividend (other than dividends payable solely in common stock of the
Person making such dividend) on, or make any payment on account of, or set apart
assets for a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of, any shares of any class of
Capital Stock (including but not limited to in respect of any preferred Capital
Stock outstanding or dividends accumulated thereon on the Closing Date) of the
Borrower or any of its Subsidiaries or any warrants or options to purchase any
such Capital Stock or any of the Convertible Subordinated Debentures or the 1997
Convertible Subordinated Notes, whether now or hereafter outstanding, or make
any other distribution in respect thereof or purchase any thereof, either
directly or indirectly, whether in cash or property or in obligations of the
Borrower or any Subsidiary (all such payments and other actions being
collectively referred to as "RESTRICTED PAYMENTS"), except that the Borrower (a)
may make open market purchases of its outstanding common stock in an aggregate
amount during the term of this Agreement not to exceed $10,000,000, after the
occurrence of the Minimum Equity Event, (b) may (i) make scheduled payments of
interest in respect of the Convertible Subordinated Debentures and the 1997
Convertible Subordinated Notes and (ii) if permitted by Section 4.21,
repurchase, redeem or defease the Convertible Subordinated Debentures after at
least 90% of the Convertible Subordinated Debentures have been converted or
repurchase, redeem or defease the 1997 Convertible Subordinated Notes after at
least 90% of the 1997 Convertible Subordinated Notes have been converted and (c)
may make cash payments required pursuant to Sections 11.1 and 11.3 of the
Indenture in connection with conversions of the Convertible Subordinated
Debentures or Section 10.3 of the 1997 Indenture in connection with conversions
of the 1997 Convertible Subordinated Notes, provided that (i) the aggregate
consideration to the holders of the 1997 Convertible Subordinated Notes upon
conversion thereof paid in cash shall not exceed $1,000,000, (ii) after giving
effect to such payment and conversion, no Default or Event of Default shall be
continuing and (iii) after giving pro forma effect to such payment and
conversion as if it had occurred on the last day of the most recently ended
fiscal quarter, the Consolidated Leverage Ratio would not exceed 2.50 to 1.00.
Notwithstanding the foregoing, any Subsidiary of the Borrower may pay dividends
and other distributions to the Borrower and Servicios may pay dividends to its
shareholders.
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<PAGE> 56
SECTION 4.19 LIMITATION ON CAPITAL EXPENDITURES. The
Borrower shall not, and shall not permit any of its Subsidiaries to, make or
commit to make any Capital Expenditure except for expenditures in the ordinary
course of business not exceeding, in the aggregate for the Borrower and its
Subsidiaries during any of the fiscal years of the Borrower set forth below, an
amount equal to the sum of (i) the amount set forth below opposite such fiscal
year plus (ii) an additional amount for any Person or business unit acquired by
the Borrower in a Permitted Acquisition since the Closing Date, such amount
being calculated as 10% of the net revenues, calculated in accordance with GAAP,
of such Person or business unit during such fiscal year (or, if such Person or
business unit was acquired after the beginning of such fiscal year, such
revenues for the portion of such fiscal year during which such Person or
business unit was owned by the Borrower):
<TABLE>
<CAPTION>
Fiscal Year Ending Amount
- ------------------ ------
<S> <C>
1999 $70,000,000
2000 $72,000,000
2001 $74,000,000
2002 $76,000,000
2003 $78,000,000
2004 $80,000,000
2005 $82,000,000
2006 $84,000,000
2007 $86,000,000
2008 $88,000,000
2009 $90,000,000
</TABLE>
Any amount permitted by the foregoing provision to be expended as Capital
Expenditures in any fiscal year and not so expended may be carried over for
expenditure in the immediately succeeding fiscal year.
SECTION 4.20 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES.
The Borrower shall not, and shall not permit any of its Subsidiaries to, make
any advance, loan, extension of credit or capital contribution to, or purchase
any stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in, any Person,
except:
(a) extensions of trade credit in the ordinary course of
business;
(b) investments in Cash Equivalents;
(c) acquisitions listed on SCHEDULE 4.20(c) consummated
within 60 days of the Closing Date;
(d) Permitted Acquisitions after the Merger Date;
(e) loans by the Borrower or any Subsidiary to Servicios
in an aggregate principal amount at any time outstanding not to exceed the
amount thereof outstanding on the date of this Agreement plus $5,000,000;
(f) as permitted by subsection 4.13(c)(iv);
(g) investments by the Borrower in a Domestic Wholly Owned
Subsidiary and investments by
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<PAGE> 57
any Subsidiary in the Borrower and in one or more Domestic Wholly Owned
Subsidiaries, provided, that any such investments provided to Odessa shall be
for capital expenditure purposes only;
(h) expense accounts for, and other expense advances to,
its directors, officers and employees in the ordinary course of business;
(i) loans and advances to its officers and employees in
an aggregate amount not to exceed $5,000,000 at any time outstanding,
$5,000,000 minus the amount of guarantees outstanding under Section 4.15(g);
(j) the Borrower's purchase or redemption of its own
Capital Stock to the extent permitted by Section 4.18;
(k) current trade and customer accounts receivable that
are for goods furnished or services rendered in the ordinary course of business
and that are payable in accordance with Borrower's or any Subsidiary's
customary trade terms;
(l) Interest Rate Protection Agreements to the extent
permitted under this Agreement, and Hedge Agreements entered into in the
ordinary course of business for hedging purposes and not for speculative
purposes;
(m) the Borrower may repurchase its Capital Stock and/or
options to purchase such stock held by directors, officers and employees of the
Borrower or any Subsidiary upon the death, disability, retirement or
termination of such directors, officers or employees or the exercise of such
options, or from the shareholders of Borrower so long as the purpose is to
acquire stock for reissuance to new employees of Borrower and its Subsidiaries;
provided, that the amount expended for such purposes shall not exceed
$1,000,000 in any fiscal year or $2,500,000 while this Agreement is in effect;
(n) the Borrower and its Subsidiaries may acquire and own
investments (including Indebtedness and other obligations) received in
connection with the bankruptcy or reorganization of suppliers and customers and
in settlement of delinquent obligations of, and other disputes with, customers
and suppliers arising in the ordinary course of business;
(o) investments acquired by the Borrower and its
Subsidiaries in connection with Permitted Acquisitions after the Merger Date;
(p) investments acquired by the Borrower and its
Subsidiaries in connection with acquisitions listed on Schedule 4.20(c) made
within 60 days of the Closing Date;
(q) the Borrower's current investment in the Argent Classic
Convertible Arbitrage Fund L.P.;
(r) in connection with the consummation of the Acquisition
pursuant to the Acquisition Documentation;
(s) Designated Noncash Consideration received in
connection with an Asset Sale permitted by Section 4.17; and
(t) on and after the Stepdown Date, the Borrower and its
Subsidiaries may acquire and own investments not otherwise permitted by the
foregoing clauses (a) though (s) in an aggregate amount not to
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exceed $10,000,000 at any one time outstanding.
SECTION 4.21 LIMITATION ON OPTIONAL PAYMENTS AND
MODIFICATIONS OF DEBT INSTRUMENTS AND ORGANIZATIONAL DOCUMENTATION, ETC. The
Borrower shall not, and shall not permit any of its Subsidiaries to, (a) make
any optional payment or optional prepayment on or redemption or purchase of any
material Indebtedness (other than the Loans and the Credit Facility) or
preferred Capital Stock including, without limitation, the Convertible
Subordinated Debentures, the 1997 Convertible Subordinated Notes and the Dawson
Notes, (b) amend, modify or change, or consent or agree to any amendment,
modification or change to any of the terms of the Dawson Notes or the
Acquisition Documents or, prior to the Merger Date, the Credit Facility without
the consent of the Majority Lenders; provided, however, that the Borrower shall
not, and shall not permit any of its Subsidiaries to amend, modify or change, or
consent or agree to any amendment, modification or change to the definition of
"Senior Subordinated Note" in the Credit Facility without the consent of the
Majority Lenders, or (c) amend, modify or change in any material respect, or
consent or agree to any amendment, modification, or change in any material
respect to the terms of (i) any of its capitalization or organizational
documents (including but not limited to in respect of any preferred Capital
Stock of any Guarantor), (ii) prior to the Merger Date, any other Indebtedness
in an aggregate principal amount in excess of $10,000,000, or (iii) a material
contract, to the extent such amendment, modification or change could reasonably
be expected to have a Material Adverse Effect, or be materially adverse to the
Lenders except that, (i) after 90% of the original outstanding principal amount
of the Convertible Subordinated Debentures have been converted into common stock
of the Borrower, the Borrower may, at any time when no Default or Event of
Default has occurred and is continuing, repurchase, redeem or defease the
remaining outstanding Convertible Subordinated Debentures and, after 90% of the
original outstanding principal amount of the 1997 Convertible Subordinated Notes
have been converted into common stock of the Borrower, the Borrower may, at any
time when no Default or Event of Default has occurred and is continuing,
repurchase, redeem or defease the remaining outstanding 1997 Convertible
Subordinated Notes; provided, that the Borrower may not repurchase, redeem or
defease such Convertible Subordinated Debentures at any time when the
Consolidated Leverage Ratio is or, after giving effect to such repurchase,
redemption or defeasance would be greater than 3.75 and (ii) at any time when
the aggregate principal amount of the remaining outstanding Dawson Notes is
$7,500,000 or less and no Default or Event of Default has occurred and is
continuing, the Borrower may repurchase, redeem, defease or otherwise prepay
such Dawson Notes; provided that any premium or other additional compensation to
be paid in connection therewith is on terms reasonably acceptable to the
Administrative Agent.
SECTION 4.22 LIMITATION ON TRANSACTIONS WITH AFFILIATES.
The Borrower shall not, and shall not permit any of its Subsidiaries to, enter
into any transaction, including, without limitation, any purchase, sale, lease
or exchange of property or the rendering of any service, with any Affiliate
(other than the Borrower) unless such transaction (a) is otherwise permitted
under this Agreement, and (b) is upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary, as the case may be, than it would
obtain in a comparable arm's length transaction with a Person which is not an
Affiliate; provided, that any such transaction involving more than $5,000,000
must be approved by a majority of the disinterested members of the Borrower's
Board of Directors.
SECTION 4.23 LIMITATION ON SALES AND LEASEBACKS. Prior to
the Stepdown Date, the Borrower shall not, and shall not permit any of its
Subsidiaries to, enter into any arrangement with any Person providing for the
leasing by the Borrower or any of its Subsidiaries of real or personal property
which has been or is to be sold or transferred by the Borrower or such
Subsidiary to such Person or to any other Person to whom funds have been or are
to be advanced by such Person on the security of such property or rental
obligations of the Borrower or such Subsidiary, if, after giving effect thereto,
the amount of all indebtedness attributable to transactions consummated pursuant
to this Section 4.23, plus the amount of Indebtedness
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outstanding pursuant to clause (d), (g) and (j) of Section 4.13, would exceed
$15,000,000.
SECTION 4.24 LIMITATION ON NEGATIVE PLEDGE CLAUSES. The
Borrower shall not, and shall not permit any of its Subsidiaries to, enter into
with any Person any agreement, other than (a) this Agreement, the Credit
Facility, the Dawson Indenture and the other Loan Documents and (b) any
industrial revenue bonds, purchase money Liens or Financing Leases permitted by
this Agreement (in which cases, any prohibition or limitation shall only be
effective against the assets financed thereby) which prohibits or limits the
ability of the Borrower or any of its Subsidiaries to create, incur, assume or
suffer to exist any Lien upon any of its property, assets or revenues, whether
now owned or hereafter acquired.
SECTION 4.25 LIMITATION ON LINES OF BUSINESS. The Borrower
shall not, and shall not permit any of its Subsidiaries to, enter into any
business, either directly or through any Subsidiary, except for those businesses
in which the Borrower and its Subsidiaries are engaged on the date of this
Agreement or which are directly related thereto including any business in the
oil and gas well service industry; provided, that Odessa shall not engage in any
business, except for those businesses in which it is engaged on the date of this
Agreement.
SECTION 4.26 LIMITATION ON CONSOLIDATED LEASE EXPENSE.
Prior to the Stepdown Date, the Borrower shall not, and shall not permit any of
its Subsidiaries to, permit Consolidated Lease Expense for any fiscal year of
the Borrower and its Subsidiaries to exceed $20,000,000.
SECTION 4.27 CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each
Lender will have the right to require the Borrower to prepay all or any part of
the principal amount of such Lender's Loans pursuant to the offer described
below (the "CHANGE OF CONTROL OFFER") at a prepayment price in cash equal to
101% of the aggregate principal amount thereof plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the date of prepayment
(collectively, the "CHANGE OF CONTROL PAYMENT"). Within 30 days following any
Change of Control, the Borrower will mail a notice to each Lender describing
the transaction or transactions that constituted the Change of Control and
offer to repay the Loans on the date specified in such notice, which date shall
be no earlier than 30 days and no later than 45 days from the date such notice
is mailed (the "CHANGE OF CONTROL PAYMENT DATE"), pursuant to the procedures
set forth below. Prior to the prepayment of any Loans in a Change of Control
Offer, but in any event within 30 days following a Change of Control, the
Company shall either repay all outstanding Indebtedness under the Credit
Facility or obtain the requisite consents, if any, under all agreements
governing such Indebtedness to permit the prepayment of such Loans pursuant to
this Section 4.27.
(b) Notice of a Change of Control Offer shall be mailed
by the Borrower to the Lenders at their addresses set forth in the Register.
The Change of Control Offer shall remain open from the time of mailing until 5
Business Days prior to the Change of Control Payment Date. The notice shall be
accompanied by a copy of the most recent reports furnished pursuant to Section
4.1(a) and (b). The notice shall contain all instructions and materials
necessary to enable such Lenders to elect to be prepaid pursuant to the Change
of Control Offer.
(c) On the Change of Control Payment Date, the Borrower
shall (i) repay all Loans or portions thereof of each Lender that properly
elected repayment thereof pursuant to the Change of Control Offer, (ii) pay
the Change of Control Payment for each such Loan (or portion thereof) elected
to be repaid and (iii) deliver to each such Lender a new Notes equal in
principal amount (excluding premiums, if any) to the unpurchased portion of
the corresponding Notes surrendered, if any. The Borrower will notify the
remaining
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Lenders of the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
SECTION 4.28 POST-CLOSING ACTIONS.
(a) VEHICLES.
(i) Within 30 days after the Closing Date, unless the
Merger Date has occurred, deliver to the Collateral Agent each
document (including, without limitation, any certificates of title)
required by the Collateral Documents or under law or reasonably
requested by the Collateral Agent to be delivered to the Collateral
Agent or to be filed, registered or recorded in order to create in
favor of the Collateral Agent, for the benefit of the Lenders, a
perfected Lien on all of the Vehicles listed on Schedule 4.28(a)(i)
covered by a certificate to title, prior and superior in right to any
other Person (other than with respect to Liens expressly permitted by
Section 4.14), which documents shall be in proper form for filing,
registration or recordation in each jurisdiction in which the filing,
registration or recordation thereof is so required or requested.
(ii) By November 17, 1998, unless the Merger Date has
occurred, deliver to the Collateral Agent each document (including,
without limitation, any certificates of title) required by the
Collateral Documents or under law or reasonably requested by the
Collateral Agent to be delivered to the Collateral Agent or to be
filed, registered or recorded in order to create in favor of the
Collateral Agent, for the benefit of the Lenders, a perfected Lien on
all of the Vehicles listed on Schedule 4.28(a)(ii) covered by a
certificate of title, prior and superior in right to any other Person
(other than with respect to Liens expressly permitted by Section
4.14), which documents shall be in proper form for filing,
registration or recordation in each jurisdiction in which the filing,
registration or recordation thereof, is so required or requested.
(b) PLEDGED SECURITIES; STOCK POWERS. (i) If the Capital
Stock of Transportes is certificated and possession of such certificate is
required in order to create a duly perfected Lien on such Capital Stock under
Argentine law, the Collateral Agent shall have received within 150 days of the
Closing Date, unless the Merger Date has occurred, 65% of the Capital Stock of
Transportes, pledged pursuant to the Master Guarantee and Collateral Agreement,
together with an undated stock power for such certificate executed in blank by
a duly authorized officer of the pledgor thereof.
(ii) The Collateral Agent shall, have received within 150
days of the Closing Date an additional 2% of the Capital Stock of
Servicios, pledged pursuant to the Master Guarantee and Collateral
Agreement, together with an undated stock power for such certificate
executed in blank by a duly authorized officer of the pledgor
thereof.
SECTION 4.29 LIMITATION ON CHANGE OF FISCAL YEAR. The
Borrower shall not permit the fiscal year of the Borrower to change more than
once during the lifetime of this Agreement; provided, that such change is to a
fiscal year ending the next December 31 after such change.
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ARTICLE V
CONDITIONS
The obligation of each of the Lenders to make Bridge Loans
is subject to (i) the representations and warranties of the Borrower and each of
the Guarantors in Article III and the representations and warranties of the
Borrower and such Guarantor, as the case may be, in the Credit Facility being
true, correct and complete in all respects on and as of the Closing Date to the
same extent as though made on and as of the Closing Date, (ii) on or prior to
the Closing Date, the Borrower and such Guarantor, as the case may be, having
performed and complied with all covenants and conditions to be performed and
observed by it on or prior to the Closing Date and (iii) the prior or concurrent
satisfaction of each of the following conditions:
SECTION 5.1 CORPORATE AND OTHER PROCEEDINGS. On or before
the Closing Date, all corporate and other proceedings taken or to be taken in
connection with the Transactions and all documents incidental thereto not
previously found acceptable by the Administrative Agent shall be satisfactory in
form and substance to the Administrative Agent, and the Administrative Agent
shall have received on behalf of the Lenders the following items, each of which
shall be in form and substance satisfactory to the Administrative Agent and,
unless otherwise noted, dated the Closing Date:
(a) a certified copy of the Borrower's and each of the
Guarantor's charter[s], in each case together with a certificate of status,
compliance, good standing or like certificate with respect to the Borrower and
each Guarantor issued by the appropriate government officials of the
respective jurisdiction of its formation and of each jurisdiction in which the
Borrower or such Guarantor owns any material assets or carries on any material
business, each to be dated a recent date prior to the Closing Date;
(b) a copy of the Borrower's and each of the Guarantor's
bylaws, in each case certified as of the Closing Date by its respective
Secretary or one of its Assistant Secretaries;
(c) resolutions of the Borrower's and each of the
Guarantor's Boards of Directors approving and authorizing the execution,
delivery and performance of this Agreement, each of the other Transaction
Documents and any other documents, instruments and certificates required to be
executed by the Borrower or such Guarantor in connection herewith or therewith
and approving and authorizing the execution, delivery and payment of the Notes,
the Securities and the consummation of the Transactions, each certified as of
the Closing Date by its respective Secretary or one of its Assistant
Secretaries as being in full force and effect without modification or amendment;
(d) signature and incumbency certificates of the
Borrower's and each of the Guarantor's Officers executing this Agreement and
the Notes and any other documents executed in connection therewith;
(e) executed copies of this Agreement and the Notes,
drawn to the order of the Lenders;
(f) an Officers' Certificate from the Borrower and each
of the Guarantors in form and substance satisfactory to the Administrative
Agent to the effect that (i) the representations and warranties in Article III
and the representations and warranties of the Borrower or such Guarantor, as
the case may be, in the Credit Facility are true, correct and complete in all
respects on and as of the Closing Date to the same extent as though made on
and as of that date, (ii) on or prior to the Closing Date, the Borrower or
such Guarantor, as the case may be, has performed and complied with all
covenants and conditions to be performed and observed by it on or prior to the
Closing Date and (iii) all conditions to the consummation of the Transactions
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have been satisfied on the terms set forth in the documentation relating thereto
and have not been waived or amended without the Administrative Agent's prior
written consent;
(g) true and correct copies of the final form of each of:
(i) the Acquisition Agreement, which shall not have been amended from the
version previously given to the Lenders; and (ii) the Credit Facility, which
shall be satisfactory in form and substance to each of the Lenders;
(h) true and correct copies of each of the other
Transaction Documents, each of which shall be satisfactory in form and
substance to each of the Lenders;
(i) a copy of all closing documents relating to the
Acquisition and all such counterpart originals or certified copies of such
documents, instruments, certificates and opinions as the Administrative Agent
may reasonably request;
(j) a copy of all closing documents relating to the
Credit Facility and all such counterpart originals or certified copies of such
documents, instruments, certificates and opinions as the Administrative Agent
may reasonably request;
(k) a copy of all closing documents relating to the other
Transactions and all such counterpart originals or certified copies of such
documents, instruments, certificates and opinions as the Administrative Agent
may reasonably request; and
(l) all authorizations, consents and approvals required
by Section 5.14.
SECTION 5.2 CONCURRENT TRANSACTIONS. Either prior to or
concurrently with the making of the Bridge Loans by the Lenders:
(a) the Borrower shall purchase at the closing of the
Tender Offer the greater of (i) a majority of shares of Dawson and (ii) such
number of shares as is sufficient number of shares to cause the Acquisition to
occur;
(b) all conditions precedent to borrowings under the
Credit Facility shall have been satisfied or, with the prior approval of the
Administrative Agent, waived, and the Borrower shall borrow funds under the
Credit Facility, which, together with the proceeds of the Bridge Loans, will
be sufficient to consummate the Tender Offer and pay all related fees and
expenses;
(c) the terms and conditions of the Tender Offer and the
Acquisition Agreement shall not have been modified in a way which is not
satisfactory to the Lenders;
(d) there shall be available under the Credit Facility
sufficient amounts to fund the Dawson Change of Control in its entirety and to
pay the other unfunded amounts required in connection with the Acquisition;
(e) there shall not exist (pro forma for the Acquisition
and the financing thereof) any Default or Event of Default, any default or
event of default under the Credit Facility, or under any other material
indebtedness or agreement of the Borrower, Dawson or their respective
Subsidiaries;
(f) the capitalization and corporate and ownership
structure of the Borrower before and after the Acquisition and the financing
thereof shall be satisfactory to the Lenders in all respects; and
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(g) except as otherwise permitted by Section 4.13, the
Borrower and Dawson shall not have any outstanding debt other than the Dawson
Notes, the Credit Facility and the $216 million in aggregate principal amount
of the 1997 Convertible Subordinated Notes and the $4.6 million in aggregate
principal amount of the Convertible Subordinated Debentures.
SECTION 5.3 NO MATERIAL LOSS. Neither the Borrower nor any
of its Subsidiaries shall have sustained any loss or interference with respect
to its businesses or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor dispute or any
legal or governmental proceeding, which loss or interference has had or is
reasonably likely to have a Material Adverse Effect.
SECTION 5.4 NO EVENT OF DEFAULT. No event shall have
occurred and be continuing or would result from the consummation of the
Transactions that would constitute an Event of Default.
SECTION 5.5 NO CHANGES IN FINANCIAL MARKETS. There shall
not have occurred any of the following: (i) trading in securities generally on
the New York Stock Exchange or The Nasdaq Stock Market's National Market or in
the over-the-counter market shall have been suspended or materially limited, or
minimum prices shall have been established on such exchange by the SEC, or by
such exchange or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by Federal or
state authorities, (iii) the United States shall have become engaged in
hostilities, there shall have been any escalation in hostilities involving the
United States or there shall have been declared a national emergency or war by
the United States, (iv) a disruption or adverse change in the financial or
capital markets generally, in the market for new issues of high yield debt or
equity securities in particular or (v) a material adverse change in the general
economic, political or financial conditions (or the effect of international
conditions on the financial markets in the United States shall be such) as to
make it, in the reasonable judgment of Majority Lenders, impracticable or
inadvisable to proceed with the funding of the Bridge Loans on the Closing Date.
SECTION 5.6 ENVIRONMENTAL REPORTS. The Administrative Agent
shall have received environmental reports reasonably satisfactory to it with
respect to real property owned or leased by the Borrower, any of its
Subsidiaries or Dawson and their respective operations from a firm satisfactory
to the Administrative Agent, in its sole discretion, and the Administrative
Agent shall be satisfied with the results of such reports, in its sole
discretion. The Administrative Agent shall have received a copy of the
Borrower's environmental compliance manual developed and implemented by the
Borrower to promote compliance with and to minimize prudently any liabilities or
potential liabilities under any Environmental Law that may affect the Borrower
or any of its Domestic Subsidiaries (the "ENVIRONMENTAL PROGRAM").
SECTION 5.7 ESCROW AGREEMENT. The Borrower, each of the
Guarantors and the Escrow Agent shall have entered into the Escrow Agreement and
a fully executed copy of the Escrow Agreement shall have been delivered to each
of the Lenders.
SECTION 5.8 EXCHANGE NOTES. The Borrower, each of the
Guarantors and the Exchange Note Trustee shall have entered into the Exchange
Note Indenture and a fully executed copy of the Exchange Note Indenture shall
have been delivered to the Escrow Agent. Executed global Exchange Notes shall
have been issued by the Borrower into escrow and delivered to the Escrow Agent
as contemplated by the Escrow Agreement.
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SECTION 5.9 ESCROW OF SECURITIES. The Borrower shall have
issued the Securities into escrow and delivered the Securities to the Escrow
Agent as contemplated by the Escrow Agreement.
SECTION 5.10 DELIVERY OF OPINIONS. The Administrative Agent
shall have received originally executed copies of the following legal opinions:
(a) the legal opinion of Jack D. Loftis, Jr., Esq., general
counsel to the Borrower and the Guarantors, in form and substance satisfactory
to the Administrative Agent;
(b) the legal opinion of Porter & Hedges, L.L.P. counsel to
the Borrower and the Guarantors, in form and substance satisfactory to the
Administrative Agent; and
(c) the executed legal opinion of Skadden, Arps, Slate,
Meagher & Flom LLP, special New York counsel to the Borrower and the Guarantors,
in form and substance satisfactory to the Administrative Agent.
Each such legal opinion shall be in form and substance reasonably satisfactory
to the Lenders and shall cover such matters incident to the transactions
contemplated by this Agreement and the other Loan Documents as the
Administrative Agent may reasonably require.
SECTION 5.11 SOLVENCY. The Administrative Agent shall have
received a reasonably satisfactory solvency analysis certified by the chief
financial officer of the Borrower which shall document the solvency of the
Borrower and its Subsidiaries and Excluded Subsidiaries considered as a whole
after giving effect to the Acquisition and the other transactions contemplated
hereby (assuming the purchase of 100% of the common equity of Dawson) and the
consummation of all acquisitions to be made by the Borrower, any Subsidiary of
the Borrower or any Excluded Subsidiary and scheduled to close on or prior to
October 31, 1998.
SECTION 5.12 PAYMENT OF FEES. On or before the Closing
Date, the Borrower shall have paid to the Lenders and their Affiliates the fees
payable on the Closing Date pursuant to Section 2.12.
SECTION 5.13 NO BREACH UNDER ENGAGEMENT LETTER, COMMITMENT
LETTER OR FEE LETTER. Neither the Borrower nor any Guarantor shall be in breach
or violation of any of its obligations under the Engagement Letter, the
Commitment Letter or the Fee Letter and each of the Engagement Letter and the
Fee Letter shall be in full force and effect.
SECTION 5.14 CONSENTS AND APPROVALS. On or before the
Closing Date, all governmental, shareholder and third-party consents (including
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended) and approvals necessary or desirable in connection with the
Transactions and the other transactions contemplated hereby shall have been
obtained; all such consents and approvals shall be in full force and effect; and
all applicable waiting periods shall have expired without any action being taken
by any authority that could restrain, prevent or impose any material adverse
conditions on the Transactions or such other transactions or that could seek or
threaten any of the foregoing.
SECTION 5.15 MARGIN REGULATIONS. The making of the Bridge
Loans in the manner contemplated in this Agreement shall not violate the
applicable provisions of Regulation T, U or X of the Board or any other
regulation of the Board.
SECTION 5.16 SATISFACTORY FINANCIAL STATEMENTS. The
Administrative Agent shall have received and, in each case, approved all audited
and unaudited historical financial statements of the Borrower,
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the Guarantors and Dawson and all completed, probable and pending acquisitions
(including pro forma financial statements) meeting the requirements of
Regulation S-X under the Securities Act applicable to a Registration Statement
on Form S-1.
SECTION 5.17 REPAYMENT OF INDEBTEDNESS. On or before the
Closing Date, all existing Indebtedness listed on SCHEDULE 5.18 of the Borrower
and its Subsidiaries shall be repaid in full and all commitments thereunder
shall be terminated.
SECTION 5.18 CONCURRENCE WITH ASSUMPTIONS. The Lenders
shall have concurred (in their sole discretion) with the operating and financial
assumptions used in preparing the combined pro forma historical and projected
performance of the Borrower after giving effect to the Acquisition.
SECTION 5.19 ABSENCE OF CERTAIN CHANGES. No material
adverse change in the consolidated financial condition, results of operations,
business, assets, liabilities, management, prospects or value of the Borrower or
Dawson (including any event which, in the opinion of the Lenders, is likely to
result in such a material adverse change) shall have occurred since the date of
the most recent audited financial statements that have been delivered to the
Lenders as of the date hereof as to make it, in the reasonable judgment of the
Administrative Agent, impractical or inadvisable to proceed with the funding of
the Loans on the Closing Date pursuant to the terms contemplated herein. No
material inaccuracy in such financial statements shall exist. The Borrower and
Dawson shall have no material liabilities except (i) those set forth on the most
recent audited balance sheets of such entities provided to the Lenders as of the
date hereof and (ii) those incurred in the ordinary course of business (and
consistent with past practice) since such date.
SECTION 5.20 NET CAPITAL. There shall not have occurred any
change in law or regulation (or interpretation thereof) that could result in any
Lender's commitment to provide, or any Lender's providing, the financing
contemplated by this Agreement being a charge to the net capital of such
Lender's parent or affiliate.
SECTION 5.21 BUSINESS PLAN. The Administrative Agent shall
have received the following:
(a) a satisfactory business plan for the Borrower and its
Subsidiaries (including the Subsidiaries of Dawson) for the six fiscal years
following the Closing Date;
(b) a satisfactory written analysis of the business and
prospects of the Borrower and its Subsidiaries (including the Subsidiaries of
Dawson) for the period from the Closing Date through the final maturity of the
Term Loans; and
(c) satisfactory pro forma projected balance sheets of the
Borrower and its Subsidiaries (including the Subsidiaries of Dawson) as at the
last day of each of the six fiscal years of the Borrower following the Merger
Date, and the related consolidated statements of projected income, retained
earnings and cash flows for such fiscal years (including the assumptions used in
preparing such statements).
SECTION 5.22 TERMINATION OF ENGAGEMENT LETTER. The
Administrative Agent shall have received evidence, satisfactory to the
Administrative Agent in its sole discretion, that the Engagement Letter dated
May 8, 1998 between the Borrower and Bear, Stearns & Co. Inc. has been
terminated.
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SECTION 5.23 FILINGS, REGISTRATIONS AND RECORDINGS. Each
document (including, without limitation, any Uniform Commercial Code financing
statement) required by the Collateral Documents or under law or reasonably
requested by the Administrative Agent to be delivered to the Collateral Agent or
to be filed, registered or recorded in order to create in favor of the
Collateral Agent, a perfected Lien on all Collateral, prior and superior in
right to any other Person (other than with respect to Liens expressly permitted
by Section 4.14), shall have been filed or be in proper form for filing,
registration or recordation in each jurisdiction in which the filing,
registration or recordation thereof is so required or requested, other than
those documents required to be filed, registered or recorded after the Closing
Date pursuant to Section 4.28.
ARTICLE VI
TRANSFER OF THE LOANS
SECTION 6.1 TRANSFER OF THE NOTES.
(a) ASSIGNMENT BY LENDERS. Any Lender may assign to one or
more assignees all or a portion of its rights and obligations under this
Agreement without the consent of the Borrower, any Guarantor or any other
Lender, but in compliance with all applicable laws; provided, however, that no
interest in any Loans may be sold, assigned or otherwise transferred except with
the prior consent of the Administrative Agent (which consent shall not
unreasonably be withheld or delayed). Except in the case of an assignment to a
Lender or an Affiliate of a Lender or an assignment of the entire remaining
amount of the assigning Lender's Loans, the amount of the Loans of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $2,000,000 unless the Borrower
otherwise consents. Each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations under
this Agreement. The parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance. Upon recording thereof
pursuant to Section 6.3, from and after the effective date specified in each
Assignment and Acceptance the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
2.7, 2.10 and 2.11 and Article XII). Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
Section 6.1(a) shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
Section 6.1(b).
(b) PARTICIPATIONS. Any Lender may, without the consent of
any Person, sell participations to one or more banks or other entities (a
"Participant") in all or a portion of such Lender's rights and obligations under
this Agreement, but in such event (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower, the Guarantors and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce the Transaction Documents and to
approve any amendment, modification or waiver of any provision of the
Transaction Documents, except that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in Section 14.3(b) that affects such
Participant. The Borrower
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agrees that each Participant shall be entitled to the benefits of Sections 2.7,
2.10 and 2.11 and Article XII to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to Section 6.1(a); provided that,
in the case of Section 2.10(g), such Participant shall have complied with the
requirements of said Section and provided, further, that no Participant shall be
entitled to receive any greater amount pursuant to any such Section than the
transferor Lender would have been entitled to receive in respect of the amount
of the participation transferred by such transferor Lender to such Participant
had no such transfer occurred.
SECTION 6.2 REGISTRATION OF TRANSFER OR EXCHANGE. Against
receipt of evidence of cancellation, discharge or surrender of any Notes by a
Lender for registration of transfer or exchange, the Borrower will execute and
deliver in exchange therefor a new Notes or Notes of the same aggregate tenor
and principal amount, registered in such names and in such denominations as such
Lender may request. The Borrower will pay any stamp tax or governmental charge
imposed in respect of any such transfer.
SECTION 6.3 REGISTER. The Administrative Agent shall keep a
copy of each Assignment and Acceptance delivered to it and maintain a register
of the names and addresses of each Lender and the principal amount of the Loans
owing to it pursuant to the terms hereof from time to time (the "REGISTER").
Upon its receipt of an Assignment and Acceptance executed by an assigning Lender
and an Assignee together with payment by the assigning Lender or the Assignee to
the Administrative Agent of a registration and processing fee of $3,500
(provided that no such payment shall be required with respect to assignments
involving Lehman Commercial Paper Inc. as assignor or assignee), the
Administrative Agent shall (i) promptly accept such Assignment and Acceptance
and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give notice of such acceptance
and recordation to the Lenders and the Borrower. No assignment shall be
effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this Section 6.3. Within ten (10) Business Days after
its receipt of such notice, the Borrower shall execute and deliver to the
applicable Lenders one or more new Notes. The entries in the Register shall be
rebuttably presumed to be correct, absent manifest error, and the Administrative
Agent, the Arranger, the Borrower, the Guarantors and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to
the contrary. The Register shall be available for inspection by the Borrower and
any Lender, at any reasonable time and from time to time upon reasonable prior
notice.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1 EVENTS OF DEFAULT. If any of the following
events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any
Loan when due in accordance with the terms hereof; or the Borrower shall fail to
pay any interest on any Loan, or any other amount payable hereunder or under any
other Loan Document, within three days after any such interest or other amount
becomes due in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by
the Borrower or any other Guarantor herein or in any other Loan Document or
which is contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Agreement or any
such other Loan Document shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
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(c) The Borrower or any other Guarantor shall default in
the observance or performance of any agreement contained in Section 4.12 through
Section 4.26, inclusive; or
(d) The Borrower or any other Guarantor shall default in
the observance or performance of any other agreement contained in this Agreement
or any other Loan Document (other than as provided in paragraphs (a) through (c)
of this Section 7.1), and such default shall continue unremedied for a period of
30 days; or
(e) The Borrower or any of its Subsidiaries shall (1) prior
to the Merger Date (i) default in making any payment of any principal of any
Indebtedness (including, without limitation, any Guarantee Obligation) on the
scheduled or original due date with respect thereto; or (ii) default in making
any payment of any interest on any Indebtedness beyond the period of grace, if
any, provided in the instrument or agreement under which such Indebtedness was
created; or (iii) default in the observance or performance of any other
agreement or condition relating to any Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or; provided that a default, event or condition
described in clause (i), (ii) or (iii) of this paragraph (e) shall not at any
time constitute an Event of Default under this Agreement unless, at such time,
one or more defaults, events or conditions of the type described in clauses (i),
(ii) and (iii) of this paragraph (e) shall have occurred and be continuing with
respect to Indebtedness of the Borrower and its Subsidiaries the outstanding
principal amount of which exceeds in the aggregate $5,000,000 or (2) on and
after the Merger Date, default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Borrower or any of its Subsidiaries (or
the payment of which is guaranteed by the Borrower or any of its Subsidiaries)
whether such Indebtedness or guarantee now exists, or is created after the date
of this Agreement, which default (a) is caused by a failure to pay principal of
or premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5,000,000; or
(f) (i) The Borrower or any of its Subsidiaries (other than
Servicios) shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or the Borrower or any of its Subsidiaries
(other than Servicios) shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Borrower or any of its
Subsidiaries (other than Servicios) any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii) there
shall be commenced against the Borrower or any of its Subsidiaries (other than
Servicios) any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) the Borrower or
any of its Subsidiaries (other than Servicios) shall take any action in
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furtherance of; or indicating its consent to, approval of; or acquiescence in,
any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the
Borrower or any of its Subsidiaries (other than Servicios) shall generally not,
or shall be unable to, or shall admit in writing its inability to, pay its debts
as they become due; or
(g) Prior to the Merger Date, (i) any Person shall engage
in any "prohibited transaction" (as defined in Section 406 of ERISA or Section
4975 of the Code) involving any Plan, (ii) any "accumulated funding deficiency"
(as defined in Section 302 of ERISA), whether or not waived, shall exist with
respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on
the assets of any Guarantor or any Commonly Controlled Entity, (iii) a
Reportable Event shall occur with respect to, or proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of the
Majority Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes
of Title IV of ERISA, (v) any Guarantor or any Commonly Controlled Entity shall,
or in the reasonable opinion of the Majority Lenders is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other such events
or conditions, if any, could, in the sole judgment of the Majority Lenders,
reasonably be expected to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered
against the Borrower or any of its Subsidiaries (other than Servicios) involving
in the aggregate a liability (not paid or fully covered by insurance) of
$5,000,000 or more and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 60 days from the
entry thereof; or
(i) Prior to the Merger Date, any of the Collateral
Documents shall cease, for any reason, to be in full force and effect, or any
Guarantor or any Affiliate of any Guarantor shall so assert, or any material
Lien created by any of the Collateral Documents shall cease to be enforceable
and of the same effect and priority purported to be created thereby; or
(j) The Merger shall fail to be consummated within 150 days
after the Closing Date;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower, the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the other Loan Documents shall immediately and
automatically become due and payable, and (B) if such event is any other Event
of Default, either or both of the following actions may be taken; with the
consent of Majority Lender, the Administrative Agent may, or upon the request of
Majority Lenders; the Administrative Agent shall, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents to be due and
payable forthwith, whereupon the same shall immediately become due and payable.
Except as expressly provided above in this Section, presentment, demand, protest
and all other notices of any kind are hereby expressly waived.
In addition to the foregoing, if the Borrower fails to
comply with the provisions of Section 8.1(b) in any material respect after a
Request, then the Lenders shall be entitled to unilaterally amend the provisions
of this Agreement and the other Loan Documents relating to interest rate,
optional redemption, maturity, warrants and registration rights so as to reflect
the terms of the Permanent Securities that would have been issued in accordance
with Section 8.1(b) had the Borrower complied therewith.
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SECTION 7.2 RIGHTS AND REMEDIES CUMULATIVE. No right or
remedy herein conferred upon or reserved to the Lenders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent or subsequent assertion or
employment of any other appropriate right or remedy.
SECTION 7.3 DELAY OR OMISSION NOT WAIVER. No delay or
omission by any Lender to exercise any right or remedy accruing upon any Event
of Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy given
by this Article VII or by law to the Lenders may be exercised from time to time,
and as often as may be deemed expedient, by the Lenders.
SECTION 7.4 WAIVER OF PAST DEFAULTS. Subject to Section
14.3, the Majority Lenders by written notice to the Borrower may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal or interest that has become due solely because of the acceleration)
have been cured or waived.
SECTION 7.5 RIGHTS OF LENDERS TO RECEIVE PAYMENT.
Notwithstanding anything to the contrary contained in this Agreement but subject
to the provisions of Article X, the right of any Lender to receive payment of
principal of, premium, if any, and interest on the Loans and Bridge Notes held
by such Lender, on or after the respective due dates expressed in this Agreement
or the Bridge Notes, or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Lender.
ARTICLE VIII
PERMANENT SECURITIES
SECTION 8.1 PERMANENT SECURITIES.
(a) The Borrower and each of the Guarantors shall do all
things required in the reasonable opinion of the Arranger in connection with the
sale of the Permanent Securities, including, but not limited to (i) no later
than 30 days following the Closing Date, commencing the preparation of a Rule
144A offering memorandum or registration statement under the Securities Act with
respect to the Permanent Securities, and other documentation (including an
indenture and registration rights agreement), all as deemed necessary by the
Arranger in its sole discretion, to effect the offering of Permanent Securities,
(ii) no later than 90 days following the Closing Date, delivering to the
Arranger such unaudited consolidated and pro forma financial information,
projections as to future operations and such other financial information
relating to the Borrower and Dawson and their respective businesses and any
probable or recently completed acquisition as may be reasonably requested by the
Arranger, (iii) no later than 150 days following the Closing Date, finalizing
the Offering Documents in form and substance reasonably satisfactory to the
Arranger, in its sole discretion, including, if applicable, filings of a
registration statement under the Securities Act, (iv) no later than 150 days
following the Closing Date, making appropriate Officers of the Borrower and its
Subsidiaries (including, without limitation, Dawson) available to the Arranger
for meetings with rating agencies and prospective purchasers of the Permanent
Securities and preparing and presenting to potential investors road show
material in a manner consistent with other new issuances of high yield debt
securities and (v) executing an underwriting or purchase agreement substantially
in the form of the Arranger's standard underwriting or purchase agreement, as
the case may be, modified as appropriate to reflect the terms of the
transactions
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contemplated thereby and containing such terms, covenants, conditions,
representations, warranties and indemnities as are customary in similar
transactions and providing for the delivery of legal opinions, comfort letters,
and Officers' Certificates, all in form and substance reasonably satisfactory to
the Arranger and its counsel, as well as such other terms and conditions as the
Arranger and their counsel may in their reasonable discretion consider
appropriate in light of then prevailing market conditions applicable to similar
financings or in light of any aspect of the transactions contemplated hereby
that requires such other terms or conditions. The proceeds from the issuance of
the Permanent Securities shall be used to prepay the Loans pursuant to Section
2.5.
(b) The Borrower and each Guarantor agrees that as soon as
practicable following the request (a "REQUEST") from the Arranger made at any
time after the date that is 180 days after Closing Date, the Borrower will issue
and sell Permanent Securities upon such terms and conditions as may be specified
in such Request, provided that (i) subject to clause (iii) of the definition of
"Permanent Securities," the interest rate thereon (whether floating or fixed)
shall be determined by the Arranger after consultation with the Company, in
light of the then prevailing market conditions but in no event shall the
interest rate on the Permanent Securities exceed the Maximum Yield as defined in
the Fee Letter; (ii) the Arranger, in their reasonable discretion after
consultation with the Borrower, shall determine whether the Permanent Securities
shall be issued through a public offering or a private placement and, if issued
in a private placement, whether the Permanent Securities will be accompanied by
customary registration rights; (iii) the aggregate principal amount of Permanent
Securities to be issued shall be in gross proceeds at least equal to
$150,000,000; and (iv) subject in all respects to the definition of "Permanent
Securities," all other arrangements with respect to the Permanent Securities
shall be reasonably satisfactory in all respects to the Arranger, the Borrower
and the Guarantors in light of the then prevailing market conditions.
SECTION 8.2 ESCROWED WARRANTS. If (and only if) it shall be
determined by the Arranger based upon the prevailing market conditions that it
is necessary to sell the Permanent Securities with an equity component, the
Arranger may, in accordance with applicable law, sell all or any portion of the
Escrowed Warrants to the purchasers of the Permanent Securities in such amount
as is necessary in order for the Borrower to issue any Permanent Securities.
ARTICLE IX
TERMINATION
SECTION 9.1 TERMINATION. If no Loans have been funded
hereunder, the Lenders, by notice to the Borrower, may terminate this Agreement
at any time after the earlier of (i) the termination of the Acquisition
Agreement, (ii) the payment for the Tender Offer and (iii) 5:00 p.m., New York
City time, on December 31, 1998.
SECTION 9.2 SURVIVAL OF CERTAIN PROVISIONS. If this
Agreement is terminated pursuant to this Article IX, such termination shall be
without liability of any party to any other party, except that, whether or not
the transactions contemplated by this Agreement are consummated, (i) the
Obligations of the Borrower and the Guarantors to reimburse the Lenders for all
of their out-of-pocket expenses pursuant to Section 13.1 and the Engagement
Letter and (ii) the indemnity provisions contained in Article XII shall, in each
case, remain operative and in full force and effect.
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ARTICLE X
SUBORDINATION
SECTION 10.1 AGREEMENT TO SUBORDINATE. The Borrower and the
Guarantors agree, and each Lender agrees, that, from and after the Merger Date,
the Loans and the Indebtedness evidenced by the Notes, after the Merger Date,
shall be subordinated in right of payment, to the extent and in the manner
provided in this Article X, to the prior payment in full in cash or Cash
Equivalents of all Senior Debt (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed), and that the subordination
is for the benefit of and enforceable by the holders of Senior Debt. Prior to
the Merger Date, the Loans are not subordinated and the remainder of this
Article X shall be of no force and effect. Notwithstanding the provisions of
Article X hereof, (i) the Borrower shall not incur any Indebtedness that is
subordinate or junior in right of payment to any Senior Debt and senior in any
respect in right of payment to the Notes, and (ii) no Guarantor shall incur any
Indebtedness that is subordinated or junior in right of payment to any
guarantees of Senior Debt and senior in any respect in right of payment to the
Guarantees.
SECTION 10.2 CERTAIN DEFINITIONS.
"DESIGNATED SENIOR DEBT" means (i) any Indebtedness
outstanding under the Credit Facility and (ii) any other Senior Debt permitted
hereunder the principal amount of which is $25,000,000 or more and that has been
designated by the Borrower as "Designated Senior Debt."
"PERMITTED JUNIOR SECURITIES" means Equity Interests in the
Borrower or any Guarantor or debt securities that are subordinated to all Senior
Debt (and any debt securities issued in exchange for Senior Debt) to
substantially the same extent as, or to a greater extent than, the Loans are
subordinated to Senior Debt pursuant to this Agreement.
"REPRESENTATIVE" means the indenture trustee or other
trustee, agent or representative for any Senior Debt. "SENIOR DEBT" means (i)
all Indebtedness under the Credit Facility, whether outstanding on the date
hereof or thereafter incurred, and all Hedging Obligations with respect thereto,
(ii) any other Indebtedness that is permitted to be incurred by the Borrower
pursuant to this Agreement unless the instrument under which such Indebtedness
is incurred expressly provides that it is on a parity with or subordinated in
right of payment to the Securities, and (iii) all Senior Obligations with
respect to any of the foregoing. Notwithstanding anything to the contrary in the
foregoing, Senior Debt shall not include (x) any Indebtedness of the Borrower to
any of its Subsidiaries or other Affiliates, (y) any Indebtedness incurred for
the purchase of goods or materials or for services obtained in the ordinary
course of business (other than with the proceeds of revolving credit borrowings
permitted hereby) and (z) any Indebtedness that is incurred in violation of this
Agreement.
"SENIOR OBLIGATIONS" means any principal, premium (if any),
interest, penalties, fees, charges, expenses, indemnifications, reimbursement
obligations, damages, guarantees and other liabilities and amounts payable under
the documentation governing any Senior Debt or in respect thereto.
A distribution may consist of cash, securities or other
property, by set-off or otherwise.
SECTION 10.3 LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any
distribution to creditors of the Borrower or the Guarantors in a liquidation or
dissolution of the Borrower or such Guarantor or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Borrower or such
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Guarantor or its property, in an assignment for the benefit of creditors or any
marshalling of the Borrower's or such Guarantor's assets and liabilities:
(1) holders of Senior Debt shall be entitled to
receive payment in full in cash of all Senior Obligations due in
respect of such Senior Debt (including interest after, or which would
accrue but for, the commencement of any such proceeding at the rate
specified in the applicable Senior Debt, whether or not a claim for
such interest would be allowed) before any Lender shall be entitled
to receive any payment with respect to its Loan (except that Lenders
may receive Permitted Junior Securities); and
(2) until all Senior Obligations with respect to
Senior Debt (as provided in subsection (1) above) are paid in full in
cash, any distribution to which Lenders would be entitled but for
this Article X shall be made to holders of Senior Debt (except that
Lenders may receive Permitted Junior Securities), as their interests
may appear.
SECTION 10.4 DEFAULT ON DESIGNATED SENIOR DEBT. The
Borrower and the Guarantors may not make any payment or distribution to the
Administrative Agent or any Lender in respect of any Obligations and may not
acquire from the Administrative Agent or any Lender any Loans for cash or
property (other than Permitted Junior Securities) until all principal and other
Senior Obligations with respect to the Senior Debt have been paid in full in
cash if:
(i) a default in the payment of any principal or
other Senior Obligations with respect to Designated Senior Debt
occurs and is continuing beyond any applicable grace period in the
agreement, indenture or other document governing such Designated
Senior Debt; or
(ii) a default, other than a payment default, on
Designated Senior Debt occurs and is continuing that permits holders
of the Designated Senior Debt to accelerate its maturity and the
Administrative Agent receives a notice of the default (a "PAYMENT
BLOCKAGE NOTICE") from a Person who may give it pursuant to Section
10.12 hereof. If the Administrative Agent receives any such Payment
Blockage Notice, no subsequent Payment Blockage Notice shall be
effective for purposes of this Section 10.4 unless and until (i) at
least 360 days shall have elapsed since the effectiveness of the
immediately prior Payment Blockage Notice and (ii) all scheduled
payments of principal, premium, if any, and interest on the Loans
that have come due have been paid in full in cash. No nonpayment
default that existed or was continuing on the date of delivery of any
Payment Blockage Notice to the Administrative Agent shall be, or be
made, the basis for a subsequent Payment Blockage Notice unless such
default shall have been waived for a period of not less than 180
days.
The Borrower and the Guarantors may and shall resume
payments on and distributions in respect of the Loans and may acquire them upon
the earlier of:
(1) the date upon which the default is cured or waived by
written notice to the Administrative Agent and the Borrower from the
Person or Persons who gave such Payment Blockage Notice and, in the
case of Designated Senior Debt that has been accelerated, such
acceleration has been rescinded by written noticed to the
Administrative Agent and the Borrower, or
(2) in the case of a default referred to in Section
10.4(ii) hereof, 179 days pass after
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notice is received if the maturity of such Designated Senior Debt has
not been accelerated,
if this Article X otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
SECTION 10.5 ACCELERATION OF LOANS. If payment of the Loans
is accelerated because of an Event of Default, the Borrower shall promptly
notify holders of Designated Senior Debt of the acceleration. If any Designated
Senior Debt is outstanding, the Borrower may not pay the Loans until five
Business Days after the Representative of the Designated Senior Debt receives
notice of such acceleration and, thereafter, may pay the Loans only if this
Article X otherwise permits the payment at that time.
SECTION 10.6 WHEN DISTRIBUTION MUST BE PAID OVER. In the
event that the Administrative Agent or any Lender receives any payment of any
Senior Obligations at a time when the Administrative Agent or such Lender, as
applicable, has actual knowledge that such payment is prohibited by Article X
hereof, such payment shall be held by the Administrative Agent or such Lender,
in trust for the benefit of, and shall be paid forthwith over and delivered to,
the holders of Senior Debt as their interests may appear or their Representative
under the indenture or other agreement (if any) pursuant to which Senior Debt
may have been issued, as their respective interests may appear, for application
to the payment of all Senior Obligations with respect to Senior Debt remaining
unpaid to the extent necessary to pay such Senior Obligations in full in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the
Administrative Agent undertakes to perform only such obligations on the part of
the Administrative Agent as are specifically set forth in this Article X, and no
implied covenants or obligations with respect to the holders of Senior Debt
shall be read into this Agreement against the Administrative Agent. The
Administrative Agent shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Administrative Agent shall pay over or distribute to or on behalf of Lenders,
the Borrower, the Guarantors or any other Person money or assets to which any
holders of Senior Debt shall be entitled by virtue of this Article X, except if
such payment is made as a result of the willful misconduct or gross negligence
of the Administrative Agent.
SECTION 10.7 NOTICE BY THE BORROWER. The Borrower and the
Guarantors shall promptly notify the Administrative Agent of any facts known to
the Borrower or any Guarantor that would cause a payment of any Senior
Obligations with respect to the Loans to violate this Article X, but failure to
give such notice shall not affect the subordination of the Loans to the Senior
Debt as provided in this Article X.
SECTION 10.8 SUBROGATION. After all Senior Debt is paid in
full in cash and until the Loans are paid in full, the Lenders shall be
subrogated (equally and ratably with all other Indebtedness pari passu with the
Loans) to the rights of holders of Senior Debt to receive distributions
applicable to Senior Debt to the extent that distributions otherwise payable to
the Lenders have been applied to the payment of Senior Debt. A distribution made
under this Article X to holders of Senior Debt that otherwise would have been
made to the Lenders is not, as between the Borrower and the Guarantors, on one
hand, and the Lenders, on the other hand, a payment by the Borrower and the
Guarantors on the Loan.
SECTION 10.9 RELATIVE RIGHTS. This Article X defines the
relative rights of the Lenders and holders of Senior Debt. Nothing in this
Agreement shall:
(a) impair, as between the Borrower and the Guarantors,
on one hand, and the Lenders, on the
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other hand, the obligation of the Borrower and the Guarantors, which is absolute
and unconditional, to pay principal of and interest on the Loans in accordance
with their terms;
(b) affect the relative rights of the Lenders and creditors
of the Borrower and the Guarantors other than their rights in
relation to holders of Senior Debt; or
(c) prevent the Administrative Agent or any Lender from
exercising its available remedies upon a Default or Event of Default, subject
to the rights of holders of Senior Debt to receive distributions and payments
otherwise payable to the Lenders.
If the Borrower and the Guarantors fail because of this
Article X to pay principal of or interest on a Loan on the due date, the failure
is still a Default or Event of Default.
SECTION 10.10 SUBORDINATION MAY NOT BE IMPAIRED BY THE
BORROWER AND THE GUARANTORS. No right of any holder of Senior Debt to enforce
the subordination of the Loans and the Indebtedness evidenced by the Notes shall
be impaired by any act or failure to act by the Borrower and the Guarantors or
any Lender or by the failure of the Borrower and the Guarantors or any Lender to
comply with this Agreement.
SECTION 10.11 DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of Senior
Debt, the distribution may be made and the notice given to their Representative.
Upon any payment or distribution of assets of the Borrower
or any Guarantor referred to in this Article X, the Administrative Agent and the
Lenders shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any distribution to the
Administrative Agent or to the Lenders for the purpose of ascertaining the
Persons entitled to participate in such distribution, the holders of the Senior
Debt and other Indebtedness of the Borrower and the Guarantors, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article X.
SECTION 10.12 RIGHTS OF ADMINISTRATIVE AGENT.
Notwithstanding the provisions of this Article X or any other provision of this
Agreement, the Administrative Agent shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Administrative Agent, and the Administrative Agent may
continue to make payments on the Loans, unless the Administrative Agent shall
have received at the address set forth in Section 14.2 hereof at least five
Business Days prior to the date of such payment written notice of facts that
would cause the payment of any Obligations with respect to the Loans to violate
this Article X. Only the Borrower or a Representative may give the notice.
The Administrative Agent in its individual or any other
capacity may hold Senior Debt with the same rights it would have if it were not
Administrative Agent. Any agent may do the same with like rights.
SECTION 10.13 AUTHORIZATION TO EFFECT SUBORDINATION. Each
Lender, authorizes and directs the Administrative Agent on such Lender's behalf
to take such action as may be necessary or appropriate to effectuate the
subordination as provided in this Article X, and appoints the Administrative
Agent to act as such Lender's attorney-in-fact for any and all such purposes.
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SECTION 10.14 AMENDMENTS. The provisions of this Article X
and Section 14.3 shall not be amended or modified without the written consent of
the holders of all Senior Debt.
ARTICLE XI
GUARANTEE
SECTION 11.1 THE GUARANTEE.
(a) Each Guarantor hereby absolutely, unconditionally and
irrevocably guarantees the full and punctual payment when due (whether at
stated maturity, upon acceleration or otherwise) of the principal of and
interest, fees and premium (if any) on the Loans and the Notes, and the full
and punctual payment of all other Obligations of the Borrower under this
Agreement, the Notes and the other Loan Documents when due, including all
reasonable costs of collection and enforcement thereof and interest thereon
which would be owing by the Borrower but for the effect of any Bankruptcy Law
(collectively, the "GUARANTEED OBLIGATIONS"). Each Guarantor understands,
agrees and confirms that each of the Lenders may enforce this Guarantee up to
the full amount guaranteed by each Guarantor hereunder against each Guarantor
without proceeding against any other obligor or against any security for the
Guaranteed Obligations. All payments made by each Guarantor under this
Guarantee shall be paid at the place and in the manner specified in Section
2.9. Each Guarantor agrees that this is a continuing Guarantee of payment and
not merely a Guarantee of collection.
(b) The obligations of each Guarantor hereunder shall be
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver
or release in respect of any Obligation of the Borrower under this
Agreement, the Notes or any other Loan Document, by operation of law
or otherwise;
(ii) any modification or amendment of or supplement to this
Agreement, the Notes or any of the other Loan Documents;
(iii) any release, non-perfection or invalidity of any
direct or indirect security for, or any other Person's guarantee of,
any of the Guaranteed Obligations;
(iv) any change in the corporate existence, structure or
ownership of the Borrower or any other guarantor of the Borrower's
Obligations, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Borrower or any obligor or any of
their respective assets or any resulting release or discharge of any
Obligation of the Borrower contained in the Loan Documents;
(v) the existence of any claim, set-off or other rights
which any obligor may have at any time against the Borrower or any
other Person, whether in connection herewith or with any unrelated
transactions, provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory
counterclaim;
(vi) any invalidity or unenforceability relating to or
against the Borrower for any reason of this Agreement, the Notes or
any other Loan Document, or any provision of
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applicable law or regulation purporting to prohibit the payment by
the Borrower of the principal of, interest, premium or fees on the
Loans or any other amount payable by the Borrower under this
Agreement, the Notes or any of the other Loan Documents; or
(vii) any other act or omission to act or delay of any kind
by the Borrower or any other Person or any other circumstance
whatsoever which might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of Guaranteed Obligations
hereunder.
(c) Each Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Borrower, any right to require a proceeding first against the
Borrower or another obligor, protest, notice and all demands whatsoever and
covenants that, subject to this Article XI, this Guarantee shall not be
discharged except by complete payment and performance of all Guaranteed
Obligations.
(d) If any Lender is required by any court or otherwise to
return to the Borrower or any Guarantor, or any Custodian for the Borrower or
any of the other obligors or their respective assets, any amount paid to any
Lender, this Guarantee, to the extent of the amount so returned, shall be
reinstated in full force and effect.
(e) Each Guarantor agrees that it shall not be entitled to
any right of subrogation in relation to the Lenders in respect of any
Guaranteed Obligations until payment in full of all Guaranteed Obligations.
Each Guarantor further agrees that (i) the maturity of the Guaranteed
Obligations may be accelerated as provided in Section 7.1 notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect
of the Guaranteed Obligations and (ii) in the event of any declaration of
acceleration of such Guaranteed Obligations as provided in Section 7.1, such
Guaranteed Obligations (whether or not due and payable) shall forthwith become
due and payable by each Guarantor for the purpose of this Guarantee.
SECTION 11.2 SUBORDINATION OF GUARANTEE. The obligations of
each Guarantor under its Guarantee pursuant to this Article XI shall be junior
and subordinated to the Senior Obligations of such Guarantor under the Credit
Facility on the same basis as the Loans are junior and subordinated to Senior
Debt of the Borrower under the Credit Facility.
SECTION 11.3 LIMITATION ON LIABILITY. Each Guarantor and,
by its acceptance of any Notes, each Lender, hereby confirms that it is the
intention of all such parties that this Guarantee not constitute a fraudulent
transfer or conveyance for purposes of any Bankruptcy Law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
law to the extent applicable to this Guarantee. To effectuate the foregoing
intention, the Lenders and the Guarantors hereby irrevocably agree that the
Obligations of each Guarantor under this Guarantee shall be limited to the
maximum amount as will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of each Guarantor that are relevant under such
laws, result in the Obligations of each Guarantor under the Guarantee not
constituting a fraudulent transfer or conveyance.
SECTION 11.4 STAY OF ACCELERATION. In the event that
acceleration of the time for payment of any Guaranteed Obligation is stayed upon
insolvency, bankruptcy or reorganization of the Borrower, all such amounts
otherwise subject to acceleration under the terms of this Agreement and the
Notes shall nonetheless by payable by the Guarantors forthwith on demand by any
Lender.
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SECTION 11.5 RELEASE OF GUARANTORS. In the event of a sale
or other disposition of all of the assets of any Guarantor, by way of merger,
consolidation or otherwise, or a sale or other disposition of all of the capital
stock of any Guarantor, then such Guarantor (in the event of a sale or other
disposition, by way of merger, consolidation or otherwise, of all of the capital
stock of such Guarantor) or the corporation acquiring the property (in the event
of a sale or other disposition of all or substantially all of the assets of such
Guarantor) will be released and relieved of any obligations under its Guarantee;
provided that the Net Cash Proceeds of such sale or other disposition are
applied in accordance with the applicable provisions of this Agreement,
including without limitation Section 2.5. Upon delivery by the Borrower to the
Administrative Agent of an Officers' Certificate to the effect that such sale or
other disposition was made by the Borrower in accordance with the applicable
provisions of this Agreement, including without limitation Section 2.5, the
Administrative Agent shall execute any documents reasonably required in order to
evidence the release of any Guarantor from its Obligations under its Guarantee.
Any Guarantor not released from its Obligations under its
Guarantee shall remain liable for the full amount of principal of and interest
on the Loans and for the other obligations of any Guarantor under this Agreement
as provided in this Article XI.
SECTION 11.6 LIMITATION ON ISSUANCES OF GUARANTEES OF
INDEBTEDNESS. The Borrower shall not permit any Subsidiary, directly or
indirectly, to Guarantee or pledge any assets to secure the payment of any
Indebtedness of the Borrower under the Credit Facility unless such Subsidiary
simultaneously agrees to Guarantee the payment of the Notes, which Guarantee
shall be pari passu with such Subsidiary's Guarantee of or pledge to secure such
other Indebtedness prior to the Merger Date and on a senior subordinated basis
after the Merger Date. The Borrower shall cause each such Subsidiary to execute
and deliver to the Administrative Agent such documents as the Administrative
Agent shall reasonable request to evidence such Subsidiary's Guarantee.
Notwithstanding the foregoing, any such Guarantee by a Subsidiary of the Notes
shall provide by its terms that it shall be automatically and unconditionally
released and discharged upon any sale, exchange or transfer, to any Person not
an Affiliate of the Borrower, of all of the Borrower's stock in, or all or
substantially all the assets of, such Subsidiary, which sale, exchange or
transfer is made in compliance with the applicable provisions of this Agreement.
ARTICLE XII
INDEMNITY
SECTION 12.1 INDEMNIFICATION. The Borrower and each
Guarantor (each, an "INDEMNIFYING PARTY" and, collectively, the "INDEMNIFYING
PARTIES") jointly and severally agree to indemnify and hold harmless each
Lender, the Arranger and the Administrative Agent and their respective
controlling persons and Affected Parties and each director, officer, employee,
affiliate, advisor, counsel and agent thereof (each, an "INDEMNIFIED PARTY")
from and against any and all losses, claims, damages and liabilities, joint or
several (but not consequential damages), to which any Indemnified Party may
become subject relating to or arising out of or in connection with the
transactions contemplated by this Agreement (including the use of the proceeds
of the Loans) or any related transaction (including the Acquisition), and to
reimburse each Indemnified Party, promptly upon demand, for expenses (including
reasonable counsel fees and expenses) as they are incurred in connection with
the investigation of, preparation for or defense of any pending or threatened
loss, claim, damage or liability, or any litigation, proceeding or other action
in respect thereof, including any amount paid in settlement of any litigation,
proceeding or other action (commenced or threatened) to which the Indemnifying
Parties shall have consented in writing (such consent not to be unreasonably
withheld) whether or not any Indemnified Party is a party and whether or not
liability resulted; provided, however, that the indemnity contained in this
Section 12.1 will not apply to any Indemnified Party
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with respect to losses, claims, damages, liabilities or related expenses arising
from the willful misconduct or gross negligence of such Indemnified Party.
SECTION 12.2 INDEMNITY NOT AVAILABLE. If indemnification
were for reason of public policy not to be available, the Indemnifying Parties,
on the one hand, and the Lenders, on the other hand, agree to contribute (in
proportion to their respective Commitments in the case of the Lenders) to the
losses, claims, damages, liabilities or expenses (or any investigation, claim,
litigation, proceeding or other action (collectively, an "ACTION") in respect
thereof) for which such indemnification is held unavailable in such proportion
as is appropriate to reflect the relative benefits to the Indemnifying Parties,
on the one hand, and the Lenders, on the other hand, in connection with the
matter giving rise to such losses, claims, damages, liabilities or expenses (or
actions in respect thereof). The Borrower and each Guarantor agree that for the
purposes of this Section 12.2 the relative benefits to the Borrower and its
Subsidiaries on the one hand, and the Indemnified Parties on the other hand, of
the transactions contemplated by this Agreement, including, without limitation,
the Loans and the other transactions contemplated by any of the Loan Documents
in any way relating to any Loan, including the use of the proceeds of the Loans
shall be deemed to be in the same proportion that the proceeds of all Loans made
or to be made to the Borrower bears to the interest and fees paid or to be paid
to the Lenders in connection with the Loans; provided, however, that, to the
extent permitted by applicable law, in no event shall the Indemnified Parties be
required to contribute an aggregate amount in excess of the aggregate interest
and fees actually paid to the Lenders in connection with the Loans. The
foregoing contribution agreement shall be in addition to any rights that any
Indemnified Party may have at common law or otherwise. No investigation or
failure to investigate by any Indemnified Party shall impair the foregoing
indemnification and contribution agreement or any right an Indemnified Party may
have.
SECTION 12.3 SETTLEMENT OF CLAIMS. The Borrower and each
Guarantor agree that, neither it nor any of its Subsidiaries will settle,
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding in respect of which indemnification or contribution
could be sought under Section 12.1 or 12.2 (whether or not any Indemnified Party
is an actual or potential party to such claim, action or proceeding) without the
prior written consent of the Indemnified Parties, unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Party from all liability arising out of such claim, action or proceeding, which
consent shall not be unreasonably withheld.
SECTION 12.4 APPEARANCE EXPENSES. If an Indemnified Party
is requested or required to appear as a witness in any action brought by or on
behalf of or against the Borrower, any Guarantor or any Affiliate thereof in
which such Indemnified Party is not named as a defendant, the Borrower agrees to
reimburse such Indemnified Party for all reasonable expenses incurred by it in
connection with such Indemnified Party's appearing and preparing to appear as
such a witness, including, without limitation, the reasonable fees and
disbursements of its legal counsel.
SECTION 12.5 INDEMNITY FOR TAXES, RESERVES AND EXPENSES.
If, after the date hereof, the adoption of any law or guideline or any amendment
or change in the administration, interpretation or application of any existing
or future law or guideline by any Governmental Entity charged with the
administration, interpretation or application thereof, or the compliance with
any request or directive of any Governmental Entity (whether or not having the
force of law):
(a) subjects any Affected Party to any tax of any kind
with respect to this Agreement or the Notes or changes the basis of taxation of
payments of amounts due hereunder or thereunder or with respect to this
Agreement or any of the other Loan Documents, (including, without limitation,
any sales, gross receipts, general corporate, personal property, privilege or
license taxes, and including claims, losses and liabilities arising from any
failure to pay or delay in paying any such tax (unless such failure or delay
results
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solely from such Affected Party's negligence or willful misconduct), but
excluding (i) federal, state or local taxes based on net income incurred by such
Affected Party arising out of or under this Agreement or any of the other Loan
Documents) and (ii) Taxes, Other Taxes and any taxes, levies, imposts,
deductions, charges or withholding specifically excluded under Section 2.10(a);
(b) imposes, modifies or deems applicable any reserve
(including, without limitation, any reserve imposed by the Board), special
deposit or similar requirement against assets of the Borrower and the
Guarantors held by, credit to the Borrower and the Guarantors extended by,
deposits of the Borrower and the Guarantors with or for the account of, or
other acquisition of funds of the Borrower and the Guarantors by, any Affected
Party;
(c) shall change the amount of capital maintained or
requested or directed to be maintained by an Affected Party; or
(d) imposes upon an Affected Party any other condition or
expense (including, without limitation, (i) loss of margin and (ii) attorneys'
fees and expenses incurred by officers or employees of an Affected Party (or
any successor thereto) and expenses of litigation or preparation therefor in
contesting any of the foregoing) with respect to this Agreement or any of the
other Loan Documents or the purchase, maintenance or funding of the Loans by an
Affected Party,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, reduce the rate of return on capital of, or impose any
expense (including loss of margin) upon, an Affected Party with respect to this
Agreement, any of the other Loan Documents, the obligations hereunder or
thereunder or the funding of the Loans hereunder, the Affected Party may notify
the Indemnifying Party of the amount of such increase, reduction, or imposition,
and the Indemnifying Parties hereby jointly and severally agree to pay to the
Affected Party the amount the Affected Party deems necessary to compensate the
Affected Party for such increase, reduction or imposition which determination
shall be conclusive. Such amounts shall be due and payable by the Indemnifying
Parties 15 days after such notice is given.
SECTION 12.6 SURVIVAL OF INDEMNIFICATION. The provisions
contained in this Article XII shall remain in full force and effect whether or
not any of the transactions contemplated hereby are consummated and
notwithstanding the termination of this Agreement or the payment in full of all
Obligations hereunder.
SECTION 12.7 LIABILITY NOT EXCLUSIVE; PAYMENTS. The
agreements of each Indemnifying Party in this Article XII shall be in addition
to any liability that each may otherwise have. All amounts due under this
Article XII shall be payable as incurred upon written demand therefor.
ARTICLE XIII
THE ADMINISTRATIVE AGENT
SECTION 13.1 APPOINTMENT. Each Lender hereby irrevocably
designates and appoints the Administrative Agent as the agent of such Lender
under this Agreement and the other Loan Documents, and each such Lender
irrevocably authorizes the Administrative Agent, in such capacity, to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, the Administrative
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Agent shall have no duties or responsibilities, except those expressly set forth
herein, or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
SECTION 13.2 DELEGATION OF DUTIES. The Administrative Agent
may execute any of its duties under this Agreement and the other Loan Documents
by or through agents or attorneys-in-fact and shall be entitled to the advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
SECTION 13.3 EXCULPATORY PROVISIONS. Neither the
Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates shall be (i) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with
this Agreement or any other Loan Document (except for its own gross negligence
or willful misconduct) or (ii) responsible in any manner to any of the Lenders
for any recitals, statements, representations or warranties made by the Borrower
or any of its Subsidiaries or any officer thereof contained in this Agreement or
any other Loan Document or in any certificate, report, statement, opinion or
other document referred to or provided for in, or received by the Administrative
Agent under or in connection with, this Agreement or any other Loan Document or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document or for any failure of
the Borrower or any of its Subsidiaries to perform its obligations hereunder or
thereunder. The Administrative Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower or any
of its Subsidiaries.
SECTION 13.4 RELIANCE BY THE ADMINISTRATIVE AGENT. The
Administrative Agent shall be entitled to rely, and shall be fully protected in
relying, upon any Notes, writing, resolution, notice, consent, certificate,
affidavit, letter, facsimile, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Borrower or any of its Subsidiaries), independent accountants and other experts
selected by the Administrative Agent. The Administrative Agent may deem and
treat the payee of the Notes as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Majority Lenders as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
The Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Majority Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
SECTION 13.5 NOTICE OF DEFAULT. The Administrative Agent
shall not be deemed to have knowledge or notice of the occurrence of any Default
or Event of Default hereunder unless the Administrative Agent has received
notice from a Lender, the Borrower or any of its Subsidiaries referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give notice thereof to
the Lenders. The Administrative Agent shall take such action with respect to
such
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Default or Event of Default as shall be reasonably directed by the Majority
Lenders; provided that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
SECTION 13.6 NON-RELIANCE ON THE ADMINISTRATIVE AGENT AND
OTHER LENDERS. Each Lender expressly acknowledges that neither the
Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or warranties to it
and that no act by the Administrative Agent hereafter taken, including any
review of the affairs of the Borrower or any of its Subsidiaries, shall be
deemed to constitute any representation or warranty by the Administrative Agent
to any Lender. Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent or any other
Lenders, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition, prospects and credit
worthiness of the Borrower and its Subsidiaries and made its own decision to
make its Loans hereunder and enter into this Agreement. Each Lender confirms
that it is a qualified institutional buyer within the meaning of Rule 144A under
the Securities Act. Each Lender also represents that it will, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition, prospects and credit
worthiness of the Borrower and its Subsidiaries. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall have no any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial or other condition,
prospects or credit worthiness of the Borrower or any of its Subsidiaries which
may come into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
SECTION 13.7 INDEMNIFICATION. The Lenders agree to
indemnify the Administrative Agent in its capacity as such (to the extent not
reimbursed by the Borrower or any of its Subsidiaries and without limiting the
obligation of the Borrower and any of its Subsidiaries to do so), ratably
according to their respective Commitments in effect on the date on which
indemnification is sought, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time (include,
without limitation, at any time following the payment of the Loans) be imposed
on, incurred by or asserted against the Administrative Agent in any way relating
to or arising out of, the Commitments, this Agreement, any other Loan Document
or any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Administrative Agent under or in connection with any of the foregoing,
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Administrative
Agent's gross negligence or willful misconduct. The agreements in this
subsection shall survive the payment of the Loans and all other Obligations
payable hereunder.
SECTION 13.8 ADMINISTRATIVE AGENT, IN ITS INDIVIDUAL
CAPACITIES. The Administrative Agent and its Affiliates may make loans to,
accept deposits from and generally engage in any kind of business with the
Borrower as though the Administrative Agent were not acting in such capacities
hereunder and under the other Loan Documents. With respect to the Loans made or
renewed by it and the Notes issued to it the Administrative Agent shall have the
same rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not the Administrative Agent,
and
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the terms "Lender" and "Lenders" shall include the Administrative Agent in its
individual capacity.
SECTION 13.9 SUCCESSOR ADMINISTRATIVE AGENT. The
Administrative Agent may resign as Administrative Agent upon 30 days' notice to
the Lenders. If the Administrative Agent shall resign as Administrative Agent
under this Agreement and the other Loan Documents then the Majority Lenders
shall appoint from among the Lenders a successor agent for the Lenders, which
successor agent (provided that it shall have been approved by the Borrower),
shall succeed to the rights, powers and duties of the Administrative Agent,
hereunder. Effective upon such appointment and approval, the term
"Administrative Agent" shall mean and include such successor agent, and the
former Administrative Agent's rights, powers and duties as Administrative Agent
shall be terminated, without any other or further act or deed on the part of
such former Administrative Agent any of the parties to this Agreement or any
holders of the Loans. After any retiring Administrative Agent's resignation as
Administrative Agent the provisions of this Article XIII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.
SECTION 13.10 LIMITATION OF DUTIES. Except as expressly set
forth herein, the Arrangers, in their capacity as such, shall have no duties or
responsibilities, and shall incur no liabilities, under this Agreement or the
other Loan Documents.
SECTION 13.11 ADMINISTRATIVE AGENT FEE. The Borrower shall
pay the Administrative Agent such fees at such times as set forth in a letter
agreement between the Borrower and the Administrative Agent. Such fees shall be
subordinated in right of payment to the prior payment of amounts outstanding
under the Credit Facility.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 EXPENSES; DOCUMENTARY TAXES. The Borrower and
the Guarantors hereby jointly and severally agree to pay (a) all reasonable
out-of-pocket expenses (including, without limitation, expenses incurred in
connection with due diligence of the Lenders) associated with the preparation,
execution and delivery, administration, waiver, enforcement or modification and
enforcement of the documentation contemplated hereby and (b) the reasonable fees
and disbursements of legal counsel to the Lenders in connection with the
transactions contemplated herein, including in each case those incurred prior to
the date hereof. The Borrower and the Guarantors hereby jointly and severally
agree to indemnify the Lenders against any transfer taxes, documentary taxes,
assessments or charges made by any Governmental Entity by reason of the
execution and delivery, or the terms, of this Agreement or any of the other Loan
Documents.
SECTION 14.2 NOTICES. All notices and other communications
pertaining to this Agreement or any Notes shall be in writing and shall be
delivered (a) in Person (with receipt acknowledged), (b) by facsimile (confirmed
immediately in writing by a copy mailed by registered or certified mail, return
receipt requested, postage prepaid, addressed as hereafter set forth), (c) by
registered or certified mail, return receipt requested, postage prepaid, or (d)
by overnight courier, addressed as follows:
(i) If to the Administrative Agent, to it at:
Lehman Commercial Paper Inc.
3 World Financial Center
New York, New York 10285
81
<PAGE> 84
Attention: Michael O'Brien
Facsimile No.: (212) 526-7691
with a copy to:
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022
Attention: Raymond Y. Lin
Facsimile No.: (212) 751-4864
(ii) If to any Lender, to it at its address
set forth on the signature pages hereto:
(iii) If to the Borrower or any Guarantor, to
it at:
Key Energy Group, Inc.
Two Tower Center, Twentieth Floor
East Brunswick, New Jersey 08816
Attention: Mr. Stephen E. McGregor
Facsimile No.: (732) 247-5148
with a copy to:
Michael P. Rogan, Esq.
Skadden, Arps, Slate, Meagher & Flom
LLP
1440 New York Ave., N.W.
Washington, D.C. 20005
Facsimile No.: (202) 393-5760
and
Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002
Attention: William W. Wiggins, Esq.
Facsimile: (713) 226-0227
or to such other Person or address as shall be furnished in writing delivered to
the other parties in compliance with this Section.
SECTION 14.3 CONSENT TO AMENDMENTS AND WAIVERS.
(a) Subject to Section 10.14 and except as provided in
Section 14.3(b), this Agreement and the Notes may be amended or supplemented
with the consent of the Borrower, each Guarantor and the Majority Lenders and
any existing default or compliance with any provision of this Agreement or the
Notes may be waived with the consent of the Majority Lenders. Notes held by the
Borrower or any of its Affiliates will not be deemed to be outstanding for
purposes of this Section 14.3.
(b) Notwithstanding the provisions of Section 14.3(a),
without the consent of each Lender
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<PAGE> 85
directly affected thereby, an amendment or waiver may not: (i) reduce the
principal amount of any Loan, (ii) change the fixed maturity of any Loan, (iii)
reduce the rate of or change the time for payment of interest on any Loan, (iv)
waive a Default or Event of Default in the payment of principal of, or premium,
fees or interest, if any, on the Loans or any other amounts payable under any of
the Loan Documents, (v) make any Loan payable in money other than that stated in
the applicable Loan, (vi) make any change in the provisions of this Agreement
relating to the rights of Lenders to receive (A) prepayments on, or (B) payments
of principal of, premium, if any, or fees or interest on, the Loans, (vii) make
any change to the provisions of Article VIII that would adversely affect the
rights of any Lender, or (viii) make any change in the foregoing amendment and
waiver provisions. Notwithstanding the provisions of Section 14.3(a), the
provisions of Article XIII shall not be amended or supplemented without the
consent of the Administrative Agent.
(c) The Borrower shall not and shall not permit any of its
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Lender for
or as an inducement to any consent, waiver or amendment permitted by Section
14.3(a) unless such consideration is offered to be paid and is paid to all
Lenders that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or amendment.
SECTION 14.4 PARTIES. This Agreement shall inure to the
benefit of and be binding upon the Borrower, each Guarantor, the Affected
Parties and each of their respective successors and assigns. Except as expressly
in this Agreement, nothing expressed or mentioned in this Agreement is intended
or shall be construed to give any other Person any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. Except as expressly provided in this Agreement, this Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Affected Parties and their respective successors and
assigns, and for the benefit of no other Person.
SECTION 14.5 NEW YORK LAW; SUBMISSION TO JURISDICTION;
WAIVER OF JURY TRIAL. THIS AGREEMENT AND THE NOTES SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH PARTY
HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT
SITTING IN NEW YORK CITY (EACH, A "NEW YORK COURT") FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THE NOTES, THIS AGREEMENT, ANY OF THE
OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THE NOTES, THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 14.6 REPLACEMENT NOTES. If any Notes becomes
mutilated and is surrendered by the applicable Lender to the Borrower, or if any
Lender claims that any of its Notes has been lost, destroyed or wrongfully
taken, the Borrower shall execute and deliver to such Lender a replacement
Notes, upon the delivery by such Lender of an indemnity to the Borrower to save
it and any agent of it harmless in respect of such loss, destruction or wrongful
taking with respect to such Notes.
83
<PAGE> 86
SECTION 14.7 MARSHALLING; RECAPTURE. Neither the
Administrative Agent nor any Lender shall be under any obligation to marshall
any assets in favor of the Borrower or any other party or against or in payment
of any or all of the Obligations. To the extent any Lender receives any payment
by or on behalf of the Borrower, which payment or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to the Borrower or its estate, trustee, receiver,
custodian or any other party under any Bankruptcy Law, state or federal law,
common law or equitable cause, then, to the extent of such payment or repayment,
the obligation or part thereof which has been paid, reduced or satisfied by the
amount so repaid shall be reinstated by the amount so repaid and shall be
included within the liabilities of Borrower to such Lender as of the date such
initial payment, reduction or satisfaction occurred.
SECTION 14.8 LIMITATION OF LIABILITY. No claim may be made
by the Borrower, any Guarantor or any other Person against the Administrative
Agent, the Arranger or any Lender or the Affiliates, directors, officers,
employees, attorneys or agents of any of them for any special, indirect,
consequential or punitive damages in respect of any claim for breach of contract
or any theory of liability arising out of or related to the transactions
contemplated by this Agreement or the other Loan Documents, or any act, omission
or event occurring in connection therewith; and the Borrower and each Guarantor
hereby waive, release and agree not to sue and shall cause each of its
respective Subsidiaries to waive, release or agree not to sue (if required),
upon any claim for any such damages, whether or not accrued and whether or not
known or suspected to exist in its favor.
SECTION 14.9 INDEPENDENCE OF COVENANTS. All covenants
hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations of, another
covenant shall not avoid the occurrence of a Default or Event of Default if such
action is taken or condition exists.
SECTION 14.10 CURRENCY INDEMNITY. The Borrower acknowledges
and agrees that this is a credit transaction where specification of dollars is
of the essence and dollars shall be the currency of account and payment in all
events. If, pursuant to a judgment or for any other reason, payment shall be
made in another currency and such payment, after prompt conversion to dollars
and transfer to New York City in accordance with normal banking procedures,
falls short of the sum due the Lenders in dollars, the Borrower shall pay the
Lender such shortfall and the Lenders shall have a separate cause of action for
such amount.
SECTION 14.11 WAIVER OF IMMUNITY. To the extent that the
Borrower or any Guarantor has or hereafter may acquire any immunity from:
(a) the jurisdiction of any court of (i) any jurisdiction
in which the Borrower or any Guarantor owns or leases property or assets or
(ii) the United States, the State of New York or any political subdivision
thereof; or
(b) from any legal process (whether through service of
notice, attachment prior to judgment, attachment in aid of execution, execution
or otherwise) with respect to itself or its property and assets, this
Agreement, any Loan Document or actions to enforce judgments in respect of any
thereof,
it hereby irrevocably waives such immunity in respect of its obligations under
the above-referenced document.
SECTION 14.12 FREEDOM OF CHOICE. The submission to the
jurisdiction of the courts referred to in this Article XIV shall not (and shall
not be construed so as to) limit the right of any Lender to
84
<PAGE> 87
take proceedings against the Borrower or any Guarantor in the courts of any
country in which the Borrower or such Guarantor has assets or in any other court
of competent jurisdiction nor shall the taking of proceedings in any one or more
jurisdictions preclude the taking of proceedings in any other jurisdiction
(whether concurrently or not) if and to the extent permitted by applicable law.
SECTION 14.13 SUCCESSORS AND ASSIGNS. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants
and agreements of the Borrower and each Guarantor in this Agreement shall bind
their respective successors and assigns. Neither the Borrower nor any Guarantor
may assign or transfer any of its rights or obligations hereunder (by operation
of law or otherwise) without the prior written consent of the Majority Lenders.
SECTION 14.14 MERGER. This Agreement, the Exchange
Indenture, the Escrow Agreement and the other documents executed in connection
therewith constitutes the entire contract among the parties relating to the
subject matter hereof and supersedes any and all previous agreements among the
parties relating to the subject matter hereof, except for those provisions in
the Fee Letter and the Engagement Letter that are in addition to the provisions
contained herein.
SECTION 14.15 SEVERABILITY CLAUSE. In case any provision in
this Agreement or any Notes shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby and such
provision shall be ineffective in such jurisdiction only to the extent of such
invalidity, illegality or unenforceability.
SECTION 14.16 REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO
SURVIVE DELIVERY. All representations, warranties and agreements contained in or
incorporated into this Agreement, or contained in Officers' Certificates
submitted pursuant hereto, shall remain operative and in full force and effect
until all Obligations under all of the Loan Documents have been repaid in full,
regardless of any investigation made by or on behalf of the Lenders or any
controlling Person of the Lenders, or by or on behalf of the Borrower or any
controlling Person of the Borrower, and shall survive delivery of the Notes.
SECTION 14.17 CONFIDENTIALITY. Each of the Arranger, the
Administrative Agent and the Lenders agrees to keep confidential all non-public
information provided to it by the Borrower or any Guarantor pursuant to this
Agreement or any other Loan Documents; provided that nothing herein shall
prevent the Arranger, the Administrative Agent or any Lender from disclosing any
such information (a) to the Arranger, the Administrative Agent, any other Lender
or any affiliate of any Lender, (b) to any assignee of any Lender or any
Participant (each, a "TRANSFEREE") or prospective Transferee which agrees to
comply with the provisions of this Section 14.17, (c) any of its employees,
directors, agents, attorneys, accountants and other professional advisors, (d)
upon the request or demand of any Governmental Entity having jurisdiction over
it, (e) in response to any order of any court or other Governmental Entity or as
may otherwise be required pursuant to any statute, rule, law or regulation, (f)
if requested or required to do so in connection with any litigation or similar
proceeding, (g) which has been publicly disclosed other than in breach of this
Section 14.17, (h) to any nationally recognized rating agency that requires
access to information about a Lender's investment portfolio in connection with
ratings issued with respect to such Lender or (i) in connection with the
exercise of any remedy hereunder or under any other Loan Document.
SECTION 14.18 INTERCREDITOR AGREEMENT. Each Lender by its
signature hereto or by its execution of an Assignment and Acceptance hereby
authorizes and directs and ratifies the execution and delivery by the
Administrative Agent of the Intercreditor Agreement and each Lender agrees to be
bound by the provisions thereof and shall have the rights and obligations of a
Lender under the Intercreditor Agreement
85
<PAGE> 88
as provided therein to the same extent as if such Lender was a party thereto.
[signature pages follow]
86
<PAGE> 89
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the date first above written.
KEY ENERGY GROUP, INC.
By:________________________________
Name:
Title:
[Insert name and signature block for
each Guarantor]
By:________________________________
Name:
Title:
LEHMAN COMMERCIAL PAPER INC.,
as Administrative Agent
By:_______________________________
Name:
Title:
LEHMAN BROTHERS INC.,
as Arranger
By:_______________________________
Name:
Title:
87
<PAGE> 90
LENDERS:
Commitment Amount:
$________________________
LEHMAN COMMERCIAL PAPER INC.
By: _______________________________,
Name:
Title:
Wire Transfer Instructions
Name of Bank: Bankers Trust Company
Address: 4 Albany Street
New York, New York 10006
ABA#: 021001033
For the account of
NYLTD Loan Services Onmibus Account
Account No.: 01-422-898
FOR FURTHER CREDIT TO LEHMAN COMMERCIAL
PAPER INC.
Reference: LCPI Key Energy
Attention: Greg Maragni
Telephone: 212-250-4398
Fax: 212-250-6151
88
<PAGE> 91
EXHIBIT A
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Bridge Loan Agreement, dated as of
September 14, 1998 (as amended, supplemented or otherwise modified from time to
time, the "BRIDGE LOAN AGREEMENT"), by and among Key Energy Group, Inc., a
Maryland corporation (the "BORROWER"), the Guarantors party thereto, the Lenders
party thereto, Lehman Brothers Inc., as Arranger, and Lehman Commercial Paper
Inc., as Administrative Agent for the Lenders (in such capacity, the
"ADMINISTRATIVE AGENT"). Unless otherwise defined herein, terms defined in the
Bridge Loan Agreement and used herein shall have the meanings given to them in
the Bridge Loan Agreement.
The Assignor identified on Schedule I hereto (the
"ASSIGNOR") and the Assignee identified on Schedule I hereto (the "ASSIGNEE")
agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the Assignor, as of
the Effective Date (as defined below), the percentage interest described in
Schedule 1 hereto (the "ASSIGNED INTEREST") in and to the Assignor's rights and
obligations under the Bridge Loan Agreement (the "ASSIGNED FACILITIES"), in a
principal amount for the Assigned Facilities as set forth on Schedule I hereto.
2. The Assignor (a) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Bridge Loan Agreement or with
respect to the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Bridge Loan Agreement, any other Loan Document or
any other instrument or document furnished pursuant thereto, other than that the
Assignor has not created any adverse claim upon the interest being assigned by
it hereunder and that such interest is free and clear of any such adverse claim;
(b) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower, any of its Subsidiaries or
any other obligor or the performance or observance by the Borrower, any of its
Subsidiaries or any other obligor of any of their respective obligations under
the Bridge Loan Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; and (c) attaches any Notes held
by it evidencing the Assigned Facilities and (i) requests that the
Administrative Agent, upon request by the Assignee, exchange the attached Notes
for a new Note or Notes payable to the Assignee and (ii) if the Assignor has
retained any interest in the Assigned Facility, requests that the Administrative
Agent exchange the attached Notes for a new Note or Notes payable to the
Assignor, in each case in amounts which reflect the assignment being made hereby
(and after giving effect to any other assignments which are effective on the
Effective Date).
3. The Assignee (a) represents and warrants that it is
legally authorized to enter into this Assignment and Acceptance; (b) confirms
that it has received a copy of the Bridge Loan Agreement, and all schedules and
exhibits thereto together with copies of the financial information delivered
pursuant to Section 4.1 thereof and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Acceptance; (c) agrees that it will, independently and
without reliance upon the Assignor, the Administrative Agent or any other Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Bridge Loan Agreement, the other Loan Documents
1
<PAGE> 92
or any other instrument or document furnished pursuant hereto or thereto; (d)
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers and discretion under the Bridge Loan
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto as are delegated to the Administrative
Agent by the terms thereof, together with such powers as are incidental
thereto; (e) agrees that it will be bound by the provisions of the Bridge Loan
Agreement and will perform in accordance with its terms all the obligations
which by the terms of the Bridge Loan Agreement are required to be performed by
it as a Lender; and (f) agrees that it shall have no recourse against the
Assignor with respect to any matters relating to the Bridge Loan Agreement, the
other Loan Documents or any others instrument or documents furnished pursuant
hereto or thereto.
4. The Assignor hereby assigns to Assignee all of its
rights and obligations under the Fee Letter with respect to the Assigned
Interest.
5. The effective date of this Assignment and Acceptance
shall be the Effective Date of Assignment described in Schedule I hereto (the
"EFFECTIVE DATE"). Following the execution of this Assignment and Acceptance, it
will be delivered to the Administrative Agent for acceptance by it and recording
by the Administrative Agent pursuant to Section 6.2 of the Bridge Loan
Agreement, effective as of the Effective Date (which shall not, unless otherwise
agreed to by the Administrative Agent, be earlier than five Business Days after
the date of such acceptance and recording by the Administrative Agent).
6. Upon such acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments in respect of
the Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts which have accrued to the Effective Date
and to the Assignee for amounts which have accrued subsequent to the Effective
Date. The Assignor and the Assignee shall make all appropriate adjustments in
payments by the Administrative Agent for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.
7. From and after the Effective Date, (a) the Assignee
shall be a party to the Bridge Loan Agreement and, to the extent provided in
this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the other Loan Documents and shall be bound by the
provisions thereof and (b) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Bridge Loan Agreement.
8. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
2
<PAGE> 93
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed as of the date first above written by
their respective duly authorized officers on Schedule I hereto.
3
<PAGE> 94
Schedule 1
to Assignment and Acceptance
Name of Assignor: ____________________________
Name of Assignee: ____________________________
Effective Date of Assignment: ___________________
<TABLE>
<CAPTION>
Credit Facility Assigned Principal Commitment Percentage Assigned(1)
Commitment Amount
Assigned
<S> <C> <C>
$---------------- ----- . ---------%
</TABLE>
- --------------------
(1) Calculate the Commitment Percentage that is assigned at least 9 decimal
places and show as a percentage of the aggregate commitment of all Lenders.
1
<PAGE> 95
[Name of Assignee] [Name of Assignor]
By: _____________________________ By: ___________________________________
Name Name:
Title: Title:
Accepted:
LEHMAN COMMERCIAL PAPER INC.,
as Administrative Agent
By: _____________________________
Name:
Title:
2
<PAGE> 96
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the date first above written.
KEY ENERGY GROUP, INC
By: /s/ STEPHEN E. MCGREGOR
-----------------------
Name:
Title:
GUARANTORS
YALE E. KEY, INC.
WELLTECH EASTERN, INC.
KEY ENERGY DRILLING INC.
KALKASKA OILFIELD SERVICES, INC.
ODESSA EXPLORATION INCORPORATED
WELL-CO OIL SERVICE, INC.
PATRICK WELL SERVICE, INC.
MOSLEY WELL SERVICE, INC.
RAM OIL WELL SERVICE, INC.
ROWLAND TRUCKING CO., INC.
LANDMARK FISHING & RENTAL, INC.
DUNBAR WELL SERVICE, INC.
FRONTIER WELL SERVICE, INC.
KEY ROCKY MOUNTAIN, INC.
KEY FOUR CORNERS, INC.
KEY ENERGY SERVICES-SOUTH TEXAS, INC.
WELLTECH MID-CONTINENT, INC.
BROOKS WELL SERVICING, INC.
MIDLAND ACQUSITION CORP.
UPDIKE BROTHERS, INC.
J.W GIBSON WELL SERVICE COMPANY
WATSON OILFIELD SERVICE & SUPPLY, INC.
JETER SERVICE CO.
JETER WELL SERVICE, INC.
JETER TRANSPORTATION, INC.
INDUSTRIAL OILFIELD SUPPLY, INC.
By: /s/ STEPHEN E. MCGREGOR
-----------------------
Name:
Title:
of all the foregoing companies
<PAGE> 97
LEHMAN COMMERCIAL PAPER INC.,
as Administrative Agent
By: /s/ DENNIS DEE
----------------------------
Name:
Title:
LEHMAN BROTHERS INC.,
as Arranger
By: /s/ MICHAEL KONIGSBERG
-----------------------------
Name:
Title:
<PAGE> 98
LENDERS:
Commitment Amount:
$
------------------------ LEHMAN COMMERCIAL PAPER INC.
By: /s/ DENNIS DEE ,
------------------------
Name:
Title:
Wire Transfer Instructions
Name of Bank:
Address:
--------------
ABA#:
----------------
For the account of
-----------------
Account No.:
------------------
FOR FURTHER CREDIT TO LEHMAN COMMERCIAL PAPER INC.
Reference:
Attention:
------
Telephone:
------
<PAGE> 1
EXHIBIT 99.2
================================================================================
KEY ENERGY GROUP, INC.
EXCHANGE NOTES DUE 2008
-------------------
INDENTURE
Dated as of September 14, 1998
---------------------
The Bank of New York
Trustee
---------------------
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions ........................................................................................ 1
Section 1.02. Other Definitions .................................................................................. 15
Section 1.03. Incorporation by Reference of Trust Indenture Act .................................................. 15
Section 1.04. Rules of Construction .............................................................................. 16
ARTICLE 2 THE NOTES
Section 2.01. Form and Dating .................................................................................... 16
Section 2.02. Execution and Authentication ....................................................................... 17
Section 2.03. Registrar and Paying Agent ......................................................................... 18
Section 2.04. Paying Agent to Hold Money in Trust ................................................................ 18
Section 2.05. Holder Lists ....................................................................................... 19
Section 2.06. Transfer and Exchange .............................................................................. 19
Section 2.07. Replacement Notes .................................................................................. 31
Section 2.08. Outstanding Notes .................................................................................. 31
Section 2.09. Treasury Notes ..................................................................................... 31
Section 2.10. Temporary Notes .................................................................................... 32
Section 2.11. Cancellation ....................................................................................... 32
Section 2.12. Defaulted Interest ................................................................................. 32
Section 2.13. CUSIP Numbers ...................................................................................... 32
ARTICLE 3 REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee ................................................................................. 33
Section 3.02. Selection of Notes to Be Redeemed .................................................................. 33
Section 3.03. Notice of Redemption ............................................................................... 33
Section 3.04. Effect of Notice of Redemption ..................................................................... 34
Section 3.05. Deposit of Redemption Price ........................................................................ 34
Section 3.06. Notes Redeemed in Part ............................................................................. 34
Section 3.07. Optional Redemption ................................................................................ 35
Section 3.08. Mandatory Redemption ............................................................................... 35
Section 3.09. Offer to Purchase by Application of Excess Proceeds ................................................ 35
ARTICLE 4 COVENANTS
Section 4.01. Payment of Notes ................................................................................... 37
Section 4.02. Maintenance of Office or Agency .................................................................... 37
Section 4.03. Reports ............................................................................................ 37
Section 4.04. Compliance Certificate ............................................................................. 38
Section 4.05. Taxes .............................................................................................. 39
Section 4.06. Stay, Extension and Usury Laws ..................................................................... 39
Section 4.07. Restricted Payments ................................................................................ 39
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries ..................................... 41
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock ......................................... 41
Section 4.10. Asset Sales ........................................................................................ 43
Section 4.11. Transactions with Affiliates ....................................................................... 44
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 4.12. Liens .............................................................................................. 44
Section 4.13. Line of Business ................................................................................... 45
Section 4.14. Corporate Existence ................................................................................ 45
Section 4.15. Offer to Repurchase Upon Change of Control ......................................................... 45
Section 4.16. No Senior Subordinated Debt ........................................................................ 46
Section 4.17. No Amendment of Subordination Provisions ........................................................... 46
Section 4.18. Limitation on Sale and Leaseback Transactions ...................................................... 46
Section 4.19. Limitation on Issuances of Guarantees of Indebtedness .............................................. 47
Section 4.20. Payments for Consent ............................................................................... 47
ARTICLE 5 SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets ........................................................... 47
Section 5.02. Successor Corporation Substituted .................................................................. 48
ARTICLE 6 DEFAULTS AND REMEDIES
Section 6.01. Events of Default .................................................................................. 48
Section 6.02. Acceleration ....................................................................................... 50
Section 6.03. Other Remedies ..................................................................................... 50
Section 6.04. Waiver of Past Defaults ............................................................................ 51
Section 6.05. Control by Majority ................................................................................ 51
Section 6.06. Limitation on Suits ................................................................................ 51
Section 6.07. Rights of Holders of Notes to Receive Payment ...................................................... 51
Section 6.08. Collection Suit by Trustee ......................................................................... 52
Section 6.09. Trustee May File Proofs of Claim ................................................................... 52
Section 6.10. Priorities ......................................................................................... 52
Section 6.11. Undertaking for Costs .............................................................................. 53
ARTICLE 7 TRUSTEE
Section 7.01. Duties of Trustee .................................................................................. 53
Section 7.02. Rights of Trustee .................................................................................. 54
Section 7.03. Individual Rights of Trustee ....................................................................... 55
Section 7.04. Trustee's Disclaimer ............................................................................... 55
Section 7.05. Notice of Defaults ................................................................................. 55
Section 7.06. Reports by Trustee to Holders of the Notes ......................................................... 55
Section 7.07. Compensation and Indemnity ......................................................................... 55
Section 7.08. Replacement of Trustee ............................................................................. 56
Section 7.09. Successor Trustee by Merger, etc. .................................................................. 57
Section 7.10. Eligibility; Disqualification ...................................................................... 57
Section 7.11. Preferential Collection of Claims Against Company .................................................. 57
Section 7.12. Trustee's Application for Instructions from the Company ............................................ 58
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance ........................................... 58
Section 8.02. Legal Defeasance and Discharge ..................................................................... 58
Section 8.03. Covenant Defeasance ................................................................................ 58
Section 8.04. Conditions to Legal or Covenant Defeasance ......................................................... 59
Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous
Provisions ....................................................................................... 60
Section 8.06. Repayment to Company ............................................................................... 61
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Section 8.07. Reinstatement ...................................................................................... 61
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes ................................................................ 61
Section 9.02. With Consent of Holders of Notes ................................................................... 62
Section 9.03. Compliance with Trust Indenture Act ................................................................ 63
Section 9.04. Revocation and Effect of Consents .................................................................. 63
Section 9.05. Notation on or Exchange of Notes ................................................................... 64
Section 9.06. Trustee to Sign Amendments, etc. ................................................................... 64
ARTICLE 10 SUBORDINATION
Section 10.01. Agreement to Subordinate .......................................................................... 64
Section 10.02. Liquidation; Dissolution; Bankruptcy .............................................................. 64
Section 10.03. Default on Designated Senior Debt ................................................................. 65
Section 10.04. Acceleration of Notes ............................................................................. 66
Section 10.05. When Distribution Must Be Paid Over ............................................................... 66
Section 10.06. Notice by Company ................................................................................. 66
Section 10.07. Subrogation ....................................................................................... 66
Section 10.08. Relative Rights ................................................................................... 66
Section 10.09. Subordination May Not Be Impaired by Company ...................................................... 67
Section 10.10. Distribution or Notice to Representative .......................................................... 67
Section 10.11. Rights of Trustee and Paying Agent ................................................................ 67
Section 10.12. Authorization to Effect Subordination ............................................................. 68
Section 10.13. Amendments ........................................................................................ 68
ARTICLE 11 COLLATERAL AND SECURITY
Section 11.01. Collateral Agreements ............................................................................ 68
Section 11.02. Recording and Opinions ............................................................................ 69
Section 11.03. Release of Collateral ............................................................................. 69
Section 11.04. Certificates of the Company ....................................................................... 70
Section 11.05. Certificates of the Trustee ....................................................................... 70
Section 11.06. Authorization of Actions to Be Taken by the Trustee Under the Collateral Agreements ............... 70
Section 11.07. Authorization of Receipt of Funds by the Trustee Under the Collateral Agreements .................. 70
Section 11.08. Termination of Security Interest .................................................................. 70
ARTICLE 12 NOTE GUARANTEES
Section 12.01. Guarantee ......................................................................................... 71
Section 12.02. Subordination of Note Guarantee ................................................................... 72
Section 12.03. Limitation on Guarantor Liability ................................................................. 72
Section 12.04. Execution and Delivery of Note Guarantee .......................................................... 72
Section 12.05. Guarantors May Consolidate, etc., on Certain Terms ................................................ 73
Section 12.06. Releases Following Sale of Assets ................................................................. 73
ARTICLE 13 MISCELLANEOUS
Section 13.01. Trust Indenture Act Controls ...................................................................... 74
Section 13.02. Notices ........................................................................................... 74
Section 13.03. Communication by Holders of Notes with Other Holders of Notes ..................................... 75
Section 13.04. Certificate and Opinion as to Conditions Precedent ................................................ 75
Section 13.05. Statements Required in Certificate or Opinion ..................................................... 76
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Section 13.06. Rules by Trustee and Agents ....................................................................... 76
Section 13.07. No Personal Liability of Directors, Officers, Employees and Stockholders .......................... 76
Section 13.08. Governing Law ..................................................................................... 76
Section 13.09. No Adverse Interpretation of Other Agreements ..................................................... 76
Section 13.10. Successors ........................................................................................ 77
Section 13.11. Severability ...................................................................................... 77
Section 13.12. Counterpart Originals ............................................................................. 77
Section 13.13. Table of Contents, Headings, etc. ................................................................. 77
EXHIBITS
Exhibit A-1 FORM OF NOTE
Exhibit A-2 FORM OF REGULATION S TEMPORARY GLOBAL NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED
INVESTOR
Exhibit E FORM OF NOTE GUARANTEE
Exhibit F FORM OF SUPPLEMENTAL INDENTURE
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INDENTURE dated as of September 14, 1998 between Key Energy Group,
Inc., a Maryland corporation (the "Company"), each of the Guarantors listed on
the signature pages hereof and The Bank of New York, a New York banking
corporation, as trustee (the "TRUSTEE").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the Senior
Subordinated Notes due 2008 (the "NOTES"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"144A GLOBAL NOTE" means a global note substantially in the form of
Exhibit A-1 hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 144A.
"ACQUIRED DEBT" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person and (ii) Indebtedness encumbering any assets
acquired by such specified Person.
"ADDITIONAL NOTES" means the Notes issuable in lieu of paying cash
interest as specified in the Notes.
"AFFILIATE" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that beneficial ownership of 10% or more of the voting securities of a Person by
a non-institutional investor shall be deemed to be control.
"AGENT" means any Registrar, Paying Agent or co-registrar.
"APPLICABLE PROCEDURES" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
"ASSET SALE" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than sales of inventory in the ordinary course of
business consistent with past practices (provided that the sale, conveyance or
other disposition of all or substantially all of the assets of the Company and
its Subsidiaries taken as a whole will be governed by Section 4.15 and/or
Article 5 and not by the provisions of Section 4.10), and (ii) the issue or sale
by the Company or any of its Subsidiaries of Equity Interests of any of the
Company's Subsidiaries, in the case of
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either clause (i) or (ii), whether in a single transaction or a series of
related transactions (a) that have a fair market value in excess of $2.0 million
or (b) for net proceeds in excess of $2.0 million. Notwithstanding the
foregoing, the following items shall not be deemed to be Asset Sales: (i) a
transfer of assets by the Company to a Guarantor or by a Guarantor to the
Company or to another Guarantor, (ii) an issuance of Equity Interests by a
Guarantor to the Company or to another Guarantor, and (iii) a Restricted Payment
that is permitted by Section 4.07.
"ATTRIBUTABLE DEBT" means with respect of a sale and leaseback
transaction means, at the time of determination, the present value (discounted
at the rate of interest implicit in such transaction, determined in accordance
with GAAP) of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction
(including any period for which such lease has been extended or may, at the
option of the lessor, be extended).
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"BOARD OF DIRECTORS" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"BRIDGE LOAN AGREEMENT" means that certain Bridge Loan Agreement
dated as of September 14, 1998, among the Company, the guarantors party thereto,
the lenders named therein, Lehman Brothers Inc. and Lehman Commercial Paper
Inc., including any related notes, guarantees, collateral documents, instruments
and agreements executed in connection therewith, and in each case as amended,
restated, supplemented, modified, renewed, refunded, replaced or refinanced from
time to time.
"BROKER-DEALER" has the meaning set forth in the Registration Rights
Agreement.
"BRIDGE LOAN AGREEMENT" means the Bridge Loan Agreement, dated as of
September 14, 1998, among Lehman Brothers Inc., as Arranger, Lehman Commercial
Paper Inc., as Administrative Agent, the lenders named therein, the Company, as
Borrower, and the guarantors named therein, as the same shall be amended,
extended or modified from time to time.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL LEASE OBLIGATION" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"CASH EQUIVALENTS" means (i) U.S. dollars, (ii) securities issued or
directly and fully guaranteed or insured by the U.S. government or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than twelve
months from the date of acquisition, (iii) certificates of deposit and
eurodollar time deposits with maturities of
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twelve months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding twelve months and overnight bank deposits, in each case
with any lender party to the Credit Agreement or with any domestic commercial
bank having capital and surplus in excess of $500 million and a Thompson Bank
Watch Rating of "B" or better, (iv) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(ii) and (iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper having the
highest rating obtainable from Moody's Investors Service, Inc. or Standard &
Poor's Corporation and in each case maturing within six months after the date of
acquisition and (vi) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (i) - (v) of this
definition.
"CEDEL" means Cedel Bank, SA.
"CHANGE OF CONTROL" means the occurrence of any of the following: (i)
the sale, transfer, conveyance or other disposition (other than by way of merger
or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act), (ii) the adoption of a plan relating to the liquidation or dissolution of
the Company, (iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in
calculating the beneficial ownership of any particular "person," such "person"
shall be deemed to have beneficial ownership of all securities that such person
has the right to acquire, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition), directly or
indirectly, of more than 35% of the Voting Stock of the Company (measured by
voting power rather than number of shares), (iv) the first day on which a
majority of the members of the Board of Directors of the Company are not
Continuing Directors, (v) the Company consolidates with, or merges with or into,
any Person, or any Person consolidates with, or merges with or into, the
Company, in any such event pursuant to a transaction in which any of the
outstanding Voting Stock of the Company is converted into or exchanged for cash,
securities or other property, other than any such transaction where the Voting
Stock of the Company outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock (other than Disqualified Stock) of
the surviving or transferee Person constituting a majority of the outstanding
shares of such Voting Stock of such surviving or transferee Person (immediately
after giving effect to such issuance). For purposes of this definition, any
transfer of an equity interest of an entity that was formed for the purpose of
acquiring Voting Stock of the Company will be deemed to be a transfer of such
portion of such Voting Stock as corresponds to the portion of the equity of such
entity that has been so transferred.
"COLLATERAL AGENT" means Norwest Bank Texas, N.A.
"COLLATERAL AGREEMENTS" means the Amended and Restated Master
Guarantee and Collateral Agreement, dated as of June 6, 1997, as amended and
restated through September 14, 1998, as the same may be amended, supplemented or
otherwise modified from time to time.
"COMPANY" means the issuer, and any and all successors thereto.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale, to the extent such losses were deducted in computing such
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Consolidated Net Income, plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was deducted in computing such Consolidated Net Income,
plus (iii) consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations), to the extent that any
such expense was deducted in computing such Consolidated Net Income, plus (iv)
depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Subsidiaries for such period to
the extent that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income, plus (v) for the fiscal year
ending June 30, 1999 only, minority interest adjustments related to Dawson,
minus (vi) non-cash items increasing such Consolidated Net Income for such
period (other than items that were accrued in the ordinary course of business),
in each case, on a consolidated basis and determined in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income of any Person that is not a Subsidiary or that
is accounted for by the equity method of accounting shall be included only to
the extent of the amount of dividends or distributions paid in cash to the
referent Person or a Guarantor, (ii) the Net Income of any Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental approval (that has not
been obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary or its stockholders, (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded and (iv) the
cumulative effect of a change in accounting principles shall be excluded.
"CONTINUING DIRECTORS" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of
the Trustee specified in Section 13.02 hereof or such other address as to which
the Trustee may give notice to the Company.
"CREDIT AGREEMENT" means that certain Second Amended and Restated
Credit Agreement, dated as of June 6, 1997, as amended and restated through
September 14, 1998, by and among the Company, PNC Bank, National Association, as
administrative agent, the other lenders, agents and arrangers named therein and
the other parties thereto, providing for up to $550 million of borrowings,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
restated, supplemented, modified, renewed, refunded, replaced or refinanced from
time to time.
"CREDIT FACILITIES" means, with respect to the Company, one or more
debt facilities (including, without limitation, the Credit Agreement) or
commercial paper facilities, in each case with banks or other institutional
lenders providing for revolving credit loans, term loans, receivables financing
(including
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through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or letters
of credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time.
"CUSTODIAN" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
"DAWSON" means Dawson Production Services, Inc., a Texas corporation.
"DEFAULT" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"DEFINITIVE NOTE" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof,
substantially in the form of Exhibit A-1 hereto except that such Note shall not
bear the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.
"DEPOSITARY" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"DESIGNATED NONCASH CONSIDERATION" means the fair market value of
noncash consideration received by the Company or one of its Subsidiaries in
connection with an Asset Sale that is so designated as Designated Noncash
Consideration pursuant to an Officer's Certificate, setting forth the basis of
such valuation, executed by the Chief Financial Officer of the Company, less the
amount of cash or Cash Equivalents received in connection with a sale of such
Designated Noncash Consideration.
"DESIGNATED SENIOR DEBT" means (i) any Indebtedness outstanding under
the Credit Agreement and (ii) any other Senior Debt permitted hereunder the
principal amount of which is $25.0 million or more and that has been designated
by the Company as "Designated Senior Debt."
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to September
14, 2009.
"ESCROW" means the escrow pursuant to the Escrow Agreement dated as
of September 14, 1998, among the Company, Lehman Brothers Inc., Lehman
Commercial Paper Inc. and The Bank of New York.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EUROCLEAR" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE NOTES" means the Notes issued in the Exchange Offer
pursuant to Section 2.06(f) hereof.
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"EXCHANGE OFFER" has the meaning set forth in the Registration Rights
Agreement.
"EXCHANGE OFFER REGISTRATION STATEMENT" has the meaning set forth in
the Registration Rights Agreement.
"EXCLUDED SUBSIDIARY" or "EXCLUDED SUBSIDIARIES" means (a) Production
Systems, Inc., WellTech, Inc. (California), WellTech, Inc., WellTech Oilfield
Services (Canada), Ltd., WellTech Oilfield Services Limited, WellTech (Overseas)
Limited, and Bronson Transport, Inc., (b) Thunderbird Tool Company, (c) KEG
Canal Properties, Inc., KEG Villa Ashley, Inc., KEG Pearl Acres, Inc., KEG Anna
Heights, Inc., KEG Orleans Place, Inc., and Pyramid Land Corporation, (d) Dawson
Production Services de Mexico, S.A. de C.V. and Ubicadora de Tecnicos, S.A. de
C.V. and (e) any other entity which becomes a Subsidiary of the Company after
the date of this Agreement if such entity has assets with a book value of
$1,000,000 or less and annual revenues of $1,000,000 or less; provided that all
entities deemed to be Excluded Subsidiaries under this clause (e) may not have,
in the aggregate, assets with a book value exceeding $5,000,000 or annual
revenues exceeding $5,000,000.
"EXISTING INDEBTEDNESS" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Credit Agreement) in existence
on the date of the Indenture and such other Indebtedness as permitted to be
incurred under the Bridge Loan Agreement prior to the date of issuance of the
first Note hereunder, until such amounts are repaid.
"FIXED CHARGES" means, with respect to any Person for any period, the
sum, without duplication, of (i) the consolidated interest expense of such
Person and its Subsidiaries for such period, whether paid or accrued, to the
extent deducted in computing Consolidated Net Income (including, without
limitation, amortization of debt issuance costs and original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations, but excluding fees owed with respect to the Credit
Agreement) and (ii) the consolidated interest of such Person and its
Subsidiaries that was capitalized during such period, and (iii) any interest
expense on Indebtedness of another Person that is Guaranteed by such Person or
one of its Subsidiaries or secured by a Lien on assets of such Person or one of
its Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv)
the product of (a) all dividend payments, whether or not in cash, on any series
of preferred stock of such Person or any of its Subsidiaries, other than
dividend payments on Equity Interests payable solely in Equity Interests of the
Company (other than Disqualified Stock) or to the Company or a Subsidiary of the
Company, times (b) a fraction, the numerator of which is one and the denominator
of which is one minus the then current combined federal, state and local
statutory tax rate of such Person, expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP.
"FIXED CHARGE COVERAGE RATIO" means with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the referent Person or any of its Subsidiaries incurs, assumes, Guarantees or
redeems any Indebtedness (other than revolving credit borrowings) or issues or
redeems preferred stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but prior to the date on
which the event for which the calculation of the Fixed Charge Coverage Ratio is
made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred at the beginning of the applicable four-quarter
reference period.
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In addition, for purposes of making the computation referred to above, (i)
acquisitions that have been made by the Company or any of its Subsidiaries,
including through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period and Consolidated
Cash Flow for such reference period shall be calculated without giving effect to
clause (iii) of the proviso set forth in the definition of Consolidated Net
Income, and (ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, and (iii) the
Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the referent Person
or any of its Subsidiaries following the Calculation Date. All pro forma
calculations shall be made in accordance with the standards under Regulation S-X
promulgated under the Securities Act.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date of this Indenture.
"GLOBAL NOTES" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, substantially in the
form of Exhibits A-1 and A-2 hereto issued in accordance with Section 2.01,
2.06(b)(iv), 2.06(d)(ii) or 2.06(f) hereof.
"GLOBAL NOTE LEGEND" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"GOVERNMENT SECURITIES" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"GUARANTEE" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"GUARANTOR" means any Subsidiary that executes a Note Guarantee in
accordance with the provisions of this Indenture, and its respective successors
and assigns.
"HEDGING OBLIGATIONS" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates or the value of foreign currencies purchased or received by
the Company in the ordinary course of business.
"HOLDER" means a Person in whose name a Note is registered.
"IAI GLOBAL NOTE" means a Global Note substantially in the form of
Exhibit A-1 hereto that bears the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of and registered in the name of the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes held by Institutional Accredited
Investors.
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<PAGE> 13
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of such Person (whether or not such Indebtedness is
assumed by such Person) and, to the extent not otherwise included, the Guarantee
by such Person of any indebtedness of any other Person. The amount of any
Indebtedness outstanding as of any date shall be (i) the accreted value thereof,
in the case of any Indebtedness issued with original issue discount, and (ii)
the principal amount thereof, together with any interest thereon that is more
than 30 days past due, in the case of any other Indebtedness.
"INDENTURE" means this Indenture, as amended or supplemented from
time to time.
"INDIRECT PARTICIPANT" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"INSTITUTIONAL ACCREDITED INVESTOR" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"INVESTMENTS" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business and
investments consisting of trade credit and accounts receivable acquired in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities, together with all items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP, provided that an acquisition of assets, Equity Interests
or other securities by the Company for consideration consisting solely of common
equity securities of the Company that is not Disqualified Stock shall not be
deemed to be on Investment. If the Company or any Subsidiary of the Company
sells or otherwise disposes of any Equity Interests of any direct or indirect
Subsidiary of the Company such that, after giving effect to any such sale or
disposition, such Person is no longer a Subsidiary of the Company, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of such
Subsidiary not sold or disposed of in an amount determined as provided in the
final paragraph of Section 4.07.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in The City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"LETTER OF TRANSMITTAL" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected
8
<PAGE> 14
under applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).
"LIQUIDATED DAMAGES" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
"MERGER" means the merger of Dawson with and into the Company such
that substantially all of the assets of Dawson and the Company as of the date of
this Indenture is in the same entity.
"MERGER DATE" means the date the certificates and/or articles of
merger are filed with and accepted by the appropriate secretaries of state as
are necessary to be filed and accepted in order to effectuate the merger of
Dawson (including any of its successors or assigns) into the Company.
"NET INCOME" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain or loss,
together with any related provision for taxes on such gain or loss, realized in
connection with (a) any Asset Sale (including, without limitation, dispositions
pursuant to sale and leaseback transactions), or (b) the disposition of any
securities by such Person or any of its Subsidiaries or the extinguishment of
any Indebtedness of such Person or any of its Subsidiaries, and (ii) any
extraordinary gain or loss, together with any related provision for taxes on
such extraordinary gain or loss.
"NET PROCEEDS" means the aggregate cash proceeds received by the
Company or any of its Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that were the subject of such Asset
Sale and any reserve for adjustment in respect of the sale price of such asset
or assets established in accordance with GAAP.
"NON-U.S. PERSON" means a Person who is not a U.S. Person.
"NOTE GUARANTEE" means the Guarantee by each Guarantor of the
Company's payment obligations under this Indenture and on the Notes, executed
pursuant to the provisions of this Indenture.
"NOTES" has the meaning assigned to it in the preamble to this
Indenture.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFERING" means the offering of the Notes by the Company.
"OFFICER" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, any Vice President, the Treasurer, any Assistant
Treasurer, the Controller, the Secretary or any Assistant Secretary of such
Person.
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<PAGE> 15
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 13.05 hereof.
"OPINION OF COUNSEL" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
13.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"PARTICIPANT" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to DTC, shall include Euroclear and Cedel).
"PERMITTED INVESTMENTS" means (a) any Investment in the Company or in
a Subsidiary of the Company that is a Guarantor; (b) any Investment in Cash
Equivalents; (c) any Investment by the Company or any Subsidiary of the Company
in a Person, if as a result of such Investment (i) such Person becomes a
Subsidiary of the Company and a Guarantor or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Subsidiary of the
Company that is a Guarantor; (d) any Investment made as a result of the receipt
of non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.10; (e) any acquisition of assets solely in exchange
for the issuance of Equity Interests (other than Disqualified Stock) of the
Company; (f) other Investments in any Subsidiary that is not a Guarantor having
an aggregate fair market value (measured on the date each such Investment was
made and without giving effect to subsequent changes in value), when taken
together with all other Investments made pursuant to this clause (f) not to
exceed $10.0 million and (g) other Investments in any Person having an aggregate
fair market value (measured on the date each such Investment was made and
without giving effect to subsequent changes in value), when taken together with
all other Investments made pursuant to this clause (g) not to exceed $10.0
million.
"PERMITTED JUNIOR SECURITIES" means Equity Interests in the Company
or any Guarantor or debt securities that are subordinated to all Senior Debt
(and any debt securities issued in exchange for Senior Debt) to substantially
the same extent as, or to a greater extent than, the Notes are subordinated to
Senior Debt pursuant to the Indenture.
"PERMITTED LIENS" means (i) Liens securing Senior Debt and other
Obligations under Credit Facilities, and all Guarantees thereof, that were
permitted by the terms of the Indenture to be incurred; (ii) Liens in favor of
the Company; (iii) Liens on property of a Person existing at the time such
Person is merged with or into or consolidated with the Company or any Subsidiary
of the Company; provided that such Liens were not incurred in contemplation of
such merger or consolidation and do not extend to any assets other than those of
the Person merged into or consolidated with the Company; (iv) Liens on property
existing at the time of acquisition thereof by the Company or any Subsidiary of
the Company, provided that such Liens were not incurred in contemplation of such
acquisition; (v) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (vi) Liens to secure Indebtedness
(including Capital Lease Obligations) permitted by clause (iv) of the second
paragraph of Section 4.09 covering only the assets acquired with such
Indebtedness and the proceeds thereon; (vii) Liens to secure Indebtedness
(including Capital Lease Obligations) permitted by clause (xi) of the second
paragraph of Section 4.09; (viii) Liens existing on the date of the Indenture;
(ix) Liens for taxes, assessments or governmental charges or claims that are not
yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided that any
reserve or other appropriate provision as shall be required in
10
<PAGE> 16
conformity with GAAP shall have been made therefor; (x) carriers',
warehousemen's, mechanics', landlords', materialmen's, repairmen's or other
similar Liens arising in the ordinary course of business which are not
delinquent or which are being contested in good faith and by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture or
sale of the property subject thereto; (xi) Liens consisting of pledges or
deposits required in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other social security legislation;
(xii) Liens on property of the Company or any Subsidiary securing (a) the
non-delinquent performance of bids, trade contacts (other than for borrowed
money), leases and statutory obligations, (b) surety bonds (excluding appeal
bonds and bonds posted in connection with court proceedings or judgments) and
(c) other non-delinquent obligations of a like nature, including pledges or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security
legislation, in each case, incurred in the ordinary course of business; (xiii)
easements, rights-of-way, restrictions and other similar encumbrances incurred
in the ordinary course of business which, in the aggregate, are not substantial
in amount, and which do not in any case materially detract from the value of the
property subject thereto or interfere with the ordinary conduct of the
businesses of the of the Company and its Subsidiaries taken as a whole; (xiv)
purchase money security interests on any property acquired by the Company or any
Subsidiary in the ordinary course of business, securing Indebtedness incurred or
assumed for the purpose of financing all or any part of the cost of acquiring
such property, provided that (a) any such Lien attaches to such property
concurrently with or within 90 days after the acquisition thereof, (b) such Lien
attached solely to the property so acquired in such transaction and (c) the
principal amount of the Indebtedness secured thereby does not exceed 100% of the
costs of such property; (xv) Liens arising solely by virtue of any statutory or
common law provisions relating to banker's liens, rights of setoff or similar
rights and remedies as to deposit accounts or the funds maintained with a
creditor depository institution, provided that (a) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated by
the Federal Reserve Board, and (b) such deposit account is not intended by the
Company or any Subsidiary to provide collateral to the depository institution;
(xvi) extensions, renewals and replacements of Liens referred to in clauses (i)
through (xv) above; provided that any such extension, renewal or replacement
Lien is limited to the property or assets covered by the Lien extended, renewed
or replaced and does not secured any Indebtedness in addition to that secured
immediately prior to such extension, renewal or replacement; and (xvii) Liens
incurred in the ordinary course of business of the Company or any Subsidiary of
the Company with respect to obligations that do not exceed $5.0 million at any
one time outstanding and that (a) are not incurred in connection with the
borrowing of money or the obtaining of advances or credit (other than trade
credit in the ordinary course of business) and (b) do not in the aggregate
materially detract from the value of the property or materially impair the use
thereof in the operation of business by the Company or such Subsidiary.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the
Company or any of its Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company or any of its Subsidiaries (other than intercompany
Indebtedness); provided that: (i) the principal amount (or accreted value, if
applicable) of such Permitted Refinancing Indebtedness does not exceed the
principal amount of (or accreted value, if applicable), plus accrued interest
on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of reasonable expenses incurred in connection
therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness is subordinated in right of payment to
the Notes on terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the
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<PAGE> 17
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and (iv) such Indebtedness is incurred either by the Company or by the
Subsidiary who is the obligor on the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"PRIVATE PLACEMENT LEGEND" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of September 14, 1998, by and among the Company and the
other parties named on the signature pages thereof, as such agreement may be
amended, modified or supplemented from time to time.
"REGULATION S" means Regulation S promulgated under the Securities
Act.
"REGULATION S GLOBAL NOTE" means a global Note bearing the Private
Placement Legend and deposited with or on behalf of the Depositary and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
issued in reliance on Rule 903 of Regulation S.
"REGULATION S PERMANENT GLOBAL NOTE" means a permanent Global Note in
the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"REGULATION S TEMPORARY GLOBAL NOTE" means a temporary global Note in
the form of Exhibit A-2 hereto bearing the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee, issued in a denomination equal to the outstanding principal amount
of the Notes initially sold in reliance on Rule 903 of Regulation S.
"REPRESENTATIVE" means the indenture trustee or other trustee, agent
or representative for any Senior Debt.
"RESPONSIBLE OFFICER" shall mean, when used with respect to the
Trustee, any officer within the corporate trust department of the Trustee,
including any vice president, assistant vice president, assistant secretary,
assistant treasurer, trust officer or any other officer of the Trustee who
customarily performs functions similar to those performed by the Persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such person's knowledge of and familiarity with
the particular subject and who shall have direct responsibility for the
administration of this Indenture.
"RESTRICTED DEFINITIVE NOTE" means a Definitive Note bearing the
Private Placement Legend.
"RESTRICTED GLOBAL NOTE" means a Global Note bearing the Private
Placement Legend.
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<PAGE> 18
"RESTRICTED INVESTMENT" means any Investment other than a Permitted
Investment.
"RESTRICTED PERIOD" means the 40-day restricted period as defined in
Regulation S.
"RULE 144" means Rule 144 promulgated under the Securities Act.
"RULE 144A" means Rule 144A promulgated under the Securities Act.
"RULE 903" means Rule 903 promulgated under the Securities Act.
"RULE 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR DEBT" means (i) all Indebtedness under the Credit Facility,
whether outstanding on the date hereof or thereafter incurred, and all Hedging
Obligations with respect thereto, (ii) any other Indebtedness that is permitted
to be incurred by the Company pursuant to this Indenture unless the instrument
under which such Indebtedness is incurred expressly provides that it is on a
parity with or subordinated in right of payment to the Notes, and (iii) all
Obligations with respect to any of the foregoing. Notwithstanding anything to
the contrary in the foregoing, Senior Debt shall not include (w) any
Indebtedness of the Company to any of its Subsidiaries or other Affiliates, (x)
any Indebtedness incurred for the purchase of goods or materials or for services
obtained in the ordinary course of business (other than with the proceeds of
revolving credit borrowings permitted hereby), (y) any Indebtedness that is
incurred in violation of this Indenture or the Bridge Loan Agreement and (z)
after the Merger Date any Indebtedness incurred pursuant to the Bridge Loan
Agreement.
"SHELF REGISTRATION STATEMENT" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"STATED MATURITY" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"SUBORDINATED CONVERTIBLE NOTE INDENTURE" means that certain
indenture, dated as of July 3, 1996, between the Company and American Stock
Transfer & Trust Company, as trustee, as amended or supplemented from time to
time, relating to the Subordinated Convertible Notes.
"SUBORDINATED CONVERTIBLE NOTES" means the Company's 5% Senior
Subordinated Notes due 2003 issued pursuant to the Subordinated Convertible Note
Indenture.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard
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<PAGE> 19
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership (a) the sole general
partner or the managing general partner of which is such Person or a Subsidiary
of such Person or (b) the only general partners of which are such Person or of
one or more Subsidiaries of such Person (or any combination thereof). Unless
otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in
this Indenture shall refer to a Subsidiary or Subsidiaries of the Company, but
such references shall not include any Excluded Subsidiary.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"TRUSTEE" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"UNRESTRICTED GLOBAL NOTE" means a permanent Global Note
substantially in the form of Exhibit A-1 attached hereto that bears the Global
Note Legend and that has the "Schedule of Exchanges of Interests in the Global
Note" attached thereto, and that is deposited with or on behalf of and
registered in the name of the Depositary, representing a series of Notes that do
not bear the Private Placement Legend.
"UNRESTRICTED DEFINITIVE NOTE" means one or more Definitive Notes
that do not bear and are not required to bear the Private Placement Legend.
"U.S. PERSON" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"VOTING STOCK" of any Person as of any date means the Capital Stock
of such Person that is at the time entitled to vote in the election of the Board
of Directors of such Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
- ---- ----------
<S> <C>
"AFFILIATE TRANSACTION"........................................ 4.11
"ASSET SALE"................................................... 4.10
"ASSET SALE OFFER"............................................. 3.09
"AUTHENTICATION ORDER"......................................... 2.02
"BANKRUPTCY LAW"............................................... 4.01
"CHANGE OF CONTROL OFFER"...................................... 4.15
"CHANGE OF CONTROL PAYMENT".................................... 4.15
"CHANGE OF CONTROL PAYMENT DATE" ............................. 4.15
</TABLE>
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<PAGE> 20
<TABLE>
<S> <C>
"COVENANT DEFEASANCE".............................................................. 8.03
"DTC".............................................................................. 2.03
"EVENT OF DEFAULT"................................................................. 6.01
"EXCESS PROCEEDS".................................................................. 4.10
"INCUR"............................................................................ 4.09
"LEGAL DEFEASANCE"................................................................. 8.02
"OFFER AMOUNT"..................................................................... 3.09
"OFFER PERIOD"..................................................................... 3.09
"PAYING AGENT"..................................................................... 2.03
"PERMITTED DEBT"................................................................... 4.09
"PURCHASE DATE".................................................................... 3.09
"REGISTRAR"........................................................................ 2.03
"RESTRICTED PAYMENTS".............................................................. 4.07
"UNIT LEGEND"...................................................................... 2.06
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes and the Note Guarantees means the Company and
the Guarantors, respectively, and any successor obligor upon the Notes and the
Note Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural
include the singular;
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<PAGE> 21
(e) provisions apply to successive events and transactions; and
(f) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections or rules
adopted by the SEC from time to time.
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.
(a) General. The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The Notes
may have notations, legends or endorsements required by law, stock exchange rule
or usage. Each Note shall be dated the date of its authentication. The Notes
shall be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
(b) Global Notes. Notes issued in global form shall be substantially
in the form of Exhibit A Exhibits A-1 or A-2 attached hereto (including the
Global Note Legend thereon and the "Schedule of Exchanges of Interests in the
Global Note" attached thereto). Notes issued in definitive form shall be
substantially in the form of Exhibit A-1 attached hereto (but without the Global
Note Legend thereon and without the "Schedule of Exchanges of Interests in the
Global Note" attached thereto). Each Global Note shall represent such of the
outstanding Notes as shall be specified therein and each shall provide that it
shall represent the aggregate principal amount of outstanding Notes from time to
time endorsed thereon and that the aggregate principal amount of outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Notes represented thereby shall be made by the
Trustee or the Custodian, at the direction of the Trustee, in accordance with
written instructions given by the Holder thereof as required by Section 2.06
hereof.
(c) Temporary Global Notes. Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of the Regulation S Temporary
Global Note, which shall be deposited on behalf of the purchasers of the Notes
represented thereby with the Trustee, at its New York office, as custodian for
the Depositary, and registered in the name of the Depositary or the nominee of
the Depositary for the accounts of designated agents holding on behalf of
Euroclear or Cedel Bank, duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The Restricted Period shall be terminated upon
the receipt by the Trustee of (i) a written certificate from the Depositary,
together with copies of certificates from Euroclear and Cedel Bank certifying
that they have received certification of non-United States beneficial ownership
of 100% of the aggregate principal amount of the Regulation S Temporary Global
Note (except to the extent of any beneficial owners thereof who acquired an
interest therein during the Restricted Period pursuant to another exemption from
registration under the Securities Act and who will take delivery of a beneficial
ownership interest in a 144A Global Note or an IAI Global Note bearing a Private
Placement Legend, all as contemplated by Section 2.06(a)(ii) hereof), and (ii)
an Officers' Certificate from the Company. Following the termination of the
Restricted Period, beneficial interests in the Regulation S
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<PAGE> 22
Temporary Global Note shall be exchanged for beneficial interests in Regulation
S Permanent Global Notes pursuant to the Applicable Procedures. Simultaneously
with the authentication of Regulation S Permanent Global Notes, the Trustee
shall cancel the Regulation S Temporary Global Note. The aggregate principal
amount of the Regulation S Temporary Global Note and the Regulation S Permanent
Global Notes may from time to time be increased or decreased by adjustments made
on the records of the Trustee and the Depositary or its nominee, as the case may
be, in connection with transfers of interest as hereinafter provided.
(d) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in the Regulation S Temporary Global Note and the
Regulation S Permanent Global Notes that are held by Participants through
Euroclear or Cedel Bank.
Section 2.02. Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and may
be in facsimile form.
If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers (an "AUTHENTICATION ORDER"), authenticate Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the Notes.
Global Notes in the form of Exhibit A-1 and Exhibit A-2 shall be
initially issued and authenticated with the registered holder, principal amount,
interest rate, optional redemption features (if any) and legends left blank.
Such Global Notes shall be deposited with The Bank of New York under an Escrow
Agreement (the "ESCROW AGREEMENT"), dated September 14, 1998, among the Company,
Lehman Commercial Paper Inc. and Lehman Brothers Inc. Upon the release of any
Notes from the Escrow Agreement, the Trustee shall (or the Registrar if not the
Trustee) register the Global Notes released from escrow in the names and with
the principal amount, interest rate and optional redemption features (if any)
and legends as specified by Lehman Brothers Inc. If less than the aggregate
principal amount stated in paragraph 4 of the Notes is released from the Escrow
Agreement, the Trustee shall authenticate Notes with a principal amount equal to
such difference and deposit such Notes into the Escrow Agreement. No Notes shall
be deemed outstanding for any purpose hereunder until such Notes are released
from the Escrow Agreement. The aggregate principal amount of Notes outstanding
at any time may not exceed such amount except as provided in Section 2.07
hereof, or in connection with the issuance of Additional Notes.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
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Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("REGISTRAR") and an
office or agency where Notes may be presented for payment ("PAYING AGENT"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar
and Paying Agent and to act as Custodian with respect to the Global Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form (which may be
electronically, i.e. on a computer system) as is reasonably practicable the most
recent list available to it of the names and addresses of all Holders and shall
otherwise comply with TIA ss. 312(a). If the Trustee is not the Registrar, the
Company shall furnish to the Trustee at least seven Business Days before each
interest payment date and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of the Holders of Notes and the Company shall
otherwise comply with TIA ss. 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion
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determines that the Global Notes (in whole but not in part) should be exchanged
for Definitive Notes and delivers a written notice to such effect to the
Trustee; provided that in no event shall the Regulation S Temporary Global Note
be exchanged by the Company for Definitive Notes prior to (x) the expiration of
the Restricted Period and (y) the receipt by the Registrar of any certificates
required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act. Upon the
occurrence of either of the preceding events in (i) or (ii) above, Definitive
Notes shall be issued in such names as the Depositary shall instruct the Trustee
in writing. Global Notes also may be exchanged or replaced, in whole or in part,
as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and
delivered in exchange for, or in lieu of, a Global Note or any portion thereof,
pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be
authenticated and delivered in the form of, and shall be, a Global Note. A
Global Note may not be exchanged for another Note other than as provided in this
Section 2.06(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Notes. The transfer and exchange of beneficial interests in the Global Notes
shall be effected through the Depositary, in accordance with the provisions of
this Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; provided, however,
that prior to the expiration of the Restricted Period, transfers of
beneficial interests in the Temporary Regulation S Global Note may not be
made to a U.S. Person or for the account or benefit of a U.S. Person (other
than Lehman Brothers. Beneficial interests in any Unrestricted Global Note
may be transferred to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note. No written orders or
instructions shall be required to be delivered to the Registrar to effect
the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor
of such beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to cause
to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer
or exchange referred to in (1) above; provided that in no event shall
Definitive Notes be issued upon the transfer or exchange of beneficial
interests in the Regulation S Temporary Global Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar of
any certificates required pursuant to Rule 903 under the Securities Act.
Upon consummation of an Exchange Offer by the Company in accordance with
Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall
be deemed to have been satisfied upon receipt by the Registrar of the
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instructions contained in the Letter of Transmittal delivered by the Holder
of such beneficial interests in the Restricted Global Notes. Upon
satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Indenture and the
Notes or otherwise applicable under the Securities Act, the Trustee shall
adjust the principal amount of the relevant Global Note(s) pursuant to
Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted
Global Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or the
Regulation S Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications and certificates and Opinion of Counsel required by
item (3) thereof, if applicable.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in the Unrestricted Global
Note. A beneficial interest in any Restricted Global Note may be exchanged
by any holder thereof for a beneficial interest in an Unrestricted Global
Note or transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1)
a broker-dealer, (2) a Person participating in the distribution of
the Exchange Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Note,
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a certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or
(D) above at a time when an Unrestricted Global Note has not yet been
issued, the Company shall issue and, upon receipt of an Authentication
Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate
principal amount equal to the aggregate principal amount of beneficial
interests transferred pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the
form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a Restricted Definitive Note, a certificate from such holder in
the form of Exhibit C hereto, including the certifications in item
(2)(a) thereof;
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule
903 or Rule 904 under the Securities Act, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
(2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(a) thereof;
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(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are
so registered. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c)(i)
shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
(ii) Beneficial Interests in Regulation S Temporary Global Note
to Definitive Notes. Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof,
a beneficial interest in the Regulation S Temporary Global Note may not be
exchanged for a Definitive Note or transferred to a Person who takes
delivery thereof in the form of a Definitive Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar of
any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the
Securities Act, except in the case of a transfer pursuant to an exemption
from the registration requirements of the Securities Act other than Rule
903 or Rule 904.
(ii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
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(C) such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(b)
thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a Definitive Note that does not bear the Private Placement
Legend, a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require,
an Opinion of Counsel in form reasonably acceptable to the
Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
(iii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in an
Unrestricted Global Note proposes to exchange such beneficial interest for
a Definitive Note or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Definitive Note, then, upon
satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the
Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Person designated in the instructions a Definitive Note in the appropriate
principal amount. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.06(c)(iii) shall be registered in such
name or names and in such authorized denomination or denominations as the
holder of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect
Participant. The Trustee shall deliver such Definitive Notes to the Persons
in whose names such Notes are so registered. Any Definitive Note issued in
exchange for a beneficial interest pursuant to this Section 2.06(c)(iii)
shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a Restricted
Global Note or to transfer such Restricted Definitive Notes to a Person who
takes delivery thereof in the form of a beneficial interest in a Restricted
Global Note, then, upon receipt by the Registrar of the following
documentation:
(A) if the Holder of such Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note, a certificate from such Holder in the form of
Exhibit C hereto, including the certifications in item (2)(b)
thereof;
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(B) if such Restricted Definitive Note is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144 under
the Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being
transferred to an Institutional Accredited Investor in reliance on an
exemption from the registration requirements of the Securities Act
other than those listed in subparagraphs (B) through (D) above, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications, certificates and Opinion of Counsel required by
item (3) thereof, if applicable;
(F) if such Restricted Definitive Note is being
transferred to the Company or any of its Subsidiaries, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(b) thereof; or
(G) if such Restricted Definitive Note is being
transferred pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or
cause to be increased the aggregate principal amount of, in the case of
clause (A) above, the appropriate Restricted Global Note, in the case of
clause (B) above, the 144A Global Note, in the case of clause (C) above,
the Regulation S Global Note, and in all other cases, the IAI Global Note.
(ii)Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Restricted Definitive Note to a Person who takes
delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
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(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes
to exchange such Notes for a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes
to transfer such Notes to a Person who shall take delivery
thereof in the form of a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in the
form of Exhibit B hereto, including the certifications in item
(4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require,
an Opinion of Counsel in form reasonably acceptable to the
Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
Upon satisfaction of the conditions of any of the subparagraphs
in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes
and increase or cause to be increased the aggregate principal amount of
the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note at any time. Upon receipt of a request for such an exchange or
transfer, the Trustee shall cancel the applicable Unrestricted Definitive
Note and increase or cause to be increased the aggregate principal amount
of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D)
or (iii) above at a time when an Unrestricted Global Note has not yet been
issued, the Company shall issue and, upon receipt of an Authentication
Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate
principal amount equal to the principal amount of Definitive Notes so
transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes.
Any Restricted Definitive Note may be transferred to and registered in the
name of Persons who take delivery thereof in the form of a Restricted
Definitive Note if the Registrar receives the following:
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(A) if the transfer will be made pursuant to Rule 144A
under the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or
Rule 904, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications in item (2)
thereof; and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities Act,
then the transferor must deliver a certificate in the form of Exhibit
B hereto, including the certifications, certificates and Opinion of
Counsel required by item (3) thereof, if applicable.
(ii)Restricted Definitive Notes to Unrestricted Definitive
Notes. Any Restricted Definitive Note may be exchanged by the Holder
thereof for an Unrestricted Definitive Note or transferred to a Person or
Persons who take delivery thereof in the form of an Unrestricted
Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive
Notes proposes to exchange such Notes for an Unrestricted
Definitive Note, a certificate from such Holder in the form of
Exhibit C hereto, including the certifications in item (1)(d)
thereof; or
(2) if the Holder of such Restricted Definitive
Notes proposes to transfer such Notes to a Person who shall
take delivery thereof in the form of an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or
transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request to register such a transfer,
the
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Registrar shall register the Unrestricted Definitive Notes pursuant to the
instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
broker-dealers, (y) they are not participating in a distribution of the Exchange
Notes and (z) they are not affiliates (as defined in Rule 144) of the Company,
and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each
Global Note and each Definitive Note (and all Notes issued in
exchange therefor or substitution thereof) shall bear the legend in
substantially the following form.
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS NOT A U.S.
PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON
AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT) (AN "IAI"), (2) AGREES THAT IT WILL NOT, WITHIN THE TIME
PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE
144(d) UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN
EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON
WHOM THE HOLDER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) TO AN IAI
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE
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A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO
THE REGISTRATION OF TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRUSTEE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS, AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THIS NOTE OR ANY INTEREST HEREIN WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE
HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING
TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON"
HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES
ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(ii),
(c)(iii)] (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section
2.06 (and all Notes issued in exchange therefor or substitution
thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend
in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY
BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE
MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY."
(iii) Regulation S Temporary Global Note Legend. The Regulation
S Temporary Global Note shall bear a legend in substantially the following
form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE
AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON."
(iv) Unit Legend. Each Note issued as a unit with warrants
prior to the Separation Date shall bear the following legend (the "Unit
Legend") on the face thereof:
"THE NOTES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSIST OF $1,000 PRINCIPAL AMOUNT OF
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THE NOTES AND WARRANT(S) (THE "WARRANTS") ENTITLING THE HOLDER THEREOF TO
PURCHASE _____ SHARES, $0.10 PAR VALUE OF THE COMPANY. PRIOR TO THE CLOSE OF
BUSINESS UPON THE EARLIEST TO OCCUR OF (i) ________ __, 1999, (ii) COMMENCEMENT
OF AN EXCHANGE OFFER WITH RESPECT TO THE NOTES, OR (iii) THE EFFECTIVENESS OF A
SHELF REGISTRATION STATEMENT RELATING TO THE NOTES OR THE NOTES EVIDENCED BY
THIS CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT MAY BE
TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE WARRANTS."
(h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive Note
for any registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchange or
transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05
hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global
Notes or Definitive Notes surrendered upon such registration of transfer
or exchange.
(v) The Company shall not be required (A) to issue, to register
the transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business
on the day of selection, (B) to register the transfer of or to exchange
any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part or (C) to register
the transfer of or to exchange a Note between a record date and the next
succeeding Interest Payment Date.
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(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem and
treat the Person in whose name any Note is registered as the absolute
owner of such Note for the purpose of receiving payment of principal of
and interest on such Notes and for all other purposes, and none of the
Trustee, any Agent or the Company shall be affected by notice to the
contrary.
(vii) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by
facsimile.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee or the Company
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee, upon receipt of
an Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an
"open-penalty" indemnity bond must be supplied by the Holder at its expense that
is sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced.
The Company may charge the Holder for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall
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be protected in relying on any such direction, waiver or consent, only Notes
that a Responsible Officer of the Trustee actually knows are so owned shall be
so disregarded.
Section 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably acceptable
to the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits
of this Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall return such
canceled Notes (subject to the record retention requirement of the Exchange Act)
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
Section 2.13. CUSIP Numbers.
The Company in issuing the Securities may use CUSIP numbers (if then
generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of
redemption as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the CUSIP numbers.
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ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 45 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate. In
the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.09 hereof, at least 30 days
but not more than 60 days before a redemption date, the Company shall mail or
cause to be mailed, by first class mail, a notice of redemption to each Holder
whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes (including CUSIP Numbers) to be
redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;
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(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.05. Deposit of Redemption Price.
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or Paying Agent shall have no duty to invest such sum and
shall not be liable for any interest thereon. The Trustee or the Paying Agent
shall promptly return to the Company any money deposited with the Trustee or the
Paying Agent by the Company in excess of the amounts necessary to pay the
redemption price of, and accrued interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
(a) Except as set forth in any Note, the Company shall not have the
option to redeem such Note prior to September 14, 2008. The Notes may provide
that there is no option to redeem the Note prior to September 14, 2008.
(b) Any optional redemption permitted in a Note shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
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Section 3.08. Mandatory Redemption.
The Company shall not be required to make mandatory redemption
payments with respect to the Notes.
Section 3.09. Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an offer to all Holders to purchase Notes (an "ASSET
SALE OFFER"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "OFFER PERIOD"). No later than
five Business Days after the termination of the Offer Period (the "PURCHASE
DATE"), the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "OFFER AMOUNT") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall
remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any
Note accepted for payment pursuant to the Asset Sale Offer shall cease to
accrete or accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an
Asset Sale Offer may elect to have Notes purchased in integral multiples of
$1,000 only;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
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(g) that Holders shall be entitled to withdraw their election if the
Company, the Depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in accordance
with the terms of this Section 3.09. The Company, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
the Company for purchase, and the Company shall promptly issue a new Note, and
the Trustee, upon written request from the Company shall authenticate and mail
or deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
The covenants of this Article 4 shall not be in effect until the
first Note is released from Escrow in accordance with the terms of the Escrow
Agreement.
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due. The Company shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.
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The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 2% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
Section 4.03. Reports.
(a) Whether or not required by the rules and regulations of the SEC,
so long as any Notes are outstanding, the Company shall furnish to the Holders
of Notes and to the Trustee (i) all quarterly and annual financial information
that would be required to be contained in a filing with the SEC on Forms 10-Q
and 10-K if the Company were required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report thereon
by the Company's certified independent accountants and (ii) all current reports
that would be required to be filed with the SEC on Form 8-K if the Company were
required to file such reports, in each case, within the time periods specified
in the SEC's rules and regulations. In addition, following consummation of the
Exchange Offer, whether or not required by the rules and regulations of the SEC,
the Company shall file a copy of all such information and reports with the SEC
for public availability within the time periods specified in the SEC's rules and
regulations (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. The Company shall at all times comply with TIA ss. 314(a). Delivery of
such reports, information and documents to the Trustee is for informational
purposes only and the Trustee's receipt of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Company's compliance with any of
its covenants hereunder (as to which the Trustee is entitled to rely exclusively
on Officers' Certificates).
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(b) For so long as any Notes remain outstanding, the Company and the
Guarantors shall furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Section 4.04. Compliance Certificate.
(a) The Company and each Guarantor (to the extent that such Guarantor
is so required under the TIA) shall deliver to the Trustee, within 90 days after
the end of each fiscal year (which is at the date hereof ________), an Officers'
Certificate stating that a review of the activities of the Company and its
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture and the Collateral Agreements, and further stating, as to each such
Officer signing such certificate, that to the best of his or her knowledge the
Company has kept, observed, performed and fulfilled each and every covenant
contained in this Indenture and the Collateral Agreements and is not in default
in the performance or observance of any of the terms, provisions and conditions
of this Indenture or the Collateral Agreements (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action the Company is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to a Responsible Officer of the Trustee, forthwith upon any Officer
becoming aware of any Default or Event of Default, an Officers' Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws.
The Company and each of the Guarantors covenants (to the extent that
it may lawfully do so) that it shall not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Company and each of the Guarantors
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(to the extent that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
Section 4.07. Restricted Payments.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly: (i) declare or pay any dividend or make any other
payment or distribution on account of the Company's or any of its Subsidiaries'
Equity Interests (including, without limitation, any payment in connection with
any merger or consolidation involving the Company) or to the direct or indirect
holders of the Company's or any of its Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company); (ii) purchase, redeem
or otherwise acquire or retire for value (including without limitation, in
connection with any merger or consolidation involving the Company) any Equity
Interests of the Company; (iii) make any payment on or with respect to, or
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Notes, except a payment of interest or
principal at Stated Maturity; or (iv) make any Restricted Investment (all such
payments and other actions set forth in clauses (i) through (iv) above being
collectively referred to as "Restricted Payments"), unless, at the time of and
after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted Payment
had been made at the beginning of the applicable four-quarter period, have
been permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in Section 4.09(i); and
(c) such Restricted Payment, together with the aggregate amount
of all other Restricted Payments made by the Company and its Subsidiaries
after the date of this Indenture (excluding Restricted Payments permitted
by clauses (ii) and (iv) of the next succeeding paragraph but otherwise
including Restricted Payments permitted by the next succeeding paragraph),
is less than the sum of (i) 50% of the Consolidated Net Income of the
Company for the period (taken as one accounting period) from the beginning
of the first fiscal quarter commencing after the date of this Indenture to
the end of the Company's most recently ended fiscal quarter for which
internal financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a deficit,
less 100% of such deficit), plus (ii) 100% of the aggregate net cash
proceeds received by the Company since the date of the Indenture as a
contribution to its common equity capital or from the issue or sale of
Equity Interests of the Company (other than Disqualified Stock) or from
the issue or sale of Disqualified Stock or debt securities of the Company
that have been converted into or exchanged for such Equity Interests
(other than Equity Interests (or Disqualified Stock or convertible debt
securities) sold to a Subsidiary of the Company), plus (iii) to the extent
that any Restricted Investment that was made after the date of this
Indenture is sold for cash or otherwise liquidated or repaid for cash, the
lesser of (A) the cash return of capital with respect to such Restricted
Investment (less the cost of disposition, if any) and (B) the initial
amount of such Restricted Investment.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the
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provisions of this Indenture; (ii) the redemption, repurchase, retirement,
defeasance or other acquisition of any subordinated Indebtedness or Equity
Interests of the Company in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company) of,
other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement, defeasance or other acquisition shall
be excluded from clause (c)(ii) of the preceding paragraph; (iii) the
defeasance, redemption, repurchase or other acquisition of subordinated
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness; (iv) the payment of any dividend by a Subsidiary of
the Company to the holders of its Equity Interests on a pro rata basis; (v) the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of the Company or any Subsidiary of the Company held by any
member of the Company's (or any of its Subsidiaries') management pursuant to any
management equity subscription agreement or stock option agreement; provided
that the aggregate price paid for all such repurchased, redeemed, acquired or
retired Equity Interests shall not exceed $1.0 million in any twelve-month
period; (vi) the redemption, repurchase, retirement, defeasance or other
acquisition of the Convertible Subordinated Debentures (as defined in the Bridge
Loan Agreement); provided that at least 90% of such Convertible Subordinated
Debentures have been converted; (vii) the redemption, repurchase, retirement,
defeasance or other acquisition of the 1997 Convertible Subordinated Notes (as
defined in the Bridge Loan Agreement); provided that at least 90% of such 1997
Convertible Subordinated Notes have been converted and (vii) Restricted Payments
not to exceed $5.0 million under this clause (viii); provided that in the case
of clauses (ii), (iii), (v) and (viii) no Default or Event of Default shall have
occurred and be continuing immediately after such transaction.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined by the Board
of Directors whose resolution with respect thereto shall be delivered to the
Trustee, such determination to be based upon an opinion or appraisal issued by
an accounting, appraisal or investment banking firm of national standing if such
fair market value exceeds $10.0 million. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this Section 4.07 were
computed, together with a copy of any fairness opinion or appraisal required by
this Indenture.
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any Subsidiary
to (a)(i) pay dividends or make any other distributions to the Company or any of
its Subsidiaries (A) on its Capital Stock or (B) with respect to any other
interest or participation in, or measured by, its profits or (ii) pay any
indebtedness owed to the Company or any of its Subsidiaries, (b) make loans or
advances to the Company or any of its Subsidiaries or (c) transfer any of its
properties or assets to the Company or any of its Subsidiaries, except for such
encumbrances or restrictions existing under or by reasons of (i) Existing
Indebtedness as in effect on the date hereof, (ii) the Credit Agreement as in
effect on the date hereof and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements and refinancings are no more
restrictive with respect to such dividend and other payment restrictions than
those contained in the Credit Agreement as of the date hereof, (iii) this
Indenture, the Guarantees, the Notes and the Subordinated Convertible Notes as
in effect on the date of this Indenture, (iv) applicable law, (v) any instrument
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governing Indebtedness or Capital Stock of a Person acquired by the Company or
any of its Subsidiaries as in effect at the time of such acquisition (except to
the extent such Indebtedness was incurred in connection with or in anticipation
of such acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that the Consolidated
Cash Flow of such Person is not taken into account in determining whether such
acquisition was permitted by the terms hereof, (vi) by reason of non-assignment
provisions in leases entered into in the ordinary course of business and
consistent with past practices, (vii) purchase money obligations for property
acquired in the ordinary course of business that impose restrictions of the
nature described in clause (c) above on the property so acquired, (viii)
Permitted Refinancing Indebtedness, provided that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced or (ix) restrictions imposed with respect to a subsidiary of
the Company imposed pursuant to a binding agreement which has been entered into
for the sale or disposition of all or substantially all of the Capital Stock or
assets of such Subsidiary; provided that such disposition will comply with
Section 4.10 hereof.
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and the
Company shall not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that the
Company and the Guarantors may incur Indebtedness (including Acquired Debt) or
issue shares of Disqualified Stock if:
(i) the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued
would have been at least 2.5 to 1, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred, or the Disqualified Stock
had been issued, as the case may be, at the beginning of such four-quarter
period; and
(ii) no Default or Event of Default has occurred and is
continuing.
The Company shall not incur any Indebtedness that is contractually
subordinated to any other Indebtedness of the Company unless such Indebtedness
is also contractually subordinated or pari passu to the Notes on substantially
identical terms; provided, however, that no Indebtedness of the Company shall be
deemed to be contractually subordinated to any other Indebtedness of the Company
solely by virtue of being unsecured.
The provisions of the first paragraph of this Section 4.09 shall not
apply to the incurrence of any of the following items of Indebtedness
(collectively, "PERMITTED DEBT"):
(i) The incurrence by the Company of Indebtedness under Credit
Facilities; provided that the aggregate principal amount of all
Indebtedness of the Company and its Subsidiaries outstanding under all
Credit Facilities after giving effect to such incurrence does not exceed
an amount equal to $600.0 million less (i) the aggregate amount of all
repayments, optional or mandatory, of the principal of any Indebtedness
under a Credit Facility that have been made by the Company or any of its
Subsidiaries since the date of the Indenture and (ii), without
duplication, the aggregate amount of all
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Net Proceeds of Asset Sales applied by the Company or any of its
Subsidiaries to permanently reduce the Indebtedness or commitments under
the Credit Facilities;
(ii) the incurrence by the Company and its Subsidiaries of the
Existing Indebtedness;
(iii) the incurrence by the Company of Indebtedness represented
by the Notes, the Guarantees and this Indenture;
(iv) the incurrence by the Company or any of its Subsidiaries
of Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment used in the
business of the Company or such Subsidiary, in an aggregate principal
amount not to exceed $25.0 million at any time outstanding;
(v) the incurrence of Indebtedness solely in respect of
bankers' acceptances, letters of credit, surety or performance bonds (to
the extent that such incurrence does not result in the incurrence of any
obligation for the payment of borrowed money of others), all in the
ordinary course of business, in amounts and for the purposes customary in
the Company's industry;
(vi) the incurrence by the Company or any of its Subsidiaries
of Permitted Refinancing Indebtedness in exchange for, or the net proceeds
of which are used to refund, refinance or replace Indebtedness (other than
intercompany Indebtedness) that was permitted by the Indenture to be
incurred under the first paragraph hereof or clauses (ii), (iii) or (x) of
this paragraph;
(vii) the incurrence by the Company or any of its Subsidiaries
of intercompany Indebtedness between or among the Company and any of its
Subsidiaries; provided, however, that (i) if the Company is the obligor on
such Indebtedness, such Indebtedness is, upon the occurrence of one of the
events set forth in Sections 6(g) or 6(h), expressly subordinated to the
prior payment in full in cash of all Obligations with respect to the Notes
to the same extent that the Notes are subordinated to Senior Debt as set
forth in Article 10 hereof and (ii)(A) any subsequent issuance or transfer
of Equity Interests that results in any such Indebtedness being held by a
Person other than the Company or a Subsidiary thereof and (B) any sale or
other transfer of any such Indebtedness to a Person that is not either the
Company or a Subsidiary thereof shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Company or such
Subsidiary, as the case may be, that was not permitted by this clause
(vii);
(viii) the incurrence by the Company or any of its Subsidiaries
of Hedging Obligations that are incurred for the purpose of fixing or
hedging interest rate risk with respect to any floating rate Indebtedness
that is permitted by the terms of this Indenture to be outstanding;
(ix) the guarantee by the Company or any of the Guarantors of
Indebtedness of the Company or a Subsidiary of the Company that was
permitted to be incurred by another provision of this covenant;
(x) the incurrence by the Company or any of its Subsidiaries of
additional Indebtedness incurred to repay, in whole or in part, the Loans
(as defined in the Bridge Loan Agreement), together with accrued and
unpaid interest on the Loans so repaid; provided, that the terms and
conditions thereof of any such Indebtedness used to prepay the Loans in
part are acceptable to the Administrative Agent (as defined in the Bridge
Loan Agreement) in its sole discretion; and
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(xi) the incurrence by the Company or any of its Subsidiaries
of additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (xi), not to exceed $50.0
million.
For purposes of determining compliance with this Section 4.09, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xi) above or is
entitled to be incurred pursuant to the first paragraph of this Section 4.09,
the Company shall, in its sole discretion, classify such item of Indebtedness in
any manner that complies with this Section 4.09 and such item of Indebtedness
shall be treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph of this Section 4.09. Accrual of interest, the
accretion of accreted value and the payment of interest in the form of
additional Indebtedness shall not be deemed to be an incurrence of Indebtedness
for purposes of this Section 4.09.
Section 4.10. Asset Sales.
The Company shall not, and shall not permit any of its Subsidiaries
to conduct any Asset Sale unless (x) the Company (or the Subsidiary, as the case
may be) receives consideration at the time of such Asset Sale at least equal to
the fair market value (for Asset Sales having a fair market value or Net
Proceeds in excess of $5.0 million as evidenced by a resolution of the Board of
Directors set forth in an Officers' Certificate delivered to the Trustee) of the
assets sold or otherwise disposed of and (y) at least 75% of the consideration
received therefor by the Company or such Subsidiary is in the form of cash;
provided, however, that the amount of (A) any liabilities (as shown on the
Company's or such Subsidiary's most recent balance sheet or in the notes
thereto) of the Company or any Subsidiary (other than liabilities that are by
their terms subordinated to the Notes or any guarantee thereof) that are assumed
by the transferee of any such assets, (B) any notes or other obligations
received by the Company or any such Subsidiary from such transferee that are
immediately converted by the Company or such Subsidiary into cash (to the extent
of the cash received), (C) any assets received in exchange for assets pursuant
to a like-kind exchange and (D) any $25.0 million of Designated Noncash
Consideration (which shall not at any time exceed, in the aggregate, $25.0
million outstanding), in each case, shall be deemed to be cash for purposes of
this provision.
Within 365 days after any Asset Sale, the Company (or such
Subsidiary) may apply the Net Proceeds from such Asset Sale, at its option,
either (a) to an investment in another business, the making of a capital
expenditures or the acquisition of other long-term assets, in each case, in the
same or similar line of business as the Company was engaged in on the date of
this Indenture, or (b) to permanently reduce long-term Indebtedness of the
Company or a Subsidiary of the Company or to permanently reduce borrowings and
commitments under Indebtedness permitted to be incurred pursuant to clause (i)
of the second paragraph of Section 4.09 hereof. Pending the final application of
any such Net Proceeds, the Company (or such Subsidiary) may temporarily reduce
Indebtedness or otherwise invest such Net Proceeds in any manner that is not
prohibited by this Indenture. Any Net Proceeds from such Asset Sale that are not
finally applied or invested as provided in the first sentence of this paragraph
will be deemed to constitute "Excess Proceeds." Within five days of each date on
which the aggregate amount of Excess Proceeds exceeds $5.0 million, the Company
shall commence a pro rata Asset Sale Offer pursuant to Section 3.09 hereof to
purchase the maximum principal amount of Notes that may be purchased out of the
Excess Proceeds at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the date fixed for the closing of such offer in accordance
with the procedures set forth in Section 3.09 hereof. To the extent that the
aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than
the Excess Proceeds, the Company (or such
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Subsidiary) may use such deficiency for general corporate purposes. Upon
completion of such offer to purchase, the amount of Excess Proceeds will be
deemed to be reset at zero.
Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Subsidiaries
to, sell, lease, transfer or otherwise dispose of any of its properties or
assets to, or purchase any property or assets from, or enter into or make any
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "AFFILIATE TRANSACTION"),
unless (a) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Subsidiary than those that would have been obtained
in a comparable transaction by the Company or such Subsidiary with an unrelated
Person and (b) the Company delivers to the Trustee (i) with respect to any
Affiliate Transaction involving aggregate consideration in excess of $1.0
million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (a)
above and that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (ii) with respect to any
Affiliate Transaction involving aggregate consideration in excess of $10.0
million, an opinion as to the fairness to the Company or such Subsidiary from a
financial point of view issued by an investment banking firm of national
standing; provided, however, that (i) any employment agreement entered into by
the Company or any of its Subsidiaries in the ordinary course of business and
consistent with the past practice of the Company or such Subsidiary, (ii)
transactions between or among the Company and/or its Subsidiaries, and (iii)
transactions permitted under Section 4.07 hereof shall not be deemed Affiliate
Transactions.
Section 4.12. Liens.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly create, incur, assume or suffer to exist any Lien on
any asset now owned or hereafter acquired, or any income or profits therefrom or
assign or convey any right to receive income therefrom, except Permitted Liens.
Section 4.13. Line of Business.
The Company shall not, and shall not permit any of its Subsidiaries
to, engage in any business other than those businesses in which the Company and
its Subsidiaries are engaged on the date hereof and reasonable extensions
thereto.
Section 4.14. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
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Section 4.15. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall
make an offer (a "CHANGE OF CONTROL OFFER") to each Holder to repurchase all or
any part (equal to $1,000 or an integral multiple thereof) of each Holder's
Notes at a purchase price equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any,
to the date of purchase, the "CHANGE OF CONTROL PAYMENT"). Within 10 days
following any Change of Control, the Company shall mail a notice to each Holder
stating: (1) that the Change of Control Offer is being made pursuant to this
Section 4.15 and that all Notes tendered will be accepted for payment; (2) the
purchase price and the purchase date, which shall be no later than 30 business
days from the date such notice is mailed (the "CHANGE OF CONTROL PAYMENT DATE");
(3) that any Note not tendered will continue to accrue interest; (4) that,
unless the Company defaults in the payment of the Change of Control Payment, all
Notes accepted for payment pursuant to the Change of Control Offer shall cease
to accrue interest after the Change of Control Payment Date; (5) that Holders
electing to have any Notes purchased pursuant to a Change of Control Offer will
be required to surrender the Notes, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Notes completed, to the Paying Agent at
the address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date; (6) that Holders will
be entitled to withdraw their election if the Paying Agent receives, not later
than the close of business on the second Business Day preceding the Change of
Control Payment Date, a telegram, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of Notes delivered for purchase,
and a statement that such Holder is withdrawing his election to have the Notes
purchased; and (7) that Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof. The Company shall comply with
the requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of Notes in connection with a
Change of Control.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered payment in an amount equal to the purchase price for the Notes, and the
Trustee shall promptly authenticate and mail (or cause to be transferred by book
entry) to each Holder a new Note equal in principal amount to any unpurchased
portion of the Notes surrendered by such Holder, if any; provided, that each
such new Note shall be in a principal amount of $1,000 or an integral multiple
thereof. The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
(c) Notwithstanding anything to the contrary in this Section 4.15,
the Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Section 4.15 and Section 3.09 hereof and all other provisions of this
Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
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Section 4.16. No Senior Subordinated Debt.
Notwithstanding the provisions of Section 4.09 hereof, (i) the
Company shall not incur any Indebtedness that is subordinate or junior in right
of payment to any Senior Debt and senior in any respect in right of payment to
the Notes, and (ii) no Guarantor shall incur any Indebtedness that is
subordinated or junior in right of payment to any Guarantees of Senior Debt and
senior in any respect in right of payment to the Note Guarantees.
Section 4.17. No Amendment of Subordination Provisions.
Without the consent of each Holder of Notes affected thereby, the
Company will not amend, modify or alter the Subordinated Convertible Note
Indenture in any way that will (i) increase the rate of or change the time for
payment of each interest on any Convertible Subordinated Notes, (ii) increase
the principal of, advance the final maturity date of or shorten the Weighted
Average Life to Maturity of any Subordinated Convertible Notes, (iii) alter the
redemption provisions or the price or terms at which the Company is required to
offer to purchase such Convertible Subordinated Notes in any manner adverse to
such Holder or (iv) amend the provisions of Article 10 of the Senior
Subordinated Note Indenture (which relate to subordination) in any manner
adverse to such Holder.
Section 4.18. Limitation on Sale and Leaseback Transactions.
The Company shall not, and shall not permit any of its Subsidiaries
to, enter into any sale and leaseback transaction; provided that the Company may
enter into a sale and leaseback transaction if (i) the Company could have (a)
incurred Indebtedness in an amount equal to the Attributable Debt relating to
such sale and leaseback transaction pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of Section 4.09 hereof and (b) incurred a
Lien to secure such Indebtedness pursuant to the provisions of Section 4.12
hereof, (ii) the gross cash proceeds of such sale and leaseback transaction are
at least equal to the fair market value (for sale and leaseback transactions
having a fair market value in excess of $1.0 million as determined in good faith
by the Board of Directors and set forth in an Officers' Certificate delivered to
the Trustee) of the property that is the subject of such sale and leaseback
transaction and (iii) the transfer of assets in such sale and leaseback
transaction is permitted by, and the Company applies the proceeds of such
transaction in compliance with, Section 4.10 hereof.
Section 4.19. Limitation on Issuances of Guarantees of Indebtedness.
The Company shall not permit any Subsidiary, directly or indirectly,
to Guarantee or pledge any assets to secure the payment of any Indebtedness of
the Company under the Credit Facilities unless such Subsidiary simultaneously
executes and delivers a supplemental indenture to this Indenture providing for
the Guarantee of the payment of the Notes by such Subsidiary, which Guarantee
shall be pari passu with such Subsidiary's Guarantee of or pledge to secure such
other Indebtedness prior to the Merger Date and on a senior subordinated basis
after the Merger Date. Notwithstanding the foregoing, any such Guarantee by a
Subsidiary of the Notes shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon any sale,
exchange or transfer, to any Person not an Affiliate of the Company, of all of
the Company's stock in, or all or substantially all the assets of, such
Subsidiary, which sale, exchange or transfer is made in compliance with the
applicable provisions of this Indenture. The form of such Guarantee is attached
as Exhibit E hereto.
Section 4.20. Payments for Consent.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an
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inducement to any consent, waiver or amendment of any of the terms or provisions
of the Indenture or the Notes unless such consideration is offered to be paid or
is paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
The Company shall not, directly or indirectly, consolidate or merge
with or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, another Person
unless (i) the Company is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, conveyance or other disposition shall
have been made is a corporation organized or existing under the laws of the
United States, any state thereof or the District of Columbia, (ii) the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or the Person to which such sale, assignment, transfer, conveyance or
other disposition shall have been made assumes all the obligations of the
Company under the Collateral Agreements, Registration Rights Agreement, the
Notes and this Indenture pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee, (iii) immediately prior to and after
such transaction, no Default or Event of Default exists and (iv) except in the
case of a merger of the Company with or into a Wholly Owned Subsidiary of the
Company and the Merger, the Company or the Person formed by or surviving any
such consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, conveyance or other disposition shall have been made
shall, immediately prior to and after such transaction after giving pro forma
effect thereto and any related financing transactions as if the same had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in clause (a) of the first paragraph of Section
4.09 hereof. In addition, the Company shall not, directly or indirectly, lease
all or substantially all of its properties or assets, in one or more related
transactions, to any other Person. The provisions of this Section 5.01 shall not
be applicable to a sale, assignment, transfer, conveyance or other disposition
of assets between or among the Company and its Wholly Owned Subsidiaries or any
of the Guarantors.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
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ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "EVENT OF DEFAULT" occurs if:
(a) the Company defaults in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes (including any failure to issue
Additional Notes when required) and such default continues for a period of 30
days;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at maturity,
upon redemption (including in connection with an offer to purchase) or
otherwise;
(c) the Company fails to comply with any of the provisions of Section
4.07, 4.09, 4.10 or 5.01 hereof such failure shall have continued for 15 days
after receipt of written notice from the Company or any Holder;
(d) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture, the Notes or,
prior to the Merger Date, the Collateral Agreements for 60 days after notice to
the Company by the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding voting as a single class;
(e) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries (or
the payment of which is guaranteed by the Company or any of its Subsidiaries)
whether such Indebtedness or guarantee now exists, or is created after the date
of the Indenture, which default (a) is caused by a failure to pay principal of
or premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $10.0 million or more;
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Significant Subsidiaries or any group of Subsidiaries that, taken as
a whole, would constitute a Significant Subsidiary and such judgment or
judgments remain undischarged for a period (during which execution shall not be
effectively stayed) of 60 days, provided that the aggregate of all such
undischarged judgments exceeds $10.0 million;
(g) the Company or any of its Significant Subsidiaries or any group
of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii)consents to the entry of an order for relief against it in
an involuntary case,
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(iii) consents to the appointment of a custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due; or
(h) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary in an involuntary case;
(ii)appoints a custodian of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary or for all or
substantially all of the property of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary; or
(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive
days; or
(i) prior to the Merger Date, the Company shall breach any material
representation, warranty or agreement set forth in the Collateral Agreements or
the Collateral Agreements shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect.
(j) except as permitted by this Indenture, any Note Guarantee is held
in any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Guarantor, or any Person acting on
behalf of any Guarantor, shall deny or disaffirm its obligations under such
Guarantor's Note Guarantee.
Section 6.02. Acceleration.
If any Event of Default (other than an Event of Default specified in
clause (g) or (h) of Section 6.01 hereof with respect to the Company, any
Significant Subsidiary or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary) occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding Notes
may declare all the Notes to be due and payable immediately. Upon any such
declaration, the Notes shall become due and payable immediately. Notwithstanding
the foregoing, if an Event of Default specified in clause (g) or (h) of Section
6.01 hereof occurs with respect to the Company, any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary, all outstanding Notes shall be due and
payable immediately without further action or notice. The Holders of a majority
in aggregate principal amount of the then outstanding Notes by written notice to
the Trustee may on behalf of all of the Holders rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal, interest
or premium that has become due solely because of the acceleration) have been
cured or waived.
If an Event of Default occurs on or after the first date for optional
redemption of the Notes by the Company by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding payment of the premium that the Company would have had to pay if the
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Company then had elected to redeem the Notes pursuant to Section 3.07 hereof,
then, upon acceleration of the Notes, an equivalent premium shall also become
and be immediately due and payable, to the extent permitted by law, anything in
this Indenture or in the Notes to the contrary notwithstanding. If an Event of
Default occurs prior to such date by reason of any willful action (or inaction)
taken (or not taken) by or on behalf of the Company with the intention of
avoiding the prohibition on redemption of the Notes prior to such date, then,
upon acceleration of the Notes, an additional premium shall also become and be
immediately due and payable in an amount, as set forth in the Notes.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or interest
on, the Notes (including in connection with an offer to purchase) (provided,
however, that the Holders of a majority in aggregate principal amount of the
then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
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(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder;
provided that a Holder shall not have the right to institute any such suit for
the enforcement of payment if and to the extent that the institution or
prosecution thereof or the entry of judgment therein would, under applicable
law, result in the surrender, impairment, waiver or loss of the Lien of the
Indenture upon any property subject to such Lien.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or
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arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the
costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium and Liquidated Damages, if any, and interest,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes for principal, premium and Liquidated
Damages, if any and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only those
duties that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against the
Trustee; and
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(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture (but need not confirm or
investigate the accuracy of any mathematical calculations or other facts stated
therein).
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights and powers under this Indenture at
the request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability, claim,
damage or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel of its own selection and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
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(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it
is actually known to a Responsible Officer of the Trustee, the Trustee shall
mail to Holders of Notes a notice of the Default or Event of Default within 90
days after it occurs. Except in the case of a Default or Event of Default in
payment of principal of, premium, if any, or interest on any Note, the Trustee
may withhold the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of the Holders of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each August 15 beginning with the August 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA ss. 313(a) (but if no
event described in TIA ss. 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA Section 313(d).
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange or delisted therefrom.
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Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all disbursements, advances and expenses incurred or made by it
in addition to the compensation for its services. Such expenses shall include
the reasonable compensation, disbursements and expenses of the Trustee's agents
and counsel.
The Company shall indemnify the Trustee (and any predecessor Trustee)
against any and all losses, liabilities, claims, damages or expenses (including
taxes other than taxes based on the income of the Trustee) incurred by it
arising out of or in connection with the acceptance or administration of its
duties under this Indenture, including the costs and expenses of enforcing this
Indenture against the Company (including this Section 7.07) and defending itself
against any claim (whether asserted by the Company or any Holder or any other
person) or liability in connection with the exercise or performance of any of
its powers or duties hereunder, except to the extent any such loss, liability,
claims, damages or expense may be attributable to its negligence or willful
misconduct. The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the
claim and the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a majority
in principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
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(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding Notes
may petition, at the expense of the Company, any court of competent jurisdiction
for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder who has been a
Holder for at least six months, fails to comply with Section 7.10, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
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Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
Section 7.12. Trustee's Application for Instructions from the Company.
Any application by the Trustee for written instructions from the
Company may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three Business Days after the date any officer of the Company actually receives
such application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight.
Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "LEGAL
DEFEASANCE"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest on such Notes when such payments
are due, (b) the Company's obligations with respect to such Notes under Article
2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities
of the Trustee hereunder and the Company's obligations in connection therewith
and (d) this Article Eight. Subject to compliance with this Article Eight, the
Company may exercise its option under this Section 8.02 notwithstanding the
prior exercise of its option under Section 8.03 hereof.
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Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18 and 4.19 hereof and clause (iv) of
Section 5.01 hereof with respect to the outstanding Notes on and after the date
the conditions set forth in Section 8.04 are satisfied (hereinafter, "Covenant
Defeasance"), the Lien securing obligations under the Notes on any Collateral
shall be released and the Collateral Documents shall no longer secure
obligations under the Notes or this Indenture and the Notes shall thereafter be
deemed not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event of Default under Section 6.01 hereof, but, except as specified
above, the remainder of this Indenture and such Notes shall be unaffected
thereby. In addition, upon the Company's exercise under Section 8.01 hereof of
the option applicable to this Section 8.03 hereof, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, Sections 6.01(c) through
6.01(f) hereof shall not constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient without any reinvestment thereof, in the opinion of a nationally
recognized firm of independent public accountants, to pay the principal of,
premium and Liquidated Damages, if any, and interest on the outstanding Notes on
the stated date for payment thereof or on the applicable redemption date, as the
case may be;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as
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a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the incurrence of Indebtedness all or a portion of the proceeds
of which will be used to defease the Notes pursuant to this Article Eight
concurrently with such incurrence) or insofar as Sections 6.01(g) or 6.01(h)
hereof is concerned, at any time in the period ending on the 91st day after the
date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under, any material agreement
or instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an Opinion of
Counsel (which may be subject to customary exceptions) to the effect that on the
91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"TRUSTEE") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which
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may be the opinion delivered under Section 8.04(a) hereof), are in excess of the
amount thereof that would then be required to be deposited to effect an
equivalent Legal Defeasance or Covenant Defeasance.
Section 8.06. Repayment to Company
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its written request or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Note shall
thereafter look only to the Company for payment thereof, and all liability of
the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause to be published
once, in the New York Times and The Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such notification
or publication, any unclaimed balance of such money then remaining will be
repaid to the Company.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture, the Notes and
the Collateral Documents shall be revived and reinstated as though no deposit
had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with
Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if the
Company makes any payment of principal of, premium, if any, or interest on any
Note following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture, the
Collateral Documents, the Note Guarantees or the Notes without the consent of
any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including the
related definitions) in a manner that does not materially adversely affect any
Holder;
(c) to provide for the assumption of the Company's or a Guarantor's
obligations to the Holders of the Notes by a successor to the Company pursuant
to Article 5 or Article 10 hereof;
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(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note;
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
(f) to allow any Guarantor to execute a supplemental indenture and/or
a Note Guarantee with respect to the Notes.
(g) after the Merger Date, release the Collateral or make the
Collateral Documents inapplicable to the obligations under the Notes and the
Indenture.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company and the Guarantors in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (excluding Section 3.09, 4.10 and
4.15 hereof), the Note Guarantees, the Notes and, prior to the Merger Date, the
Collateral Documents may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the Notes then outstanding
voting as a single class (including consents obtained in connection with a
tender offer or exchange offer for, or purchase of, the Notes), and, subject to
Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other
than a Default or Event of Default in the payment of the principal of, premium,
if any, or interest on the Notes, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of this
Indenture, the Note Guarantees or the Notes and, prior to the Merger Date, the
Collateral Documents, may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes voting as a single
class (including consents obtained in connection with a tender offer or exchange
offer for, or purchase of, the Notes). Without the consent of at least 662/3% in
principal amount of the Notes then outstanding (including consents obtained in
connection with a tender offer or exchange offer for, or purchase of, such
Notes), no waiver or amendment to this Indenture may make any change in the
provisions of Section 4.10, 3.09 or 4.15 hereof that adversely affects the
rights of any Holder of Notes. Section 2.08 hereof shall determine which Notes
are considered to be "outstanding" for purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
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It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a
single class may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder affected, an amendment or waiver under this Section 9.02 may not
(with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note
or alter or waive any of the provisions with respect to the redemption of the
Notes except as provided above with respect to Sections 3.09, 4.10 and 4.15
hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal
of or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the then outstanding Notes and a waiver of the payment
default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or interest on the Notes;
(g) make any change in Section 6.04 or 6.07 hereof or in the
foregoing amendment and waiver provisions; or
(h) release any Guarantor from any of its obligations under its Note
Guarantee or this Indenture, except in accordance with the terms of this
Indenture.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
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made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 11.04 hereof, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate.
The Company agrees, and each Holder by accepting a Note agrees, that
beginning after the effective time of the Merger, Indebtedness evidenced by the
Notes is subordinated in right of payment, to the extent and in the manner
provided in this Article 10, to the prior payment in full in cash or Cash
Equivalents of all Senior Debt (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed), and that the subordination
is for the benefit of and enforceable by the holders of Senior Debt. Prior to
the effective time of the Merger, (i) the Notes are not subordinated and (ii)
the remainder of this Article 10 shall be of no force and effect.
Section 10.02. Liquidation; Dissolution; Bankruptcy.
After the effective time of the Merger, upon any distribution to
creditors of the Company in a liquidation or dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property, in an assignment for the benefit of
creditors or any marshaling of the Company's assets and liabilities:
(i) holders of Senior Debt shall be first entitled to receive
payment in full of all Obligations due in respect of such Senior Debt
(including interest after, or which would have accrued but for, the
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commencement of any such proceeding at the rate specified in the
applicable Senior Debt, whether or not a claim for such interest would be
allowed) before Holders of the Notes shall be entitled to receive any
payment with respect to the Notes (except that Holders may receive (A)
Permitted Junior Securities and (B) payments and other distributions made
from any defeasance trust created pursuant to Section 8.01 hereof); and
(ii) until all Obligations with respect to Senior Debt (as
provided in clause (i) above) are paid in full, any distribution to which
Holders would be entitled but for this Article 10 shall be made to holders
of Senior Debt (except that Holders of Notes may receive (A) Permitted
Junior Securities and (B) payments and other distributions made from any
defeasance trust created pursuant to Section 8.01 hereof), as their
interests may appear.
Section 10.03. Default on Designated Senior Debt.
(a) After the effective time of the Merger, the Company may not make
any payment or distribution to the Trustee or any Holder in respect of any
Obligations with respect to the Notes and may not acquire from the Trustee or
any Holder any Notes for cash or property (other than (A) Permitted Junior
Securities and (B) payments and other distributions made from any defeasance
trust created pursuant to Section 8.01 hereof) until all principal and other
Obligations with respect to the Senior Debt have been paid in full if:
(i) a default in the payment of any principal or other
Obligations with respect to Designated Senior Debt occurs and is
continuing beyond any applicable grace period in the agreement, indenture
or other document governing such Designated Senior Debt; or
(ii) a default, other than a payment default, on Designated
Senior Debt occurs and is continuing that then permits holders of the
Designated Senior Debt to accelerate its maturity and the Trustee receives
a notice of the default (a "Payment Blockage Notice") from a Person who
may give it pursuant to Section 10.12 hereof. If the Trustee receives any
such Payment Blockage Notice, no subsequent Payment Blockage Notice shall
be effective for purposes of this Section unless and until (A) at least
360 days shall have elapsed since the effectiveness of the immediately
prior Payment Blockage Notice and (B) all scheduled payments of principal,
premium, if any, and interest on the Securities that have come due have
been paid in full in cash. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice unless such default shall have been waived for a period of not less
than 180 days.
(b) The Company may and shall resume payments on and distributions in
respect of the Notes and may acquire them upon the earlier of:
(i) the date upon which the default is cured or waived by
written notice to the Trustee and the Company from the Person or Persons
who gave such Payment Blockage Notice and, in the case of Designated
Senior Debt that has been accelerated, such acceleration has been
rescinded, or
(ii) in the case of a default referred to in clause (ii) of
Section 10.04(a) hereof, 179 days pass after notice is received if the
maturity of such Designated Senior Debt has not been accelerated,
if this Article 10 otherwise permits the payment, distribution or acquisition
at the time of such payment or acquisition.
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Section 10.04. Acceleration of Notes.
If payment of the Notes is accelerated because of an Event of
Default, the Company shall promptly notify holders of Designated Senior Debt of
the acceleration. If any Designated Senior Debt is outstanding, the Company may
not pay the Notes until five Business Days after the Representative of the
Designated Senior Debt receives notice of such acceleration and, thereafter, may
pay the Notes only if this Article X otherwise permits the payment at that time.
Section 10.05. When Distribution Must Be Paid Over.
In the event that the Trustee or any Holder receives any payment of
any Obligations with respect to the Notes at a time when the Trustee or such
Holder, as applicable, has actual knowledge that such payment is prohibited by
Article 10 hereof, such payment shall be held by the Trustee or such Holder, in
trust for the benefit of, and shall be paid forthwith over and delivered to the
holders of Senior Debt as their interests may appear or their Representative
under the indenture or other agreement (if any) pursuant to which Senior Debt
may have been issued, as their respective interests may appear, for application
to the payment of all Obligations with respect to Senior Debt remaining unpaid
to the extent necessary to pay such Obligations in full in accordance with their
terms, after giving effect to any concurrent payment or distribution to or for
the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall be
entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
Section 10.06. Notice by Company.
The Company shall promptly notify a Responsible Officer of the
Trustee and a Responsible Officer of the Paying Agent of any facts known to the
Company that would cause a payment of any Obligations with respect to the Notes
to violate this Article 10, but failure to give such notice shall not affect the
subordination of the Notes to the Senior Debt as provided in this Article 10.
Section 10.07. Subrogation.
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders of Notes shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this Article 10 to holders of
Senior Debt that otherwise would have been made to Holders of Notes is not, as
between the Company and Holders, a payment by the Company on the Notes.
Section 10.08. Relative Rights.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Debt after the effective time of the Merger. Nothing in this
Indenture shall:
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(i) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(ii) affect the relative rights of Holders of Notes and
creditors of the Company other than their rights in relation to holders of
Senior Debt; or
(iii) prevent the Trustee or any Holder of Notes from
exercising its available remedies upon a Default or Event of Default,
subject to the rights of holders and owners of Senior Debt to receive
distributions and payments otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay principal of
or interest on a Note on the due date, the failure is still a Default or Event
of Default.
Section 10.09. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Company or any Holder or by the failure of the Company or any
Holder to comply with this Indenture.
Section 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to
in this Article 10, the Trustee and the Holders of Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
Section 10.11. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Company or a
Representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
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Section 10.12. Authorization to Effect Subordination.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the Representatives are hereby authorized to file an appropriate
claim for and on behalf of the Holders of the Notes.
Section 10.13. Amendments.
The provisions of this Article 10 shall not be amended or modified as
against any Senior Debt incurred after the date of this Indenture without the
written consent of the holders of such Senior Debt.
ARTICLE 11
COLLATERAL AND SECURITY
Section 11.01. Collateral Agreements.
Prior to the effective time of the Merger, the due and punctual
payment of the principal of and interest and Liquidated Damages, if any, on the
Notes when and as the same shall be due and payable, whether on an interest
payment date, at maturity, by acceleration, repurchase, redemption or otherwise,
and interest on the overdue principal of and interest and Liquidated Damages (to
the extent permitted by law), if any, on the Notes and performance of all other
obligations of the Company to the Holders of Notes or the Trustee under this
Indenture and the Notes, according to the terms hereunder or thereunder, shall
be secured as provided in the [_______________] Agreements which the Company has
entered into simultaneously with the execution of this Indenture. Each Holder of
Notes, by its acceptance thereof, consents and agrees to the terms of the
[_______________] Agreement (including, without limitation, the provisions
providing for foreclosure and release of Collateral) as the same may be in
effect or may be amended from time to time in accordance with its terms and
authorizes and directs the Collateral Agent to enter into the [_______________]
Agreement and to perform its obligations and exercise its rights thereunder in
accordance therewith. The Company shall deliver to the Trustee copies of all
documents delivered to the Collateral Agent pursuant to the [_______________]
Agreement, and shall do or cause to be done all such acts and things as may be
necessary or proper, or as may be required by the provisions of the
[_______________] Agreement , to assure and confirm to the Trustee and the
Collateral Agent the security interest in the Collateral contemplated hereby, by
the [_______________] Agreement or any part thereof, as from time to time
constituted, so as to render the same available for the security and benefit of
this Indenture and of the Notes secured hereby, according to the intent and
purposes herein expressed. The Company shall take, or shall cause its
Subsidiaries to take, upon request of the Trustee, any and all actions
reasonably required to cause the [_______________] Agreement to create and
maintain, as security for the Obligations of the Company hereunder, a valid and
enforceable perfected first priority Lien in and on all the Collateral, in favor
of the Collateral Agent for the benefit of the Holders of Notes and the lenders
under the Credit Agreement, superior to and prior to the rights of all third
Persons and subject to no other Liens (other than "PERMITTED LIENS" as defined
in the Credit Agreement).
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Section 11.02. Recording and Opinions.
Prior to the effective time of the Merger, the Company shall furnish
to the Trustee simultaneously with the execution and delivery of this Indenture
an Opinion of Counsel either (i) stating that in the opinion of such counsel all
action has been taken with respect to the recording, registering and filing of
this Indenture, financing statements or other instruments necessary to make
effective the Lien intended to be created by the Collateral Agreements, and
reciting with respect to the security interests in the Pledged Collateral, the
details of such action, or (ii) stating that, in the opinion of such counsel, no
such action is necessary to make such Lien effective.
Prior to the effective time of the Merger, the Company shall furnish
to the Collateral Agent and the Trustee on _________ __ in each year beginning
with _________ __, 199__, an Opinion of Counsel, dated as of such date, either
(i) (A) stating that, in the opinion of such counsel, action has been taken with
respect to the recording, registering, filing, re-recording, re-registering and
refiling of all supplemental indentures, financing statements, continuation
statements or other instruments of further assurance as is necessary to maintain
the Lien of the Collateral Agreements and reciting with respect to the security
interests in the Pledged Collateral the details of such action or referring to
prior Opinions of Counsel in which such details are given, (B) stating that,
based on relevant laws as in effect on the date of such Opinion of Counsel, all
financing statements and continuation statements have been executed and filed
that are necessary as of such date and during the succeeding 12 months fully to
preserve and protect, to the extent such protection and preservation are
possible by filing, the rights of the Holders of Notes and the Collateral Agent
and the Trustee hereunder and under the Collateral Agreements with respect to
the security interests in the Collateral, or (ii) stating that, in the opinion
of such counsel, no such action is necessary to maintain such Lien and
assignment.
The Company shall otherwise comply with the provisions of TIA
ss.314(b).
Section 11.03. Release of Collateral.
(a) Prior to the effective time of the Merger, subject to subsection
(b) of this Section 11.03, Collateral may be released from the Lien and security
interest created by the Collateral Agreements at any time or from time to time
in accordance with the provisions of the Collateral Agreements or as provided
hereby.
(b) Prior to the effective time of the Merger, the release of any
Collateral from the terms of this Indenture and the Collateral Agreements shall
not be deemed to impair the security under this Indenture in contravention of
the provisions hereof if and to the extent the Collateral is released pursuant
to the terms of the Collateral Agreements. To the extent applicable, the Company
shall cause TIA ss. 313(b), relating to reports, and TIA ss. 314(d), relating to
the release of property or securities from the Lien and security interest of the
Collateral Agreements and relating to the substitution therefor of any property
or securities to be subjected to the Lien and security interest of the
Collateral Agreements, to be complied with. Any certificate or opinion required
by TIA ss. 314(d) may be made by an Officer of the Company except in cases where
TIA ss. 314(d) requires that such certificate or opinion be made by an
independent Person, which Person shall be an independent engineer, appraiser or
other expert selected or approved by the Trustee and the Collateral Agent in the
exercise of reasonable care.
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Section 11.04. Certificates of the Company.
Prior to the effective time of the Merger, the Company shall furnish
to the Trustee and the Collateral Agent, prior to each proposed release of
Collateral pursuant to the Collateral Agreements, (i) all documents required by
TIA ss.314(d) and (ii) an Opinion of Counsel, which may be rendered by internal
counsel to the Company, to the effect that such accompanying documents
constitute all documents required by TIA ss.314(d). The Trustee may, to the
extent permitted by Sections 7.01 and 7.02 hereof, accept as conclusive evidence
of compliance with the foregoing provisions the appropriate statements contained
in such documents and such Opinion of Counsel.
Section 11.05. Certificates of the Trustee.
Prior to the effective time of the Merger, in the event that the
Company wishes to release Collateral in accordance with the Collateral
Agreements and has delivered the certificates and documents required by the
Collateral Agreements and Sections 11.03 and 11.04 hereof, the Trustee shall
determine whether it has received all documentation required by TIA ss.314(d) in
connection with such release and, based on such determination and the Opinion of
Counsel delivered pursuant to Section 11.04(b), shall deliver a certificate
prepared by the Company to the Collateral Agent setting forth such
determination.
Section 11.06. Authorization of Actions to Be Taken by the Trustee Under the
Collateral Agreements.
Prior to the effective time of the Merger, subject to the provisions
of Section 7.01 and 7.02 hereof, the Trustee may, in its sole discretion and
without the consent of the Holders of Notes, direct, on behalf of the Holders of
Notes, the Collateral Agent to, take all actions it deems necessary or
appropriate in order to (a) enforce any of the terms of the Collateral
Agreements and (b) collect and receive any and all amounts payable in respect of
the Obligations of the Company hereunder. The Trustee shall have power to
institute and maintain such suits and proceedings as it may deem expedient to
prevent any impairment of the Collateral by any acts that may be unlawful or in
violation of the Collateral Agreements or this Indenture, and such suits and
proceedings as the Trustee may deem expedient to preserve or protect its
interests and the interests of the Holders of Notes in the Collateral (including
power to institute and maintain suits or proceedings to restrain the enforcement
of or compliance with any legislative or other governmental enactment, rule or
order that may be unconstitutional or otherwise invalid if the enforcement of,
or compliance with, such enactment, rule or order would impair the security
interest hereunder or be prejudicial to the interests of the Holders of Notes or
of the Trustee).
Section 11.07. Authorization of Receipt of Funds by the Trustee Under the
Collateral Agreements.
Prior to the effective time of the Merger, the Collateral Agent is
authorized to receive any funds for the benefit of the Holders of Notes
distributed under the Collateral Agreements, and to make further distributions
of such funds to the Holders of Notes according to the provisions of this
Indenture.
Section 11.08. Termination of Security Interest.
Prior to the effective time of the Merger, upon the earlier of (i)
the effective time of the Merger and (ii) the payment in full of all Obligations
of the Company under this Indenture and the Notes, or upon Legal Defeasance, the
Trustee shall, at the request of the Company, deliver a certificate prepared by
the Company to the Collateral Agent instructing the Collateral Agent to release
the Liens securing the Obligations under the Notes and this Indenture.
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ARTICLE 12
NOTE GUARANTEES
Section 12.01. Guarantee.
Subject to this Article 12, each of the Guarantors hereby, jointly
and severally, unconditionally guarantees to each Holder of a Note authenticated
and delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Company hereunder or thereunder, that: (a) the principal
of and interest on the Notes will be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors shall be jointly and severally
obligated to pay the same immediately. Each Guarantor agrees that this is a
guarantee of payment and not a guarantee of collection.
The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that this Note Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Note Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Note Guarantee. The Guarantors shall have the right to
seek contribution from any non-paying Guarantor so long as the exercise of such
right does not impair the rights of the Holders under the Guarantee.
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Section 12.02. Subordination of Note Guarantee.
After the effective time of the Merger, the Obligations of each
Guarantor under its Note Guarantee pursuant to this Article 12 shall be junior
and subordinated to the Senior Guarantee of such Guarantor on the same basis as
the Notes are junior and subordinated to Senior Debt of the Company. For the
purposes of the foregoing sentence, the Trustee and the Holders shall have the
right to receive and/or retain payments by any of the Guarantors only at such
times as they may receive and/or retain payments in respect of the Notes
pursuant to this Indenture, including Article 10. "Senior Guarantees" means the
Guarantees by the Guarantors of Obligations under the Credit Agreement. Prior to
the Merger Date, each Note Guarantee shall be pari passu in right of payment
with my guarantee of the Credit Facilities.
Section 12.03. Limitation on Guarantor Liability.
Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Note Guarantee of
such Guarantor not constitute a fraudulent transfer or conveyance for purposes
of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders
and the Guarantors hereby irrevocably agree that the obligations of such
Guarantor will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of such Guarantor that are relevant under such
laws, and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under this Article 12, result
in the obligations of such Guarantor under its Note Guarantee not constituting a
fraudulent transfer or conveyance.
Section 12.04. Execution and Delivery of Note Guarantee.
To evidence its Note Guarantee set forth in Section 12.01, each
Guarantor hereby agrees that a notation of such Note Guarantee substantially in
the form included in Exhibit E shall be endorsed by an Officer of such Guarantor
on each Note authenticated and delivered by the Trustee and that this Indenture
shall be executed on behalf of such Guarantor by its President or one of its
Vice Presidents.
Each Guarantor hereby agrees that its Note Guarantee set forth in
Section 12.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on this Indenture or on the Note
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Note Guarantee is endorsed, the Note Guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Note Guarantee set forth
in this Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any new
Subsidiaries subsequent to the date of this Indenture, if required by Section
4.19 hereof, the Company shall cause such Subsidiaries to execute supplemental
indentures to this Indenture and Note Guarantees in accordance with Section 4.19
hereof and this Article 12, to the extent applicable.
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Section 12.05. Guarantors May Consolidate, etc., on Certain Terms.
Except as otherwise provided in this Section 12.05, no Guarantor may
consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person) another Person whether or not affiliated with such Guarantor
unless:
(a) subject to this Section 12.05, the Person formed by or surviving
any such consolidation or merger (if other than a Guarantor or the Company)
unconditionally assumes all the obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, the Indenture and the Note Guarantee on the terms set
forth herein or therein; and
(b) immediately after giving effect to such transaction, no Default
or Event of Default exists.
In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor Person, by supplemental indenture, executed
and delivered to the Trustee and satisfactory in form to the Trustee, of the
Note Guarantee endorsed upon the Notes and the due and punctual performance of
all of the covenants and conditions of this Indenture to be performed by the
Guarantor, such successor Person shall succeed to and be substituted for the
Guarantor with the same effect as if it had been named herein as a Guarantor.
Such successor Person thereupon may cause to be signed any or all of the Note
Guarantees to be endorsed upon all of the Notes issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee. All the Note Guarantees so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Note Guarantees theretofore
and thereafter issued in accordance with the terms of this Indenture as though
all of such Note Guarantees had been issued at the date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses (a) and (b) above, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor, or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.
Section 12.06. Releases Following Sale of Assets.
In the event of a sale or other disposition of all of the assets of
any Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all to the capital stock of any Guarantor, in each case to a
Person that is not (either before or after giving effect to such transactions) a
Subsidiary of the Company, then such Guarantor (in the event of a sale or other
disposition, by way of merger, consolidation or otherwise, of all of the capital
stock of such Guarantor) or the corporation acquiring the property (in the event
of a sale or other disposition of all or substantially all of the assets of such
Guarantor) will be released and relieved of any obligations under its Note
Guarantee; provided that the Net Proceeds of such sale or other disposition are
applied in accordance with the applicable provisions of this Indenture,
including without limitation Section 4.10 hereof. Upon delivery by the Company
to the Trustee of an Officers' Certificate and an Opinion of Counsel to the
effect that such sale or other disposition was made by the Company in accordance
with the provisions of this Indenture, including without limitation Section 4.10
hereof, the Trustee shall execute any documents reasonably required in order to
evidence the release of any Guarantor from its obligations under its Note
Guarantee.
Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this Indenture
as provided in this Article 12.
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ARTICLE 13
MISCELLANEOUS
Section 13.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA ss.318(c), the imposed duties shall control.
Section 13.02. Notices.
Any notice or communication by the Company, any Guarantor or the
Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company and/or any Guarantor:
Key Energy Group, Inc.
Two Tower Center
East Brunswick, New Jersey 08816
Telecopier No.: (908) 659-1526
Attention: Stephen E. McGregor
With a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue, N.W.
Washington, DC 20005
Telecopier No.: (202) 393-5760
Attention: Michael Rogan, Esq.
and
Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002
Telecopier No.: (713) 226-0227
Attention: William W. Wiggins
If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 W
New York, New York 10286
Telecopier No.: (212) 815-5915
Attention: Corporate Trust Administration
The Company, any Guarantor or the Trustee, by notice to the others
may designate additional or different addresses for subsequent notices or
communications.
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All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA ss. 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 13.03. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).
Section 13.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
Section 13.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
73
<PAGE> 79
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
Section 13.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 13.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company or any Guarantor, as such, shall have any
liability for any obligations of the Company or such Guarantor under the Notes,
the Note Guarantees, this Indenture or the Agreement or for any claim based on,
in respect of, or by reason of, such obligations or their creation. Each Holder
by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes.
Section 13.08. Governing Law.
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE THIS INDENTURE, THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Section 13.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 13.10. Successors.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors. All agreements of each Guarantor in this Indenture shall bind
its successors, except as otherwise provided in Section 13.05.
Section 13.11. Severability.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 13.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
74
<PAGE> 80
Section 13.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
75
<PAGE> 81
SIGNATURES
Dated as of September 14, 1998
KEY ENERGY GROUP, INC.
By:
--------------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
--------------------------------
Name:
Title:
<PAGE> 82
EXHIBIT A1
[Face of Note]
================================================================================
CUSIP/CINS ____________
__% Exchange Notes due 2008
No. ___ $____________
Key Energy Group, Inc.
promises to pay to __________________________________________ or registered
assigns, the principal sum of __________________________________________ Dollars
on September 14, 2008. Interest Payment Dates: March 15 and September 15 Record
Dates: March 1 and September 1
Key Energy Group, Inc.
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
This is one of the Notes referred to
in the within-mentioned Indenture:
Dated: __________ __, ____
The Bank of New York
as Trustee
By:
----------------------------------
Authorized Signatory
A1-1
<PAGE> 83
[Back of Note]
___% Exchange Notes due 2008
[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]
[Insert the Unit Legend, if applicable pursuant to the provisions of the
Indenture]
Capitalized terms used herein shall have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.
1. INTEREST. Key Energy Group, Inc., a Maryland corporation (the
"COMPANY"), promises to pay interest on the principal amount of this
Note at ___% per annum from ________ __, 19__ until maturity and shall
pay the Liquidated Damages payable pursuant to Section 5 of the
Registration Rights Agreement referred to below. The Company will pay
interest and Liquidated Damages semi-annually in arrears on March 15
and September 15 of each year, or if any such day is not a Business
Day, on the next succeeding Business Day (each an "INTEREST PAYMENT
DATE"). Interest on the Notes will accrue from the most recent date to
which interest has been paid hereunder or, if no interest has been paid
hereunder, from the date that this Note was first released from Escrow
(as defined in the Indenture) together with any accrued and unpaid
interest on the Loan that was converted into this Note under the Bridge
Loan Agreement (as defined in the Indenture); provided that if there is
no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and
the next succeeding Interest Payment Date, interest shall accrue from
such next succeeding Interest Payment Date; provided, further, that the
first Interest Payment Date shall be ________ __, 19__. The Company
shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 2% per annum in excess of
the rate then in effect; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate
to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who
are registered Holders of Notes at the close of business on March 1 or
September 1 next preceding the Interest Payment Date, even if such
Notes are canceled after such record date and on or before such
Interest Payment Date, except as provided in Section 2.12 of the
Indenture with respect to defaulted interest. The Notes will be payable
as to principal, premium and Liquidated Damages, if any, and interest
at the office or agency of the Company maintained for such purpose
within or without the City and State of New York, or, at the option of
the Company, payment of interest and Liquidated Damages may be made by
check mailed to the Holders at their addresses set forth in the
register of Holders, and provided that payment by wire transfer of
immediately available funds will be required with respect to principal
of and interest, premium and Liquidated Damages on, all Global Notes
and all other Notes the Holders of which shall have provided wire
transfer instructions to the Company or the Paying Agent. Such payment
shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private
debts; provided, that if the interest rate provided in paragraph 1 is
greater than 14% per annum, interest in excess of 14% per annum in any
period may be paid by the issuance of additional Notes (the "Additional
Notes"); provided further that the Additional Notes shall be issued in
integral multiples of $1,000 and any amounts less than $1,000 shall be
paid in cash.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar.
The Company may change any Paying Agent or Registrar without notice to
any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
A1-2
<PAGE> 84
4. INDENTURE AND COLLATERAL AGREEMENTS. The Company issued the Notes
under an Indenture dated as of September 14, 1998 ("INDENTURE") between the
Company and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes
are subject to all such terms, and Holders are referred to the Indenture and
such Act for a statement of such terms. To the extent any provision of this Note
conflicts with the express provisions of the Indenture, the provisions of the
indenture shall govern and be controlling. The Notes are obligations of the
Company limited to $150.0 million in aggregate principal amount plus any amounts
issued as Additional Notes or any amounts in lieu of interest under the Bridge
Loan Agreement, dated September 14, 1998 among the Company, the lenders named
therein, Lehman Commercial Paper Inc., as administrative agent and Lehman
Brothers Inc., as Arranger. Prior to the Merger Date, the Notes are not
subordinated and are secured by the Collateral Agreements referred to in the
Indenture.
5. OPTIONAL REDEMPTION.
The Company shall not have the option to redeem the Notes prior to
________ __, ____ (the "INITIAL REDEMPTION DATE"). Thereafter, if such Initial
Redemption Date is prior to September 14, 2008, the Company shall have the
option to redeem the Notes, in whole or in part, upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest thereon to
the applicable redemption date.
If the Initial Redemption Date is prior to September 14, 2008, then
the redemption price for the one year following such date (or until September
14, 2008 if sooner) shall be equal 100% plus 1/2 of the annual interest rate
(expressed as a percentage). The redemption price in excess of 100% shall
decline ratably in each subsequent year, if any, until the redemption premium is
zero in any period beginning September 14, 2007 (except if the Initial
Redemption Date is on or after September 14, 2007).
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be required
to make an offer (a "CHANGE OF CONTROL OFFER") to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a
purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase, (the "CHANGE OF CONTROL PAYMENT"). Within 10 days following any
Change of Control, the Company shall mail a notice to each Holder setting forth
the procedures governing the Change of Control Offer as required by the
Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales,
within five days of each date on which the aggregate amount of Excess Proceeds
exceeds $5.0 million, the Company shall commence an offer to all Holders of
Notes (as "ASSET SALE OFFER") pursuant to Section 3.09 of the Indenture to
purchase the maximum principal amount of Notes principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
fixed for the closing of such offer, in accordance with the procedures set forth
in the Indenture. To the extent that the aggregate amount of Notes tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company
(or such Subsidiary) may use such deficiency for general corporate purposes. If
the aggregate principal amount of Notes surrendered by Holders thereof exceeds
the amount of Excess Proceeds, the Trustee shall select the Notes to be
purchased on a pro rata basis. Holders of Notes that are the subject of an offer
to purchase will receive an Asset Sale Offer from the Company prior to any
related purchase date and may elect to have such Notes purchased by completing
the form entitled "Option of Holder to Elect Purchase" on the reverse of the
Notes.
A1-3
<PAGE> 85
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture, the Note Guarantees or the Notes may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Notes voting as a single class, and any existing default or
compliance with any provision of the Indenture, the Note Guarantees or the Notes
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Notes voting as a single class. Without the consent of
any Holder of a Note, the Indenture, the Note Guarantees or the Notes may be
amended or supplemented to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's or Guarantor's obligations
to Holders of the Notes in case of a merger or consolidation, to make any change
that would provide any additional rights or benefits to the Holders of the Notes
or that does not adversely affect the legal rights under the Indenture of any
such Holder, to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act, to
provide for the Issuance of Additional Notes in accordance with the limitations
set forth in the Indenture, or to allow any Guarantor to execute a supplemental
indenture to the Indenture and/or a Note Guarantee with respect to the Notes.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for
30 days in the payment when due of interest or Liquidated Damages on the Notes;
(ii) default in payment when due of principal of or premium, if any, on the
Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise, (iii) failure
by the Company to comply with Section 4.07, 4.09, 4.10 or 5.01 of the Indenture,
remaining uncured for 15 days after written notice; (iv) failure by the Company
for 60 days after notice to the Company by the Trustee or the Holders of at
least 25% in principal amount of the Notes then outstanding voting as a single
class to comply with certain other Agreements in the Indenture, the Notes or the
Collateral Agreements; (v) default under certain other Agreements relating to
Indebtedness of the Company which default results in the acceleration of such
Indebtedness prior to its express maturity; (vi) certain final judgments for the
payment of money that remain undischarged for a period of 60 days; (vii) certain
events of bankruptcy or insolvency with respect to the Company or any of its
Significant Subsidiaries; (viii) the breach of certain covenants in the
Collateral Agreements or the Collateral Agreements shall be held in any judicial
proceeding to be unenforceable or invalid or shall cease for any reason to be in
full force and effect; and (ix) except as permitted by the Indenture, any Note
Guarantee shall be held in any judicial proceeding to be unenforceable or
A1-4
<PAGE> 86
invalid or shall cease for any reason to be in full force and effect or any
Guarantor or any Person acting on its behalf shall deny or disaffirm its
obligations under such Guarantor's Note Guarantee. If any Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all outstanding
Notes will become due and payable without further action or notice. Holders may
not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the A/B Exchange
Registration Rights Agreement dated as of September 14, 1998, between the
Company and the parties named on the signature pages thereof (the "REGISTRATION
RIGHTS AGREEMENT").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in
A1-5
<PAGE> 87
any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Key Energy Group, Inc.
Two Tower Center, Twentieth Floor
East Brunswick, New Jersey 08816
Attention: Stephen E. McGregor
A1-6
<PAGE> 88
Assignment Form
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to:_______________________________
(Insert assignee's legal name)
__________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint___________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:______________________
Your Signature:
-----------------------
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee*:
-------------------------
* Participant in a recognized Signature Guarantee Medallion Program.
A1-7
<PAGE> 89
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box
below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:
$
------------------
Date:
------------------
Your Signature:
-----------------------
(Sign exactly as your name appears
on the face of this Note)
Tax Identification No.:
---------------
Signature Guarantee*:
-------------------------
* Participant in a recognized Signature Guarantee Medallion Program.
A1-8
<PAGE> 90
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a
part of another Global Note or Definitive Note for an interest in this
Global Note, have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of decrease in Amount of increase in [at maturity] of Signature of
Principal Amount Principal Amount this Global Note authorized Signatory
[at maturity] of [at maturity] of following such decrease of Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
---------------- --------------------- --------------------- ----------------------- --------------------
<S> <C> <C> <C> <C>
</TABLE>
* This schedule should be included only if the Note is issued in global form.
A1-9
<PAGE> 91
EXHIBIT A2
================================================================================
CUSIP/CINS __________
____% Exchange Notes due 2008
No. ___ $__________
Key Energy Group, Inc.
promises to pay to ________________________________________ or registered
assigns, the principal sum of _______________________________________ Dollars on
_______________, 2008. Interest Payment Dates: March 15 and September 15 Record
Dates: March 1 and September 1
Key Energy Group, Inc.
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
This is one of the Notes referred to
in the within-mentioned Indenture:
Dated: _______________, ____
The Bank of New York,
as Trustee
By:
----------------------------------
Authorized Signatory
================================================================================
A2-1
<PAGE> 92
[Back of Regulation S Temporary Global Note]
___% Exchange Notes due 2008
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE NOTE
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT. THE
HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN OF RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT
OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
OF THE NOTE EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (1) ABOVE.
[Insert the Unit Legend, if applicable pursuant to the provisions of the
Indenture.]
A2-2
<PAGE> 93
Capitalized terms used herein shall have the meanings assigned to
them in the indenture referred to below unless otherwise indicated.
1. INTEREST. Key Energy Group, Inc., a Maryland corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
___% per annum from ________ __, 19__ until maturity and shall pay the
Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages semi-annually on March 15 and September 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"INTEREST PAYMENT DATE"). Interest on the Notes will accrue from the most recent
date to which interest has been paid hereunder or, if no interest has been paid
hereunder, from the date that this Note was first released from Escrow (as
defined in the Indenture) together with any accrued and unpaid interest on the
Loan that was converted into this Note under the Bridge Loan Agreement (as
defined in the Indenture); provided, further, that the first Interest Payment
Date shall be ________ __, 19__. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is 2%
per annum in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
Until this Regulation S Temporary Global Note is exchanged for one or
more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Senior Subordinated Notes under the Indenture.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the March 1 or September
1 next preceding the Interest Payment Date, even if such Notes are canceled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
The Notes will be payable as to principal, premium, interest and Liquidated
Damages at the office or agency of the Company maintained for such purpose
within or without the City and State of New York, or, at the option of the
Company, payment of interest and Liquidated Damages may be made by check mailed
to the Holders at their addresses set forth in the register of Holders, and
provided that payment by wire transfer of immediately available/next day funds
will be required with respect to principal of and interest, premium and
Liquidated Damages on, all Global Notes and all other Notes the Holders of which
shall have provided wire transfer instructions to the Company or the Paying
Agent. Such payment shall be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, that if the interest rate provided in paragraph 1 is
greater than 14% per annum, interest in excess of 14% per annum in any period
may be paid by the issuance of additional Notes (the "ADDITIONAL NOTES");
provided further that the Additional Notes shall be issued in integral multiples
of $1,000 and any amounts less than $1,000 shall be paid in cash.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE AND COLLATERAL AGREEMENTS. The Company issued the Notes
under an Indenture dated as of September 14, 1998 ("INDENTURE") between the
Company and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes
are subject to all such terms, and Holders are referred to the Indenture and
such Act for a statement of such terms. The Notes are obligations of the Company
limited to $150.0 million in aggregate principal amount plus any
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amounts issued as Additional Notes or any amounts in lieu of interest under the
Bridge Loan Agreement, dated September 14, 1998 among the Company, the lenders
named therein, Lehman Commercial Paper Inc., as administrative agent and Lehman
Brothers Inc., as Arranger. Prior to the Merger Date, the Notes are not
subordinated and are secured pursuant to the Collateral Agreement referred to in
the Indenture.
5. OPTIONAL REDEMPTION.
The Company shall not have the option to redeem the Notes prior to
________ __, ____ (the "INITIAL REDEMPTION DATE"). Thereafter, if such Initial
Redemption Date is prior to September 14, 2008, the Company shall have the
option to redeem the Notes, in whole or in part, upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest thereon to
the applicable redemption date.
If the Initial Redemption Date is prior to September 14, 2008, then
the redemption price for the one year following such date (or until September
14, 2008 if sooner) shall be equal 100% plus 1/2 of the annual interest rate
(expressed as a percentage). The redemption price in excess of 100% shall
decline ratably in each subsequent year, if any, until the redemption premium is
zero in any period beginning September 14, 2007 (except if the Initial
Redemption Date is on or after September 14, 2007).
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be required
to make an offer (a "CHANGE OF CONTROL OFFER") to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a
purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase the "CHANGE OF
CONTROL PAYMENT"). Within 10 days following any Change of Control, the Company
shall mail a notice to each Holder setting forth the procedures governing the
Change of Control Offer as required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales,
within five days of each date on which the aggregate amount of Excess Proceeds
exceeds $5.0 million, the Company shall commence an offer to all Holders of
Notes (as "ASSET SALE OFFER") pursuant to Section 3.09 of the Indenture to
purchase the maximum principal amount of Notes that may be purchased out of the
Excess Proceeds at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
fixed for the closing of such offer in accordance with the procedures set forth
in the Indenture. To the extent that the aggregate amount of Notes tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company
(or such Subsidiary) may use such deficiency for general corporate purposes. If
the aggregate principal amount of Notes surrendered by Holders thereof exceeds
the amount of Excess Proceeds, the Trustee shall select the Notes to be
purchased on a pro rata basis. Holders of Notes that are the subject of an offer
to purchase will receive an Asset Sale Offer from the Company prior to any
related purchase date and may elect to have such Notes purchased by completing
the form entitled "Option of Holder to Elect Purchase" on the reverse of the
Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be
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registered and Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the Indenture.
The Company need not exchange or register the transfer of any Note or portion of
a Note selected for redemption, except for the unredeemed portion of any Note
being redeemed in part. Also, it need not exchange or register the transfer of
any Notes for a period of 15 days before a selection of Notes to be redeemed or
during the period between a record date and the corresponding Interest Payment
Date.
This Regulation S Temporary Global Note is exchangeable in whole or
in part for one or more Global Notes only (i) on or after the termination of the
40-day restricted period (as defined in Regulation S) and (ii) upon presentation
of certificates (accompanied by an Opinion of Counsel, if applicable) required
by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary
Global Note for one or more Global Notes, the Trustee shall cancel this
Regulation S Temporary Global Note.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for
30 days in the payment when due of interest or Liquidated Damages on the Notes;
(ii) default in payment when due of principal of or premium, if any, on the
Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise, (iii) failure
by the Company to comply with Section 4.07, 4.09, 4.10 or 5.01 of the Indenture,
remaining uncured for 15 days after written notice; (iv) failure by the Company
for 60 days after notice to the Company by the Trustee or the Holders of at
least 25% in principal amount of the Notes then outstanding voting as a single
class to comply with certain other Agreements in the Indenture, the Notes or the
Collateral Agreements; (v) default under certain other Agreements relating to
Indebtedness of the Company which default results in the acceleration of such
Indebtedness prior to its express maturity; (vi) certain final judgments for the
payment of money that remain undischarged for a period of 60 days; (vii) certain
events of bankruptcy or insolvency with respect to the Company or any of its
Significant Subsidiaries; (viii) the breach of certain covenants in the
Collateral Agreements or the Collateral Agreements shall be held in any judicial
proceeding to be unenforceable or invalid or shall cease for any reason to be in
full force and effect; and (ix) except as permitted by the Indenture, any Note
Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or any
Guarantor or any Person acting on its behalf shall deny or disaffirm its
obligations under such Guarantor's Note Guarantee. If any Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all outstanding
Notes will become due and payable without further action or
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<PAGE> 96
notice. Holders may not enforce the Indenture or the Notes except as provided in
the Indenture. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Notes then outstanding by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest on,
or the principal of, the Notes. The Company is required to deliver to the
Trustee annually a statement regarding compliance with the Indenture, and the
Company is required upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company or any of the Guarantors, as such,
shall not have any liability for any obligations of the Company or such
Guarantor under the Notes, the Note Guarantees or the Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the A/B Exchange
Registration Rights Agreement dated as of September 14, 1998, between the
Company and the parties named on the signature pages thereof the "REGISTRATION
RIGHTS AGREEMENT").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Key Energy Group, Inc.
Two Tower Center, Twentieth Floor
East Brunswick, New Jersey 08816
Attention: Stephen E. McGregor
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<PAGE> 97
Assignment Form
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to:_________________________________
(Insert assignee's legal name)
______________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_______________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:_________________________
Your Signature:
---------------------------
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee*:
------------------------------
* Participant in a recognized Signature Guarantee Medallion Program.
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<PAGE> 98
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box
below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:
$
----------------
Date:
-------------------
Your Signature:
------------------------
(Sign exactly as your name appears
on the face of this Note)
Tax Identification No.:
----------------
Signature Guarantee*:
-------------------------------
* Participant in a recognized Signature Guarantee Medallion Program.
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<PAGE> 99
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
<TABLE>
The following exchanges of a part of this Regulation S Temporary Global Note for an interest
in another Global Note, or of other Restricted Global Notes for an interest in this Regulation S Temporary
Global Note, have been made:
Principal Amount
Amount of decrease in Amount of increase in [at maturity] of this Signature of
Principal Amount Principal Amount Global Note authorized Signatory
[at maturity] of [at maturity] of following such decrease of Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
---------------- -------------------- --------------------- ----------------------- --------------------
<S> <C> <C> <C> <C>
</TABLE>
A2-9
<PAGE> 100
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Key Energy Group, Inc.
Two Tower Center, Twentieth Floor
New Brunswick, New Jersey 08816
The Bank of New York
101 Barclay Street, Floor 21 W
New York, New York 10286
Attention: Corporate Trust Administration
Re: Exchange Notes due 2008
Reference is hereby made to the Indenture, dated as of September 14,
1998 (the "INDENTURE"), between Key Energy Group, Inc., as issuer (the
"COMPANY"), and The Bank of New York, as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
___________________, (the "TRANSFEROR") owns and proposes to transfer
the Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "TRANSFER"),
to ___________________________ (the "TRANSFEREE"), as further specified in Annex
A hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A.
The Transfer is being effected pursuant to and in accordance with Rule 144A
under the United States Securities Act of 1933, as amended (the "Securities
Act"), and, accordingly, the Transferor hereby further certifies that the
beneficial interest or Definitive Note is being transferred to a Person that
the Transferor reasonably believed and believes is purchasing the beneficial
interest or Definitive Note for its own account, or for one or more accounts
with respect to which such Person exercises sole investment discretion, and
such Person and each such account is a "qualified institutional buyer" within
the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A
and such Transfer is in compliance with any applicable blue sky securities laws
of any state of the United States. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the 144A Global Note
and/or the Definitive Note and in the Indenture and the Securities Act.
2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE TEMPORARY REGULATION S GLOBAL NOTE, THE REGULATION S GLOBAL
NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S. The Transfer is being
effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and, accordingly, the Transferor hereby further certifies that
(i) the Transfer is not being made to a person in the United States and (x) at
the time the buy order was originated, the Transferee was outside the United
States or such Transferor and any Person acting on its behalf reasonably
believed and believes that the Transferee was outside the United States or (y)
the transaction was executed in, on or through the facilities of a designated
offshore securities market and neither such Transferor nor any Person acting on
its
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<PAGE> 101
behalf knows that the transaction was prearranged with a buyer in the United
States, (ii) no directed selling efforts have been made in contravention of the
requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities
Act, (iii) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act and (iv) if the proposed
transfer is being made prior to the expiration of the Restricted Period, the
transfer is not being made to a U.S. Person or for the account or benefit of a
U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed
transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will be subject to the restrictions on
Transfer enumerated in the Private Placement Legend printed on the Regulation S
Global Note, the Temporary Regulation S Global Note and/or the Definitive Note
and in the Indenture and the Securities Act.
3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY
PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):
(a) [ ] such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Company or a
subsidiary thereof;
or
(c) [ ] such Transfer is being effected pursuant to an
effective registration statement under the Securities Act and in
compliance with the prospectus delivery requirements of the Securities
Act;
or
(d) [ ] such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or Rule
904, and the Transferor hereby further certifies that it has not engaged
in any general solicitation within the meaning of Regulation D under the
Securities Act and the Transfer complies with the transfer restrictions
applicable to beneficial interests in a Restricted Global Note or
Restricted Definitive Notes and the requirements of the exemption claimed,
which certification is supported by (1) a certificate executed by the
Transferee in the form of Exhibit D to the Indenture and (2) if such
Transfer is in respect of a principal amount of Notes at the time of
transfer of less than $250,000, an Opinion of Counsel provided by the
Transferor or the Transferee (a copy of which the Transferor has attached
to this certification), to the effect that such Transfer is in compliance
with the Securities Act. Upon consummation of the proposed transfer in
accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the IAI
Global Note and/or the Definitive Notes and in the Indenture and the
Securities Act.
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<PAGE> 102
4. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer
is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
-------------------------------------
[Insert Name of Transferor]
By:
----------------------------------
Name:
Title:
Dated:
----------------------
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<PAGE> 103
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] a beneficial interest in the:
(I) [ ] 144A Global Note (CUSIP _____________), or
(ii) [ ] Regulation S Global Note (CUSIP _________), or
(iii) [ ] IAI Global Note (CUSIP _______________); or
(b) [ ] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP _____________), or
(ii) [ ] Regulation S Global Note (CUSIP _________), or
(iii) [ ] IAI Global Note (CUSIP ______________); or
(iv) [ ] Unrestricted Global Note (CUSIP ________); or
(b) [ ] a Restricted Definitive Note; or
(c) [ ] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
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<PAGE> 104
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Key Energy Group, Inc.
Two Tower Center, Twentieth Floor
East Brunswick, New Jersey 08816
The Bank of New York
101 Barclay Street, Floor 21 W
New York, New York 10286
Attention: Corporate Trust Administration
Re: Exchange Notes due 2008
(CUSIP ____________)
Reference is hereby made to the Indenture, dated as of
September 14, 1998 (the "INDENTURE"), between Key Energy Group, Inc., as
issuer (the "COMPANY"), and The Bank of New York, a New York banking
corporation, as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
__________________________, (the "OWNER") owns and proposes to
exchange the Note[s] or interest in such Note[s] specified herein, in the
principal amount of $____________ in such Note[s] or interests (the
"EXCHANGE"). In connection with the Exchange, the Owner hereby certifies
that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL
INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR
BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL
NOTE. In connection with the Exchange of the Owner's beneficial interest
in a Restricted Global Note for a beneficial interest in an Unrestricted
Global Note in an equal principal amount, the Owner hereby certifies (i)
the beneficial interest is being acquired for the Owner's own account
without transfer, (ii) such Exchange has been effected in compliance with
the transfer restrictions applicable to the Global Notes and pursuant to
and in accordance with the United States Securities Act of 1933, as
amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv)
the beneficial interest in an Unrestricted Global Note is being acquired
in compliance with any applicable blue sky securities laws of any state of
the United States.
(b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with
the Exchange of the Owner's beneficial interest in a Restricted Global
Note for an Unrestricted Definitive Note, the Owner hereby certifies (i)
the Definitive Note is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and
pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the
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<PAGE> 105
EXHIBIT C
Definitive Note is being acquired in compliance with any applicable blue
sky securities laws of any state of the United States.
(c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest
in an Unrestricted Global Note, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the beneficial interest is being acquired in
compliance with any applicable blue sky securities laws of any state of
the United States.
(d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner
hereby certifies (i) the Unrestricted Definitive Note is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the Unrestricted
Definitive Note is being acquired in compliance with any applicable blue
sky securities laws of any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL
INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR
BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with
the Exchange of the Owner's beneficial interest in a Restricted Global
Note for a Restricted Definitive Note with an equal principal amount, the
Owner hereby certifies that the Restricted Definitive Note is being
acquired for the Owner's own account without transfer. Upon consummation
of the proposed Exchange in accordance with the terms of the Indenture,
the Restricted Definitive Note issued will continue to be subject to the
restrictions on transfer enumerated in the Private Placement Legend
printed on the Restricted Definitive Note and in the Indenture and the
Securities Act.
(b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the
Exchange of the Owner's Restricted Definitive Note for a beneficial
interest in the [CHECK ONE] o 144A Global Note, o Regulation S Global
Note, o IAI Global Note with an equal principal amount, the Owner hereby
certifies (i) the beneficial interest is being acquired for the Owner's
own account without transfer and (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Restricted
Global Notes and pursuant to and in accordance with the Securities Act,
and in compliance with any applicable blue sky securities laws of any
state of the United States. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the beneficial interest issued
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.
C-2
<PAGE> 106
EXHIBIT C
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company.
----------------------------------------
[Insert Name of Transferor]
By:
------------------------------------
Name:
Title:
Dated:
---------------------
C-3
<PAGE> 107
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Key Energy Group, Inc.
Two Tower Center, Twentieth Floor
East Brunswick, New Jersey 08816
The Bank of New York
101 Barclay Street, Floor 21 W
New York, New York 10286
Attention: Corporate Trust Administration
Re: Exchange Notes due 2008
Reference is hereby made to the Indenture, dated as of September 14,
1998 (the "INDENTURE"), between Key Energy Group, Inc., as issuer (the
"COMPANY"), and The Bank of New York, as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) [ ] a beneficial interest in a Global Note, or
(b) [ ] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "SECURITIES ACT").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and, if such transfer is in respect of
a principal amount of Notes, at the time of transfer of less than $250,000, an
Opinion of Counsel in form reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act, (D) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or
(F) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A)
D-1
<PAGE> 108
EXHIBIT D
through (E) of this paragraph a notice advising such purchaser that resales
thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
---------------------------------------
[Insert Name of Accredited Investor]
By:
-----------------------------------
Name:
Title:
Dated:
--------------------
D-2
<PAGE> 109
EXHIBIT E
[FORM OF NOTATION OF GUARANTEE]
For value received, each Guarantor (which term includes any successor
Person under the Indenture) has, jointly and severally, unconditionally
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture dated as of September 14, 1998 (the "Indenture")
among the Company, the Guarantors listed on Schedule I thereto and The Bank of
New York, as trustee (the "Trustee"), (a) the due and punctual payment of the
principal of, premium, if any, and interest on the Notes (as defined in the
Indenture) when due, whether at maturity, by acceleration, redemption or
otherwise, the due and punctual payment of interest on overdue principal and
premium, and, to the extent permitted by law, interest, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms of the Indenture and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. The obligations of the Guarantors to the
Holders of Notes and to the Trustee pursuant to the Note Guarantee and the
Indenture are expressly set forth in Article 12 of the Indenture and reference
is hereby made to the Indenture for the precise terms of the Note Guarantee.
Each Holder of a Note, by accepting the same, (a) agrees to and shall be bound
by such provisions, (b) authorizes and directs the Trustee, on behalf of such
Holder, to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
Indebtedness evidenced by this Note Guarantee shall cease to be so subordinated
and subject in right of payment upon any defeasance of this Note in accordance
with the provisions of the Indenture.
[Name of Guarantor(s)]
By:
---------------------------------
Name:
Title:
E-1
<PAGE> 110
EXHIBIT F
[FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS]
Supplemental Indenture (this "SUPPLEMENTAL INDENTURE"), dated as of
________ __, among __________________ (the "GUARANTEEING SUBSIDIARY"), a
subsidiary of Key Energy Group, Inc. (or its permitted successor), a Maryland
corporation (the "COMPANY"), the Company, the other Guarantors (as defined in
the Indenture referred to herein) and The Bank of New York, as trustee under the
indenture referred to below (the "TRUSTEE").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "INDENTURE"), dated as of September 14, 1998 providing
for the issuance of an aggregate principal amount of up to $________ of __%
Exchange Notes due 2008 (the "NOTES");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "Note Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees
as follows:
(a) Along with all Guarantors named in the Indenture, to
jointly and severally Guarantee to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and
assigns, the Notes or the obligations of the Company hereunder or
thereunder, that:
(i) the principal of and interest on the Notes will be
promptly paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal of and
interest on the Notes, if any, if lawful, and all other obligations
of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and
(ii) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that same will
be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise. Failing payment when due of any amount so
guaranteed or any performance so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to pay the same
immediately.
F-1
<PAGE> 111
(b) The obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Notes or
the Indenture, the absence of any action to enforce the same, any waiver
or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any
action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor.
(c) The following is hereby waived: diligence presentment,
demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding
first against the Company, protest, notice and all demands whatsoever.
(d) This Note Guarantee shall not be discharged except by
complete performance of the obligations contained in the Notes and the
Indenture, and the Guaranteeing Subsidiary accepts all obligations of a
Guarantor under the Indenture.
(e) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors, or any Custodian,
Trustee, liquidator or other similar official acting in relation to either
the Company or the Guarantors, any amount paid by either to the Trustee or
such Holder, this Note Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to any
right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the Holders
and the Trustee, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article 6 of the
Indenture for the purposes of this Note Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in
respect of the obligations guaranteed hereby, and (y) in the event of any
declaration of acceleration of such obligations as provided in Article 6
of the Indenture, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of this
Note Guarantee.
(h) The Guarantors shall have the right to seek contribution
from any non-paying Guarantor so long as the exercise of such right does
not impair the rights of the Holders under the Guarantee.
(i) Pursuant to Section 12.02 of the Indenture, after giving
effect to any maximum amount and any other contingent and fixed
liabilities that are relevant under any applicable Bankruptcy or
fraudulent conveyance laws, and after giving effect to any collections
from, rights to receive contribution from or payments made by or on behalf
of any other Guarantor in respect of the obligations of such other
Guarantor under Article 12 of the Indenture, this new Note Guarantee shall
be limited to the maximum amount permissible such that the obligations of
such Guarantor under this Note Guarantee will not constitute a fraudulent
transfer or conveyance.
3. EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that
the Note Guarantees shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.
F-2
<PAGE> 112
4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
(a) The Guaranteeing Subsidiary may not consolidate with or merge
with or into (whether or not such Guarantor is the surviving Person) another
corporation, Person or entity whether or not affiliated with such Guarantor
unless:
(i) subject to Sections 12.04 and 12.05 of the Indenture, the
Person formed by or surviving any such consolidation or merger (if other
than a Guarantor or the Company) unconditionally assumes all the
obligations of such Guarantor, pursuant to a supplemental indenture in
form and substance reasonably satisfactory to the Trustee, under the
Notes, the Indenture and the Note Guarantee on the terms set forth herein
or therein; and
(ii) immediately after giving effect to such transaction, no
Default or Event of Default exists.
(b) In case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in form to
the Trustee, of the Note Guarantee endorsed upon the Notes and the due and
punctual performance of all of the covenants and conditions of the Indenture to
be performed by the Guarantor, such successor corporation shall succeed to and
be substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor corporation thereupon may cause to be
signed any or all of the Note Guarantees to be endorsed upon all of the Notes
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee. All the Note Guarantees so issued shall in all
respects have the same legal rank and benefit under the Indenture as the Note
Guarantees theretofore and thereafter issued in accordance with the terms of
the Indenture as though all of such Note Guarantees had been issued at the date
of the execution hereof.
(c) Except as set forth in Articles 4 and 5 and Section 12.05 of
Article 12 of the Indenture, and notwithstanding clauses (a) and (b) above,
nothing contained in the Indenture or in any of the Notes shall prevent any
consolidation or merger of a Guarantor with or into the Company or another
Guarantor, or shall prevent any sale or conveyance of the property of a
Guarantor as an entirety or substantially as an entirety to the Company or
another Guarantor.
5. RELEASES.
(a) In the event of a sale or other disposition of all of the assets
of any Guarantor, by way of merger, consolidation or otherwise, or a sale or
other disposition of all to the capital stock of any Guarantor, in each case to
a Person that is not (either before or after giving effect to such transaction)
a Subsidiary of the Company, then such Guarantor (in the event of a sale or
other disposition, by way of merger, consolidation or otherwise, of all of the
capital stock of such Guarantor) or the corporation acquiring the property (in
the event of a sale or other disposition of all or substantially all of the
assets of such Guarantor) will be released and relieved of any obligations under
its Note Guarantee; provided that the Net Proceeds of such sale or other
disposition are applied in accordance with the applicable provisions of the
Indenture, including without limitation Section 4.10 of the Indenture. Upon
delivery by the Company to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such sale or other disposition was made by
the Company in accordance with the provisions of the Indenture, including
without limitation Section 4.10 of the Indenture, the Trustee shall execute any
documents reasonably required in order to evidence the release of any Guarantor
from its obligations under its Note Guarantee.
F-3
<PAGE> 113
(b) Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under the Indenture
as provided in Article 12 of the Indenture.
6. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guaranteeing Subsidiary under the Notes, any Note Guarantees, the
Indenture or this Supplemental Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of the
Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. Such waiver may
not be effective to waive liabilities under the federal securities laws and it
is the view of the SEC that such a waiver is against public policy.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW
YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
8. COUNTERPARTS The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
10. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
F-4
<PAGE> 114
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: , .
----------- ----
[GUARANTEEING SUBSIDIARY]
By:
-------------------------------
Name:
Title:
KEY ENERGY GROUP, INC.
By:
-------------------------------
Name:
Title:
[EXISTING GUARANTORS]
By:
---------------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Trustee
By:
--------------------------------
Authorized Signatory
F-5
<PAGE> 115
EXHIBIT H
SCHEDULE I
SCHEDULE OF GUARANTORS
<TABLE>
<S><C>
The following schedule lists each Guarantor under the Indenture as of the Issue Date
</TABLE>
H-6
<PAGE> 116
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
KEY ENERGY GROUP, INC.
By /s/ STEPHEN E. MCGREGOR
-----------------------------------
Title:
THE BANK OF NEW YORK
By /s/ T. C. KNIGHT
-----------------------------------
Title: THOMAS C. KNIGHT
ASSISTANT VICE PRESIDENT
<PAGE> 1
EXHIBIT 99.3
================================================================================
KEY ENERGY GROUP, INC.
AND
THE BANK OF NEW YORK
-------------------------------
WARRANT AGREEMENT
DATED AS OF SEPTEMBER 14, 1998
================================================================================
<PAGE> 2
WARRANT AGREEMENT
TABLE OF CONTENTS(1)
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. APPOINTMENT OF WARRANT AGENT..........................................1
SECTION 2. WARRANT CERTIFICATES..................................................1
SECTION 3. EXECUTION OF WARRANT CERTIFICATES.....................................1
SECTION 4. REGISTRATION AND COUNTERSIGNATURE.....................................2
SECTION 5. REGISTRATION OF TRANSFERS AND EXCHANGES...............................2
SECTION 6. TERMS OF WARRANTS; EXERCISE OF WARRANTS...............................3
SECTION 7. PAYMENT OF TAXES......................................................6
SECTION 8. MUTILATED OR MISSING WARRANT CERTIFICATES.............................6
SECTION 9. RESERVATION OF WARRANT SHARES.........................................6
SECTION 10. OBTAINING STOCK EXCHANGE LISTINGS....................................7
SECTION 11. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES ISSUABLE...7
SECTION 12. FRACTIONAL INTERESTS.................................................16
SECTION 13. CERTAIN COVENANTS....................................................17
SECTION 14. NOTICES TO WARRANT HOLDERS...........................................17
SECTION 15. MERGER, CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT.............18
SECTION 16. WARRANT AGENT........................................................19
SECTION 17. CHANGE OF WARRANT AGENT..............................................21
SECTION 18. NOTICES TO COMPANY AND WARRANT AGENT.................................22
</TABLE>
- ----------------------------
(1) This Table of Contents does not constitute a part of this Agreement or have
any bearing upon the interpretation of any of its terms or provisions.
i
<PAGE> 3
<TABLE>
<S> <C>
SECTION 19. SUPPLEMENTS AND AMENDMENTS...........................................22
SECTION 20. SUCCESSORS...........................................................23
SECTION 21. TERMINATION..........................................................23
SECTION 22. GOVERNING LAW........................................................23
SECTION 23. BENEFITS OF THIS AGREEMENT...........................................23
SECTION 24. COUNTERPARTS.........................................................23
</TABLE>
ii
<PAGE> 4
WARRANT AGREEMENT dated as of September 14, 1998 between Key Energy
Group, Inc., a Maryland corporation (the "COMPANY"), and The Bank of New York, a
New York banking corporation, as Warrant Agent (the "WARRANT AGENT").
WHEREAS, the Company proposes to issue 150,000 Common Stock Purchase
Warrants, as hereinafter described (the "WARRANTS"), which in the aggregate
initially entitle the holders thereof to purchase up to 15.0% of the Common
Stock (outstanding on a fully diluted basis), par value $0.10 per share (the
"COMMON STOCK"), of the Company (the Common Stock issuable on exercise of the
Warrants being referred to herein as the "WARRANT SHARES"), in connection with a
bridge loan of $150,000,000 in aggregate principal amount (the "LOANS") pursuant
to a Bridge Loan Agreement among the Company, Lehman Commercial Paper Inc. and
Lehman Brothers Inc.
WHEREAS, the Company desires the Warrant Agent to act on behalf of
the Company, and the Warrant Agent is willing so to act, in connection with the
issuance, transfer, exchange and exercise of Warrants and other matters as
provided herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. Warrant Certificates. The certificates evidencing the
Warrants (the "WARRANT CERTIFICATES") to be delivered pursuant to this Agreement
shall be in registered form only and shall be substantially in the form set
forth in Exhibit A attached hereto.
SECTION 3. Execution of Warrant Certificates. Warrant Certificates
shall be signed on behalf of the Company by its Chairman of the Board or its
President or a Vice President and by its Secretary or an Assistant Secretary.
Each such signature upon the Warrant Certificates may be in the form of a
facsimile signature of the present or any future Chairman of the Board,
President, Vice President, Secretary or Assistant Secretary and may be imprinted
or otherwise reproduced on the Warrant Certificates and for that purpose the
Company may adopt and use the facsimile signature of any person who shall have
been Chairman of the Board, President, Vice President, Secretary or Assistant
Secretary, notwithstanding the fact that at the time the Warrant Certificates
shall be countersigned and delivered or disposed of he shall have ceased to hold
such office.
In case any officer of the Company who shall have signed any of the
Warrant
1
<PAGE> 5
Certificates shall cease to be such officer before the Warrant Certificates so
signed shall have been countersigned by the Warrant Agent, or disposed of by the
Company, such Warrant Certificates nevertheless may be countersigned and
delivered or disposed of as though such person had not ceased to be such officer
of the Company; and any Warrant Certificate may be signed on behalf of the
Company by any person who, at the actual date of the execution of such Warrant
Certificate, shall be a proper officer of the Company to sign such Warrant
Certificate, although at the date of the execution of this Warrant Agreement any
such person was not such officer.
Warrant Certificates shall be dated the date of countersignature by
the Warrant Agent.
SECTION 4. Registration and Countersignature. The Warrant Agent, on
behalf of the Company, shall hold the Warrants unnumbered and unregistered.
Initially, the Warrants will be issued by the Company and deposited with The
Bank of New York, as escrow agent (the "ESCROW AGENT"), pursuant to an Escrow
Agreement, dated September 14, 1998 (the "ESCROW AGREEMENT"), among the Company,
Lehman Brothers Inc. (the "ARRANGER") and The Bank of New York. Upon any release
of any Warrants under the Escrow Agreement to the Arranger, the Warrant Agent
shall number and register such Warrants in the names, denominations and
exercisable for such number of shares of Common Stock as directed in writing by
the Arranger.
Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. The
Warrant Agent shall, upon written instructions of the Chairman of the Board, the
President, a Vice President, the Treasurer or the Chief Financial Officer of the
Company, initially countersign, issue and deliver Warrants entitling the holders
thereof to purchase not more than the number of Warrant Shares referred to above
in the first recital hereof and shall countersign and deliver Warrants as
otherwise provided in this Agreement.
The Company and the Warrant Agent may deem and treat the registered
holder(s) of the Warrant Certificates as the absolute owner(s) thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone), for all purposes, and neither the Company nor the Warrant Agent shall
be affected by any notice to the contrary.
SECTION 5. Registration of Transfers and Exchanges. The Warrant Agent
shall from time to time, subject to the limitations of Section 6, register the
transfer of any outstanding Warrant Certificates upon the records to be
maintained by it for that purpose, upon surrender thereof duly endorsed or
accompanied (if so required by it) by a written instrument or instruments of
transfer in form satisfactory to the Warrant Agent, duly executed by the
registered holder or holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney. Upon any such
registration of transfer, a new Warrant Certificate shall be issued to the
transferee(s) and the surrendered Warrant Certificate shall be cancelled by the
Warrant Agent. Cancelled Warrant Certificates shall thereafter be disposed of by
the Warrant Agent in its customary manner.
The Warrant holders agree that prior to any proposed transfer of the
Warrants or of the Warrant Shares, if such transfer is not made pursuant to an
effective Registration Statement
2
<PAGE> 6
under the Securities Act of 1933, as amended (the "ACT"), or an opinion of
counsel that the Warrant or Warrant Shares may be transferred without
registration under the Act, the Warrant holder will deliver to the Company:
(1) an investment covenant reasonably satisfactory to the Company
signed by the proposed transferee;
(2) an agreement by such transferee to the impression of the
restrictive investment legend set forth below on the Warrant or the Warrant
Shares;
(3) an agreement by such transferee to be bound by the provisions of
this Agreement.
The Warrant holders agree that each certificate representing Warrant
Shares will bear a legend in substantially the following form:
"The securities evidenced or constituted hereby have
been acquired for investment and have not been
registered under the Securities Act of 1933, as amended.
Such securities may not be sold, transferred, pledged or
hypothecated unless the registration provisions of said
Act have been complied with or unless the Company has
received an opinion of counsel reasonably satisfactory
to the Company that such registration is not required."
Subject to the terms of this Agreement, Warrant Certificates may be
exchanged at the option of the holder(s) thereof, when surrendered to the
Warrant Agent at its principal office, which is currently located at the address
listed in Section 18 hereof, for another Warrant Certificate or other Warrant
Certificates of like tenor and representing in the aggregate a like number of
Warrants. Any holder desiring to exchange a Warrant Certificate shall deliver a
written request to the Warrant Agent, and shall surrender, duly endorsed or
accompanied (if so required by the Warrant Agent) by a written instrument or
instruments of transfer in form satisfactory to the Warrant Agent, the Warrant
Certificate or Certificates to be so exchanged. Warrant Certificates surrendered
for exchange shall be cancelled by the Warrant Agent. Such cancelled Warrant
Certificates shall then be disposed of by such Warrant Agent in its customary
manner.
The Warrant Agent is hereby authorized to countersign, in accordance
with the provisions of this Section 5 and of Section 4, the new Warrant
Certificates required pursuant to the provisions of this Section 5.
3
<PAGE> 7
SECTION 6. Terms of Warrants; Exercise of Warrants.
The initial exercise price per share at which Warrant Shares shall be
purchasable upon the exercise of Warrants (the "EXERCISE PRICE") shall be equal
to 110% of the fair market value (as defined below) of one share of Common Stock
as of the Escrow Release Date (as defined below) for such Warrant. On its
respective Escrow Release Date, each Warrant shall be initially exercisable for
that number of shares of Common Stock equal to: 0.15 times the number of shares
of Common Stock outstanding on such date on a fully diluted basis (after giving
effect to the exercise of all options, warrants and rights to acquire Common
Stock and the conversion of all convertible securities for the maximum number of
shares of Common Stock obtainable whether or not such options, warrants or
rights are then exercisable or vested and whether or not such convertible
securities are then convertible) divided by 150,000; provided, however, that
such calculation shall not give effect to issuances of Common Stock made prior
to the Escrow Release Date if such issuances would not have caused an adjustment
pursuant to Section 11 hereof. For purposes of this paragraph of Section 6,
"FAIR MARKET VALUE" shall be (i) if the Common Stock is reported on an
interdealer quotation system, the last reported sales price, per share or if
there is no reported sales price, the average of the last bid and ask per share,
of the Common Stock on the trading day immediately prior to the Escrow Release
Date, (2) if the Common Stock is listed on a securities exchange, the average of
the closing prices of the Company's Common Stock for the five consecutive
trading days on the principal securities exchange on which the Common Stock is
so listed immediately prior to the Escrow Release Date, or (3) if the Common
Stock is not so reported or listed, as reasonably determined by the Company's
Board of Directors, as supported by an opinion of a nationally recognized
investment banking firm. The term "ESCROW RELEASE DATE," with respect to any
Warrant, shall be the date that such Warrant was first released from escrow
under the Escrow Agreement. The Arranger shall send a notice to the Warrant
Agent and the Company of any such release from escrow, which notice shall state
the number of Warrants so released, the Escrow Release Date and the initial
Exercise Price. Such notice shall be binding on the Company and the Warrant
Agent absent manifest error. The Company shall immediately notify the Warrant
Agent and the Arranger as to its determination of the number of shares for which
one Warrant is then exercisable (which shall be determined as specified in this
Section 6), which number may be impressed on the Warrant Certificate and shall
be binding upon the Company, but shall not be binding upon any Warrant holder
who disputes such determination.
Subject to the terms of this Agreement, each Warrant holder shall
have the right, which may be exercised commencing at the opening of business on
the Escrow Release Date of such warrant and until 5:00 p.m., New York City time
on September 14, 2008, to receive from the Company the number of fully paid and
nonassessable Warrant Shares which the holder may at the time be entitled to
receive on exercise of such Warrants and payment of the Exercise Price then in
effect for such Warrant Shares. In the alternative, each Holder may exercise its
right, during the Exercise Period, to receive Warrant Shares on a net basis,
such that, without the exchange of any funds, the Holder receives that number of
Warrant Shares otherwise issuable (or payable) upon exercise of its Warrants
less that number of Warrant Shares having an aggregate fair market value (as
defined below) at the time of exercise equal to the aggregate Exercise Price
that would otherwise have been paid by the Holder of the Warrant Shares. Each
Warrant not exercised prior to 5:00 p.m., New York City time, on September 14,
2008 shall become void and all rights
4
<PAGE> 8
thereunder and all rights in respect thereof under this agreement shall cease as
of such time. No adjustments as to dividends will be made upon exercise of the
Warrants.
A Warrant may be exercised upon surrender to the Company at the
principal office of the Warrant Agent, which is currently located at the address
listed in Section 18 hereof, of the certificate or certificates evidencing the
Warrants to be exercised with the form of election to purchase on the reverse
thereof duly filled in and signed, which signature shall be guaranteed by a
participant in a recognized Signature Guarantee Medallion Program and such other
documentation as the Warrant Agent may reasonably request, and upon payment to
the Warrant Agent for the account of the Company of the Exercise Price which is
set forth in the form of Warrant Certificate attached hereto as Exhibit A as
adjusted as herein provided, for the number of Warrant Shares in respect of
which such Warrants are then exercised. Payment of the aggregate Exercise Price
shall be made (i) in cash or by certified or official bank check payable to the
order of the Company in New York Clearing House Funds, (ii) through the
surrender of debt or preferred equity securities of the Company having a
principal amount or liquidation preference, as the case may be, equal to the
aggregate Exercise Price to be paid (the Company will pay the accrued interest
or dividends on such surrendered debt or preferred equity securities in cash at
the time of surrender notwithstanding the stated terms thereof), or (iii) in the
manner provided in the second paragraph of this Section 6.
Subject to the provisions of Section 7 hereof, upon such surrender of
Warrants and payment of the Exercise Price, the Company shall issue and cause to
be delivered with all reasonable dispatch to and in such name or names as the
Warrant holder may designate, a certificate or certificates for the number of
full Warrant Shares issuable upon the exercise of such Warrants together with
cash as provided in Section 12; provided, however, that if any consolidation,
merger or lease or sale of assets is proposed to be effected by the Company as
described in subsection (m) of Section 11 hereof, or a tender offer or an
exchange offer for shares of Common Stock of the Company shall be made, upon
such surrender of Warrants and payment of the Exercise Price as aforesaid, the
Company shall, as soon as possible, but in any event not later than two business
days thereafter, issue and cause to be delivered the full number of Warrant
Shares issuable upon the exercise of such Warrants in the manner described in
this sentence together with cash as provided in Section 12. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
Warrant Shares as of the date of the surrender of such Warrants and payment of
the Exercise Price.
The Warrants shall be exercisable, at the election of the holders
thereof, either in full or from time to time in part and, in the event that a
certificate evidencing Warrants is exercised in respect of fewer than all of the
Warrant Shares issuable on such exercise at any time prior to the date of
expiration of the Warrants, a new certificate evidencing the remaining Warrant
or Warrants will be issued, and the Warrant Agent is hereby irrevocably
authorized to countersign and to deliver the required new Warrant Certificate or
Certificates pursuant to the provisions of this Section 6 and of Section 3
hereof, and the Company, whenever required by the Warrant Agent, shall supply
the Warrant Agent with Warrant Certificates duly executed on behalf of the
Company for such purpose. The Warrant Agent may assume that any Warrant
presented for exercise is permitted to be so exercised under applicable law and
shall have no liability for acting in reliance on such assumption.
5
<PAGE> 9
All Warrant Certificates surrendered upon exercise of Warrants shall
be cancelled by the Warrant Agent. Such cancelled Warrant Certificates shall
then be disposed of by the Warrant Agent in its customary manner. The Warrant
Agent shall account promptly to the Company with respect to Warrants exercised
and concurrently pay to the Company all monies received by the Warrant Agent for
the purchase of the Warrant Shares through the exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement and any notices
given or received hereunder available for inspection by the holders with
reasonable prior written notice during normal business hours at its office. The
Company shall supply the Warrant Agent from time to time with such numbers of
copies of this Agreement as the Warrant Agent may request.
SECTION 7. Payment of Taxes. The Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants; provided, however, that the Company shall not be required
to pay any tax or taxes which may be payable in respect of any transfer involved
in the issue of any Warrant Certificates or any certificates for Warrant Shares
in a name other than that of the registered holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and the Company shall not be
required to issue or deliver such Warrant Certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
SECTION 8. Mutilated or Missing Warrant Certificates. In case any of
the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company may in its discretion issue and the Warrant Agent may countersign, in
exchange and substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the Warrant Certificate lost,
stolen or destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence satisfactory to
the Company of such loss, theft or destruction of such Warrant Certificate and
indemnity, if requested, also satisfactory to the Company. Applicants for such
substitute Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company may prescribe.
SECTION 9. Reservation of Warrant Shares. The Company will at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or its authorized and
issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants. The Warrant Agent shall have no duty to
verify availability of such shares set aside by the Company.
The Company or, if appointed, the transfer agent for the Common Stock
(the "TRANSFER AGENT") and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be required for such purpose.
The Company will keep a copy of this Agreement on file with the Transfer Agent
6
<PAGE> 10
and with every subsequent transfer agent for any shares of the Company's capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrants. The Warrant Agent is hereby irrevocably authorized to requisition from
time to time from such Transfer Agent the stock certificates required to honor
outstanding Warrants upon exercise thereof in accordance with the terms of this
Agreement. The Company will supply such Transfer Agent with duly executed
certificates for such purposes and will provide or otherwise make available any
cash which may be payable as provided in Section 12. The Company will furnish
such Transfer Agent a copy of all notices of adjustments and certificates
related thereto, transmitted to each Holder pursuant to Section 14 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 11 hereof to reduce the Exercise Price below the then par value (if any)
of the Warrant Shares, the Company will take any corporate action which may, in
the opinion of its counsel (which may be counsel employed by the Company), be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares at the Exercise Price as so adjusted.
The Company covenants that all Warrant Shares which may be issued
upon exercise of Warrants will, upon payment of the Exercise Price therefor and
issue, be fully paid, nonassessable, free of preemptive rights and free from all
taxes, liens, charges and security interests with respect to the issue thereof.
SECTION 10. Obtaining Stock Exchange Listings. The Company will from
time to time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed on
the principal securities exchanges and markets within the United States of
America, if any, on which other shares of Common Stock are then listed.
SECTION 11. Adjustment of Exercise Price and Number of Warrant Shares
Issuable. The Exercise Price and the number of Warrant Shares issuable upon the
exercise of each Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 11. With respect to any
Warrant, no adjustment to the Exercise Price or to the number of Warrant Shares
issuable upon exercise shall be made for any event enumerated in this Section 11
if the date as to which the Company committed to undertake such event was prior
to such Warrant's respective Escrow Release Date. For purposes of this Section
11, "COMMON STOCK" means shares now or hereafter authorized of any class of
common stock of the Company and any other stock of the Company, however
designated, that has the right (subject to any prior rights of any class or
series of preferred stock) to participate in any distribution of the assets or
earnings of the Company without limit as to per share amount.
(a) Adjustment for Change in Capital Stock.
If the Company:
7
<PAGE> 11
(1) pays a dividend or makes a distribution on its Common
Stock in shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into
a greater number of shares;
(3) combines its outstanding shares of Common Stock into a
smaller number of shares;
(4) makes a distribution on its Common Stock in shares of
its capital stock other than Common Stock; or
(5) issues by reclassification of its Common Stock any
shares of its capital stock,
then the Warrant in effect immediately prior to such action
shall be proportionately adjusted so that the Holder of any Warrant
thereafter exercised may receive the aggregate number and kind of shares of
capital stock of the Company which he would have owned immediately
following such action if such Warrant had been exercised immediately prior
to such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
If after an adjustment a Holder of a Warrant upon exercise of it may
receive shares of two or more classes of capital stock of the Company, the
Company shall determine the allocation of the adjusted Exercise Price between
the classes of capital stock. After such allocation, the exercise privilege and
the Exercise Price of each class of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common Stock in this
Section 11.
Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) Adjustment for Rights Issue.
If the Company distributes any rights, options or warrants to all
holders of its Common Stock entitling them for a period expiring within 60 days
after the record date mentioned below to purchase shares of Common Stock at a
price per share less than the current market price per share on that record
date, the Exercise Price shall be adjusted in accordance with the formula:
N x P
---------
E' = E x O + M
----------
O + N
where:
E'= the adjusted Exercise Price.
8
<PAGE> 12
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on the record
date.
N = the number of additional shares of Common Stock offered.
P = the purchase price per share of the additional shares.
M = the current market price per share of Common Stock on the
record date.
(1) The adjustment shall be made successively whenever any
such rights, options or warrants are issued and shall become effective
immediately after the record date for the determination of stockholders
entitled to receive the rights, options or warrants. If at the end of the
period during which such rights, options or warrants are exercisable, not
all rights, options or warrants shall have been exercised, the Exercise
Price shall be immediately readjusted to what it would have been if "N" in
the above formula had been the number of shares actually issued.
(c) Adjustment for Other Distributions.
If the Company distributes to all holders of its Common Stock any of
its assets or debt securities or any rights or warrants to purchase debt
securities, assets or other securities of the Company, the Exercise Price shall
be adjusted in accordance with the formula:
E' = E x M - F
-------
M
where:
E'= the adjusted Exercise Price.
E = the current Exercise Price.
M = the current market price per share of Common Stock on the
record date mentioned below.
F = the fair market value on the record date of the assets,
securities, rights or warrants distributable to one share of
Common Stock. The Board of Directors shall determine the fair
market value.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
This subsection (c) does not apply to regular quarterly cash
dividends or cash
9
<PAGE> 13
distributions paid out of consolidated current or retained earnings as shown on
the books of the Company prepared in accordance with generally accepted
accounting principles. Also, this subsection does not apply to rights, options
or warrants referred to in subsection (b) of this Section 11. If any adjustment
is made pursuant to this subsection (c) as a result of the issuance of rights,
options or warrants and at the end of the period during which any such rights,
options or warrants are exercisable, not all such rights, options or warrants
shall have been exercised, the Warrant shall be immediately readjusted as if "F"
in the above formula was the fair market value on the record date of the
indebtedness or assets actually distributed upon exercise of such rights,
options or warrants divided by the number of shares of Common Stock outstanding
on the record date. Notwithstanding anything to the contrary contained in this
subsection (c), if "M-F" in the above formula is less than $1.00 (or is a
negative number) then in lieu of the adjustment otherwise required by this
subsection (c), the Company may elect to distribute to the holders of the
Warrants, upon exercise thereof, the evidences of indebtedness, assets, rights,
options or warrants which would have been distributed to such holders had such
warrants been exercised immediately prior to the record date for such
distribution.
(d) Adjustment for Common Stock Issue.
If the Company issues shares of Common Stock for a consideration per
share less than the current market price per share on the date the Company fixes
the offering price of such additional shares, the Exercise Price shall be
adjusted in accordance with the formula:
P
-
E' = E x O + M
-------
A
where:
E'= the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the
issuance of such additional shares.
P = the aggregate consideration received for the issuance of such
additional shares.
M = the current market price per share on the date of issuance of
such additional shares.
A = the number of shares outstanding immediately after the issuance
of such additional shares.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
10
<PAGE> 14
This subsection (d) does not apply to:
(1) any of the transactions described in subsections (b) and
(c) of this Section 11,
(2) the exercise of Warrants, or the conversion or exchange of
other securities convertible or exchangeable for Common Stock,
(3) Common Stock issued to the Company's employees, officers
and directors under bona fide employee benefit plans or stock option plans
adopted by the Board of Directors of the Company and approved by the
holders of Common Stock when required by law, if such Common Stock would
otherwise be covered by this subsection (d) (but only to the extent that
the aggregate number of shares excluded hereby and issued after the date of
this Warrant Agreement shall not exceed 5% of the Common Stock outstanding
at the time of the adoption of each such plan, exclusive of antidilution
adjustments thereunder),
(4) Common Stock upon the exercise of rights or warrants
issued to the holders of Common Stock,
(5) Common Stock issued to shareholders of any person which
merges into the Company in proportion to their stock holdings of such
person immediately prior to such merger, upon such merger, or
(6) Common Stock issued in a bona fide public offering
pursuant to a firm commitment underwriting.
(e) Adjustment for Convertible Securities Issue.
If the Company issues any securities convertible into or exchangeable
for Common Stock (other than securities issued in transactions described in
subsections (b) and (c) of this Section 11) for a consideration per share of
Common Stock initially deliverable upon conversion or exchange of such
securities less than the current market price per share on the date of issuance
of such securities, the Exercise Price shall be adjusted in accordance with this
formula:
P
-
E' = E x O + M
---------
O + D
where:
E'= the adjusted Exercise Price.
E = the then current Exercise Price.
11
<PAGE> 15
O = the number of shares outstanding immediately prior to the
issuance of such securities.
P = the aggregate consideration received for the issuance of such
securities.
M = the current market price per share on the date of issuance of
such securities.
D = the maximum number of shares deliverable upon conversion or in
exchange for such securities at the initial conversion or
exchange rate.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion or exchange of
such securities have not been issued when such securities are no longer
outstanding, then the Exercise Price shall promptly be readjusted to the
Exercise Price which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of
shares of Common Stock issued upon conversion or exchange of such securities.
This subsection (e) does not apply to:
(1) convertible securities issued to shareholders of any
person which merges into the Company, or with a subsidiary of the Company,
in proportion to their stock holdings of such person immediately prior to
such merger, upon such merger,
(2) convertible securities issued in a bona fide public
offering pursuant to a firm commitment underwriting or
(3) convertible securities issued in a bona fide private
placement through a placement agent which is a member firm of the National
Association of Securities Dealers, Inc. (except to the extent that any
discount from the current market price attributable to restrictions on
transferability of Common Stock issuable upon conversion, as determined in
good faith by the Board of Directors and described in a Board resolution
which shall be filed with the Trustee, shall exceed 20% of the then current
market price).
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<PAGE> 16
(f) Current Market Price.
In subsections (b), (c), (d) and (e) of this Section 11 the current
market price per share of Common Stock on any date is the average of the Quoted
Prices of the Common Stock for 30 consecutive trading days commencing 45 trading
days before the date in question. The Company shall be solely responsible for
tracking and calculation of the Quoted Price and its average. The "QUOTED PRICE"
of the Common Stock is the last reported sales price of the Common Stock as
reported by NASDAQ, National Market System, or if the Common Stock is listed on
a securities exchange, the last reported sales price of the Common Stock on such
exchange which shall be for consolidated trading if applicable to such exchange,
or if neither so reported or listed, the last reported bid price of the Common
Stock. In the absence of one or more such quotations, the Board of Directors of
the Company shall determine the current market price on the basis of such
quotations as it in good faith considers appropriate.
(g) Consideration Received.
For purposes of any computation respecting consideration received
pursuant to subsections (d) and (e) of this Section 11, the following shall
apply:
(1) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided that in
no case shall any deduction be made for any commissions, discounts or other
expenses incurred by the Company for any underwriting of the issue or
otherwise in connection therewith;
(2) in the case of the issuance of shares of Common Stock for
a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors of the Company
(irrespective of the accounting treatment thereof), whose determination
shall be conclusive, and described in a Board resolution which shall be
filed with the Warrant Agent; and
(3) in the case of the issuance of securities convertible into
or exchangeable for shares, the aggregate consideration received therefor
shall be deemed to be the consideration received by the Company for the
issuance of such securities plus the additional minimum consideration, if
any, to be received by the Company upon the conversion or exchange thereof
(the consideration in each case to be determined in the same manner as
provided in clauses (1) and (2) of this subsection).
(h) When De Minimis Adjustment May Be Deferred.
No adjustment in the Exercise Price need be made unless the
adjustment would require an increase or decrease of at least 1% in the Exercise
Price. Any adjustments that are not made shall be carried forward and taken into
account in any subsequent adjustment.
13
<PAGE> 17
All calculations under this Section 11 shall be made to the nearest
cent or to the nearest 1/100th of a share, as the case may be.
(i) When No Adjustment Required.
No adjustment need be made for a transaction referred to in
subsections (b) or (c), (d) or (e) of this Section 11 if Warrant holders are to
participate, without requiring the Warrants to be exercised, in the transaction
on a basis and with notice that the Board of Directors of the Company determines
to be fair and appropriate in light of the basis and notice on which holders of
Common Stock participate in the transaction.
No adjustment need be made for a change in the par value or no par
value of the Common Stock.
To the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the amount of cash into which such
Warrants are exercisable. Interest will not accrue on the cash.
(j) Notice of Adjustment.
Whenever the Exercise Price is adjusted, the Company shall provide
the notices required by Section 14 hereof.
(k) Voluntary Reduction.
The Company from time to time may reduce the Exercise Price by any
amount for any period of time (including, without limitation, permanently) if
such period is at least 20 days; provided, however, that in no event may the
Exercise Price be less than the par value of a share of Common Stock.
Whenever the Exercise Price is reduced, the Company shall mail to
Warrant holders a notice of the reduction. The Company shall mail the notice at
least 15 days before the date the reduced Exercise Price takes effect. The
notice shall state the reduced Exercise Price and the period it will be in
effect.
A reduction of the Exercise Price does not change or adjust the
Exercise Price otherwise in effect for purposes of subsections (a), (b), (c),
(d) and (e) of this Section 11.
(l) Notice of Certain Transactions.
If:
(1) the Company takes any action that would require an
adjustment in the Exercise Price pursuant to subsections (a), (b), (c), (d)
or (e) of this Section 11 and if the Company does not arrange for Warrant
holders to participate pursuant to subsection (i) of this Section 11;
(2) the Company takes any action that would require a
supplemental
14
<PAGE> 18
Warrant Agreement pursuant to subsection (m) of this Section 11; or
(3) there is a liquidation or dissolution of the Company,
the Company shall mail to Warrant holders a notice stating the
proposed record date for a dividend or distribution or the proposed
effective date of a subdivision, combination, reclassification,
consolidation, merger, transfer, lease, liquidation or dissolution. The
Company shall mail the notice at least 15 days before such date. Failure to
mail the notice or any defect in it shall not affect the validity of the
transaction.
(m) Reorganization of Company.
If the Company consolidates or merges with or into, or transfers or
leases all or substantially all its assets to, any person, upon consummation of
such transaction the Warrants shall automatically become exercisable for the
kind and amount of securities, cash or other assets which the Holder of a
Warrant would have owned immediately after the consolidation, merger, transfer
or lease if the Holder had exercised the Warrant immediately before the
effective date of the transaction. Concurrently with the consummation of such
transaction, the corporation formed by or surviving any such consolidation or
merger if other than the Company, or the person to which such sale or conveyance
shall have been made, shall enter into a supplemental Warrant Agreement so
providing and further providing for adjustments which shall be as nearly
equivalent as may be practical to the adjustments provided for in this Section.
The successor Company shall mail to Warrant holders a notice describing the
supplemental Warrant Agreement.
If the issuer of securities deliverable upon exercise of Warrants
under the supplemental Warrant Agreement is an affiliate of the formed,
surviving, transferee or lessee corporation, that issuer shall join in the
supplemental Warrant Agreement.
If this subsection (m) applies, subsections (a), (b), (c), (d) and
(e) of this Section 11 do not apply.
(n) Warrant Agent's Disclaimer.
The Warrant Agent has no duty to determine when an adjustment under
this Section 11 should be made, how it should be made or what it should be. The
Warrant Agent has no duty to determine whether any provisions of a supplemental
Warrant Agreement under subsection (m) of this Section 11 are correct. The
Warrant Agent makes no representation as to the validity or value of any
securities or assets issued upon exercise of Warrants. The Warrant Agent shall
not be responsible for the Company's failure to comply with this Section.
15
<PAGE> 19
(o) When Issuance or Payment May Be Deferred.
In any case in which this Section 11 shall require that an adjustment
in the Exercise Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event (i)
issuing to the holder of any Warrant exercised after such record date the
Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise over and above the Warrant Shares and other capital stock of the
Company, if any, issuable upon such exercise on the basis of the Exercise Price
and (ii) paying to such holder any amount in cash in lieu of a fractional share
pursuant to Section 12; provided, however, that the Company shall deliver to
such holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional Warrant Shares, other capital stock and cash
upon the occurrence of the event requiring such adjustment.
(p) Adjustment in Number of Shares.
Upon each event that provides for an adjustment of the Exercise Price
pursuant to this Section 11, each Warrant outstanding prior to the making of the
adjustment shall thereafter evidence the right to receive upon payment of the
adjusted Exercise Price that number of shares of Common Stock (calculated to the
nearest ten millionth) obtained from the following formula:
N' = N x E
-
E'
where:
N'= the adjusted number of Warrant Shares issuable upon exercise of a
Warrant by payment of the adjusted Exercise Price.
N = the number of Warrant Shares previously issuable upon exercise
of a Warrant by payment of the Exercise Price prior to
adjustment.
E'= the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
(q) Form of Warrants.
Irrespective of any adjustments in the Exercise Price or the number
or kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
SECTION 12. Fractional Interests.
16
<PAGE> 20
(a) The Company shall not be required to issue fractional Warrant
Shares on the exercise of Warrants. If more than one Warrant shall be presented
for exercise in full at the same time by the same holder, the number of full
Warrant Shares which shall be issuable upon the exercise thereof shall be
computed on the basis of the aggregate number of Warrant Shares purchasable on
exercise of the Warrants so presented. If any fraction of a Warrant Share would,
except for the provisions of this Section 12, be issuable on the exercise of any
Warrants (or specified portion thereof), the Company shall pay an amount in cash
equal to the fair market value on the day immediately preceding the date the
Warrant is presented for exercise, multiplied by such fraction.
(b) Warrants may be issued in fractional interests. Holders of
fractional interests in Warrants will be entitled to purchase a number of
Warrant Shares equal to the product obtained by multiplying the number of
Warrant Shares issuable with respect to a full Warrant multipled by the
fractional interest owned by such Holder in the Warrant.
SECTION 13. Certain Covenants. Except with the consent of the Warrant
holders holding a majority of the outstanding and unexercised Warrants, the
Company, so long as any Warrant is outstanding and not exercised, shall not
issue any stock with a preference as to liquidation or dividends over the Common
Stock and shall not permit any of its direct or indirect subsidiaries to effect
a public offering or private sale of stock (except to the Company or any
subsidiary of the Company).
SECTION 14. Notices to Warrant holders. Upon any adjustment of the
Exercise Price pursuant to Section 11, the Company shall promptly thereafter; or
within five days, (i) cause to be filed with the Warrant Agent a certificate
executed by the Chief Financial Officer of the Company (or an assistant) setting
forth the Exercise Price after such adjustment and setting forth in reasonable
detail the method of calculation and the facts upon which such calculations are
based and setting forth the number of Warrant Shares (or portion thereof)
issuable after such adjustment in the Exercise Price, upon exercise of a Warrant
and payment of the adjusted Exercise Price, which certificate shall be
conclusive evidence of the correctness of the matters set forth therein, and
(ii) cause to be given to each of the registered holders of the Warrant
Certificates at his address appearing on the Warrant register written notice of
such adjustments by first-class mail, postage prepaid. Where appropriate, such
notice may be given in advance and included as a part of the notice required to
be mailed under the other provisions of this Section 14. The Warrant Agent shall
be fully protected in relying on any such certificate and on any adjustment
therein contained and shall not be deemed to have knowledge of such adjustment
unless and until it shall have received such certificate.
In case:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for or
purchase shares of Common Stock or of any
17
<PAGE> 21
other subscription rights or warrants; or
(b) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other than
cash dividends or cash distributions payable out of consolidated earnings or
earned surplus or dividends payable in shares of Common Stock or distributions
referred to in subsection (a) of Section 11 hereof); or
(c) of any consolidation or merger to which the Company is a party
and for which approval of any shareholders of the Company is required, or of the
conveyance or transfer of the properties and assets of the Company substantially
as an entirety, or of any reclassification or change of Common Stock issuable
upon exercise of the Warrants (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or a tender offer or exchange offer for shares of
Common Stock; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company proposes to take any action (other than actions of
the character described in Section 11(a)) which would require an adjustment of
the Exercise Price pursuant to Section 11; then the Company shall cause to be
filed with the Warrant Agent and shall cause to be given to each of the
registered holders of the Warrant Certificates at his address appearing on the
Warrant register, at least 20 calendar days (or 10 calendar days in any case
specified in clauses (a) or (b) above) prior to the applicable record date
hereinafter specified, or promptly in the case of events for which there is no
record date, by first-class mail, postage prepaid, a written notice stating (i)
the date as of which the holders of record of shares of Common Stock to be
entitled to receive any such rights, options, warrants or distribution are to be
determined, or (ii) the initial expiration date set forth in any tender offer or
exchange offer for shares of Common Stock, or (iii) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of shares of Common Stock shall be entitled
to exchange such shares for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up. The failure to give the notice required
by this Section 14 or any defect therein shall not affect the legality or
validity of any distribution, right, option, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the vote upon
any action.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the right
to vote or to consent or to receive notice as shareholders in respect of the
meetings of shareholders or the election of Directors of the Company or any
other matter, or any rights whatsoever as shareholders of the Company.
SECTION 15. Merger, Consolidation or Change of Name of Warrant Agent.
Any corporation into which the Warrant Agent may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Warrant Agent shall be a party, or any corporation succeeding to
the business of the Warrant Agent,
18
<PAGE> 22
shall be the successor to the Warrant Agent hereunder without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
warrant agent under the provisions of Section 17. In case at the time such
successor to the Warrant Agent shall succeed to the agency created by this
Agreement, and in case at that time any of the Warrant Certificates shall have
been countersigned but not delivered, any such successor to the Warrant Agent
may adopt the countersignature of the original Warrant Agent; and in case at
that time any of the Warrant Certificates shall not have been countersigned, any
successor to the Warrant Agent may countersign such Warrant Certificates either
in the name of the predecessor Warrant Agent or in the name of the successor to
the Warrant Agent; and in all such cases such Warrant Certificates shall have
the full force and effect provided in the Warrant Certificates and in this
Agreement.
In case at any time the name of the Warrant Agent shall be changed
and at such time any of the Warrant Certificates shall have been countersigned
but not delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name, and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
SECTION 16. Warrant Agent. The Warrant Agent undertakes the duties
and obligations imposed by this Agreement (and no implied duties or obligations
shall be read into this Agreement against the Warrant Agent) upon the following
terms and conditions, by all of which the Company and the holders of Warrants,
by their acceptance thereof, shall be bound:
(a) The statements contained herein and in the Warrant Certificates
shall be taken as statements of the Company and the Warrant Agent assumes no
responsibility for the correctness of any of the same except such as describe
the Warrant Agent or action taken or to be taken by it. The Warrant Agent
assumes no responsibility with respect to the distribution of the Warrant
Certificates except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of
the Company to comply with any of the covenants contained in this Agreement or
in the Warrant Certificates to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel of its
own selection (who may be counsel for the Company) and the Warrant Agent shall
incur no liability or responsibility to the Company or to any holder of any
Warrant Certificate in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with the opinion or the advice of such
counsel.
(d) The Warrant Agent shall incur no liability or responsibility to
the Company or to any holder of any Warrant Certificate for any action taken in
reliance on any Warrant Certificate,
19
<PAGE> 23
certificate of shares, notice, resolution, waiver, consent, order, certificate,
or other paper, document or instrument (whether in its original or facsimile
form) believed by it to be genuine and to have been signed, sent or presented by
the proper party or parties.
(e) The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent (including fees and
expenses of its counsel) in the administration and execution of this Agreement,
to reimburse the Warrant Agent for all expenses, taxes and governmental charges
and other charges of any kind and nature incurred by the Warrant Agent in the
execution of this Agreement and to indemnify the Warrant Agent (and any
predecessor Warrant Agent) and save it harmless against any and all claims
(whether asserted by the Company, a holder or any other person), damages,
losses, expenses (including taxes other than taxes based on the income of the
Warrant Agent), liabilities, including judgments, costs and counsel fees and
expenses, for anything done or omitted by the Warrant Agent in the execution of
this Agreement except as a result of its gross negligence or willful misconduct.
The provisions of this Section 16(e) shall survive the expiration of the
Warrants and the termination of this Agreement.
(f) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more registered holders of Warrant
Certificates shall furnish the Warrant Agent with reasonable security and
indemnity reasonably satisfactory to it for any costs and expenses which may be
incurred, but this provision shall not affect the power of the Warrant Agent to
take such action as it may consider proper, whether with or without any such
security or indemnity. All rights of action under this Agreement or under any of
the Warrants may be enforced by the Warrant Agent without the possession of any
of the Warrant Certificates or the production thereof at any trial or other
proceeding relative thereto, and any such action, suit or proceeding instituted
by the Warrant Agent shall be brought in its name as Warrant Agent and any
recovery of judgment shall be for the ratable benefit of the registered holders
of the Warrants, as their respective rights or interests may appear.
(g) The Warrant Agent, and any stockholder, director, officer or
employee of it, may buy, sell or deal in any of the Warrants or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for the
Company, and its duties shall be determined solely by the provisions hereof. The
Warrant Agent shall not be liable for anything which it may do or refrain from
doing in connection with this Agreement except for its own gross negligence or
willful misconduct.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of any Warrant Certificate to make or cause to be
made any adjustment of the Exercise Price or number of the Warrant Shares or
other securities or property deliverable as provided in this Agreement, or to
determine whether any facts exist which may require any of such adjustments, or
with respect to the nature or extent of any such adjustments, when made, or with
respect to the method employed in making the same. The Warrant Agent shall not
be accountable with respect to the validity or value or the kind or amount of
any Warrant Shares or of any securities or property
20
<PAGE> 24
which may at any time be issued or delivered upon the exercise of any Warrant or
with respect to whether any such Warrant Shares or other securities will when
issued be validly issued and fully paid and nonassessable, and makes no
representation with respect thereto.
(j) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Warrant Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; provided that the Company must use its
reasonable best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
(k) Any application by the Warrant Agent for written instructions
from the Company may, at the option of the Warrant Agent, set forth in writing
any action proposed to be taken or omitted by the Warrant Agent under this
Agreement and the date on and/or after which such action shall be taken or such
omission shall be effective. The Warrant Agent shall not be liable for any
action taken by, or omission of, the Warrant Agent in accordance with a proposal
included in such application on or after the date specified in such application
(which date shall not be less than three Business Days after the date any
officer of the Company actually receives such application, unless any such
officer shall have consented in writing to any earlier date) unless prior to
taking any such action (or the effective date in the case of an omission), the
Warrant Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
(l) No provision of this Agreement shall require the Warrant Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its rights
if there shall be reasonable grounds for believing that repayment of such funds
or adequate indemnification against such risk or liability is not reasonably
assured to it.
(m) In addition to the foregoing, the Warrant Agent shall be
protected and shall incur no liability for, or in respect of, any action taken
or omitted by it in connection with its administration of this Agreement if such
acts or omissions are in reliance upon (i) the proper execution of the
certification concerning beneficial ownership appended to the form of assignment
and the form of the election attached hereto unless the Warrant Agent shall have
actual knowledge that, as executed, such certification is untrue, or (ii) the
non-execution of such certification including, without limitation, any refusal
to honor any otherwise permissible assignment or election by reason of such
non-execution.
21
<PAGE> 25
SECTION 17. Change of Warrant Agent.
If the Warrant Agent shall become incapable of acting as Warrant
Agent, the Company shall appoint a successor to such Warrant Agent. If the
Company shall fail to make such appointment within a period of 30 days after it
has been notified in writing of such incapacity by the Warrant Agent or by the
registered holder of a Warrant Certificate, then the registered holder of any
Warrant Certificate may apply to any court of competent jurisdiction for the
appointment of a successor to the Warrant Agent. Pending appointment of a
successor to such Warrant Agent, either by the Company or by such a court, the
duties of the Warrant Agent shall be carried out by the Company. The holders of
a majority of the unexercised Warrants shall be entitled at any time to remove
the Warrant Agent and appoint a successor to such Warrant Agent. Such successor
to the Warrant Agent need not be approved by the Company or the former Warrant
Agent. After appointment the successor to the Warrant Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Warrant Agent without further act or deed; but the former
Warrant Agent upon payment of all fees and expenses due it and its agents and
counsel shall deliver and transfer to the successor to the Warrant Agent any
property at the time held by it hereunder and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Failure to give
any notice provided for in this Section 17, however, or any defect therein,
shall not affect the legality or validity of the appointment of a successor to
the Warrant Agent.
SECTION 18. Notices to Company and Warrant Agent. Any notice or
demand authorized by this Agreement to be given or made by the Warrant Agent or
by the registered holder of any Warrant Certificate to or on the Company shall
be sufficiently given or made when and if deposited in the mail, first class or
registered, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent), as follows:
Key Energy Group, Inc.
Two Tower Center, 20th Floor
East Brunswick, NJ 08816
Attention: General Counsel
In case the Company shall fail to maintain such office or agency or
shall fail to give such notice of the location or of any change in the location
thereof, presentations may be made and notices and demands may be served at the
principal office of the Warrant Agent.
Any notice pursuant to this Agreement to be given by the Company or
by the registered holder(s) of any Warrant Certificate to the Warrant Agent
shall be sufficiently given when and if deposited in the mail, first-class or
registered, postage prepaid, addressed (until another address is filed in
writing by the Warrant Agent with the Company) to the Warrant Agent as follows:
The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
Attention: Corporate Trust Administration
22
<PAGE> 26
SECTION 19. Supplements and Amendments.
The Company and the Warrant Agent may from time to time supplement or
amend this Agreement without the approval of any holders of Warrant Certificates
in order to cure any ambiguity or to correct or supplement any provision
contained herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions in regard to matters or questions
arising hereunder which the Company and the Warrant Agent may deem necessary or
desirable and which shall not in any way adversely affect the interests of the
holders of Warrant Certificates. Notwithstanding anything in this Agreement to
the contrary, the prior written consent of the Warrant Agent must be obtained in
connection with any supplement or amendment which alters the rights or duties of
the Warrant Agent.
SECTION 20. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 21. Termination. This Agreement will terminate on any earlier
date if all Warrants have been exercised or expired without exercise. The
provisions of Section 16 shall survive such termination.
SECTION 22. Governing Law. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be construed in
accordance with the internal laws of said State.
SECTION 23. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Warrant Agent and the registered holders of the Warrant Certificates any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Warrant Agent and the registered holders of the Warrant Certificates.
SECTION 24. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
[Signature Page Follows]
23
<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
KEY ENERGY GROUP, INC.
By
-----------------------------------
Title:
THE BANK OF NEW YORK
By
-----------------------------------
Title:
24
<PAGE> 28
EXHIBIT A
[Form of Warrant Certificate]
[Face]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. SAID SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT.
EXERCISABLE ON OR BEFORE 5:00 P.M. NEW YORK CITY TIME ON SEPTEMBER 14, 2008.
A-1
<PAGE> 29
No. _____ 150,000 Warrants
Warrant Certificate
KEY ENERGY GROUP, INC.
This Warrant Certificate certifies that ________________________, or
registered assigns, is the registered holder of 150,000 Warrants expiring
September 14, 2008 (the "WARRANTS") to purchase Common Stock, $0.10 (the "COMMON
STOCK"), of KEY ENERGY GROUP, INC., a Maryland corporation (the "COMPANY"). Each
Warrant entitles the holder upon exercise to receive from the Company on or
before 5:00 p.m. New York City Time on September 14, 2008, that number of fully
paid and nonassessable shares of Common Stock (each, a "WARRANT SHARE") as set
forth below at the exercise price (the "EXERCISE PRICE") as determined pursuant
to the Warrant Agreement referenced below payable in lawful money of the United
States of America upon surrender of this Warrant Certificate and payment of the
Exercise Price at the office or agency of the Warrant Agent, but only subject to
the conditions set forth herein and in the Warrant Agreement referred to on the
reverse hereof. Notwithstanding the foregoing, Warrants may be exercised without
the exchange of funds pursuant to the net exercise provisions of Section 6 of
the Warrant Agreement. The Exercise Price and number of Warrant Shares issuable
upon exercise of the Warrants are subject to adjustment upon the occurrence of
certain events set forth in the Warrant Agreement.
The number of Warrant Shares for which one Warrant is initially
exercisable shall be equal to: 0.15 times the number of shares of Common Stock
outstanding on such date on a fully diluted basis (after giving effect to the
exercise of all options, warrants and rights to acquire Common Stock and the
conversion of all convertible securities for the maximum number of shares of
Common Stock obtainable whether or not such options, warrants or rights are then
exercisable or vested and whether or not such convertible securities are then
convertible) divided by 150,000. According to the Company's calculations, that
number is __________ shares.
The initial Exercise Price per share of Common Stock for any Warrant
shall be equal to 110% of the fair market value of one share of Common Stock as
of the Escrow Release Date for such Warrant. The fair market value shall be as
determined in the Warrant Agreement. The initial Exercise Price is $_______ per
share.
No warrant may be exercised before the Escrow Release Date or after
5:00 p.m. New York City Time on September 15, 2008 and to the extent not
exercised by such time such warrants shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed and construed in
accordance with the
A-2
<PAGE> 30
internal laws of the State of New York.
IN WITNESS WHEREOF, ____________________ has caused this Warrant
Certificate to be signed by its President and by its Secretary.
KEY ENERGY GROUP, INC.
By
------------------------------
Stephen E. McGregor
Executive Vice President
By
------------------------------
Jack D. Loftis, Jr.
Secretary
Countersigned:
Dated:
THE BANK OF NEW YORK,
as Warrant Agent
By
----------------------------
Authorized Signatory
A-3
<PAGE> 31
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring September 14, 2008 entitling the holder on
exercise to receive shares of Common Stock, par value $0.10 per share, of the
Company (the "COMMON STOCK"), and are issued or to be issued pursuant to a
Warrant Agreement dated as of September 14, 2008 (the "WARRANT AGREEMENT"), duly
executed and delivered by the Company to The Bank of New York, a New York
banking corporation, as warrant agent (the "WARRANT AGENT"), which Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the holders (the words "HOLDERS" or "HOLDER" meaning the
registered holders or registered holder) of the Warrants. A copy of the Warrant
Agreement may be obtained by the holder hereof upon written request to the
Company.
Warrants may be exercised at any time on or before 5:00 p.m. New York
City time on September 14, 2008. The holder of Warrants evidenced by this
Warrant Certificate may exercise them by surrendering this Warrant Certificate,
with the form of election to purchase set forth hereon properly completed and
executed, together with payment of the Exercise Price as specified in the
Warrant Agreement at the office of the Warrant Agent. In the event that upon any
exercise of Warrants evidenced hereby the number of Warrants exercised shall be
less than the total number of Warrants evidenced hereby, there shall be issued
to the holder hereof or his assignee a new Warrant Certificate evidencing the
number of Warrants not exercised. No adjustment shall be made for any dividends
on any Common Stock issuable upon exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
The holders of the Warrants are entitled to certain registration
rights with respect to the Common Stock purchasable upon exercise thereof. Said
registration rights are set forth in full in a Registration Rights Agreement
dated as of September 14, 1998, among the Company and certain investors named
therein. A copy of the Registration Rights Agreement may be obtained by the
holder hereof upon written request to the Company or the Warrant Agent.
Warrant Certificates, when surrendered at the principal corporate
trust office of the Warrant Agent by the registered holder thereof in person or
by legal representative or attorney duly authorized in writing, may be
exchanged, in the manner and subject to the limitations provided in the Warrant
Agreement, but without payment of any service charge, for another Warrant
Certificate or Warrant Certificates of like tenor evidencing in the aggregate a
like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and
A-4
<PAGE> 32
evidencing in the aggregate a like number of Warrants shall be issued to the
transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
A-5
<PAGE> 33
Election to Purchase
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive __________ shares of Common
Stock and herewith tenders payment for such shares to the order of KEY ENERGY
GROUP, INC. in the amount of $______ in accordance with the terms hereof unless
the holder is exercising Warrants pursuant to the net exercise provisions of
Section 6 of the Warrant Agreement. The undersigned requests that a certificate
for such shares be registered in the name of ________________, whose address is
__________________________ and that such shares be delivered to _______________
whose address is _________________________________. If said number of shares is
less than all of the shares of Common Stock purchasable hereunder, the
undersigned requests that a new Warrant Certificate representing the remaining
balance of such shares be registered in the name of ______________, whose
address is _________________________, and that such Warrant Certificate be
delivered to ________________________, whose address is ______________________.
Signature:
Date:
Signature Guaranteed:
A-6
<PAGE> 34
SIGNATURES
Dated as of September 14, 1998
KEY ENERGY GROUP, INC.
By: /s/ STEPHEN E. MCGREGOR
------------------------
Name:
Title:
THE BANK OF NEW YORK
By: /s/ THOMAS C. KNIGHT
-----------------------
Name: THOMAS C. KNIGHT
Title: ASSISTANT VICE PRESIDENT
<PAGE> 1
EXHIBIT 99.4
================================================================================
DEBT REGISTRATION RIGHTS AGREEMENT
among
KEY ENERGY GROUP, INC.
THE GUARANTORS listed on the signature pages hereto as Guarantors
and
LEHMAN COMMERCIAL PAPER INC.
Dated as of September 14, 1998
================================================================================
<PAGE> 2
DEBT REGISTRATION RIGHTS AGREEMENT
This DEBT REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made
and entered into as of September 14, 1998, among KEY ENERGY GROUP, INC., a
Maryland corporation (the "COMPANY"), the Guarantors listed on signature pages
hereto (the "GUARANTORS") and LEHMAN COMMERCIAL PAPER INC., as ("ADMINISTRATIVE
AGENT").
RECITALS
This Agreement is made pursuant to the Bridge Loan Agreement, dated
as of the date hereof (the "BRIDGE LOAN AGREEMENT"), among the Company, the
Guarantors, the Lenders referred to therein (the "LENDERS"), Lehman Brothers
Inc. (the "ARRANGER") and the Administrative Agent. In order to induce the
Lenders to enter into the Bridge Loan Agreement, the Company and the Guarantors
have agreed to provide the registration rights set forth in this Agreement. The
execution of this Agreement is a condition to the effectiveness of the Bridge
Loan Agreement.
AGREEMENT
The parties agree as follows:
1. Definitions
Capitalized terms used herein without definition have the meanings
assigned to them in the Bridge Loan Agreement. As used in this Agreement, the
following capitalized terms shall have the following meanings:
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE NOTE INDENTURE: The Indenture, dated as of September 14,
1998, among the Company, the Guarantors, as guarantors and The Bank of New York,
as trustee, pursuant to which the Exchange Notes are issued, as the same may be
amended from time to time in accordance with the terms thereof.
EXCHANGE NOTES: The Exchange Notes issued pursuant to the Exchange
Note Indenture in the form attached as Exhibit A to the Exchange Note Indenture.
LIQUIDATED DAMAGES: See Section 3(b) hereof.
LOANS: As defined in the Bridge Loan Agreement.
NASD: National Association of Securities Dealers, Inc.
PERSON: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
PROSPECTUS: The prospectus included in any Registration Statement,
as amended or supplemented by any prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered by
such Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
<PAGE> 3
REGISTRABLE SECURITIES: All Exchange Notes; provided that an
Exchange Note ceases to be a Registrable Security when it is no longer a
Transfer Restricted Security.
REGISTRANTS: The Company and the Guarantors.
REGISTRATION DEFAULT: See Section 3(b) hereof.
REGISTRATION EXPENSES: See Section 6 hereof.
REGISTRATION STATEMENT: Any registration statement of the
Registrants which covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
RULE 144: Rule 144 promulgated under the Securities Act..
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended.
SHELF REGISTRATION: See Section 3(a) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Exchange Note Indenture.
TRANSFER RESTRICTED SECURITIES: The Registrable Securities upon
original issuance thereof, and with respect to any particular such Registrable
Security, until such securities are sold to the public.
UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A registration
in which securities of the Company are sold to an underwriter for reoffering to
the public.
2. Holders of Registrable Securities
A Person is deemed to be a holder of Registrable Securities whenever
such Person owns Registrable Securities of record or has provided evidence
reasonably satisfactory to the Company that such Person has the right to acquire
such Registrable Securities, whether or not such acquisition has actually been
effected and disregarding any legal restrictions upon the exercise of such
right.
3. Shelf Registration
(a) Filing of Shelf Registration. The Registrants shall use its
reasonable best efforts to file a "shelf" registration statement on any
appropriate form pursuant to Rule 415 (or similar rule that may be adopted by
the SEC) under the Securities Act (a "SHELF REGISTRATION") as promptly as
practicable and in no event later than the date that is 300 days following the
initial making of the Loans (the "FILING DATE") to permit resales of all of the
Registrable Securities. The Registrants agree to use their reasonable best
efforts to cause such Shelf Registration to become effective as promptly as
possible after the filing thereof, but in no event later than 60 days after the
Filing Date (the "EFFECTIVE DATE"), and thereafter to keep it continuously
effective for the period that will terminate upon the earlier of (1) when all
the Registrable Securities covered by the Shelf Registration have been sold
pursuant to such Shelf Registration or have been sold to the public pursuant to
Rule 144 and (2) no Registrable Securities or Loans are outstanding.
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<PAGE> 4
(b) Liquidated Damages. If (i) the Registration Statement has not
been declared effective by the SEC on or prior to the Effective Date or (ii) the
Registration Statement is filed and declared effective but shall thereafter
cease to be effective or fail to be usable for its intended purpose at any time
within the time period required for effectiveness in subsection (a) above
without being succeeded immediately by a post-effective amendment to the
Registration Statement that cures such failure and that is itself immediately
declared effective (each such event referred to in clauses (i) and (ii), a
"REGISTRATION DEFAULT"), the Registrants jointly and severally agree to pay
liquidated damages ("LIQUIDATED DAMAGES") to each holder of Transfer Restricted
Securities and each Lender equal to $0.05 per week per $1,000 principal amount
of Transfer Restricted Securities held by such holder or Lender for each week or
portion thereof that the Registration Default continues for the first 90-day
period immediately following the occurrence of such Registration Default. The
amount of the liquidated damages shall increase by an additional $0.05 per week
per $1,000 principal amount of Transfer Restricted Securities with respect to
each subsequent 90-day period until all Registration Defaults have been cured,
up to a maximum amount of liquidated damages of $0.20 per week per $1,000
principal amount of Transfer Restricted Securities; provided that the Company
shall in no event be required to pay liquidated damages for more than one
Registration Default at any given time. All Liquidated Damages shall be
calculated based on the actual number of days elapsed and a 360 day year and all
accrued Liquidated Damages shall be paid to each record holder of Registrable
Securities in cash, except if the interest rate on the Exchange Notes exceeds
14.0%, Liquidated Damages shall be paid in the form of additional Registrable
Securities having a principal amount equal to the amount of such Liquidated
Damages; provided that such additional Registrable Securities shall be in
denominations of $1,000 and integral multiples thereof and that any difference
between such Liquidated Damages owing and such additional Registrable Securities
shall be paid in cash by wire transfer of immediately available funds or by
federal funds check on each Interest Payment Date, as provided in the Exchange
Note Indenture or the Bridge Loan Agreement, as applicable. Following the cure
of all Registration Defaults relating to any particular Registrable Security,
the accrual of Liquidated Damages with respect to such Registration Default will
cease.
All obligations of the Registrants set forth in the preceding
paragraph that are outstanding with respect to any Transfer Restricted Security
at the time such security ceases to be a Transfer Restricted Security shall
survive until such time as all such obligations have been paid in full. Any
holder of Registrable Securities may notify the Exchange Note Indenture trustee
(and any paying agent under the Exchange Note Indenture) and the Administrative
Agent under the Bridge Loan Agreement immediately after the occurrence of each
and every event which pursuant to this Section 3(b) results in the accrual of
Liquidated Damages with respect to such Registrable Securities.
4. Hold-Back Agreements
(a) Restrictions on Public Sale by Holder of Registrable
Securities. Each holder of Registrable Securities whose Registrable Securities
are covered by a Registration Statement filed pursuant to Section 3 hereof
agrees, if requested by the managing underwriters in an underwritten offering,
not to effect any public sale or distribution of securities of the Registrants
of the same class as the securities included in such Registration Statement,
including a sale pursuant to Rule 144 under the Securities Act (except as part
of such underwritten registration), during the 10-day period prior to, and
during the 90-day period beginning on, the closing date of each underwritten
offering made pursuant to such Registration Statement, to the extent timely
notified in writing by the Registrants or the managing underwriters; provided,
however, that each holder of Registrable Securities shall be subject to the
hold-back restrictions of this Section 4(a) only once during the term of this
Agreement.
The foregoing provisions shall not apply to any holder of
Registrable Securities if such holder is
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<PAGE> 5
prevented by applicable statute or regulation from entering any such agreement;
provided, however, that any such holder shall undertake, in its request to
participate in any such underwritten offering, not to effect any public sale or
distribution of any Registrable Securities held by such holder and covered by a
Registration Statement commencing on the date of sale of the Registrable
Securities covered by such Registration Statement unless it has provided 90 days
prior written notice of such sale or distribution to the underwriter or
underwriters.
(b) Restrictions on Sale of Securities by the Registrants and
Others. The Registrants agree (1) not to effect any public or private offer,
sale or distribution of any of their debt securities or any class or series of
their capital stock having a preference in liquidation or with respect to
dividends, including a sale pursuant to Regulation D under the Securities Act,
during the 10-day period prior to, and during the 90-day period beginning with,
the effectiveness of a Registration Statement filed under Section 3 to the
extent timely notified in writing by a holder of Registrable Securities or the
managing underwriters in an underwritten offering and (2) to use reasonable best
efforts to cause each holder of each of the Registrants' privately placed debt
securities or any class or series of the Registrants' capital stock having a
preference in liquidation or with respect to dividends purchased from the
Registrants at any time on or after the date of this Agreement to agree not to
effect any public sale or distribution of any such securities during such
period, including a sale pursuant to Rule 144 under the Securities Act (except
as part of such registration, if permitted).
5. Registration Procedures
In connection with the Registrants' Shelf Registration obligations
set forth in Section 3 hereof, each of the Registrants will use its reasonable
best efforts to effect such registration to permit the sale of such Registrable
Securities in accordance with the intended method or methods of distribution
thereof, and pursuant thereto the Registrants will, as expeditiously as
possible:
(a) prepare and file with the SEC, within the time period provided
in Section 3 hereof, a Registration Statement or Registration Statements
relating to the Shelf Registration on any appropriate form under the Securities
Act, which form shall be available for the sale of the Registrable Securities in
accordance with the intended method or methods of distribution thereof and shall
include all financial statements (including, if applicable, financial statements
of any Person which shall have guaranteed any indebtedness of the Registrants)
required by the SEC to be filed therewith, cooperate and assist in any filings
required to be made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the rules and
regulations of the NASD, and use its reasonable best efforts to cause such
Registration Statement to become effective; provided that before filing a
Registration Statement or any amendments or supplements thereto, the Registrants
will furnish to the holders of the Registrable Securities covered by such
Registration Statement and the underwriters, if any, copies of all such
documents proposed to be filed, which documents will be subject to the review by
such holders and underwriters, and the Registrants will not file any
Registration Statement or any amendments or supplements thereto to which the
holders of a majority in aggregate principal amount of such Registrable
Securities or such managing underwriters, if any, shall reasonably object within
14 days;
(b) prepare and file with the SEC such amendments and post-
effective amendments to the Registration Statement as may be necessary to keep
the Registration Statement effective for the applicable period, or such shorter
period as will terminate when all Registrable Securities covered by such
Registration Statement have been sold; cause the Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Securities Act;
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<PAGE> 6
comply with the applicable provisions of Rules 424 and 430A under the Securities
Act in a timely manner; and comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities covered by such
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers thereof set forth in
such Registration Statement or supplement to the Prospectus;
(c) notify the selling holders of Registrable Securities and the
managing underwriters, if any, promptly, and (if requested by any such Person)
confirm such advice in writing, (1) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective, (2) of any request by the SEC for amendments or supplements to the
Registration Statement or the Prospectus or for additional information, (3) of
the issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose,
(4) if at any time the representations and warranties of the Registrants
contemplated by paragraph (o) below cease to be true and correct, (5) of the
receipt by the Registrants of any notification with respect to the suspension of
the qualification of the Registrable Securities for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose and (6) of the
happening of any event or the existence of any fact which makes any statement
made in the Registration Statement, the Prospectus or any document incorporated
therein by reference untrue or which requires the making of any changes in the
Registration Statement, the Prospectus or any document incorporated therein by
reference in order to make the statements therein not misleading. If at any time
the Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities or
Blue Sky laws, the Registrants shall use their reasonable best efforts to obtain
the withdrawal or lifting of such order at the earliest possible time;
(d) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(e) if requested by the managing underwriter or underwriters or a
holder of Registrable Securities being sold in connection with an underwritten
offering, promptly incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters or the holders of a
majority in aggregate principal amount of the Registrable Securities being sold
agree should be included therein relating to the plan of distribution with
respect to such Registrable Securities, including, without limitation,
information with respect to the principal amount of Registrable Securities being
sold to such underwriters, the purchase price being paid therefor by such
underwriters and any other terms of the underwritten (or best efforts
underwritten) offering of the Registrable Securities to be sold in such
offering; and make all required filings of such Prospectus supplement or
post-effective amendment as soon as notified of the matters to be incorporated
in such Prospectus supplement or post-effective amendment;
(f) furnish to each selling holder of Registrable Securities and
each managing underwriter, if any, without charge, if requested, at least one
signed copy of the Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those
incorporated by reference);
(g) deliver to each selling holder of Registrable Securities and
the underwriters, if any, without charge, if requested, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons may reasonably request; the Registrants
consent to the use of the Prospectus or any amendment or supplement thereto by
each of the selling holders of Registrable
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<PAGE> 7
Securities and the underwriters, if any, in connection with the offering and
sale of the Registrable Securities covered by the Prospectus or any amendment or
supplement thereto;
(h) prior to any public offering of Registrable Securities,
register or qualify or cooperate with the selling holders of Registrable
Securities, the underwriters, if any, and their respective counsel in connection
with the registration or qualification of such Registrable Securities for offer
and sale under the securities or blue sky laws of such jurisdictions as any such
seller or underwriter reasonably requests in writing and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of such Registrable Securities; provided that the Registrants will
not be required to qualify generally to do business in any jurisdiction where it
is not then so qualified or to take any action which would subject it to general
service of process in any such jurisdiction where it is not then so subject;
(i) cooperate with the selling holders of Registrable Securities
and the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing such Registrable Securities to be sold and
not bearing any restrictive legends; and enable such Registrable Securities to
be in such denominations and registered in such names as such managing
underwriters may request at least two business days prior to any sale of such
Registrable Securities to the underwriters;
(j) use their reasonable best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the underwriters, if any,
to consummate the disposition of such Registrable Securities;
(k) upon the occurrence of any event contemplated by paragraph
(c)(6) above, prepare a supplement or post-effective amendment to the related
Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the holders of the Registrable Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading;
(l) use reasonable efforts to cause all Registrable Securities
covered by a Registration Statement to be listed on each securities exchange on
which similar securities issued by the Registrants are then listed if requested
by the holders of a majority in aggregate principal amount of such Registrable
Securities or the managing underwriters, if any;
(m) cause the Registrable Securities covered by a Registration
Statement to be rated with such rating agencies as the holders of a majority in
aggregate principal amount of such Registrable Securities or the managing
underwriters, if any, may designate;
(n) not later than the effective date of the Shelf Registration,
provide a CUSIP number for all Registrable Securities and provide the Exchange
Note Indenture trustee or transfer agent with printed certificates for the
Registrable Securities which are in a form eligible for deposit with The
Depository Trust Company;
(o) enter into such agreements (including an underwriting
agreement) and take all such other actions in connection therewith in order to
expedite or facilitate the disposition of such Registrable Securities and in
such connection, whether or not an underwriting agreement is entered into and
whether or not the registration is an underwritten registration (1) make such
representations and warranties to the holders of such Registrable Securities and
the underwriters, if any, in form, substance and scope as are customarily made
by issuers to underwriters in primary underwritten offerings; (2) obtain
opinions of
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<PAGE> 8
counsel to the Registrants and updates thereof (which counsel and opinions (in
form, scope and substance) shall be reasonably satisfactory to the managing
underwriters, if any, and the holders of a majority in principal amount of such
Registrable Securities) addressed to each selling holder and the underwriters,
if any, covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by
such holders and underwriters; (3) obtain "comfort" letters and updates thereof
from the Registrants' independent certified public accountants addressed to such
holders and underwriters, if any, such letters to be in customary form and
covering matters of the type customarily covered in "comfort" letters by
underwriters in connection with primary underwritten offerings; (4) if an
underwriting agreement is entered into, the same shall set forth in full the
indemnification provisions and procedures of Section 7 hereof with respect to
all parties to be indemnified pursuant to Section 7; and (5) deliver such
documents and certificates as may be requested by the holders of a majority of
the Registrable Securities being sold and the managing underwriters, if any, to
evidence compliance with clause (k) above and with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
Registrants. The above shall be done at each closing under such underwriting or
similar agreement or as and to the extent required thereunder;
(p) make available for inspection by any underwriter participating
in any disposition of such Registrable Securities pursuant to a Shelf
Registration, and any attorney or accountant retained by such holders or
underwriters, if any, all financial and other records, pertinent corporate
documents and properties of the Registrants, and cause the Registrants'
officers, directors and employees to supply all information reasonably requested
by any such representative, underwriter, attorney or accountant in connection
with such Shelf Registration;
(q) otherwise use their best efforts to comply with all applicable
rules and regulations of the SEC;
(r) cause the Exchange Note Indenture to be qualified under the
TIA, provide an indenture trustee for each of the Registrable Securities not
later than the effective date of the Shelf Registration, and in connection
therewith, cooperate with the trustee under the Exchange Note Indenture and the
holders of the Exchange Notes to effect such changes to the Exchange Note
Indenture as may be required for the Exchange Note Indenture to be so qualified
in accordance with the terms of the TIA and execute, and use their reasonable
best efforts to cause such trustee to execute, all documents as may be required
to effect such changes and all other forms and documents required to be filed
with the SEC to enable the Exchange Note Indenture to be so qualified in a
timely manner; and
(s) make appropriate officers of the Registrants available to such
holders and the underwriters, if any, for meetings with prospective purchasers
of the Registrable Securities and prepare and present to potential investors
"roadshow" material in a manner consistent with other new issuances of high
yield debt securities.
The Registrants may require each seller of Registrable Securities as
to which any registration is being effected to furnish to the Registrants such
information regarding the distribution of such securities as the Registrants may
from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acceptance of such
Registrable Securities that, upon receipt of any notice from the Registrants of
the happening of any event of the kind described in Section 5(k) hereof, such
holder will forthwith discontinue disposition of Registrable Securities until
such holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(k) hereof, or until it is advised in writing (the
"ADVICE") by the Registrants that the use of such Prospectus
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may be resumed, and has received copies of any additional or supplemental
filings which are incorporated by reference in such Prospectus, and, if so
directed by the Registrants, such holder will deliver to the Registrants (at the
Registrants' expense) all copies, other than permanent file copies then in such
holder's possession, of such Prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Registrants
shall give any such notice, the time periods regarding the maintenance of the
Shelf Registration and the filing and maintenance of the Shelf Registration in
Section 3 hereof shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section 5(c)(6)
hereof to and including the date when each seller of Registrable Securities
covered by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof or the
Advice.
6. Registration Expenses
(a) All expenses incident to the Registrants' performance of or
compliance with this Agreement, including without limitation all (i)
registration and filing fees, fees and expenses associated with filings required
to be made with the NASD (including, if applicable, the fees and expenses of any
"qualified independent underwriter" and their counsel as may be required by the
rules and regulations of the NASD), (ii) fees and expenses of compliance with
securities or blue sky laws (including fees and disbursements of counsel for the
underwriters or selling holders in connection with blue sky qualifications of
the Registrable Securities and determination of their eligibility for investment
under the laws of such jurisdictions as the managing underwriters or holders of
a majority in aggregate principal amount of the Registrable Securities being
sold may designate), (iii) printing expenses (including expenses of printing
certificates for the Registrable Securities in a form eligible for deposit with
The Depository Trust Company and of printing prospectuses), messenger, telephone
and delivery expenses, (iv) fees and disbursements of counsel for the
Registrants and for the sellers of the Registrable Securities (subject to the
provisions of Section 6(b) hereof), of all independent certified public
accountants (including the expenses of any special audit and "comfort" letters
required by or incident to such performance), and of underwriters (excluding
discounts, commissions or fees of underwriters, selling brokers, dealer managers
or similar securities industry professionals relating to the distribution of the
Registrable Securities or legal expenses of any Person other than the
Registrants and the selling holders), (v) the cost of securities acts liability
insurance if the Registrants so desires, (vi) "roadshow" travel and other
expenses incurred in connection with the marketing and sale of the Registrable
Securities, (vii) fees and expenses in connection with the rating of the
Registrable Securities by rating agencies, if any, and (viii) fees and expenses
of other Persons retained by the Registrants (all such expenses being herein
called "REGISTRATION EXPENSES") will be borne by the Registrants, regardless
whether the Registration Statement becomes effective. The Registrants, in any
event, will pay their own internal expenses (including, without limitation, all
salaries and expenses of their officers and employees performing legal or
accounting duties), the expense of any annual audit, the fees and expenses
incurred in connection with the listing of the securities to be registered on
each securities exchange on which similar securities issued by the Registrants
are then listed, rating agency fees and the fees and expenses of any Person,
including special experts, retained by the Registrants.
(b) In connection with the Shelf Registration hereunder, the
Registrants will reimburse the selling holders of Registrable Securities being
registered in such registration for the reasonable fees and disbursements of not
more than one law firm (which shall be reasonably acceptable to the Company)
chosen by the selling holders of a majority in principal amount of such
Registrable Securities.
7. Indemnification
(a) Indemnification by the Registrants. The Registrants jointly and
severally agree to
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indemnify and hold harmless, to the full extent permitted by law, each holder of
Registrable Securities, their officers, directors and employees and each Person
who controls such holder (within the meaning of the Securities Act) (the
"INDEMNIFIED PARTIES") against all losses, claims, damages, liabilities and
expenses incurred by such party in connection with any actual or threatened
action arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or preliminary
Prospectus or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein (in
the case of a Prospectus or a preliminary Prospectus, in light of the
circumstances then existing) not misleading, except insofar as the same arise
out of or are based upon any such untrue statement or omission made in reliance
on and in conformity with any information furnished in writing to the
Registrants by such holder or its counsel expressly for use therein; provided,
that the Registrants shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission in
the Prospectus, if such untrue statement or alleged untrue statement or omission
or alleged omission is completely corrected in an amendment or supplement to the
Prospectus and the holder of Registrable Securities thereafter fails to deliver
such Prospectus as so amended or supplemented prior to or concurrently with the
sale of the Registrable Securities to the person asserting such loss, claim,
damage, liability or expense after the Registrants had furnished such holder
with a sufficient number of copies of the same. The Registrants shall also
indemnify underwriters, their officers and directors and each Person who
controls such Persons (within the meaning of the Securities Act) to the same
extent as provided above with respect to the indemnification of the Indemnified
Parties, if requested.
(b) Indemnification by Holder of Registrable Securities. In
connection with the Shelf Registration, each holder of Registrable Securities
will furnish to the Registrants in writing such information and affidavits as
the Registrants reasonably request for use in connection with any Registration
Statement or Prospectus and agrees to indemnify and hold harmless, to the full
extent permitted by law, the Registrants, their directors and officers and each
Person who controls the Registrants (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses resulting from any
untrue statement of a material fact contained in any Registration Statement or
Prospectus or any omission of a material fact required to be stated in the
Registration Statement or Prospectus or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, to the extent, but only to the extent, that such untrue statement or
omission relates to a holder and is made in reliance on and in conformity with
any information or affidavit furnished in writing by such holder to the
Registrants specifically for inclusion in such Registration Statement or
Prospectus. In no event shall the liability of any selling holder of Registrable
Securities hereunder be greater in amount than the dollar amount of the proceeds
received by such holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation. The Registrants shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution of such
Registrable Securities to the same extent above with respect to information or
affidavit furnished writing by such Persons as provided specifically for any
Prospectus or Registration Statement.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the Registrants or
holder of Registrable Securities, as the case may be (in either case, as
applicable, an "INDEMNIFYING PARTY"), of any claim with respect to which it
seeks indemnification and (ii) permit such Indemnifying Party to assume the
defense of such claim with counsel reasonably satisfactory to such Person;
provided, however, that any Person entitled to indemnification hereunder shall
have the right to employ separate counsel and to participate in the defense of
such claim, but the fees and expenses of such counsel shall be at the expense of
such Person unless (a) the Indemnifying Party has agreed to pay such fees or
expenses, (b) the Indemnifying Party has failed to assume the defense of such
claim or (c) in the reasonable judgment of any such Person, based upon written
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advice of its counsel, a conflict of interest may exist between such Person and
the Indemnifying Party with respect to such claims (in which case, if the Person
notifies the Indemnifying Party in writing that such Person elects to employ
separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense of such claim on behalf of
such Person). If such defense is not assumed by the Indemnifying Party, the
Indemnifying Party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably withheld). No
Indemnifying Party will be required to consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Person entitled to indemnification a
release from all liability in respect to such claim or litigation. Any
Indemnifying Party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all Persons entitled to indemnification by such Indemnifying Party
with respect to such claim in any one jurisdiction, unless in the reasonable
judgment of such Person a conflict of interest may exist between such Person and
any other Person entitled to indemnification hereunder with respect to such
claim, in which event the Indemnifying Party shall be obligated to pay the fees
and expenses of such additional counsel or counsels, but only of one such
additional counsel for each group of similarly situated Persons in any one
jurisdiction.
(d) Contribution. If for any reason the indemnification provided
for in the preceding paragraphs (a) and (b) is unavailable to a Person entitled
to indemnification or is insufficient to hold it harmless as contemplated by the
preceding paragraphs (a) and (b), then the Indemnifying Party shall contribute
to the amount paid or payable by such Person as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect not only the
relative benefits received by such Person and the Indemnifying Party, but also
the relative fault of such Person and the Indemnifying Party, as well as any
other relevant equitable considerations, provided that no holder of Registrable
Securities shall be required to contribute an amount greater than the dollar
amount of the proceeds received by such holder of Registrable Securities with
respect to the sale of any securities. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
8. Rule 144
The Registrants covenant that they will file the reports required to
be filed by them under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder (or, if any of them is not required to
file such reports, the applicable party will, upon the request of any holder of
Registrable Securities made after the two year anniversary of the making of the
Loans, make publicly available other information so long as necessary to permit
sales pursuant to Rule 144 under the Securities Act), and they will take such
further action as any holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such holder to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any holder of
Registrable Securities, the Registrants will deliver to such holder a written
statement as to whether they have complied with such information and filing
requirements.
9. Miscellaneous
(a) Remedies. Each holder of Registrable Securities and Loans, in
addition to being entitled to exercise all rights provided herein, in the
Exchange Note Indenture or granted by law, including recovery of damages, in
connection with the breach by the Registrants of their obligations to register
the Registrable
11
<PAGE> 12
Securities will be entitled to specific performance of its rights under this
Agreement. The Registrants agree that monetary damages (including the Liquidated
Damages contemplated hereby) would not be adequate compensation for any loss
incurred by reason of a breach by any of them of the provisions of this
Agreement and each agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Registrants will not on or
after the date of this Agreement enter into any agreement with respect to their
securities which is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the holders of Registrable Securities
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Registrants' respective securities under
any other agreements. The Registrants have not previously entered into, and
shall not for the term of this Agreement enter into, any agreement with respect
to their securities granting any registration rights to any Person.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions of this
Agreement may not be given unless the Registrants have obtained the written
consent of holders of at least a majority of the principal amount of (x) the
outstanding Registrable Securities and (y) the outstanding Loans (excluding
Registrable Securities held by the Company, the Guarantors or one of their
respective affiliates); provided that provisions hereunder relating to
Liquidated Damages and the payment thereof may not be amended, modified or
supplemented, and waivers or consents to departures from such provisions may not
be given unless the Registrants have obtained the written consent of holders of
at least 66-2/3% of the principal amount of (x) the outstanding Registrable
Securities and (y) the outstanding Loans (excluding Registrable Securities held
by the Company, the Guarantors or one of their respective affiliates).
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, facsimile or air courier guaranteeing overnight delivery:
(i) if to a holder of Registrable Securities, at the most
current address given by such holder to the Registrants in
accordance with the provisions of this Section 9(d), which address
initially is, with respect to the Administrative Agent to it at the
address set forth in the Bridge Loan Agreement, with a copy to
Latham & Watkins, 885 Third Avenue, Suite 1000, New York, New York
10022-4802, Attention: Raymond Y. Lin, Esq.; and
(ii) if to the Registrants, initially to them at the address
set forth in the Bridge Loan Agreement and thereafter at such other
address, notice of which is given in accordance with the provisions
of this Section 9(d), with copies to Skadden, Arps, Slate, Meagher &
Flom LLP, 1440 New York Avenue, N.W., Washington DC 20005,
Attention: Michael Rogan, Esq. and Porter & Hedges, L.L.P., 700
Louisiana, 35th Floor, Houston, Texas, 77002, Attention: William W.
Wiggins, Esq.
All such notices and communications shall be deemed to have been
duly given at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if delivered by facsimile; and on the next business day if timely
delivered to an air courier guaranteeing overnight delivery.
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<PAGE> 13
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the trustee under the
Exchange Note Indenture at the address specified in the Exchange Note Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto, including without limitation and without the need for an express
assignment, all subsequent holders of Registrable Securities or Loans.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(h) New York Law; Submission to Jurisdiction; Waiver of Jury Trial.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES
OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of any such provision in such jurisdiction in every
other respect and of the remaining provisions contained herein shall not be
affected or impaired thereby.
(j) Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement with respect to the subject matter
contained herein and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Registrants with respect to the
securities sold pursuant to the Bridge Loan Agreement. This Agreement supersedes
all prior agreements and understandings between the parties with respect to such
subject matter.
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<PAGE> 14
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
KEY ENERGY GROUP, INC.
By:
--------------------------------------------
Name:
Title:
GUARANTORS
[Insert name and signature block for each Guarantor]
By:
--------------------------------------------
Name:
Title:
LEHMAN COMMERCIAL PAPER INC.
By:
--------------------------------------------
Name:
Title:
14
<PAGE> 15
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
KEY ENERGY GROUP, INC.
By: /s/ STEPHEN E. MCGREGOR
--------------------------------------------
Name:
Title:
GUARANTORS
YALE E. KEY, INC.
WELLTECH EASTERN, INC.
KEY ENERGY DRILLING INC.
KALKASKA OILFIELD SERVICES, INC.
ODESSA EXPLORATION INCORPORATED
WELL-CO OIL SERVICE, INC.
PATRICK WELL SERVICE, INC.
MOSLEY WELL SERVICE, INC.
RAM OIL WELL SERVICE, INC.
ROWLAND TRUCKING CO., INC.
LANDMARK FISHING & RENTAL, INC.
DUNBAR WELL SERVICE, INC.
FRONTIER WELL SERVICE, INC.
KEY ROCKY MOUNTAIN, INC.
KEY FOUR CORNERS, INC.
KEY ENERGY SERVICES-SOUTH TEXAS, INC.
WELLTECH MID-CONTINENT, INC.
BROOKS WELL SERVICING, INC.
MIDLAND ACQUISITION CORP.
UPDIKE BROTHERS, INC.
J.W. GIBSON WELL SERVICE COMPANY
WATSON OILFIELD SERVICE & SUPPLY, INC.
JETER SERVICE CO.
JETER WELL SERVICE, INC.
JETER TRANSPORTATION, INC.
INDUSTRIAL OILFIELD SUPPLY, INC.
By: /s/ STEPHEN E. MCGREGOR
--------------------------------------------
Name:
Title:
of all the foregoing companies
LEHMAN COMMERCIAL PAPER INC.
By: /s/ DENNIS DEE
--------------------------------------------
Name:
Title:
15
<PAGE> 1
EXHIBIT 99.5
================================================================================
EQUITY REGISTRATION RIGHTS AGREEMENT
between
KEY ENERGY GROUP, INC.
and
LEHMAN BROTHERS INC.
-------------------
Dated as of September 14, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. Definitions.......................................................1
2. Securities Subject to this Agreement..............................3
3. Shelf Registration................................................3
4. Hold-Back Agreements..............................................4
5. Registration Procedures...........................................4
6. Registration Expenses.............................................8
7. Indemnification...................................................9
8. Rule 144.........................................................11
9. Miscellaneous....................................................11
</TABLE>
2
<PAGE> 3
EQUITY REGISTRATION RIGHTS AGREEMENT
This EQUITY REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is made and
entered into as of September 14, 1998, between Key Energy Group, Inc., a
Maryland corporation (the "COMPANY"), and Lehman Brothers Inc. ("LBI" and,
together with any successors and assigns, the "ARRANGER").
RECITALS
This Agreement is made pursuant to the Bridge Loan, dated as of September
14, 1998 (the "BRIDGE LOAN AGREEMENT"), between the Company and the Arranger. In
order to induce the Arranger to enter into the Bridge Loan Agreement, the
Company has agreed to the registration rights set forth in this Agreement. The
execution of this Agreement is a condition to the Closing under the Bridge Loan
Agreement.
AGREEMENT
The parties agree as follows:
1. Definitions
As used in this Agreement, the following capitalized terms shall have the
following meanings:
ESCROW AGREEMENT: The Escrow Agreement, dated as of September 14, 1998,
among the Company, LBI and The Bank of New York, as escrow agent.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE NOTE INDENTURE: The Indenture, dated as of September 14, 1998
among the Company, the guarantors party thereto and The Bank of New York, as
trustee, pursuant to which the Exchange Notes are issued, as the same may be
amended from time to time in accordance with the terms thereof.
EXCHANGE NOTES: The Exchange Notes issued pursuant to the Exchange Note
Indenture.
INDEMNIFIED PARTIES: See Section 7(a) hereof.
INDEMNIFYING PARTY: See Section 7(c) hereof.
ISSUER: Key Energy Group, Inc., a Maryland corporation.
LIQUIDATED DAMAGES: See Section 3(b) hereof.
NASD: National Association of Securities Dealers, Inc.
PERSON: An individual, partnership, corporation, trust or unincorporated
organization, or a government or agency or political subdivision thereof.
PROSPECTUS: The prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
3
<PAGE> 4
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
REGISTRABLE SECURITIES: The Registrable Warrants and the Registrable
Warrant Shares; provided that a security ceases to be a Registrable Security
when it is no longer a Transfer Restricted Security.
REGISTRABLE WARRANT SHARES: All Warrant Shares issuable to the holders of
Warrants upon exercise of such Warrants.
REGISTRABLE WARRANTS: All Warrants originally issued pursuant to the
Warrant Agreement, and released from the Escrow Agreement pursuant to Section
3(b) and (c) thereof.
REGISTRATION DEFAULT: See Section 3(b) hereof.
REGISTRATION EXPENSES: See Section 6 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company which
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration Statement.
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended.
SHELF REGISTRATION: See Section 3(a) hereof.
TRANSFER RESTRICTED SECURITY: The Registrable Securities upon original
issuance thereof; provided that a Registrable Security is no longer a Transfer
Restricted Security when such Registrable Security is sold to the public.
UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
WARRANT AGREEMENT: The Warrant Agreement, dated as of September 14, 1998,
between the Company and the warrant agent named therein.
WARRANT SHARES: The shares of capital stock of the Company issuable to the
holders of Warrants upon exercise of the Warrants, together with any other
securities that may in the future become issuable Supon exercising the Warrants.
WARRANTS: Warrants to purchase capital stock of the Company issued in
accordance with the Warrant Agreement.
2. Securities Subject to this Agreement
(a) Registrable Securities. The securities entitled to the benefits
of this Agreement are the Registrable Securities.
(b) Holders of Registrable Securities. A Person is deemed to be a
holder of Registrable
4
<PAGE> 5
Securities whenever such Person owns Registrable Securities of record or has
provided evidence reasonably satisfactory to the Company that such Person has
the right to acquire such Registrable Securities, whether or not such
acquisition has actually been effected and disregarding any legal restrictions
upon the exercise of such right.
3. Shelf Registration
(a) Filing of Shelf Registration. The Company shall use its
reasonable best efforts to file a "shelf" registration statement on any
appropriate form pursuant to Rule 415 (or similar rule that may be adopted by
the SEC) under the Securities Act (a "SHELF REGISTRATION") as promptly as
practicable and in no event later than the date that is 300 days following the
initial making of the Loans (the "FILING DATE") to permit resales of all of the
Registrable Securities. The Company agrees to use its reasonable best efforts to
cause such Shelf Registration to become effective as promptly as possible after
the filing thereof, but in no event later than 60 days after the Filing Date
(the "EFFECTIVE DATE"), and thereafter to keep it continuously effective for the
period that will terminate upon the earlier of (1) when all the Registrable
Securities covered by the Shelf Registration have been sold pursuant to such
Shelf Registration or have been sold to the public pursuant to Rule 144 and (2)
no Registrable Securities are outstanding.
(b) Liquidated Damages. If (i) the Registration Statement has not
been declared effective by the SEC on or prior to the Effective Date or (ii) the
Registration Statement is filed and declared effective but shall thereafter
cease to be effective or fail to be usable for its intended purpose at any time
within the time period required for effectiveness in subsection (a) above
without being succeeded immediately by a post-effective amendment to the
Registration Statement that cures such failure and that is itself immediately
declared effective (each such event referred to in clauses (i) and (ii), a
"REGISTRATION DEFAULT"), the Company shall pay liquidated damages ("LIQUIDATED
DAMAGES") to each holder of Registrable Securities (or if the Registrable
Securities are still in escrow, to LBI) in an amount equal to $0.05 per Warrant
held by such holder for each week or portion thereof during which any
Registration Default continues. The amount of such Liquidated Damages shall
increase on each 90-day anniversary of the day the first Registration Default
occurred by an additional $0.05 per Warrant Share for each week or portion
thereof during which any Registration Default continues until all Registration
Defaults have been cured, up to a maximum amount of Liquidated Damages of $0.20
per week or portion thereof per Warrant Share. All accrued Liquidated Damages
shall be paid by wire transfer of immediately available funds or by federal
funds check on each Interest Payment Date, as defined in the Exchange Note
Indenture. Following the cure of all Registration Defaults relating to any
particular Registrable Security, the accrual of Liquidated Damages with respect
to such Registrable Security will cease. Except as provided in Section 7 hereof,
no holder of Registrable Securities shall be entitled to any damages for a
Registration Default beyond the Liquidated Damages provided for herein.
All obligations of the Company set forth in the preceding paragraph that
are outstanding with respect to any Registrable Security at the time such
security ceases to be a Registrable Security shall survive until such time as
all such obligations have been paid in full.
4. Hold-Back Agreements
(a) Restrictions on Public Sale by Holder of Registrable Securities.
Each holder of Registrable Securities whose Registrable Securities are covered
by a Registration Statement filed pursuant to Section 3 hereof agrees, if
requested by the managing underwriters in an underwritten offering, not to
effect any public sale or distribution of securities of the Company of the same
class as the securities included in such Registration Statement, including a
sale pursuant to Rule 144 under the Securities Act
5
<PAGE> 6
(except as part of such underwritten registration), during the 30-day period
prior to, and during the 90-day period beginning on, the closing date of each
underwritten offering made pursuant to such Registration Statement, to the
extent timely notified in writing by the Company or the managing underwriters;
provided, however, that each holder of Registrable Securities shall be subject
to the hold-back restrictions of this Section 4(a) only once during the term of
this Agreement.
The foregoing provisions shall not apply to any holder of Registrable
Securities if such holder is prevented by applicable statute or regulation from
entering any such agreement; provided, however, that any such holder shall
undertake, in its request to participate in any such underwritten offering, not
to effect any public sale or distribution of any Registrable Securities held by
such holder and covered by a Registration Statement commencing on the date of
sale of the Registrable Securities unless it has provided 45 days prior written
notice of such sale or distribution to the underwriter or underwriters.
(b) Restrictions on Sale of Securities by the Company and Others. The
Company agrees (1) not to effect any public or private offer, sale or
distribution of any of its equity securities or any class or series of its
capital stock having a preference in liquidation or with respect to dividends,
including a sale pursuant to Regulation D under the Securities Act (other than
any such sale or distribution of such securities in connection with any merger
or consolidation by the Company or any subsidiary of the Company or the
acquisition by the Company or a subsidiary of the Company of the capital stock
or substantially all the assets of any other Person or in connection with any
employee stock option or other benefit plan), during the 10-day period prior to,
and during the 90-day period beginning with, the effectiveness of a Registration
Statement filed under Section 3 to the extent timely notified in writing by a
holder of Registrable Securities or the managing underwriters in an underwritten
offering (except as part of such if permitted, or pursuant to registrations on
Forms S-4 or S-8 or any successor form to such registration Forms) and (2)
during the aforementioned period to use reasonable best efforts to cause each
holder of each of its privately placed equity securities or any class or series
of its capital stock having a preference in liquidation or with respect to
dividends purchased from the Company at any time on or after the date of this
Agreement to agree not to effect any public sale or distribution of any such
securities during such period, including a sale pursuant to Rule 144 under the
Securities Act (except as part of such registration, if permitted).
5. Registration Procedures
In connection with the Company's Shelf Registration obligations
pursuant to Section 3 hereof, the Company will use its reasonable best efforts
to effect such registration to permit the sale of such Registrable Securities in
accordance with the intended method or methods of distribution thereof, and
pursuant thereto the Company will, as expeditiously as possible:
(a) prepare and file with the SEC, within the time period provided
in Section 3 hereof, a Registration Statement or Registration Statements
relating to the Shelf Registration on any appropriate form under the Securities
Act, which form shall be available for the sale of the Registrable Securities in
accordance with the intended method or methods of distribution thereof and shall
include all financial statements (including, if applicable, financial statements
of any Person which shall have guaranteed any indebtedness of the Company)
required by the SEC to be filed therewith, cooperate and assist in any filings
required to be made with the NASD, and use its reasonable best efforts to cause
such Registration Statement to become effective within such time period;
provided that before filing a Registration Statement or any amendments or
supplements thereto, the Company will furnish to the holders of the Registrable
Securities covered by such Registration Statement and the underwriters, if any,
copies of all such
6
<PAGE> 7
documents proposed to be filed, which documents will be subject to the review by
such holders and underwriters, and the Company will not file any Registration
Statement or any amendments or supplements thereto to which the holders of a
majority of the Registrable Securities or such managing underwriters, if any,
shall reasonably object within 14 days;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep the
Registration Statement effective until all Registrable Securities covered by
such Registration Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Securities Act; and comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration Statement or
supplement to the Prospectus;
(c) notify the selling holders of Registrable Securities and the
managing underwriters, if any, promptly, and (if requested by any such Person)
confirm such advice in writing, (1) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective, (2) of any request by the SEC for amendments or supplements to the
Registration Statement or the Prospectus or for additional information, (3) of
the issuance by the SEC of any stop order of which the Company or its counsel is
aware suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, (4) if at any time the
representations and warranties of the Company contemplated by paragraph (n)
below cease to be true and correct in any material respect, (5) of the receipt
by the Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose and (6) of the
Company's becoming aware that the Prospectus (including any document
incorporated therein by reference), as then in effect, includes an untrue
statement of material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;
(d) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(e) if reasonably requested by the managing underwriter or
underwriters or a holder of Registrable Securities being sold in connection with
an underwritten offering, promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing underwriter or
underwriters or the holders of a majority of the Registrable Securities being
sold agree should be included therein relating to the plan of distribution with
respect to such Registrable Securities, including, without limitation,
information with respect to the amount of Registrable Securities being sold to
such managing underwriter or underwriters, the purchase price being paid
therefor by such underwriters and any other terms of the underwritten (or best
efforts underwritten) offering of the Registrable Securities to be sold in such
offering; and make all required filings of such Prospectus supplement or
post-effective amendment as promptly as practicable upon being notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment;
(f) furnish to each selling holder of Registrable Securities and
each managing underwriter, if any, without charge, if requested, at least one
signed copy of the Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, all documents
incorporated
7
<PAGE> 8
therein by reference and all exhibits (including those incorporated by
reference);
(g) deliver to each selling holder of Registrable Securities and the
underwriters, if any, without charge, if requested, as many copies of the
Prospectus (including each preliminary Prospectus) and any amendment or
supplement thereto as such Persons may reasonably request; the Company consents
to the use (subject to the limitations set forth in the last paragraph of this
Section 5) of the Prospectus or any amendment or supplement thereto by each of
the selling holders of Registrable Securities and the underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered by
the Prospectus or any amendment or supplement thereto;
(h) prior to any public offering of Registrable Securities, use its
best efforts to register or qualify or cooperate with the selling holders of
Registrable Securities, the underwriters, if any, and their respective counsel
in connection with the registration or qualification of such Registrable
Securities for offer and sale under the securities or blue sky laws of such
jurisdictions as any such seller or underwriter reasonably requests in writing
and do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of such Registrable Securities; provided that
the Company will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to general service of process or taxation in any such jurisdiction
where it is not then so subject;
(i) cooperate with the selling holders of Registrable Securities and
the managing underwriters, if any, to facilitate to the extent commercially
reasonable under the circumstances the timely preparation and delivery of
certificates representing such Registrable Securities to be sold and not bearing
any restrictive legends; and enable such Registrable Securities to be in such
denominations and registered in such names as such managing underwriters may
request at least two business days prior to any sale of such Registrable
Securities to the underwriters;
(j) use its reasonable best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the underwriters, if any,
to consummate the disposition of such Registrable Securities;
(k) upon the occurrence of any event contemplated by paragraph
(c)(6) above, prepare a supplement or post-effective amendment to the related
Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the holders of the Registrable Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading in light of the
circumstances then existing;
(l) use reasonable efforts to cause all Registrable Securities
covered by a Registration Statement to be listed on each securities exchange on
which similar securities issued by the Company are then listed if such listing
is permitted under the rules of such exchange and if requested by the holders of
a majority of such Registrable Securities or the managing underwriters, if any;
(m) not later than the effective date of the Shelf Registration,
provide a CUSIP number for all Registrable Securities and provide the transfer
agent with printed certificates for the Registrable Securities which are in a
form eligible for deposit with The Depository Trust Company;
(n) enter into such agreements (including an underwriting agreement)
and take all such other
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<PAGE> 9
appropriate and reasonable actions in connection therewith in order to expedite
or facilitate the disposition of such Registrable Securities and in such
connection, whether or not an underwriting agreement is entered into and whether
or not the registration is an underwritten registration (1) make such
representations and warranties to the holders of such Registrable Securities and
the underwriters, if any, in form, substance and scope as are customarily made
by issuers to underwriters in primary underwritten offerings and covering
matters including, but not limited to, those set forth in the Bridge Loan
Agreement by the Company; (2) obtain opinions of counsel to the Company (which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters, if any, and the holders of a majority
of the Registrable Securities) addressed to each selling holder and the
underwriters, if any, covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be reasonably
requested by such holders and underwriters; (3) obtain "cold comfort" letters
and updates thereof from the Company's independent certified public accountants
addressed to such holders and underwriters, if any, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters by underwriters in connection with primary underwritten
offerings; (4) if an underwriting agreement is entered into, if permitted by the
managing underwriter the same shall set forth in full the indemnification
provisions and procedures of Section 7 hereof with respect to all parties to be
indemnified pursuant to said Section; provided that, the indemnification
provisions and procedures set forth in such underwriting agreement shall be no
less favorable to the selling holders of Registrable Securities and the
underwriters than the indemnification provisions and procedures of Section 7
hereof; and (5) the Company shall deliver such documents and certificates as may
be requested by the holders of a majority of the Registrable Securities being
sold and the managing underwriters, if any, to evidence compliance with
paragraph (k) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company. The above
shall be done at each closing under such underwriting or similar agreement or as
and to the extent required thereunder;
(o) make available for inspection by any underwriter participating
in any disposition of such Registrable Securities pursuant to a Shelf
Registration, and any attorney or accountant retained by such holders or
underwriters, if any, all financial and other records, pertinent corporate
documents and properties of the Company as may be reasonably necessary to enable
them to exercise their due diligence responsibilities, and provide reasonable
access to appropriate officers of the Company in connection with such due
diligence responsibilities;
(p) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC; and
(q) make appropriate officers of the Company available to such
holders and underwriters for meetings with prospective purchasers of the
Registrable Securities and prepare and present to potential investors customary
"road show" material in a manner consistent with other new issuances of other
securities similar to the Registrable Securities.
The Company may require each seller of Registrable Securities as to which
any registration is being effected to furnish to the Company such information
regarding the distribution of such securities as the Company may from time to
time reasonably request in writing.
Each holder of Registrable Securities agrees by acceptance of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5(c)(3), (5) or (6)
hereof that, in the reasonable judgment of the Company's Board of Directors, it
is advisable to suspend use of the prospectus for a discrete period of time due
to pending corporate
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<PAGE> 10
developments, public filings with the SEC or similar events, such holder will
forthwith discontinue disposition of Registrable Securities until such holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 5(k) hereof, or until it is advised in writing (the "ADVICE") by the
Company that the use of such Prospectus may be resumed, and has received copies
of any additional or supplemental filings which are incorporated by reference in
such Prospectus, and, if so directed by the Company such holder will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies then in such holder's possession, of such Prospectus covering such
Registrable Securities current at the time of receipt of such notice. The
Company shall use all reasonable efforts to insure that the use of the
prospectus may be resumed as soon as practicable, and in any event shall not be
entitled to require the Holder to suspend use of any prospectus for more than
thirty (30) business days in any twelve-month period.
6. Registration Expenses
(a) All reasonable expenses incident to the Company's performance of
or compliance with this Agreement, including without limitation all (i)
registration and filing fees, fees and expenses associated with filings required
to be made with the NASD (including, if applicable, the fees and expenses of any
"qualified independent underwriter" and its counsel as may be required by the
rules and regulations of the NASD), (ii) fees and expenses of compliance with
securities or blue sky laws (including fees and disbursements of counsel for the
underwriters or selling holders in connection with blue sky qualifications of
the Registrable Securities and determination of their eligibility for investment
under the laws of such jurisdictions as the managing underwriters or holders of
a majority of the Registrable Securities being sold may reasonably designate),
(iii) printing expenses (including expenses of printing certificates for the
Registrable Securities in a form eligible for deposit with The Depository Trust
Company and of printing prospectuses), (iv) fees and disbursements of counsel
for the Company and customary out of pocket expenses and fees paid by issuers to
the extent provided for in an underwriting agreement (excluding discounts,
commissions or fees of underwriters, selling brokers, dealer managers or similar
securities industry professionals relating to the distribution of the
Registrable Securities, transfer taxes or legal expenses of any Person other
than the Company and the selling holders), (v) the cost of securities acts
liability insurance if the Company so desires and (vi) fees and expenses of
other Persons retained by the Company (all such expenses being herein called
"REGISTRATION EXPENSES") will be borne by the Company regardless whether the
Registration Statement becomes effective. Each holder of Registrable Securities
will pay any fees or disbursements of counsel to such holder (other than as
provided in Section 6(b)) and all underwriting discounts and commissions and
transfer taxes, if any, and other fees, costs and expenses of such holder (other
than Registration Expenses) relating to the sale or disposition of such holder's
Registrable Securities. The Company, in any event, will pay the Company's own
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any annual audit, the fees and expenses incurred in connection with the
listing of the securities to be registered on each securities exchange on which
similar securities issued by the Company are then listed, rating agency fees and
the fees and expenses of any Person, including special experts, retained by the
Company.
(b) In connection with the Shelf Registration hereunder, the Company
will reimburse the selling holders of Registrable Securities being registered in
such registration for the reasonable fees and disbursements of not more than one
law firm (which shall be reasonably acceptable to the Company) chosen by the
selling holders of a majority of such Registrable Securities.
7. Indemnification
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<PAGE> 11
(a) Indemnification by the Company. The Company agrees to indemnify
and hold harmless, to the full extent permitted by law, each holder of
Registrable Securities, their officers, directors and employees and each Person
who controls such holder (within the meaning of the Securities Act) (the
"INDEMNIFIED PARTIES") against all losses, claims, damages, liabilities and
expenses incurred by such party in connection with any actual or threatened
action arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or preliminary
Prospectus or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein (in
the case of a Prospectus or a preliminary Prospectus, in light of the
circumstances then existing) not misleading, except insofar as the same arise
out of or are based upon any such untrue statement or omission made in reliance
on and in conformity with any information furnished in writing to the Company by
such holder or its counsel expressly for use therein; provided, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission in the Prospectus,
if such untrue statement or alleged untrue statement or omission or alleged
omission is completely corrected in an amendment or supplement to the Prospectus
and the holder of Registrable Securities thereafter fails to deliver such
Prospectus as so amended or supplemented prior to or concurrently with the sale
of the Registrable Securities to the person asserting such loss, claim, damage,
liability or expense after the Company had furnished such holder with a
sufficient number of copies of the same. The Company shall also indemnify
underwriters, their officers and directors and each Person who controls such
Persons (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the Indemnified Parties,
if requested.
(b) Indemnification by Holder of Registrable Securities. In
connection with the Shelf Registration, each holder of Registrable Securities
will furnish to the Company in writing such information and affidavits as the
Company reasonably requests for use in connection with any Registration
Statement or Prospectus and agrees to indemnify and hold harmless, to the full
extent permitted by law, the Company, its directors and officers and each Person
who controls the Company (within the meaning of the Securities Act) against any
losses, claims, damages, liabilities and expenses resulting from any untrue
statement of a material fact contained in any Registration Statement or
Prospectus or any omission of a material fact required to be stated in the
Registration Statement or Prospectus or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, to the extent, but only to the extent, that such untrue statement or
omission relates to a holder and is made in reliance on and in conformity with
any information or affidavit furnished in writing by such holder to the Company
specifically for inclusion in such Registration Statement or Prospectus. In no
event shall the liability of any selling holder of Registrable Securities
hereunder be greater in amount than the dollar amount of the proceeds received
by such holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation. The Company shall be entitled to receive indemnities
from underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution of such Registrable
Securities to the same extent above with respect to information or affidavit
furnished writing by such Persons as provided specifically for any Prospectus or
Registration Statement.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the Company or holder
of Registrable Securities, as the case may be (in either case, as applicable, an
"INDEMNIFYING PARTY"), of any claim with respect to which it seeks
indemnification and (ii) permit such Indemnifying Party to assume the defense of
such claim with counsel reasonably satisfactory to such Person; provided,
however, that any Person entitled to indemnification hereunder shall have the
right to employ separate counsel and to participate in the defense of such
claim, but the fees and expenses of such counsel shall be at the expense of such
Person unless (a) the Indemnifying Party has
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<PAGE> 12
agreed to pay such fees or expenses, (b) the Indemnifying Party has failed to
assume the defense of such claim or (c) in the reasonable judgment of any such
Person, based upon written advice of its counsel, a conflict of interest may
exist between such Person and the Indemnifying Party with respect to such claims
(in which case, if the Person notifies the Indemnifying Party in writing that
such Person elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the defense of
such claim on behalf of such Person). If such defense is not assumed by the
Indemnifying Party, the Indemnifying Party will not be subject to any liability
for any settlement made without its consent (but such consent will not be
unreasonably withheld). No Indemnifying Party will be required to consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Person entitled to indemnification a release from all liability in respect to
such claim or litigation. Any Indemnifying Party who is not entitled to, or
elects not to, assume the defense of a claim will not be obligated to pay the
fees and expenses of more than one counsel for all Persons entitled to
indemnification by such Indemnifying Party with respect to such claim in any one
jurisdiction, unless in the reasonable judgment of such Person a conflict of
interest may exist between such Person and any other Person entitled to
indemnification hereunder with respect to such claim, in which event the
Indemnifying Party shall be obligated to pay the fees and expenses of such
additional counsel or counsels, but only of one such additional counsel for each
group of similarly situated Persons in any one jurisdiction.
(d) Contribution. If for any reason the indemnification provided for
in the preceding paragraphs (a) and (b) is unavailable to a Person entitled to
indemnification or is insufficient to hold it harmless as contemplated by the
preceding paragraphs (a) and (b), then the Indemnifying Party shall contribute
to the amount paid or payable by such Person as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect not only the
relative benefits received by such Person and the Indemnifying Party, but also
the relative fault of such Person and the Indemnifying Party, as well as any
other relevant equitable considerations, provided that no holder of Registrable
Securities shall be required to contribute an amount greater than the dollar
amount of the proceeds received by such holder of Registrable Securities with
respect to the sale of any securities. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
8. Rule 144
The Company covenants that it will file the reports required to be filed
by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder (or, if it is not required to file
such reports, it will, upon the request of any holder of Registrable Securities,
make publicly available other information so long as necessary to permit sales
pursuant to Rule 144 under the Securities Act), and it will take such further
action as any holder of Registrable Securities may reasonably request, all to
the extent required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written statement as to
whether it has complied with such information and filing requirements.
9. Miscellaneous
(a) Remedies. Each holder of Registrable Securities, in addition to
being entitled to exercise
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<PAGE> 13
all rights provided herein or granted by law, including recovery of damages, in
connection with the breach by the Company of its obligations to register the
Registrable Securities will be entitled to specific performance of its rights
under this Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on or after the
date of this Agreement enter into any agreement with respect to its securities
which is inconsistent with the rights granted to the holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions hereof.
The rights granted to the holders of Registrable Securities hereunder do not in
any way conflict with and are not inconsistent with the rights granted to the
holders of the Company's securities under any other agreements. The Company has
not previously entered into any inconsistent agreement with respect to its
securities granting any registration rights to any Person.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions of this
Agreement may not be given unless the Company has obtained the written consent
of holders of a majority of the outstanding Registrable Securities (excluding
Registrable Securities held by the Company, any Guarantor or one of their
respective affiliates).
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, facsimile or air courier guaranteeing overnight delivery:
(i) if to a holder of Registrable Securities, at the most current
address given by such holder to the Company in accordance with the
provisions of this Section 9(d), which address initially is, with respect
to each Interim Lender, the address set forth next to such Interim
Lender's name on the signature pages of the Bridge Loan Agreement, with a
copy to Latham & Watkins, 885 Third Avenue, Suite 1000, New York, New York
10022-4802, Attention: Raymond Y. Lin, Esq.; and
(ii) if to the Company, initially to it at the address set forth in
the Bridge Loan Agreement and thereafter at such other address, notice of
which is given in accordance with the provisions of this Section 9(d),
with copies to Skadden, Arps, Slate, Meagher & Flom LLP, 1440 New York
Avenue, N.W., Washington, DC, 20005, Attention: Michael Rogan, Esq. and to
Porter & Hedges, 700 Louisiana, 35th Floor, Houston, Texas, 77022,
Attention: William W. Wiggins, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage if mailed; when answered back,
if delivered by facsimile; and on the next business day if timely delivered to
an air courier guaranteeing overnight delivery.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto, including without limitation and without the need for an express
assignment, subsequent holders of Registrable Securities.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the
13
<PAGE> 14
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) New York Law; Submission to Jurisdiction; Waiver of Jury Trial.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES
OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(j) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement with respect to the subject matter contained
herein and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Company with respect to the Registrable
Securities. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
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<PAGE> 15
IN WITNESS WHEREOF, the parties have executed this Equity Registration Rights
Agreement as of the date first written above.
KEY ENERGY GROUP, INC.
By: /s/ STEPHEN E. MCGREGOR
-------------------------------------
Name:
Title:
LEHMAN BROTHERS INC.
By: /s/ MICHAEL KONIGSBERG
-------------------------------------
Name:
Title:
15
<PAGE> 1
EXHIBIT 99.6
================================================================================
ESCROW AGREEMENT
among
KEY ENERGY GROUP, INC.
and
LEHMAN BROTHERS INC.
and
LEHMAN COMMERCIAL PAPER INC.
and
THE BANK OF NEW YORK
------------------------------
dated as of September 14, 1998
------------------------------
================================================================================
<PAGE> 2
ESCROW AGREEMENT
Escrow Agreement (the "ESCROW AGREEMENT"), dated as of September 14,
1998, among Key Energy Group, Inc., a Maryland corporation (the "COMPANY"),
Lehman Brothers Inc., a New York corporation ("LBI"), Lehman Commercial Paper
Inc., a New York corporation ("LCPI"), and The Bank of New York, a New York
banking corporation, as escrow agent (the "ESCROW AGENT").
RECITALS
WHEREAS, the Company, the guarantors listed as parties thereto (the
"GUARANTORS"), LCPI, as Administrative Agent (the "ADMINISTRATIVE AGENT"), LBI,
as Arranger (the "ARRANGER"), and the Lenders party thereto (the "LENDERS") have
entered into a Bridge Loan Agreement dated as of September 14, 1998 (the "BRIDGE
LOAN AGREEMENT") pursuant to which the Lenders have agreed, inter alia, to make
loans to the Company, in an aggregate principal amount not to exceed
$150,000,000, such loans to be evidenced by Increasing Rate Notes (the "NOTES"),
subject to the terms and conditions set forth in the Bridge Loan Agreement.
WHEREAS, pursuant to Sections 5.7, 5.8 and 5.9 of the Bridge Loan
Agreement, it is a condition to each Lender's obligation to make Bridge Loans
that, contemporaneously therewith: (i) this Escrow Agreement shall have been
executed and delivered by each of the parties hereto, (ii) the Indenture dated
as of September 14, 1998 (the "EXCHANGE NOTE INDENTURE") among the Company, the
Guarantors and The Bank of New York, as trustee (the "TRUSTEE") shall have been
executed by each of the parties thereto and delivered to the Escrow Agent to be
held pursuant to this Escrow Agreement, (iii) $150,000,000 in aggregate
principal amount of Exchange Notes shall have been authorized pursuant to the
Exchange Note Indenture and delivered to the Escrow Agent to be held pursuant to
this Escrow Agreement, and (iv) the Company shall have executed and delivered to
the Escrow Agent warrants (the "WARRANTS") to purchase 15.0% of the
fully-diluted capital stock (including all series of preferred and common stock
(other than Disqualified Stock (as defined in the Exchange Note Indenture)) and
all other outstanding warrants, options or other convertible securities) of the
Company (calculated after giving effect to the exercise of the Warrants and all
other outstanding warrants, options or other convertible securities), to be held
pursuant to this Escrow Agreement.
AGREEMENT
NOW, THEREFORE, the parties hereto agree as follows:
1. Delivery of Escrow Securities and Agreements.
(a) At or prior to the date of the making of the
Bridge Loans (the "CLOSING DATE") by the Lenders to the Company, the Company
shall deliver, or cause to be delivered to the Escrow Agent (i) a warrant
agreement dated as of September 14, 1998 (the "WARRANT AGREEMENT") between the
Company and The Bank of New York, as warrant agent (the "WARRANT AGENT"); (ii)
the Exchange Note Indenture, executed by each of the Company, the Guarantors
named therein and the Trustee; (iii) executed Exchange Notes, undated and
<PAGE> 3
unregistered as to payee or registered in blank, in an aggregate principal
amount equal to $150,000,000; and (iv) duly authorized and executed
certificates, undated and registered in blank (the "WARRANT CERTIFICATES"),
representing the Warrants, as contemplated by the Bridge Loan Agreement and the
Company Warrant Agreement.
(b) The Exchange Notes and the Warrants (collectively, the
"ESCROW SECURITIES") delivered to the Escrow Agent pursuant to this Escrow
Agreement shall be held in escrow and released therefrom on the terms and
conditions set forth herein.
2. Release of Escrow Securities.
(a) If the Notes remain outstanding on the first
anniversary of the Closing Date (the "MATURITY DATE"), and the Escrow Agent
receives a notice in the form of Exhibit A hereto from the Administrative Agent,
the Escrow Agent shall deliver to the Trustee, for authentication and delivery
to the holders of Notes who have elected to exchange Notes for Exchange Notes,
an executed authentication order and an Exchange Note or Exchange Notes,
registered in the name of such person or persons designated by the
Administrative Agent and dated the date of the delivery thereof, in an aggregate
principal amount equal to the aggregate principal amount of Notes so exchanged,
together with a copy of the executed Exchange Note Indenture. Concurrently with
the delivery of the Exchange Notes to the Trustee pursuant to this Escrow
Agreement, the Escrow Agent shall deliver, or cause to be delivered to the
Company, all outstanding Notes so exchanged.
(b) If Notes remain outstanding on the Maturity Date,
and the Escrow Agent shall have received written notice in the form of Exhibit B
hereto from the Arranger, the Escrow Agent shall deliver to the Warrant Agent
for countersignature and delivery to the Arranger, on any one or more occasions,
an executed countersignature order and Warrants, registered in the name of such
person or persons designated by the Arranger and dated the date of the release
thereof, as shall be specified in the notice to the Escrow Agent. Upon the
payment in full of the Notes prior to the Maturity Date, and the receipt by the
Escrow Agent of written notice in the form of Exhibit C hereto from the
Arranger, the Escrow Agent shall release Warrants remaining in escrow to the
Company.
(c) If on any date after the Closing Date the Arranger
determines (after consultation with the Company) that in connection with
issuance of any indebtedness, convertible debt or equity securities incurred or
issued by the Company or any affiliate thereof, the proceeds of which will be
applied in full or in part to refinance, directly or indirectly, the Bridge
Loans (as converted, extended or exchanged) (the "PERMANENT SECURITIES"), it is
necessary to deliver to the Warrant Agent for countersignature and delivery to
the purchasers of the Permanent Securities an executed countersignature order
and any or all of the Warrants then held in escrow pursuant to this Escrow
Agreement, and the Escrow Agent shall have received written notice in the form
of Exhibit D hereto from the Arranger, the Escrow Agent shall release to the
Arranger the aggregate amount of Warrants, registered in the name of such person
or persons designated by the Administrative Agent and dated the date of the
delivery thereof, as shall be specified in the notice to the Escrow Agent.
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<PAGE> 4
(d) If any Bridge Loans are outstanding on the Maturity
Date, and the Escrow Agent shall have received written notice in the form of
Exhibit E hereto from the Arranger, the Escrow Agent shall release to the
Arranger, on any one or more occasions, the aggregate amount of Warrants,
registered in the name of such person or persons designated by the
Administrative Agent and dated the date of the delivery thereof, as shall be
specified in the notice to the Escrow Agent.
(e) On the date (the "TERMINATION DATE") on which the
Escrow Agent receives a certificate signed on behalf of the Administrative Agent
and the Company to the effect that all outstanding obligations with respect to
the Notes have been repaid in cash in their entirety on or prior to the Maturity
Date, the Escrow Agent shall return any Escrow Securities then held by it marked
"cancelled" as shall be specified in writing by the Administrative Agent and the
Company.
(f) The Company will provide, or cause to be provided, to
the Escrow Agent all such information as the Escrow Agent may from time to time
reasonably request.
(g) The Arranger will provide, or cause to be provided, to
the Escrow Agent all information required to fill in the blanks on the Notes and
Warrants.
3. Responsibility of the Escrow Agent. The Company, the
Administrative Agent and each of the Lenders appoint and designate the Escrow
Agent as escrow agent for the purposes set forth herein, and the Escrow Agent
owes no duty to any other person or entity by reason of this Escrow Agreement.
The Escrow Agent accepts the duties expressly set forth in this Escrow Agreement
and undertakes to perform only such duties relating thereto as are specifically
set forth herein. The Escrow Agent shall have no duty to calculate or verify the
calculation of any amounts, percentages or ratios to be determined hereunder and
shall be entitled to conclusively rely on the amounts set forth in notices
delivered to it hereunder. The parties hereto agree that the following terms and
conditions shall govern and control with respect to the rights, duties,
liabilities and immunities of the Escrow Agent hereunder.
(a) The duties and obligations of the Escrow Agent shall be
determined solely by the express provisions of this Escrow Agreement, and no
implied covenants, duties or obligations (including, without limitation, any
duty to solicit the delivery of any Escrow Securities) shall be read into this
Escrow Agreement against the Escrow Agent, nor shall it have, or be deemed to
have, any duties or responsibilities under the provisions of any other
agreements (including without limitation the Bridge Loan Agreement) between the
other parties hereto or any other Person.
(b) The Escrow Agent shall not be liable for any error of
judgment, or any action taken, suffered or omitted by it in good faith, or
mistake of fact or law, or for anything it may do or refrain from doing in
connection herewith or therewith, except its own gross negligence or willful
misconduct.
(c) The Escrow Agent may conclusively rely and shall be
fully authorized and protected in acting or refraining from acting in good faith
in reliance upon any
3
<PAGE> 5
written instruction, communication, notice, request, resolution, direction,
certificate, statement, approval, appraisal, promissory note, share or warrant
certificate or other paper or document (whether in its original or facsimile
form), not only as to its due execution and the validity and effectiveness of
its provision, but also as to the truth of any information therein contained,
which it in good faith believes to be genuine and to have been presented by the
proper party.
(d) The Escrow Agent may consult with counsel of its own
selection, auditors and other experts of its own choice and any opinion or
advice of counsel or of such auditors or other experts shall be full and
complete authorization and protection with respect to any action taken or
suffered or omitted by the Escrow Agent hereunder in good faith and in
accordance with such opinion or advice of counsel or of such auditors or other
experts within the area of their respective expertise.
(e) The Escrow Agent may execute any of its powers or
responsibilities hereunder and exercise any rights hereunder either directly or
by or through its agents or attorneys.
(f) The Escrow Agent shall not be responsible for and shall
not be under a duty to examine or pass upon, the validity, binding effect,
execution or sufficiency of this Escrow Agreement, the Escrow Securities or of
any agreement amendatory or supplemental hereto or thereto or the absence or
presence of any liens or encumbrances on the property held in escrow hereunder.
(g) The Escrow Agent shall be under no duty to prepare,
conduct or monitor any filing, recording or registration, re-filing,
re-recording or re-registration of this Escrow Agreement or of any agreement
amendatory hereof or of any instrument or assignment, conveyance or further
assurance, or to pay any taxes, fees or charges in connection therewith, or to
give any notice with respect thereto or to pay, inquire into or prepare, conduct
or monitor the payment of, or be under any duty in respect of or arising out of,
any tax or assessment or other governmental charge which may be levied or
assessed on the property held in escrow hereunder or any part thereof or any
confiscation of such property. No property held in escrow by the Escrow Agent
hereunder shall be subject to any set-off, counterclaim, recoupment or other
right which the Escrow Agent may have against any of the parties hereto (except
with respect to any payments to be made to the Escrow Agent hereunder) or
against any other Person for any reason whatsoever.
(h) If any controversy arises between the parties hereto or
with any third person with respect to the subject matter of the escrow described
herein, the Escrow Agent shall not be required to determine the outcome of same
or take any action in the premises, but may await the settlement of any such
controversy by final appropriate legal proceedings or otherwise as the Escrow
Agent may require, notwithstanding instructions to the contrary, and in such
event the Escrow Agent shall not be liable for interest or damages, except that
the Escrow Agent shall not deliver the Escrow Securities held in escrow
hereunder in any manner other than in accordance with Section 2 hereof, except
in accordance with a final unappealable order of a court of competent
jurisdiction.
4
<PAGE> 6
(i) If the Escrow Agent shall be uncertain as to its duties
or rights hereunder or shall receive instructions, claims or demands from any
party hereto which, in its opinion, conflict with any of the provisions of this
Escrow Agreement, it shall be entitled to seek advice from outside counsel and
may conclusively rely on such advice and may refrain from taking any action and
its sole obligation shall be to keep safely all property held in escrow until it
shall be directed otherwise in writing by all of the other parties hereto or by
a final order or judgment of a court of competent jurisdiction.
(j) Without limiting and in furtherance of the foregoing,
the Escrow Agent shall not be liable or responsible for any of the provisions of
the Notes or the Escrow Securities except for those expressly referred to
herein.
(k) This Agreement is for the exclusive benefit of the
parties hereto and their respective successors hereunder, and shall not be
deemed to give, either express or implied, any legal or equitable right, remedy,
or claim to any other entity or person whatsoever.
(l) If at any time Escrow Agent is served with any judicial
or administrative order, judgment, decree, writ or other form of judicial or
administrative process which in any way affects Escrow Property (including but
not limited to orders of attachment or garnishment or other forms of levies or
injunctions or stays relating to the transfer of Escrow Property), Escrow Agent
is authorized to comply therewith in any manner as it or its legal counsel of
its own choosing deems appropriate; and if Escrow Agent complies with any such
judicial or administrative order, judgment, decree, writ or other form of
judicial or administrative process, Escrow Agent shall not be liable to any of
the parties hereto or to any other person or entity even though such order,
judgment, decree, writ or process may be subsequently modified or vacated or
otherwise determined to have been without legal force or effect.
(m) Escrow Agent shall not incur any liability for not
performing any act or fulfilling any duty, obligation or responsibility
hereunder by reason of any occurrence beyond the control of Escrow Agent
(including but not limited to any act or provision of any present or future law
or regulation or governmental authority, any act of God or war, or the
unavailability of the Federal Reserve Bank wire or telex or other wire or
communication facility).
(n) In the event of any dispute between or conflicting
claims by or among the Depositors and/or any other person or entity with respect
to any Escrow Property, Escrow Agent shall be entitled, in its sole discretion,
to refuse to comply with any and all claims, demands or instructions with
respect to such Escrow Property so long as such dispute or conflict shall
continue, and Escrow Agent shall not be or become liable in any way to the
Depositors for failure or refusal to comply with such conflicting claims,
demands or instructions. Escrow Agent shall be entitled to refuse to act until,
in its sole discretion, either (i) such conflicting or adverse claims or demands
shall have been determined by a final order, judgment or decree of a court of
competent jurisdiction, which order, judgment or decree is not subject to
appeal, or settled by agreement between the conflicting parties as evidenced in
a writing satisfactory to Escrow Agent or (ii) Escrow Agent shall have received
security or an indemnity satisfactory to it sufficient to hold it harmless from
and against any and all Losses which it may incur by reason of so acting. Escrow
Agent may, in addition, elect, in its sole discretion, to commence an
interpleader action or
5
<PAGE> 7
seek other judicial relief or orders as it may deem, in its sole discretion,
necessary. The costs and expenses (including reasonable attorneys' fees and
expenses) incurred in connection with such proceeding shall be paid by, and
shall be deemed a joint and several obligation of, the Depositors.
(o) Each Depositor hereby represents and warrants (a) that
this Escrow Agreement has been duly authorized, executed and delivered on its
behalf and constitutes its legal, valid and binding obligation and (b) that the
execution, delivery and performance of this Escrow Agreement by Depositor do not
and will not violate any applicable law or regulation.
(p) The Escrow Agent does not have any interest in the
Escrowed Property Deposited hereunder but is serving as escrow holder only and
having only possession thereof. The Company shall pay or reimburse the Escrow
Agent upon request for any transfer taxes or other taxes relating to the
Escrowed Property incurred in connection herewith and shall indemnify and hold
harmless the Escrow Agent any amounts that it is obligated to pay in the way of
such taxes. Any payments of income from this Escrow Account shall be subject to
withholding regulations then in force with respect to United States taxes. The
parties hereto will provide the Escrow Agent with appropriate W-9 forms for tax
I.D., number certifications, or W-8 forms for non-resident alien certifications.
It is understood that the Escrow Agent shall be responsible for income reporting
only with respect to income earned on investment of funds which are a part of
the Escrowed Property and is not responsible for any other reporting. This
Section 3(p) and Section 7 shall survive notwithstanding any termination of this
Escrow Agreement or the resignation of the Escrow Agent.
4. Qualifications. The Escrow Agent shall at all times be The
Bank of New York (and its successors and assigns), or a bank, trust company or
corporation in good standing organized and doing business under the laws of the
United States of America or a State of the United States, and having combined
capital and surplus of not less than fifty million dollars ($50,000,000). If the
Escrow Agent shall at any time cease to have the foregoing qualifications, the
Escrow Agent shall resign within 30 days thereafter, such resignation to become
effective as provided in Section 5 hereof.
5. Removal and Resignation. The Escrow Agent and any successor
Escrow Agent may at any time be removed at the written direction of the
Administrative Agent and the Company. The Escrow Agent or any successor Escrow
Agent may at any time resign and be discharged of its obligations hereunder by
giving written notice to the Company and the Administrative Agent specifying the
date upon which it desires that such resignation shall take effect. Such removal
or resignation shall take effect on the date specified in the notice of removal
or resignation, which date shall not be earlier than 30 days after the giving of
the notice of removal or resignation unless previously a successor Escrow Agent
shall have been appointed pursuant to Section 6 hereof and shall have accepted
such appointment, in which event such removal or resignation shall take effect
immediately upon the acceptance by such successor Escrow Agent. The
Administrative Agent and the Company agree to take prompt steps to have a
successor Escrow Agent appointed in the manner hereinafter provided.
6. Appointment of Successor Agent. If at any time the Escrow
Agent shall resign or be removed or otherwise become incapable of acting or if
at any time a vacancy shall
6
<PAGE> 8
occur in the office of the Escrow Agent for any other cause, a successor Escrow
Agent (duly qualified as provided in Section 4 above) shall be appointed by the
Administrative Agent and the Company by an instrument in writing delivered to
the Escrow Agent within the time specified below. Upon delivery of said
instrument to and acceptance of said instrument by the successor Escrow Agent,
the resignation or removal of the Escrow Agent shall become effective and such
successor Escrow Agent shall become vested with all the rights, powers, duties
and obligations of its predecessor hereunder. If no successor Escrow Agent shall
have been appointed at the effective date of resignation or within 30 days of a
notice of removal, the Escrow Agent or any other party hereto may petition, at
the expense of the Company, a court of competent jurisdiction for the
appointment of a successor.
7. Compensation, Reimbursement and Indemnification of Escrow
Agent. The Escrow Agent shall be entitled to compensation from the Company as
shall be agreed to in writing from time to time by the Company and the Escrow
Agent for all services rendered by it hereunder, as well as reimbursement from
the Company for all expenses, disbursements, advances and liabilities incurred
or made by the Escrow Agent hereunder (including the reasonable compensation,
expenses and disbursements of the Escrow Agent's agents and counsel).
The Company agrees to indemnify the Escrow Agent (and any
predecessor Escrow Agent) for, and to hold it harmless from and against, any
loss, liability, claims, actions, damages or expenses (including reasonable
expenses and disbursements of its agents and counsel) incurred without gross
negligence or willful misconduct on the part of the Escrow Agent arising out of
or in connection with its entering into this Escrow Agreement and carrying out
its duties hereunder, including the costs and expenses of defending itself
against any claim or liability in the premises.
The provisions of this Section 7 shall survive the termination of
this Escrow Agreement.
8. Termination. This Escrow Agreement shall terminate on the
Termination Date.
9. Notices. Except as otherwise expressly provided herein, all
demands, notices, consents, requests and other documents authorized or required
to be given to any party to this Escrow Agreement shall be given in writing and
either personally served on an officer of such party or mailed by registered or
certified first class mail, postage prepaid, return receipt requested, or sent
by facsimile (with a copy sent by first class mail promptly thereafter),
addressed as follows:
if to the Escrow Agent:
The Bank of New York
101 Barclay Street, Floor 21 W
New York, New York 10286
Facsimile No: (212) 815-5915
Attention: Corporate Trust Administration
7
<PAGE> 9
if to the Company:
Key Energy Group, Inc.
Two Energy Tower, 10th Floor
East Brunswick, New Jersey 08816
Facsimile: (908) 659-1526
Attention: Stephen E. McGregor
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue, N.W.
Washington, DC 20005
Attention: Michael Rogan, Esq.
Facsimile: (202) 393-5760
and
Porter & Hedges, L.L.P
700 Louisiana, 35th Floor
Houston, Texas 77002
Attention: William W. Wiggins
Facsimile: (713) 226-0227
if to Lehman Brothers Inc.:
3 World Financial Center
New York, New York 10285
Attention: Michael Konigsberg
Facsimile No.: (212) 526-4911
with a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: Raymond Y. Lin, Esq.
Facsimile No.: (212) 751-4864
if to Lehman Commercial Paper Inc.:
c/o Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285
Attention: Michael Konigsberg
Facsimile No.: (212) 526-4911
8
<PAGE> 10
with a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: Raymond Y. Lin, Esq.
Facsimile No.: (212) 751-4864
Any party may change its address by specifying in writing a new
address for such notices to each of the other parties hereto.
10. Successors and Assigns; Amendments and Modifications. This
Escrow Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns and shall not inure to the
benefit of any third party except for any holder of Notes or Exchange Notes who
is not a party to this Escrow Agreement. This Escrow Agreement may not be
amended or modified in any respect without the express written consent of the
Company, the Escrow Agent and the Administrative Agent.
11. Severability. In case any one or more provisions contained in
this Escrow Agreement shall be invalid, illegal or unenforceable in any respect
in any jurisdiction, the validity, legality and enforceability of the remaining
provisions contained herein shall not be in any way affected or impaired thereby
and such provision shall be ineffective in such Jurisdiction only to the extent
of such invalidity, illegality or unenforceability.
12. New York Law; Submission to Jurisdiction; Waiver of Jury
Trial. THIS ESCROW AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY
FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS ESCROW
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS ESCROW AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
13. Counterparts. This Escrow Agreement may be executed in any
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
9
<PAGE> 11
14. No Waiver. No course of dealing, nor any delay on the part of
any party hereto in exercising any rights hereunder, or any failure to exercise
the same, shall operate as a waiver of such or any other rights.
15. Descriptive Headings. The descriptive headings of the several
sections of this Escrow Agreement are inserted for convenience only and do not
constitute a part of this Escrow Agreement.
10
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be
duly executed by their respective authorized officers, as of the date first
above written.
KEY ENERGY GROUP, INC.
By:
------------------------------------
Name:
Title:
LEHMAN BROTHERS INC.
By:
------------------------------------
Name:
Title:
LEHMAN COMMERCIAL PAPER INC.
By:
------------------------------------
Name:
Title:
THE BANK OF NEW YORK, as Escrow Agent
By:
------------------------------------
Name:
Title:
11
<PAGE> 13
Exhibit A to the Escrow Agreement
LEHMAN COMMERCIAL PAPER INC.
3 World Financial Center
New York, New York 10285
[Date]
The Bank of New York
101 Barclay Street, Floor 21 W
New York, New York 10286
Attention: Corporate Trust Administration
Re: Escrow Agreement dated as of September 14, 1998
Ladies and Gentlemen:
Reference is hereby made to the Exchange Note Indenture and to
Section 2(a) of the Escrow Agreement dated as of September 14, 1998 (the "ESCROW
AGREEMENT") among Key Energy Group, Inc., Lehman Brothers Inc., Lehman
Commercial Paper Inc. and The Bank of New York. Capitalized terms used herein
and not defined shall have the meanings assigned to them in the Escrow
Agreement.
The undersigned hereby notifies you that Loans remained outstanding
on the Maturity Date. You are hereby requested to authenticate the Notes, as
Trustee, pursuant to the escrowed authentication order and to deliver to the
undersigned, for the benefit of each holder of Notes designated on the schedule
attached hereto, an Exchange Note or Exchange Notes, in an amount or amounts,
and registered in the name of such person or persons, as designated in the
schedule attached hereto, together with a copy of the executed Exchange Note
Indenture at the time of such presentation and exchange. All Exchange Notes
delivered by you to the undersigned shall be dated ___________.
Sincerely yours,
LEHMAN COMMERCIAL PAPER INC.
By:
-------------------------------
Name:
Title:
<PAGE> 14
Schedule
- --------------------------------------------------------------------------------
Notes Exchange Notes
- --------------------------------------------------------------------------------
Holder Principal Registered to Principal
Amount Amount
- --------------------------------------------------------------------------------
Name Address Tax
Identification
Number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 15
Exhibit B to the Escrow Agreement
LEHMAN BROTHERS INC.
3 World Financial Center
New York, New York 10285
[Date]
The Bank of New York
101 Barclay Street, Floor 21 W
New York, New York 10286
Attention: Corporate Trust Administration
Re: Escrow Agreement dated as of September 14, 1998
Ladies and Gentlemen:
Reference is hereby made to the Warrant Agreement and to Section 2(b)
of the Escrow Agreement dated as of September 14, 1998 (the "ESCROW AGREEMENT")
among Key Energy Group, Inc., Lehman Brothers Inc., Lehman Commercial Paper Inc.
and The Bank of New York. Capitalized terms used herein and not defined shall
have the meanings assigned to them in the Escrow Agreement.
The undersigned hereby notifies you that on the Maturity Date Loans
remained outstanding. You are hereby requested to countersign the Warrants, as
Warrant Agent, pursuant to the escrowed countersigning order and to release to
the undersigned ___% of the Warrants originally placed in escrow pursuant to the
Escrow Agreement, registered in the name of such person or persons designated in
the schedule attached hereto. All Exchange Notes delivered by you to the
undersigned shall be dated ____________.
Sincerely yours,
LEHMAN BROTHERS INC.
By:
----------------------------------
Name:
Title:
<PAGE> 16
Schedule
- --------------------------------------------------------------------------------
Warrants
- --------------------------------------------------------------------------------
Registered to Percent of Warrants
Originally Placed In
Escrow
- --------------------------------------------------------------------------------
Name Address Tax
Identification
Number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 17
Exhibit C to the Escrow Agreement
LEHMAN BROTHERS INC.
3 World Financial Center
New York, New York 10285
[Date]
The Bank of New York
101 Barclay Street, Floor 21 W
New York, New York 10286
Attention: Corporate Trust Administration
Re: Escrow Agreement dated as of September 14, 1998
Ladies and Gentlemen:
Reference is hereby made to Section 2(b) of the Escrow Agreement
dated as of September 14, 1998 (the "ESCROW AGREEMENT") among Key Energy Group,
Inc., Lehman Brothers Inc., Lehman Commercial Paper Inc. and The Bank of New
York. Capitalized terms used herein and not defined shall have the meanings
assigned to them in the Escrow Agreement.
The undersigned hereby notifies you that the Loans have been paid in
full prior to the Maturity Date. You are hereby requested to release the
Warrants and the Exchange Notes remaining in escrow to the Company, together
with the Warrant Agreement and the Exchange Note Indenture.
Sincerely yours,
LEHMAN BROTHERS INC.
By:
----------------------------------
Name:
Title:
<PAGE> 18
Exhibit D to the Escrow Agreement
LEHMAN BROTHERS INC.
3 World Financial Center
New York, New York 10285
[Date]
The Bank of New York
101 Barclay Street, Floor 21 W
New York, New York 10286
Attention: Corporate Trust Administration
Re: Escrow Agreement dated as of September 14, 1998
Ladies and Gentlemen:
Reference is hereby made to the Warrant Agreement and to Section 2(c)
of the Escrow Agreement dated as of September 14, 1998 (the "ESCROW AGREEMENT")
among Key Energy Group, Inc., Lehman Brothers Inc. ("LEHMAN"), Lehman Commercial
Paper Inc. ("LCPI") and The Bank of New York. Capitalized terms used herein and
not defined shall have the meanings assigned to them in the Escrow Agreement.
In accordance with the release provisions of Section 4 of the fee
letter among Lehman, LCPI and the Company, dated as of September 14, 1998, the
undersigned hereby notifies you that Lehman has determined that in order to sell
Permanent Securities it is necessary to countersign the Warrants, as Warrant
Agent, pursuant to the escrowed countersigning order and to deliver to the
purchasers thereof all or a portion of the Warrants originally placed in escrow
pursuant to the Escrow Agreement. You are hereby requested to release to the
undersigned ___ % of such Warrants originally placed in escrow pursuant to the
Escrow Agreement, registered in the name of such person or persons designated in
the schedule attached hereto.
Sincerely yours,
LEHMAN BROTHERS INC.
By:
----------------------------------
Name:
Title:
<PAGE> 19
Schedule
- --------------------------------------------------------------------------------
Warrants
- --------------------------------------------------------------------------------
Registered to Percent of Warrants
Originally Placed In
Escrow
- --------------------------------------------------------------------------------
Name Address Tax
Identification
Number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 20
Exhibit E to the Escrow Agreement
LEHMAN BROTHERS INC.
3 World Financial Center
New York, New York 10285
[Date]
The Bank of New York
101 Barclay Street, Floor 21 W
New York, New York 10286
Attention: Corporate Trust Administration
Re: Escrow Agreement dated as of September 14, 1998
Ladies and Gentlemen:
Reference is hereby made to the Warrant Agreement and to Section 2(d)
of the Escrow Agreement dated as of September 14, 1998 (the "ESCROW AGREEMENT")
among Key Energy Group, Inc., Lehman Brothers Inc., Lehman Commercial Paper Inc.
and The Bank of New York. Capitalized terms used herein and not defined shall
have the meanings assigned to them in the Escrow Agreement.
The undersigned hereby notifies you that Loans are outstanding as of
the Maturity Date. You are hereby requested to countersign the Warrants, as
Warrant Agent, pursuant to the escrowed countersigning order and to release to
the undersigned ___% of the Warrants originally placed in escrow pursuant to the
Escrow Agreement, registered in the name of such person or persons designated in
the schedule attached hereto. All Exchange Notes delivered by you to the
undersigned shall be dated _____________.
Sincerely yours,
LEHMAN BROTHERS INC.
By:
----------------------------------
Name:
Title:
<PAGE> 21
Schedule
- --------------------------------------------------------------------------------
Warrants
- --------------------------------------------------------------------------------
Registered to Percent of Warrants
Originally Placed In
Escrow
- --------------------------------------------------------------------------------
Name Address Tax
Identification
Number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 22
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be duly executed by their respective authorized officers, as of the
date first above written.
KEY ENERGY GROUP, INC.
By: /s/ STEPHEN E. MCGREGOR
--------------------------------
Name:
Title:
LEHMAN BROTHERS INC.
By: /s/ MICHAEL KONIGSBERG
--------------------------------
Name:
Title:
LEHMAN COMMERCIAL PAPER INC.
By: /s/ DENNIS DEE
--------------------------------
Name:
Title:
THE BANK OF NEW YORK, as Escrow Agent
By: /s/ THOMAS C. KNIGHT
--------------------------------
Name: THOMAS C. KNIGHT
Title: ASSISTANT VICE PRESIDENT
<PAGE> 1
EXHIBIT 99.7
================================================================================
$550,000,000
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
KEY ENERGY GROUP, INC.
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO
PNC BANK, NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT
NORWEST BANK TEXAS, N.A.,
AS COLLATERAL AGENT
AND
PNC CAPITAL MARKETS, INC.
AS ARRANGER
DATED AS OF JUNE 6, 1997
AS AMENDED AND RESTATED THROUGH
SEPTEMBER 14, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Other Definitional Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.1 Term Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.2 Procedure for Term Loan Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.3 Repayment of Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.4 Revolving Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.5 Procedure for Revolving Loan Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.6 Commitment Fees, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.7 Repayment of Loans; Evidence of Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.8 Optional Termination or Reduction of Revolving Commitments . . . . . . . . . . . . . . . . . . . 34
2.9 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.10 Mandatory Prepayments and Commitment Reductions . . . . . . . . . . . . . . . . . . . . . . . . 34
2.11 Conversion and Continuation Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.12 Minimum Amounts and Maximum Number of Eurodollar Tranches . . . . . . . . . . . . . . . . . . . 37
2.13 Interest Rates and Payment Dates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.14 Computation of Interest and Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.15 Inability to Determine Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.16 Pro Rata Treatment and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.17 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.18 Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.19 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.20 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
2.21 Change of Lending Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
2.22 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
2.23 Replacement of Lenders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
2.24 Reallocation of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.1 L/C Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.2 Procedure for Issuance of Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.3 Fees, Commissions and Other Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.4 L/C Participation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
3.5 Reimbursement Obligation of the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
3.6 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
3.7 Letter of Credit Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
3.8 Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
4.1 Financial Condition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
4.2 No Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.3 Corporate Existence; Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.4 Corporate Power; Authorization; Enforceable Obligations. . . . . . . . . . . . . . . . . . . . . 51
4.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
4.6 No Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
4.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
4.8 Ownership of Property; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
4.9 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
4.10 No Burdensome Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C>
4.11 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.12 Federal Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.13 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.14 Investment Company Act; Other Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
4.16 Purpose of Loans; Limitations on Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
4.17 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
4.18 Accuracy of Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
4.19 Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
4.20 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
4.21 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.22 Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.23 Excluded Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.24 Oil and Gas Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.25 Year 2000 Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 5. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
5.1 Conditions to Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
5.2 Conditions to Loans made on or after the Merger Date and occurrence of
Scheduled Revolving Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
5.3 Conditions to Each Extension of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
6.1 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
6.2 Certificates; Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
6.3 Payment of Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.4 Conduct of Business and Maintenance of Existence, etc.. . . . . . . . . . . . . . . . . . . . 67
6.5 Maintenance of Property; Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.6 Inspection of Property; Books and Records; Discussions. . . . . . . . . . . . . . . . . . . . 67
6.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.8 Environmental Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.9 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
6.10 Additional Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.11 Consummation of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.12 Interest Rate Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.13 Subordinated Put Facility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.14 Post-Closing Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 7. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
7.1 Financial Condition Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
7.2 Limitation on Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
7.3 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
7.4 Limitation on Guarantee Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
7.5 Limitation on Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
7.6 Limitation on Sale of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
7.7 Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
7.8 Limitation on Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
7.9 Limitation on Investments, Loans and Advances . . . . . . . . . . . . . . . . . . . . . . . . 83
7.10 Limitation on Optional Payments and Modifications of Debt Instruments and
Organizational Documentation, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
7.11 Limitation on Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . 85
7.12 Limitation on Sales and Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
7.13 Limitation on Change of Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
7.14 Limitation on Negative Pledge Clauses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
7.15 Limitation on Lines of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C>
7.16 Limitation on Consolidated Lease Expense................................................... 86
SECTION 8. EVENTS OF DEFAULT............................................................................. 86
SECTION 9. THE AGENTS.................................................................................... 89
9.1 Appointment................................................................................. 89
9.2 Delegation of Duties........................................................................ 89
9.3 Exculpatory Provisions...................................................................... 89
9.4 Reliance by Agents.......................................................................... 90
9.5 Notice of Default........................................................................... 90
9.6 Non-Reliance on Agents and Other Lenders.................................................... 91
9.7 Indemnification............................................................................. 91
9.8 Agents in Their Individual Capacities....................................................... 91
9.9 Successor Agents............................................................................ 92
SECTION 10. MISCELLANEOUS................................................................................ 92
10.1 Amendments and Waivers..................................................................... 92
10.2 Notices.................................................................................... 93
10.3 No Waiver; Cumulative Remedies............................................................. 94
10.4 Survival................................................................................... 94
10.5 Payment of Expenses and Taxes.............................................................. 94
10.6 Successors and Assigns; Participation and Assignments...................................... 95
10.7 Adjustments; Set-off....................................................................... 98
10.8 Counterparts............................................................................... 99
10.9 Severability............................................................................... 99
10.10 Integration............................................................................... 99
10.11 GOVERNING LAW............................................................................. 99
10.12 Submission To Jurisdiction; Waivers....................................................... 99
10.13 Acknowledgements.......................................................................... 100
10.14 WAIVERS OF JURY TRIAL..................................................................... 100
10.15 Confidentiality........................................................................... 100
10.16 Enforceability; Usury..................................................................... 101
10.17 Intercreditor Agreement................................................................... 101
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
ANNEXES:
I Pricing Grid A
II Pricing Grid B
</TABLE>
<TABLE>
<S> <C>
SCHEDULES:
1.1A Commitments; Lending Offices and Addresses
1.1B Mortgaged Property
1.1C Mortgaged Oil and Gas Properties
3.1 Existing Letters of Credit
4.4 Consents
4.8 Other Real Property Interests
4.15 Subsidiaries
4.19(b) UCC Filing Jurisdictions
4.19(c) Mortgage Filing Jurisdictions
4.19(d) Oil and Gas Mortgage Filing Jurisdictions
6.14(a)(i) Unperfected Vehicles
6.14(a)(ii) Newly Acquired Vehicles
7.2 Existing Indebtedness
7.3 Existing Liens
7.9(c) Additional Permitted Acquisitions
</TABLE>
<TABLE>
<S> <C>
EXHIBITS:
A Form of Master Guarantee and Collateral Agreement
B Form of Mortgage Amendment
C Form of Oil and Gas Mortgage Amendment
D Form of Closing Certificate
E Form of Exemption Certificate
F Form of Assignment and Acceptance
G Form of Compliance Certificate
H Form of Intercreditor Agreement
I Form of Prepayment Option Notice
J Form of Pro Forma EBITDA Statement
</TABLE>
iv
<PAGE> 6
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June
6, 1997, as amended and restated through September 14, 1998, among KEY ENERGY
GROUP, INC., a Maryland corporation (the "Borrower"), the several banks and
other financial institutions or entities from time to time parties to this
Agreement (the "Lenders"), PNC BANK, NATIONAL ASSOCIATION, as Administrative
Agent for the Lenders hereunder (in such capacity, the "Administrative Agent"),
NORWEST BANK TEXAS, N.A., as Collateral Agent for the Lenders hereunder (in
such capacity, the "Collateral Agent") and PNC CAPITAL MARKETS, INC., as
arranger with respect to the credit facilities contained herein (in such
capacity, the "Arranger").
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders, the Administrative Agent
and the Collateral Agent are parties to the Amended and Restated Credit
Agreement, dated as of June 6, 1997 (as amended and restated through November
6, 1997 and as further amended prior to the date hereof, the "Existing Credit
Agreement");
WHEREAS, pursuant to the Existing Credit Agreement, the
Lenders have over time made revolving credit loans ("Existing Revolving Credit
Loans") to, and have issued letters of credit ("Existing Letters of Credit")
for the account of, the Borrower which are secured pursuant to the Security
Documents (as hereinafter defined);
WHEREAS, Midland Acquisition Corp., a New Jersey corporation
and a direct, wholly owned subsidiary of the Borrower ("Midland"), has made an
offer (the "Tender Offer") to purchase all the shares of common stock (and
associated common stock purchase rights) of Dawson Production Services, Inc., a
Texas corporation ("Dawson"), at a price of $17.50 per share;
WHEREAS, pursuant to the Agreement and Plan of Merger, dated
as of August 11, 1998, among the Borrower, Midland and Dawson (the "Merger
Agreement") after the consummation of the Tender Offer, Midland will merge with
and into Dawson and thereafter no later than the next day Dawson will merge
with and into the Borrower (the "Merger", together with the Tender Offer, the
"Acquisition") with the Borrower being the surviving corporation of the Merger;
WHEREAS, in connection with the Acquisition, the Borrower has
requested that the Existing Credit Agreement be amended and restated to provide
senior credit facilities in the aggregate amount of $550,000,000 and the
Lenders are willing to makes such credit facilities available upon and subject
to the terms and conditions hereinafter set forth;
WHEREAS, this Second Amended and Restated Credit Agreement is
intended to confirm and evidence (i) the amendment and restatement and
continuation (but not payment) of the existing obligations of the Loan Parties
under the Loan Documents and (ii) the continuation as security for the
indebtedness and obligations under this Second Amended and Restated Agreement
and the other Loan Documents, without any release or termination whatsoever, of
all liens and security interests granted under and in connection with the
Existing Credit Agreement and the other Loan Documents;
ACCORDINGLY, the parties hereto hereby agree that on the
Closing Date, the Existing Credit Agreement is hereby amended and restated in
its entirety to read as follows:
<PAGE> 7
2
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"Acquisition Documentation" collectively, the Tender Offer
Documents and the Merger Agreement and all exhibits and annexes
thereto in each case as amended, supplemented or otherwise modified
from time to time in accordance with Section 7.10.
"Adjustment Date": each date on or after the First Full Fiscal
Quarter Date that is the second Business Day following receipt by the
Lenders of both (i) the financial statements required to be delivered
pursuant to Section 6.1(a) or 6.1(b), as applicable, for the most
recently completed fiscal period (which shall be the First Full Fiscal
Quarter Date, in the case of the Adjustment Date occurring on or
immediately after the First Full Fiscal Quarter Date) and (ii) the
related compliance certificate required to be delivered pursuant to
Section 6.2(b) with respect to such fiscal period.
"Administrative Agent": as defined in the preamble hereto.
"Affiliate": as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. For purposes of this
definition, "control" of a Person means the power, directly or
indirectly, either to (a) vote 10% or more of the securities having
ordinary voting power for the election of directors of such Person or
(b) direct or cause the direction of the management and policies of
such Person, whether by contract or otherwise. Notwithstanding the
foregoing (i) no Subsidiary of the Borrower shall be deemed to be an
Affiliate of the Borrower and (ii) no Affiliate of any investment
company that controls the Borrower shall be deemed to be an Affiliate
of the Borrower solely because such investment company Affiliate is in
control of, is controlled by, or is under common control with, such
investment company.
"Agents": the collective reference to the Arranger, the
Collateral Agent and the Administrative Agent.
"Aggregate Exposure": with respect to any Lender at any time,
an amount equal to (a) until the Closing Date, the aggregate amount of
such Lender's Commitments at such time and (b) thereafter, the sum of
(i) the aggregate then unpaid principal amount of such Lender's Term
Loans and the undrawn amount of its Term Loan Commitments then in
effect and (ii) the amount of such Lender's Revolving Commitment then
in effect or, if the Revolving Commitments have been terminated, the
amount of such Lender's Revolving Extensions of Credit then
outstanding.
"Aggregate Exposure Percentage": with respect to any Lender
at any time, the ratio (expressed as a percentage) of such Lender's
Aggregate Exposure at such time to the Aggregate Exposure of all
Lenders at such time.
"Agreement": this Credit Agreement, as amended, supplemented
or otherwise modified from time to time.
"Applicable Margin": during the period from the Closing Date
until the first Adjustment Date, for each Type of Loan, the rate per
annum set forth under the relevant column heading below:
<PAGE> 8
3
<TABLE>
<CAPTION>
Base Rate Loans Eurodollar Loans
--------------- ----------------
<S> <C> <C>
Revolving Loans 1.25% 2.75%
Tranche A Loans 1.25% 2.75%
Tranche B Loans 1.75% 3.25%
</TABLE>
provided that from and after the occurrence of the Minimum Equity
Event each of the foregoing Applicable Margins shall be reduced by
.50%.
On and after the first Adjustment Date, the Applicable Margin with
respect to Revolving Loans, Tranche A Loans and Tranche B Loans will
be adjusted on each Adjustment Date to the applicable rate per annum
set forth under the heading "Applicable Margin for Loans which are
Eurodollar Loans" or "Applicable Margin for Loans which are Base Rate
Loans", as the case may be, on the Pricing Grid then in effect which
corresponds to the Consolidated Leverage Ratio as determined from the
financial statements and compliance certificate relating to the end of
the fiscal period immediately preceding such Adjustment Date;
provided, that in the event that the financial statements required to
be delivered pursuant to Section 6.1(a) or 6.1(b), as applicable, and
the related compliance certificate required to be delivered pursuant
to Section 6.2(b), are not delivered when due, then
(i) if such financial statements and
compliance certificate are delivered after the date such
financial statements and compliance certificate were required
to be delivered (but no more than 30 days after such date) and
the Applicable Margin increases from that previously in effect
as a result of the delivery of such financial statements, then
the Applicable Margin in respect of the Loans during the
period from the date upon which such financial statements were
required to be delivered until the date upon which they
actually are delivered shall, except as otherwise provided in
clause (iii) below, be the Applicable Margin as so increased;
(ii) if such financial statements and
compliance certificate are delivered after the date such
financial statements and compliance certificate were required
to be delivered and the Applicable Margin decreases from that
previously in effect as a result of the delivery of such
financial statements, then such decrease in the Applicable
Margin shall not become applicable until the date upon which
the financial statements and certificate actually are
delivered; and
(iii) if such financial statements and
compliance certificate are not delivered prior to the
expiration of 30 days after the date such financial statements
and compliance certificate were required to be delivered,
then, effective upon such expiration, for the period from the
date 30 days after which such financial statements and
compliance certificate were required to be delivered until two
Business Days following the date upon which they actually are
delivered, the Applicable Margin in respect of Loans shall be
that set forth under Level VI on the Pricing Grid then in
effect (it being understood that the foregoing shall not limit
the rights of the Administrative Agent and the Lenders set
forth in Section 8).
"Application": an application, in such form as the Issuing
Lender may specify from time to time, requesting the Issuing Lender to
issue a Letter of Credit.
<PAGE> 9
4
"Argentine Subsidiaries": Kenting, Servicios and Transportes.
"Arranger": as defined in the preamble hereto.
"Assignee": as defined in Section 10.6(c).
"Available Revolving Commitment": as to any Lender at any
time, an amount equal to the excess, if any, of (a) such Lender's
Revolving Commitment over (b) such Lender's Revolving Extensions of
Credit.
"Base Rate": for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day, and (b) the
Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For
purposes hereof: "Prime Rate" shall mean the rate of interest per
annum established from time to time by PNC Bank, National Association
as its prime rate in effect at its principal office in Pittsburgh (the
Prime Rate not being intended to be the lowest rate of interest
charged by PNC Bank, National Association in connection with
extensions of credit to debtors); and "Federal Funds Effective Rate"
shall mean, for any day, the weighted average of the rates on
overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business
Day, the average of the quotations for the day of such transactions
received by the Administrative Agent from three federal funds brokers
of recognized standing selected by it. Any change in the Base Rate due
to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective as of the opening of business on the effective day
of such change in the Prime Rate or the Federal Funds Effective Rate,
respectively.
"Base Rate Loans": Loans the rate of interest applicable to
which is based upon the Base Rate.
"Board": the Board of Governors of the Federal Reserve System
of the United States (or any successor).
"Borrower": as defined in the preamble hereto.
"Business Day": (a) for all purposes other than as covered by
clause (b) below, a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by
law to close and (b) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar
Loans, any day which is a Business Day described in clause (a) and
which is also a day for trading by and between banks in Dollar
deposits in the interbank eurodollar market.
"Capital Expenditures": for any period, with respect to any
Person, the aggregate of all expenditures by such Person and its
Subsidiaries for the acquisition or leasing (pursuant to a Financing
Lease) of fixed or capital assets or additions to equipment (including
replacements and improvements during such period) which should be
capitalized under GAAP on a consolidated balance sheet of such Person
and its Subsidiaries; provided that "Capital Expenditures" shall not
include (i) expenditures for Permitted Acquisitions or (ii)
expenditures by any Person prior to the time such Person was acquired
by the Borrower or any Subsidiary in a Permitted Acquisition.
<PAGE> 10
5
"Capital Lease Obligations": as to any Person, the obligations
of such Person to pay rent or other amounts under any Financing Lease
and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at
such time determined in accordance with GAAP.
"Capital Stock": any and all shares of capital stock of a
corporation, and any and all equivalent ownership interests in a
Person (other than a corporation).
"Cash Equivalents": (a) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit
of the United States, in each case maturing within one year from the
date of acquisition; (b) demand deposits, certificates of deposit,
time deposits, eurodollar time deposits or overnight bank deposits
having maturities of twelve months or less from the date of
acquisition issued by any Lender or by any commercial bank organized
under the laws of the United States or any state thereof having
combined capital and surplus of not less than $250,000,000; (c)
commercial paper of (i) an issuer rated at least A-1 by Standard &
Poor's Ratings Services or P-1 by Moody's Investors Service, Inc., or
carrying an equivalent rating by a nationally recognized rating
agency, if both of the two named rating agencies cease publishing
ratings of commercial paper issuers generally or (ii) the holding
company of any Lender, and, in either case, maturing within twelve
months from the date of acquisition; and (d) money market funds the
assets of which consist primarily of obligations of the types referred
to in clauses (a) through (c) above.
"Change of Control": a "Change of Control" shall be deemed to
occur if a "Change in Control" (as defined in the 1997 Indenture or,
if the 1997 Indenture shall have been terminated, as defined in the
1997 Indenture immediately prior to such termination) shall occur.
"Closing Date": the date on which the conditions precedent set
forth in Section 5.1 shall be satisfied and the initial Loans are made
hereunder, which date shall be no later than September 30, 1998.
"Code": the Internal Revenue Code of 1986, as amended.
"Collateral": all assets of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by
any Security Document.
"Collateral Agent": as defined in the preamble hereto.
"Commercial Letter of Credit": as defined in Section 3.1(a).
"Commitment": as to any Lender, the sum of the Tranche A Term
Commitment, the Tranche B Term Commitment and the Revolving Commitment
of such Lender.
"Commitment Fee Rate": during the period from the Closing Date
until the first Adjustment Date 0.50% annum. On and after the first
Adjustment Date, the Commitment Fee Rate will be adjusted on each
Adjustment Date to the applicable rate per annum set forth under the
heading "Commitment Fee Rate" on the Pricing Grid then in effect which
corresponds to the Consolidated Leverage Ratio as determined from the
financial statements and compliance certificate relating to the end of
the fiscal period immediately preceding such Adjustment Date;
provided, that in the event that
<PAGE> 11
6
the financial statements required to be delivered pursuant to Section
6.1(a) or 6.1(b), as applicable, and the related compliance
certificate required to be delivered pursuant to Section 6.2(b), are
not delivered when due, then
(i) if such financial statements and
compliance certificate are delivered after the date such
financial statements and compliance certificate were required
to be delivered (but no more than 30 days after such date) and
the Commitment Fee Rate increases from that previously in
effect as a result of the delivery of such financial
statements, then the Commitment Fee Rate in respect of the
Loans during the period from the date upon which such
financial statements were required to be delivered until the
date upon which they actually are delivered shall, except as
otherwise provided in clause (iii) below, be the Commitment
Fee Rate as so increased;
(ii) if such financial statements and
compliance certificate are delivered after the date such
financial statements and compliance certificate were required
to be delivered and the Commitment Fee Rate decreases from
that previously in effect as a result of the delivery of such
financial statements, then such decrease in the Commitment Fee
Rate shall not become applicable until the date upon which the
financial statements and certificate actually are delivered;
and
(iii) if such financial statements and
compliance certificate are not delivered prior to the
expiration of 30 days after the date such financial statements
and compliance certificate were required to be delivered,
then, effective upon such expiration, for the period from the
date 30 days after which such financial statements and
compliance certificate were required to be delivered until two
Business Days following the date upon which they actually are
delivered, the Commitment Fee Rate in respect of Loans shall
be that set forth under Level VI on the Pricing Grid then in
effect (it being understood that the foregoing shall not limit
the rights of the Administrative Agent and the Lenders set
forth in Section 8).
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"Compliance Certificate": a certificate duly executed by a
Responsible Officer substantially in the form of Exhibit G.
"Confidential Information Memorandum": the Confidential
Information Memorandum dated September 1998 with respect to the
Borrower and the credit facilities provided for herein.
"Consolidated" or "consolidated": when used in respect of any
Subsidiary or any financial statements or financial term relating to
the Borrower and its Subsidiaries, refers to the Borrower and the
Subsidiaries of the Borrower (including Excluded Subsidiaries) whose
accounts are consolidated with the Borrower's accounts in accordance
with GAAP.
"Consolidated Current Assets": at any date, all amounts
(other than cash and Cash Equivalents) that would, in conformity with
GAAP, be set forth opposite the
<PAGE> 12
7
caption "total current assets" (or any like caption) on a consolidated
balance sheet of the Borrower and its Subsidiaries at such date.
"Consolidated Current Liabilities": at any date, all amounts
that would, in conformity with GAAP, be set forth opposite the caption
"total current liabilities" (or any like caption) on a consolidated
balance sheet of the Borrower and its Subsidiaries at such date, but
excluding (a) the current portion of any Funded Debt of the Borrower
and its Subsidiaries and (b) without duplication of clause (a) above,
all Indebtedness consisting of Revolving Loans to the extent otherwise
included therein.
"Consolidated EBITDA": with respect to any Person for any
period, Consolidated Net Income of such Person for such period plus,
without duplication and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such period, the sum of
(a) total income tax expense, (b) interest expense, (c) depreciation
and amortization expense, (d) amortization of intangibles (including,
but not limited to, goodwill) and organization costs, (e) any
extraordinary expenses or losses (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated
Net Income for such period, losses on sales of assets outside of the
ordinary course of business), (f) any other noncash charges, (g) if
applicable, non-recurring transaction expenses incurred in connection
with the consummation of the Acquisition and related financings,
restructuring charges, write-off of goodwill and licensing agreements,
and (h) for the fiscal period ending June 30, 1999, only, minority
interest adjustments related to Dawson, and minus, to the extent
included in the statement of such Consolidated Net Income for such
period, the sum of (a) interest income, (b) any extraordinary income
or gains (including, whether or not otherwise includable as a separate
item in the statement of such Consolidated Net Income for such period,
gains on the sales of assets outside of the ordinary course of
business) and (c) any other noncash income (other than any income
represented by a receivable that in the ordinary course would be
expected to be paid in cash), all as determined on a consolidated
basis.
"Consolidated Interest Coverage Ratio": for any period, the
ratio of (a) Consolidated EBITDA of the Borrower and its Subsidiaries
for such period to (b) Consolidated Interest Expense for such period;
provided that for purposes of calculating Consolidated EBITDA of the
Borrower and its Subsidiaries for any period of four full fiscal
quarters, the Consolidated EBITDA of any Person acquired by the
Borrower or its Subsidiaries which upon such acquisition becomes a
Consolidated Subsidiary or is merged into the Borrower or a Subsidiary
(including, without limitation, Dawson and its Subsidiaries) during
such period shall be included on a pro forma basis for such period of
four full fiscal quarters (assuming the consummation of each such
acquisition and the incurrence or assumption of any Indebtedness in
connection therewith occurred on the first day of such period of four
full fiscal quarters and assuming only such cost reductions as are
related to such acquisition and are realizable on or before the date
of calculation) if the consolidated balance sheet of such acquired
Person and its consolidated Subsidiaries as at the end of the period
preceding the acquisition of such Person and the related consolidated
statements of income and stockholders' equity and of cash flows for
such period (i) have been previously provided to the Administrative
Agent and the Lenders and (ii) either (A) have been reported on
without a qualification arising out of the scope of the audit (other
than a "going concern" or like qualification or exception) by
independent certified public accountants of nationally recognized
standing or (B) have been found acceptable by the Administrative
Agent.
<PAGE> 13
8
"Consolidated Interest Expense": for any period, total
interest expense (including that attributable to Capital Lease
Obligations), both expensed and capitalized, of the Borrower and its
Subsidiaries for such period with respect to all outstanding
Indebtedness of the Borrower and its Subsidiaries (including, without
limitation, all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing
and net costs under Interest Rate Protection Agreements and excluding
fees owed with respect to the Existing Credit Agreement and the
imputed interest attributable to Senior Subordinated Notes that are
original issue discount notes to the extent such net costs are
allocable to such period in accordance with GAAP), determined on a
consolidated basis in accordance with GAAP, net of interest income of
the Borrowers and its Subsidiaries for such period (determined on a
consolidated basis in accordance with GAAP).
"Consolidated Lease Expense": for any period, the aggregate
amount of fixed and contingent rentals payable by the Borrower and its
Subsidiaries, determined on a consolidated basis in accordance with
GAAP, for such period with respect to leases of real and personal
property; provided that amounts payable under Financing Leases and oil
and gas leases shall be excluded from Consolidated Lease Expense.
"Consolidated Leverage Ratio": on the date of any
determination thereof, the ratio of (a) Consolidated Total Debt on
such date, less the amount of cash and Cash Equivalents in excess of
$5,000,000 held by the Borrower and its Subsidiaries on such date to
(b) Consolidated EBITDA of the Borrower and its Subsidiaries for the
four full fiscal quarters ending on such date; provided that for
purposes of calculating Consolidated EBITDA of the Borrower and its
Subsidiaries for any period of four full fiscal quarters, the
Consolidated EBITDA of any Person acquired by the Borrower or its
Subsidiaries which upon such acquisition becomes a Consolidated
Subsidiary or is merged into the Borrower or a Subsidiary (including,
without limitation, Dawson and its Subsidiaries) during such period
shall be included on a pro forma basis for such period of four full
fiscal quarters (assuming the consummation of each such acquisition
and the incurrence or assumption of any Indebtedness in connection
therewith occurred on the first day of such period of four full fiscal
quarters and assuming only such cost reductions as are related to such
acquisition and are realizable on or before the date of calculation)
if the consolidated balance sheet of such acquired Person and its
consolidated Subsidiaries as at the end of the period preceding the
acquisition of such Person and the related consolidated statements of
income and stockholders' equity and of cash flows for such period (i)
have been previously provided to the Administrative Agent and the
Lenders and (ii) either (A) have been reported on without a
qualification arising out of the scope of the audit (other than a
"going concern" or like qualification or exception) by independent
certified public accountants of nationally recognized standing or (B)
have been found acceptable by the Administrative Agent.
"Consolidated Net Income": with respect to any Person for any
period, the consolidated net income (or loss) of such Person for such
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Worth": at a particular date, as to any
Person, the amount which would be included under stockholders' equity
on a consolidated balance sheet of such Person and its Subsidiaries
determined on a consolidated basis in accordance with GAAP.
"Consolidated Senior Debt": with respect to the Borrower and
its Subsidiaries, consolidated Indebtedness of the Borrower and its
Subsidiaries determined on a
<PAGE> 14
9
consolidated basis in accordance with GAAP other than Subordinated
Indebtedness.
"Consolidated Senior Leverage Ratio": on the date of any
determination thereof, the ratio of (a) Consolidated Senior Debt on
such date, less the amount of cash and Cash Equivalents in excess of
$5,000,000 held by the Borrower and its Subsidiaries on such date to
(b) Consolidated EBITDA of the Borrower and its Subsidiaries for the
four full fiscal quarters ending on such date; provided that for
purposes of calculating Consolidated EBITDA of the Borrower and its
Subsidiaries for any period of four full fiscal quarters, the
Consolidated EBITDA of any Person acquired by the Borrower or its
Subsidiaries which upon such acquisition becomes aConsolidated
Subsidiary or is merged into the Borrower or a Subsidiary (including,
without limitation, Dawson and its Subsidiaries) during such period
shall be included on a pro forma basis for such period of four full
fiscal quarters (assuming the consummation of each such acquisition
and the incurrence or assumption of any Indebtedness in connection
therewith occurred on the first day of such period of four full fiscal
quarters and assuming only such cost reductions as are related to such
acquisition and are realizable on or before the date of calculation)
if the consolidated balance sheet of such acquired Person and its
consolidated Subsidiaries as at the end of the period preceding the
acquisition of such Person and the related consolidated statements of
income and stockholders' equity and of cash flows for such period (i)
have been previously provided to the Administrative Agent and the
Lenders and (ii) either (A) have been reported on without a
qualification arising out of the scope of the audit (other than a
"going concern" or like qualification or exception) by independent
certified public accountants of nationally recognized standing or (B)
have been found acceptable by the Administrative Agent.
"Consolidated Total Debt": at any date, the aggregate
principal amount of all Indebtedness of the Borrower and its
Subsidiaries at such date, which on a consolidated basis in accordance
with GAAP would be required to be reflected on a consolidated balance
sheet of the Borrower and its Subsidiaries as a liability.
"Consolidated Working Capital": at any date, the excess of
Consolidated Current Assets on such date over Consolidated Current
Liabilities on such date.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or
any of its property is bound.
"Convertible Subordinated Debentures": the 7% Convertible
Subordinated Debentures due 2003 issued by the Borrower pursuant to
the Indenture.
"Dawson": as defined in the recitals hereto.
"Dawson Change of Control": "change of control" as defined in
the Dawson Indenture which occurs in connection with the Acquisition.
"Dawson Indenture": the indenture, dated as of February 20,
1997, among Dawson, certain Subsidiaries of Dawson and U.S. Trust
Company of Texas, N.A., as trustee.
"Dawson 9-3/8% Notes": the 9-3/8% Senior Notes due 2007 issued
by Dawson pursuant to the Dawson Indenture.
<PAGE> 15
10
"Dawson Put Termination Date": 70 days after the earlier of
(i) the Closing Date and (ii) the date the Dawson Change of Control
occurs.
"Default": any of the events specified in Section 8, whether
or not any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"Disqualified Stock": any Capital Stock that, by its terms
(or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures
or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or redeemable at the option of the holder thereof, in whole
or in part, on or prior to the date that is one year and one day after
the final maturity of the Loans as provided on the date hereof.
"Dollars" and "$": dollars in lawful currency of the United
States.
"Domestic Subsidiary": any Subsidiary of the Borrower
organized under the laws of any jurisdiction within the United States.
"Environmental Program": as defined in Section 5.1(n).
"Environmental Laws": any and all laws, rules, orders,
regulations, statutes, ordinances, codes, decrees, or other legally
enforceable requirements (including, without limitation, common law)
of any foreign government, the United States, or any state, local,
municipal or other governmental authority, regulating, relating to or
imposing liability or standards of conduct concerning protection of
the environment or of human health, or employee health and safety, as
has been, is now, or at any time hereafter is, in effect.
"Environmental Permits": any and all permits, licenses,
registrations, approvals, notifications, exemptions and any other
authorization required under any Environmental Law.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to
a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on
such day (including, without limitation, basic, supplemental, marginal
and emergency reserves under any regulations of the Board or other
Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D
of the Board) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum of
interest determined on the basis of the rate for deposits in Dollars
for a period equal to such Interest Period commencing on the first day
of such Interest Period appearing on Page 3750 of the Dow Jones
Markets screen as of 11:00 A.M., London time, two Business Days prior
to the beginning of such Interest Period. In the event that such rate
does not appear on Page 3750 of the Dow Jones Markets screen (or
otherwise on such service), the "Eurodollar Base Rate" for purposes of
this definition shall be determined by reference to such other
comparable publicly available service for displaying eurodollar rates
as may be
<PAGE> 16
11
selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate at which the Administrative
Agent is offered Dollar deposits at or about 11:00 A.M., New York City
time, two Business Days prior to the beginning of such Interest Period
in the interbank eurodollar market where its eurodollar and foreign
currency and exchange operations are then being conducted for delivery
on the first day of such Interest Period for the number of days
comprised therein.
"Eurodollar Loans": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
------------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar
Loans, the then current Interest Periods with respect to all of which
begin on the same date and end on the same later date (whether or not
such Loans shall originally have been made on the same day).
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of
time, or both, has been satisfied.
"Excess Cash Flow": for any fiscal year of the Borrower, the
excess, if any, of (a) the sum, without duplication, of (i)
Consolidated Net Income for such fiscal year, (ii) an amount equal to
the amount of all non-cash charges (including depreciation and
amortization) deducted in arriving at such Consolidated Net Income,
(iii) decreases in Consolidated Working Capital for such fiscal year,
and (iv) an amount equal to the aggregate net non-cash loss on the
disposition of property by the Borrower and its Subsidiaries during
such fiscal year (other than sales of inventory in the ordinary course
of business), to the extent deducted in arriving at such Consolidated
Net Income over (b) the sum, without duplication, of (i) an amount
equal to the amount of all non-cash credits included in arriving at
such Consolidated Net Income, (ii) the aggregate amount actually paid
by the Borrower and its Subsidiaries in cash during such fiscal year
on account of Capital Expenditures (excluding the principal amount of
Indebtedness incurred in connection with such expenditures), (iii) the
aggregate amount of all prepayments of Revolving Loans during such
fiscal year to the extent accompanying permanent optional reductions
of the Revolving Commitments and all optional prepayments of the Term
Loans during such fiscal year, (iv) the aggregate amount of all
regularly scheduled principal payments of Funded Debt (including the
Term Loans) of the Borrower and its Subsidiaries made during such
fiscal year (other than in respect of any revolving credit facility to
the extent there is not an equivalent permanent reduction in
commitments thereunder), (v) the aggregate amount of all mandatory
prepayments of Funded Debt of the Borrower and its Subsidiaries made
during such fiscal year pursuant to Section 2.10(d), (vi) increases in
Consolidated Working Capital for such fiscal year, and (vii) an amount
equal to the aggregate net non-cash gain on the disposition of
property by the Borrower and its Subsidiaries during such fiscal year
(other than sales of inventory in the ordinary course of business), to
the extent included in arriving at such Consolidated Net Income.
"Excess Cash Flow Application Date": as defined in Section
2.10(c).
<PAGE> 17
12
"Excluded Vehicles": as defined in the Master Guarantee and
Collateral Agreement.
"Excluded Subsidiary" or "Excluded Subsidiaries": (a)
Production Systems, Inc., WellTech, Inc. (California), WellTech, Inc.,
WellTech Oilfield Services (Canada), Ltd., WellTech Oilfield Services
Limited, WellTech (Overseas) Limited, and Bronson Transport, Inc., (b)
Thunderbird Tool Company, (c) KEG Canal Properties, Inc., KEG Villa
Ashley, Inc., KEG Anna Heights, Inc., KEG Orleans Place, Inc., and
Pyramid Land Corporation, (d) Dawson Production Services de Mexico,
S.A. de C.V. and Ubicadora de Tecnicos, S.A. de C.V. and (e) any other
entity which becomes a Subsidiary of Borrower after the date of this
Agreement if such entity has assets with a book value of $1,000,000 or
less and annual revenues of $1,000,000 or less; provided that all
entities deemed to be Excluded Subsidiaries under this subsection (e)
may not have, in the aggregate, assets with a book value exceeding
$5,000,000 or annual revenues exceeding $5,000,000.
"Existing Credit Agreement": as defined in the recitals
hereto.
"Existing Letters of Credit": as defined in Section 3.1.
"Existing Oil and Gas Mortgages": the Oil and Gas Mortgages
listed on Schedule 1.1C.
"Existing Mortgages": the Mortgages listed on Schedule 1.1B.
"Existing Revolving Credit Loans": as defined in the recitals
hereto.
"Facility": each of (a) the Tranche A Term Commitments and the
Tranche A Term Loans made thereunder (the "Tranche A Term Facility"),
(b) the Tranche B Term Commitments and the Tranche B Term Loans made
thereunder (the "Tranche B Term Facility"), and (c) the Revolving
Commitments and the extensions of credit made thereunder (the
"Revolving Facility").
"Financing Lease": any lease (or other similar arrangement
conveying the right to use) of property, real or personal, the
obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of the
lessee.
"First Fiscal Quarter Date": the last day of the first full
fiscal quarter of the Borrower completed after the Closing Date.
"Foreign Subsidiary": any Subsidiary of the Borrower organized
under the laws of any jurisdiction outside the United States.
"Funded Debt": as to any Person, all Indebtedness of such
Person that matures more than one year from the date of its creation
or matures within one year from such date but is renewable or
extendible, at the option of such Person, to a date more than one year
from such date or arises under a revolving credit or similar agreement
that obligates the lender or lenders to extend credit during a period
of more than one year from such date, including all current maturities
and current sinking fund payments in respect of such Indebtedness
whether or not required to be paid within one year from the date of
its creation and, in the case of the Borrower, Indebtedness in respect
of the
<PAGE> 18
13
Loans.
"GAAP": generally accepted accounting principles in the United
States in effect from time to time.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "primary obligations") of
any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation
of the guaranteeing person, whether or not contingent, (i) to purchase
any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for
the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary
obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of
any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount
equal to the stated or determinable amount of the primary obligation
in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such guaranteeing person may be liable
pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for
which such guaranteeing person may be liable are not stated or
determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated
liability in respect thereof as determined by the Borrower in good
faith.
"Hedge Obligations": as defined in the Master Guarantee and
Collateral Agreement.
"Indebtedness": of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money,
(b) all obligations of such Person for the deferred purchase price of
property or services (other than trade payables and accrued expenses
incurred in the ordinary course of such Person's business not more
than 150 days past due or being contested in good faith), (c) all
obligations of such Person evidenced by notes, bonds, debentures or
other similar instruments, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with
respect to property acquired by such Person, (e) all Capital Lease
Obligations of such Person, (f) all obligations, contingent or
otherwise, of such Person as an account party under acceptance, letter
of credit or similar facilities (other than obligations in respect of
undrawn letters of credit securing trade payables or performance
obligations incurred in the ordinary course of business not more than
150 days past due or being contested in good faith), (g) all
obligations of such Person to
<PAGE> 19
14
purchase, redeem, retire or otherwise acquire for value any Capital
Stock of such Person, (h) all Guarantee Obligations of such Person in
respect of Indebtedness of others and (i) all obligations of the kind
referred to in clauses (a) through (h) above secured by any Lien on
property (including, without limitation, accounts and contract rights)
owned by such Person, whether or not such Person has assumed or become
liable for the payment of such obligation (but if not so assumed, the
amount of such obligation shall be deemed not to exceed the fair
market value of the property subject to the Lien).
"Indenture": the Indenture, dated as of July 3, 1996, between
the Borrower and American Stock Transfer & Trust Company, as trustee.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Insurance Policies": (i) the insurance policies the Borrower
is required to maintain pursuant to Section 6.5 and (ii) the insurance
policies the Borrower is required to maintain pursuant to Section 5.3
of the Master Guarantee and Collateral Agreement.
"Intercreditor Agreement": the Intercreditor and Collateral
Agency Agreement, substantially in the form of Exhibit H, as the same
may be amended, supplemented or otherwise modified from time to time.
"Interest Payment Date": (a) as to any Base Rate Loan, the
last day of each March, June, September and December to occur while
such Loan is outstanding, (b) as to any Eurodollar Loan having an
Interest Period of three months or less, the last day of such Interest
Period, (c) as to any Eurodollar Loan having an Interest Period longer
than three months, each day which is three months, or a whole multiple
thereof, after the first day of such Interest Period and the last day
of such Interest Period.
"Interest Period": as to any Eurodollar Loan, (a) initially,
the period commencing on the borrowing or conversion date, as the case
may be, with respect to such Eurodollar Loan and ending one, two,
three or six months thereafter, as selected by the Borrower in its
notice of borrowing or notice of conversion, as the case may be, given
with respect thereto; and (b) thereafter, each period commencing on
the last day of the next preceding Interest Period applicable to such
Eurodollar Loan and ending one, two, three or six months thereafter,
as selected by the Borrower by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the
last day of the then current Interest Period with respect thereto;
provided that all of the foregoing provisions relating to Interest
Periods are subject to the following:
(i) if any Interest Period would otherwise end
on a day that is not a Business Day, such Interest Period
shall be extended to the next succeeding Business Day unless
the result of such extension would be to carry such Interest
Period into another calendar month in which event such
Interest Period shall end on the immediately preceding
Business Day;
(ii) any Interest Period that would otherwise
extend beyond the Schedule Termination Date shall end on the
Scheduled Termination Date;
(iii) any Interest Period that begins on the last
Business Day of a
<PAGE> 20
15
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of a
calendar month; and
(iv) the Borrower shall select Interest Periods
so as not to require a payment or prepayment of any Eurodollar
Loan during an Interest Period for such Loan.
"Interest Rate Protection Agreement": any interest rate
protection agreement, interest rate futures contract, interest rate
option, interest rate cap or other interest rate hedge arrangement, to
or under which the Borrower or any Subsidiary is a party or a
beneficiary on the date hereof or becomes a party or a beneficiary
after the date hereof.
"Interest Rate Protection Agreement Obligation": in respect of
any Loan Party, the obligation of such Loan Party under an Interest
Rate Protection Agreement to make a payment to the counterparty
thereto in the event of a termination event or similar occurrence
thereunder.
"Interim Loan Agreement": the Bridge Loan Agreement, dated as
of the date hereof, among the Borrower, the Subsidiaries of the
Borrower party thereto, Lehman Commercial Paper Inc., as
administrative agent, Lehman Brothers Inc., as arranger and the
several lenders party thereto, as amended, supplemented or otherwise
modified from time to time in accordance with Section 7.10.
"Interim Loans": the principal amount of Indebtedness
outstanding under the Interim Loan Agreement (excluding the term loans
and/or exchange notes refinancing such Indebtedness).
"Investment Property": as defined in the Master Guarantee and
Collateral Agreement.
"Issuing Lender": (a) with respect to the Existing Letters of
Credit, Norwest Bank and any issuer under the Existing Credit
Agreement of an Existing Letter of Credit and (b) with respect to any
Letters of Credit issued after the Closing Date, any Lender designated
as "Issuing Lender" hereunder by the Borrower with the consent of the
Administrative Agent and such Lender, in its capacity as issuer of any
Letter of Credit.
"Kenting": Kenting Holdings (Argentina) S.A., an Argentine
corporation, and Kenting Drilling (Argentina) S.A., an Argentine
corporation.
"L/C Commitment": $20,000,000.
"L/C Fee Payment Date": the last day of each March, June,
September and December and the last day of the Revolving Commitment
Period.
"L/C Obligations": at any time, an amount equal to the sum of
(a) the aggregate then undrawn and unexpired amount of the then
outstanding Letters of Credit and (b) the aggregate amount of drawings
under Letters of Credit which have not then been reimbursed pursuant
to Section 3.5.
"L/C Participants": the collective reference to all the
Revolving Lenders other than the Issuing Lender.
<PAGE> 21
16
"Lenders": as defined in the preamble hereto (which shall
include the Issuing Lender).
"Letters of Credit": as defined in Section 3.1(a).
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing) and any filing of or
agreement to give any financing statement under the Uniform Commercial
Code (or equivalent statutes) of any jurisdiction.
"Loan": any loan made by any Lender under this Agreement.
"Loan Documents": this Agreement, the Notes, the Applications,
the Security Documents and the Intercreditor Agreement.
"Loan Parties": at any time, the Borrower and each Domestic
Subsidiary of the Borrower which, at such time, is, or is required by
the terms hereof to be, a party to a Loan Document.
"Majority Facility Lenders": with respect to any Facility,
the holders of more than 50% of the aggregate unpaid principal amount
of the Term Loans (and related undrawn Term Loan Commitments) or the
Total Revolving Extensions of Credit, as the case may be, outstanding
under such Facility (or, in the case of the Revolving Facility, prior
to any termination of the Revolving Commitments, the holders of more
than 50% of the Total Revolving Commitments).
"Majority Revolving Facility Lenders": the Majority Facility
Lenders in respect of the Revolving Facility.
"Margin Stock": as defined in Regulation U.
"Master Guarantee and Collateral Agreement": the Amended and
Restated Master Guarantee and Collateral Agreement executed and
delivered by the Borrower and each of its Domestic Subsidiaries
(including the Subsidiaries of Dawson after the Merger Date),
substantially in the form of Exhibit A, as the same may be amended,
supplemented or otherwise modified from time to time.
"Material Adverse Effect": a material adverse effect on (a)
the Acquisition, (b) the business, assets, property, condition
(financial or otherwise) or prospects of the Borrower, its
Subsidiaries and the Excluded Subsidiaries taken as a whole or (c) the
validity or enforceability of this Agreement or any of the other Loan
Documents or the rights or remedies of the Administrative Agent, the
Collateral Agent or the Lenders hereunder or thereunder.
"Material Environmental Amount": an amount payable by the
Borrower and/or its Subsidiaries under any Environmental Law in excess
of $5,000,000 for remedial costs, compliance costs, compensatory
damages, punitive damages, fines, penalties or any combination
thereof.
<PAGE> 22
17
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products, polychlorinated biphenyls, urea-formaldehyde insulation,
asbestos, pollutants, contaminants, radioactive materials, and any
other substances of any kind, whether or not any such substance is
defined as hazardous or toxic under any Environmental Law, that is
regulated pursuant to or could give rise to liability under any
Environmental Law.
"Merger": as defined in the recitals hereto.
"Merger Agreement": as defined in the recitals hereto.
"Merger Date": the date the certificates and/or articles of
merger are filed with and accepted by the appropriate secretaries of
state as are necessary to be filed and accepted in order to effectuate
the merger of Dawson (including any of its successors or assigns) into
the Borrower.
"Merger Loan Date": the date on which the conditions precedent
set forth in Section 5.2 shall be satisfied.
"Midland": as defined in the recitals to this Agreement.
"Minimum Equity Event": either (i) the receipt by the Borrower
of Net Cash Proceeds of at least $75,000,000 from the issuance of
Capital Stock of the Borrower after the Closing Date or (ii) one or
more issuances by the Borrower of its Capital Stock with a market
value at the time of issuance of at least $75,000,000 in the aggregate
in connection with the acquisition of one or more Persons or the
assets of one or more Persons; provided, no Default or Event of
Default shall have occurred and be in existence and provided, further,
that with respect to the issuance of Capital Stock of the type
referred to in clause (ii) above a Minimum Equity Event shall not be
deemed to occur unless and until the ratio of (a) Consolidated Total
Debt to (b) the sum of Consolidated Total Debt plus Consolidated Net
Worth of the Borrower and its Subsidiaries is equal to or less than
75%.
"Moody's": Moody's Investors Service, Inc.
"Mortgage": the collective reference to the Existing Mortgages
as amended by the Mortgage Amendments and any mortgage or deed of
trust to be made by the appropriate Loan Party in favor of, or for the
benefit of, the Collateral Agent, as provided for in the Loan
Documents, as the same may be amended, supplemented or otherwise
modified from time to time.
"Mortgage Amendment": each Mortgage Amendment substantially in
the form of Exhibit B to be entered into on or prior to the Closing
Date.
"Mortgaged Property": the real property listed on Schedule
1.1B, as to which the Collateral Agent has been granted a Lien
pursuant to the Mortgages and the real property as to which the
Collateral Agent shall be granted a Lien in accordance with Section
6.10.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
<PAGE> 23
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"Net Cash Proceeds": (a) in connection with the Significant
Disposition, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred
payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and
when received) of the Significant Disposition, net of attorneys' fees,
accountants' fees, investment banking fees, brokers' and underwriters'
commissions paid to third parties, amounts required to be applied to
the repayment of Indebtedness secured by a Lien expressly permitted
hereunder on any asset which is the subject of the Significant
Disposition (other than any Lien in favor of the Collateral Agent for
the benefit of the Lenders), the aggregate amount of reserves required
in the reasonable judgment of the Borrower to pay contingent
liabilities with respect to the Significant Disposition (provided that
amounts deducted from aggregate proceeds pursuant to this clause and
not actually paid by the Borrower or any of its Subsidiaries in
liquidation of such contingent liabilities shall be deemed to be Net
Cash Proceeds and shall be applied in accordance with Section 2.10(c)
at such time as the Borrower shall reasonably determine that such
amounts are not required to pay contingent liabilities with respect to
the Significant Disposition) and other customary fees and expenses
actually incurred in connection therewith and net of taxes paid or
reasonably estimated to be payable as a result thereof (after taking
into account any available tax credits or deductions and any tax
sharing arrangements with any Person other than the Borrower and its
Subsidiaries) and (b) in connection with any issuance or sale of
Capital Stock or debt securities or instruments or the incurrence of
Indebtedness, the cash proceeds received from such issuance or
incurrence, net of attorneys' fees, investment banking fees,
accountants' fees, underwriting discounts and commissions and other
customary fees and expenses actually incurred in connection therewith.
"1997 Convertible Subordinated Notes": the 5% Convertible
Subordinated Notes due 2004 issued by the Borrower pursuant to the
1997 Indenture.
"1997 Indenture": the Indenture, dated as of September 25,
1997, between the Borrower and American Stock Transfer & Trust
Company, as trustee.
"Non-Excluded Taxes": as defined in Section 2.19(a).
"Non-U.S. Lender": as defined in Section 2.19(b).
"Norwest Bank": Norwest Bank Texas, N.A.
"Note": as defined in Section 2.7(e).
"Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity
of the Loans and Reimbursement Obligations and interest accruing after
the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the
Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Notes and all other
obligations and liabilities of the Borrower to the Arranger, the
Administrative Agent or to any Lender, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under this Agreement, any other
Loan Document, the Letters of Credit, any Interest Rate Protection
Agreement entered into with any Lender or any other document made,
delivered or given in connection herewith or therewith, whether on
account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses (including, without limitation, all fees,
charges and disbursements of counsel
<PAGE> 24
19
to the Administrative Agent and the Collateral Agent) or otherwise.
"Odessa": Odessa Exploration Incorporated.
"Oil and Gas Mortgages": the collective reference to the
Existing Oil and Gas Mortgages as amended by the Oil and Gas Mortgage
Amendments and any mortgages in favor of the Collateral Agent, as
provided for in the Loan Documents, in form and substance reasonably
satisfactory to the Collateral Agent, covering the Oil and Gas
Properties.
"Oil and Gas Mortgage Amendment": each Oil and Gas Mortgage
Amendment substantially in the form of Exhibit C to be entered into on
or prior to the Closing Date.
"Oil and Gas Properties": the oil and gas properties described
in Schedule 1.1C which are mortgaged pursuant hereto and the oil and
gas properties as to which the Collateral Agent shall be granted a
Lien in accordance with Section 6.10.
"Participant": as defined in Section 10.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"Percentage": with respect to the applicable Facility, the
Tranche A Term Percentage, the Tranche B Term Percentage and the
Revolving Percentage.
"Permitted Acquisitions": the acquisition by the Borrower and
its Subsidiaries of (a) rigs and other well service equipment, (b)
well service companies and (c) oil and gas properties and related
equipment, provided that (i) the aggregate amount of cash
consideration paid with respect to such acquisitions does not exceed
$15,000,000, or (ii) after giving effect to such acquisitions and any
borrowings hereunder in connection therewith, (x) the Consolidated
Leverage Ratio shall not be more than the lesser of 3.75 to 1.00 or
the ratio set forth in subsection 7.1(a) applicable to the Borrower at
the time of such acquisition and (y) the sum of (1) the Borrower's
cash and Cash Equivalents on hand and (2) the aggregate Available
Revolving Commitments shall be at least $20,000,000, or (iii) after
giving effect to such acquisition the Consolidated Leverage Ratio is
not increased and such acquisition is funded solely with the
Borrower's Capital Stock.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Pledged Notes" and "Pledged Stock": each as defined in the
Master Guarantee and Collateral Agreement.
"Pricing Grid": during the period from the Closing Date until
the Minimum Equity Event, Annex I and thereafter, Annex II.
<PAGE> 25
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"Pro Forma Balance Sheet": as defined in Section 4.1(a).
"Pro Forma EBITDA Statement": an unaudited pro forma statement
of Consolidated EBITDA of the Borrower for any period of four full
fiscal quarters (including the notes thereto) substantially in the
form of Exhibit J hereto.
"Projections": as defined in Section 6.2(c).
"Properties": the collective reference to the real property
owned or leased by the Borrower or any of its Subsidiaries (or with
respect to Sections 6.8 and 10.5, any of the Excluded Subsidiaries).
"Proved Reserves": the estimated quantities of crude oil,
condensate, natural gas and natural gas liquids that adequate
geological and engineering data demonstrate with reasonable certainty
to be recoverable in future years from known reservoirs under existing
economic and operating conditions (i.e., prices and costs as of the
date the estimate is made).
"Put Facility": the collective reference to the "Loan
Documents" (as defined in the Interim Loan Agreement), the Interim
Loans and the term loans and/or exchange notes refinancing the Interim
Loans provided that the terms and provisions of such term loans and
exchange notes (including the subordination provisions) shall be as
provided in the Interim Loan Agreement and to the extent not provided
for therein shall be acceptable to the Administrative Agent and
provided further that until the Merger Date, the obligations of the
Borrower and its Subsidiaries under the Put Facility may be senior
Indebtedness and secured by the Collateral as provided in the Loan
Documents and on the Merger Date the obligations of the Borrower and
its Subsidiaries under the Put Facility shall be automatically
subordinated to the Obligations and the Put Facility shall no longer
be secured by the Collateral, as amended, supplemented or otherwise
modified from time to time in accordance with Section 7.10.
"Register": as defined in Section 10.6(e).
"Regulation U": Regulation U of the Board as in effect from
time to time.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn
under Letters of Credit.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty day
notice period is waived under subsection .13, .14, .16, .18, .19 or
.20 of PBGC Reg. Section 2615.
"Required Lenders": at any time, the holders of more than 50%
of (a) until the Closing Date, the Commitments then in effect and (b)
thereafter, the sum of (i) the aggregate unpaid principal amount of
the Term Loans then outstanding and, if the Term Loan Commitments have
not been terminated, the aggregate undrawn amount of the Term Loan
Commitments then in effect and (ii) the Total Revolving Commitments
then in effect or, if the Revolving Commitments have been terminated,
the Total Revolving Extensions of Credit then outstanding.
<PAGE> 26
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"Required Prepayment Lenders": the Majority Facility Lenders
in respect of each Facility.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is
subject.
"Responsible Officer": the chief executive officer, president
or chief financial officer of the Borrower, but in any event, with
respect to financial matters, the chief financial officer of the
Borrower.
"Revolving Borrowing Date": any Business Day specified in a
notice pursuant to Section 2.5 as a date on which the Borrower
requests the Revolving Lenders to make Revolving Loans hereunder.
"Revolving Commitment": as to any Lender, the obligation of
such Lender, if any, to make Revolving Loans to and/or issue or
participate in Letters of Credit issued on behalf of the Borrower
hereunder in an aggregate principal and/or face amount not to exceed
the amount set forth under the heading "Revolving Commitment" opposite
such Lender's name on Schedule 1.1A, as the same may be changed from
time to time pursuant to the terms hereof and as the same shall be
reduced pursuant to Section 2.4(c). The original amount of the Total
Revolving Commitments is $250,000,000.
"Revolving Commitment Period": the period from and including
the Closing Date to but not including the Revolving Termination Date,
or such earlier date on which the Revolving Commitments shall have
been terminated.
"Revolving Extensions of Credit": as to any Revolving Lender
at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Loans held by such Lender then outstanding and
(b) such Lender's Revolving Percentage of the L/C Obligations then
outstanding.
"Revolving Lender": each Lender that has a Revolving
Commitment or that holds Revolving Loans.
"Revolving Loans": as defined in Section 2.4(a).
"Revolving Percentage": as to any Revolving Lender at any
time, the percentage which such Lender's Revolving Commitment then
constitutes of the Total Revolving Commitments (or, at any time after
the Revolving Commitments shall have expired or terminated, the
percentage which the aggregate principal amount of such Lender's
Revolving Loans then outstanding constitutes of the aggregate
principal amount of the Revolving Loans then outstanding).
"Revolving Termination Date": the earlier to occur of (i) 365
days after the Closing Date and (ii) termination or abandonment by the
Borrower of the Acquisition; provided, however, that in the event the
Merger Loan Date occurs on or before the date referred to in clause
(i) above, and the Term Loans are made to the full extent of the Term
Loan Commitments, the Revolving Termination Date will be extended to
the Scheduled Revolving Termination Date.
<PAGE> 27
22
"Scheduled Revolving Termination Date": the fifth anniversary
of the Closing Date.
"SEC": the Securities and Exchange Commission and any
successor thereto.
"Security Documents": the collective reference to each
Mortgage, each Oil and Gas Mortgage, the Master Guarantee and
Collateral Agreement and all other security documents hereafter
delivered to the Collateral Agent granting a Lien on any asset or
assets of any Person to secure the obligations and liabilities of the
Borrower hereunder and/or under any of the other Loan Documents or to
secure any guarantee of any such obligations and liabilities.
"Seller Indebtedness": Indebtedness of the Borrower which is
issued to the seller in a Permitted Acquisition as all or a portion of
the consideration for such Permitted Acquisition.
"Senior Subordinated Note Indenture": the indenture to be
entered into by the Borrower in connection with the issuance of Senior
Subordinated Notes containing, terms and conditions consistent with
those set forth in the definition of Senior Subordinated Notes or such
other terms and conditions approved by the Required Lenders and the
Administrative Agent, as amended, supplemented or otherwise modified
from time to time in accordance with Section 7.10.
"Senior Subordinated Notes": either (a) senior subordinated
notes, provided that such notes shall:
(i) be unsecured, provided that such notes may
provide for a covenant requiring equal and ratable security in
the event that any Indebtedness that is pari passu with or
subordinated to such notes is secured in a manner not
prohibited by this Agreement;
(ii) not amortize, or otherwise be subject to
scheduled redemptions, repurchases or other payments of
principal, prior to the date that is one year and one day
after the final maturity of the Loans as provided on the date
hereof, but may be accompanied by warrants to purchase common
stock of the Borrower;
(iii) bear interest (x) at a rate per annum not in
excess of 17% and (y) payable in cash at a rate per annum not
in excess of 14%;
(iv) be subordinated to the Loans in a manner no less
favorable to the Lenders than the Exchange Notes (as defined
in the Interim Loan Agreement) are to be subordinated to the
Loans (as provided on the date hereof) on and after the Merger
Date;
(v) provide for covenants, events of default and
remedies not materially less favorable (in each case, taken as
a whole) to the Borrower than those applicable to the Exchange
Notes (as defined in the Interim Loan Agreement) on the date
hereof, subject to modification where necessary to reflect
prevailing market terms at the time of issuance of such senior
subordinated notes for "high-yield" securities issued by
companies of comparable size, credit rating and capitalization
(including, without limitation, having in place a senior
secured credit facility) to the Borrower, provided, in any
event, that such covenants,
<PAGE> 28
23
events of default and remedies shall be no more restrictive of
the conduct of business by the Borrower than those in effect
on the Stepdown Date (as defined in the Interim Loan
Agreement) pursuant to the Interim Loan Agreement (it being
understood, in any event, that (x) there shall be no financial
maintenance covenants, (y) the indebtedness limitation
covenant shall be based only upon an "incurrence test" and (z)
there shall be a cross-payment default/cross-acceleration
default provision, rather than a simple cross-default
provision); and
(vi) not require prepayments or mandatory redemption
of such senior subordinated notes, except (A) in the event of
a "change of control" of the Borrower, subject to terms not
materially less favorable (taken as a whole) to the Borrower
than those contained in the Exchange Note Indenture (as
defined in the Interim Loan Agreement) on the date hereof, and
(B) in the event of an asset sale, so long as the proceeds
thereof are not required by this Agreement to be used to
prepay the Loans or reduce the Commitments or for reinvestment
in the Borrower's business, in each case in accordance with
this Agreement; or
(b) other Subordinated Indebtedness the terms and conditions of which
are reasonably satisfactory to the Administrative Agent and the
Required Lenders.
"Servicios": Servicios WellTech, S.A., an Argentine
corporation.
"Sharing Percentage": the percentage which the then
outstanding principal amount of the Interim Loans then constitutes of
the sum of (i) the then outstanding principal amount of the Interim
Loans and (ii) the then outstanding amount of Reimbursement
Obligations, Loans and, without duplication, the L/C Obligations.
"Significant Disposition": as defined in Section 7.6(d).
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that,
as of any date of determination, (a) the amount of the "present fair
saleable value" of the assets of such Person will, as of such date,
exceed the amount of all "liabilities of such Person, contingent or
otherwise", as of such date, as such quoted terms are determined in
accordance with applicable federal and state laws governing
determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be
greater than the amount that will be required to pay the liability of
such Person on its debts as such debts become absolute and matured,
(c) such Person will not have, as of such date, an unreasonably small
amount of capital with which to conduct its business, and (d) such
Person will be able to pay its debts as they mature. For purposes of
this definition, (i) "debt" means liability on a "claim", and (ii)
"claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured or (y) right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether
or not such right to an equitable remedy is reduced to judgment,
fixed, contingent, matured or unmatured, disputed, undisputed, secured
or unsecured.
"S&P": Standard & Poor's Ratings Group.
"Standby Letter of Credit": as defined in Section 3.1(a).
<PAGE> 29
24
"Subordinated Indebtedness": the Convertible Subordinated
Debentures, the 1997 Convertible Subordinated Notes, after the Merger
Date the Put Facility and the Senior Subordinated Notes and any other
Indebtedness of the Borrower subordinated to the prior payment in full
of the Obligations to at least the extent the 1997 Convertible
Subordinated Notes are subordinated to the Obligations or otherwise in
a manner acceptable to the Required Lenders as evidenced by their
written approval.
"Subsidiary": as to any Person at any date, a corporation,
partnership or other entity of which, at such date, shares of stock or
other ownership interests having ordinary voting power (other than
stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation, partnership
or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise qualified,
all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower
(including on and after the Closing Date, Dawson and its
Subsidiaries), but such references shall not include any Excluded
Subsidiary and reference to Subsidiaries of Dawson shall not include
any Excluded Subsidiary.
"Subsidiary Guarantor": each Subsidiary of the Borrower which
is a party to the Master Guarantee and Collateral Agreement.
"Tender Offer": as defined in the recitals hereto.
"Tender Offer Documents: the collective reference to the Offer
to Purchase, dated August 17, 1998 by Midland and all associated
documents filed by the Borrower and/or Midland with the SEC in
connection with the Tender Offer prior to the Closing Date.
"Term Lenders": the collective reference to the Tranche A
Term Lenders and the Tranche B Term Lenders.
"Term Loan Borrowing Date": any Business Day specified in a
notice pursuant to Section 2.2 as a date on which the Borrower
requests the Term Lenders to make Term Loans hereunder.
"Term Loan Commitment Period": the period from and including
the Closing Date to and including, the earliest of (i) 365 days after
the Closing Date, (ii) the Merger Loan Date and (iii) the termination
or abandonment by the Borrower of the Acquisition.
"Term Loan Commitments": the Tranche A Term Commitments and
the Tranche B Term Commitments.
"Term Loans": the collective reference to the Tranche A Term
Loans and Tranche B Term Loans.
"Total Revolving Commitments": at any time, the aggregate
amount of the Revolving Commitments then in effect.
"Total Revolving Extensions of Credit": at any time, the
aggregate amount of the Revolving Extensions of Credit of the
Revolving Lenders outstanding at such time.
<PAGE> 30
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"Tranche A Term Commitment": as to any Lender, the obligation
of such Lender, if any, to make a Tranche A Term Loan to the Borrower
hereunder in a principal amount not to exceed the amount set forth
under the heading "Tranche A Term Commitment" opposite such Lender's
name on Schedule 1.1A. The original aggregate amount of Tranche A
Term Commitments is $150,000,000.
"Tranche A Term Lender": each Lender that has a Tranche A
Term Commitment or is the holder of a Tranche A Term Loan.
"Tranche A Term Loan": as defined in Section 2.1.
"Tranche A Term Percentage": as to any Tranche A Term Lender
at any time, the percentage which such Lender's Tranche A Term
Commitment then constitutes of the aggregate Tranche A Term
Commitments (or, at any time after the Closing Date, the percentage
which the aggregate principal amount of such Lender's Tranche A Term
Loans then outstanding plus the undrawn amount of such Tranche A Term
Commitment then in effect constitute of the aggregate principal amount
of the Tranche A Term Loans then outstanding and the undrawn Tranche A
Term Commitments then in effect).
"Tranche B Term Commitment": as to any Lender, the obligation
of such Lender, if any, to make a Tranche B Term Loan to the Borrower
hereunder in a principal amount not to exceed the amount set forth
under the heading "Tranche B Term Commitment" opposite such Lender's
name on Schedule 1.1A. The original aggregate amount of Tranche B Term
Commitments is $150,000,000.
"Tranche B Term Lender": each Lender that has a Tranche B
Term Commitment or that holds a Tranche B Term Loan.
"Tranche B Term Loan": as defined in Section 2.1.
"Tranche B Term Percentage": as to any Tranche B Term Lender
at any time, the percentage which such Lender's Tranche B Term
Commitment then constitutes of the aggregate Tranche B Term
Commitments (or, at any time after the Closing Date, the percentage
which the aggregate principal amount of such Lender's Tranche B Term
Loans then outstanding plus the undrawn amount of such Tranche B Term
Loan Commitment then in effect constitute of the aggregate principal
amount of the Tranche B Term Loans and the undrawn Tranche B Term
Commitments then in effect then outstanding); provided, that solely
for purposes of calculating the amount of each installment of Tranche
B Term Loans (other than the last installment) payable to a Tranche B
Term Lender, such Term Lender's Tranche B Term Percentage shall be
calculated without giving effect to any portion of any prior mandatory
or optional prepayment attributable to such Term Lender's Tranche B
Term Loans that shall have been declined by such Term Lender (or, in
the case of any Term Lender that shall have acquired its Tranche B
Term Loans by assignment from another Person, by such other Person).
"Transferee": as defined in Section 10.6(g).
"Transportes": Transportes Dimopulos Sociedad de
Respondsibilidad Limitada, an Argentine limited partnership.
<PAGE> 31
26
"Type": as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time.
"United States": the United States of America.
"Vehicles": as defined in the Master Guarantee and Collateral
Agreement.
"Wholly Owned Subsidiary": as to any Person, any other Person
all of the Capital Stock of which (other than directors' qualifying
shares) is owned by such Person directly and/or through other Wholly
Owned Subsidiaries.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the other Loan Documents or any certificate or other
document made or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Borrower and its Subsidiaries not defined in
Section 1.1 and accounting terms partly defined in Section 1.1, to the extent
not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Term Commitments. Subject to the terms and conditions
hereof, (a) each Tranche A Term Lender severally agrees to make loans (each, a
"Tranche A Term Loan") to the Borrower up to four times during the Term Loan
Commitment Period in an aggregate amount not to exceed the amount of the
Tranche A Term Commitment of such Lender and (b) each Tranche B Term Lender
severally agrees to make loans (each, a "Tranche B Term Loan") to the Borrower
up to four times during the Term Loan Commitment Period in an aggregate amount
not to exceed the amount of the Tranche B Term Commitment of such Lender. The
Term Loans may from time to time be Eurodollar Loans or Base Rate Loans, as
determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.2 and 2.11. On the Closing Date, all Existing
Revolving Credit Loans outstanding on the Closing Date shall be continued
(without payment thereof) as Term Loans hereunder.
2.2 Procedure for Term Loan Borrowing. The Borrower shall
give the Administrative Agent irrevocable notice (which notice must be received
by the Administrative Agent prior to 10:00 A.M., New York City time, (i) three
Business Days prior to the requested Term Loan Borrowing Date, if all or any
part of the Loans are to be Eurodollar Loans, or (ii) one Business Day prior to
such Term Loan Borrowing Date, otherwise) requesting that the Term Lenders make
the Term Loans on the Merger Date and specifying (x) the amount to be
<PAGE> 32
27
borrowed, (y) whether the borrowing is to be of Eurodollar Loans, Base Rate
Loans or a combination thereof and (z) if the borrowing is to be entirely or
partly Eurodollar Loans, the respective amounts of each such Type of Loan and
the respective lengths of the initial Interest Periods thereof; provided that
the initial Term Loans shall be made on the Closing Date and thereafter Term
Loans may be made two additional times prior to the Merger Date to prepay
Interim Loans as provided in Section 4.16(a) and to pay for Capital Stock of
Dawson tendered under the Tender Offer and on the Merger Date and the Term
Loans shall be allocated on a pro rata basis between the Tranche A Term Loans
and the Tranche B Term Loans. Each borrowing under the Term Loan Commitments
shall be in an amount equal to (x) in the case of Base Rate Loans, $1,000,000
or a whole multiple thereof and (y) in the case of Eurodollar Loans, $5,000,000
or a whole multiple of $1,000,000 in excess thereof. Upon receipt of any such
notice the Administrative Agent shall promptly notify each Term Lender thereof
and of the amount of Term Loans constituting Tranche A Term Loans and Tranche B
Term Loans, respectively. Not later than 12:00 Noon, New York City time, on
each Term Loan Borrowing Date each Term Lender shall make available to the
Administrative Agent at the Funding Office an amount in immediately available
funds equal to the Term Loan or Term Loans to be made by such Lender. The
Administrative Agent shall credit the account of the Borrower on the books of
such office of the Administrative Agent with the aggregate of the amounts made
available to the Administrative Agent by the Term Lenders in immediately
available funds.
2.3 Repayment of Term Loans. (a) The Tranche A Term Loan of
each Tranche A Lender shall mature in sixteen consecutive quarterly
installments commencing on the date fifteen months after the Closing Date, each
of which shall be in an amount equal to such Lender's Tranche A Term Percentage
multiplied by the percentage set forth below opposite such installment of the
Tranche A Term Loans outstanding on the Merger Date (after giving effect to any
Term Loans made on such date):
<TABLE>
<CAPTION>
Principal Amount
Installment of each Installment
----------- -------------------
<S> <C>
1 to 4 4%
5 to 8 6%
9 to 12 7%
13 to 16 8%
</TABLE>
(b) The Tranche B Term Loan of each Tranche B Lender shall
mature in nineteen consecutive quarterly installments commencing on the date
fifteen months after the Closing Date, each of which shall be in an amount
equal to such Lender's Tranche B Term Percentage multiplied by the percentage
set forth below opposite such installment of the Trance B Term Loans
outstanding on the Merger Date (after giving effect to any Term Loans made on
such date):
<TABLE>
<CAPTION>
Principal Amount
Installments of each Installment
------------ -------------------
<S> <C>
1 to 4 0.25%
5 to 8 0.25%
9 to 12 0.25%
</TABLE>
<PAGE> 33
28
<TABLE>
<S> <C>
13 to 16 0.25%
17 to 18 24.00%
19 48.00%
</TABLE>
(c) Notwithstanding the foregoing, the Term Loans shall be
paid in full on the Revolving Termination Date if the Revolving Termination
Date is not extended to the Scheduled Revolving Termination Date.
2.4 Revolving Commitments. (a) Subject to the terms and
conditions hereof, each Revolving Lender severally agrees to make revolving
credit loans ("Revolving Loans") to the Borrower from time to time during the
Revolving Commitment Period after the Term Loan Commitments have been fully
utilized in an aggregate principal amount at any one time outstanding which,
when added to such Lender's Percentage of the L/C Obligations then outstanding,
does not exceed the amount of such Lender's Revolving Commitment. During the
Revolving Commitment Period, the Borrower may use the Revolving Commitments by
borrowing, prepaying the Revolving Loans in whole or in part, and reborrowing,
all in accordance with the terms and conditions hereof.
(b) The Revolving Loans may from time to time be (i)
Eurodollar Loans, (ii) Base Rate Loans or (iii) a combination thereof, as
determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.5 and 2.11, provided that no Revolving Loan shall be
made as a Eurodollar Loan after the day that is one month prior to the
Scheduled Revolving Termination Date.
(c) The Revolving Commitments shall be permanently reduced
(and each Revolving Lender's Commitment shall be ratably reduced) on the third
and fourth anniversary of the Closing Date by the amount set forth opposite
such anniversary below:
<TABLE>
<CAPTION>
Anniversary Amount
----------- -----------
<S> <C>
Third $25,000,000
Fourth $25,000,000
</TABLE>
2.5 Procedure for Revolving Loan Borrowing. The Borrower may
borrow under the Revolving Commitments during the Revolving Commitment Period
on any Business Day after the Term Commitments have been fully utilized,
provided that the Borrower shall give the Administrative Agent irrevocable
notice (which notice must be received by the Administrative Agent prior to
12:00 Noon, New York City time, (a) three Business Days prior to the requested
Revolving Borrowing Date, if all or any part of the requested Revolving Loans
are to be Eurodollar Loans or (b) one Business Day prior to the requested
Borrowing Date, otherwise), specifying (i) the amount to be borrowed, (ii) the
requested Borrowing Date, (iii) whether the borrowing is to be of Eurodollar
Loans, Base Rate Loans, or a combination thereof and (iv) if the borrowing is
to be entirely or partly of Eurodollar Loans, the respective amounts of each
such Type of Loan and the respective lengths of the initial Interest Periods
therefor. Each borrowing under the Revolving Commitments shall be in an amount
equal to (x) in the case of Base Rate Loans, $1,000,000 or a whole multiple
thereof (or, if the then Available Revolving Commitments are less than
$1,000,000, such lesser amount) and (y) in the case of Eurodollar Loans,
$5,000,000 or a whole multiple of $1,000,000 in excess thereof. Upon receipt of
any such notice from the Borrower, the Administrative Agent shall promptly
notify each Lender thereof. Each Lender will make the amount of its pro rata
share of each borrowing available to the Administrative Agent for the account
of the Borrower at the office of the Administrative Agent specified in Section
10.2 prior to 11:00 A.M., New York City time, on the Borrowing Date
<PAGE> 34
29
requested by the Borrower in funds immediately available to the Administrative
Agent. The aggregate of the amounts made available to the Administrative Agent
by the Lenders will then be made available to the Borrower by the
Administrative Agent in accordance with the instructions of the Borrower in
like funds as received by the Administrative Agent.
2.6 Commitment Fees, etc. (a) The Borrower agrees to pay to
the Administrative Agent for the account of each Lender a commitment fee for
the period from and including the Closing Date to the last day of the Term Loan
Commitment Period or the Revolving Commitment Period, as applicable, computed
at the Commitment Fee Rate on the average daily amount of the unutilized Term
Loan Commitments and the Available Revolving Commitment, as applicable, of such
Lender during the period for which payment is made, payable quarterly in
arrears on the last day of each March, June, September and December and on the
last day of the Term Loan Commitment Period or the Revolving Commitment Period,
as applicable, commencing on the first of such dates to occur after the date
hereof.
(b) The Borrower agrees to pay to the Administrative Agent and
the Arranger the fees in the amounts and on the dates agreed to in writing from
time to time by the Borrower, the Administrative Agent and the Arranger.
(c) The Borrower agrees to pay to the Collateral Agent the
fees in the amount and on the dates agreed to in writing from time to time by
the Borrower and the Collateral Agent.
2.7 Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of the appropriate Lender the then unpaid principal amount of each Term
Loan of such Lender as provided in Section 2.2 and the unpaid principal amount
of each Revolving Loan of each such Lender on the last day of the Revolving
Commitment Period (or such earlier date on which the Loans become due and
payable pursuant to Section 8). The Borrower hereby further agrees to pay
interest on the unpaid principal amount of the Loans from time to time
outstanding from the date hereof until payment in full thereof at the rates per
annum, and on the dates, set forth in Section 2.13.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower to such
Lender resulting from each Loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Administrative Agent, on behalf of the Borrower, shall
maintain the Register pursuant to Section 10.6(e) and a subaccount therein for
each Lender, in which shall be recorded (i) the amount of each Loan made
hereunder, the Type thereof and each Interest Period applicable thereto, (ii)
the amount of any principal or interest due and payable or to become due and
payable from the Borrower to each Lender hereunder and (iii) both the amount of
any sum received by the Administrative Agent hereunder from the Borrower and
each Lender's share thereof.
(d) The entries made in the Register and the accounts of each
Lender maintained pursuant to Section 2.7(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made
to such Borrower by such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender a promissory note of the Borrower evidencing any Loans of such
Lender, substantially in the form agreed to by the Administrative Agent and the
Borrower with appropriate insertions as to date and principal amount (a
"Note"). A Note and the obligation evidenced thereby may be assigned or
otherwise transferred in whole or in part only by registration of such
assignment or transfer of such Note and the obligation evidenced thereby in the
Register (and each Note shall expressly so provide). Any assignment or
transfer of all or part of an obligation evidenced by a Note shall be
registered in the Register only upon surrender for registration of assignment
or transfer of the Note evidencing such obligation, accompanied by an
Assignment and Acceptance substantially in the form of Exhibit F duly executed
by the Assignor thereof, and thereupon one or more new Notes shall be issued to
the designated Assignee and the old Note shall be returned by the
Administrative Agent to the Borrower marked "cancelled". No assignment of a
Note and the obligation evidenced thereby shall be effective unless it shall
have been recorded in the Register by the Administrative Agent as provided in
this Section 2.7(e).
2.8 Optional Termination or Reduction of Revolving
Commitments. The Borrower shall have the right, upon not less than three
Business Days' notice to the Administrative Agent, to terminate the Revolving
Commitments or, from time to time, to reduce the amount of the Revolving
Commitments; provided that no such termination or reduction of Revolving
Commitments shall be permitted if, after giving effect thereto and to any
prepayments of the Revolving Loans made on the effective date thereof, the sum
of the Total Revolving Extensions of Credit would exceed the Total Revolving
Commitments. Any such reduction shall be in an amount equal to $5,000,000, or
a whole multiple thereof, and shall reduce permanently the Revolving
Commitments then in effect.
2.9 Optional Prepayments. The Borrower may at any time and
from time to time prepay the Loans, in whole or in part, without premium or
penalty, upon at least three Business Days' irrevocable notice to the
Administrative Agent by the Borrower, specifying the date and amount of
prepayment and whether the prepayment is of Eurodollar Loans, Base Rate Loans
or a combination thereof, and, if of a combination thereof, the amount
allocable to each, provided that if a Eurodollar Loan is prepaid on any day
other than the last day of the Interest Period applicable thereto the Borrower
shall also pay any amounts owing pursuant to Section 2.20. Upon receipt of any
such notice, the Administrative Agent shall promptly notify each Lender
thereof. If any such notice is given, the amount specified in such notice shall
be due and payable on the date specified therein, together with (except
Revolving Loans that are Base Rate Loans) accrued interest to such date on the
amount prepaid. Partial prepayments of Loans shall be in an aggregate principal
amount of $5,000,000 or a whole multiple thereof. Subject to subsection 2.10(g)
below, partial prepayments of the Term Loans shall be applied to the prepayment
of the Tranche A Term Loans and the Tranche B Term Loans ratably. Amounts to be
applied to the installments of the Tranche A Term Loans and the Tranche B Term
Loans shall be applied ratably in accordance with the outstanding amounts
thereof and such amount prepaid may not be reborrowed.
2.10 Mandatory Prepayments and Commitment Reductions. (a)
Unless the Required Prepayment Lenders shall otherwise agree, 100% of the Net
Cash Proceeds of the Senior Subordinated Notes (to the extent such Net Cash
Proceeds are not used to prepay the Put Facility) shall be applied on the date
such Net Cash Proceeds are received to the prepayment of the Term Loans (or
reduction of Term Loan Commitments) as set forth in Section 2.10(f).
(b) Unless the Required Prepayment Lenders shall otherwise
agree, if any
<PAGE> 35
30
Capital Stock shall be issued by the Borrower or any of its Subsidiaries, an
amount equal to 100% of the Net Cash Proceeds thereof until such Net Cash
Proceeds aggregate $75,000,000 and thereafter 75% of the Net Cash Proceeds
thereof shall be applied on the date of such issuance or incurrence toward the
prepayment of the Term Loans (or reduction of Term Loan Commitments) as set
forth in Section 2.10(f) provided that so long as no Event of Default has
occurred or is continuing pursuant to Sections 8(a), 8(e)(i), 8(e)(ii), 8(f) or
8(k), Net Cash Proceeds of Capital Stock (other than Disqualified Stock) issued
by the Borrower may be used to prepay the Put Facility and to the extent so
used shall not be required to be used as mandatory prepayments or Term Loan
Commitment reductions hereunder.
(c) Unless the Required Prepayment Lenders otherwise agree,
if, for any fiscal year of the Borrower commencing with the fiscal year ending
June 30, 1999, there shall be Excess Cash Flow, the Borrower shall, on the
relevant Excess Cash Flow Application Date, apply 75% of such Excess Cash Flow
toward the prepayment of the Term Loans as set forth in Section 2.10(f),
provided that if (i) the Consolidated Leverage Ratio as of the last day of the
fiscal year immediately prior to such Excess Cash Flow Application Date shall
be less than 3.75 to 1.00 or (ii) the Minimum Equity Event shall have occurred,
the Borrower shall be required to apply only 50% of such Excess Cash Flow
toward such prepayment of the Term Loans. Each such prepayment and commitment
reduction shall be made on a date (an "Excess Cash Flow Application Date") no
later than five days after the earlier of (i) the date on which the financial
statements of the Borrower referred to in Section 6.1(a), for the fiscal year
with respect to which such prepayment is made, are required to be delivered to
the Lenders and (ii) the date such financial statements are actually delivered.
Notwithstanding anything to the contrary in this Section 2.10(c), (i) if the
Borrower prior to June 30 in any calendar year changes its fiscal year to
December 31 of such year as permitted by Section 7.13, Excess Cash Flow
prepayments required hereunder for such fiscal year shall be calculated as if
the fiscal year ended on June 30 of such year and the prepayment for the fiscal
year ending December 31 of such year shall be based on the six month period
ending on such date and (ii) if the Borrower after June 30 of any calendar year
changes its fiscal year to December 31 of such year as permitted by Section
7.13, the prepayment based on Excess Cash Flow for the fiscal year ending on
December 31 of such year shall be based on the six month period ending on such
date.
(d) Unless the Required Prepayment Lenders otherwise agree, if
the Borrower or any of its Subsidiaries shall receive Net Cash Proceeds from
the Significant Disposition permitted under Section 7.6(d) (i) prior to the
Merger Loan Date, 100% of the Net Cash Proceeds thereof, or (ii) on or after
the Merger Loan Date, 75% of the Net Cash Proceeds thereof, shall be applied on
the date such Net Cash Proceeds are received toward the prepayment of the Term
Loans and the reduction of the Term Loan Commitments as set forth in Section
2.10(f).
(e) To the extent the Borrower or any of its Subsidiaries or
Excluded Subsidiaries is to receive Net Cash Proceeds which otherwise would be
required to be used to prepay the Put Facility (other than Net Cash Proceeds
permitted by this Agreement to be so applied) or the Senior Subordinated Notes,
such Net Cash Proceeds shall be applied (unless the Required Prepayment Lenders
shall otherwise agree) within three days after the receipt thereof toward the
prepayment of the Term Loans (or toward reduction of the Term Loan Commitments)
as set forth in Section 2.10(f).
(f) Amounts to be applied in connection with prepayments of
Loans and Commitment reductions made pursuant to this Section 2.10 shall be
applied, to the permanent reduction of Term Loan Commitments and then to
prepayment of the Term Loans. The application of any prepayment pursuant to
this Section 2.10 shall be made first to Base Rate
<PAGE> 36
31
Loans and second to Eurodollar Loans, provided that at the request of the
Borrower the application of any prepayment to any Eurodollar Loan may be
delayed until the end of an Interest Period (or Interest Periods) so that such
application does not result in the incurrence by any Lender of any loss or
expense under Section 2.20, and during such delay, the Administrative Agent
shall hold the amount of such prepayment in a cash collateral account. Each
prepayment of the Loans under this Section 2.10 shall be accompanied by accrued
interest to the date of such prepayment on the amount prepaid.
(g) Notwithstanding anything to the contrary in Section 2.09,
2.10(f) or 2.16, with respect to the amount of any optional or mandatory
prepayment described in Section 2.09 or Section 2.10 that is allocated to
Tranche B Term Loans (such amounts, the "Tranche B Prepayment Amount"), at any
time when Tranche A Term Loans remain outstanding, the Borrower will, in lieu
of applying such amount to the prepayment of Tranche B Term Loans on the date
specified in Section 2.09 or 2.10 for such prepayment, give the Administrative
Agent telephonic notice (promptly confirmed in writing) requesting that the
Administrative Agent prepare and provide to each Tranche B Lender a notice
(each, a "Prepayment Option Notice") as described below. As promptly as
practicable after receiving such notice from the Borrower, the Administrative
Agent will send to each Tranche B Lender a Prepayment Option Notice, which
shall be in the form of Exhibit I, and shall include an offer by the Borrower
to prepay on the date (each a "Prepayment Date") that is 10 Business Days after
the date of the Prepayment Option Notice, the relevant Term Loans of such
Lender by an amount equal to the portion of the Prepayment Amount indicated in
such Lender's Prepayment Option Notice as being applicable to such Lender's
Tranche B Term Loans. On the Prepayment Date, (i) the Borrower shall pay to
the relevant Tranche B Lenders the aggregate amount necessary to prepay that
portion of the outstanding Tranche B Term Loans in respect of which such
Lenders have accepted prepayment as described above (such Lenders, the
"Accepting Lenders"), (ii) the Borrower shall pay to the Tranche A Lenders an
amount equal to 100% of the portion of the Tranche B Prepayment Amount not
accepted by the Accepting Lenders, and such amount shall be applied to the
prepayment of the Tranche A Term Loans.
(h) Notwithstanding anything to the contrary contained
herein, on or prior to the Merger Date any amounts required to prepay the Loans
hereunder or to reduce the Commitment shall, at the option of the Borrower, be
reduced by an amount equal to up to the Sharing Percentage of the amount
otherwise required to be prepaid hereunder on such date provided such amount is
used to permanently reduce the principal amount of the Interim Loans provided
that the amount not so used is promptly used to prepay the Loans.
2.11 Conversion and Continuation Options. (a) The Borrower may
elect from time to time to convert Eurodollar Loans to Base Rate Loans by
giving the Administrative Agent at least two Business Days' prior irrevocable
notice of such election, provided that any such conversion of Eurodollar Loans
may only be made on the last day of an Interest Period with respect thereto.
The Borrower may elect from time to time to convert Base Rate Loans to
Eurodollar Loans by giving the Administrative Agent at least three Business
Days' prior irrevocable notice of such election. Any such notice of conversion
to Eurodollar Loans shall specify the length of the initial Interest Period
therefor. Upon receipt of any such notice, the Administrative Agent shall
promptly notify each Lender thereof. All or any part of outstanding Eurodollar
Loans and Base Rate Loans may be converted as provided herein, provided that
(i) no Loan under a particular Facility may be converted into a Eurodollar Loan
(A) when any Event of Default has occurred and is continuing and the
Administrative Agent has or the Majority Facility Lenders in respect of such
Facility have determined in its or their sole discretion not to permit such a
conversion or (B) having an Interest Period in excess of one month prior to the
date which is the earlier of (y) 180 days after the Closing Date or (z) the
date the initial syndication of Loans is completed by the Arranger and (ii) no
Revolving Loan, may
<PAGE> 37
32
be converted into a Eurodollar Loan after the date that is one month prior to
the Scheduled Revolving Termination Date, (iii) no Tranche A Term Loan may be
converted into a Eurodollar Loan after the date that is one month prior to the
fifth anniversary of the Closing Date, and (iv) no Tranche B Term Loans may be
converted into a Eurodollar Loan after the date that is one month prior to the
final maturity of the Tranche B Term Loans.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving irrevocable notice to the Administrative Agent, in accordance
with the applicable provisions of the term "Interest Period" set forth in
Section 1.1, of the length of the next Interest Period to be applicable to such
Loans, provided that no Eurodollar Loan under a particular Facility may be
continued as such (i) when any Event of Default has occurred and is continuing
and the Administrative Agent has or the Majority Facility Lenders under the
relevant Facility have determined in its or their sole discretion not to permit
such a continuation, (ii) in the case of Revolving Loans, after the date that
is one month prior to the Scheduled Revolving Termination Date, (iii) in the
case of Tranche A Term Loans, after the date that is one month prior to the
fifth anniversary of the Closing Date, or (iv) in the case of Tranche B Term
Loans, the date that is one month prior to the final maturity of the Tranche B
Term Loans; and provided, further, that if the Borrower shall fail to give any
required notice as described above in this paragraph or if such continuation is
not permitted pursuant to the preceding proviso such Loans shall be
automatically converted to Base Rate Loans on the last day of such then
expiring Interest Period.
2.12 Minimum Amounts and Maximum Number of Eurodollar
Tranches. Notwithstanding anything to the contrary in this Agreement, all
borrowings, conversions, continuations and optional prepayments of Loans
hereunder and all selections of Interest Periods hereunder shall be in such
amounts and be made pursuant to such elections so that, (a) after giving effect
thereto, the aggregate principal amount of the Loans comprising each Eurodollar
Tranche shall be equal to $5,000,000 or a whole multiple of $1,000,000 in
excess thereof and (b) no more than twelve Eurodollar Tranches in respect of
all Loans shall be outstanding at any one time.
2.13 Interest Rates and Payment Dates. (a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such
day plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per
annum equal to the Base Rate plus the Applicable Margin.
(c) If all or a portion of any principal of any Loan or
Reimbursement Obligations shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such amounts shall bear interest at 2%
above the rate otherwise applicable thereto from the date of such non-payment
until such overdue principal is paid in full (as well after as before
judgment). If all or a portion of any interest shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such amounts
shall bear interest at 2% above the rate otherwise applicable to the Loans or
Reimbursement Obligations on which such interest accrued from the date of such
non-payment until such overdue principal is paid in full (as well after as
before judgment). If all or a portion of any commitment fee or any other amount
payable hereunder shall not be paid when due (whether at the stated maturity,
by acceleration or otherwise), such amounts shall bear interest at a rate which
is 2% above the rate applicable to Base Rate Loans, in each case from the date
of such non-payment until such overdue commitment fee or other amount is paid
in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date, provided
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that interest accruing pursuant to paragraph (c) of this Section 2.13 shall be
payable from time to time on demand.
2.14 Computation of Interest and Fees. (a) Interest on Loans
and Reimbursement Obligations, commitment fees, letter of credit commissions
and interest on overdue interest, commitment fees and other amounts payable
hereunder shall be calculated on the basis of a 360-day year for the actual
days elapsed, except that, with respect to Base Rate Loans the rate of interest
on which is calculated on the basis of the Prime Rate, the interest thereon
shall be calculated on the basis of a 365- (or 366-, as the case may be) day
year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of each determination
of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from
a change in the Base Rate or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of the effective date and the amount of each
such change in interest rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error.
2.15 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and reasonable
means do not exist for ascertaining the Eurodollar Rate for such Interest
Period, or
(b) the Administrative Agent shall have received notice from
the Majority Facility Lenders in respect of the relevant Facility that the
Eurodollar Rate determined or to be determined for such Interest Period will
not adequately and fairly reflect the cost to such Lenders (as conclusively
certified by such Lenders) of making or maintaining their affected Loans during
such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to
the Borrower and the relevant Lenders as soon as practicable thereafter. If
such notice is given (x) any Eurodollar Loans requested to be made on the first
day of such Interest Period shall be made as Base Rate Loans, (y) any Loans
under the relevant Facility that were to have been converted on the first day
of such Interest Period to Eurodollar Loans shall be continued as Base Rate
Loans and (z) any outstanding Eurodollar Loans under the relevant Facility that
were to be continued on the first day of such Interest Period as Eurodollar
Loans shall be converted, on the first day of such Interest Period, to Base
Rate Loans. Until such notice has been withdrawn by the Administrative Agent,
no further Eurodollar Loans shall be made or continued as such, nor shall the
Borrower have the right to convert Loans under the relevant Facility to
Eurodollar Loans.
2.16 Pro Rata Treatment and Payments. (a) Each borrowing by
the Borrower from the Lenders hereunder, each payment by the Borrower on
account of any commitment fee and any reduction of the Commitments of the
Lenders shall be made pro rata according to the respective Percentages, as the
case may be, of the relevant Lenders.
(b) Except for payments made pursuant to Section 2.3, each
payment (including
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34
each prepayment) by the Borrower on account of principal of and interest on the
Term Loans shall be made pro rata according to the respective outstanding
principal amounts of the Term Loans then held by the Term Lenders (except as
otherwise provided in Section 2.10(g)). The amount of each principal
prepayment of the Term Loans shall be applied to reduce the then remaining
installments of the Tranche A Term Loans and Tranche B Term Loans, as the case
may be, pro rata based upon the then remaining principal amount thereof.
Amounts prepaid on account of the Term Loans may not be reborrowed.
(c) Each payment (including each prepayment) by the Borrower
on account of principal of and interest on the Revolving Loans shall be made
pro rata according to the respective outstanding principal amounts of the
Revolving Loans then held by the Lenders.
(d) Each payment made at any time when any amount hereunder is
due and payable shall be made pro rata according to the respective amounts then
due and payable to the relevant Lenders.
(e) All payments (including prepayments) to be made by the
Borrower hereunder whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 12:00 Noon, New York City time, on the due date thereof to the
Administrative Agent, for the account of the Lenders, at the Administrative
Agent's office specified in Section 10.2, in Dollars and in immediately
available funds. Payments received by the Administrative Agent after such time
shall be deemed to have been received on the next Business Day. The
Administrative Agent shall distribute such payments to the Lenders promptly
upon receipt in like funds as received. If any payment hereunder (other than
payments on the Eurodollar Loans) becomes due and payable on a day other than a
Business Day, such payment shall be extended to the next succeeding Business
Day. If any payment on a Eurodollar Loan becomes due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day unless the result of such extension would be to extend
such payment into another calendar month, in which event such payment shall be
made on the immediately preceding Business Day. In the case of any extension of
any payment of principal pursuant to the preceding two sentences, interest
thereon shall be payable at the then applicable rate during such extension.
(f) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make
the amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If such amount is not made available to
the Administrative Agent by the required time on the Borrowing Date therefor,
such Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Effective
Rate for the period until such Lender makes such amount immediately available
to the Administrative Agent. A certificate of the Administrative Agent
submitted to any Lender with respect to any amounts owing under this Section
2.16(f) shall be conclusive in the absence of manifest error. If such Lender's
share of such borrowing is not made available to the Administrative Agent by
such Lender within three Business Days of such Borrowing Date, the
Administrative Agent shall also be entitled to recover such amount with
interest thereon at the rate per annum applicable to Base Rate Loans hereunder,
on demand, from the Borrower (together with any amounts due under Section 2.20,
calculated as if such Lender's failure to fund such amount were a failure of
the Borrower to borrow such amount after having given notice of such
borrowing). Nothing herein shall be deemed to limit the rights of the Borrower
against any defaulting Lender.
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(g) Unless the Administrative Agent shall have been notified
in writing by the Borrower prior to the date of any payment being made
hereunder that the Borrower will not make such payment to the Administrative
Agent, the Administrative Agent may assume that the Borrower is making such
payment, and the Administrative Agent may, but shall not be required to, in
reliance upon such assumption, make available to the Lenders their respective
pro rata shares of a corresponding amount. If such payment is not made to the
Administrative Agent by the Borrower within three Business Days of such
required date, the Administrative Agent shall be entitled to recover, on
demand, from each Lender to which any amount which was made available pursuant
to the preceding sentence, such amount with interest thereon at the rate per
annum equal to the daily average Federal Funds Effective Rate. Nothing herein
shall be deemed to limit the rights of the Administrative Agent or any Lender
against the Borrower.
2.17 Illegality. Notwithstanding any other provision herein,
if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall
forthwith be suspended and (b) such Lender's Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans
on the respective last days of the then current Interest Periods with respect
to such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of
the then current Interest Period with respect thereto, the Borrower shall pay
to such Lender such amounts, if any, as may be required pursuant to Section
2.20.
2.18 Requirements of Law. (a) If after the date hereof the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof or compliance by any Lender with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:
(i) shall subject any Lender to any tax of any
kind whatsoever with respect to this Agreement, any Note, any Letter
of Credit, any Application or any Eurodollar Loan made by it, or
change the basis of taxation of payments to such Lender in respect
thereof (except for taxes covered by Section 2.19 and changes in the
rate of tax (whether characterized as income, franchise or other tax)
on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other
condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender on
an after-tax basis for such increased cost or reduced amount receivable. If any
Lender becomes entitled to claim any additional amounts pursuant to this
Section 2.18, it shall promptly notify the Borrower (with a copy to the
Administrative Agent) of the event by reason
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36
of which it has become so entitled.
(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter
of Credit to a level below that which such Lender or such corporation could
have achieved but for such adoption, change or compliance (taking into
consideration such Lender's or such corporation's policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time, after submission by such Lender to the Borrower (with a copy to
the Administrative Agent) of a written request therefor, the Borrower shall pay
to such Lender such additional amount or amounts as will compensate such Lender
on an after-tax basis for such reduction.
(c) If any Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify the Borrower
(with a copy to the Administrative Agent) of the event by reason of which it
has become so entitled. A certificate as to any additional amounts payable
pursuant to this Section 2.18, together with a calculation thereof in
reasonable detail, shall be submitted by the affected Lender to the Borrower
(with a copy to the Administrative Agent) and such certificate shall be
conclusive in the absence of manifest error. The obligations of the Borrower
pursuant to this Section 2.18 shall survive the termination of this Agreement
and the payment of the Notes and all other amounts payable hereunder.
2.19 Taxes. (a) All payments made by the Borrower under this
Agreement and the Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, excluding net income taxes and franchise taxes
(imposed in lieu of net income taxes) imposed on the Administrative Agent or
any Lender as a result of a present or former connection between the
Administrative Agent or such Lender and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing authority
thereof or therein (other than any such connection arising solely from the
Administrative Agent or such Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement or any
other Loan Document). If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings ("Non-Excluded Taxes") are required
to be withheld from any amounts payable to the Administrative Agent or any
Lender hereunder or under the Notes, the amounts so payable to the
Administrative Agent or such Lender shall be increased to the extent necessary
to yield to the Administrative Agent or such Lender (after payment of all
Non-Excluded Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Agreement and the Notes, provided,
however, that the Borrower shall make payments net of and after deduction for
Non-Excluded Taxes and shall not be required to increase any such amounts
payable to any Non-U.S. Lender (as defined below) that fails to comply with
Section 2.19(b). Whenever any Non-Excluded Taxes are payable by the Borrower,
as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for its own account or for the account of such Lender, as
the case may be, a certified copy of an original official receipt received by
the Borrower showing payment thereof. If the Borrower fails to pay any
Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Administrative Agent and
the Lenders for any Non-Excluded
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Taxes, incremental taxes, interest or penalties that may become payable by the
Administrative Agent or any Lender as a result of any such failure. The
agreements in this Section 2.19 shall survive the termination of this Agreement
and the payment of the Notes and all other amounts payable hereunder.
(b) Each Lender (or Transferee) that is not a corporation or
partnership created or organized in or under the laws of the United States, any
estate that is subject to federal income taxation regardless of the source of
its income or any trust which is subject to the supervision of a court within
the United States and the control of a United States fiduciary as described in
section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver to the
Borrower and the Administrative Agent (or, in the case of a Participant, to the
Lender from which the related participation shall have been purchased) on or
before the date on which it becomes a party to this Agreement (or, in the case
of a Participant, on or before the date on which such Participant purchases the
related participation) either:
(A) (x) two duly completed and signed copies of either
Internal Revenue Service Form 1001 (relating to such Non-U.S. Lender
and entitling it to a complete exemption from withholding of U.S.
Taxes on all amounts to be received by such Non-U.S. Lender pursuant
to this Agreement and the other Loan Documents) or Form 4224 (relating
to all amounts to be received by such Non-U.S. Lender pursuant to this
Agreement and the other Loan Documents), or successor and related
applicable forms, as the case may be, and (y) two duly completed and
signed copies of Internal Revenue Service Form W-8 or W-9, or
successor and related applicable forms, as the case may be; or
(B) in the case of a Non-U.S. Lender that is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code and that does
not comply with the requirements of clause (A) hereof, (x) a statement
in the form of Exhibit E (or such other form of statement as shall be
reasonably requested by the Borrower or the Administrative Agent from
time to time) to the effect that such Non-U.S. Lender is eligible for
a complete exemption from withholding of U.S. Taxes under Code Section
871(h) or 881(c), and (y) two duly completed and signed copies of
Internal Revenue Service Form W-8 or successor and related applicable
form.
Further, each Non-U.S. Lender agrees to deliver to the Borrower and the
Administrative Agent, and if applicable, the assigning Lender (or, in the case
of a Participant, to the Lender from which the related participation shall have
been purchased) two further duly completed and signed copies of such Forms
1001, 4224, W-8 or W-9, as the case may be, or successor and related applicable
forms, on or before the date that any such form expires or becomes obsolete and
promptly after the occurrence of any event requiring a change from the most
recent form(s) previously delivered by it to the Borrower or the Administrative
Agent (or, in the case of a Participant, to the Lender from which the related
participation shall have been purchased) in accordance with applicable United
States laws and regulations; unless, in any such case, any change in law or
regulation has occurred subsequent to the date such Lender became a party to
this Agreement (or in the case of a Participant, the date on which such
Participant purchased the related participation) which renders all such forms
inapplicable or which would prevent such Lender (or Participant) from properly
completing and executing any such form with respect to it and such Lender
promptly notifies the Borrower and the Administrative Agent (or, in the case of
a Participant, the Lender from which the related participation shall have been
purchased) if it is no longer able to deliver, or if it is required to withdraw
or cancel, any form or statement previously delivered by it pursuant to this
Section 2.19(b). A Non-U.S. Lender shall not be required to deliver any form or
statement pursuant to the immediately preceding sentences in this Section
2.19(b) that such Non-U.S. Lender is not
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legally able to deliver (it being understood and agreed that the Borrower shall
withhold or deduct such amounts from any payments made to such Non-U.S. Lender
that the Borrower reasonably determines are required by law and that payments
resulting from a failure to comply with this paragraph (b) shall not be subject
to payment or indemnity by the Borrower pursuant to Section 2.19(a)).
2.20 Indemnity. The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (c) the making of a prepayment of Eurodollar
Loans on a day which is not the last day of an Interest Period with respect
thereto, or the assignment of any Eurodollar Loan on a day which is not the
last day of an Interest Period with respect thereto as a result of the
replacement of a Lender pursuant to Subsection 2.23. Such indemnification
shall not exceed the sum of (i) an amount equal to the excess, if any, of (A)
the amount of interest which would have accrued on the amount so prepaid, or
not so borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans
provided for herein (excluding, however, the Applicable Margin included
therein, if any) over (B) the amount of interest (as reasonably determined by
such Lender) which would have accrued to such Lender on such amount by placing
such amount on deposit for a comparable period with leading banks in the
interbank eurodollar market plus (ii) any transaction costs of such Lender in
connection with the related funding or redeployment of funds. A certificate as
to any amounts payable pursuant to this Section 2.20, together with a
calculation thereof in reasonable detail, shall be submitted to the Borrower by
any affected Lender and such certificate shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and the payment of the Notes and all other amounts payable hereunder.
2.21 Change of Lending Office. Each Lender agrees that, upon
the occurrence of any event giving rise to the operation of Section 2.17,
2.18(a) or 2.19 with respect to such Lender, it will, if requested by the
Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Loans affected by such
event with the object of avoiding the consequences of such event; provided that
such designation is made on terms that, in the sole judgment of such Lender,
cause such Lender and its lending office(s) to suffer no material economic,
legal or regulatory disadvantage, and provided, further, that nothing in this
Section 2.21 shall affect or postpone any of the obligations of the Borrower or
the rights of any Lender pursuant to Section 2.17, 2.18(a) or 2.19.
2.22 Use of Proceeds. The Borrower shall use the proceeds of
the Loans only in the manner expressly contemplated by Section 4.16.
2.23 Replacement of Lenders. If no Event of Default then
exists, the Borrower may replace any Lender (the "Replaced Lender") if an event
occurs giving rise to the operation of Section 2.17 or Section 2.18, which
results in the Replaced Lender charging to Borrower increased costs in excess
of those being generally charged by the other Lenders and such Lender is not
able to eliminate the increased costs pursuant to Section 2.21. The Replaced
Lender shall be replaced with one or more banks, financial institutions, or
other entities which are reasonably acceptable to the Administrative Agent
(each a "Replacement Lender") under
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the terms set out in Section 10.6(c). Upon execution of the Assignment and
Acceptance referred to in Section 10.6(c), payment of amounts referred to in
Section 10.6(c), and delivery to the Replacement Lender of the appropriate Note
or Notes executed by Borrower, the Replacement Lender shall become a Lender
under this Agreement and the Replaced Lender shall no longer be a Lender under
this Agreement, except with respect to indemnification provisions under this
Agreement, which shall survive as to such Replaced Lender.
2.24 Reallocation of Commitments. At any time prior to 45 days
after the Closing Date, the Administrative Agent with the consent of the
Borrower (not to be unreasonably withheld) may reallocate the amount of the
Commitments among the Tranche A Term Commitments, the Tranche B Term
Commitments and the Revolving Commitments provided that (a) the aggregate
amount of the Revolving Commitments shall not be less than $150,000,00 and (b)
the aggregate amount of the Commitments and the Loans to be made hereunder
shall remain unchanged.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Prior to the date hereof, Norwest Bank
has issued the Letters of Credit listed on Schedule 3.1 (the "Existing Letters
of Credit"), and subject to the terms and conditions hereof, the Lender
designated as Issuing Lender hereunder, in reliance on the agreements of the
other Lenders set forth in Section 3.4(a), agrees to issue letters of credit
(together with the Existing Letters of Credit, "Letters of Credit") for the
account of the Borrower, or for the joint and several account of the Borrower
and any Subsidiary, on any Business Day during the Revolving Commitment Period
in such form as may be requested by the Borrower and approved from time to time
by the Issuing Lender; provided, that such approval may not be unreasonably
withheld, delayed or conditioned; and provided, further, that the Issuing
Lender shall have no obligation to issue any Letter of Credit if, after giving
effect to such issuance, (i) the L/C Obligations would exceed the L/C
Commitment or (ii) the aggregate amount of the Available Revolving Commitments
would be less than zero. Each Letter of Credit shall (i) be denominated in
Dollars, (ii) be either (x) a standby letter of credit issued to support (I)
obligations of the Borrower or any of its Subsidiaries, contingent or
otherwise, which finance the working capital or business needs of the Borrower
or its Subsidiaries or (II) performance obligations of the Borrower and its
Subsidiaries, in each case, incurred in the ordinary course of business (a
"Standby Letter of Credit"), or (y) a commercial letter of credit in respect of
the purchase of goods or services by the Borrower or any of its Subsidiaries in
the ordinary course of business (a "Commercial Letter of Credit"), (iii) expire
no later than five Business Days prior to the Scheduled Revolving Termination
Date and (iv) expire no later than 365 days after its date of issuance,
provided that any Letter of Credit with a 365-day duration may provide for the
renewal thereof at the election of the Borrower (in accordance with procedures
to be established by the Issuing Lender) for additional 365-day periods (which
shall not expire later than five Business Days prior to the Scheduled Revolving
Termination Date).
(b) Each Letter of Credit issued after the Closing Date shall
be subject to the Uniform Customs and, to the extent not inconsistent
therewith, the laws of the State of New York.
3.2 Procedure for Issuance of Letter of Credit. The Borrower
may from time to time request that the Issuing Lender issue a Letter of Credit
by delivering to the Issuing Lender at its address for notices specified herein
an Application therefor, completed to the satisfaction of the Issuing Lender,
and such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender
will process such Application and the certificates, documents and other papers
and
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information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other
papers and information relating thereto) by issuing the original of such Letter
of Credit to the beneficiary thereof or as otherwise may be agreed to by the
Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of
such Letter of Credit to the Borrower promptly following the issuance thereof.
The Issuing Lender shall promptly furnish to the Administrative Agent, which
shall in turn promptly furnish to the Lenders, notice of the issuance of each
Standby Letter of Credit (including the amount thereof). On each L/C Fee
Payment Date, the Issuing Lender shall promptly furnish to the Administrative
Agent, which shall in turn promptly furnish to the Lenders, notice of the
aggregate face amount of the Commercial Letters of Credit outstanding on such
date.
3.3 Fees, Commissions and Other Charges. (a) The Borrower
agrees that it will pay a commission on all outstanding Letters of Credit at a
rate per annum equal to 1/8 of 1% above the Applicable Margin then in effect
with respect to Loans that are Eurodollar Loans of the face amount of each such
Letter of Credit, of which 1/8 of 1% per annum will be a fronting fee for the
account of the Issuing Lender, and the remainder will be shared ratably among
the Revolving Lenders in accordance with their Revolving Percentages, payable
quarterly in arrears on each L/C Fee Payment Date after the issuance date.
(b) In addition to the foregoing fees and commissions, the
Borrower agrees that it shall pay or reimburse the Issuing Lender promptly upon
demand for such normal and customary costs and expenses as are incurred or
charged by the Issuing Lender in issuing, negotiating, effecting payment under,
or amending any Letter of Credit.
(c) The Administrative Agent shall, promptly following its
receipt thereof, distribute to the Issuing Lender and the L/C Participants all
fees and commissions received by the Administrative Agent for their respective
accounts pursuant to this Section.
3.4 L/C Participation. (a) Effective on the Closing Date in
respect of the Existing Letters of Credit, and effective on the date of
issuance thereof in respect of each Letter of Credit issued hereunder after the
Closing Date, the Issuing Lender in respect of each Letter of Credit
irrevocably agrees to grant and hereby grants to each L/C Participant, and, to
induce such Issuing Lender to issue Letters of Credit hereunder, each L/C
Participant irrevocably agrees to accept and purchase and hereby accepts and
purchases from such Issuing Lender, on the terms and conditions hereinafter
stated, for such L/C Participant's own account and risk an undivided interest
equal to such L/C Participant's Revolving Percentage in such Issuing Lender's
obligations and rights under such Letter of Credit and the amount of each draft
paid by such Issuing Lender thereunder. Each L/C Participant unconditionally
and irrevocably agrees with such Issuing Lender in respect of each Letter of
Credit that, if a draft is paid under any Letter of Credit issued by such
Issuing Lender for which such Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C Participant
shall pay to such Issuing Lender upon demand at such Issuing Lender's address
for notices specified herein an amount equal to such L/C Participant's
Revolving Percentage of the amount of such draft, or any part thereof, which is
not so reimbursed.
(b) If any amount required to be paid by any L/C Participant
to the Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed
portion of any payment made by the Issuing Lender under any Letter of Credit is
paid to the Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to the Issuing Lender on demand
an amount equal to the product of (i) such amount, times (ii) the
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daily average Federal Funds Effective Rate during the period from and including
the date such payment is required to the date on which such payment is
immediately available to the Issuing Lender, times (iii) a fraction the
numerator of which is the number of days that elapse during such period and the
denominator of which is 360. If any such amount required to be paid by any L/C
Participant pursuant to Section 3.4(a) is not made available to the Issuing
Lender by such L/C Participant within three Business Days after the date such
payment is due, the Issuing Lender shall be entitled to recover from such L/C
Participant, on demand, such amount with interest thereon calculated from such
due date at the rate per annum applicable to Loans that are Base Rate Loans
hereunder. A certificate of the Issuing Lender submitted to any L/C Participant
with respect to any amounts owing under this Section shall be conclusive in the
absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made
payment under any Letter of Credit and has received from any L/C Participant
its pro rata share of such payment in accordance with Section 3.4(a), the
Issuing Lender receives any payment related to such Letter of Credit (whether
directly from the Borrower or otherwise, including proceeds of collateral
applied thereto by the Issuing Lender), or any payment of interest on account
thereof, the Issuing Lender will distribute to such L/C Participant its pro
rata share thereof; provided that in the event that any such payment received
by the Issuing Lender shall be required to be returned by the Issuing Lender,
such L/C Participant shall return to the Issuing Lender the portion thereof
previously distributed by the Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. The Borrower
agrees to reimburse the Issuing Lender on each date on which the Issuing Lender
notifies the Borrower of the date and amount of a draft presented under any
Letter of Credit and paid by the Issuing Lender for the amount of (a) such
draft so paid and (b) any taxes, fees, charges or other costs or expenses
incurred by the Issuing Lender in connection with such payment. Each such
payment shall be made to the Issuing Lender at its address for notices
specified herein in lawful money of the United States and in immediately
available funds. Interest shall be payable to the Issuing Lender on any and all
amounts drawn under Letters of Credit from the date of such drawing until the
date three Business Days after receipt by the Borrower from the Issuing Lender
of notice of such drawing at the rate set forth in Section 2.13(b) for Loans,
and thereafter until payment in full at the rate set forth in Section 2.13(c).
3.6 Obligations Absolute. The Borrower's obligations under
this Section 3 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Borrower may have or have had against the Issuing Lender, any
beneficiary of a Letter of Credit or any other Person. The Borrower also agrees
with the Issuing Lender that, subject to Section 3.7, the Issuing Lender shall
not be responsible for, and the Borrower's Reimbursement Obligations under
Section 3.5 shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even though such
documents shall in fact prove to be invalid, fraudulent or forged, or any
dispute between or among the Borrower and any beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be transferred or
any claims whatsoever of the Borrower against any beneficiary of such Letter of
Credit or any such transferee. The Issuing Lender shall not be liable for any
error, omission, interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with any Letter of
Credit, except for errors or omissions found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of the Issuing Lender. The Borrower agrees
that any action taken or omitted by the Issuing Lender under or in connection
with any Letter of Credit or the related drafts or documents, if done in the
absence of gross negligence or willful misconduct and in accordance with the
standards of care specified in the Uniform Commercial Code of the
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State of New York, shall be binding on the Borrower and shall not result in any
liability of the Issuing Lender to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented
for payment under any Letter of Credit, the Issuing Lender shall promptly
notify the Borrower of the date and amount thereof. The responsibility of the
Issuing Lender to the Borrower in connection with any draft presented for
payment under any Letter of Credit shall, in addition to any payment obligation
expressly provided for in such Letter of Credit, be to determine whether the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.
3.8 Applications. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Arranger, the Administrative Agent, the
Collateral Agent and the Lenders to enter into this Agreement and to make the
Loans and issue or participate in the Letters of Credit, the Borrower hereby
represents and warrants to the Arranger, the Administrative Agent, the
Collateral Agent and each Lender that (provided that any representation or
warranty made with respect to Dawson and its Subsidiaries which relates to
matters which occurred prior to the Closing Date shall be deemed to be made to
the best of the knowledge of the Borrower):
4.1 Financial Condition. (a) The unaudited pro forma
consolidated balance sheet of the Borrower as at June 30, 1998 (including the
notes thereto) (the "Pro Forma Balance Sheet"), copies of which have heretofore
been furnished to each Lender, has been prepared giving effect (as if such
events had occurred on such date) to (i) the consummation of the Acquisition,
(ii) the consummation of the acquisitions listed on Schedule 7.9(c), (iii) the
issuance of notes or borrowing of loans under the Put Facility to occur on or
prior to the Closing Date, (iv) the Loans to be made on or prior to the Merger
Date and the use of proceeds thereof and (v) the payment of estimated fees and
expenses in connection with the foregoing. The Pro Forma Balance Sheet has
been prepared based on the best information available to the Borrower as of the
date of delivery thereof and, based upon such information, presents fairly in
all material respects on a pro forma basis the estimated consolidated financial
position of the Borrower as of June 30, 1998, assuming that the events
specified in the preceding sentence had actually occurred at such date. The
Pro Forma EBITDA Statement for the fiscal year ending June 30, 1998 a copy of
which has heretofore been furnished to each Lender, has been prepared giving
effect (as if such events had occurred on July 1, 1997) to the consummation of
the Acquisition and the acquisitions listed on Schedule 7.9(c). Such Pro Forma
EBITDA Statement has been prepared based on the best information available to
the Borrower as of the date of delivery thereof and, based on such information,
presents fairly in all material respects on a pro forma basis the Consolidated
EBITDA of the Borrower for the one-year period ended June 30, 1998.
(b) The audited consolidated balance sheets of the Borrower as
at June 30, 1997 and the related audited consolidated statements of income and
of cash flows for the fiscal year then ended, reported on by KPMG Peat Marwick
LLP, copies of which have heretofore been furnished to each Lender, are
complete and correct and present fairly in all material respects the
consolidated financial condition of the Borrower as at such dates, and the
consolidated results of operations and consolidated cash flows for the fiscal
years then
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ended.
(c) The unaudited consolidated balance sheet of the Borrower
as at June 30, 1998 and the related unaudited consolidated statements of income
and of cash flows for the fiscal year then ended, copies of which have
heretofore been furnished to each Lender, are complete and correct and present
fairly in all material respects the consolidated financial condition of the
Borrower as at such date, and the consolidated results of operations and
consolidated cash flows for the fiscal year then ended and shall not differ in
any material respect from the audited consolidated balance sheet of the
Borrower as at June 30, 1998 and the related unaudited consolidated statements
of income and of cash flows for the fiscal year then ended to be delivered
pursuant to Section 6.1
All financial statements described in Section 4.1(b) and (c), including the
related schedules and notes thereto, if any, have been prepared in accordance
with GAAP applied consistently throughout the periods involved (except as
approved by such accountants and as disclosed therein). Except for contingent
obligations incurred in the ordinary course of business, the Borrower had at
the date of the most recent audited balance sheet referred to above no material
undisclosed liabilities, material Guarantee Obligations, material contingent
liability or material liability for taxes, nor any material long-term lease or
material unusual forward or long-term commitment, including, without
limitation, any interest rate or foreign currency swap or exchange transaction,
which is not reflected in such balance sheet or in the notes thereto. During
the period from June 30, 1997 to and including the date hereof there has been
no sale, transfer or other disposition by the Borrower or any of its
Consolidated Subsidiaries of any material part of their business or property.
(d) The audited consolidated balance sheet of Dawson and its
Subsidiaries as at March 31, 1998 and the related consolidated statements of
income and of cash flows for the fiscal year ended on such date, reported on by
and accompanied by an unqualified report from KPMG Peat Marwick LLP contained
in the annual report of Dawson on Form 10-K filed with the SEC, present fairly
the consolidated financial condition of Dawson as at such date, and the
consolidated results of its operations and its consolidated cash flows for the
fiscal year then ended. The unaudited consolidated balance sheet of Dawson and
its Subsidiaries as at June 30, 1998, and the related statements of income and
cash flows for the three month period ended on such date contained in the
quarterly report of Dawson on Form 10-Q filed with the SEC, present fairly the
consolidated financial condition of Dawson as at such date, and the
consolidated results of its operations and its consolidated cash flows for the
three month period then ended (subject to normal year-end audit adjustments).
To the best of the Borrower's knowledge, all such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP applied consistently throughout the periods involved
(except as approved by the aforementioned accountants and disclosed therein).
Except for contingent obligations incurred in the ordinary course of business,
to the best of the Borrower's knowledge, the balance sheets referred to above
reflect any material Guarantee Obligations, material contingent liabilities and
material liabilities for taxes, and any material long-term leases and material
unusual forward or long-term commitments, including, without limitation, any
interest rate or foreign currency swap or exchange transaction or other
obligation in respect of derivatives, in each case as of the date of such
balance sheets. During the period from March 31, 1998 to and including the
date hereof, there has been no disposition by Dawson or any of its Subsidiaries
of any material part of its business or property.
4.2 No Change. (a) Since June 30, 1998, there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect, and (b) during the period from June 30, 1998 to and
including the date hereof no dividends or other
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44
distributions have been declared, paid or made upon the Capital Stock of the
Borrower nor has any of the Capital Stock of the Borrower been redeemed,
retired, purchased or otherwise acquired for value by the Borrower. Without
limiting the representation in the preceding sentence, since June 30, 1998
there has been no development or event which, to the best knowledge of the
Borrower, has had or could reasonably be expected to have a material adverse
effect on the business, operations, property, condition (financial or
otherwise) or prospects of Dawson and its Subsidiaries taken as a whole.
4.3 Corporate Existence; Compliance with Law. Each Loan Party
(a) is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, except (in the case of any Subsidiary)
where the failure to do so could not reasonably be expected to have a Material
Adverse Effect, (b) has the power and authority, and the legal right, to own
and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, except where the failure
to do so could not reasonably be expected to have a Material Adverse Effect,
(c) is duly qualified and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified could not reasonably be expected to have a Material Adverse Effect
and (d) is in compliance with all Requirements of Law except to the extent that
the failure to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations.
Each Loan Party has the power and authority, and the legal right, to make,
deliver and perform each Loan Document to which it is a party and, in the case
of the Borrower, to borrow hereunder. Each Loan Party has taken all necessary
action to authorize the execution, delivery and performance of the Loan
Documents to which it is a party and, in the case of the Borrower, to authorize
the borrowings on the terms and conditions of this Agreement and the Notes. No
material consent or authorization of, filing with, notice to or other act by or
in respect of, any Governmental Authority or any other Person is required in
connection with (i) the transactions contemplated hereby including, without
limitation, the consummation of the Acquisition and (ii) the borrowings
hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the Loan Documents, except for those
obtained on or before the date of this Agreement and those listed in Schedule
4.4, except (x) the filings referred to in Section 4.19, (ii) prior to the
Merger Date, the approval of the Merger by the Dawson shareholders and (iii)
prior to the Merger Loan Date, the approval by the Subsidiaries of Dawson of
the transactions to be undertaken by them pursuant to Section 6.10. Each Loan
Document has been duly executed and delivered on behalf of each Loan Party
thereto. This Agreement constitutes, and each other Loan Document upon
execution will constitute, a legal, valid and binding obligation of each Loan
Party thereto, enforceable against each such Loan Party in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
4.5 No Legal Bar. The execution, delivery and performance of
this Agreement and the other Loan Documents, the issuance of Letters of Credit,
the borrowings hereunder and the use of the proceeds thereof will not violate
any Requirement of Law or Contractual Obligation of any Loan Party and will not
result in, or require, the creation or imposition of any Lien on any of their
respective properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation (other than the Liens created by the Security
Documents).
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4.6 No Material Litigation. Except Midland Acquisition Corp.
v. Dawson Production Services, Inc. et al. (W.D. Tex. Midland/Odessa), which
suit shall be promptly dismissed by the Borrower without prejudice, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against the Borrower or any of its Subsidiaries or against any
of its or their respective properties or revenues (a) with respect to any of
the Loan Documents or any of the transactions contemplated hereby or thereby or
(b) which could reasonably be expected to have a Material Adverse Effect.
4.7 No Default. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a
Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.
4.8 Ownership of Property; Liens. Each of the Borrower and its
Domestic Subsidiaries has title in fee simple to, or a valid leasehold interest
in, all its real property, and good title to, or a valid leasehold interest in,
all its other property, and none of such property is subject to any Lien except
as permitted by Section 7.3. As of the date hereof, the Borrower and its
Subsidiaries (other than Argentine Subsidiaries) have no fee interests in any
material real property other than the Mortgaged Property, the Oil and Gas
Properties and the real property described on Schedule 4.8.
4.9 Intellectual Property. The Borrower and each of its
Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of its
business as currently conducted, except for those the failure to own or license
which could not reasonably be expected to have a Material Adverse Effect
(collectively, the "Intellectual Property"). No material claim has been
asserted and is pending by any Person challenging or questioning the use of any
Intellectual Property or the validity or effectiveness of any Intellectual
Property, nor does the Borrower know of any valid basis for any such claim. To
the Borrower's knowledge, the use of Intellectual Property by the Borrower and
its Subsidiaries does not infringe on the rights of any Person where such
infringement could reasonably be expected to have a Material Adverse Effect.
4.10 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrower or any of its Subsidiaries could
reasonably be expected to have a Material Adverse Effect.
4.11 Taxes. Each of the Borrower and its Domestic
Subsidiaries, and to the knowledge of the Borrower, its Argentine Subsidiaries
have filed or caused to be filed all material Federal, state and other tax
returns which are required to be filed and has paid all taxes shown to be due
and payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any the amount or validity
of which are currently being contested in good faith by appropriate proceedings
and with respect to which reserves in conformity with GAAP have been provided
on the books of the Borrower); no material tax Lien has been filed; and, to the
knowledge of the Borrower, no claim is being asserted, with respect to any
material tax, fee or other charge.
4.12 Federal Regulations. No part of the proceeds of any
Loans will be used for any purpose which violates the provisions of the
Regulations T, U or X of the Board.
4.13 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan, and
each Plan has complied in all material respects with the applicable provisions
of ERISA and the Code. No termination of a Single Employer Plan has occurred,
and no Lien in favor of the PBGC or a Plan has arisen, during such five-year
period. The present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits by a material amount. Neither the Borrower nor any
Commonly Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan which has resulted or could reasonably be expected to result
in a liability under ERISA which could reasonably be expected to result in a
Material Adverse Effect, and neither the Borrower nor any Commonly Controlled
Entity would become subject to any liability under ERISA which could reasonably
be expected to result in a Material Adverse Effect if the Borrower or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which this
representation is made or deemed made. To the knowledge of the Borrower and the
Commonly Controlled Entities, no such Multiemployer Plan is in Reorganization
or Insolvent. The present value (determined using actuarial and other
assumptions which are reasonable in respect of the benefits provided and the
employees participating) of the liability of the Borrower and each Commonly
Controlled Entity for post retirement benefits to be provided to their current
and former employees under Plans which are welfare benefit plans (as defined in
Section 3(1) of ERISA) does not, in the aggregate, exceed the assets under all
such Plans allocable to such benefits by an amount in excess of $1,000,000.
4.14 Investment Company Act; Other Regulations. No Loan Party
is an "investment company" within the meaning of the Investment Company Act of
1940, as amended. No Loan Party is subject to regulation under any Requirement
of Law (other than Regulation X of the Board) which limits its ability to incur
Indebtedness.
4.15 Subsidiaries. Schedule 4.15 sets forth a complete list of
all the direct and indirect Subsidiaries of the Borrower on the Closing Date
after giving effect to the consummation of the Acquisition, and Schedule 4.15
shows, as to each such Subsidiary, its jurisdiction of its incorporation, its
authorized capitalization and the ownership of Capital Stock of such
Subsidiary.
4.16 Purpose of Loans; Limitations on Use. (a) Up to
$490,000,000 of the proceeds of the Loans may be used on and after the Closing
Date (i) to fund the Acquisition and to pay transaction costs associated
therewith, (ii) to refinance certain indebtedness of the Borrower, Dawson and
their respective subsidiaries (including, without limitation the Existing
Credit Agreement and the Interim Loans), (iii) to pay fees and expenses in
connection with the Loan Documents, (iv) to pay holders of Dawson 9-3/8% Notes
who have put their notes in connection with the Dawson Change of Control on the
date such payment is to be made provided such date is no later than the Dawson
Put Termination Date and (v) to finance the acquisitions listed on Schedule
7.9(c) provided that such acquisitions are consummated within 60 days of the
Closing Date. Notwithstanding the foregoing, any prepayment of the Interim
Loans with the proceeds of Loans hereunder shall take place on the same day as
payment is made under clause (iv) above (or the Dawson Put Termination Date if
no Dawson 9-3/8% Notes have been put by the Dawson Put Termination Date and if
no Dawson 9-3/8% Notes may thereafter be put as a result of a Dawson Change of
Control) and only to the extent that the principal amount of the Interim Loans
exceed 101% of the principal amount of the Dawson 9-3/8% Notes put (if any) in
connection with the Dawson Change of Control plus interest, fees and expenses
paid in connection therewith.
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(b) The balance of proceeds of the Loans may be used for
working capital purposes and after the Merger Loan Date may be used to finance
Permitted Acquisitions and capital expenditures, to finance the repurchase from
time to time the outstanding Capital Stock of the Borrower to the extent
permitted by Section 7.7 and for general corporate purposes of the Borrower and
its Subsidiaries (including Excluded Subsidiaries) in the ordinary course of
business; provided, that the amount of proceeds of the Revolving Loans which
may be used for Permitted Acquisitions of oil and gas properties shall be
limited to an amount equal to the lesser of (a) $25,000,000 and (b) 65% of the
value of the oil and gas properties of Odessa Exploration Incorporated (after
giving effect to any such Permitted Acquisition), which value shall be
calculated as the present value discounted at 10% of future net revenue
relating to all proved developed producing reserves and proved undeveloped
reserves from such properties as at the most recent fiscal year end. In
addition, if at least 90% of the original outstanding principal amount of the
Convertible Subordinated Debentures or the 1997 Convertible Subordinated Notes
shall have been converted into common stock of the Borrower, the Borrower may
use proceeds of the Revolving Loans to repurchase or redeem the remaining
outstanding Convertible Subordinated Debentures or 1997 Convertible
Subordinated Notes, as applicable, as permitted by Section 7.10.
4.17 Environmental Matters. Other than exceptions to any of
the following that could not, individually or in the aggregate, reasonably be
expected to give rise to a Material Adverse Effect:
(a) the Borrower and each of its Subsidiaries: (i) are, and to
the knowledge of the executive management of the Borrower within the period of
all applicable statutes of limitation have been, in compliance with all
applicable Environmental Laws; (ii) hold all Environmental Permits (each of
which is in full force and effect) required for any of their current operations
or for any property owned, leased, or otherwise operated by any of them; (iii)
are, and to the knowledge of the executive management of the Borrower within
the period of all applicable statutes of limitation have been, in compliance
with all of their Environmental Permits; and (iv) reasonably believe that: each
of their Environmental Permits required for their continued operations will be
timely renewed and complied with, without material expense; any additional
Environmental Permits that may be required of any of them will be timely
obtained and complied with, without material expense; and compliance with any
Environmental Law that is or is reasonably expected by the Borrower's executive
management to become applicable to any of them will be timely attained and
maintained, without material expense.
(b) To the knowledge of the executive management of the
Borrower, Materials of Environmental Concern are not present at, on, under, in,
or about any real property now or formerly owned, leased or operated by the
Borrower or any of its Subsidiaries or at any other location (including,
without limitation, any location to which Materials of Environmental Concern
have been sent for re-use or recycling or for treatment, storage, or disposal)
which could reasonably be expected to (i) give rise to liability of the
Borrower or any of its Subsidiaries under any applicable Environmental Law or
otherwise result in costs to the Borrower or any of its Subsidiaries, or (ii)
interfere with the continued operations of the Borrower or any of its
Subsidiaries, or (iii) impair the fair saleable value of any real property
owned or leased by the Borrower or any of its Subsidiaries.
(c) There is no judicial, administrative, or arbitral
proceeding (including any notice of violation or alleged violation) under or
relating to any Environmental Law to which the Borrower or any of its
Subsidiaries is, or to the knowledge of the executive management of the
Borrower will be, named as a party that is pending or, to the knowledge of the
executive management of the Borrower, threatened.
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(d) Neither the Borrower nor any of its Subsidiaries has
received any written request for information, or been notified that it is a
potentially responsible party under or relating to the federal Comprehensive
Environmental Response, Compensation, and Liability Act or any similar
Environmental Law.
(e) Neither the Borrower nor any of its Subsidiaries has
entered into or agreed to any consent decree, order, or settlement or other
agreement, nor is subject to any judgment, decree, or order or other agreement,
in any judicial, administrative, arbitral, or other forum, relating to
compliance with or liability under any Environmental Law.
(f) To the knowledge of the executive management of the
Borrower, neither the Borrower nor any of its Subsidiaries has assumed or
retained, by contract or operation of law, any liabilities of any kind, fixed
or contingent, known or unknown, under or relating to any Environmental Law
except for contractual indemnities given in the ordinary course of business and
consistent with the Borrower's past business practice and with general practice
in the oil and gas well service industry.
For purposes of Section 8, each of the foregoing representations and warranties
contained in this Section 4.17 that is qualified by the knowledge of the
executive management of the Borrower shall be deemed not to be so qualified.
4.18 Accuracy of Information. No statement or information
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum or any other document, certificate or statement
furnished to the Arranger, the Administrative Agent or the Lenders, by or on
behalf of any Loan Party for use in connection with the transactions
contemplated by this Agreement or the other Loan Documents, contained as of the
date such statement, information, document or certificate was so furnished any
untrue statement of a material fact or, with all such statements and
information being taken as a whole, omitted to state a material fact necessary
in order to make the statements contained herein or therein not misleading. It
is understood that no representation or warranty is made concerning the
forecasts, estimates, pro forma information, projections and statements as to
anticipated future performance or conditions, and the assumptions on which they
were based contained in any such information, reports, financial statements,
exhibits or schedules, except that as of the date such forecasts, estimates,
pro forma information, projections and statements were generated, such
forecasts, estimates, pro forma information, projections and statements were
based upon good faith estimates and assumptions believed by management of the
Borrower and its Subsidiaries to be reasonable at such time. There is no fact
known to the executive management of the Borrower that could reasonably be
expected to have a Material Adverse Effect that has not been expressly
disclosed herein, in the other Loan Documents, or in such other documents,
certificates and statements furnished to the Administrative Agent and the
Lenders for use in connection with the transactions contemplated hereby and by
the other Loan Documents.
4.19 Security Documents. (a) The Master Guarantee and
Collateral Agreement is effective to create in favor of the Collateral Agent,
for the benefit of the Lenders, a security interest which has attached (as that
term is used in Section 9-203 of the New York UCC) in the Investment Property
and other instruments, negotiable documents, chattel paper and money described
therein, to the extent that the Loan Parties to the Master Guaranty and
Collateral Agreement have rights in such Collateral, and proceeds thereof and,
when the Pledged Notes and the stock certificates representing the Pledged
Stock described therein and other instruments, negotiable documents, chattel
paper and money described therein are delivered to the Collateral Agent, the
Master Guarantee and Collateral Agreement shall constitute a perfected first
priority Lien on, and security interest in, all right, title and interest of
the relevant
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pledgor in such Investment Property and other instruments, negotiable
documents, chattel paper and money and the proceeds thereof, as security for
the Obligations (as defined in the Master Guarantee and Collateral Agreement),
in each case prior and superior in right to any other Person, except for
inchoate tax liens for obligations to be paid in the ordinary course of
business; and except that (x) until the Merger Date, the Borrower's obligations
with respect to the Interim Loans will also be secured by such Collateral as
provided in the Loan Documents and (y) after the Merger Date, the Borrower's
obligations under the Dawson Indenture will be secured by such Collateral as
provided in the Loan Documents.
(b) The Master Guarantee and Collateral Agreement is effective
to create in favor of the Collateral Agent, for the benefit of the Lenders, a
security interest which has attached (as that term is used in Section 9-203 of
the New York UCC) in the Collateral described therein (other than the
Collateral described in Section 4.19(a)), to the extent that the Loan Parties
to the Master Guarantee and Collateral Agreement have rights in such
Collateral, and proceeds thereof, and when financing statements in appropriate
form are properly filed (with all required filing fees being paid) in the
offices specified on Schedule 3 of the Master Guarantee and Collateral
Agreement and, with respect to vehicles included in the Collateral and covered
by certificates of title issued by any State, when the security interest of the
Collateral Agent has been noted on such certificate of title in accordance with
the certificate of title laws of such State, the Master Guarantee and
Collateral Agreement shall constitute a perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in substantially
all of such Collateral and the proceeds thereof, as security for the
Obligations (as defined in the Master Guarantee and Collateral Agreement), in
each case prior and superior in right to any other Person, other than with
respect to Liens expressly permitted by Section 7.3 and other than as provided
in clauses (x) and (y) of Section 4.19(a).
(c) Each Mortgage is effective to create in favor of the
Collateral Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and each
Mortgage, which has been executed and delivered by the relevant Loan Party, and
properly filed and recorded (with all required filing and recording fees being
paid) in the office(s) specified on Schedule 4.19(c), constitutes a Lien on,
and security interest in, all right, title and interest of the Loan Parties in
the Mortgaged Property properly described therein, as security for the
Obligations (as defined in the relevant Mortgage), in each case prior and
superior in right to any other Person, other than with respect to Liens
expressly permitted by Section 7.3 and other than as provided in clauses (x)
and (y) of Section 4.19(a).
(d) Each Oil and Gas Mortgage is effective to create in favor
of the Collateral Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the Oil and Gas Properties described therein and each Oil
and Gas Mortgage, which has been executed and delivered by the relevant Loan
Party, and properly filed and recorded (with all required filing and recording
fees being paid) in the office(s) specified on Schedule 4.19(d), constitutes a
perfected Lien on, and security interest in, all right, title and interest of
the Loan Parties in the Oil and Gas Property properly described therein, as
security for the Obligations (as defined in the relevant Oil and Gas Mortgage),
in each case prior and superior in right to any other Person, other than with
respect to Liens expressly permitted by Section 7.3 and other than as provided
in clauses (x) and (y) of Section 4.19(a).
4.20 Solvency. The Borrower, its Subsidiaries and the Excluded
Subsidiaries, taken as a whole, are, and after giving effect to the incurrence
of all Indebtedness and the Acquisition and obligations being incurred in
connection herewith will be, Solvent.
4.21 Labor Matters. There are no strikes pending or, to the
knowledge of the Borrower, threatened against the Borrower or any of its
Subsidiaries which, individually or in
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the aggregate, could reasonably be expected to have a Material Adverse Effect.
The hours worked and payments made to employees of the Borrower and each of its
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable Requirement of Law, except to the extent such violations could
not, individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect. All material payments due from the Borrower or any of
its Subsidiaries on account of wages and employee health and welfare insurance
and other benefits have been paid or accrued as a liability on the books of the
Borrower or such Subsidiary.
4.22 Indentures. (a) All Indebtedness of the Borrower
hereunder constitutes "Senior Indebtedness" within the meaning of the Indenture
and the 1997 Indenture.
(b) After the Merger Date, all Indebtedness of the Borrower
hereunder will constitute "Senior Indebtedness" within the meaning of the Put
Facility and the Senior Subordinated Notes.
4.23 Excluded Subsidiaries. As of the Closing Date the
Borrower is in the process of dissolving all Excluded Subsidiaries listed in
clause (a) of the definition of Excluded Subsidiaries in Section 1.1, and the
Borrower expects to dissolve the Excluded Subsidiaries listed in clauses (c)
and (d) of the definition of Excluded Subsidiaries in Section 1.1 in the
ordinary of business when the assets of such corporations are disposed of.
4.24 Oil and Gas Properties. The Oil and Gas Properties
described in Schedule 1.1C constitute 80% of the value of the proved developed
producing and proved undeveloped reserves of Odessa Exploration Incorporated on
the Closing Date. For purposes of this Section, the value of such reserves
shall be calculated as the present value discounted at 10% of future revenue
relating to such reserves.
4.25 Year 2000 Matters. Any reprogramming required to permit
the proper functioning (but only to the extent that such proper functioning
would otherwise be impaired by the occurrence of the year 2000) in and
following the year 2000 of computer systems and other equipment containing
embedded microchips, in either case owned or operated by the Borrower or any of
its Subsidiaries (including any such systems and other equipment supplied by
others or with which the computer systems of the Borrower or any of its
Subsidiaries interface), and the testing of all such systems and other
equipment as so reprogrammed, will be completed by July 1, 1999. The costs to
the Borrower and its Subsidiaries that have not been incurred as of the date
hereof for such reprogramming and testing and for the other reasonably
foreseeable consequences to them of any improper functioning of other computer
systems and equipment containing embedded microchips due to the occurrence of
the year 2000 could not reasonably be expected to result in a Default or Event
of Default or to have a Material Adverse Effect. Except for any reprogramming
referred to above, the computer systems of the Borrower and its Subsidiaries
are and, with ordinary course upgrading and maintenance, will continue for the
term of this Agreement to be, sufficient for the conduct of their business as
currently conducted.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Effectiveness and Loans on the Closing Date.
The effectiveness of the changes to the Existing Credit Agreement made pursuant
to this Agreement and the agreement of each Lender to make the Loans requested
to be made by it are subject to the satisfaction, prior to or concurrently with
the making of such Loans on the Closing Date, of the following conditions
precedent:
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(a) Loan Documents. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by a duly authorized
officer of the Borrower, with a counterpart or a conformed copy for each
Lender, (ii) the Master Guarantee and Collateral Agreement, executed and
delivered by a duly authorized officer of the parties thereto, with a
counterpart or a conformed copy for each Lender, (iii) the Intercreditor
Agreement, executed and delivered by a duly authorized officer of the parties
thereto, (iv) the Mortgage Amendments and the (v) Oil and Gas Mortgage
Amendments.
(b) Related Agreements. The Administrative Agent shall have
received, with a copy for each Lender, true and correct copies, certified as to
authenticity by the Borrower, of (i) the Acquisition Documentation, (ii) the
Interim Loan Agreement and (iii) the Insurance Policies (or certificates
evidencing the effectiveness of such Insurance Policies and the material terms
thereof).
(c) Fees. The Lenders, Arranger and the Administrative Agent
shall have received all fees required to be paid, and all expenses for which
invoices have been presented, on or before the Closing Date.
(d) Put Facility. Prior to, or simultaneously with, the
Closing Date, the Borrower shall have received (i) $150,000,000 of gross
proceeds from the Interim Loans and (ii) an engagement letter (acceptable to
the Administrative Agent) providing for the refinancing thereof from the
proceeds of the issuance of Senior Subordinated Notes.
(e) Acquisition. The following transactions shall have been
consummated (and the Administrative Agent shall have received a certificate of
the Borrower to such effect, accompanied by copies of any documentary evidence
thereof reasonably requested by the Administrative Agent):
(i) all conditions precedent to the consummation of
the Tender Offer set forth in the Tender Offer Documents shall
have been satisfied or waived with the consent of the
Administrative Agent;
(ii) since the date thereof, the terms of the Tender
Offer and the Tender Offer Documents shall not have been
amended, waived or modified as to price, consideration,
conditions, termination or expiration or in any other material
respect without the prior approval of the Administrative
Agent;
(iii) since the date thereof, (A) the terms of the
Merger Agreement shall not have been amended, waived or
modified as to price, consideration, conditions, termination
or expiration or in any other material respect without the
prior approval of the Administrative Agent, and (B) the Board
of Directors of Dawson shall not have withdrawn their approval
thereof;
(iv) the Borrower, together with its Subsidiaries,
shall, concurrently with the funding of the initial Loans
hereunder, have acquired at least 51% of the shares of the
common stock of Dawson (or such higher percentage of the
common and other Capital Stock of Dawson as is necessary under
applicable Requirements of Law in order to, without the
affirmative vote of any other holder of capital stock of
Dawson, (A) permit the Merger to be consummated on or prior to
the date which is 150 days after the Closing Date and (B)
immediately appoint a majority of the Board of Directors of
Dawson or such higher number of directors as is required to
approve the Merger independently of the votes of any
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other Dawson shareholders);
(v) there shall be no material legal impediments to
consummation of the Merger;
(vi) all required actions shall have been taken so
that (a) the applicable state anti-takeover law shall be
inapplicable to the Acquisition and (b) any preferred stock
purchase rights or other "poison pill" arrangements of Dawson
(including, without limitation, the Rights Agreement, between
Dawson and Harris Trust Company of New York, as rights agent,
dated as of September 11, 1997) shall not have become, and
shall not become, exercisable;
(vii) all governmental and third party approvals
(including, without limitation, Hart-Scott-Rodino clearance)
necessary or, in the reasonable discretion of the
Administrative Agent, advisable in connection with the
Acquisition, this Agreement and the financings contemplated
hereby and the continuing operations of the Borrower and its
Domestic Subsidiaries shall have been obtained and be in full
force and effect, and all applicable waiting periods shall
have expired without any action being taken or threatened by
any competent authority which would restrain, prevent or
otherwise impose adverse conditions on the Acquisition or the
continuing operations of the Borrower;
(viii) there shall be in place no injunction or other
prohibition against the consummation of the Acquisition or the
financing contemplated hereby in effect or threatened, and no
litigation or proceeding pending or threatened which seeks to
enjoin the Acquisition or the financing contemplated hereby or
which could reasonably be expected to have a Material Adverse
Effect;
(ix) neither Dawson nor any of its Subsidiaries shall
have taken, or be taking, any action (including any
reorganization, recapitalization, asset sale, stock purchase
or distribution to its stockholders) that, in the reasonable
good faith judgment of the Administrative Agent, could be
reasonably expected to have a material adverse effect on the
condition (financial or otherwise), business, operations,
assets or prospects of Dawson or its Subsidiaries or on the
consummation of the Tender Offer or the Merger;
(x) all actions required to be taken under Dawson's
existing indentures and credit facilities shall have been
taken or are otherwise provided for such that the consummation
of the Tender Offer and the Merger does not constitute a
default, or an event of mandatory prepayment, thereunder (it
being understood that the put to be made upon the Dawson
Change of Control will be initiated promptly after the Closing
Date).
(f) Regulations of Board. The Administrative Agent shall be
satisfied (i) that the Acquisition and the financing thereof comply with
Regulation T, U and X of the Board and (ii) with all other matters relating to
Regulation U.
(g) Solvency Certificate. The Lenders shall have received a
reasonably satisfactory solvency analysis certified by the chief financial
officer of the Borrower which shall document the solvency of the Borrower, its
Subsidiaries and the Excluded Subsidiaries considered as a whole after giving
effect to the Acquisition and the other transactions contemplated hereby.
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(h) Legal Opinions. The Administrative Agent shall have
received, with a counterpart for each Lender, the following executed legal
opinions:
(i) the executed legal opinion of Jack D. Loftis,
Jr., Esq., general counsel to the Loan Parties, in form and
substance reasonably satisfactory to the Administrative Agent;
(ii) the executed legal opinion of Porter & Hedges,
L.L.P., counsel to the Loan Parties, in form and substance
reasonably satisfactory to the Administrative Agent; and
(iii) the executed legal opinion of Skadden, Arps,
Slate, Meagher & Flom LLP, special New York counsel to the
Loan Parties, in form and substance reasonably satisfactory to
the Administrative Agent.
Each such legal opinion shall be in form and substance reasonably satisfactory
to the Administrative Agent and shall cover such matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(i) Business Plan. The Lenders shall have received, in each
case as set forth in the Confidential Information Memorandum, the following:
(i) a satisfactory business plan for the Borrower and
its Subsidiaries (including the Subsidiaries of Dawson) for
the six fiscal years following the Closing Date;
(ii) a satisfactory written analysis of the business
and prospects of the Borrower and its Subsidiaries (including
the Subsidiaries of Dawson) for the period from the Closing
Date through the final maturity of the Term Loans; and
(iii) satisfactory pro forma projected balance sheets
of the Borrower and its Subsidiaries (including the
Subsidiaries of Dawson) as at the last day of each of the six
fiscal years of the Borrower following the Merger Date, and
the related consolidated statements of projected income and
cash flows for such fiscal years (including the assumptions
used in preparing such statements).
(j) Closing Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each Loan Party,
dated the Closing Date, substantially in the form of Exhibit D, with
appropriate insertions and attachments, executed by the President or any Vice
President and the Secretary or any Assistant Secretary of such Loan Party.
(k) Corporate Proceedings of Loan Parties. The Administrative
Agent shall have received, with a counterpart for each Lender, a copy of the
resolutions of the Board of Directors of each Loan Party authorizing (i) the
execution, delivery and performance of the Loan Documents to which it is a
party (including, but not limited to, the granting of any Liens provided for
therein), and (ii) in the case of the Borrower, the borrowings contemplated
hereunder.
(l) Lien Searches. The Administrative Agent shall have
received the results of a recent lien search in each of the jurisdictions where
assets of the Loan Parties are located, and such search shall reveal no liens
on any of the assets of the Borrower or its Subsidiaries
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except for liens permitted by Section 7.3 or discharged on or prior to the
Closing Date pursuant to documentation reasonably satisfactory to the
Administrative Agent.
(m) Environmental Audit Reports. The Administrative Agent
shall have received environmental reports reasonably satisfactory to it with
respect to the real properties owned or leased by the Borrower and its
Subsidiaries.
(n) Environmental Program. The Administrative Agent shall
have received a copy of the Borrower's environmental compliance manual
developed and implemented by the Borrower to promote compliance with and to
minimize prudently any liabilities or potential liabilities under any
Environmental Law that may affect the Borrower or any of its Domestic
Subsidiaries (the "Environmental Program").
(o) Investment Property; Stock Powers. The Collateral Agent
shall have received the Pledged Stock pledged pursuant to the Master Guarantee
and Collateral Agreement, together with an undated stock power for each such
certificate executed in blank by a duly authorized officer of the pledgor
thereof.
(p) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code financing
statement) required by the Security Documents or the Existing Credit Agreement
or under law or reasonably requested by the Administrative Agent to be
delivered to the Collateral Agent or to be filed, registered or recorded in
order to (i) continue the liens on the Collateral under the Security Documents
with the same priority as under the Existing Credit Agreement immediately prior
to the Closing Date (subject to the Liens provided for in clauses (x) and (y)
of Section 4.19(a)) and (ii) create in favor of the Collateral Agent, for the
benefit of the Lenders, a perfected Lien on all Collateral that was to have
been perfected pursuant to Section 6.10 and 6.11 of the Existing Credit
Agreement immediately prior to the Closing Date, prior and superior in right to
any other Person (other than with respect to Liens expressly permitted by
Section 7.3), shall have been filed or be in proper form for filing,
registration or recordation in each jurisdiction in which the filing,
registration or recordation thereof is so required or requested , other than
those documents required to be filed, registered or recorded after the Closing
Date pursuant to Section 6.14.
(q) Existing Credit Agreement. To the extent requested by any
Lender, the Borrower shall execute and deliver a new Note in the amount of such
Lender's Commitment in replacement and substitution of (but not in payment of)
such Lender's note under the Existing Credit Agreement and the Administrative
Agent shall request all the Lenders who hold notes under the Existing Credit
Agreement to return such notes to the Administrative Agent for cancellation and
replacement (but not payment), if applicable. The Borrower shall have paid all
interest, fees and other amounts (other than principal) accrued under the
Existing Credit Agreement through the Closing Date.
5.2 Conditions to Loans made on or after the Merger Date and
occurrence of Scheduled Revolving Termination Date. The agreement of each
Lender to make its initial Loan on or after the Merger Date and the extension
of the Revolving Termination Date to the Scheduled Revolving Termination Date
is subject to the satisfaction of the following conditions precedent on or
prior to the date on which the initial Loan is made on or after the Merger
Date:
(a) Merger. Receipt by the Agent of satisfactory evidence
that the Merger has been completed in accordance with the Acquisition
Documentation and no provision thereof shall have been waived, amended,
supplemented or otherwise modified in a manner which could, in the opinion of
the Administrative Agent, reasonably be expected to be adverse to the
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interest of the Administrative Agent or the Lenders.
(b) Lien Searches. The Administrative Agent shall have
received the results of a recent lien search prior to the Merger Date in each
of the jurisdictions where assets of Dawson and its Subsidiaries are located,
and such search shall reveal no liens on any of the assets of the such Persons
except for liens permitted by Section 7.3 or discharged on or prior to the
Merger Date pursuant to documentation reasonably satisfactory to the
Administrative Agent.
(c) Collateral. All actions required to be taken by Section
6.10 in respect of all Subsidiaries and assets acquired on the Merger Date
(including the delivery of legal opinions with respect thereto as provided in
Section 6.10) shall have been taken so that on the Merger Date (i) the
Collateral Agent, for the benefit of the Lenders, shall have a duly perfected
first priority security interest in all the Capital Stock and the Collateral of
Dawson and its Subsidiaries (subject only to Liens expressly permitted by
Section 7.3, other than those documents required to be filed, registered or
recorded after the Closing Date pursuant to Section 6.10 or Section 6.14) and
(ii) Dawson's Subsidiaries shall have become Subsidiary Guarantors.
(d) Dawson 9-3/8% Notes. All actions required under the Dawson
Indenture shall have been taken such that the consummation of the Merger and
the financing thereof (including granting of lien's on assets of Dawson and
guarantees by Dawson's Subsidiaries) does not constitute a default, or an event
of mandatory redemption, thereunder (it being understood that to the extent the
Merger Date occurs prior to the Dawson Put Termination Date, the Borrower's
payment obligations in connection with the Dawson Change of Control may remain
outstanding until such date);
(e) Environmental Audit Reports. The Administrative Agent
shall have received environmental reports prior to or concurrently with the
Merger Date reasonably satisfactory to it with respect to the real properties
owned or leased by Dawson and its Subsidiaries.
5.3 Conditions to Each Extension of Credit. The agreement of
each Lender to make any extension of credit requested to be made by it on any
date (including, without limitation, its initial extension of credit) and the
occurrence of the Closing Date is subject to the satisfaction of the following
conditions precedent:
(a) Representations and Warranties. Except to the extent that
they are made as of a specific date, each of the representations and warranties
made by any Loan Party in or pursuant to the Loan Documents shall be true and
correct in all material respects on and as of such date as if made on and as of
such date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
extensions or credit requested to be made on such date.
(c) Additional Matters. All proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Agreement and the other Loan Documents shall be reasonably
satisfactory in form and substance to the Administrative Agent, and the
Administrative Agent shall have received such other documents and legal
opinions in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably request.
(d) Borrowing Notice. The Borrower shall have delivered to the
Administrative
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Agent the applicable borrowing notice in accordance with the
relevant subsection of Section 2.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.3 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Loan or Letter of Credit remains outstanding and unpaid
or any other amount is owing to any Lender, the Arranger or the Administrative
Agent hereunder, the Borrower shall and, if applicable, shall cause each of its
Subsidiaries (and with respect to Section 6.8, each of the Excluded
Subsidiaries) to:
6.1 Financial Statements. Furnish to the Administrative Agent
for distribution to each Lender:
(a) as soon as available, but in any event within 95 days
after the end of each fiscal year of the Borrower, a copy of the audited
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as
at the end of such year and the related audited consolidated statements of
income and retained earnings and of cash flows for such year, setting forth in
each case in comparative form the figures for the previous year, reported on
without a "going concern" or like qualification or exception, or qualification
arising out of the scope of the audit, by KPMG Peat Marwick LLP or other
independent certified public accountants of nationally recognized standing; and
(b) as soon as available, but in any event not later than 50
days after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and retained earnings and of cash
flows of the Borrower and its Consolidated Subsidiaries for such quarter and
the portion of the fiscal year through the end of such quarter, setting forth
in each case in comparative form the figures for the previous year, certified
by a Responsible Officer of the Borrower as being fairly stated in all material
respects (subject to normal year-end audit adjustments);
all such financial statements referred to in this Section 6.1(b) shall be
complete and correct in all material respects and shall be prepared in
reasonable detail and in accordance with GAAP applied consistently throughout
the periods reflected therein and with prior periods, subject to normal
year-end adjustments.
6.2 Certificates; Other Information. Furnish to each Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), (i) a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate and (ii)
copies of all reports or written communications providing advice,
recommendations or analysis to the management of the Borrower from such
independent certified public accountants with regard to their audit of the
financial statements referred to in Section 6.1(a) or the internal financial
controls and systems of the Borrower;
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(b) concurrently with the delivery of any financial statement
pursuant to Section 6.1, (x) a certificate of a Responsible Officer of the
Borrower stating that, to the best of each such Responsible Officer's
knowledge, during such period (i) no Subsidiary has been formed or acquired
(or, if any such Subsidiary has been formed or acquired, the Loan Parties have
complied with the requirements of Section 6.10 with respect thereto), (ii)
neither the Borrower nor any of its Subsidiaries has changed its name, its
principal place of business, its chief executive office, its principal place of
business, the location where records concerning the Collateral are kept or the
location of any material item of tangible Collateral without complying with the
requirements of this Agreement and the Security Documents with respect thereto
and (iii) each Loan Party has observed or performed all of its covenants and
other agreements, and satisfied every condition, contained in this Agreement
and the other Loan Documents to which it is a party to be observed, performed
or satisfied by it, and that such Responsible Officer has obtained no knowledge
of any Default or Event of Default except as specified in such certificate and
(y) in the case of quarterly or annual financial statements, (i) a Compliance
Certificate containing all information and calculations reasonably necessary
for determining compliance by the Borrower and its Subsidiaries with the
provisions of this Agreement (including but not limited to Sections 2.10 and
7.1) as of the last day of such fiscal quarter or fiscal year of the Borrower
and (ii) a Pro Forma EBITDA Statement for the four fiscal quarters ended on the
last day of such four quarters or fiscal year of the Borrower if during such
fiscal quarter period a Person acquired by the Borrower or a Subsidiary becomes
a Consolidated Subsidiary or is merged into the Borrower or a Subsidiary;
(c) as soon as available, and in any event no later than the
end of each fiscal year of the Borrower, a projected consolidated balance sheet
of the Borrower as of the end of the following fiscal year, and the related
consolidated statements of projected cash flow, projected retained earnings and
projected income for the following fiscal year, together with an operating
budget with respect to the following fiscal year, and, as soon as available,
significant revisions, if any, of such projections with respect to such fiscal
year (collectively, the "Projections"), which Projections shall in each case be
accompanied by a certificate of a Responsible Officer of the Borrower stating
that such Projections are based on estimates, information and assumptions
believed by such Responsible Officer to be reasonable and that such Responsible
Officer has no reason to believe that such Projections are incorrect or
misleading in any material respect;
(d) within 50 days after the end of each fiscal quarter of
each fiscal year of the Borrower, a narrative discussion and analysis of the
consolidated financial condition and results of operations of the Borrower and
its Subsidiaries for such fiscal quarter and for the period from the beginning
of the then current fiscal year to the end of such fiscal quarter, as compared
to the portion of the Projections, as applicable, covering such periods and to
the comparable periods of the previous year;
(e) within five days after the same are filed, copies of all
financial statements and reports which the Borrower or any of its Subsidiaries
may make to, or file with, the Securities and Exchange Commission or any
successor or analogous Governmental Authority of the United States; and
(f) promptly, such additional financial and other information
as any Lender may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent or (in the case
of trade payables and obligations other than for borrowed money) within 150
days after the due date, as the case may be, all its material obligations of
whatever nature, except where the amount or validity thereof is currently
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being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP with respect thereto have been provided on the books
of the Borrower or its Subsidiaries, as the case may be.
6.4 Conduct of Business and Maintenance of Existence, etc.
(a) Continue to engage in business of the same general type as now conducted by
it, (b) preserve, renew and keep in full force and effect its existence and (c)
take all commercially reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its business,
except, in each case in clauses (a), (b) and (c) above, as otherwise permitted
pursuant to Section 7.5 and except, in the case of clause (c) above, to the
extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (d) comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
6.5 Maintenance of Property; Insurance. (a) Keep all material
property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted; (b) maintain with financially sound
and reputable insurance companies insurance on all its property in at least
such amounts and against at least such risks (but including in any event
general liability) as are usually insured against in the same general area by
companies engaged in the same or a similar business and otherwise comply with
Section 5.3 of the Master Guarantee and Collateral Agreement; and (c) furnish
to each Lender, upon written request, full information as to the insurance
carried.
6.6 Inspection of Property; Books and Records; Discussions.
Keep proper books of records and account in which full, true and correct
entries in conformity with GAAP or, in the case of Foreign Subsidiaries, in
conformity with generally accepted accounting principles in effect in the
jurisdiction where such Foreign Subsidiary is located at such time and, in the
case of the Borrower and its Domestic Subsidiaries, all Requirements of Law
shall be made of all dealings and transactions in relation to its business
and activities; and upon reasonable notice permit representatives of any
Lender to visit and inspect any of its properties and examine and make
abstracts from any of its books and records at any reasonable time and as often
as may reasonably be desired and to discuss the business, operations, properties
and financial and other condition of the Borrower and its Subsidiaries with
senior officers of the Borrower and its Subsidiaries and with its independent
certified public accountants.
6.7 Notices. Promptly give notice to the Administrative Agent
of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the Borrower or
any of its Subsidiaries and any Governmental Authority, which in either case,
if not cured or if adversely determined, as the case may be, could reasonably
be expected to have a Material Adverse Effect;
(c) the following events, as soon as possible and in any event
within 30 days after the Borrower or any of its Subsidiaries knows or has
reason to know thereof: (i) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan, a failure to make any required
contribution in a material amount to a Plan, the creation of any Lien in a
material amount in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii)
the institution of proceedings or the taking of any other action by the PBGC or
the Borrower or any Commonly Controlled Entity
<PAGE> 63
58
or any Multiemployer Plan with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Plan;
(d) (i) any release or discharge by the Borrower or any
Subsidiary of any Materials of Environmental Concern required to be reported
under Environmental Laws to any Governmental Authority which could reasonably
be expected to result in the assessment or payment of a Material Environmental
Amount; (ii) any condition, circumstance, occurrence or event that could
reasonably be expected to result in the assessment or payment of a Material
Environmental Amount, or could result in the imposition of any Lien or other
restriction on the title, ownership or transferability of any Mortgaged
Property; and (iii) any action to be taken by the Borrower or any Subsidiary
that could reasonably be expected to subject the Borrower or any Subsidiary to
the assessment or payment of a Material Environmental Amount; and
(e) any development or event which could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower or the applicable
Subsidiary proposes to take with respect thereto.
6.8 Environmental Laws.
(a)(i) Comply with all Environmental Laws applicable to it,
and obtain, comply with and maintain any and all Environmental Permits
necessary for its operations as conducted and as planned; and (ii) take all
reasonable efforts to ensure that all of its tenants, subtenants, contractors,
subcontractors, and invitees comply with all applicable Environmental Laws, and
obtain, comply with and maintain any and all Environmental Permits, applicable
to any of them insofar as any failure to so comply, obtain or maintain
reasonably could be expected to adversely affect the Borrower or any of its
Subsidiaries. For purposes of this 6.8(a), noncompliance by the Borrower with
any applicable Environmental Law or Environmental Permit shall be deemed not to
constitute a breach of this covenant provided that, upon learning of any actual
or suspected noncompliance, the Borrower shall undertake reasonable efforts to
achieve compliance, and provided further that, in any case, such
non-compliance, and any other noncompliance with applicable Environmental Law,
individually or in the aggregate, could not reasonably be expected to give rise
to a Material Adverse Effect.
(b) Promptly comply in all material respects with all orders
and directives of all Governmental Authorities directed to the Borrower or any
of its Domestic Subsidiaries regarding Environmental Laws, other than such
orders and directives or parts thereof as are being contested in good faith and
by appropriate proceedings.
(c) Maintain the Environmental Program.
(d) Prior to acquiring any ownership or leasehold interest in
real property, or other interest in any real property which in the Borrower's
reasonable judgment could give rise to significant liability under any
Environmental Law, obtain a written environmental assessment report regarding
the environmental condition of such real property by a reputable independent
environmental consulting firm. Upon the request of the Administrative Agent, a
copy of each such environmental assessment report shall be delivered to the
Administrative Agent by the end of the calendar quarter in which the
acquisition closed, together with a list of all acquisitions of interests in
real property by the Borrower and the Subsidiaries in such quarter. Pursuant to
this Section 6.8(d), the Administrative Agent shall have the right, but shall
not have
<PAGE> 64
59
any duty, to obtain, review or discuss any such report.
(e) Promptly upon the Administrative Agent's request if there
has been an Event of Default which has not been fully and timely cured, permit
an Environmental Consultant whom the Administrative Agent in its discretion
designates to perform an environmental assessment (including, without
limitation: reviewing documents; interviewing knowledgeable persons; and
sampling and analyzing soil, air, surface water, groundwater, and/or other
media in or about property owned or leased by the Borrower, or on which
operations of the Borrower otherwise take place). Such environmental assessment
shall be in form, scope, and substance reasonably satisfactory to the
Administrative Agent. The Borrower shall cooperate fully in the conduct of such
environmental assessment, and shall pay the costs of such environmental
assessment immediately upon written demand by the Administrative Agent.
Pursuant to this section 6.8(e), the Administrative Agent shall have the right,
but shall not have any duty, to request and/or obtain such environmental
assessment.
6.9 Further Assurances. (a) Upon the request of the
Administrative Agent promptly perform or cause to be performed any and all acts
and execute or cause to be executed any and all documents (including, without
limitation, financing statements and continuation statements) for filing under
the provisions of the Uniform Commercial Code or any other Requirement of Law
which are necessary or advisable in the reasonable judgment of the Collateral
Agent to maintain in favor of the Collateral Agent, Liens on the Collateral
that are duly perfected in accordance with all applicable Requirements of Law.
(b) Notwithstanding any other provision herein, the Borrower
shall not be deemed to have failed to satisfy the conditions of Section 5.1(p)
or 5.2(c) or to be in violation of Section 6.10 or 6.14 for failure to have
caused a duly perfected Lien to be placed on any Vehicles (other than Excluded
Vehicles) covered by a certificate of title of any State if (i) the aggregate
fair market value of such unperfected Vehicles (the "Unperfected Amount") is
less than $5,000,000 and (ii) the Collateral Agent either has a duly perfected
first priority security interest in or has in its possession each document
(including, without limitation, certificates of title) in proper form for
filing, registration or recordation to give the Collateral Agent such duly
perfected first priority security interest in Excluded Vehicles having an
aggregate fair market value equal to or greater than the Unperfected Amount.
6.10 Additional Collateral. (a) With respect to any assets
acquired after the Closing Date by the Borrower or any of its Domestic
Subsidiaries that are intended to be subject to the Lien created by any of the
Security Documents but which are not so subject (other than any assets
described in paragraph (b), (c), (d) or (e) of this Section 6.10), promptly
(and in any event within 30 days after the acquisition or creation thereof):
(i) execute and deliver to the Collateral Agent such amendments to the Master
Guarantee and Collateral Agreement or such other documents as the Collateral
Agent shall reasonably deem necessary or advisable to grant to the Collateral
Agent a Lien on such assets, (ii) take all actions reasonably necessary or
advisable to cause such Lien to be duly perfected in accordance with all
applicable Requirements of Law, including, without limitation, the filing of
Uniform Commercial Code financing statements in such jurisdictions as may be
reasonably requested by the Collateral Agent (provided that for any Vehicles
that are covered by a certificate of title, the Borrower shall cause such Lien
to be duly perfected in accordance with all applicable Requirements of Law
within 90 days after the acquisition thereof), and (iii) if requested by the
Collateral Agent, deliver to the Collateral Agent within 30 days of such
request legal opinions relating to the matters described in clauses (i) and
(ii) immediately preceding, which opinions shall be in form and substance and
from counsel reasonably satisfactory to the Collateral Agent.
<PAGE> 65
60
(b) With respect to any Person (other than Dawson or any
existing Subsidiary of Dawson) that, subsequent to the Closing Date, becomes a
Domestic Subsidiary of the Borrower (including, without limitation, any Person
which had previously been an Excluded Subsidiary), promptly (and in any event
within 30 days after the acquisition or creation thereof) and, with respect to
any Domestic Subsidiary of Dawson, on the Merger Date: (i) execute and deliver
to the Collateral Agent such amendments to the Master Guarantee and Collateral
Agreement as the Collateral Agent shall deem reasonably necessary or advisable
to grant to the Collateral Agent a Lien on the Capital Stock of such Subsidiary
which is owned by the Borrower or any of its Subsidiaries, (ii) deliver to the
Collateral Agent the certificates representing such Capital Stock, together
with undated stock powers duly executed and delivered in blank, (iii) cause
such new Domestic Subsidiary (A) to become a party to the Master Guarantee and
Collateral Agreement, pursuant to documentation which is in form and substance
reasonably satisfactory to the Collateral Agent, and (B) to take all actions
necessary or advisable to cause the Lien created by such security agreement
to be duly perfected in accordance with all applicable Requirements of Law,
including, without limitation, the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be reasonably requested by the
Collateral Agent (provided that for any Vehicles that are covered by a
certificate of title, the Borrower shall cause such Lien to be duly perfected
in accordance with all applicable Requirements of Law within 90 days after the
acquisition thereof, provided, however, that with respect to Vehicles owned by
Dawson and/or its Domestic Subsidiaries on the Closing Date, the Borrower shall
take such actions within 90 days after the Closing Date or, if later, 10 days
after the Merger Date), and (iv) if requested by the Collateral Agent, deliver
to the Collateral Agent within 30 days of such request legal opinions relating
to the matters described in clauses (i), (ii) and (iii) immediately preceding,
which opinions shall be in form and substance and from counsel reasonably
satisfactory to the Collateral Agent.
(c) With respect to any fee interest in any real property
acquired after the Closing Date by the Borrower or any of its Domestic
Subsidiaries (including any such property owned by Dawson or any of its
Domestic Subsidiaries) having a purchase price (or, if acquired through a
merger or stock acquisition, a fair market value) in excess of $1,000,000,
promptly (and in any event within 90 days after the acquisition thereof or with
respect to real property owned on the Merger Date by Dawson or its Domestic
Subsidiaries on the Merger Date (i) execute and deliver a first priority
mortgage or deed of trust, as the case may be (subordinate only to such
mortgages or deeds of trust as are necessary to permit the Borrower or such
Domestic Subsidiary to purchase such real property but subject to such
easements, rights of way, restrictions and other similar encumbrances as such
property may be subject at the time of acquisition), in favor of the Collateral
Agent, covering such real property, in form and substance reasonably
satisfactory to the Collateral Agent, (ii) provide to the Collateral Agent all
necessary documents reasonably requested by the Collateral Agent to confirm the
Borrower's or its Subsidiaries' ownership of such real property, (iii) if
requested by the Collateral Agent, provide the Lenders with any consents or
estoppels deemed necessary or advisable by the Collateral Agent in connection
with such mortgage or deed of trust, each of the foregoing in form and
substance reasonably satisfactory to the Collateral Agent and (iv) if requested
by the Collateral Agent, deliver to the Collateral Agent legal opinions
relating to the matters described in the preceding clauses (i) and (iii), which
opinions shall be in form and substance and from counsel reasonably
satisfactory to the Collateral Agent. Notwithstanding the foregoing, compliance
shall not be required with the foregoing provision of this paragraph (c) in
respect of any interest in real property which, at the time of acquisition
thereof by the Borrower or its Subsidiary, is subject to a legal or contractual
restriction that would prohibit the granting of a mortgage thereon to the
Collateral Agent; provided, that the aggregate book value of real property
owned by the Borrower and its Subsidiaries so subject may not exceed $7,500,000
at any time.
<PAGE> 66
61
(d) With respect to any Foreign Subsidiary created or acquired
after the Closing Date by the Borrower or any of its Domestic Subsidiaries,
promptly (and in any event within 150 days after the acquisition or creation
thereof) (i) execute and deliver to the Collateral Agent such amendments to the
Master Guarantee and Collateral Agreement (or comparable documentation) as the
Collateral Agent deems reasonably necessary or advisable in order to grant to
the Collateral Agent a perfected first priority security interest in the
Capital Stock (except for Liens permitted under Section 7.3) of such new
Foreign Subsidiary which is owned by the Borrower or any of its Domestic
Subsidiaries (provided that in no event shall more than 65% of the Capital
Stock of any such new Subsidiary be required to be so pledged), (ii) deliver to
the Collateral Agent the certificates representing such Capital Stock,
together with undated stock powers, in blank, executed and delivered by a duly
authorized officer of the Borrower or such Subsidiary, as the case may be, and
(iii) if requested by the Collateral Agent, deliver to the Collateral Agent
legal opinions relating to the matters described in the preceding clauses (i)
and (ii), which opinions shall be in form and substance and from counsel
reasonably satisfactory to the Collateral Agent.
(e) With respect to any oil and gas property acquired after
the Closing Date by the Borrower or any of its Domestic Subsidiaries having a
purchase price (or, if acquired through a merger or stock acquisition, a fair
market value) in excess of $1,000,000 and which, after giving effect to such
acquisition and assuming that a perfected first priority Lien thereon were not
granted to the Collateral Agent would result in the Collateral Agent having a
perfected first priority Lien on less than 80% in value (calculated as provided
in Section 4.24) of the reserves contained in all of the oil and gas properties
of the Borrower and its Domestic Subsidiaries, promptly (and in any event
within 30 days after the acquisition thereof) (i) execute and deliver a first
priority oil and gas mortgage (subordinate only to such oil and gas mortgages
as are necessary to permit the Borrower or such Domestic Subsidiary to purchase
such property but subject to such restrictions and other similar encumbrances
as such property may be subject at the time of acquisition), in favor of the
Collateral Agent covering such property, in form and substance reasonably
satisfactory to the Collateral Agent, and (ii) if requested by the Collateral
Agent, deliver to the Collateral Agent within 180 days of such request title
opinions relating to the matters described in the preceding clause reasonably
satisfactory to the Collateral Agent.
6.11 Consummation of Merger. (a) Use its best efforts to
consummate the merger of Midland and Dawson in accordance with the Acquisition
Documentation and the Merger as promptly as practical.
(b) Unless Section 6.11(c) is applicable, within 10 Business
Days after the Closing Date in accordance with applicable Requirements of Law,
cause Dawson to prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and the Merger Agreement.
Thereafter, cause Dawson to use its best efforts to (i) respond promptly to any
comments made by the SEC with respect to such preliminary proxy statement or
information statement so that a definitive proxy statement or information
statement can be promptly mailed to its shareholders to obtain the necessary
approvals of the Merger and the Merger Agreement within the minimum time period
permitted by applicable Requirements of Law and (ii) duly call and give notice
of, or convene and hold, a special meeting of its shareholders for the purpose
of approving the Merger Agreement.
(c) To the extent that the Borrower and its Subsidiaries have
acquired at least 90% of the outstanding shares of each class of the Capital
Stock of Dawson pursuant to the Tender Offer or otherwise, cause Dawson to take
all necessary and appropriate action to cause the Merger to become effective
within 10 Business Days of such acquisition, without the meeting of the
shareholders of the Borrower, in accordance with applicable Requirements of
<PAGE> 67
62
Law.
6.12 Interest Rate Protection. Within 180 days after the
Closing Date, enter into one or more Interest Rate Protection Agreements for an
amount which (when added to the fixed rate Indebtedness of the Borrower and its
Subsidiaries) is at least equal to 50% of Consolidated Total Debt on terms and
conditions satisfactory to the Administrative Agent.
6.13 Subordinated Put Facility. Use reasonable efforts to
cause the issuance of the Senior Subordinated Notes and use the proceeds
thereof to prepay the Put Facility within six months after the Closing Date.
6.14 Post-Closing Actions.
(a) Vehicles.
(i) Within 30 days after the Closing Date,
deliver to the Collateral Agent each document (including,
without limitation, any certificates of title) required by the
Security Documents or under law or reasonably requested by the
Collateral Agent to be delivered to the Collateral Agent or to
be filed, registered or recorded in order to create in favor
of the Collateral Agent, for the benefit of the Lenders, a
perfected Lien on all of the Vehicles listed on Schedule
6.14(a)(i) covered by a certificate of title, prior and
superior in right to any other Person (other than with respect
to Liens expressly permitted by Section 7.3), which documents
shall be in proper form for filing, registration or
recordation in each jurisdiction in which the filing,
registration or recordation thereof is so required or
requested.
(ii) By November 17, 1998, deliver to the
Collateral Agent each document (including, without limitation,
any certificates of title) required by the Security Documents
or under law or reasonably requested by the Collateral Agent
to be delivered to the Collateral Agent or to be filed,
registered or recorded in order to create in favor of the
Collateral Agent, for the benefit of the Lenders, a perfected
Lien on all of the Vehicles listed on Schedule 6.14(a)(ii)
covered by a certificate of title, prior and superior in right
to any other Person (other than with respect to Liens
expressly permitted by Section 7.3), which documents shall be
in proper form for filing, registration or recordation in each
jurisdiction in which the filing, registration or recordation
thereof is so required or requested.
(b) Pledged Securities; Stock Powers.
(i) If the Capital Stock of Transportes is
certificated and possession of such certificate is required in
order to create a duly perfected Lien on such Capital Stock
under Argentine law, the Collateral Agent shall have received
within 150 days of the Closing Date 65% of the Capital Stock
of Transportes pledged pursuant to the Master Guarantee and
Collateral Agreement, together with an undated stock power for
such certificate executed in blank by a duly authorized
officer of the pledgor thereof.
(ii) The Collateral Agent shall have received
within 150 days of the Closing Date an additional 2% of the
Capital Stock of Servicios, pledged pursuant to the Master
Guarantee and Collateral Agreement, together with an undated
stock power for such certificate executed in blank by a duly
authorized
<PAGE> 68
63
officer of the pledgor thereof.
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Loan or Letter of Credit remains outstanding and unpaid
or any other amount is owing to any Lender, the Arranger, the Collateral Agent
or the Administrative Agent hereunder, the Borrower shall not, and, if
applicable, shall not permit any of its Subsidiaries to, directly or
indirectly:
7.1 Financial Condition Covenants.
(a) Consolidated Leverage Ratio. Permit the Consolidated
Leverage Ratio as of any date set forth below to exceed the ratio set forth
below opposite such date:
<TABLE>
<CAPTION>
Consolidated
Date Leverage Ratio
---------- --------------
<S> <C>
September 30, 1998 5.25 to 1.00
December 31, 1998 5.00 to 1.00
March 31, 1999 5.00 to 1.00
June 30, 1999 4.75 to 1.00
September 30, 1999 4.75 to 1.00
December 31, 1999 4.50 to 1.00
March 31, 2000 4.25 to 1.00
June 30, 2000 4.25 to 1.00
September 30, 2000 4.25 to 1.00
December 31, 2000 4.00 to 1.00
March 31, 2001 3.50 to 1.00
June 30, 2001 3.50 to 1.00
September 30, 2001 3.50 to 1.00
December 31, 2001 3.50 to 1.00
March 31, 2002 3.50 to 1.00
June 30, 2002 3.00 to 1.00
September 30, 2002 3.00 to 1.00
December 31, 2002 3.00 to 1.00
March 31, 2003 3.00 to 1.00
June 30, 2003 3.00 to 1.00
September 30, 2003 3.00 to 1.00
December 31, 2003 3.00 to 1.00
March 31, 2004 2.50 to 1.00
June 30, 2004 2.50 to 1.00
September 30, 2004 2.50 to 1.00
--------------
</TABLE>
(b) Consolidated Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio for any period of four consecutive fiscal
quarters of the Borrower ending as of any date set forth below to be less than
the ratio set forth below opposite such date:
<PAGE> 69
64
<TABLE>
<CAPTION>
Consolidated
Interest
Date Coverage Ratio
---------- --------------
<S> <C>
December 31, 1998 2.00 to 1.00
March 31, 1999 2.25 to 1.00
June 30, 1999 2.25 to 1.00
September 30, 1999 2.50 to 1.00
December 31, 1999 2.75 to 1.00
March 31, 2000 2.75 to 1.00
June 30, 2000 3.00 to 1.00
September 30, 2000 3.00 to 1.00
December 31, 2000 3.50 to 1.00
March 31, 2001 3.50 to 1.00
June 30, 2001 4.00 to 1.00
September 30, 2001 4.00 to 1.00
December 31, 2001 4.00 to 1.00
March 31, 2002 4.00 to 1.00
June 30, 2002 4.00 to 1.00
September 30, 2002 4.00 to 1.00
March 31, 2003 4.00 to 1.00
June 30, 2003 4.00 to 1.00
September 30, 2003 4.00 to 1.00
December 31, 2003 4.00 to 1.00
March 31, 2004 4.00 to 1.00
June 30, 2004 4.00 to 1.00
September 30, 2004 4.00 to 1.00
</TABLE>
; provided, that for the purposes of determining the ratio described above for
the fiscal quarters of the Borrower ending December 31, 1998, March 31, 1999
and June 30, 1999, Consolidated Interest Expense for the relevant period shall
be deemed to equal Consolidated Interest Expense for such fiscal quarter (and,
in the case of the latter two such determinations each previous fiscal quarter
commencing after September 31, 1998) multiplied by 4, 2, and 4/3, respectively.
(c) Consolidated Senior Leverage Ratio. (i) Permit the
Consolidated Senior Leverage Ratio as of any date set forth below to exceed the
ratio set forth below opposite such date:
<TABLE>
<CAPTION>
Consolidated
Date Senior
---------- Leverage Ratio
--------------
<S> <C>
September 30, 1998 3.75 to 1.00
December 31, 1998 3.75 to 1.00
March 31, 1999 3.75 to 1.00
June 30, 1999 3.50 to 1.00
September 30, 1999 3.50 to 1.00
December 31, 1999 3.25 to 1.00
March 31, 2000 3.25 to 1.00
June 30, 2000 3.25 to 1.00
</TABLE>
<PAGE> 70
65
<TABLE>
<S> <C>
September 30, 2000 3.25 to 1.00
December 31, 2000 2.75 to 1.00
March 31, 2001 2.75 to 1.00
June 30, 2001 2.50 to 1.00
September 30, 2001 2.50 to 1.00
December 31, 2001 2.50 to 1.00
March 31, 2002 2.50 to 1.00
June 30, 2002 2.50 to 1.00
September 30, 2002 2.50 to 1.00
December 31, 2002 2.00 to 1.00
March 31, 2003 2.00 to 1.00
June 30, 2003 2.00 to 1.00
September 30, 2003 2.00 to 1.00
December 31, 2003 2.00 to 1.00
March 31, 2004 2.00 to 1.00
June 30, 2004 2.00 to 1.00
September 30, 2004 2.00 to 1.00
</TABLE>
provided that each of the foregoing Consolidated Senior Leverage Ratios shall
be reduced by 0.05 for each $10,000,000 of the Dawson 9-3/8% put and paid in
connection with the Dawson Change of Control; provided that in no event shall
the Consolidated Senior Leverage Ratio be reduced to lower than 2.00 to 1.00.
(d) Consolidated Net Worth. Permit the Consolidated Net Worth
of the Borrower and its Subsidiaries to be less than the sum of (i) 90% of the
Consolidated Net Worth of the Borrower and its Subsidiaries on the Closing
Date, plus (ii) 75% of Consolidated Net Income of the Borrower and its
Subsidiaries (to the extent a positive number) for each fiscal quarter
completed after the Closing Date commencing with the fiscal quarter ending
December 31, 1998, plus (iii) 75% of the Net Cash Proceeds of any offerings or
issuances of Capital Stock of the Borrower or any of its Subsidiaries after the
Closing Date, plus (iv) 75% of the increase in the Consolidated Net Worth of
the Borrower and its Subsidiaries resulting from any conversion of the 1997
Convertible Subordinated Notes or any future convertible indebtedness of the
Borrower and its Subsidiaries.
7.2 Limitation on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness of the Borrower under the Loan Documents;
(b) (i) Interim Loans not to exceed $150,000,000 until the
date on which all or part of the Interim Loans are prepaid as provided in
Section 4.16(a) and thereafter Indebtedness under the Put Facility not to
exceed the amount of the Interim Loans on such prepayment date (after giving
effect to such prepayment), (ii) on or after the later of the Merger Loan Date
and the date all or a portion of the Dawson 9-3/8% Notes are put as a result of
a Dawson Change of Control, Senior Subordinated Notes in an aggregate principal
amount not to exceed $150,000,000 (plus, in the case of Senior Subordinated
Notes that are original issue discount notes, an amount equal to the amount of
such discount, provided that the imputed interest represented thereby shall be
in compliance with clause (iii) of the definition thereof) provided the
proceeds thereof are used to prepay the Put Facility or prepay the Loans as
provided in Section 2.10 (and Guarantee Obligations of the Borrower's
Subsidiaries in connection with the foregoing as contemplated hereby) and (iii)
Indebtedness under the Put Facility or Senior Subordinated Notes arising from
the payment of interest by capitalizing such
<PAGE> 71
66
interest as additional Interim Loans or, in the case of the Senior Subordinated
Notes, the original issue discount;
(c) Indebtedness (i) of the Borrower to a Wholly Owned
Subsidiary, (ii) of a Domestic Wholly Owned Subsidiary to the Borrower or any
other Subsidiary, (iii) of Servicios to the Borrower or any Subsidiary in an
aggregate principal amount at any time outstanding not to exceed $5,000,000 in
excess of the amount of such Indebtedness outstanding on the date of this
Agreement and (iv) of any Foreign Subsidiary (other than Servicios) to the
Borrower or any Subsidiary in an aggregate principal amount at any time
outstanding (with respect to all such Foreign Subsidiaries of the Borrower) not
to exceed $1,000,000, provided that such Indebtedness referred to in clauses
(iii) and (iv) hereof, if to the Borrower or any Domestic Subsidiary, is
evidenced by a promissory note or promissory notes which has or have been
pledged to the Collateral Agent on terms and conditions reasonably satisfactory
to the Administrative Agent; provided, further, that any such Indebtedness
referred to in this clauses (c) provided to Odessa shall be for capital
expenditure purposes only.
(d) Indebtedness of the Borrower or any Subsidiary incurred to
finance the acquisition or construction of fixed or capital assets (whether
pursuant to a loan, a Financing Lease or otherwise) in an aggregate principal
amount not exceeding as to the Borrower and its Subsidiaries (i) $15,000,000 at
any time outstanding minus (ii) the amount of Indebtedness outstanding under
clauses (g) and (j) of this Section 7.2 and the amount of indebtedness
attributable to sale and leaseback transactions permitted pursuant to Section
7.12;
(e) Indebtedness of the Borrower and its Subsidiaries under
the Convertible Subordinated Debentures and the 1997 Convertible Subordinated
Notes;
(f) Indebtedness outstanding on the date hereof, or incurred
hereafter pursuant to existing commitments or agreements, and, in each case,
listed on Schedule 7.2 and any refinancings, refundings, renewals or extensions
thereof not increasing the principal amount thereof;
(g) Indebtedness of a Person which becomes a Subsidiary after
the date hereof in an aggregate principal amount at any time outstanding not
exceeding (i) $15,000,000, minus (ii) the sum of (A) the amount of Indebtedness
outstanding under clauses (d) and (j) of this Section 7.2 and (B) the amount of
indebtedness attributable to sale and leaseback transactions permitted pursuant
to Section 7.12, provided that (x) such Indebtedness existed at the time such
corporation became a Subsidiary and was not created in anticipation thereof and
(y) immediately after giving effect to the acquisition of such corporation by
the Borrower no Default or Event of Default shall have occurred and be
continuing, and any refinancings, refundings, renewals or extensions thereof
not increasing the principal amount thereof.
(h) Indebtedness constituting deposits to secure the
performance of bids, trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds and performance bonds and other
obligations of a like nature that are incurred in the ordinary course of
business, not to exceed $5,000,000 in the aggregate at any time outstanding;
(i) Indebtedness under Interest Rate Protection Agreements and
Hedge Obligations entered into the ordinary course of business for hedging
purposes and not for speculative purposes including, without limitation, the
agreement entered into for purposes of Section 6.12;
(j) Seller Indebtedness in an aggregate principal amount at
any time outstanding
<PAGE> 72
67
not exceeding (i) $15,000,000 minus (ii) the sum of (A) the amount of
Indebtedness outstanding under clauses (d) and (g) of this Section 7.2, and any
refinancings, refundings, renewals or extensions thereof not increasing the
principal amount thereof and (B) the amount of indebtedness attributable to
sale and leaseback transactions permitted pursuant to Section 7.12;
(k) Indebtedness in the form of Guarantee Obligations
permitted by Section 7.4;
(l) Indebtedness of Dawson under the Dawson 9-3/8% Notes until
the Merger Date and thereafter Indebtedness of the Borrower under the Dawson
9-3/8% Notes; and
(m) Indebtedness incurred after the Merger Loan Date not
otherwise permitted by the foregoing clauses (a) through (l) in an aggregate
principal amount at any time outstanding of not to exceed $5,000,000.
7.3 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested
in good faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or its Subsidiaries
in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, landlord's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 180 days or which are
being contested in good faith by appropriate proceedings and which, in any
case, do not encumber a material amount of the assets of the Borrower and its
Subsidiaries;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the Borrower or any
Subsidiary;
(f) Liens securing Indebtedness of the Borrower or any
Subsidiary incurred to finance the acquisition or construction of fixed or
capital assets, provided that (i) such Liens shall be created within 180 days
after the acquisition or construction of such fixed or capital assets, (ii)
such Liens do not at any time encumber any property other than the property
financed by such Indebtedness and the proceeds and products thereof, (iii) the
principal amount of Indebtedness secured thereby is not increased and (iv) the
proceeds of the Indebtedness secured by any such Lien shall at no time exceed
100% of the original purchase price of such property;
(g) Liens created pursuant to the Security Documents
(including Liens securing the Put Facility until the Merger Date and Liens
securing the Dawson 9-3/8% Notes on and after the Merger Date);
<PAGE> 73
68
(h) Liens in existence on the date hereof listed on Schedule
7.3(h) securing Indebtedness permitted by Section 7.2(f) provided that no such
Lien is spread to cover any additional property after the Closing Date and that
the principal amount of Indebtedness secured thereby is not increased or (ii)
securing Indebtedness which is being repaid on the Closing Date, provided that
such Liens shall be released promptly following the Closing Date;
(i) Liens on the property or assets of a corporation which
becomes a Subsidiary after the date hereof securing Indebtedness permitted by
Section 7.2(g), provided that (i) such Liens existed at the time such
corporation became a Subsidiary and were not created in anticipation thereof,
(ii) any such Lien is not spread to cover any property or assets of such
corporation after the time such corporation becomes a Subsidiary, and (iii) the
principal amount of Indebtedness secured thereby is not increased;
(j) Liens on assets acquired in a Permitted Acquisition
securing Seller Indebtedness incurred in connection with such Permitted
Acquisition;
(k) Liens in favor of lessees on assets leased to such lessees
pursuant to Section 7.6(a); and
(l) the Permitted Exceptions (as defined in the Mortgages).
Notwithstanding the foregoing, until the Merger Date the foregoing limitations
shall not apply to Capital Stock owned by the Borrower or its Subsidiaries
which is Margin Stock to the extent the value of such Margin Stock exceeds 25%
of the value of the assets of the Borrower and its Subsidiaries.
7.4 Limitation on Guarantee Obligations. Create, incur, assume
or suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations made in the ordinary course of its
business by the Borrower or any Subsidiary in respect of Indebtedness and other
obligations of any of the Borrower or any of its Subsidiaries which
Indebtedness or other obligations are otherwise not prohibited under this
Agreement;
(b) the Guarantee Obligations of the Loan Parties pursuant to
the Master Guarantee and Collateral Agreement;
(c) the Guarantee Obligations of the Subsidiaries of the
Borrower under the Indenture and the 1997 Indenture;
(d) the Guarantee Obligations of the Subsidiaries under the
Dawson Indenture;
(e) Guarantees Obligations of the Subsidiaries of the Borrower
in respect of the holders of the Put Facility and the Senior Subordinated Notes
provided that on and after the Merger Date such Guarantee Obligations are
subordinated to the Obligations to the same extent as the obligations of the
Borrower under Put Facility and the Senior Subordinated Notes are so
subordinated;
(f) Guarantee Obligations (in respect of obligations not
constituting Indebtedness) arising under agreements entered into by the
Borrower or any Subsidiary in the ordinary course of business; and
(g) Guarantee Obligations of the Borrower or its Subsidiaries
in respect of
<PAGE> 74
69
Indebtedness of its officers, directors and employees in an aggregate principal
amount not to exceed, at any time outstanding, $5,000,000 minus the amount of
loans or advances outstanding under Section 7.9(i).
7.5 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all of its property,
business or assets, or make any material change in its present method of
conducting business, except:
(a) any Subsidiary of the Borrower may be merged or combined
with or into the Borrower (provided that the Borrower shall be the continuing
or surviving corporation) or with or into any one or more Subsidiaries of the
Borrower provided that in the case of any such transaction involving a Wholly
Owned Subsidiary, such Wholly Owned Subsidiary shall be the continuing or
surviving corporation;
(b) any Subsidiary may be dissolved, liquidated or wound up or
may sell, lease, assign, transfer or otherwise dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to Borrower or any Domestic
Wholly Owned Subsidiary of the Borrower, and the Borrower may sell, lease,
assign, transfer or otherwise dispose of any or all of its assets to any wholly
owned Subsidiary of the Borrower which is a party to the Master Guarantee and
Collateral Agreement;
(c) any Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets so long as (i) such transaction does not
violate Section 7.6 and (ii) the Borrower complies with the provisions of
Section 2.10(d) with respect to such transaction;
(d) the merger of Midland into Dawson in accordance with the
Acquisition Documentation; and
(e) the Merger may be consummated in accordance with the terms
of the Merger Agreement.
7.6 Limitation on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Subsidiary of the
Borrower, issue or sell any shares of such Subsidiary's Capital Stock to any
Person other than the Borrower or any Domestic Wholly Owned Subsidiary of the
Borrower, except:
(a) the sale, lease or other disposition of any property in
the ordinary course of business, including immaterial real property or
equipment and obsolete or worn out property, provided that (other than
inventory and light vehicles) the aggregate proceeds received from all assets
so sold, leased or disposed of in any fiscal year shall not exceed 5% of the
Borrower's Consolidated Net Worth as of the end of the immediately preceding
fiscal year;
(b) the sale of inventory and light vehicles in the ordinary
course of business;
(c) as permitted by Section 7.5(b); and
(d) the sale of Odessa (the "Significant Disposition").
To the extent the Required Lenders waive the provisions of this Section 7.6
with respect to the
<PAGE> 75
70
sale of any Collateral, or any Collateral is sold as permitted by this Section
7.6, such Collateral in each case shall be sold free and clear of the Liens in
favor of the Collateral Agent created by the Security Documents, and the
Collateral Agent shall take such actions as it deems appropriate in connection
therewith or may be reasonably requested by the Borrower to evidence such Lien
release, in each case at the Borrower's expense. Notwithstanding the foregoing,
until the Merger Date the foregoing limitations shall not apply to Capital
Stock owned by the Borrower or its Subsidiaries which is Margin Stock to the
extent the value of such Margin Stock exceeds 25% of the value of the assets of
the Borrower and its Subsidiaries.
7.7 Limitation on Restricted Payments. Declare or pay any
dividend (other than dividends payable solely in common stock of the Person
making such dividend) on, or make any payment on account of, or set apart
assets for a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of, any shares of any class of
Capital Stock (including but not limited to in respect of any preferred Capital
Stock outstanding or dividends accumulated thereon on the Closing Date) of the
Borrower or any of its Subsidiaries or any warrants or options to purchase any
such Capital Stock or any of the Convertible Subordinated Debentures, 1997
Convertible Subordinated Notes, the Put Facility or the Senior Subordinated
Notes, whether now or hereafter outstanding, or make any other distribution in
respect thereof or purchase any thereof, either directly or indirectly, whether
in cash or property or in obligations of the Borrower or any Subsidiary, except
that the Borrower (a) may make open market purchases of its outstanding common
stock in an aggregate amount during the term of this Agreement not to exceed
$10,000,000, after the occurrence of the Minimum Equity Event, (b) may (i) make
scheduled payments of interest in respect of the Convertible Subordinated
Debentures, the 1997 Convertible Subordinated Notes, the Put Facility and the
Senior Subordinated Notes and may make prepayments of the Put Facility to the
extent provided in this Agreement, and (ii) if permitted by Section 7.10,
repurchase, redeem or defease the Convertible Subordinated Debentures after at
least 90% of the Convertible Subordinated Debentures have been converted or
repurchase, redeem or defease the 1997 Convertible Subordinated Notes after at
least 90% of the 1997 Convertible Subordinated Notes have been converted and
(c) may make cash payments required pursuant to Sections 11.1 and 11.3 of the
Indenture in connection with conversions of the Convertible Subordinated
Debentures or Section 10.3 of the 1997 Indenture in connection with conversions
of the 1997 Convertible Subordinated Notes, provided that (i) no more than 40%
of the aggregate consideration to any holder of the 1997 Convertible
Subordinated Notes upon conversion thereof may be in cash, (ii) after giving
effect to such payment and conversion, no Default or Event of Default shall be
continuing and (iii) after giving pro forma effect to such payment and
conversion as if it had occurred on the last day of the most recently ended
fiscal quarter, the Consolidated Leverage Ratio would not exceed 2.50 to 1.00.
Notwithstanding the foregoing, any Subsidiary of the Borrower may pay dividends
and other distributions to the Borrower and Servicios may pay dividends to its
shareholders.
7.8 Limitation on Capital Expenditures. Make or commit to make
any Capital Expenditure except for expenditures in the ordinary course of
business not exceeding, in the aggregate for the Borrower and its Subsidiaries
during any of the fiscal years of the Borrower set forth below, an amount equal
to the sum of (i) the amount set forth below opposite such fiscal year plus
(ii) an additional amount for any Person or business unit acquired by the
Borrower in a Permitted Acquisition since the Closing Date, such amount being
calculated as 10% of the net revenues, calculated in accordance with GAAP, of
such Person or business unit during such fiscal year (or, if such Person or
business unit was acquired after the beginning of such fiscal year, such
revenues for the portion of such fiscal year during which such Person or
business unit was owned by the Borrower):
<PAGE> 76
71
<TABLE>
<CAPTION>
Fiscal Year Ending Amount
------------------ ------
<S> <C>
1999 $62,000,000
2000 $64,000,000
2001 $66,000,000
2002 $68,000,000
2003 $70,000,000
2004 $72,000,000
</TABLE>
Any amount permitted by the foregoing provision to be expended as Capital
Expenditures in any fiscal year and not so expended may be carried over for
expenditure in the immediately succeeding fiscal year.
7.9 Limitation on Investments, Loans and Advances. Make any
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in, any Person,
except:
(a) extensions of trade credit in the ordinary course of
business;
(b) investments in Cash Equivalents;
(c) acquisitions listed on Schedule 7.9(c) consummated within
60 days of the Closing Date;
(d) Permitted Acquisitions after the Merger Loan Date;
(e) loans by the Borrower or any Subsidiary to Servicios in an
aggregate principal amount at any time outstanding not to exceed the amount
thereof outstanding on the date of this Agreement plus $5,000,000;
(f) as permitted by subsection 7.2(c)(iv);
(g) investments by the Borrower in a Domestic Wholly Owned
Subsidiary and investments by any Subsidiary in the Borrower and in one or more
Domestic Wholly Owned Subsidiaries, provided, that any such investments
provided to Odessa shall be for capital expenditure purposes only;
(h) expense accounts for, and other expense advances to, its
directors, officers and employees in the ordinary course of business;
(i) loans and advances to its officers and employees in an
aggregate amount not to exceed, at any time outstanding, $5,000,000 minus the
amount of Guarantee Obligations outstanding under Section 7.4(g).
(j) the Borrower's purchase or redemption of its own Capital
Stock to the extent permitted by Section 7.7;
(k) current trade and customer accounts receivable that are
for goods furnished or services rendered in the ordinary course of business and
that are payable in accordance with Borrower's or any Subsidiary's customary
trade terms;
(l) Interest Rate Protection Agreements to the extent
permitted under this Agreement, and Hedge Agreements entered into in the
ordinary course of business for
<PAGE> 77
72
hedging purposes and not for speculative purposes;
(m) the Borrower may repurchase its Capital Stock and/or
options to purchase such stock held by directors, officers and employees of the
Borrower or any Subsidiary upon the death, disability, retirement or
termination of such directors, officers or employees or the exercise of such
options, or from the shareholders of Borrower so long as the purpose is to
acquire stock for reissuance to new employees of Borrower and its Subsidiaries;
provided, that the amount expended for such purposes shall not exceed
$1,000,000 in any fiscal year or $2,500,000 while this Agreement is in effect;
(n) the Borrower and its Subsidiaries may acquire and own
investments (including Indebtedness and other obligations) received in
connection with the bankruptcy or reorganization of suppliers and customers and
in settlement of delinquent obligations of, and other disputes with, customers
and suppliers arising in the ordinary course of business;
(o) investments acquired by the Borrower and its Subsidiaries
in connection with Permitted Acquisitions after the Merger Loan Date;
(p) investments acquired by the Borrower and its Subsidiaries
in connection with acquisitions listed on Schedule 7.9(c) made within 60 days
of the Closing Date;
(q) the Borrower's current investment in the Argent Classic
Convertible Arbitrage Fund L.P; and
(r) in connection with the consummation of the Acquisition
pursuant to the Acquisition Documentation.
7.10 Limitation on Optional Payments and Modifications of Debt
Instruments and Organizational Documentation, etc. (a) Make any optional
payment or optional prepayment on or redemption or purchase of any material
Indebtedness (other than the Loans) or preferred Capital Stock including,
without limitation, the Convertible Subordinated Debentures, the 1997
Convertible Subordinated Notes, the Put Facility, the Dawson Notes and the
Senior Subordinated Notes, (b) amend, modify or change, or consent or agree to
any amendment, modification or change to any of the terms (i) the Put Facility
(other than any such amendment, modification or change to the terms of the
Interim Loans such that would satisfy in all respects the definition of "Senior
Subordinated Notes" contained in Section 1.1), the Senior Subordinated Notes or
the Acquisition Documents without the consent of the Required Lenders or (ii)
the Dawson Notes without the consent of the Administrative Agent, or (c) amend,
modify or change in any material respect, or consent or agree to any amendment,
modification, or change in any material respect to the terms of (i) any of its
capitalization or organizational documents (including but not limited to in
respect of any preferred Capital Stock of any Loan Party), (ii) any
Indebtedness, or (iii) a material contract, to the extent such amendment,
modification or change could reasonably be expected to have a Material Adverse
Effect, or be materially adverse to the Lenders except that, (i) after 90% of
the original outstanding principal amount of Convertible Subordinated
Debentures have been converted into common stock of the Borrower, the Borrower
may, at any time when no Default or Event of Default has occurred and is
continuing, repurchase, redeem or defease the remaining outstanding Convertible
Subordinated Debentures and, after 90% of the original outstanding principal
amount of 1997 Convertible Subordinated Notes have been converted into common
stock of the Borrower, the Borrower may, at any time when no Default or Event
of Default has occurred and is continuing, repurchase or redeem the remaining
outstanding 1997 Convertible Subordinated Notes; provided that the Borrower may
not repurchase, redeem or defease such Convertible Subordinated Debentures at
any time when the Consolidated Leverage Ratio is or,
<PAGE> 78
73
after giving effect to such repurchase or redemption, would be, greater than
3.75, (ii) the Interim Loans may be prepaid as provided for in Section 2.10(h)
or 4.16(a) and the Put Facility may be prepaid as provided in Sections
2.10((a), 2.10(b) and 6.13, (iii) payment may be made to the holders of Dawson
9-3/8% Notes pursuant to Section 4.16(a)(iv) and (iv) at any time when the
aggregate principal amount of the remaining outstanding Dawson 9-3/8% Notes is
$7,500,000 or less and no Default or Event of Default has occurred and is
continuing, the Borrower may repurchase, redeem, defease or otherwise prepay
such Dawson 9-3/8% Notes provided that any premium or other additional
compensation to be paid in connection therewith is on terms reasonably
acceptable to the Administrative Agent.
7.11 Limitation on Transactions with Affiliates. Enter into
any transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate (other
than the Borrower) unless such transaction (a) is otherwise permitted under
this Agreement, and (b) is upon fair and reasonable terms no less favorable to
the Borrower or such Subsidiary, as the case may be, than it would obtain in a
comparable arm's length transaction with a Person which is not an Affiliate;
provided, that any such transaction involving more than $5,000,000 must be
approved by a majority of the disinterested members of the Borrower's Board of
Directors.
7.12 Limitation on Sales and Leasebacks. Enter into any
arrangement with any Person providing for the leasing by the Borrower or any of
its Subsidiaries of real or personal property which has been or is to be sold
or transferred by the Borrower or such Subsidiary to such Person or to any
other Person to whom funds have been or are to be advanced by such Person on
the security of such property or rental obligations of the Borrower or such
Subsidiary, if, after giving effect thereto, the amount of all indebtedness
attributable to transactions consummated pursuant to this Section 7.12, plus
the amount of Indebtedness outstanding pursuant to clause (d), (g) and (j) of
Section 7.2, would exceed $15,000,000.
7.13 Limitation on Change of Fiscal Year. Permit the fiscal
year of the Borrower to change more than once during the lifetime of this
Agreement; provided, that such change is to a fiscal year ending the next
December 31 after such change.
7.14 Limitation on Negative Pledge Clauses. Enter into with
any Person any agreement, other than (a) this Agreement and the other Loan
Documents, (b) the Put Facility, (c) the Senior Subordinated Notes, (d) the
Dawson Indenture and (e) any industrial revenue bonds, purchase money Liens or
Financing Leases permitted by this Agreement (in which cases, any prohibition
or limitation shall only be effective against the assets financed thereby)
which prohibits or limits the ability of the Borrower or any of its
Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired.
7.15 Limitation on Lines of Business. Enter into any business,
either directly or through any Subsidiary, except for those businesses in which
the Borrower and its Subsidiaries are engaged on the date of this Agreement or
which are directly related thereto including any business in the oil and gas
well service industry, provided that Odessa shall not engage in any business,
except for those businesses in which it is engaged on the date of this
Agreement.
7.16 Limitation on Consolidated Lease Expense. Permit
Consolidated Lease Expense for any fiscal year of the Borrower and its
Subsidiaries to exceed $20,000,000.
SECTION 8. EVENTS OF DEFAULT
<PAGE> 79
74
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan
or Reimbursement Obligation when due in accordance with the terms hereof; or
the Borrower shall fail to pay any interest on any Loan or Reimbursement
Obligation, or any other amount payable hereunder or under any other Loan
Document, within three days after any such interest or other amount becomes due
in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by the
Borrower or any other Loan Party herein or in any other Loan Document or which
is contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Agreement or any
such other Loan Document shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(c) The Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in Section 7; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this Agreement or
any other Loan Document (other than as provided in paragraphs (a) through (c)
of this Section 8), and such default shall continue unremedied for a period of
30 days; or
(e) The Borrower or any of its Subsidiaries shall (i) default
in making any payment of any principal of any Indebtedness (including, without
limitation, any Guarantee Obligation) or Interest Rate Protection Agreement
Obligation on the scheduled or original due date with respect thereto; or (ii)
default in making any payment of any interest on any such Indebtedness beyond
the period of grace, if any, provided in the instrument or agreement under
which such Indebtedness or Interest Rate Protection Agreement Obligation was
created; or (iii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or Interest Rate
Protection Agreement Obligation or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or beneficiary of such Indebtedness (or a
trustee or agent on behalf of such holder or beneficiary) to cause, with the
giving of notice if required, such Indebtedness to become due prior to its
stated maturity or (in the case of any such Indebtedness constituting a
Guarantee Obligation or Interest Rate Protection Agreement Obligation) to
become payable; provided that a default, event or condition described in clause
(i), (ii) or (iii) of this paragraph (e) shall not at any time constitute an
Event of Default under this Agreement unless, at such time, one or more
defaults, events or conditions of the type described in clauses (i), (ii) and
(iii) of this paragraph (e) shall have occurred and be continuing with respect
to Indebtedness and/or Guarantee Obligations and/or Interest Rate Protection
Agreement Obligations of the Borrower and its Subsidiaries the outstanding
principal amount of which exceeds in the aggregate $5,000,000; or
(f) (i) The Borrower or any of its Subsidiaries (other than
Servicios) shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or the Borrower or any of its Subsidiaries
(other than
<PAGE> 80
75
Servicios) shall make a general assignment for the benefit of its creditors; or
(ii) there shall be commenced against the Borrower or any of its Subsidiaries
(other than Servicios) any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against the Borrower or any of its Subsidiaries (other than
Servicios) any case, proceeding or other action seeking issuance of a warrant
of attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) the Borrower or
any of its Subsidiaries (other than Servicios) shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the
Borrower or any of its Subsidiaries (other than Servicios) shall generally not,
or shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of
any Loan Party or any Commonly Controlled Entity, (iii) a Reportable Event
shall occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Required Lenders,
likely to result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV
of ERISA, (v) any Loan Party or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Required Lenders is likely to, incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or exist
with respect to a Plan; and in each case in clauses (i) through (vi) above,
such event or condition, together with all other such events or conditions, if
any, could, in the sole judgment of the Required Lenders, reasonably be
expected to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
the Borrower or any of its Subsidiaries (other than Servicios) involving in the
aggregate a liability (not paid or fully covered by insurance) of $5,000,000 or
more, and all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 60 days from the entry
thereof; or
(i) Any of the Security Documents shall cease, for any reason,
to be in full force and effect, or any Loan Party or any Affiliate of any Loan
Party shall so assert, or any material Lien created by any of the Security
Documents shall cease to be enforceable and of the same effect and priority
purported to be created thereby; or
(j) Any Change of Control shall occur; or
(k) The Merger shall fail to be consummated within 150 days
after the Closing Date;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under
this Agreement and the other Loan Documents (including, without
<PAGE> 81
76
limitation, all amounts of L/C Obligations, whether or not the beneficiaries of
the then outstanding Letters of Credit shall have presented the documents
required thereunder) shall immediately become due and payable, and (B) if such
event is any other Event of Default, either or both of the following actions
may be taken: (i) with the consent of the Majority Facility Lenders, in respect
of a Facility, the Administrative Agent may, or upon the request of the
Majority Revolving Facility Lenders, the Administrative Agent shall, by notice
to the Borrower declare the Commitments, under such Facility, to be terminated
forthwith, whereupon the Revolving Commitments shall immediately terminate; and
(ii) with the consent of the Required Lenders, the Administrative Agent may, or
upon the request of the Required Lenders, the Administrative Agent shall, by
notice to the Borrower declare the Commitments to be terminated forthwith,
whereupon the Commitments shall immediately terminate; and (ii) with the
consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Borrower, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement and the other Loan Documents
(including, without limitation, all amounts of L/C Obligations, whether or not
the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) to be due and payable forthwith,
whereupon the same shall immediately become due and payable.
With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to this paragraph, the Borrower shall at such time deposit in a cash
collateral account opened by the Administrative Agent an amount equal to the
aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts
held in such cash collateral account shall be applied by the Administrative
Agent to the payment of drafts drawn under such Letters of Credit, and the
unused portion thereof after all such Letters of Credit shall have expired or
been fully drawn upon, if any, shall be applied to repay other obligations of
the Borrower hereunder and under the other Loan Documents. After all such
Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations
of the Borrower hereunder and under the other Loan Documents shall have been
paid in full, the balance, if any, in such cash collateral account shall be
returned to the Borrower (or such other Person as may be lawfully entitled
thereto). Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
SECTION 9. THE AGENTS
9.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Agents as the agents of such Lender under this Agreement and the
other Loan Documents, and each Lender irrevocably authorizes each Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to such Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, no Agent shall have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against any Agent.
9.2 Delegation of Duties. Each Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys in-fact
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77
selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither the Agents nor any of
their officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement or any other Loan
Document (except to the extent that any of the foregoing are found by a final
and nonappealable decision of a court of competent jurisdiction to have
resulted from its or such Person's own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for
in, or received by any Agent under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or the Notes or any other Loan
Document or for any failure of any Loan Party a party thereto to perform its
obligations hereunder or thereunder. No Agent shall be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the properties, books or records of any Loan
Party.
9.4 Reliance by Agents. Each Agent shall be entitled to rely,
and shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and other
experts selected by such Agent. The Agents may deem and treat the payee of any
Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. Each Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the Required
Lenders (or, if so specified by this Agreement, all Lenders) as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action, provided that in no event
shall the Lenders be obligated to indemnify the Agents for any amounts
described in the proviso to Section 9.7. Each Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
other Loan Documents in accordance with a request of the Required Lenders (or,
if so specified by this Agreement, all Lenders), and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Notes.
9.5 Notice of Default. No Agent shall be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless such Agent has received written notice from a Lender or the
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event
that the Administrative Agent receives such a notice, the Administrative Agent
shall give notice thereof to the Lenders. The Administrative Agent and the
Collateral Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders (or,
if so specified by this Agreement, all Lenders); provided that unless and until
the Administrative Agent or the Collateral Agent shall have received such
directions, the Administrative Agent or the Collateral Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders.
<PAGE> 83
78
9.6 Non-Reliance on Agents and Other Lenders. Each Lender
expressly acknowledges that neither any Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agents hereafter
taken, including any review of the affairs of a Loan Party or any Affiliate of
a Loan Party, shall be deemed to constitute any representation or warranty by
any Agent to any Lender. Each Lender represents to each Agent that it has,
independently and without reliance upon any Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and
their Affiliates and made its own decision to make its Loans hereunder and
enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon any Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their Affiliates. Except for notices,
reports and other documents expressly required to be furnished to the Lenders
by the Administrative Agent hereunder, no Agent shall have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any Affiliate of
a Loan Party which may come into the possession of such Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
9.7 Indemnification. The Lenders agree to indemnify each Agent
in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Commitments, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against any Agent in any way relating to
or arising out of, the Commitments, this Agreement, any of the other Loan
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by any Agent under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements which are found by a final and nonappealable decision
of a court of competent jurisdiction to have resulted from such Agent's gross
negligence or willful misconduct. The agreements in this Section 9.7 shall
survive the payment of the Notes and all other amounts payable hereunder.
9.8 Agents in Their Individual Capacities. Each Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with any Loan Party as though such Agent were not an Agent
hereunder and under the other Loan Documents. With respect to its Loans made or
renewed by it and any Note issued to it and with respect to any Letter of
Credit issued or participated in by it, each Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not an Agent, respectively, and the
terms "Lender" and "Lenders" shall include each Agent in their individual
capacities.
9.9 Successor Agents. The Administrative Agent or the
Collateral Agent may resign as Administrative Agent or Collateral Agent, as the
case may be, upon 10 days' notice to the Lenders. If the Administrative Agent
or the Collateral Agent shall resign as Administrative Agent or Collateral
Agent under this Agreement and the other Loan Documents, then the Required
Lenders shall appoint from among the Lenders a successor agent in such
<PAGE> 84
79
capacity, which successor agent, so long as no Default or Event of Default
shall have occurred and be continuing, shall have been approved by the Borrower
(which approval shall not be unreasonably withheld or delayed), whereupon such
successor agent shall succeed to the rights, powers and duties of the
Administrative Agent or the Collateral Agent, as the case may be, hereunder.
Effective upon such appointment and approval, the terms "Administrative Agent"
and "Collateral Agent" shall mean such successor agent, and the former
Administrative Agent's or Collateral Agent's rights, powers and duties as such
shall be terminated, without any other or further act or deed on the part of
such former Administrative Agent or Collateral Agent or any of the parties to
this Agreement or any holders of the Notes. After any retiring Agent's
resignation as Agent, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement and the other Loan Documents.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement, any other
Loan Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders and each Loan Party which is party to the relevant Loan
Documents may, or, with the written consent of the Required Lenders, the
Administrative Agent and each Loan Party which is a party to the relevant Loan
Document may, from time to time, (a) enter into written amendments, supplements
or modifications hereto and to the other Loan Documents for the purpose of
adding any provisions to this Agreement or the other Loan Documents or changing
in any manner the rights of the Lenders or of the Loan Parties hereunder or
thereunder or (b) waive, on such terms and conditions as the Required Lenders
or the Administrative Agent, as the case may be, may specify in such
instrument, any of the requirements of this Agreement or the other Loan
Documents or any Default or Event of Default and its consequences; provided
that no such waiver and no such amendment, supplement or modification shall (i)
forgive the principal amount of any Loan or any L/C Obligation, extend the
scheduled date of any amortization payment in respect of any Term Loan or
extend the final scheduled date of maturity of any Loan, or reduce the stated
rate of any interest, fee or letter of credit commission payable hereunder or
extend the scheduled date of any payment thereof or increase the amount or
extend the expiration date of any Lender's Commitment, or waive any mandatory
prepayment or make any change in the application of any prepayment of the Loans
specified in Section 2.16(b) and (c) in each case without the consent of each
Lender directly affected thereby, (ii) extend the scheduled date or reduce the
amount of any reduction of the Revolving Commitments referred to in Section
2.4(c) without the consent of each Lender directly affected thereby, (iii)
amend, modify or waive any provision of this Section 10.1 or reduce any
percentage specified in the definition of Required Lenders or Required
Prepayment Lenders, or consent to the assignment or transfer by any Loan
Party of any of its rights and obligations under this Agreement and the other
Loan Documents or release all or a substantial portion of the Collateral (other
than in connection with any sale or other disposition of assets permitted by
Section 7.6) or any guarantee of the Obligations, in each case, without the
written consent of all the Lenders, (iv) reduce the percentage specified in the
definition of Majority Facility Lender with respect to any Facility without the
written consent of all the Lenders under such Facility, (v) amend, modify or
waive any provision of Section 9 without the written consent of the Agents, or
(vi) amend, modify or waive any provision of Section 3 without the written
consent of the Issuing Lender. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Loan Parties, the Lenders, the Agents and all future
holders of the Notes. In the case of any waiver, the Loan Parties, the Lenders
and the Agents shall be restored to their former position and rights hereunder
and under the other Loan Documents, and any Default or Event
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80
of Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereon.
10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice,
when received, addressed as follows in the case of the Borrower, the
Administrative Agent, the Collateral Agent and the Arranger, and as set forth
in Schedule 1.1A in the case of the Lenders, or to such other address as may be
hereafter notified by the respective parties hereto and any future holders of
the Notes:
<TABLE>
<S> <C>
The Borrower: Key Energy Group, Inc.
Two Tower Center, Tenth Floor
East Brunswick, New Jersey 08816
Attention: Mr. Stephen E. McGregor
Telecopy: (908) 659-1526
Telephone: (908) 247-5148
The Administrative
Agent: PNC Bank, National Association
One PNC Plaza, Third Floor
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707
Attention: Mr. Thomas Majeski
Telecopy: (412) 762-2571
Telephone: (412) 762-2431
with a copy to: PNC Bank, National Association
One PNC Plaza, Fourth Floor Annex
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707
Attention: Ms. Arlene Ohler
Telecopy: (412) 762-8672
Telephone: (412) 762-3627
The Collateral
Agent: Norwest Bank Texas, N.A.
500 West Texas Avenue
Midland, Texas 79701
Attention: Mr. Mark McKinney
Telecopy: (915) 685-5441
Telephone: (915) 685-5149
</TABLE>
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to Section 2.5, 2.8, 2.9 or 2.11 shall not be effective
until received. Any notice or delivery to or from or consent required of the
Borrower hereunder or pursuant to any other Loan Document may be made to or by
the Borrower.
10.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of any Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any
<PAGE> 86
81
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law.
10.4 Survival. All representations and warranties made
hereunder, in the other Loan Documents and in any document, certificate or
statement delivered pursuant hereto or in connection herewith shall survive the
execution and delivery of this Agreement and the Notes and the making of the
Loans hereunder.
10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to
pay or reimburse the Agents for all their reasonable out-of-pocket costs and
expenses incurred in connection with the development, preparation and execution
of, and any amendment, supplement or modification to, this Agreement and the
other Loan Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements of counsel (including any local counsel) to the Agents,
(b) to pay or reimburse each Lender and each of the Agents for all its costs
and expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to each Lender
and counsel to the Agents, (c) to pay, indemnify, and hold each Lender and each
Agent harmless from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d)
to pay, indemnify, and hold each Lender and each Agent and their respective
officers, directors, trustees, employees, affiliates, agents and controlling
persons (each, an "indemnitee") harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement, the other Loan Documents and any such other documents,
including, without limitation, any of the foregoing relating to the use of
proceeds of the Loans or the violation of, noncompliance with or liability
under, any Environmental Law applicable to the Borrower, any of its
Subsidiaries, any of its Excluded Subsidiaries or any of the Properties (all
the foregoing in this clause (d), collectively, the "indemnified liabilities"),
provided that the Borrower shall have no obligation hereunder to any indemnitee
with respect to indemnified liabilities to the extent such indemnified
liabilities are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of such indemnitee. Without limiting the foregoing, and to the
extent permitted by applicable law, the Borrower agrees not to assert, and
hereby waives, and to cause each of its Subsidiaries not to assert and to so
waive, all rights for contribution or any other rights of recovery with respect
to all claims, demands, penalties, fines, liabilities, settlements, damages,
costs and expenses of whatever kind or nature, under or related to
Environmental Laws, that any of them might have by statute or otherwise against
any Indemnitee. The agreements in this Section 10.5 shall survive repayment of
the Notes and all other amounts payable hereunder and the termination of the
Commitments and, in the case of any Lender that may assign any interest in its
Commitments, Loans or Letter of Credit interest hereunder, shall survive the
making of such assignment, notwithstanding that such assigning Lender may cease
to be a "Lender" hereunder.
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10.6 Successors and Assigns; Participation and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Agents, all future holders of the Notes and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of each Lender.
(b) Any Lender may, without the consent of the Borrower, in
the ordinary course of its business and in accordance with applicable law, at
any time sell to one or more banks or other entities (each, a "Participant")
participating interests in any Loan owing to such Lender, any Note held by such
Lender, any Commitment of such Lender or any other interest of such Lender
hereunder and under the other Loan Documents. In the event of any such sale by
a Lender of a participating interest to a Participant, such Lender's
obligations under this Agreement to the other parties to this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Note for
all purposes under this Agreement and the other Loan Documents, and the
Borrower and the Administrative Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. In no event
shall any Participant under any such participation have any right to approve
any amendment or waiver of any provision of any Loan Document, or any consent
to any departure by any Loan Party therefrom, except to the extent that such
amendment, waiver or consent would reduce the principal of, or interest on, the
Notes or any fees payable hereunder, postpone the date of the final maturity of
the Notes, consent to the assignment or transfer by the Borrower of any of its
rights and obligations under this Agreement and the other Loan Documents,
release all or a substantial portion of the Collateral (other than in
connection with any sale or other disposition of assets permitted by Section
7.6) or any guarantee of the Obligations, in each case to the extent subject to
such participation. The Borrower agrees that if amounts outstanding under this
Agreement and the Notes are due or unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating interest in amounts
owing under this Agreement and any Note to the same extent as if the amount of
its participating interest were owing directly to it as a Lender under this
Agreement or any Note, provided that, in purchasing such participating
interest, such Participant shall be deemed to have agreed to share with the
Lenders the proceeds thereof as provided in Section 10.7(a) as fully as if it
were a Lender hereunder. The Borrower also agrees that each Participant shall
be entitled to the benefits of Sections 2.18, 2.19 and 2.20 with respect to its
participation in the Commitments and the Loans outstanding from time to time as
if it was a Lender; provided that, in the case of Section 2.19, such
Participant shall have complied with the requirements of said Section and
provided, further, that no Participant shall be entitled to receive any greater
amount pursuant to any such Section than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred
by such transferor Lender to such Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its business and
in accordance with applicable law, at any time and from time to time assign to
any Lender or any affiliate thereof or any Person under common management with
any such Lender or, with the consent of the Borrower, the Administrative Agent
and, in the case of an assignment of Commitments, the Issuing Lender (which, in
each case, shall not be unreasonably withheld, delayed or conditioned), to an
additional bank, financial institution or other entity (an "Assignee") all or
any part of its rights and obligations under this Agreement, the Letters of
Credit and the Notes pursuant to an Assignment and Acceptance, substantially in
the form of Exhibit F, executed by such Assignee, such assigning Lender (and,
in the case of an Assignee that is not then a Lender or an affiliate thereof or
a Person under common management with such Lender, by
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83
the Borrower, the Administrative Agent and, in the case of an assignment of
Revolving Commitments, the Issuing Lender) and delivered to the Administrative
Agent for its acceptance and recording in the Register; provided that (except
with the consent of the Borrower and the Administrative Agent) (i) no such
assignment to an Assignee (other than any Lender or any affiliate thereof or
any Person under common management with such Lender) shall be in an aggregate
principal amount of less than $5,000,000 (other than in the case of an
assignment of all of a Lender's interests under this Agreement and the Notes)
and (ii) subsequent to any such assignment the assigning Lender shall not
retain an aggregate principal amount of less than $5,000,000 in Commitments and
Loans. Such assignment need not be ratable as among any Commitments and/or
Loans of the assigning Lender. Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with a Commitment as set forth therein,
and (y) the assigning Lender thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such assigning Lender shall cease to be a party hereto).
Notwithstanding any provision of this paragraph (c) and paragraph (e) of this
Section 10.6, the consent of the Borrower shall not be required for any
assignment which occurs at any time when any Event of Default shall have
occurred and be continuing.
(d) A Note and the Obligation(s) evidenced thereby may be
assigned or otherwise transferred in whole or in part only by registration of
such assignment or transfer of such Note and the Obligation(s) evidenced
thereby on the Register (and each Note shall expressly so provide). Any
assignment or transfer of all or part of such Obligation(s) and the Note(s)
evidencing the same shall be registered on the Register only upon surrender for
registration of assignment or transfer of the Note(s) evidencing such
Obligation(s), accompanied by an Assignment and Acceptance duly executed by the
holder of such Note(s), and thereupon one or more new Note(s) in the same
aggregate principal amount shall be issued to the designated Assignee(s) and
the old Notes(s) shall be returned by the Administrative Agent to the Borrower
marked "cancelled." No assignment of a Note and the Obligation(s) evidenced
thereby shall be effective unless it has been recorded in the Register as
provided in this Section 10.6(d).
(e) The Administrative Agent shall maintain at its address
referred to in Section 10.2 a copy of each Assignment and Acceptance delivered
to it and a register (the "Register") for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of the
Loans owing to, each Lender from time to time and the registered owners of the
Obligation(s) evidenced by the Note(s). The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, the
Administrative Agent and the Lenders shall treat each Person whose name is
recorded in the Register as the owner of the Loan or the Obligation evidenced
by a Note recorded therein for all purposes of this Agreement. The Register
shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an Assignee (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof or a Person under common management
with such Lender, by the Borrower, the Administrative Agent and the Issuing
Lender) together with payment to the Administrative Agent of a registration and
processing fee of $3,500, the Administrative Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register and
give notice of
<PAGE> 89
84
such acceptance and recordation to the Lenders and the Borrower. On or prior to
such effective date, the Borrower, at its own expense, upon request, shall
execute and deliver to the Administrative Agent (in exchange for the Note of
the assigning Lender) a new Note to the order of such Assignee in an amount
equal to the Commitment assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained a Commitment, upon request
a Note to the order of the assigning Lender in an amount equal to the
Commitment retained by it hereunder. Such new Notes shall be dated the Closing
Date and shall otherwise be in the form of the Note replaced thereby.
(g) The Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee
any and all financial information in such Lender's possession concerning the
Borrower and its Affiliates which has been delivered to such Lender by or on
behalf of the Borrower pursuant to this Agreement or which has been delivered
to such Lender by or on behalf of the Borrower in connection with such Lender's
credit evaluation of the Borrower and its Affiliates prior to becoming a party
to this Agreement.
(h) Nothing herein shall prohibit or restrict any Lender from
(i) pledging or assigning any Note to any Federal Reserve Bank in accordance
with applicable law or (ii) with the prior consent of the Administrative Agent
and the Borrower (which, in each case, shall not be unreasonably withheld or
delayed or conditioned), pledging its rights in connection with any Loan or
Note to any other Person.
10.7 Adjustments; Set-off. (a) Except to the extent that this
Agreement expressly provides for payments to be allocated to a particular
Lender or to the Lender of a particular Facility, if any Lender (a "Benefitted
Lender") shall at any time receive any payment of all or part of its Loans or
the Reimbursement Obligations owing to it, or interest thereon, or receive any
collateral in respect thereof then due and owing to such Lender (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Section 8(f), or otherwise), in a greater proportion
than any such payment to or collateral received by any other Lender, if any, in
respect of such other Lender's Loans or the Reimbursement Obligations then due
and owing to such other Lender, or interest thereon, such Benefitted Lender
shall purchase for cash from the other Lenders a participating (or, at the
option of such Lender, a direct) interest in such portion of each such other
Lender's Loan and/or of the Reimbursement Obligations owing to each such other
Lender, or shall provide such other Lenders with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
Benefitted Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; provided that if all or any portion
of such excess payment or benefits is thereafter recovered from such Benefitted
Lender, such purchase shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder or under the Notes (whether at the stated maturity, by
acceleration or otherwise) to set off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Lender or any branch or
agency thereof to or for the credit or the account of the Borrower. Each Lender
agrees promptly to notify the Borrower and the Administrative Agent after any
such setoff and application made by such Lender, provided that the failure to
give
<PAGE> 90
85
such notice shall not affect the validity of such setoff and application.
10.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. Delivery of an executed
signature page of this Agreement by facsimile transmission shall be effective
as delivery of a manually executed counterpart hereof. A set of the copies of
this Agreement signed by all the parties shall be lodged with the Borrower and
the Administrative Agent.
10.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Borrower, the Administrative Agent, the Arranger
and the Lenders with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent, the Arranger or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State
of New York, the courts of the United States for the Southern District of New
York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in Section 10.2 or at such other address of
which the Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this Section 10.12 any special, exemplary, punitive or
consequential damages.
<PAGE> 91
86
10.13 Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) neither any Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
the Agents and Lenders, on one hand, and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Lenders or among the Borrower and the Lenders.
10.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND
FOR ANY COUNTERCLAIM THEREIN.
10.15 Confidentiality. Each of the Agents and each Lender
agrees to keep confidential all non-public information provided to it by any
Loan Party pursuant to this Agreement that is designated by such Loan Party as
confidential; provided that nothing herein shall prevent the Agents or any
Lender from disclosing any such information (a) to the Agents any other Lender
or any affiliate or investment advisor of any Lender, (b) to any Transferee or
prospective Transferee which agrees to comply with the provisions of this
Section 10.15, (c) to the employees, directors, agents, attorneys, accountants
and other professional advisors of such Lender or its affiliates, (d) upon the
request or demand of any Governmental Authority having jurisdiction over such
Agent or such Lender, (e) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (f) if requested or required to do so in connection with
any litigation or similar proceeding, (g) which has been publicly disclosed
other than in breach of this Section 10.15 or (h) in connection with the
exercise of any remedy hereunder or under any other Loan Document.
10.16 Enforceability; Usury. In no event shall any provision
of this Agreement, the Notes, or any other instrument evidencing or securing
the indebtedness of the Borrower hereunder ever obligate the Borrower to pay or
allow any Lender to collect interest on the Notes or any other indebtedness of
the Borrower hereunder at a rate greater than the maximum non-usurious rate
permitted by applicable law (herein referred to as the "Highest Lawful Rate"),
or obligate the Borrower to pay any taxes, assessments, charges, insurance
premiums or other amounts to the extent that such payments, when added to the
interest payable on the Notes, would be held to constitute the payment by the
Borrower of interest at a rate greater than the Highest Lawful Rate; and this
provision shall control over any provision to the contrary.
Without limiting the generality of the foregoing, in the event
the maturity of all or any part of the principal amount of the indebtedness of
the Borrower hereunder shall be accelerated for any reason, then such principal
amount so accelerated shall be credited with any interest theretofore paid
thereon in advance and remaining unearned at the time of such acceleration. If,
pursuant to the terms of this Agreement or the Notes, any funds are applied to
the payment of any part of the principal amount of the indebtedness of the
Borrower hereunder prior to the maturity thereof, then (a) any interest which
would otherwise thereafter
<PAGE> 92
87
accrue on the principal amount so paid by such application shall be canceled,
and (b) the indebtedness of the Borrower hereunder remaining unpaid after such
application shall be credited with the amount of all interest, if any,
theretofore collected on the principal amount so paid by such application and
remaining unearned at the date of said application; and if the funds so applied
shall be sufficient to pay in full all the indebtedness of the Borrower
hereunder, then the Lenders shall refund to the Borrower all interest
theretofore paid thereon in advance and remaining unearned at the time of such
acceleration. Regardless of any other provision in this Agreement, or in any of
the written evidences of the indebtedness of the Borrower hereunder, the
Borrower shall never be required to pay any unearned interest on such
indebtedness or any portion thereof, and shall never be required to pay
interest thereon at a rate in excess of the Highest Lawful Rate construed by
courts having competent jurisdiction thereof.
10.17 Intercreditor Agreement. Each Lender by its signature
hereto or by its execution of an Assignment and Acceptance substantially in the
form of Exhibit F hereby authorizes and directs and ratifies the execution and
delivery by the Administrative Agent of the Intercreditor Agreement and each
Lender agrees to be bound by the provisions thereof and shall have the rights
and obligations of a Lender under the Intercreditor Agreement as provided
therein to the same extent as if such Lender was a party thereto.
<PAGE> 93
88
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
KEY ENERGY GROUP, INC..
By: /s/ Stephen E. McGregor
---------------------------------
Title: Executive Vice President
PNC BANK, NATIONAL ASSOCIATION
as Administrative Agent and as a Lender
By: /s/ Thomas K. Grundman
---------------------------------
Title: Senior Vice President
<PAGE> 94
89
NORWEST BANK TEXAS, N.A.
as Collateral Agent and Issuing Lender
By: /s/ Mark D. McKinney
--------------------------------
Title: Senior Vice President
<PAGE> 95
Schedule 1.1A
Commitments; Lending Offices and Addresses
<TABLE>
<CAPTION>
Name of Lender and Revolving Tranche A Term Tranche B Term
Information for Notices Commitment Commitment Commitment
<S> <C> <C> <C>
PNC BANK, $250,000,000 $150,000,000 $150,000,000
NATIONAL ASSOCIATION
One PNC Plaza,Third Floor
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707
Attention: Mr. Thomas Majeski
Telecopy: (412) 762-2571
Telephone: (412) 762-2431
</TABLE>
<PAGE> 96
Schedule 1.1B
Mortgaged Property
<PAGE> 97
Schedule 1.1C
Oil and Gas Properties Mortgaged
<PAGE> 98
Schedule 3.1
Existing Letters of Credit
Account Party Issuer Amount Number Beneficiary
<PAGE> 99
Schedule 4.4
Consents
<PAGE> 100
Schedule 4.8
Other Real Property Interests
<PAGE> 101
Schedule 4.15
Subsidiaries
<PAGE> 102
Schedule 4.19(b)
UCC Filing Jurisdictions
<PAGE> 103
Schedule 4.19(c)
Mortgage Filing Jurisdictions
<PAGE> 104
Schedule 4.19(d)
Oil and Gas Mortgage Filing Jurisdictions
<PAGE> 105
Schedule 6.11(e)
Mortgaged Properties to be Covered by Environmental Reports
<PAGE> 106
Schedule 7.2
Existing Indebtedness
<PAGE> 107
Schedule 7.3
Existing Liens
<PAGE> 108
Schedule 7.9(C)
Additional Permitted Acquisitions
<PAGE> 109
ANNEX I
PRICING GRID A
<TABLE>
<CAPTION>
=================================================================================================================================
REVOLVING LOANS
=================================================================================================================================
Level Consolidated Leverage Applicable Margin for Loans Applicable Margin for Loans Commitment Fee Rate
Ratio which are Eurodollar Loans which are Base Rate Loans
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
I less than or equal to 3.0 1.50 0.00 0.25
to 1.0
- ---------------------------------------------------------------------------------------------------------------------------------
II greater than 3.0 to 1.0 1.75 0.25 0.375
but less than or equal to
3.5 to 1.0
- ---------------------------------------------------------------------------------------------------------------------------------
III greater than 3.5 to 1.0 2.00 0.50 0.375
but less than or equal to
4.0 to 1.0
- ---------------------------------------------------------------------------------------------------------------------------------
IV greater than 4.0 to 1.0 2.25 0.75 0.50
but less than or equal to
4.5 to 1.0
- ---------------------------------------------------------------------------------------------------------------------------------
V greater than 4.5 to 1.0 2.50 1.00 0.50
but less than or equal to
5.0 to 1.0
- ---------------------------------------------------------------------------------------------------------------------------------
VI greater than 5.0 to 1.0 2.75 1.25 0.50
=================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
=================================================================================================================================
TRANCHE A TERM LOANS
=================================================================================================================================
Level Consolidated Leverage Applicable Margin for Loans Applicable Margin for Loans Commitment Fee Rate
Ratio which are Eurodollar Loans which are Base Rate Loans
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
I less than or equal to 3.0 1.50 0.00 0.25
to 1.0
- ---------------------------------------------------------------------------------------------------------------------------------
II greater than 3.0 to 1.0 1.75 0.25 0.375
but less than or equal to
3.5 to 1.0
- ---------------------------------------------------------------------------------------------------------------------------------
III greater than 3.5 to 1.0 2.00 0.50 0.375
but less thank or equal
to 4.0 to 1.0
- ---------------------------------------------------------------------------------------------------------------------------------
IV greater than 4.0 to 1.0 2.25 0.75 0.50
but less than or equal to
4.5 to 1.0
- ---------------------------------------------------------------------------------------------------------------------------------
V greater than 4.5 to 1.0 2.50 1.00 0.50
but less than or equal to
5.0 to 1.0
- ---------------------------------------------------------------------------------------------------------------------------------
VI greater than 5.0 to 1.0 2.75 1.25 0.50
=================================================================================================================================
</TABLE>
<PAGE> 110
2
<TABLE>
<CAPTION>
==============================================================================================================================
TRANCHE B TERM LOANS
==============================================================================================================================
Level Consolidated Leverage Applicable Margin for Loans Applicable Margin for Loans Commitment Fee Rate
Ratio which are Eurodollar Loans which are Base Rate Loans
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
I less than or equal to 3.25 1.75 0.25
3.0 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------
II greater than 3.0 to 1.0 3.25 1.75 0.375
but less than or equal
to 3.5 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------
III greater than 3.5 to 1.0 3.25 1.75 0.375
but less thank or equal
to 4.0 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------
IV greater than 4.0 to 1.0 3.25 1.75 0.50
but less than or equal
to 4.5 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------
V greater than 4.5 to 1.0 3.25 1.75 0.50
but less than or equal
to 5.0 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------
VI greater than > 5.0 to 3.25 1.75 0.50
1.0
==============================================================================================================================
</TABLE>
<PAGE> 111
ANNEX II
PRICING GRID B
<TABLE>
<CAPTION>
==============================================================================================================================
REVOLVING LOANS
==============================================================================================================================
Level Consolidated Leverage Applicable Margin for Loans Applicable Margin for Loans Commitment Fee Rate
Ratio which are Eurodollar Loans which are Base Rate Loans
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
I less than or equal to 2.5 1.00 0.00 0.20
to 1.0
- ------------------------------------------------------------------------------------------------------------------------------
II greater than 2.5 to 1.0 1.25 0.00 0.25
but less than or equal to
3.0 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------
III greater than 3.0 to 1.0 1.50 0.00 0.30
but less than or equal to
3.5 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------
IV greater than 3.5 to 1.0 1.75 0.25 0.35
but less than or equal to
4.0 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------
V greater than 4.0 to 1.0 2.00 0.50 0.40
but less than or equal to
4.5 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------
VI greater than 4.5 to 1.0 2.25 0.75 0.50
==============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
==============================================================================================================================
TRANCHE A TERM LOANS
==============================================================================================================================
Level Consolidated Leverage Applicable Margin for Loans Applicable Margin for Loans Commitment Fee Rate
Ratio which are Eurodollar Loans which are Base Rate Loans
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
I equal to or lesser than 1.00 0.00 0.20
2.5 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------
II greater than 2.5 to 1.0 1.25 0.00 0.25
but less than or equal to
3.0 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------
III greater than 3.0 to 1.0 1.50 0.00 0.30
but less than or equal to
3.5 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------
IV greater than 3.5 to 1.0 1.75 0.25 0.35
but less than or equal to
4.0 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------
V greater than 4.0 to 1.0 2.00 0.50 0.40
but less than or equal to
4.5 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------
VI greater than 4.5 to 1.0 2.25 0.75 0.50
==============================================================================================================================
</TABLE>
<PAGE> 112
2
<TABLE>
<CAPTION>
==============================================================================================================================
TRANCHE B TERM LOANS
==============================================================================================================================
Level Consolidated Leverage Applicable Margin for Loans Applicable Margin for Loans Commitment Fee Rate
Ratio which are Eurodollar Loans which are Base Rate Loans
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
I less than or equal to 2.75 1.25 0.20
2.5 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------
II greater than 2.5 to 1.0 2.75 1.25 0.25
but less than or equal
to 3.0 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------
III greater than 3.0 to 1.0 2.75 1.25 0.30
but less than or equal
to 3.5 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------
IV greater than 3.5 to 1.0 2.75 1.25 0.35
but less than or equal
to 4.0 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------
V greater than 4.0 to 1.0 2.75 1.25 0.40
but less than or equal
to 4.5 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------
VI greater than 4.5 to 1.0 2.75 1.25 0.50
==============================================================================================================================
</TABLE>
<PAGE> 1
EXHIBIT 99.8
AMENDED AND RESTATED
MASTER GUARANTEE AND COLLATERAL AGREEMENT
made by
KEY ENERGY GROUP, INC.
and certain of its Subsidiaries
in favor of
NORWEST BANK TEXAS, N.A.,
as Collateral Agent
Dated as of June 6, 1997,
as amended and restated through September 14, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 1. DEFINED TERMS..................................................... 2
1.1 Definitions......................................................... 2
1.2 Other Definitional Provisions....................................... 8
SECTION 2. GUARANTEE......................................................... 9
2.1 Guarantee........................................................... 9
2.2 Right of Contribution............................................... 10
2.3 No Subrogation...................................................... 10
2.4 Amendments, etc. with respect to the Guaranteed Obligations......... 10
2.5 Guarantee Absolute and Unconditional................................ 11
2.6 Reinstatement....................................................... 12
2.7 Payments............................................................ 12
SECTION 3. GRANT OF SECURITY INTEREST........................................ 13
SECTION 4. REPRESENTATIONS AND WARRANTIES.................................... 13
4.1 Representations in Credit Agreement................................. 14
4.2 Title; No Other Liens............................................... 14
4.3 Perfected First Priority Liens...................................... 14
4.4 Chief Executive Office, Etc......................................... 14
4.5 Inventory and Equipment............................................. 15
4.6 Farm Products....................................................... 15
4.7 Investment Property................................................. 15
4.8 Receivables......................................................... 15
4.9 Intellectual Property............................................... 15
4.10 Vehicles........................................................... 16
SECTION 5. COVENANTS......................................................... 16
5.1 Covenants in Credit Agreement....................................... 16
5.2 Delivery of Instruments and Chattel Paper........................... 16
5.3 Maintenance of Insurance............................................ 16
5.4 Payment of Obligations.............................................. 17
5.5 Maintenance of Perfected Security Interest; Further Documentation... 17
5.6 Changes in Locations, Name, etc..................................... 17
5.7 Notices............................................................. 18
5.8 Investment Property................................................. 18
5.9 Receivables......................................................... 19
5.10 Intellectual Property.............................................. 19
5.11 Vehicles........................................................... 21
SECTION 6. REMEDIAL PROVISIONS............................................... 21
6.1 Certain Matters Relating to Receivables............................. 22
6.2 Communications with Obligors; Grantors Remain Liable................ 22
6.3 Pledged Stock....................................................... 23
6.4 Proceeds to be Turned Over To Collateral Agent...................... 24
6.5 Application of Proceeds............................................. 24
6.6 Code and Other Remedies............................................. 24
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C> <C>
6.7 Private Sales....................................................... 25
6.8 Waiver; Deficiency.................................................. 26
SECTION 7. THE COLLATERAL AGENT.............................................. 26
7.1 Collateral Agent's Appointment as Attorney-in-Fact, etc............. 26
7.2 Duty of Collateral Agent............................................ 28
7.3 Execution of Financing Statements................................... 28
7.4 Authority of Collateral Agent....................................... 28
SECTION 8. MISCELLANEOUS..................................................... 29
8.1 Amendments in Writing............................................... 29
8.2 Notices............................................................. 29
8.3 No Waiver by Course of Conduct; Cumulative Remedies................. 29
8.4 Enforcement Expenses; Indemnification............................... 29
8.5 Successors and Assigns.............................................. 30
8.6 Set-Off............................................................. 30
8.7 Counterparts........................................................ 31
8.8 Severability........................................................ 31
8.9 Section Headings.................................................... 31
8.10 Integration........................................................ 31
8.11 GOVERNING LAW...................................................... 31
8.12 Submission To Jurisdiction; Waivers................................ 31
8.13 Acknowledgements................................................... 32
8.14 WAIVER OF JURY TRIAL............................................... 32
8.15 Additional Grantors................................................ 32
8.16 Releases........................................................... 32
8.17 Interim Lenders/Holders Rights..................................... 33
</TABLE>
ii
<PAGE> 4
SCHEDULES
1 Notice Addresses of Grantors
2 Description of Investment Property
3 Filings and Other Actions Required to Perfect Security Interests
4 Location of Jurisdiction of Organization and Chief Executive Office
5 Location of Inventory and Equipment
6 [Reserved]
7 [Reserved]
8 Vehicles
ANNEXES
1 Form of Assumption Agreement
iii
<PAGE> 5
AMENDED AND RESTATED MASTER GUARANTEE AND COLLATERAL AGREEMENT, dated
as of June 6, 1997, as amended and restated through September 14, 1998, made by
each of the signatories hereto (together with any other entity that may become a
party hereto as provided herein, individually a "Grantor" and collectively, the
"Grantors"), in favor of (i) NORWEST BANK TEXAS, N.A., as collateral agent (in
such capacity, the "Lender Collateral Agent") for the banks and other financial
institutions (the "Lenders") from time to time parties to the Second Amended and
Restated Credit Agreement, dated as of June 6, 1997, as amended and restated
through September 14, 1998 (as further amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among KEY ENERGY GROUP,
INC. (the "Borrower"), the Lenders, PNC BANK NATIONAL ASSOCIATION, as
Administrative Agent (the "Administrative Agent"); the Lender Collateral Agent
and PNC CAPITAL MARKETS, INC., as Arranger (the "Lender Arranger"; together with
the Lenders, the Administrative Agent, the "Lender Creditors"), (ii) from the
Closing Date until the Merger Date, NORWEST BANK TEXAS, N.A. as collateral agent
(in such capacity, the "Interim Lender Collateral Agent") for the banks and
other financial institutions (the "Interim Lenders") from time to time parties
to the Bridge Loan Agreement dated as of the date hereof (the "Interim Loan
Agreement") among the Borrower, the Interim Lenders, Lehman Commercial Paper,
Inc., as administrative agent thereunder (the "Interim Lender Agent") and Lehman
Brothers Inc., as arranger (the "Interim Loan Arranger"; together with the
Interim Lenders and the Interim Lender Agent, the "Interim Lender Creditors")
and (iii) on and after the Merger Date, NORWEST BANK TEXAS, N.A. as collateral
agent (in such capacity, the "Holder Collateral Agent") for the holders of the
9-3/8% Senior Notes due 2007 (the "Holders") issued pursuant to the Indenture
(the "Dawson Indenture") dated as of February 20, 1997 among Dawson Production
Services, Inc. ("Dawson"), certain of its subsidiaries and U.S. Trust Company of
Texas N.A., as trustee (in such capacity, the "Dawson Trustee"; together with
the Holders, the "Holder Creditors").
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make extensions of credit to the Borrower upon the terms and subject
to the conditions set forth therein;
WHEREAS, pursuant to the Interim Loan Agreement, the Interim Lenders
have severally agreed to make extensions of credit to the Borrower upon the
terms and subject to the conditions set forth therein;
WHEREAS, on the Merger Date (as defined in the Credit Agreement) the
Borrower shall become the primary obligor under the Dawson Indenture (as
successor by merger to Dawson):
WHEREAS, the Borrower is a member of an affiliated group of companies
that includes each other Grantor;
WHEREAS, the Borrower and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the making of the extensions of credit under the Credit Agreement and the
Interim Loan Agreement and from the Merger; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
and
<PAGE> 6
2
Interim Lenders to make their respective extensions of credit to the Borrower
under the Credit Agreement and the Interim Loan Agreement that the Grantors
shall have executed and delivered this Agreement;
WHEREAS, the Dawson Indenture contains provisions the effect of which
is to require that upon the occurrence of the Merger the Dawson 9-3/8% Notes (as
defined in the Credit Agreement) be equally and ratably secured by the
Collateral (as defined herein);
NOW, THEREFORE, in consideration of the premises and to induce the
Lenders and the Interim Lenders to enter into the Credit Agreement and the
Interim Loan Agreement, as the case may be, and to make their respective
extensions of credit to the Borrower thereunder and in order to satisfy the
requirements of the Dawson Indenture, each Grantor hereby agrees with the
Collateral Agent (as hereinafter defined), for the equal and ratable benefit of
the Creditors as provided for herein, as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are used
herein as so defined: Accounts, Certificated Securities, Chattel Paper,
Documents, Farm Products, Instruments and Inventory.
(b) The following terms shall have the following meanings:
"Applicable Default or Event of Default": any Default or Event of
Default and, until the Merger Date, any Default or Event of Default as defined
in the Interim Loan Agreement.
"Applicable Event of Default": any Event of Default and until the
Merger Date any Event of Default as defined in the Interim Loan Agreement.
"Agreement": this Amended and Restated Master Guarantee and Collateral
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time.
"Borrower Obligations": the collective reference to (i) Lender Loan
Obligations, (ii) until the Merger Date, the Interim Lender Loan Obligations and
(iii) commencing on the Merger Date, the Holder Note Obligations.
"Collateral": as defined in Section 3.
"Collateral Account": any collateral account established by the
Collateral Agent as provided in Section 6.1 or 6.4.
"Collateral Agent": subject to Section 1.2(d), the collective reference
to the Lender Collateral Agent, the Interim Lender Collateral Agent and the
Holder Collateral Agent.
"Copyrights": (i) all copyrights arising under the laws of the United
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished, all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and
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applications in the United States Copyright Office, and (ii) the right to obtain
all renewals thereof.
"Copyright Licenses": any written agreement naming any Grantor as
licensor or licensee, granting any right under any Copyright, including, without
limitation, the grant of rights to manufacture, distribute, exploit and sell
materials derived from any Copyright.
"Creditors": the collective reference to (i) the Lender Creditors, (ii)
until the Merger Date, the Interim Lender Creditors and (iii) commencing on the
Merger Date and until the Holder Termination Date, the Holder Creditors.
"Foreign Subsidiary Voting Stock": the voting Capital Stock of any
Foreign Subsidiary.
"Equipment": all "equipment" as such term is defined in Section 9-109
of the Uniform Commercial Code in effect in the State of New York on the date
hereof, excluding any Vehicles and Excluded Vehicles covered by a certificate of
title issued by any State.
"Excluded Assets": any assets of the type specified in Sections 3(a)
through 3(l) now owned or hereafter acquired by any Grantor or in which any
Grantor has or at any time in the future may acquire any right, title or
interest and which is, but only so long as the same is, subject to any Lien (x)
in existence on the date hereof listed on Schedule 7.3 of the Credit Agreement
or, (y) permitted under clauses (f), (i) and (j) of Section 7.3 of the Credit
Agreement, which, in the case of either (x) or (y) prohibits the granting of a
Lien to the Collateral Agent (unless an appropriate consent of the lienholder
thereof has been obtained).
"Excluded Vehicles": all trucks, trailers, construction and earth
moving equipment, drilling rigs, well service rigs and workover rigs covered by
a certificate of title issued by any State and having a fair market value of
less than $50,000 each.
"General Intangibles": all "general intangibles" as such term is
defined in Section 9-106 of the Uniform Commercial Code in effect in the State
of New York on the date hereof and, in any event, including, without limitation,
with respect to any Grantor, all contracts, agreements, instruments and
indentures in any form, and portions thereof, to which such Grantor is a party
or under which such Grantor has any right, title or interest or to which such
Grantor or any property of such Grantor is subject, as the same may from time to
time be amended, supplemented or otherwise modified, including, without
limitation, (i) all rights of such Grantor to receive moneys due and to become
due to it thereunder or in connection therewith, (ii) all rights of such Grantor
to damages arising thereunder and (iii) all rights of such Grantor to perform
and to exercise all remedies thereunder, in each case to the extent the grant by
such Grantor of a security interest pursuant to this Agreement in its right,
title and interest in such contract, agreement, instrument or indenture is not
prohibited by such contract, agreement, instrument or indenture without the
consent of any other party thereto, would not give any other party to such
contract, agreement, instrument or indenture the right to terminate its
obligations thereunder, or is permitted with consent if all necessary consents
to such grant of a security interest have been obtained from the other parties
thereto (it being understood that the foregoing shall not be deemed to obligate
such Grantor to obtain such consents); provided, that the foregoing limitation
shall not affect, limit, restrict or impair the grant by such Grantor of a
security interest pursuant to this Agreement in any Receivable or any money or
other amounts due or to become due under any such contract, agreement,
instrument or indenture.
"Guaranteed Obligations": the collective reference to (i) the Lender
Loan
<PAGE> 8
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Obligations and (ii) until the Merger Date, the Interim Lender Loan Obligations.
"Guarantors": the collective reference to each Grantor other than the
Borrower.
"Hedge Agreements": as to any Person, all foreign exchange
transactions, and commodity, currency and interest rate swaps, caps or collar
agreements or similar arrangements entered into by such Person providing for
protection against fluctuations in hydrocarbon prices, interest rates or
currency exchange rates or the exchange of nominal interest obligations, either
generally or under specific contingencies.
"Holder Guarantee Obligations": with respect to any Subsidiary of the
Borrower that is a guarantor under the Dawson Indenture (at the time of the
Merger and after giving effect thereto), (i) the Holder Note Obligations and
(ii) all obligations and liabilities of such Subsidiary as a guarantor which may
arise under or in connection with the Dawson Indenture or the Dawson 9-3/8%
Notes, in each case whether on account of guarantee obligations, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Dawson Trustee, the
Collateral Agent or to the Holders that are required to be paid by such
Subsidiary pursuant to the terms of the Dawson Indenture or the Dawson 9-3/8%
Notes).
"Holder Obligations": the collective reference to the Holder Guarantee
Obligations and the Holder Note Obligations.
"Holder Note Obligations": the collective reference to the unpaid
principal of and interest on the Dawson 9-3/8% Notes and all other obligations
and liabilities of the Borrower (including, without limitation, interest
accruing at the then applicable rate provided in the Dawson 9-3/8% Notes after
the maturity of the Dawson 9-3/8% Notes and interest accruing at the then
applicable rate provided in the Dawson 9-3/8% Notes after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) to the
Dawson Trustee, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, the Dawson 9-3/8% Notes, in each case whether on
account of principal, interest, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Dawson Trustee, the Collateral Agent or to the Holders that are required to be
paid by the Borrower pursuant to the terms of any of the foregoing agreements).
"Holders": as defined in the preamble hereto.
"Holder Termination Date": as defined in Section 8.17(a).
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, the Copyrights, the Copyright Licenses, the Patents, the
Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to
sue at law or in equity for any infringement or other impairment thereof,
including the right to receive all proceeds and damages therefrom.
"Intercompany Note": any promissory note evidencing loans made by any
Grantor to the Borrower or any of its Subsidiaries.
"Interim Lenders": as defined in the preamble hereto.
<PAGE> 9
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"Interim Lender Guarantee Obligations": with respect to any Guarantor,
the collective reference to (i) the Interim Lender Loan Obligations and (ii) all
obligations and liabilities of such Guarantor which may arise under or in
connection with this Agreement or any other Interim Loan Document, whether on
account of guarantee obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the Interim Lender Agent, the Collateral Agent, the Interim Lender Arranger
or the Interim Lenders that are required to be paid by such Guarantor pursuant
to the terms of this Agreement).
"Interim Lender Loan Obligations": the collective reference to the
unpaid principal of and interest on the Interim Loans and all other obligations
and liabilities of the Borrower (including, without limitation, interest
accruing at the then applicable rate provided in the Interim Loan Agreement
after the maturity of the Interim Loans and interest accruing at the then
applicable rate provided in the Interim Loan Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) to the
Interim Lender Agent, the Collateral Agent, the Interim Lender Arranger or any
Interim Lender, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, the Interim Loan Agreement, this Agreement or any
other Interim Loan Document, in each case whether on account of principal,
interest, fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Interim Lender Agent,
the Collateral Agent, the Interim Lender Arranger or the Interim Lenders that
are required to be paid by the Borrower pursuant to the terms of any of the
foregoing agreements).
"Interim Lender Obligations": the collective reference to the Interim
Lender Guarantee Obligations and the Interim Lender Loan Obligations.
"Interim Loan Documents": the "Loan Documents" as defined in the
Interim Loan Agreement.
"Investment Property": the collective reference to (i) all "investment
property" as such term is defined in Section 9-115 of the New York UCC (other
than any Foreign Subsidiary Voting Stock excluded from the definition of
"Pledged Stock") and (ii) whether or not constituting "investment property" as
so defined, all Pledged Notes and all Pledged Stock.
"Issuers": the collective reference to each issuer of any Investment
Property.
"Lender Guarantee Obligations": with respect to any Guarantor, the
collective reference to (i) the Lender Loan Obligations and (ii) all obligations
and liabilities of such Guarantor which may arise under or in connection with
this Agreement or any other Loan Document to which such Guarantor is a party, in
each case whether on account of guarantee obligations, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Administrative Agent,
the Collateral Agent, the Lender Arranger or the Lenders that are required to be
paid by such Guarantor pursuant to the terms of this Agreement or any other Loan
Document).
"Lender Loan Obligations": the collective reference to the unpaid
principal of and interest on the Loans and Reimbursement Obligations and all
other obligations and liabilities of the Borrower (including, without
limitation, interest accruing at the then applicable rate provided in the Credit
Agreement after the maturity of the Loans and Reimbursement
<PAGE> 10
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Obligations and interest accruing at the then applicable rate provided in the
Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) to the Administrative Agent, the Collateral
Agent, the Lender Arranger or any Lender (or any Affiliate of any Lender),
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, the Credit Agreement, this Agreement, the other Loan Documents or any
Letter of Credit or any Hedge Agreement entered into by the Borrower with any
Lender (or, in the case of any Hedge Agreement, any Affiliate of any Lender) in
each case whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Administrative Agent, the
Collateral Agent or to the Lenders that are required to be paid by the Borrower
pursuant to the terms of any of the foregoing agreements).
"Lender Obligations": the collective reference to the Lender Guarantee
Obligations and the Lender Loan Obligations.
"New York UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Obligations": (i) in the case of the Borrower, the Borrower
Obligations, and (ii) in the case of each Guarantor, its (A) Lender Guarantee
Obligations, (B) until the Merger Date, Interim Lender Guarantee Obligations and
(C) commencing on the Merger Date and until the Holder Termination Date, Holder
Guarantee Obligations.
"Patents": (i) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, (ii) all applications for letters
patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof and (iii) all rights to obtain
any reissues or extensions of the foregoing.
"Patent License": all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use or sell any
invention covered in whole or in part by a Patent.
"Pledged Notes": all promissory notes listed on Schedule 2, all other
Intercompany Notes at any time issued to any Grantor and all other promissory
notes issued to or held by any Grantor in an amount in excess of $500,000 (other
than promissory notes issued in connection with extensions of trade credit by
any Grantor in the ordinary course of business).
"Pledged Stock": the shares of Capital Stock listed on Schedule 2,
together with any other shares, stock certificates, options or rights of any
nature whatsoever in respect of the Capital Stock of any Person that may be
issued or granted to, or held by, any Grantor after the date of this Agreement
and while this Agreement is in effect which is required by the Credit Agreement
to be pledged hereunder provided that in no event shall more than 65% of the
total outstanding Foreign Subsidiary Voting Stock of any Foreign Subsidiary be
required to be pledged hereunder.
"Proceeds": all "proceeds" as such term is defined in Section 9-306(1)
of the Uniform Commercial Code in effect in the State of New York on the date
hereof and, in any event, shall include, without limitation, all dividends or
other income from the Investment
<PAGE> 11
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Property, collections thereon or distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument or
Chattel Paper and whether or not it has been earned by performance (including,
without limitation, any Account).
"Securities Act": the Securities Act of 1933, as amended.
"State": any state of the United States of America.
"Trademarks": (i) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service marks,
logos and other source or business identifiers, and all goodwill associated
therewith, now existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith, whether in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any State thereof or any other country or any political
subdivision thereof, or otherwise, and all common-law rights related thereto,
and (ii) the right to obtain all renewals thereof.
"Trademark License": any agreement, whether written or oral, providing
for the grant by or to any Grantor of any right to use any Trademark.
"Vehicles": (i) all trucks, trailers, construction and earth moving
equipment, drilling rigs, well service rigs, workover rigs and other vehicles
not covered by a certificate of title issued by any State, including without
limitation any of the foregoing listed on Schedule 8, (ii) all trucks, trailers,
construction and earth moving equipment, drilling rigs, well service rigs,
workover rigs and other vehicles covered by a certificate of title issued by any
State and having a fair market value in excess of $50,000 each, (iii) without
duplication of the foregoing, all items listed on Schedule 8, (iv) any Excluded
Vehicle for which the Collateral Agent has been named as a lienholder on its
certificate of title and (v) all tires and other appurtenances to any of the
foregoing.
1.2 Other Definitional Provisions. (a) The words "hereof," "herein",
"hereto" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral or any
part thereof, when used in relation to a Grantor, shall refer to such Grantor's
Collateral or the relevant part thereof.
(d) As used herein and in the Intercreditor Agreement and unless the
context shall otherwise require (i) references to the term Collateral Agent
prior to September 14, 1998 shall be deemed to be a reference only to the Lender
Collateral Agent, (ii) references to the Collateral Agent from September 14,
1998 until the Merger Date shall be deemed to be collective references to the
Lender Collateral Agent and the Interim Collateral Agent, (iii) references to
the Collateral Agent from the Merger Date until the Holder Termination Date
shall be deemed to be collective references to the Lender Collateral Agent and
the Holder Collateral Agent and (iv) on and after the later to occur of the
Merger Date and the Holder Termination Date, references to the Collateral Agent
shall be deemed to be references to the Lender
<PAGE> 12
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Collateral Agent only, provided that (i) if for purposes of possession,
perfection of liens or security interests, Requirements of Law, convenience or
otherwise it is necessary or advisable that one of the Collateral Agents act or
be designated to act on behalf of all Collateral Agents such Collateral Agent
will be the Lender Collateral Agent who will act in such capacity not only on
behalf of the Lender Creditors but also on behalf of, as bailee and/or agent, as
appropriate, for the other Collateral Agents, the Interim Lender Creditors and
the Holder Creditors, (ii) any designation of "Norwest Bank Texas, N.A., as
Collateral Agent" will be deemed sufficient to identify Norwest Bank Texas, N.A.
acting in its capacity as Lender Collateral Agent, Interim Lender Collateral
Agent and Holder Collateral Agent and (iii) reference to the Collateral Agent in
Section 2 hereof and when used with respect to the guarantee provided for
therein shall be deemed not to refer to the Holder Collateral Agent.
SECTION 2. GUARANTEE
2.1 Guarantee. (a) Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the Lender Creditors
and the Interim Lender Creditors, and to the Collateral Agent, for the equal and
ratable benefit thereof, and their respective successors, indorsees, transferees
and assigns, the prompt and complete payment and performance by the Borrower
when due (whether at the stated maturity, by acceleration or otherwise) of the
Guaranteed Obligations.
(b) Anything herein or in any other Loan Document or any Interim Loan
Document to the contrary notwithstanding, the maximum liability of each
Guarantor hereunder and under the other Loan Documents and the Interim Loan
Documents shall in no event exceed the amount which can be guaranteed by such
Guarantor under applicable federal and state laws relating to the insolvency of
debtors (after giving effect to the right of contribution established in Section
2.2) and as provided in Section 8.17, the liability of each Guarantor with
respect to the Interim Lender Guarantee Obligations shall terminate
automatically, without any further action by any Person, on the occurrence of
the Merger Date.
(c) Each Guarantor agrees that the Guaranteed Obligations may at any
time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Section 2 or
affecting the rights and remedies of the Collateral Agent, any Lender or any
Interim Lender hereunder.
(d) Subject to Section 8.17 and subject to the limitations in Section
2.1(b), the guarantee contained in this Section 2 shall remain in full force and
effect until all the Guaranteed Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full in cash, no Letter of Credit shall be outstanding
(other than Letters of Credit that have been cash collateralized in a manner
reasonably satisfactory to the Administrative Agent or backstopped by a letter
of credit or other security arrangement in each case reasonably acceptable to
the Administrative Agent) and the Commitments shall be terminated,
notwithstanding that from time to time during the term of the Credit Agreement
the Borrower may be free from any Lender Loan Obligations.
(e) No payment made by the Borrower, any of the Guarantors, any other
guarantor or any other Person or received or collected by any Lender Creditor,
any Interim Lender Creditor or the Collateral Agent from the Borrower, any of
the Guarantors, any other guarantor or any other Person by virtue of any action
or proceeding or any set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the Guaranteed Obligations shall
be deemed to modify, reduce, release or otherwise affect the liability of any
Guarantor hereunder which shall, notwithstanding any such payment (other than
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any payment made by such Guarantor in respect of the Guaranteed Obligations or
any payment received or collected from such Guarantor in respect of the
Guaranteed Obligations), remain liable for the Guaranteed Obligations up to the
maximum liability of such Guarantor hereunder until the Guaranteed Obligations
are paid in full in cash, no Letter of Credit shall be outstanding (other than
as provided in Section 2.1(d)) and the Commitments are terminated.
2.2 Right of Contribution. Each Guarantor hereby agrees that to the
extent that a Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder which has not paid
its proportionate share of such payment. Each Guarantor's right of contribution
shall be subject to the terms and conditions of Section 2.3. The provisions of
this Section 2.2 shall in no respect limit the obligations and liabilities of
any Guarantor to the Collateral Agent, the Lender Creditors and the Interim
Lender Creditors and each Guarantor shall remain liable to the Collateral Agent,
the Lender Creditors and the Interim Lender Creditors, for the full amount
guaranteed by such Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any Guarantor
hereunder or any set-off or application of funds of any Guarantor by the
Collateral Agent, any Lender Creditor or any Interim Lender Creditor, as the
case may be, no Guarantor shall be entitled to be subrogated to any of the
rights of the Collateral Agent, any Lender Creditor or any Interim Lender
Creditor, as the case may be, against the Borrower or any other Guarantor or any
collateral security or guarantee or right of offset held by the Collateral
Agent, any Lender Creditor or any Interim Lender Creditor as the case may be,
for the payment of the Borrower Obligations, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from the Borrower or any
other Guarantor in respect of payments made by such Guarantor hereunder, until
all amounts owing to the Collateral Agent, the Lender Creditors and the Interim
Lender Creditors by the Borrower on account of the Guaranteed Obligations are
paid in full, no Letter of Credit shall be outstanding (other than as provided
in Section 2.1(d)), and the Commitments are terminated. If any amount shall be
paid to any Guarantor on account of such subrogation rights at any time when all
of the Guaranteed Obligations shall not have been paid in full in cash, such
amount shall be held by such Guarantor in trust for the Collateral Agent and the
Lender Creditors or Interim Lender Creditors, as the case may be, segregated
from other funds of such Guarantor, and shall, forthwith upon receipt by such
Guarantor, be turned over to the Collateral Agent in the exact form received by
such Guarantor (duly indorsed by such Guarantor to the Collateral Agent, if
required), to be applied against the Guaranteed Obligations, whether matured or
unmatured, in the order specified in Section 6.5.
2.4 Amendments, etc. with respect to the Guaranteed Obligations. (a)
Each Guarantor shall remain obligated hereunder notwithstanding that, without
any reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Lender Loan
Obligations made by the Collateral Agent or any Lender Creditor may be rescinded
by the Collateral Agent or such Lender Creditor and any of the Lender Loan
Obligations continued, and the Lender Loan Obligations, or the liability of any
other Person upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Collateral Agent or any
Lender Creditor, as the case may be, and the Credit Agreement and the other Loan
Documents and any other documents executed and delivered in connection therewith
may be amended, modified, supplemented or terminated, in whole or in part, as
the Administrative Agent, the Collateral Agent (or the Required Lenders or all
Lenders, as the case may be) may deem advisable from time to time. Neither the
Collateral Agent nor any Lender Creditor shall have any obligation to protect,
secure, perfect or insure
<PAGE> 14
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any Lien at any time held by it as security for the Lender Loan Obligations or
for the guarantee contained in this Section 2 or any property subject thereto.
(b) Each Guarantor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against any Guarantor and without notice
to or further assent by any Guarantor, any demand for payment of any of the
Interim Lender Loan Obligations made by the Collateral Agent or any Interim
Lender Creditor may be rescinded by the Collateral Agent or such Interim Lender
Creditor and any of the Interim Lender Loan Obligations continued, and the
Interim Lender Loan Obligations, or the liability of any other Person upon or
for any part thereof, or any collateral security or guarantee therefor or right
of offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Collateral Agent or any Interim Lender Creditor,
as the case may be, and the Interim Loan Agreement and the other Interim Loan
Documents and any other documents executed and delivered in connection therewith
may be amended, modified, supplemented or terminated, in whole or in part, as
the Interim Lender Agent, the Collateral Agent (or the Majority Interim Lenders
as defined in the Interim Loan Agreement) or all Interim Lenders, as the case
may be) may deem advisable from time to time. Neither the Collateral Agent nor
any Interim Lender Creditor shall have any obligation to protect, secure,
perfect or insure any Lien at any time held by it as security for the Interim
Lender Loan Obligations or for the guarantee contained in this Section 2 or any
property subject thereto.
2.5 Guarantee Absolute and Unconditional. Each Guarantor waives (to the
fullest extent permitted by law) any and all notice of the creation, renewal,
extension or accrual of any of the Guaranteed Obligations and notice of or proof
of reliance by the Collateral Agent, any Lender Creditor or any Interim Lender
Creditor upon the guarantee contained in this Section 2 or acceptance of the
guarantee contained in this Section 2; the Guaranteed Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon the guarantee
contained in this Section 2; and all dealings between the Borrower and any of
the Guarantors, on the one hand, and the Collateral Agent, the Lender Creditors
or Interim Lender Creditors, as the case may be, on the other hand, likewise
shall be conclusively presumed to have been had or consummated in reliance upon
the guarantee contained in this Section 2. Each Guarantor waives (to the fullest
extent permitted by law) diligence, presentment, protest, demand for payment and
notice of default or nonpayment to or upon the Borrower or any of the Guarantors
with respect to the Guaranteed Obligations. Each Guarantor understands and
agrees that subject to the limitations in Section 2.1(b) the guarantee contained
in this Section 2 shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity or enforceability of the
Credit Agreement, any other Loan Document, the Interim Loan Agreement, any other
Interim Loan Document, any of the Guaranteed Obligations or any other collateral
security therefor or guarantee or right of offset with respect thereto at any
time or from time to time held by the Collateral Agent, any Lender Creditor or
any Interim Lender Creditor, (b) any defense, set-off or counterclaim (other
than a defense of payment or performance) which may at any time be available to
or be asserted by the Borrower or any other Person against the Collateral Agent,
any Lender Creditor or any Interim Lender Creditor, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the Borrower
or such Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Borrower for the Guaranteed Obligations, or
of such Guarantor under the guarantee contained in this Section 2, in bankruptcy
or in any other instance. When making any demand hereunder or otherwise pursuing
its rights and remedies hereunder against any Guarantor, the Collateral Agent,
any Lender Creditor or any Interim Lender Creditor may, but shall be under no
obligation to, make a similar demand on or otherwise pursue such rights and
remedies as it may have against the Borrower, any other
<PAGE> 15
11
Guarantor or any other Person or against any collateral security or guarantee
for the Guaranteed Obligations or any right of offset with respect thereto, and
any failure by the Collateral Agent, any Lender Creditor or any Interim Lender
Creditor to make any such demand, to pursue such other rights or remedies or to
collect any payments from the Borrower, any other Guarantor or any other Person
or to realize upon any such collateral security or guarantee or to exercise any
such right of offset, or any release of the Borrower, any other Guarantor or any
other Person or any such collateral security, guarantee or right of offset,
shall not relieve any Guarantor of any obligation or liability hereunder, and
shall not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of the Collateral Agent, any Lender Creditor or
any Interim Lender Creditor against any Guarantor. For the purposes hereof
"demand" shall include the commencement and continuance of any legal
proceedings.
2.6 Reinstatement. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Guaranteed Obligations is rescinded
or must otherwise be restored or returned by the Collateral Agent, any Lender
Creditor or any Interim Lender Creditor upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any Guarantor, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, the Borrower or any Guarantor or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
2.7 Payments. Each Guarantor hereby guarantees that payments hereunder
will be paid to the Collateral Agent without set-off or counterclaim (other
than a defense of payment and performance in full of the Guaranteed
Obligations) in Dollars at the office of the Collateral Agent located at [500
West Texas Avenue, Midland, Texas 79701].
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the Collateral Agent, and
hereby grants to the Collateral Agent, for the equal and ratable benefit of (i)
the Lender Creditors, (ii) until the Merger Date, the Interim Lender Creditors
and (iii) effective on and after the Merger Date and until the Holder
Termination Date, the Holder Creditors, a security interest in, all of the
following property now owned or at any time hereafter acquired by such Grantor
or in which such Grantor now has or at any time in the future may acquire any
right, title or interest, but expressly excluding the Excluded Assets
(collectively, the "Collateral"), as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of such Grantor's Obligations:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Documents;
(d) all Equipment;
<PAGE> 16
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(e) all General Intangibles;
(f) all Instruments;
(g) all Intellectual Property;
(h) all Inventory;
(i) all Investment Property;
(j) all Vehicles;
(k) all books and records pertaining to the Collateral; and
(l) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing and all collateral security
and guarantees given by any Person with respect to any of the
foregoing.
As provided in Section 8.17 the grant of such security interest as provided
above in favor of (i) the Interim Lenders shall terminate on the Merger Date and
(ii) the Holders shall terminate on the Holder Termination Date.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent, the Collateral Agent and the
Lenders to enter into the Credit Agreement and, to induce the Interim Lenders
and Interim Lender Agent to enter into the Interim Loan Agreement and to induce
the Lenders and the Interim Lenders, as the case may be, to make their
respective extensions of credit to the Borrower thereunder, each Grantor hereby
represents and warrants to the Collateral Agent, each Lender Creditor and each
Interim Lender Creditor that:
4.1 Representations in Credit Agreement. The representations and
warranties of the Borrower set forth in Section 4 of the Credit Agreement and
Article III of the Interim Loan Agreement which are specifically made in respect
of a particular Guarantor or in respect of the Loan Documents to which such
Guarantor is a party, each of which is hereby incorporated herein by reference,
are true and correct in all material respects, and the Collateral Agent, each
Lender and each Interim Lender shall be entitled to rely on each of them as if
they were fully set forth herein, provided that each reference in each such
representation and warranty to the Borrower's knowledge shall, for the purposes
of this Section 4.1, be deemed to be a reference to such Guarantor's knowledge.
4.2 Title; No Other Liens. Except for the security interest granted
to granted to the Collateral Agent for the ratable benefit of the Creditors
pursuant to this Agreement and the other Liens permitted to exist on the
Collateral by (i) prior to the Merger Date, both the Credit Agreement and the
Interim Loan Agreement and (ii) thereafter the Credit Agreement, such Grantor
owns each item of the Collateral free and clear of any and all Liens or claims
of others. No financing statement or other public notice with respect to all or
any part of the Collateral is on file or of record in any public office, except
(i) the financing statements that have been filed in favor of the Collateral
Agent, for the ratable benefit of the Creditors pursuant to this Agreement and
(ii) those filed with respect to Liens permitted by (x) prior to
<PAGE> 17
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the Merger Date, both the Credit Agreement and the Interim Loan Agreement and
(y) thereafter the Credit Agreement.
4.3 Perfected First Priority Liens. The security interests granted
pursuant to this Agreement (a) upon completion of the filings and other actions
specified on Schedule 3 will constitute valid perfected security interests in
all of the Collateral in favor of the Collateral Agent, for the ratable benefit
of the Creditors (effective as of and until the time specified in Section 3) as
collateral security for such Grantor's Obligations, enforceable in accordance
with the terms hereof against all creditors of such Grantor, except as provided
in ss.9-307 of the UCC in effect in the relevant jurisdiction, and any Persons
purporting to purchase any Collateral from such Grantor and (b) are prior to all
other Liens on the Collateral in existence on the date hereof except for (1)
unrecorded Liens permitted (i) prior to the Merger Date, by both the Credit
Agreement and the Interim Loan Agreement and (ii) thereafter the Credit
Agreement, which have priority over the Liens on the Collateral by operation of
law and (2) Liens permitted to be incurred pursuant to (A) prior to the Merger
Date, clauses (f), (i) and (j) of Section 7.3 of the Credit Agreement and
clauses (f), (i) and (j) of Section 4.1 of the Interim Loan Agreement and (B)
thereafter clause (f), (i) and (j) of Section 7.3 of the Credit Agreement.
4.4 Chief Executive Office, Etc. On the date hereof, such Grantor's
jurisdiction of organization and the location of such Grantor's chief executive
office, principal place of business and office where records concerning the
Accounts of such Grantor are kept, or its sole place of business, are specified
on Schedule 4.
4.5 Inventory and Equipment. On the date hereof, the Inventory and the
Equipment (other than mobile goods) are kept at the locations listed on Schedule
5.
4.6 Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
4.7 Investment Property. (a) The shares of Pledged Stock pledged by
such Grantor hereunder constitute all the issued and outstanding shares of all
classes of the Capital Stock of each Issuer owned by such Grantor or, in the
case of Foreign Subsidiary Voting Stock, if less, 65% of the outstanding Foreign
Subsidiary Voting Stock of each relevant issuer (except in the case of Servicios
in which 63% is pledged on the date hereof and in which an additional 2% will be
pledged in accordance with Section 6.14(b)(ii) of the Credit Agreement).
(b) All the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable (except that no such representation
is made as to Foreign Subsidiary Voting Stock).
(c) To the knowledge of the Borrower's executive management, each of
the Pledged Notes constitutes the legal, valid and binding obligation of the
obligor with respect thereto, enforceable in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has good
and marketable title to, the Investment Property pledged by it hereunder, free
of any and all Liens or options in favor of, or claims of, any other Person,
except the security interest created by this Agreement and except as permitted
by (i) prior to the Merger Date, both the Credit Agreement and the Interim Loan
Agreement and (ii) thereafter the Credit Agreement.
<PAGE> 18
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4.8 Receivables. (a) No amount payable to such Grantor under or in
connection with any Receivable is evidenced by any Instrument or Chattel Paper
in an amount in excess of $500,000 (or in excess of $1,000,000 in the aggregate
for all such Instruments and Chattel Paper) which has not been delivered to the
Collateral Agent.
(b) Receivables in respect of which the obligor is a Governmental
Authority do not constitute more than 5% of the Receivables.
(c) The amounts represented by such Grantor to the Creditors from time
to time as owing to such Grantor in respect of the Receivables will at such
times be accurate to the best knowledge of such Grantor.
4.9 Intellectual Property. The Borrower and its Subsidiaries have no
material Intellectual Property on the date hereof.
4.10 Vehicles. Schedule 8 is a substantially complete and correct list
of all Vehicles having a fair market value in excess of $50,000 owned by such
Grantor on the date hereof.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Collateral Agent, the
Lenders and, until the Merger Date, the Interim Lenders that, from and after the
date of this Agreement until the Obligations shall have been paid in full, no
Letter of Credit shall be outstanding and the Commitments shall have terminated:
5.1 Covenants in Credit Agreement. In the case of each Guarantor, such
Guarantor shall take, or shall refrain from taking, as the case may be, each
action that is necessary to be taken or not taken, as the case may be, so that
no Applicable Default or Event of Default is caused by the failure to take such
action or to refrain from taking such action by such Guarantor or any of its
Subsidiaries.
5.2 Delivery of Instruments and Chattel Paper. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any Instrument, or Chattel Paper in an amount in excess of $500,000 (or in
excess of $1,000,000 in the aggregate for all such Instruments and Chattel
Paper), such Instrument or Chattel Paper shall be immediately delivered to the
Collateral Agent, duly indorsed in a manner reasonably satisfactory to the
Collateral Agent, to be held as Collateral pursuant to this Agreement.
5.3 Maintenance of Insurance. (a) Such Grantor will maintain, with
financially sound and reputable companies, insurance policies (i) insuring the
Inventory, Equipment and Vehicles against loss by fire, explosion, theft and
such other casualties as may be customary in the business in which such Grantor
is engaged and (ii) insuring such Grantor, the Collateral Agent, the Lenders
and, until the Merger Date, the Interim Lenders, against liability for personal
injury and property damage relating to such Inventory, Equipment and Vehicles,
such policies to be in such form and amounts and having such coverage as may be
customary in the business in which such Grantor is engaged.
(b) All such insurance shall (i) provide that no cancellation, material
reduction in amount or material change in coverage thereof shall be effective
until at least 30 days after receipt by the Collateral Agent of written notice
thereof, (ii) name the Collateral Agent as insured party or loss payee, (iii) if
reasonably requested by the Collateral Agent, include a
<PAGE> 19
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breach of warranty clause and (iv) be otherwise customary in the business in
which the Borrower is engaged.
(c) The Borrower shall deliver to the Collateral Agent, Administrative
Agent and, until the Merger Date, the Interim Lender Agent, a report of a
reputable insurance broker with respect to such insurance once in each calendar
year and such supplemental reports with respect thereto as the Collateral Agent
may from time to time reasonably request.
5.4 Payment of Obligations. Such Grantor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all taxes, assessments and governmental charges or levies imposed
upon a material portion of the Collateral or in respect of income or profits
therefrom, as well as all claims of any kind (including, without limitation,
claims for labor, materials and supplies) against or with respect to a material
portion of the Collateral, except that no such charge need be paid if the amount
or validity thereof is currently being contested in good faith by appropriate
proceedings, reserves in conformity with GAAP with respect thereto have been
provided on the books of such Grantor and such proceedings could not reasonably
be expected to result in the sale, forfeiture or loss of any material portion of
the Collateral or any interest therein.
5.5 Maintenance of Perfected Security Interest; Further Documentation.
(a) Such Grantor shall take such steps as are reasonably requested by the
Collateral Agent to maintain the security interest created by this Agreement as
a perfected security interest having at least the priority described in Section
4.3.
(b) Such Grantor will furnish to the Collateral Agent, the
Administrative Agent and, until the Merger Date, the Interim Lender Agent, from
time to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the
Collateral Agent may reasonably request, all in reasonable detail.
(c) At any time and from time to time, upon the written request of the
Collateral Agent, and at the sole expense of such Grantor, such Grantor will
promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Collateral Agent
may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, (i) the filing of any financing or continuation
statements under the Uniform Commercial Code (or other similar laws) in effect
in any jurisdiction with respect to the security interests created hereby and
(ii) in the case of Investment Property and any other relevant Collateral,
taking any actions necessary to enable the Collateral Agent to obtain "control"
(within the meaning of the applicable Uniform Commercial Code) with respect
thereto.
5.6 Changes in Locations, Name, etc. Such Grantor will not, except upon
written notice to the Collateral Agent and delivery (within 30 days thereafter)
to the Collateral Agent of (a) all additional executed financing statements and
other documents reasonably requested by the Collateral Agent to maintain the
validity, perfection and priority of the security interests provided for herein
and (b) if applicable, a written supplement to Schedule 5 showing any additional
location at which Inventory or Equipment shall be kept:
(i) permit any material portion of the Inventory or Equipment
(other than Inventory or Equipment covered by a certificate of title or
constituting mobile goods) to be kept at a location other than those listed
on Schedule 5;
(ii) change the location of its chief executive office, principal
place of business or office where records concerning the Accounts are kept,
or sole place of
<PAGE> 20
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business from that referred to in Section 4.4 (except to another location
specified on Schedule 4 with respect to such Grantor); or
(iii) change its name, identity or corporate structure to such an
extent that any financing statement filed by the Collateral Agent in
connection with this Agreement would become misleading.
5.7 Notices. Such Grantor will advise the Collateral Agent, the
Administrative Agent and, until the Merger Date, the Interim Lender Agent
promptly, in reasonable detail, of:
(a) any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of the Collateral which would
materially and adversely affect the ability of the Collateral Agent to exercise
any of its remedies hereunder; and
(b) of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
5.8 Investment Property. (a) If such Grantor shall become entitled to
receive or shall receive any stock certificate (including, without limitation,
any certificate representing a stock dividend or a distribution in connection
with any reclassification, increase or reduction of capital or any certificate
issued in connection with any reorganization), option or rights in respect of
the Capital Stock of any Issuer, whether in addition to, in substitution of, as
a conversion of, or in exchange for, any shares of the Pledged Stock, or
otherwise in respect thereof, such Grantor shall accept the same as the agent of
the Collateral Agent (for the benefit of the Creditors) hold the same in trust
for the Administrative Agent, until the Merger Date, the Interim Lender Agent,
the Collateral Agent and the Creditors and deliver the same forthwith to the
Collateral Agent in the exact form received, duly indorsed by such Grantor to
the Collateral Agent, if required, together with an undated stock power covering
such certificate duly executed in blank by such Grantor and with, if the
Collateral Agent so requests, signature guaranteed, to be held by the Collateral
Agent, subject to the terms hereof, as additional collateral security for the
Obligations. Any sums paid upon or in respect of the Investment Property upon
the liquidation or dissolution of any Issuer (other than any amount which the
Borrower would not be required to apply to prepay the Loans pursuant to Section
2.10(d) of the Credit Agreement) shall be paid over to the Collateral Agent to
be held by it hereunder as additional collateral security for the Obligations,
and in case any distribution of capital shall be made on or in respect of the
Investment Property or any property shall be distributed upon or with respect to
the Investment Property pursuant to the recapitalization or reclassification of
the capital of any Issuer or pursuant to the reorganization thereof, the
property so distributed shall, unless otherwise subject to a perfected security
interest in favor of the Collateral Agent, be delivered to the Collateral Agent
to be held by it hereunder as additional collateral security for the
Obligations. If any such sums of money or property so paid or distributed in
respect of the Investment Property shall be received by such Grantor, such
Grantor shall, until such money or property is paid or delivered to the
Collateral Agent, hold such money or property in trust for the Creditors,
segregated from other funds of such Grantor, as additional collateral security
for the Obligations.
(b) Without the prior written consent of the Collateral Agent, such
Grantor will not (i) sell, assign, transfer, exchange, or otherwise dispose of,
or grant any option with respect to, the Investment Property or Proceeds thereof
(except pursuant to a transaction permitted by (A) until the Merger Date, both
the Credit Agreement and the Interim Loan Agreement) and (B) thereafter, the
Credit Agreement, (ii) create, incur or permit to exist any Lien or option in
favor of, or any claim of any Person with respect to, any of the Investment
Property or Proceeds
<PAGE> 21
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thereof, or any interest therein, except for the security interests created by
this Agreement or permitted by (A) until the Merger Date, both the Credit
Agreement and the Interim Loan Agreement and (B) thereafter, the Credit
Agreement, or (iii) enter into any agreement or undertaking restricting the
right or ability of such Grantor or the Collateral Agent to sell, assign or
transfer any of the Investment Property or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer agrees
that (i) it will be bound by the terms of this Agreement relating to the
Investment Property issued by it and will comply with such terms insofar as such
terms are applicable to it, (ii) it will notify the Collateral Agent promptly in
writing of the occurrence of any of the events described in Section 5.8(a) with
respect to the Investment Property issued by it and (iii) the terms of Sections
6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to all actions
that may be required of it pursuant to Section 6.3(c) or 6.7 with respect to the
Investment Property issued by it.
5.9 Receivables. (a) Other than in the ordinary course of business
consistent with its reasonable business practices, such Grantor will not (i)
grant any extension of the time of payment of any Receivable, (ii) compromise or
settle any Receivable for less than the full amount thereof, (iii) release,
wholly or partially, any Person liable for the payment of any Receivable, (iv)
allow any credit or discount whatsoever on any Receivable or (v) amend,
supplement or modify any Receivable in any manner that could adversely affect
the value thereof.
(b) Such Grantor will deliver to the Collateral Agent a copy of each
material demand, notice or document received by it that collectively questions
or calls into doubt the validity or enforceability of more than 5% of the
aggregate amount of the then outstanding Receivables of the Grantors taken as a
whole.
5.10 Intellectual Property. (a) Except to the extent such Grantor, in
the exercise of its reasonable business judgment, may elect not to do so and
where its failure to do so will not have a Material Adverse Effect, such Grantor
(either itself or through licensees) will (i) use each material Trademark on
each and every trademark class of goods applicable to its current line as
reflected in its current catalogs, brochures and price lists in order to
maintain such material Trademark in full force free from any claim of
abandonment for non-use, (ii) maintain as in the past the quality of products
and services offered under such material Trademark, (iii) use such material
Trademark with the appropriate notice of registration and all other notices and
legends required by applicable Requirements of Law, (iv) not adopt or use any
mark which is confusingly similar or a colorable imitation of such material
Trademark unless the Collateral Agent, for the ratable benefit of the Creditors,
shall obtain a perfected security interest in such mark pursuant to this
Agreement, and (v) not (and not permit any licensee or sublicensee thereof to)
do any act or knowingly omit to do any act whereby such material Trademark may
become invalidated or impaired in any way.
(b) Except to the extent such Grantor, in the exercise of its
reasonable business judgment, may elect not to do so and where its failure to do
so will not have a Material Adverse Effect, such Grantor (either itself or
through licensees) will not do any act, or omit to do any act, whereby any
material Patent may become forfeited, abandoned or dedicated to the public.
(c) Except to the extent such Grantor, in the exercise of its
reasonable business judgment, may elect not to do so and where its failure to do
so will have a Material Adverse Effect, such Grantor (either itself or through
licensees) (i) will employ each material Copyright and (ii) will not (and will
not permit any licensee or sublicensee thereof to) do any act or knowingly omit
to do any act whereby any material portion of the Copyrights may become
<PAGE> 22
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invalidated or otherwise impaired. Such Grantor will not (either itself or
through licensees) do any act whereby any material portion of the Copyrights may
fall into the public domain.
(d) Except to the extent such Grantor, in the exercise of its
reasonable business judgment, may elect not to do so and where its failure to do
so will not have a Material Adverse Effect, such Grantor (either itself or
through licensees) will not do any act that knowingly uses any material
Intellectual Property to infringe the intellectual property rights of any other
Person.
(e) Except to the extent such Grantor, in the exercise of its
reasonable business judgment, may elect not to do so and where its failure to do
so will not have a Material Adverse Effect, such Grantor will notify the
Collateral Agent, the Administrative Agent and, until the Merger Date, the
Interim Lender Agent, immediately if it knows, or has reason to know, that any
application or registration relating to any material Intellectual Property may
become forfeited, abandoned or dedicated to the public, or of any adverse
determination or development (including, without limitation, the institution of,
or any such determination or development in, any proceeding in the United States
Patent and Trademark Office, the United States Copyright Office or any court or
tribunal in any country) regarding such Grantor's ownership of, or the validity
of, any material Intellectual Property or such Grantor's right to register the
same or to own and maintain the same.
(f) Except to the extent such Grantor, in the exercise of its
reasonable business judgment, may elect not to do so and where its failure to do
so will not have a Material Adverse Effect, whenever such Grantor, either by
itself or through any agent, employee, licensee or designee, shall file an
application for the registration of any Intellectual Property with the United
States Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any other country or any political subdivision
thereof, such Grantor shall report such filing to the Collateral Agent within
five Business Days after the last day of the fiscal quarter in which such filing
occurs. Upon request of the Collateral Agent, such Grantor shall execute and
deliver, and have recorded, any and all agreements, instruments, documents, and
papers as the Collateral Agent may request to evidence the Collateral Agent's
and the Creditors' security interest in any Copyright, Patent or Trademark and
the goodwill and general intangibles of such Grantor relating thereto or
represented thereby.
(g) Except to the extent such Grantor, in the exercise of its
reasonable business judgment, may elect not to do so and where its failure to do
so will not have a Material Adverse Effect, such Grantor will take all
reasonable and necessary steps, including, without limitation, in any proceeding
before the United States Patent and Trademark Office, the United States
Copyright Office or any similar office or agency in any other country or any
political subdivision thereof, to maintain and pursue each application (and to
obtain the relevant registration) and to maintain each registration of the
material Intellectual Property, including, without limitation, filing of
applications for renewal, affidavits of use and affidavits of incontestability.
(h) In the event that any material Intellectual Property is infringed,
misappropriated or diluted by a third party, such Grantor shall, except to the
extent such Grantor, in the exercise in its reasonable business judgment, may
elect not to do so and where its failure to do so will not have a Material
Adverse Effect, (i) take such actions as such Grantor shall reasonably deem
appropriate under the circumstances to protect such Intellectual Property and
(ii) if such Intellectual Property is of material economic value, promptly
notify the Collateral Agent after it learns thereof and sue for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement, misappropriation or dilution.
<PAGE> 23
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5.11 Vehicles. (a) If a Grantor removes a Vehicle covered by a
certificate of title from the State which has issued the certificate of title
for such Vehicle with the intent of permanently relocating that Vehicle in a
different State, such Grantor shall, (i) if the laws of such different State
require that a certificate of title be issued for such Vehicle, within four
months after such relocation, file all applications for certificates of title
indicating the Collateral Agent's first priority security interest in such
Vehicle, (ii) if the laws of such different State do not require a certificate
of title for such Vehicle, file any financing statements required to continue
the perfected first priority security interest of the Collateral Agent in such
Vehicle and (iii) take all other actions required to continue the perfected
first priority security interest of the Collateral Agent in such Vehicle, unless
otherwise provided in the Credit Agreement.
(b) Except as permitted by Section 6.9(b) of the Credit Agreement with
respect to any Vehicles acquired by a Grantor subsequent to the date hereof,
within 90 days after the date of acquisition thereof, all applications for
certificates of title indicating the Collateral Agent's first priority security
interest in the Vehicle covered by such certificate, and any other necessary
documentation, shall be filed in each office in each jurisdiction which the
Collateral Agent shall deem advisable to perfect its security interests in the
Vehicles, except as otherwise provided in the Credit Agreement.
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables. (a) The Collateral Agent
shall have the right to make test verifications of the Receivables in any manner
and through any medium that it reasonably considers advisable, and each Grantor
shall furnish all such assistance and information as the Collateral Agent may
require in connection with such test verifications. At any time and from time to
time, upon the Collateral Agent's request and at the expense of the applicable
Grantor, such Grantor shall cause independent public accountants or others
satisfactory to the Collateral Agent to furnish to the Collateral Agent reports
showing reconciliations, aging and test verifications of, and trial balances
for, the Receivables.
(b) The Collateral Agent hereby authorizes each Grantor to collect such
Grantor's Receivables; provided, however, the Collateral Agent may curtail or
terminate said authority at any time after the occurrence and during the
continuance of an Applicable Event of Default. If required by the Collateral
Agent at any time after the occurrence and during the continuance of an
Applicable Event of Default, any payments of Receivables, when collected by any
Grantor, (i) shall be forthwith (and, in any event, within two Business Days)
deposited by such Grantor in the exact form received, duly indorsed by such
Grantor to the Collateral Agent if required, in a Collateral Account maintained
under the sole dominion and control of the Collateral Agent, subject to
withdrawal by the Collateral Agent for the account of the Creditors only as
provided in Section 6.5, and (ii) until so turned over, shall be held by such
Grantor in trust for the Collateral Agent and the Creditors, segregated from
other funds of such Grantor. Each such deposit of Proceeds of Receivables shall
be accompanied by a report identifying in reasonable detail the nature and
source of the payments included in the deposit.
(c) At the Collateral Agent's request, at any time during the
continuance of an Applicable Event of Default, each Grantor shall deliver to the
Collateral Agent all original and other documents evidencing, and relating to,
the agreements and transactions which gave rise to the Receivables, including,
without limitation, all original orders, invoices and shipping receipts.
6.2 Communications with Obligors; Grantors Remain Liable. (a) The
Collateral
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20
Agent in its own name or in the name of others may at any time after the
occurrence and during the continuance of an Applicable Event of Default
communicate with obligors under the Receivables to verify with them to the
Collateral Agent's satisfaction the existence, amount and terms of any
Receivables.
(b) Upon the request of the Collateral Agent at any time after the
occurrence and during the continuance of an Applicable Event of Default, each
Grantor shall notify obligors on the Receivables that the Receivables have been
assigned to the Collateral Agent for the ratable benefit of the Creditors and
that payments in respect thereof shall be made directly to the Collateral Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor shall
remain liable under each of the Receivables to observe and perform all the
conditions and obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise thereto. Neither the
Collateral Agent nor any Creditor shall have any obligation or liability under
any Receivable (or any agreement giving rise thereto) by reason of or arising
out of this Agreement or the receipt by the Collateral Agent or any Creditor of
any payment relating thereto, nor shall the Collateral Agent or any Creditor be
obligated in any manner to perform any of the obligations of any Grantor under
or pursuant to any Receivable (or any agreement giving rise thereto), to make
any payment, to make any inquiry as to the nature or the sufficiency of any
payment received by it or as to the sufficiency of any performance by any party
thereunder, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
6.3 Pledged Stock. (a) Unless an Applicable Event of Default shall have
occurred and be continuing and the Collateral Agent shall have given notice to
the applicable Grantor of the Collateral Agent's intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted
to receive all cash dividends paid in respect of the Pledged Stock and all
payments made in respect of the Pledged Notes, in each case paid in the normal
course of business of the relevant Issuer and consistent with past practice, and
to exercise all voting and corporate rights with respect to the Investment
Property; provided, however, that no vote shall be cast or corporate right
exercised or other action taken which would materially impair the Collateral or
which would be inconsistent with or result in any violation of any provision of
(i) until the Merger Date, the Credit Agreement, this Agreement, any other Loan
Document, the Interim Loan Agreement or the Interim Loan Documents and (ii)
thereafter the Credit Agreement, this Agreement or any other Loan Document.
(b) If an Applicable Event of Default shall occur and be continuing and
the Collateral Agent shall give notice of its intent to exercise such rights to
the applicable Grantor or Grantors, (i) the Collateral Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Investment Property and make application thereof to the
Obligations, and (ii) any or all of the Investment Property shall be registered
in the name of the Collateral Agent or its nominee, and the Collateral Agent or
its nominee may thereafter exercise (x) all voting, corporate and other rights
pertaining to such Investment Property at any meeting of shareholders of the
relevant Issuer or Issuers or otherwise and (y) any and all rights of
conversion, exchange and subscription and any other rights, privileges or
options pertaining to such Investment Property as if it were the absolute owner
thereof (including, without limitation, the right to exchange at its discretion
any and all of the Investment Property upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate
structure of any Issuer, or upon the exercise by any Grantor or the Collateral
Agent of any right, privilege or option pertaining to such Investment Property,
and in connection therewith, the right to deposit and deliver any and all of the
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20
Investment Property with any committee, depositary, transfer agent, registrar or
other designated agency upon such terms and conditions as the Collateral Agent
may determine), all without liability except to account for property actually
received by it, but the Collateral Agent shall have no duty to any Grantor to
exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Investment Property pledged by such Grantor hereunder to comply with any
instruction received by it from the Collateral Agent in writing that (x) states
that an Applicable Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each Issuer
shall be fully protected in so complying.
6.4 Proceeds to be Turned Over To Collateral Agent. In addition to the
rights of the Collateral Agent and the Creditors specified in Section 6.1 with
respect to payments of Receivables, if an Applicable Event of Default shall
occur and be continuing and the Collateral Agent shall have given notice to the
applicable Grantor, all Proceeds received by any Grantor consisting of cash,
checks and other near-cash items shall be held by such Grantor in trust for the
Collateral Agent (for the benefit of the Creditors), segregated from other funds
of such Grantor, and shall, forthwith upon receipt by such Grantor, be turned
over to the Collateral Agent in the exact form received by such Grantor (duly
indorsed by such Grantor to the Collateral Agent, if required). All Proceeds
received by the Collateral Agent hereunder shall be held by the Collateral Agent
in a Collateral Account maintained under its sole dominion and control. All
Proceeds while held by the Collateral Agent in a Collateral Account (or by such
Grantor in trust for the Collateral Agent and the Creditors) shall continue to
be held as collateral security for all the Obligations and shall not constitute
payment thereof until applied as provided in Section 6.5.
6.5 Application of Proceeds. (a) So long as the Interim Lenders or the
Holders are Creditors, proceeds of the Collateral shall be applied as provided
in the Intercreditor Agreement and (b) thereafter at such intervals as may be
agreed upon by the Borrower and the Collateral Agent, or, if an Event of Default
shall have occurred and be continuing, at any time at the Collateral Agent's
election, the Collateral Agent may apply all or any part of Proceeds
constituting Collateral, whether or not held in any Collateral Account, and any
proceeds of the guarantee set forth in Section 2, in payment of the Lender
Obligations in the following order:
First, to pay incurred and unpaid fees and expenses of the Collateral
Agent and the Administrative Agent under the Loan Documents;
Second, (a) to the Administrative Agent, for application by it towards
payment of the amounts then due and owing and remaining unpaid in respect of
the Lender Obligations, pro rata among the Lenders according to the amount
of the Lender Obligations then due and owing and remaining unpaid to the
Lenders;
Third, to the Administrative Agent, for application by it towards
prepayment of the Lender Obligations, pro rata among the Lenders according
to the amounts of the Lender Obligations then held by the Lenders; and
Fourth, any balance of such Proceeds remaining after the Lender
Obligations shall have been paid in full, no Letters of Credit shall be
outstanding and the Commitments shall have terminated shall be paid over to
the Borrower or to whomsoever may be lawfully entitled to receive the same.
<PAGE> 26
21
6.6 Code and Other Remedies. If an Applicable Event of Default shall
occur and be continuing, the Collateral Agent, on behalf of the Creditors, may
exercise, in addition to all other rights and remedies granted to them in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the New York UCC or any other applicable law. Without limiting the generality of
the foregoing, the Collateral Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Grantor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do any
of the foregoing), in one or more parcels at public or private sale or sales, at
any exchange, broker's board or office of the Collateral Agent or any Creditor
or elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. Any Lender Creditor, the Collateral Agent, any
Interim Lender Creditor (prior to the Merger Date only), or any Holder Creditor
(from the Merger Date and until the Holder Termination Date only) shall have the
right upon any such public sale or sales, and, to the extent permitted by law,
upon any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in any Grantor,
which right or equity is hereby waived and released. Each Grantor further
agrees, at the Collateral Agent's request, to assemble the Collateral and make
it available to the Collateral Agent at places which the Collateral Agent shall
reasonably select, whether at such Grantor's premises or elsewhere. The
Collateral Agent shall apply the net proceeds of any action taken by it pursuant
to this Section 6.6, after deducting all reasonable costs and expenses of every
kind incurred in connection therewith or incidental to the care or safekeeping
of any of the Collateral or in any way relating to the Collateral or the rights
of the Collateral Agent and the Creditors hereunder, including, without
limitation, reasonable attorneys' fees and disbursements, to the payment in
whole or in part of the Obligations, in accordance with the Intercreditor
Agreement so long as the Interim Lenders or the Holders are Creditors, and
thereafter in the order set forth in Section 6.5, and only after such
application and after the payment by the Collateral Agent of any other amount
required by any provision of law, including, without limitation, Section
9-504(1)(c) of the New York UCC, need the Collateral Agent account for the
surplus, if any, to any Grantor. To the extent permitted by applicable law, each
Grantor waives all claims, damages and demands it may acquire against the
Collateral Agent or any Creditors arising out of the exercise by them of any
rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other disposition.
6.7 Private Sales. (a) Each Grantor recognizes that the Collateral
Agent may be unable to effect a public sale of any or all the Pledged Stock, by
reason of certain prohibitions contained in the Securities Act and applicable
state securities laws or otherwise, and may be compelled to resort to one or
more private sales thereof to a restricted group of purchasers which will be
obliged to agree, among other things, to acquire such securities for their own
account for investment and not with a view to the distribution or resale
thereof. Each Grantor acknowledges and agrees that any such private sale may
result in prices and other terms less favorable than if such sale were a public
sale and, notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner. The
Collateral Agent shall be under no obligation to delay a sale of any of the
Pledged Stock for the period of time necessary to permit the Issuer thereof to
register such securities for public sale under the Securities Act, or under
applicable state
<PAGE> 27
22
securities laws, even if such Issuer would agree to do so.
(b) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Stock pursuant to this Section 6.7 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Each Grantor further agrees that a breach of any of the covenants contained in
this Section 6.7 will cause irreparable injury to the Collateral Agent and the
Creditors, that the Collateral Agent and the Creditors have no adequate remedy
at law in respect of such breach and, as a consequence, that each and every
covenant contained in this Section 6.7 shall be specifically enforceable against
such Grantor, and such Grantor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants except for
a defense that no Event of Default has occurred and is continuing under the
Credit Agreement.
6.8 Waiver; Deficiency. Each Grantor waives and agrees not to assert
any rights or privileges which it may acquire under Section 9-112 of the New
York UCC. Each Grantor shall remain liable for any deficiency if the proceeds of
any sale or other disposition of the Collateral are insufficient to pay its
Obligations and the fees and disbursements of any attorneys employed by the
Collateral Agent or any Creditors to collect such deficiency.
SECTION 7. THE COLLATERAL AGENT
7.1 Collateral Agent's Appointment as Attorney-in-Fact, etc. (a) Each
Grantor hereby irrevocably constitutes and appoints the Collateral Agent and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of such Grantor and in the name of such Grantor or in its own name,
for the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, each Grantor hereby gives the
Collateral Agent the power and right, on behalf of such Grantor, without notice
to or assent by such Grantor, to do any or all of the following:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes, acceptances
or other instruments for the payment of moneys due under any Receivable or
with respect to any other Collateral and file any claim or take any other
action or proceeding in any court of law or equity or otherwise deemed
appropriate by the Collateral Agent for the purpose of collecting any and
all such moneys due under any Receivable or with respect to any other
Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and deliver, and
have recorded, any and all agreements, instruments, documents and papers as
the Collateral Agent may request to evidence the Collateral Agent's and the
Creditors' security interest in such Intellectual Property and the goodwill
and general intangibles of such Grantor relating thereto or represented
thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in Section 6.6
or 6.7, any
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indorsements, assignments or other instruments of conveyance or transfer
with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Collateral Agent or as the Collateral Agent shall
direct; (2) ask or demand for, collect, and receive payment of and receipt
for, any and all moneys, claims and other amounts due or to become due at
any time in respect of or arising out of any Collateral; (3) sign and
indorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications,
notices and other documents in connection with any of the Collateral; (4)
commence and prosecute any suits, actions or proceedings at law or in equity
in any court of competent jurisdiction to collect the Collateral or any
portion thereof and to enforce any other right in respect of any Collateral;
(5) defend any suit, action or proceeding brought against such Grantor with
respect to any Collateral; (6) settle, compromise or adjust any such suit,
action or proceeding and, in connection therewith, give such discharges or
releases as the Collateral Agent may deem appropriate; (7) assign any
Copyright, Patent or Trademark (along with the goodwill of the business to
which any such Copyright, Patent or Trademark pertains), throughout the
world for such term or terms, on such conditions, and in such manner, as the
Collateral Agent shall in its sole discretion determine; and (8) generally,
sell, transfer, pledge and make any agreement with respect to or otherwise
deal with any of the Collateral as fully and completely as though the
Collateral Agent were the absolute owner thereof for all purposes, and do,
at the Collateral Agent's option and such Grantor's expense, at any time, or
from time to time, all acts and things which the Collateral Agent deems
necessary to protect, preserve or realize upon the Collateral and the
Collateral Agent's and the Creditors' security interests therein and to
effect the intent of this Agreement, all as fully and effectively as such
Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Collateral Agent agrees that it will not exercise any rights under the power of
attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Collateral Agent, at its option, but without
any obligation so to do, may perform or comply, or otherwise cause performance
or compliance, with such agreement.
(c) The expenses of the Collateral Agent incurred in connection with
actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate per annum equal to the rate per annum at which interest would
then be payable on past due Base Rate Loans that are Revolving Credit Loans
under the Credit Agreement, from the date of payment by the Collateral Agent to
the date reimbursed by the relevant Grantor, shall be payable by such Grantor to
the Collateral Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall lawfully
do or cause to be done by virtue hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable
until this Agreement is terminated and the security interests created hereby are
released.
7.2 Duty of Collateral Agent. The Collateral Agent's sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the New York UCC or otherwise, shall
be to deal with it in the same manner as the Collateral Agent deals with similar
property for its own account. Neither the Collateral
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Agent, any Creditor nor any of their respective officers, directors, employees
or agents shall be liable for failure to demand, collect or realize upon any of
the Collateral or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any Collateral upon the request of any Grantor or
any other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof. The powers conferred on the Collateral Agent and
the Creditors hereunder are solely to protect the Collateral Agent's and the
Creditors' interests in the Collateral and shall not impose any duty upon the
Collateral Agent or any Lender to exercise any such powers. The Collateral Agent
and the Creditors shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither they nor any of
their officers, directors, employees or agents shall be responsible to any
Grantor for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.
7.3 Execution of Financing Statements. Pursuant to Section 9-402 of the
New York UCC and any other applicable law, each Grantor authorizes the
Collateral Agent to file or record financing statements and other filing or
recording documents or instruments with respect to the Collateral without the
signature of such Grantor in such form and in such offices as the Collateral
Agent reasonably determines appropriate to perfect the security interests of the
Collateral Agent under this Agreement. A photographic or other reproduction of
this Agreement shall be sufficient as a financing statement or other filing or
recording document or instrument for filing or recording in any jurisdiction.
7.4 Authority of Collateral Agent. Each Grantor acknowledges that the
rights and responsibilities of the Collateral Agent under this Agreement with
respect to any action taken by the Collateral Agent or the exercise or
non-exercise by the Collateral Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Collateral Agent and the Creditors,
be governed by the Intercreditor Agreement until the Merger Date and thereafter,
be governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Collateral Agent and the Grantors, the Collateral Agent shall be conclusively
presumed to be acting as agent for the Creditors with full and valid authority
so to act or refrain from acting, and no Grantor shall be under any obligation,
or entitlement, to make any inquiry respecting such authority.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 10.1 of the Credit Agreement and, prior to the Merger
Date, Section 14.3 of the Interim Loan Agreement.
8.2 Notices. So long as the Interim Lenders or the Holders are
Creditors, all notices required and demand to or upon the Collateral Agent or
any Grantor hereunder shall be as provided in the Intercreditor Agreement, and
thereafter all notices, requests and demands to or upon the Collateral Agent or
any Grantor hereunder shall be effected in the manner provided for in Section
10.2 of the Credit Agreement; provided that any such notice, request or demand
to or upon any Guarantor shall be addressed to such Guarantor at its notice
address set forth on Schedule 1.
8.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Collateral Agent nor any Creditor shall by any act (except by a written
instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or
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25
remedy hereunder or to have acquiesced in any Applicable Default or Event of
Default. No failure to exercise, nor any delay in exercising, on the part of the
Collateral Agent or any Creditor, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by the Collateral
Agent or any Creditor of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy which the Collateral Agent or
such Obligee would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any other rights or remedies provided by law.
8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor agrees to
pay or reimburse each Creditor and the Collateral Agent for all its costs and
expenses incurred in collecting against such Guarantor under the guarantee
contained in Section 2 or otherwise enforcing or preserving any rights under
this Agreement and the other Loan Documents to which such Guarantor is a party,
including, without limitation, the fees and disbursements of counsel to each
Lender and the Interim Lenders and of counsel to the Collateral Agent.
(b) Each Guarantor agrees to pay, and to save the Collateral Agent and
the Creditors harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Agreement.
(c) Each Guarantor agrees to pay, and to save the Collateral Agent and
the Creditors harmless from, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement to the extent the
Borrower would be required to do so pursuant to Section 10.5 of the Credit
Agreement.
(d) The agreements in this Section 8.4 shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement, the other
Loan Documents, the Interim Loan Agreement and the Dawson 9-3/8% Notes.
8.5 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Administrative Agent, the Collateral Agent and the Creditors and their
successors and assigns; provided that no Grantor may assign, transfer or
delegate any of its rights or obligations under this Agreement without the prior
written consent of the Collateral Agent.
8.6 Set-Off. Each Grantor hereby irrevocably authorizes the
Administrative Agent, the Interim Lender Agent, the Collateral Agent and each
Creditor at any time and from time to time while an Applicable Event of Default
pursuant to Section 8(a) of the Credit Agreement or pursuant to Section 7.1(a)
of the Interim Loan Agreement shall have occurred and be continuing, without
notice to such Grantor or any other Grantor, any such notice being expressly
waived by each Grantor, to set-off and appropriate and apply any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Administrative Agent, the Collateral
Agent or such Creditor to or for the credit or the account of such Grantor, or
any part thereof in such amounts as the Administrative Agent, the Interim Lender
Agent, the Collateral Agent or such Creditor may elect, against and on account
of the obligations and
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26
liabilities of such Grantor to the Administrative Agent, the Interim Lender
Agent, the Collateral Agent or such Creditor hereunder and claims of every
nature and description of the Administrative Agent, the Interim Lender Agent,
the Collateral Agent or such Creditor against such Grantor, in any currency,
whether arising hereunder, under the Credit Agreement, the Interim Loan
Agreement, the Dawson Indenture, any other Loan Document or otherwise, as the
Administrative Agent, the Collateral Agent or such Creditor may elect, whether
or not the Collateral Agent or any Creditor has made any demand for payment and
although such obligations, liabilities and claims may be contingent or
unmatured. The Collateral Agent and each Creditor shall notify such Grantor
promptly of any such set-off and the application made by the Administrative
Agent, the Interim Lender Agent, the Collateral Agent or such Creditor of the
proceeds thereof, provided that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of the Administrative
Agent, the Interim Lender Agent, the Collateral Agent and each Creditor under
this Section 8.6 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which the Administrative Agent, the
Interim Lender Agent, the Collateral Agent or such Creditor may have.
8.7 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
8.8 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9 Section Headings. The Section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
8.10 Integration. This Agreement, the Interim Loan Agreement, the
Dawson Indenture and the other Loan Documents and Interim Loan Documents
represent the agreement of the Grantors, the Collateral Agent and the Creditors
with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Collateral Agent or
any Creditor relative to the subject matter hereof and thereof not expressly set
forth or referred to herein or in the other Loan Documents or Interim Loan
Documents, the Interim Loan Agreement or the Dawson Indenture, as the same may
be supplemented from time to time in accordance with the terms thereof and the
terms of the Credit Agreement.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers. Each Grantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
<PAGE> 32
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(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to such Grantor
at its address referred to in Section 8.2 or at such other address of which
the Collateral Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to
sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
8.13 Acknowledgements. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement, the Interim Loan Documents, and the other Loan
Documents to which it is a party;
(b) neither the Collateral Agent nor any Creditor has any fiduciary
relationship with or duty to any Grantor arising out of or in connection
with this Agreement, the Interim Loan Documents, the Dawson Indenture or
any of the other Loan Documents, and the relationship between the Grantors,
on the one hand, and the Collateral Agent and the Creditors, on the other
hand, in connection herewith or therewith is solely that of debtor and
creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Creditors or among the Grantors and the Creditors.
8.14 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.15 Additional Grantors. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to Section 6.10 of the
Credit Agreement or, until the Merger Date, pursuant to Section 4.10 of the
Interim Lender Agreement (including, without limitation, the Subsidiaries of
Dawson upon consummation of the Merger) shall become a Grantor for all purposes
of this Agreement upon execution and delivery by such Subsidiary of an
Assumption Agreement in the form of Annex 1 hereto.
8.16 Releases. (a) At such time as the Loans, the Reimbursement
Obligations and the other Lender Obligations shall have been paid in full, the
Commitments have been terminated and no Letters of Credit shall be outstanding
and, if prior to the Merger Date, the Interim Lender Obligations have been paid
in full, the Collateral shall be released from the
<PAGE> 33
28
Liens created hereby, and this Agreement and all obligations (other than those
expressly stated to survive such termination) of the Collateral Agent and each
Grantor hereunder shall terminate, all without delivery of any instrument or
performance of any act by any party, and all rights to the Collateral shall
revert to the Grantors. At the request and sole expense of any Grantor following
any such termination, the Collateral Agent shall deliver to such Grantor any
Collateral held by the Collateral Agent hereunder, and execute and deliver to
such Grantor such documents as such Grantor shall reasonably request to evidence
such termination.
(b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor in a transaction permitted by the Credit Agreement
and, prior to the Merger Date, the Interim Loan Agreement, then the Collateral
Agent, at the request and sole expense of such Grantor, shall execute and
deliver to such Grantor all releases or other documents reasonably necessary or
desirable for the release of the Liens created hereby on such Collateral. At the
request and sole expense of the Borrower, a Subsidiary Guarantor shall be
released from its obligations hereunder in the event that all the Capital Stock
of such Subsidiary Guarantor shall be sold, transferred or otherwise disposed of
in a transaction permitted by the Credit Agreement and, if prior to the Merger
Date, the Interim Loan Agreement; provided that the Borrower shall have
delivered to the Collateral Agent, at least five Business Days prior to the date
of the proposed release, a written request for release identifying the
applicable Subsidiary Guarantor and the terms of the sale or other disposition
in reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by the Borrower stating that such
transaction is in compliance with the Credit Agreement and the other Loan
Documents and, if prior to the Merger Date, the Interim Loan Documents.
8.17 Interim Lenders/Holders Rights. (a) Anything herein, or in any
other Loan Document, or the Interim Loan Documents, or the Dawson Indenture to
the contrary notwithstanding, upon the occurrence of the Merger Date and without
the requirement of any further action to be taken hereunder, the Interim Lenders
(including their successors and assigns) will no longer be entitled to the
benefits of this Agreement (including without limitation, the guarantee under
Section 2, the grant of security interest under Section 3 and the application of
proceeds under Section 6.5) and all obligations of the Grantors in favor of the
Interim Lenders (including their successors and assigns) and/or the Collateral
Agent for the benefit of the Interim Lenders shall automatically be terminated
and be of no force and effect and any Liens on the Collateral for the benefit of
such Interim Lenders (including their successors and assigns) and/or the
Collateral Agent or any other party for the benefit of the Interim Lenders
(including their successors and assigns) will be automatically released solely
as to the Interim Lenders (including their successors and assigns). Promptly
after the occurrence of the Merger Date, the Interim Lender Collateral Agent
shall (and is hereby authorized and directed by the Interim Lender Creditors to)
execute such UCC-3 termination statements or take such other action as may be
necessary to terminate and release the Liens provided for herein in favor of the
Lender Collateral Agent for the benefit of the Interim Creditors. The Interim
Lender Agent shall promptly after the occurrence of the Merger Date execute and
deliver to the Collateral Agent such other documentation as may be reasonably
requested by the Collateral Agent or the Borrower in connection with the
foregoing termination and releases. On the occurrence of the Merger Date the
holders of the Dawson 9-3/8% Notes will be automatically equally and ratably
secured with the Collateral until the earliest to occur of (i) the Collateral
being released by the Collateral Agent as provided in Section 8.16(a) or the
payment in full of the Holder Obligations and (ii) at such time as the Holders
shall waive the equal and ratable provisions under the Dawson Indenture with
respect to the Collateral or the Dawson Notes is redeemed, defeased or otherwise
prepaid in accordance with the terms of the Dawson Indenture and the terms of
the Credit Agreement (such earliest date, the "Holder Termination Date").
Promptly after the occurrence of the Holder Termination Date, the Holder
<PAGE> 34
29
Collateral Agent shall execute such UCC-3 termination statements or take such
other action as may be necessary to terminate and release the Liens provided for
herein in favor of the Holder Collateral Agent for the benefit of the Holders.
(b) The rights granted to the Collateral Agent for the equal and
ratable benefit, effective on and after the Merger Date, of the Holder
Creditors, are solely derivative rights, and such rights exist and continue only
to the extent, and for so long as, the Lender Collateral Agent for benefit of
the Lenders, has any security interest, right, title or interest in the
Collateral. In the event that this Agreement is terminated in accordance with
its terms, the rights granted to the Collateral Agent for the equal and ratable
benefit, effective on and after the Merger Date, of the Holder Creditors, will
be automatically terminated without any further action.
<PAGE> 35
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement
to be duly executed and delivered as of the date first above written.
KEY ENERGY GROUP, INC.
By: /s/ Stephen E. McGregor
----------------------------------
Title: Executive Vice President
YALE E. KEY, INC.
KEY ENERGY DRILLING, INC.
WELLTECH EASTERN, INC.
ODESSA EXPLORATION INCORPORATED
KALKASKA OILFIELD SERVICES, INC.
WELL-CO OIL SERVICE, INC.
PATRICK WELL SERVICE, INC.
MOSLEY WELL SERVICE, INC.
RAM OIL WELL SERVICE, INC.
ROWLAND TRUCKING CO., INC.
LANDMARK FISHING & RENTAL, INC.
DUNBAR WELL SERVICE, INC.
FRONTIER WELL SERVICE, INC.
KEY ROCKY MOUNTAIN, INC.
KEY FOUR CORNERS, INC.
JETER SERVICE CO.
JETER WELL SERVICE, INC.
JETER TRANSPORTATION, INC.
INDUSTRIAL OILFIELD SUPPLY, INC.
BROOKS WELL SERVICING, INC.
UPDIKE BROTHERS, INC.
J.W. GIBSON WELL SERVICE COMPANY
KEY ENERGY SERVICES -
SOUTH TEXAS, INC.
MIDLAND ACQUISITION CORP.
WATSON OILFIELD SERVICE &
SUPPLY, INC.
WELLTECH MID-CONTINENT, INC.
By: /s/ Stephen E. McGregor
----------------------------------
Title: Vice President
of all the foregoing companies
<PAGE> 36
NORWEST BANK TEXAS, N.A.,
as Lender Collateral Agent
By: /s/ Mark D. McKinney
---------------------------------
Title: Senior Vice President
NORWEST BANK TEXAS, N.A.,
as Interim Lender Collateral Agent
By: /s/ Mark D. McKinney
---------------------------------
Title: Senior Vice President
NORWEST BANK TEXAS, N.A.,
as Holder Collateral Agent
By: /s/ Mark D. McKinney
---------------------------------
Title: Senior Vice President
<PAGE> 37
Annex 1 to
Master Guarantee and Collateral Agreement
FORM OF ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT, dated as of ________________, ____, made by
______________________________, a ______________ corporation (the "Additional
Grantor"), in favor of NORWEST BANK TEXAS, N.A., as collateral agent (in such
capacity, the "Collateral Agent") for the Creditors (as defined in the Amended
and Restated Master Guarantee and Collateral Agreement, dated as of June 6,
1997, as amended and restated through September 14, 1998 (as further amended,
supplemented or otherwise modified from time to time, the "Guarantee and
Collateral Agreement") in favor of the Collateral Agent. All capitalized terms
not defined herein shall have the meaning ascribed to them in the Credit
Agreement referred to below.
W I T N E S S E T H :
WHEREAS, Key Energy Group, Inc. (the "Borrower"), the Lenders, the
Administrative Agent, the Collateral Agent and the Arrangers, have entered into
an Amended and Restated Credit Agreement, dated as of June 6, 1997, as amended
and restated through September 14, 1998 (as further amended, supplemented or
otherwise modified from time to time, the "Credit Agreement");
WHEREAS, in connection with the Credit Agreement, the Borrower and
certain of its Affiliates (other than the Additional Grantor) have entered into
the Guarantee and Collateral Agreement in favor of the Collateral Agent:
WHEREAS, the Credit Agreement requires the Additional Grantor to become
a party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Guarantee and Collateral
Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and delivering this
Assumption Agreement, the Additional Grantor, as provided in Section 8.15 of the
Guarantee and Collateral Agreement, hereby becomes a party to the Guarantee and
Collateral Agreement as a Grantor thereunder with the same force and effect as
if originally named therein as a Grantor and, without limiting the generality of
the foregoing, hereby expressly assumes all obligations and liabilities of a
Grantor thereunder. The information set forth in Annex 1-A hereto is hereby
added to the information set forth in Schedules ____________(1) to the Guarantee
and Collateral Agreement. The Additional Grantor hereby represents and warrants
- -------- 1 Refer to each Schedule which needs to be supplemented. that each of
the representations and warranties contained in Section 4 of the Guarantee and
Collateral Agreement is true and correct on and as the date hereof (after giving
effect to this Assumption Agreement) as if made on and as of such date.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
- ----------------------------------------------------------
(1) Refer to each Schedule which needs to be supplemented.
<PAGE> 38
LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By: _______________________________
Title:
<PAGE> 39
ACKNOWLEDGMENT AND CONSENT(2)
The undersigned hereby acknowledges receipt of a copy of the Second
Amended and Restated Guarantee and Collateral Agreement dated as of (the
"Agreement"), made by the Grantors parties thereto for the benefit of Norwest
Bank Texas, N.A., as Collateral Agent. The undersigned agrees for the benefit of
the Collateral Agent and the Creditors as follows:
1. The undersigned will be bound by the terms of the Agreement and
will comply with such terms insofar as such terms are applicable to the
undersigned.
2. The undersigned will notify the Collateral Agent promptly in
writing of the occurrence of any of the events described in Section 5.8(a) of
the Agreement.
3. The terms of Sections 6.3(c) and 6.7 of the Agreement shall apply
to it, mutatis mutandis, with respect to all actions that may be required of it
pursuant to Section 6.3(c) or 6.7 of the Agreement.
[NAME OF ISSUER]
By
----------------------------------
Name:
Title:
Address for Notices:
------------------------------------
------------------------------------
------------------------------------
Fax:
- ----------------------
(2) This consent is necessary only with respect to any Issuer which
is not also a Grantor. This consent may be modified or eliminated with respect
to any Issuer that is not controlled by a Grantor. If a consent is required, its
execution and delivery should be included among the conditions to the initial
borrowing specified in the Credit Agreement.
<PAGE> 1
EXHIBIT 99.9
INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT
INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT, dated as of September
14, 1998, among (i) the Lender Agent (for the benefit of the Lender Creditors),
(ii) the Interim Lender Agent (for the benefit of the Interim Lender Creditors),
(iii) Norwest Bank Texas, N.A., as collateral agent for the Lenders, (in such
capacity, the "Lender Collateral Agent"), (iv) Norwest Bank Texas, N.A., as
collateral agent for the Interim Lenders, (in such capacity, the "Interim Lender
Collateral Agent"), (v) Norwest Bank Texas, N.A., as collateral agent for the
Holders (in such capacity, the "Holder Collateral Agent"), and (vi) Key Energy
Group, Inc. and certain of its subsidiaries party hereto.
RECITALS
WHEREAS, Key Energy Group, Inc., a Maryland corporation (the
"Borrower"), the several banks and other financial institutions or entities
parties thereto (the "Lenders"), PNC National Bank, National Association, as
administrative agent for the Lenders (in such capacity, the "Lender Agent"), the
Lender Collateral Agent and PNC Capital Markets, Inc., as arranger (the "Lender
Arranger"; together with the Lenders and the Lender Agent, the "Lender
Creditors"), have entered into a Second Amended and Restated Credit Agreement of
even date herewith (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement");
WHEREAS, the Borrower, the several banks and other financial
institutions or entities parties thereto (the "Interim Lenders"), Lehman
Commercial Paper Inc., as administrative agent for the Interim Lenders (in such
capacity, the "Interim Lender Agent") and Lehman Brothers Inc., as arranger (the
"Interim Lender Arranger"; together with the Interim Lenders and the Interim
Lender Agent, the "Interim Lender Creditors") have entered into an Interim Loan
Agreement of even date herewith (as amended, supplemented or otherwise modified
from time to time, the "Interim Loan Agreement");
WHEREAS, Dawson Production Services, Inc. has issued 9-3/8% Notes to
the holders thereof (the "Holders") pursuant to the Indenture dated as of
February 20, 1997 among Dawson, certain Subsidiaries of Dawson and U.S. Trust
Company of Texas, N.A. (in such capacity, the "Dawson Trustees"; together with
the Holders, the "Holder Creditors");
WHEREAS, pursuant to the Amended and Restated Master Guarantee and
Collateral Agreement of even date herewith (as amended, supplemented or
otherwise modified from time to time, the "Master Guarantee and Collateral
Agreement"), certain of the Borrower's subsidiaries (collectively, the
"Guarantors"; together with the Borrower, the "Grantors") have guaranteed the
payment in full of the Lender Obligations and, until the Merger Date (as defined
in the Credit Agreement), the Interim Lender Obligations (such guarantees, the
"Guarantees");
WHEREAS, pursuant to the Master Guarantee and Collateral Agreement,
each Grantor has granted to the Collateral Agent, as defined in the Master
Guarantee and Collateral Agreement (for the benefit of the Lender Creditors and,
to the extent set forth therein, the Interim Lender Creditors and the Holder
Creditors) a Lien on and security interest in certain of its assets and
properties to secure the Lender Obligations and, to the extent set forth
therein, the Interim Lender Obligations and the Holder Obligations (all as
defined in the Master Guarantee and Collateral Agreement);
WHEREAS, pursuant to the Mortgages and the Oil and Gas Mortgages (each
as defined in the Credit Agreement), the Grantors parties thereto have granted
and will grant to the Collateral Agent (for the benefit of the Lender Creditors
and, to the extent set forth therein, the Interim Lender Creditors and the
Holder Creditors, as the case may be) a Lien on and security interest in the
assets and properties covered thereby to secure the Lender Obligations and, to
the extent set forth therein, the Interim Lender Obligations and the Holder
Obligations; and
<PAGE> 2
2
WHEREAS, each of the Lender Agent and the Interim Lender Agent desires
to provide for its respective rights (and the rights of the Lenders and the
Interim Lenders, respectively) in the Collateral and certain collections from
the Grantors and appoint the Collateral Agent as the "collateral agent" as
provided for herein and the Grantors wish to agree to and acknowledge the
provisions contained herein.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1.
DEFINITIONS
1.1 Definitions of Certain Terms. As used herein, unless otherwise
defined herein, all terms defined in the Master Guarantee and Collateral
Agreement shall be used herein as therein defined, and the following terms shall
have the meanings set forth below:
"Actionable Event of Default": shall have the same meaning as
Applicable Event of Default under the Master Guarantee and Collateral
Agreement.
"Administrative Expenses": the unpaid costs and expenses of any sale or
sales of, and collections on, any Collateral or any other realization of
monies in respect thereof, the reasonable care and safekeeping of any
Collateral, and the payment of the unpaid indemnifications, costs and
expenses (including reasonable fees and disbursements of counsel employed by
the Collateral Agent and any unpaid costs and expenses incurred in
connection with the enforcement by the Collateral Agent of this Agreement),
fees and other compensation of the Collateral Agent provided for in and
under this Agreement.
"Agreement": this Intercreditor Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
"Bankruptcy Event of Default": shall mean any Event of Default pursuant
to (a) clause (i), (ii) or (iii) of subsection 8(f) of the Credit Agreement
or (b) until the Merger Date clauses (i), (ii) or (iii) of subsection 7,1(f)
of the Interim Loan Agreement.
"Collateral": the assets and properties upon which a Lien is to be
granted pursuant to the Intercreditor Security Documents.
"Collateral Account": has the meaning as set forth in subsection 3.1.
"Creditors": the collective reference to (i) the Lender Creditors, (ii)
until the Merger Date, the Interim Lender Creditors and (iii) commencing on
the Merger Date and until the Holder Termination Date, the Holder Creditors.
"Directing Parties": with respect to the Intercreditor Security
Documents and all actions to be taken in connection therewith, the Required
Lenders (as defined in the Credit Agreement) and, until the Merger Date, the
Majority Lenders (as defined in the Interim Loan Agreement).
"Intercreditor Security Documents": the Master Guarantee and Collateral
Agreement, the Mortgages and the Oil and Gas Mortgages.
"Mortgages": the collective reference to the Mortgages (as defined in
the Credit Agreement) and the mortgages entered into by the Borrower
pursuant to the Interim Loan Agreement.
"Notice of Actionable Event of Default": a written notice delivered by
any of the Lender Agent, the Interim Lender Agent or the Borrower to the
Collateral Agent, stating that an Actionable Event of Default has occurred.
A Notice of Actionable Event of
<PAGE> 3
3
Default shall be deemed to have been given when the notice referred to in
the preceding sentence has actually been received by the Collateral Agent. A
Notice of Actionable Event of Default shall be deemed to have been rescinded
when, after a Notice of Actionable Event of Default (other than a Bankruptcy
Event of Default) has been given, the Collateral Agent has been instructed
by the Person giving such notice that there exists no Actionable Event of
Default (provided that, if the Notice of Actionable Event of Default was
sent by the Borrower, the Collateral Agent shall confirm the Borrower's
rescission of the same with the Lender Agent and, until the Merger Date, the
Interim Lender Agent), or when, after a Bankruptcy Event of Default, such
Bankruptcy Event of Default is no longer continuing. A Notice of Actionable
Event of Default shall be deemed to be outstanding at all times after such
notice has been given until such time, if any, as such notice has been
rescinded.
"Operative Documents": the collective reference to the Loan Documents
and the Interim Loan Documents.
"Representative Creditor": each of (i) the Lender Agent, (ii) until the
Merger Date, the Interim Lender Agent and (iii) commencing with the Merger
Date, the Dawson Trustee and their respective successors and assigns.
1.2 Terms Generally. The definitions in Section 1.1 shall apply equally
to both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". All references in this Agreement
to designated Sections and other subdivisions, unless otherwise noted, are to
designated Sections and other subdivisions of this Agreement, and the words
"herein," "hereof," and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular Section or other
subdivision. Except as otherwise indicated, all the agreements or instruments
herein defined or referred to shall mean such agreements or instruments as the
same may from time to time be supplemented or amended or the terms thereof
waived or modified to the extent permitted by, and in accordance with, the terms
thereof.
SECTION 2.
ACTS OF CREDITORS; AMOUNT OF OBLIGATIONS
2.1 Acts of Creditors. Any request, demand, authorization, direction,
notice, consent, waiver or other action permitted or required by this Agreement
to be given or taken by the Directing Parties may be, and at the request of the
Collateral Agent shall be, embodied in and evidenced by one or more instruments
reasonably satisfactory in form to the Collateral Agent and signed by or on
behalf of such Directing Parties and, except as otherwise expressly provided in
any such instrument, any such action shall become effective when such instrument
or instruments shall have been delivered to the Collateral Agent. The instrument
or instruments evidencing any action (and the action embodied therein and
evidenced thereby) are sometimes referred to herein as an "Act" of the persons
signing such instrument or instruments. The Collateral Agent shall be entitled
to rely absolutely upon an Act of the Directing Parties if such Act purports to
be taken by or on behalf of such Directing Parties, and nothing in this
subsection 2.1 or elsewhere in this Agreement shall be construed to require any
of the Directing Parties to demonstrate that it has been authorized to take any
action which it purports to be taking, the Collateral Agent being entitled to
rely conclusively, and being fully protected in so relying, on any Act of such
Person.
2.2 Determination of Amounts of Obligations. Whenever the Collateral
Agent is required to determine the existence or amount of any of the Obligations
or any portion thereof for any purposes of this Agreement, it shall be entitled
to make such determination on the basis of one or more certificates of the
Lender Agent (with respect to the Lender Obligations), the Interim Lender Agent
(with respect to the Interim Lender Obligations, or any of them) and the Dawson
Trustee (with respect to Holder Obligations); provided, however, that if,
notwithstanding the request of the Collateral Agent, any Representative Creditor
shall fail or refuse within five Business Days of such request to certify as to
the existence or amount of any outstanding Obligations or any portion thereof
owed to it or any Person on whose behalf it acts thereunder, the Collateral
Agent shall be entitled to determine such existence or amount by such method as
the Collateral Agent may, in its sole discretion,
<PAGE> 4
4
determine, including by reliance upon a certificate of the Borrower; provided,
further, however, that, promptly following determination of any such amount
pursuant to the foregoing proviso, the Collateral Agent shall notify the
affected Representative Creditor of such determination and thereafter shall
correct any error that such Representative Creditor brings to the attention of
the Collateral Agent as promptly as practical, but in any event, within three
Business Days. The Collateral Agent may rely conclusively, and shall be fully
protected in so relying, on any determination made by it in accordance with the
provisions of the preceding sentence (or as otherwise directed by a court of
competent jurisdiction) and shall have no liability to the Borrower or any other
Grantor, any Representative Creditor or any other Person as a result of any
action taken by the Collateral Agent based upon such determination prior to
receipt of notice of any error in such determination.
2.3 Restrictions on Actions. (a) Until the Merger Date has occurred, as
long as any Obligation is outstanding, the provisions of this Agreement shall,
notwithstanding the provisions of any other Operative Document, exclusively
govern the method by which any Creditor may exercise rights and remedies as to
the Collateral. Therefore, each Lender and Interim Lender shall, for the mutual
benefit of all Lender Creditors and Interim Lender Creditors (but not for the
benefit of any other Person), except as permitted under this Agreement: (i)
refrain from taking or filing any action, judicial or otherwise, to enforce any
rights or pursue any remedies in respect of the Collateral, except for
delivering notices hereunder; and (ii) subject to the second sentence of Section
4.2(b)(i), refrain from exercising any rights or remedies under the
Intercreditor Security Documents which may be exercisable as a result of an
Actionable Event of Default.
(b) Notwithstanding subsection 2.3(a), nothing shall prevent (i) any
Lender Creditor or any Interim Lender Creditor from exercising the rights and
remedies available to it under Section 8 of the Credit Agreement or under
Section 7.1 of the Interim Loan Agreement or from otherwise taking action,
judicial or otherwise, to collect past due amounts or enforce its rights under
and in accordance with the Loan Documents or the Interim Loan Documents, as
applicable (except for exercising any remedies in respect of the Collateral),
and (ii) any Lender Creditor or Interim Lender Creditor from raising any
defenses in any action in which it has been made a party defendant or has been
joined as a third party, except that the Collateral Agent may direct and control
any defense to the extent solely relating to the Collateral or any one or more
of the Intercreditor Security Documents, subject to and in accordance with the
provisions of this Agreement.
2.4 Perfection. Irrespective of the date, manner or order of perfection
of the security interests and Liens on the Collateral, and notwithstanding the
provisions of the Uniform Commercial Code or any applicable law or decision, as
among the Creditors, the priority of each Creditor with respect to the
Collateral shall be deemed to be equal.
SECTION 3.
PROCEEDS OF COLLATERAL;
PAYMENTS BY COLLATERAL AGENT
3.1 Collateral Account. On the Closing Date there shall be established
and, at all times thereafter until this Agreement shall have terminated, there
shall be maintained with the Lender Collateral Agent at the office of the Lender
Collateral Agent located at 500 West Texas Avenue, Midland, Texas 79701, a
collateral account, which shall be entitled the "Key Collateral Account" (the
"Collateral Account"). Upon an Actionable Event of Default, the Collateral Agent
shall deposit all amounts received by it in its capacity as Collateral Agent
(and not in any other capacity) in respect of the Collateral or, until the
Merger Date, pursuant to enforcement of the Guarantees, including all monies
received on account of any sale of or other realization upon any of the
Collateral pursuant to any Operative Document. All right, title and interest in
and to the Collateral Account shall vest exclusively in the Collateral Agent,
for the benefit of the applicable Creditors, and shall be held by the Collateral
Agent hereunder subject to the terms hereof. Neither the Borrower nor any other
Person shall have any rights with respect to the Collateral Account and the
Collateral Agent shall have exclusive dominion and control over the Collateral
Account and the monies deposited therein; provided that the Collateral Agent
shall at all times act in accordance with the provisions of this Agreement.
Monies deposited in the Collateral Account and all certificates and instruments
evidencing investments made with monies deposited in the Collateral Account
pursuant to subsection 3.4 hereof shall constitute security for (i) the Lender
Obligations, (ii) until the Merger Date has occurred, the Interim Lender
Obligations and (iii) commencing with the Merger Date and until the Holder
Termination Date, the Holder Obligations, and shall be applied or disbursed in
accordance with the
<PAGE> 5
5
terms of this Agreement.
3.2 Application of Proceeds.
(a) General Application: Amounts on deposit in the Collateral Account
shall be applied:
First, to the payment of any Administrative Expenses;
Second, to the reimbursement of any Creditor for any and all losses
incurred resulting from any indemnity provided in accordance with subsection
4.4(d) or 4.7 by such Creditor;
Third, (to the extent not previously reimbursed), to the pro rata
payment of all Obligations that consist of costs and expenses incurred in
connection with the preservation, collection, enforcement or protection of
the rights in respect of the Collateral;
Fourth, to (i) the Lender Agent (for the benefit of the Lenders) in
payment of the unpaid principal of the Loans and the Reimbursement
Obligations, for the then undrawn and unexpired amount of the then
outstanding Letters of Credit and for all amounts then owing under the Hedge
Agreements (other than fees, expenses or interest), (ii) until the Merger
Date, to the Interim Lender Agent (for the benefit of the Interim Lenders)
in payment of the unpaid principal of the Interim Loans, and (iii)
commencing on the Merger Date, to the Dawson Trustee (for the benefit of the
Holders) in payment of the unpaid principal of the Dawson 9-3/8% Notes, such
amount in this clause Fourth to be shared pro rata in accordance with the
respective outstanding amounts thereof, until all such amounts are paid in
full;
Fifth, to (i) the Lender Agent (for the benefit of the Lenders) in
payment of all due and payable interest on the Loans and Reimbursement
Obligations, (ii) until the Merger Date, to the Interim Lender Agent (for
the benefit of the Interim Lenders) in payment of all due and payable
interest on the Interim Loans, and (iii) commencing on the Merger Date, to
the Dawson Trustee (for the benefit of the Holders) in payment of all due
and payable interest on the Dawson 9-3/8% Notes, such amounts in this clause
Fifth to be shared pro rata in accordance with the respective amounts
thereof, until all such amounts are paid in full;
Sixth, to the Lender Agent (for the benefit of the Lender Creditors) in
payment of all remaining Lender Obligations, (ii) until the Merger Date, to
the Interim Lender Agent (for the benefit of the Interim Lender Creditors)
in payment of all remaining Interim Lender Obligations, and (iii) commencing
on the Merger Date, to the Dawson Trustee (for the benefit of the Holders)
in payment of all remaining Holder Obligations, such amounts in this clause
Sixth to be shared pro rata in accordance with the respective amounts
thereof, until all such amounts are paid in full; and
Seventh, the balance, if any, after all of the Obligations have been
satisfied and the Commitments terminated, to the Borrower or such other
Person as may be required by law.
3.3 Time of Payments. Unless the Collateral Agent shall have received
written instructions from the Lender Agent and the Interim Lender Agent as to
the times at which any amounts are to be distributed pursuant to subsection 3.2,
all distributions under subsection 3.2 shall be made at such times as the
Collateral Agent shall in its reasonable discretion determine to be as soon as
practicable.
3.4 Investment of Amounts in Collateral Account. Pending the
disbursement thereof pursuant to the terms of this Agreement, all amounts in the
Collateral Account shall (to the extent the Collateral Agent deems practical) be
invested by the Collateral Agent in Cash Equivalents. Any reduction in such
amounts so invested resulting from a reduction in the value of such Cash
Equivalents shall not be deemed to reduce any outstanding Obligations or to give
rise to any claim or right by any party. All such investments shall be evidenced
either (a) by negotiable certificates or instruments which are held by or for
the account of the Collateral Agent or (b) by book entries maintained in a state
in which the Collateral Agent may be granted by book entries a perfected
security interest in the securities relating thereto.
3.5 Amounts Held for Contingent Obligations. In the event any Lender
shall receive any
<PAGE> 6
6
moneys pursuant to subsection 3.2 in respect of the contingent portion of the
outstanding Obligations, then such Lender shall invest such moneys in Cash
Equivalents maturing within 90 days after they are acquired by such Lender and
shall hold all such amounts so distributable, and all such investments and the
net proceeds thereof, in trust until (i) all or part of such contingent claim
shall have become fixed, in which case such Lender shall apply to the payment of
such fixed claim from such investments and the proceeds thereof an amount equal
to such fixed claim, and shall promptly give notice thereof to the Borrower and
the Collateral Agent or (ii) all or part of such contingent claim shall have
been extinguished, whether as the result of an expiration without drawing of any
Letter of Credit, payment of amounts secured or covered by any Letter of Credit
other than by drawing thereunder, in which case such Lender, shall, as soon as
practicable thereafter, notify the Borrower and the Collateral Agent and shall
distribute from such investments, and the proceeds thereof, an amount equal to
the portion of contingent claim which has been extinguished together with
interest earned thereon from the date first invested until so distributed, to
the Collateral Agent for deposit in the Collateral Account and application in
accordance with the provisions of subsection 3.2.
SECTION 4.
CONCERNING THE COLLATERAL AGENT
4.1 Appointment of Collateral Agent. Each of the Lender Agent (on
behalf of the Lenders) and the Interim Lender Agent (on behalf of the Interim
Lenders) hereby appoints Norwest Bank Texas, N.A. to act as its Collateral Agent
pursuant to the terms of the Intercreditor Security Documents and this
Agreement, and Norwest Bank Texas, N.A. agrees to act as Collateral Agent for
the Representative Creditors, pursuant to the terms of the Intercreditor
Security Documents and this Agreement.
4.2 Duties.
(a) Notices to Representative Creditors. The Collateral Agent shall
promptly notify the Lender Agent and the Interim Lender Agent in the event it
shall receive any Notice of Actionable Event of Default or any Notice of
Actionable Event of Default shall be rescinded.
(b) Actions Under Security Documents. (i) The Collateral Agent shall
not be obligated to take any action under this Agreement or any of the
Intercreditor Security Documents except for the performance of such duties as
are specifically set forth herein or therein. Subject to the provisions of this
Section 4, the Collateral Agent shall take any action under or with respect to
the Intercreditor Security Documents which is requested by the Directing Parties
and which is not inconsistent with or contrary to the provisions of this
Agreement or the Intercreditor Security Documents. At any time when a Notice of
Actionable Event of Default shall have been given and shall be outstanding, the
Collateral Agent shall, subject in all cases to the provisions of this Section
4, exercise or refrain from exercising all such rights, powers and remedies as
shall be available to it under the Intercreditor Security Documents or any of
them in accordance with any written instructions received from the Directing
Parties. Absent written instructions from the Directing Parties, the Collateral
Agent may take, but shall have no obligation to take, any and all such actions
under the Intercreditor Security Documents or any of them or otherwise as it
shall deem to be in the best interests of the Creditors in order to maintain the
Collateral and protect and preserve the Collateral and the rights of the
Creditors; provided that, except as provided in paragraph (ii) below, in the
absence of written instructions (which may relate to the exercise of specific
remedies or to the exercise of remedies in general) from the Directing Parties
the Collateral Agent shall not foreclose any Lien on the Collateral or exercise
any other remedies available to it under any Intercreditor Security Documents
with respect to the Collateral or any part thereof. Absent contrary instructions
from the Directing Parties, the Collateral Agent shall take reasonable measures
to maintain the perfection of the security interests in the Collateral granted
pursuant to the Intercreditor Security Documents.
(ii) If the Collateral Agent has requested instructions from the
Directing Parties at a time when a Notice of Actionable Event of Default shall
be outstanding and the Directing Parties have not responded to such request
within 30 days thereafter, the Collateral Agent may take, but shall have no
obligation to take, any and all actions under the Intercreditor Security
Documents or any of them or otherwise, including foreclosure of any Lien or any
other exercise of remedies, as the Collateral Agent, in good faith, shall
determine to be in the interests of the Creditors and to maximize both the value
of the Collateral and the present value of
<PAGE> 7
7
the recovery by each of the Creditors of the outstanding Obligations owed to it;
provided, that, if instructions are thereafter received from the Directing
Parties, then the actions of the Collateral Agent shall be subject to subsection
4.2(b)(i)
4.3 Limitations on Responsibility of Collateral Agent. (a) The
Collateral Agent shall not be responsible in any manner whatsoever for the
correctness of any recitals, statements, representations or warranties contained
herein or in any other Operative Document, except for those expressly made by it
herein. The Collateral Agent makes no representation as to the value or
condition of the Collateral or any part thereof, as to the title of the Grantors
to the Collateral, as to the security afforded by this Agreement or any
Intercreditor Security Document, except as expressly set forth in Section 5, as
to the validity, execution, enforceability, legality or sufficiency of this
Agreement or any other Operative Document, and the Collateral Agent shall incur
no liability or responsibility in respect of any such matters. The Collateral
Agent shall not be responsible for insuring the Collateral, for the payment of
taxes, charges, assessments or liens upon the Collateral or otherwise as to the
maintenance of the Collateral, except as provided in the Intercreditor Security
Documents or the immediately following sentence when the Collateral Agent has
possession of the Collateral. The Collateral Agent shall have no duty to the
Grantors or to any Creditor as to any Collateral in its possession or control or
in the possession or control of any agent or nominee of the Collateral Agent or
any income thereon or as to the preservation of rights against prior parties or
any other rights pertaining thereto, except the duty to accord such of the
Collateral as may be in its possession at least that level of care as it accords
its own assets and the duty to account for monies received by it. The Collateral
Agent shall not be required to ascertain or inquire as to the performance by the
Borrower or the other Grantors of any of the covenants or agreements contained
herein or in the other Operative Documents. Neither the Collateral Agent nor any
officer, agent or representative thereof shall be personally liable for any
action taken or omitted to be taken by any such person in connection with this
Agreement or any other Operative Document except for its or such person's own
gross negligence or wilful misconduct. Neither the Collateral Agent nor any
officer, agent or representative thereof shall be personally liable for any
action taken by it or any such person in accordance with any notice given by the
Directing Parties. The Collateral Agent may execute any of the powers granted
under this Agreement or any of the Intercreditor Security Documents and perform
any duty hereunder or thereunder either directly or by or through agents or
attorneys-in-fact, and shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by it with reasonable care and
without gross negligence or wilful misconduct.
4.4 Reliance by Collateral Agent; Indemnity Against Liabilities; etc.
(a) The Collateral Agent may consult with counsel and shall be fully protected
in taking any action hereunder in accordance with any advice of such counsel.
The Collateral Agent shall have the right but not the obligation at any time to
seek instructions concerning the administration of this Agreement, the duties
created hereunder or the Collateral from any court of competent jurisdiction.
(b) The Collateral Agent shall be fully protected in relying upon any
resolution, statement, certificate, instrument, opinion, report, notice,
request, consent, order or other paper or document which it believes to be
genuine and to have been signed or presented by the proper party or parties. In
the absence of its gross negligence or wilful misconduct or actual notice to the
contrary, the Collateral Agent may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificate or opinions furnished to the Collateral Agent in connection with
this Agreement.
(c) The Collateral Agent shall not be deemed to have actual,
constructive, direct or indirect notice or knowledge of the occurrence of any
Actionable Event of Default unless and until the Collateral Agent shall have
received a Notice of Actionable Event of Default. The Collateral Agent shall
have no obligation whatsoever either prior to or after receiving such a notice
to inquire whether an Actionable Event of Default has, in fact, occurred and
shall be entitled to rely conclusively, and shall be fully protected in so
relying, on any such notice so furnished to it.
(d) If the Collateral Agent has been requested to take any specific
action pursuant to any provision of this Agreement, the Collateral Agent shall
not be under any obligation to exercise any of the rights or powers vested in it
by this Agreement in the manner so requested unless it shall have been provided
indemnity satisfactory to it against the costs, expenses and liabilities which
may be incurred by it in compliance with such request or direction.
<PAGE> 8
8
4.5 Resignation or Removal of the Collateral Agent. The Collateral
Agent may at any time (a) by giving 30 days' prior written notice to the Lender
Agent and, prior to the Merger Date, the Interim Agent, resign and be discharged
from the responsibilities hereby created, or (b) if the Directing Parties
conclude that the Collateral Agent shall have acted under and in respect of this
Agreement in a manner which constitutes negligence or otherwise conclude in the
reasonable exercise of their business judgment that the Collateral Agent should
be removed, be removed from its position as Collateral Agent by the Directing
Parties, such resignation or removal to become effective upon the earlier of (x)
the acceptance of the appointment of a successor pursuant to the following
sentence or (y) the appointment of a successor by the Directing Parties and the
acceptance of such appointment by such successor. If no successor shall be
appointed and approved pursuant to clause (y) above within 30 days after the
date of any such resignation, the Collateral Agent may apply to any court of
competent jurisdiction to appoint a successor to act until a successor shall
have been appointed by the Directing Parties as above provided or may, on behalf
of the Representative Creditors, appoint a successor Collateral Agent. Any
successor Collateral Agent shall be a bank organized under the laws of the
United States or any State thereof, with an office in New York, New York, having
a combined capital and surplus of at least $500,000,000 that is authorized to
perform the functions of the Collateral Agent hereunder.
4.6 Expenses and Indemnification by Borrower. By its consent hereto,
each Grantor jointly and severally agrees (i) to reimburse the Collateral Agent,
on demand, for any reasonable expenses incurred by the Collateral Agent,
including reasonable counsel fees and compensation of agents, arising out of, in
any way connected with, or as a result of, the execution or delivery of this
Agreement or any related document or any agreement or instrument contemplated
hereby or thereby or the performance by the parties hereto or thereto of their
respective obligations hereunder or thereunder or in connection with the
enforcement or protection of the rights of the Collateral Agent and the
Creditors under this Agreement and the Intercreditor Security Documents and (ii)
to indemnify and hold harmless the Collateral Agent and its directors, officers,
employees and agents, on demand, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Collateral Agent in its capacity as the
Collateral Agent or any of them in any way relating to or arising out of this
Agreement or any action taken or omitted by them under this Agreement; provided
that the Grantors shall not be liable to the Collateral Agent for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the gross negligence or
wilful misconduct of the Collateral Agent or any of its directors, officers,
employees or agents.
4.7 Expenses and Indemnification by Lenders and Interim Lenders. (a)
Each Lender and until the Merger Date each Interim Lender agrees (i) to
reimburse the Collateral Agent, on demand, in accordance with the provisions of
subsection 4.7(b), for any expenses referred to in subsection 4.6 which shall
not have been reimbursed by the Grantors or paid from the proceeds of Collateral
as provided herein and (ii) to indemnify and hold harmless the Collateral Agent
and its directors, officers, employees and agents, on demand, in the amount of
its pro rata share, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements referred to in subsection 4.6, to the extent the same shall not
have been reimbursed by the Borrower or any other Grantor or paid from the
Proceeds of Collateral as provided herein; provided that no Lender or Interim
Lender shall be liable to the Collateral Agent for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or wilful
misconduct of the Collateral Agent or any of its directors, officers, employees
or agents.
(b) The reimbursement and indemnification obligations of each Lender
and each Interim Lender shall be for the benefit of all Collateral Agents and
shall be several and pro rata, at any time to be based upon the Obligations owed
to each such Creditor at such time in relation to the aggregate Obligations then
outstanding, provided, that nothing in this subsection 4.7(b) shall be
interpreted in a manner to limit the indemnity provided to the Collateral Agent
by any Creditor pursuant to subsection 4.4(d).
SECTION 5.
REPRESENTATIONS AND WARRANTIES
The Collateral Agent, the Lender Agent and the Interim Lender Agent
each represents and
<PAGE> 9
9
warrants to the other parties hereto that (a) the execution, delivery and
performance of this Agreement (i) have been duly authorized by all requisite
corporate action on its part and (ii) will not contravene any provision of its
charter or by-laws or any order of any court or other Governmental Authority
having applicability to it or any applicable law, and (b) this Agreement has
been duly executed and delivered by it and constitutes its legal, valid,
enforceable and binding obligation.
SECTION 6.
GENERAL INTERCREDITOR ARRANGEMENTS
6.1 Turnover of Collateral and Certain Payments. (a) If any Lender or
Interim Lender (i) acquires custody, control or possession of any Collateral or
Proceeds therefrom or (ii) receives any payment of the Obligations from the
Collateral or Proceeds thereof or, until the Merger Date, from enforcement of
the Guarantee, other than pursuant to the terms of this Agreement (an "Excess
Payment"), then such Creditor shall in each such case promptly cause such
Collateral or Proceeds to be delivered to or put in the custody, possession or
control of the Collateral Agent for disposition or distribution in accordance
with the provisions of this Agreement. Until such time as the provisions of the
immediately preceding sentence have been complied with, such Creditor shall be
deemed to hold such Collateral, proceeds or payments in trust for the parties
entitled thereto hereunder. Notwithstanding the foregoing, no Creditor shall be
required to deliver to or put in the custody, possession or control of the
Collateral Agent or to hold in trust as specified in the preceding sentence any
payment or prepayment of principal, interest, premium or fees received in
accordance with the terms of the Credit Agreement or the Interim Loan Agreement,
as applicable, prior to the Collateral Agent's receipt of a Notice of Actionable
Event of Default, or amounts paid pursuant to the provisions of Section 3 at any
time.
6.2 Setoffs. If any Creditor exercises any right of setoff or similar
right with respect to any assets (whether or not such assets shall constitute
Collateral) of the Borrower or any other Grantor for payment of any outstanding
Obligations, such Creditor may apply such amounts to such outstanding Obligation
arising under the Operative Documents, as applicable; provided, that any Lender
Creditor exercising such rights shall comply with the provisions of subsection
10.7 of the Credit Agreement and any Interim Lender Creditor exercising such
rights shall comply with the provisions of subsection 2.11 of the Interim Loan
Agreement.
SECTION 7.
MISCELLANEOUS
7.1 No Individual Action. No Creditor may require the Collateral Agent
to take or refrain from taking any action hereunder or under any of
Intercreditor Security Documents or with respect to any of the Collateral except
as and to the extent expressly set forth in this Agreement.
7.2 Successors and Assigns. (a) This Agreement shall be binding on and
inure to the benefit of the Collateral Agent, each of the Administrative Agent
and Interim Lender Agent and their respective successors and permitted assigns
(including any assignee of the Administrative Agent in accordance with the
Credit Agreement and any assignee of any Interim Lender Agent in accordance with
the Interim Loan Agreement). The rights and obligations of any Lender or Interim
Lender under this Agreement shall be assigned automatically, without the need
for the execution of any document or any other action, to, and the term "Lender"
or "Interim Lender" as used in this Agreement shall include, any assignee,
transferee or successor of such Creditor under the Credit Agreement or the
Interim Loan Agreement, as the case may be, in accordance with the terms of and
upon the effectiveness of an assignment pursuant to subsection 10.6 of the
Credit Agreement or subsection 6.1 of the Interim Loan Agreement, as the case
may be, and any such assignee, transferee or successor shall automatically
become a party to this Agreement. Each of the Lenders and the Interim Lenders
agrees that it shall deliver a complete copy of this Agreement to any potential
assignee, transferee or successor of such Lender or Interim Lender prior to the
execution of any such assignment. This Agreement is not intended to confer any
benefit on, or create any obligation of the Collateral Agent or any Creditor to,
the Borrower or any third party, including the Guarantors, even if such Person
acquires, by subrogation or otherwise, any interest of the Lenders or the
Interim Lenders in any of the Obligations or Collateral.
<PAGE> 10
10
7.3 Notices. Notices and other communications provided for herein or in
any related document shall be in writing and shall be delivered by hand or
overnight courier service, mailed or sent by telex, graphic scanning or other
telegraphic communications equipment of the sending party, as follows:
<TABLE>
<S> <C>
if to the Lender Agent: PNC Bank, National Association
One PNC Plaza, Third Floor
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707
Attention: Mr. Thomas Majeski
Telecopy: (412) 762-2571
Telephone: (412) 762-2431
with a copy to: PNC Bank, National Association
One PNC Plaza, Fourth Floor Annex
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707
Attention: Ms. Arlene Ohler
Telecopy: (412) 762-8672
Telephone: (412) 762-3627
if to the Interim
Lender Agent: Lehman Commercial Paper Inc.
3 World Financial Center
New York, New York 10285
Attention: Michael O'Brien
Telecopy: (212) 526-7691
if to the Lender
Collateral Agent,
Interim Lender
Collateral Agent
and/or the Holder
Collateral Agent: Norwest Bank Texas, N.A., as Collateral Agent
pursuant to the Key Energy Group, Inc. Intercreditor
Agreement, dated as of September 14, 1998
500 West Texas Avenue
Midland, Texas 79701
Attention: Mr. Mark McKinney
Telecopy: (915) 685-5441
Telephone: (915) 685-5149]
if to any Grantor: Key Energy Group, Inc.
Two Tower Center, Tenth Floor
East Brunswick, New Jersey 08816
Attention: Mr. Stephen E. McGregor
Telecopy: (908) 659-1526
Telephone: (908) 247-5148.
</TABLE>
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telex, graphic scanning or other telegraphic communications equipment of the
sender, or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this subsection 7.3 or in accordance
with the latest unrevoked direction from such party given in accordance with
this subsection 7.3. Addresses of any party may be changed by written notice by
such party to the Collateral Agent.
<PAGE> 11
11
7.4 Termination. This Agreement shall terminate automatically upon the
earlier of (a) the Merger Date occurring and the Holder Termination Date and (b)
the indefeasible payment in full of the Obligations; provided, however, that
subsections 4.6, 4.7 and 7.5 of this Agreement shall survive, and remain
operative and in full force and effect, regardless of the termination of this
Agreement.
7.5 APPLICABLE LAW; WAIVER OF JURY TRIAL. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY
IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY
COUNTERCLAIM THEREIN.
7.6 Modification of Agreement. No modification or amendment of any
provision of this Agreement shall in any event be effective unless the same
shall be in writing and signed by each party hereto (other than the Interim Loan
Agent after the Merger Date). No waiver of any provision of this Agreement and
no consent to any departure by any party hereto from the provisions hereof shall
be effective unless such waiver or consent shall be set forth in a written
instrument executed by the party against which it is sought to be enforced, and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No notice to or demand on any party hereto in
any case shall entitle such party to any other or further notice or demand in
the same, similar or other circumstances.
7.7 Waiver of Rights. Neither any failure nor any delay on the part of
any party hereto in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, and a single or partial exercise thereof shall not
preclude any other or further exercise or the exercise of any other right, power
or privilege.
7.8 Severability. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provision.
7.9 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
facsimile transmission), each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument.
7.10 Section Headings. The Section headings used herein are for
convenience of reference only and are not to affect the construction of or be
taken into consideration in interpreting this Agreement.
7.11 Complete Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior representations, negotiations, writings, memoranda and
agreements. To the extent any provision of this Agreement conflicts with any
other Operative Document, the provisions of this Agreement shall be controlling.
7.12 Applicability. (a) Anything herein, or in any other Operative
Document, or the Dawson Indenture to the contrary notwithstanding, upon the
occurrence of the Merger Date and without the requirement of any further action
to be taken hereunder, the Interim Lender Creditors (including their successors
and assigns) will no longer be entitled to the benefits of this Agreement
including without limitation, the right to share in payments from Proceeds of
the Collateral or the Guarantee. The Interim Lender Collateral Agent is hereby
authorized and directed by the Interim Lender Creditors, on the occurrence of
the Merger Date, to execute such UCC-3 termination statements, Mortgage releases
or take such other action as may be necessary to terminate and release the Liens
provided for in the Intercreditor Security Documents in favor of the Lender
Collateral Agent for the benefit of the Interim Creditors. At the Borrower's
expense, the Interim Lender Agent shall promptly after the occurrence of the
Merger Date execute and deliver to the Collateral Agent such other documentation
as may be reasonably requested by the Collateral Agent or the Borrower in
connection with the foregoing terminations and releases. On the occurrence of
the Merger Date, the Holders will be entitled to the benefits of this Agreement
with respect to the Collateral (but not the Guarantee) until the earlier of (i)
the Collateral being
<PAGE> 12
12
released by the Collateral Agent or the payment in full of the Lender
Obligations and (ii) the Holder Termination Date. The Holder Collateral Agent is
hereby authorized, on the occurrence of the Holder Termination Date, to execute
such UCC-3 termination statements, Mortgage releases or take such other action
as may be necessary to terminate and release the Liens provided for in the
Intercreditor Security Documents in favor of the Holder Collateral Agent for the
benefit of the Holders.
(b) The rights granted to the Collateral Agent for the equal and
ratable benefit, effective on and after the Merger Date, of the Holder
Creditors, are solely derivative rights, and such rights exist and continue only
to the extent, and for so long as, the Lender Collateral Agent for benefit of
the Lenders, has any security interest, right, title or interest in the
Collateral. In the event that this Agreement is terminated in accordance with
its terms, the rights granted to the Collateral Agent for the equal and ratable
benefit, effective on and after the Merger Date, of the Holder Creditors, will
be automatically terminated without any further action.
7.13 Parties. Pursuant to Section 10.17 of the Credit Agreement, the
Lender Agent has been directed by all Lenders parties thereto to execute and
deliver this Agreement on their behalf, thereby constituting their assumption of
the rights and obligations of Lenders hereunder, and pursuant to Section 14.18
of the Interim Loan Agreement, the Interim Lender Agent has been directed by the
Interim Lenders party thereto to execute and deliver this Agreement on their
behalf, thereby constituting their assumption off the rights and obligations of
Interim Lenders hereunder.
<PAGE> 13
IN WITNESS WHEREOF, the Collateral Agent, the Lender Agent and the
Interim Lender Agent have caused this Agreement to be duly executed by their
duly authorized officers, all as of the day and year first above written.
PNC BANK, NATIONAL ASSOCIATION, as
Lender Agent
By: /s/ Thomas K. Grundman
---------------------------------------
Name: Thomas K. Grundman
Title: Senior Vice President
LEHMAN COMMERCIAL PAPER INC., as
Interim Lender Agent
By: /s/ Dennis Dee
---------------------------------------
Name: Dennis J. Dee
Title: Authorized Signatory
<PAGE> 14
NORWEST BANK TEXAS, N.A., as
Lender Collateral Agent
By: /s/ Mark D. McKinney
---------------------------------------
Name: Mark D. McKinney
Title: Senior Vice President
NORWEST BANK TEXAS, N.A., as
Interim Lender Collateral Agent
By: /s/ Mark D. McKinney
---------------------------------------
Name: Mark D. McKinney
Title: Senior Vice President
NORWEST BANK TEXAS, N.A., as
Holder Collateral Agent
By: /s/ Mark D. McKinney
---------------------------------------
Name: Mark D. McKinney
Title: Senior Vice President
<PAGE> 15
KEY ENERGY GROUP, INC.
By: /s/ Stephen E. McGregor
--------------------------------------------
Title: Executive Vice President
YALE E. KEY, INC.
KEY ENERGY DRILLING, INC.
WELLTECH EASTERN, INC.
ODESSA EXPLORATION INCORPORATED
KALKASKA OILFIELD SERVICES, INC.
WELL-CO OIL SERVICE, INC.
PATRICK WELL SERVICE, INC.
MOSLEY WELL SERVICE, INC.
RAM OIL WELL SERVICE, INC.
ROWLAND TRUCKING CO., INC.
LANDMARK FISHING & RENTAL, INC.
DUNBAR WELL SERVICE, INC.
FRONTIER WELL SERVICE, INC.
KEY ROCKY MOUNTAIN, INC.
KEY FOUR CORNERS, INC.
JETER SERVICE CO.
JETER WELL SERVICE, INC.
JETER TRANSPORTATION, INC.
INDUSTRIAL OILFIELD SUPPLY, INC.
BROOKS WELL SERVICING, INC.
UPDIKE BROTHERS, INC.
J.W. GIBSON WELL SERVICE COMPANY
KEY ENERGY SERVICES -
SOUTH TEXAS, INC.
MIDLAND ACQUISITION CORP.
WATSON OILFIELD SERVICE &
SUPPLY, INC.
WELLTECH MID-CONTINENT, INC.
By: /s/ Stephen E. McGregor
-------------------------------------
Title: Vice President
of all the foregoing companies
<PAGE> 1
EXHIBIT 99.11
SUPPLEMENTAL INDENTURE
Supplemental Indenture (this "SUPPLEMENTAL INDENTURE") dated as of
September 21, 1998 among Key Energy Group, Inc. (or its permitted successor), a
Maryland corporation (the "COMPANY"), the Subsidiary Guarantors (defined below),
and U.S. Trust Company of Texas, N.A. as trustee (the "TRUSTEE") under the
Indenture (defined below).
WITNESSETH
WHEREAS, Dawson Production Services, Inc., a Texas corporation
("DAWSON"), and Taylor Companies, Inc. and Dawson Production Services de Mexico,
S.A. de C.V. (together, the "ORIGINAL SUBSIDIARY GUARANTORS") have previously
executed and delivered to the Trustee an indenture (the "INDENTURE"), dated as
of February 20, 1997, providing for the issuance of an aggregate principal
amount of up to $140,000,000 of 9-3/8% Senior Notes due 2007 (the "NOTES");
WHEREAS, the Company has entered into that certain Agreement and Plan
of Merger by and among the Company, Dawson and Midland Acquisition Corp., a New
Jersey corporation and a wholly-owned subsidiary of the Company ("MIDLAND"),
dated as of August 11, 1998 (the "MERGER AGREEMeNT");
WHEREAS, Midland has made a tender offer for the stock of Dawson;
WHEREAS, under the terms of the Merger Agreement, Midland will be
merged with and into Dawson with Dawson being the surviving entity, and Dawson
will be merged with and into the Company with the Company being the surviving
entity (collectively, the "MERGER");
WHEREAS, Section 5.1 of the Indenture does not permit Dawson to merge
with another entity unless the surviving entity satisfies certain conditions,
including the execution and delivery to the Trustee of a supplemental indenture
pursuant to which the Company assumes all of Dawson's obligations under the
Notes and the Indenture;
WHEREAS, the Company has entered into a Second Amended and Restated
Credit Agreement dated as of June 6, 1997, as amended and restated through
September 14, 1998 (the "PNC CREDIT FACILITY"), among PNC Bank, National
Association, as Administrative Agent, the lenders from time to time party
thereto (the "LENDERS"), the Arranger named therein, and Norwest Bank Texas,
N.A., as collateral agent (the "COLLATERAL AGENT");
WHEREAS, each of the Company and certain of the Subsidiary Guarantors
have granted liens on their assets to secure the PNC Credit Facility under the
terms of (a) that certain Amended and Restated Master Guarantee and Collateral
Agreement made by the Company and certain of its subsidiaries in favor of the
Collateral Agent, dated as of June 6, 1997, as amended and restated
<PAGE> 2
through September 14, 1998 (the "COLLATERAL AGREEMENT"), and (b) certain real
property mortgages and oil and gas mortgages (the "MORTGAGES");
WHEREAS, Section 4.12 of the Indenture only permits the PNC Credit
Facility to be secured if the Notes and the Indenture are ratably secured by the
collateral which secures the PNC Credit Facility;
WHEREAS, Section 10.2 of the Indenture requires each of the
Subsidiaries listed on attached SCHEDULE 1 (the "SUBSIDIARY GUARANTORS") to
become a Subsidiary Guarantor under and as defined in the Indenture; and
WHEREAS, pursuant to Section 9.1(a) of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
to this Supplemental Indenture mutually covenant and agree for the equal and
ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. ASSUMPTION OF OBLIGATIONS. The Company hereby assumes and becomes
personally liable for all of the obligations of Dawson under the Indenture and
the Notes.
3. AGREEMENT TO GUARANTEE. Each of the undersigned Subsidiary
Guarantors hereby jointly and severally and unconditionally guarantees, on a
senior basis, to each Holder of a Note authenticated and delivered by the
Trustee, irrespective of the validity or enforceability of the Indenture, the
Notes or the obligations of the Company under the Indenture or the Notes, in the
manner provided in Section 10.1 of the Indenture and agrees to be bound by all
the terms of Article 10 of the Indenture.
4. AGREEMENT TO SECURE NOTES. Pursuant to Section 4.12 of the
Indenture which requires the Notes to be equally and ratably secured with
respect to the PNC Credit Facility, under the Collateral Agreement, effective
upon consummation of the Merger, the Company and certain of the Subsidiary
Guarantors have granted a lien in favor of, equally and ratably, the Lenders and
the Holders of the Notes, which lien attaches to the collateral described in the
Collateral Agreement. The Company and certain of the Subsidiary Guarantors have
also granted, effective upon consummation of the Merger, equal and ratable liens
in favor of the Lenders and the Holders of the Notes on certain of their
respective real property and oil and gas properties. All assets equally and
ratably pledged to the Lenders have also been pledged, effective upon the
Merger, to the Holders of the Notes. In the event that the Collateral Agreement
(or any of the Mortgages) is terminated in accordance with its terms, the rights
granted to the Collateral Agent
<PAGE> 3
under the Collateral Agreement (or any terminated Mortgage) for the equal
and ratable benefit of the Holders of the Notes will be automatically terminated
without any further action.
5. AGREEMENT TO APPOINT COLLATERAL AGENT. The parties to this
Supplemental Indenture hereby agree, approve and ratify the appointment of
Norwest Bank Texas, N.A. as collateral agent for the Trustee, to act for the
benefit of the Trustee under the terms of the Collateral Agreement and Mortgages
and the terms and conditions set forth in the Intercreditor and Collateral
Agency Agreement, dated as of September 14, 1998, among Norwest Bank Texas,
N.A., as collateral agent, and the Company and certain of its subsidiaries.
6. EXECUTION AND DELIVERY. Each Subsidiary Guarantor agrees that
this Supplemental Indenture shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
guarantee.
7. GOVERNING LAW. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE, THE NOTES, AND THE
SUBSIDIARY GUARANTEES BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
8. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
10. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Subsidiary Guarantors and the Company.
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
KEY ENERGY GROUP, INC.
By: /s/ STEPHEN E. MCGREGOR
--------------------------------------
Name: STEPHEN E. MCGREGOR
Title: EXECUTIVE VICE PRESIDENT
YALE E. KEY, INC.
WELL-CO OIL SERVICE, INC.
RAM OIL WELL SERVICE, INC.
ROWLAND TRUCKING COMPANY
ODESSA EXPLORATION INCORPORATED
KEY ENERGY SERVICES-SOUTH TEXAS, INC.
KEY FOUR CORNERS, INC.
KEY ROCKY MOUNTAIN, INC.
UPDIKE BROTHERS, INC.
DUNBAR WELL SERVICE, INC.
J. W. GIBSON WELL SERVICE COMPANY
FRONTIER WELL SERVICE, INC.
WATSON OILFIELD SERVICE & SUPPLY, INC.
KEY ENERGY DRILLING, INC.
WELLTECH EASTERN, INC.
WELLTECH MID-CONTINENT, INC.
BROOKS WELL SERVICING, INC.
JETER SERVICE CO.
JETER WELL SERVICE CO.
JETER TRANSPORTATION, INC.
INDUSTRIAL OILFIELD SUPPLY, INC.
KALKASKA OILFIELD SERVICES, INC.
LANDMARK FISHING & RENTAL, INC.
PATRICK WELL SERVICE, INC.
MOSLEY WELL SERVICE, INC.
By: /s/ STEPHEN E. MCGREGOR
--------------------------------------
Name: STEPHEN E. MCGREGOR
Title: VICE PRESIDENT , of each of the
foregoing companies
<PAGE> 5
DAWSON PRODUCTION
MANAGEMENT, INC.
DAWSON PRODUCTION ACQUISITION
CORP.
DAWSON PRODUCTION TAYLOR, INC.
By: /s/ STEPHEN E. MCGREGOR
Name: STEPHEN E. MCGREGOR
Title: VICE PRESIDENT , of each of the
foregoing companies
DAWSON PRODUCTION PARTNERS, L.P.
By: DAWSON PRODUCTION
MANAGEMENT, INC., Its
sole general partner,
By: /s/ STEPHEN E. MCGREGOR
Name: STEPHEN E. MCGREGOR
Title: VICE PRESIDENT
U.S. TRUST COMPANY OF TEXAS, N.A.,
as Trustee
By: /s/ BILL BARBER
-------------------------------
Bill Barber
Vice President
<PAGE> 6
SCHEDULE 1
SCHEDULE OF SUBSIDIARY GUARANTORS
The following schedule lists each Subsidiary Guarantor under this
Supplemental Indenture as of September 21, 1998:
Subsidiaries of Key Energy Group, Inc.
Yale E. Key, Inc.
Well-Co Oil Service, Inc.
Ram Oil Well Service, Inc.
Rowland Trucking Company
Odessa Exploration Incorporated
Key Energy Services-south Texas, Inc.
Key Four Corners, Inc.
Key Rocky Mountain, Inc.
Updike Brothers, Inc.
Dunbar Well Service, Inc.
J. W. Gibson Well Service Company
Frontier Well Service, Inc.
Watson Oilfield Service & Supply, Inc.
Key Energy Drilling, Inc.
Welltech Eastern, Inc.
Welltech Mid-Continent, Inc.
Brooks Well Servicing, Inc.
Jeter Service Co.
Jeter Well Service Co.
Jeter Transportation, Inc.
Industrial Oilfield Supply, Inc.
Kalkaska Oilfield Services, Inc.
Landmark Fishing & Rental, Inc.
Patrick Well Service, Inc.
Mosley Well Service, Inc.
Former Subsidiaries of Dawson Production Services, Inc.
Dawson Production Management, Inc.
Dawson Production Acquisition Corp.
Dawson Production Taylor, Inc.
Dawson Production Partners, L.P.
