<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D)
OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): APRIL 13, 1995
BJ SERVICES COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Delaware 1-10570 63-0084140
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (IRS EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
</TABLE>
5500 Northwest Central Drive
Houston, Texas 77092
(ADDRESS OF PRINCIPAL
EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(713) 462-4239
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
2
<PAGE> 3
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
THE WESTERN COMPANY OF NORTH AMERICA
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholders' equity and of cash
flows present fairly, in all material respects, the financial position of The
Western Company of North America and its subsidiaries at December 31, 1994 and
1993, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 7 to the consolidated financial statements, The Western
Company of North America changed its method of accounting for income taxes by
adopting Statement of Financial Accounting Standards No. 109 in 1993. Also in
1993, The Western Company of North America adopted Statement of Financial
Accounting Standards No. 106, discussed in Note 8, and accordingly changed its
method of accounting for postretirement benefits other than pensions.
PRICE WATERHOUSE LLP
Houston, Texas
February 22, 1995
3
<PAGE> 4
THE WESTERN COMPANY OF NORTH AMERICA
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARES)
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1994 1993
---------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash (including cash equivalents of $10,459 in
1994 and $134,467 in 1993) ....................... $ 12,650 $141,279
Marketable securities ............................. -- 18,868
Receivables (less allowances of $4,273 in
1994 and $4,373 in 1993) ......................... 74,080 63,853
Inventories ....................................... 20,065 16,887
Assets held for sale, net - discontinued
operations ....................................... 35,060 --
Other current assets .............................. 5,154 9,464
-------- --------
Total current assets ............................ 147,009 250,351
-------- --------
PROPERTY AND EQUIPMENT, AT COST:
Pressure pumping equipment ........................ 199,720 183,172
Offshore drilling equipment ....................... -- 69,668
Buildings and other ............................... 56,395 45,098
Construction in progress .......................... 6,676 8,775
-------- --------
262,791 306,713
Less - Accumulated depreciation and
amortization ................................... 76,696 77,897
-------- --------
186,095 228,816
-------- --------
OTHER ASSETS ........................................ 20,597 9,218
-------- --------
$353,701 $488,385
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt ................. $ -- $ 97,784
Accounts payable .................................. 29,996 33,112
Accrued liabilities ............................... 38,389 51,184
--------- --------
Total current liabilities ....................... 68,385 182,080
--------- --------
LONG-TERM DEBT ...................................... 90,909 90,910
--------- --------
OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS .... 15,258 14,948
--------- --------
STOCKHOLDERS' EQUITY:
Common stock -- par value $.10; authorized
50,000,000 shares, issued 18,279,914 and
18,198,285 shares at December 31, 1994
and 1993, respectively ........................... 1,828 1,820
Additional paid-in capital ........................ 193,991 193,451
Cumulative translation adjustment ................. (317) --
Retained earnings (accumulated deficit),
since May 12, 1989 ............................... (16,353) 5,176
--------- --------
179,149 200,447
--------- --------
COMMITMENTS AND CONTINGENCIES (NOTE 6)
$ 353,701 $488,385
========= ========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
4
<PAGE> 5
THE WESTERN COMPANY OF NORTH AMERICA
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
REVENUES:
Pressure pumping ............................. $ 307,511 $ 294,073 $ 225,353
Production chemicals ......................... 34,990 -- --
---------- ---------- ----------
342,501 294,073 225,353
---------- ---------- ----------
OPERATING COSTS AND EXPENSES:
Pressure pumping ............................. 270,737 250,471 200,532
Production chemicals ......................... 31,027 -- --
Depreciation and amortization ................ 18,814 14,589 14,887
General and administrative ................... 8,846 9,022 8,076
---------- ---------- ----------
329,424 274,082 223,495
---------- ---------- ----------
Operating income ........................... 13,077 19,991 1,858
---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest expense, net of interest capitalized (10,032) (13,505) (10,407)
Interest income .............................. 1,236 4,653 1,059
Merger related expenses ...................... (21,118) -- --
Writedown of pressure pumping assets and other -- (7,132) --
---------- ---------- ----------
Total other income (expense) ............... (29,914) (15,984) (9,348)
---------- ---------- ----------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE PROVISION FOR INCOME TAXES AND
EXTRAORDINARY LOSSES .......................... (16,837) 4,007 (7,490)
Provision for income taxes ................... 495 627 353
---------- ---------- ----------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE EXTRAORDINARY LOSSES ................... (17,332) 3,380 (7,843)
DISCONTINUED OPERATIONS ........................ (4,197) 35,321 9,510
EXTRAORDINARY LOSSES ........................... -- (25,713) (1,223)
---------- ---------- ----------
NET INCOME (LOSS) .............................. $ (21,529) $ 12,988 $ 444
========== ========== ==========
EARNINGS (LOSS) PER SHARE:
Primary:
Income (loss) from continuing
operations before extraordinary
losses .................................... $ (0.95) $ 0.18 $ (0.44)
Discontinued operations .................... (0.23) 1.90 0.53
Extraordinary losses ....................... -- (1.38) (0.07)
---------- ---------- ----------
Net income (loss) .......................... $ (1.18) $ 0.70 $ 0.02
========== ========== ==========
Fully diluted:
Income (loss) from continuing operations
before extraordinary losses ............... $ * $ * $ *
Discontinued operations .................... * 1.48 *
Extraordinary losses ....................... * * *
---------- ---------- ----------
Net income (loss) .......................... $ * $ * $ *
========== ========== ==========
</TABLE>
* Fully diluted computation is not reflected because per share effect is
antidilutive
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
THE WESTERN COMPANY OF NORTH AMERICA
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS ASSOCIATED WITH OPERATING ACTIVITIES:
Net income (loss) ................................... $ (21,529) $ 12,988 $ 444
Reconciliation of net income (loss) to net
cash provided by operating activities --
Depreciation and amortization ..................... 22,846 24,294 26,891
(Gains)/losses on sales of offshore
drilling rigs .................................... 4,818 (59,161) --
Writedown of offshore drilling rigs ............... -- 18,328 --
Writedown of pressure pumping assets .............. -- 3,500 --
Extraordinary losses .............................. -- 25,713 1,223
Non-cash provision for income taxes ............... -- 6,630 825
Provision for doubtful accounts receivable ........ (207) (450) --
Other, net ........................................ 1,439 2,146 457
Changes in assets and liabilities --
Accounts receivable .............................. 1,721 10,935 (3,177)
Inventory ........................................ (1,319) (4,689) 1,869
Accounts payable ................................. (5,778) 5,077 (2,066)
Accrued interest payable ......................... (1,049) (448) 572
Accrued merger related expenses .................. 10,386 -- --
Other, net ....................................... 1,523 (246) (2,512)
---------- ---------- ----------
Net cash provided by operating activities ...... 12,851 44,617 24,526
---------- ---------- ----------
CASH FLOWS ASSOCIATED WITH INVESTING ACTIVITIES:
Additions to property and equipment ................. (21,313) (53,312) (38,773)
Acquisitions, net of cash acquired .................. (27,535) (10,400) --
Proceeds from sales of offshore drilling rigs ....... 5,340 169,250 --
Disposition costs for rig sales ..................... -- (4,406) --
Proceeds from sales of marketable securities ........ 18,711 153,458 --
Purchases of marketable securities .................. -- (173,687) --
Other, net .......................................... 964 347 367
---------- ---------- ----------
Net cash provided (used) in investing activities (23,833) 81,250 (38,406)
---------- ---------- ----------
CASH FLOWS ASSOCIATED WITH FINANCING ACTIVITIES:
Debt incurred ....................................... 7,000 7,000 114,801
Debt payments ....................................... (124,946) (7,000) (106,118)
Proceeds from exercise of stock options ............. 486 2,243 --
Other, net .......................................... (187) (10) (307)
---------- ---------- ----------
Net cash provided (used) by financing activities (117,647) 2,233 8,376
---------- ---------- ----------
Net increase (decrease) in cash and
cash equivalents ............................ (128,629) 128,100 (5,504)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR ......... 141,279 13,179 18,683
---------- ---------- ----------
CASH AND CASH EQUIVALENTS - END OF YEAR ............... $ 12,650 $ 141,279 $ 13,179
========== ========== ==========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid, net of interest capitalized .......... $ 11,007 $ 14,182 $ 10,577
Income taxes paid ................................... 1,804 1,965 1,345
</TABLE>
NONCASH INVESTING AND FINANCING ACTIVITIES (NOTES 1, 3, 4 AND 8)
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
THE WESTERN COMPANY OF NORTH AMERICA
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK RETAINED
PAR VALUE $.10 ADDITIONAL CUMULATIVE EARNINGS
------------------------- PAID-IN TRANSLATION (ACCUMULATED
SHARES AMOUNT CAPITAL ADJUSTMENT DEFICIT) TOTAL
---------- ---------- ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE DECEMBER 31, 1991 .............. 17,741 $ 1,774 $ 180,618 -- $ (8,256) $ 174,136
Net income ........................... -- -- -- -- 444 444
Realization of pre-reorganization net
operating losses .................... -- -- 825 -- -- 825
Other, net ........................... 1 -- -- -- -- --
------- -------- --------- ------ --------- ----------
BALANCE DECEMBER 31, 1992 .............. 17,742 1,774 181,443 -- (7,812) 175,405
Net income ........................... -- -- -- -- 12,988 12,988
Realization of pre-reorganization net
operating losses .................... -- -- 6,013 -- -- 6,013
Exercise of stock options ............ 455 46 5,374 -- -- 5,420
Tax benefit of stock options exercised -- -- 617 -- -- 617
Other, net ........................... 1 -- 4 -- -- 4
------- -------- --------- ------ --------- ----------
BALANCE DECEMBER 31, 1993 .............. 18,198 1,820 193,451 -- 5,176 200,447
Net loss ............................. -- -- -- -- (21,529) (21,529)
Exercise of stock options ............ 90 9 539 -- -- 548
Cumulative translation adjustment .... -- -- -- (317) -- (317)
Other, net ........................... (9) (1) 1 -- -- --
------- -------- --------- ------ --------- ----------
BALANCE DECEMBER 31, 1994 .............. 18,279 $ 1,828 $ 193,991 $ (317) $ (16,353) $ 179,149
======= ======== ========= ====== ========= ==========
</TABLE>
The accompanying notes are an integral part of these statements.
7
<PAGE> 8
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include all accounts of The Western
Company of North America and its wholly-owned subsidiaries (the "Company"). All
significant intercompany transactions have been eliminated in consolidation.
PLAN OF REORGANIZATION
On February 2, 1988, The Western Company of North America ("WCNA") filed a
voluntary petition for reorganization under chapter 11 of the federal
Bankruptcy Code. On May 12, 1989 the WCNA Third Amended Plan of Reorganization
was consummated.
The Company adopted reorganization accounting to record the effects of
consummating the Plan of Reorganization.
REVENUE RECOGNITION
Revenue related to pressure pumping, production chemicals and offshore drilling
services and sales of pressure pumping and production chemical products are
recognized as services are provided and products are shipped or delivered.
The Company uses the percentage-of-completion method for equipment sales
contracts to recognize revenues and expenses as the earnings process
progresses.
CONCENTRATION OF CREDIT RISK
The Company's customers consist primarily of major integrated international oil
companies and independent oil and gas companies, including companies owned in
whole or in part by foreign governments. The Company performs ongoing credit
evaluations of its customers and generally does not require material
collateral. The Company maintains reserves for potential credit losses, and
historically such losses have been within its expectations. No single customer
accounted for 10% or more of the Company's consolidated revenues during 1994,
1993 and 1992.
CASH EQUIVALENTS AND MARKETABLE SECURITIES
Cash equivalents represent highly liquid investments with a maturity of three
months or less. Marketable securities represent highly liquid investments with a
maturity in excess of three months but less than one year. Cash equivalents and
marketable securities are carried at cost, which approximates market value at
December 31, 1994 and 1993. During 1994, proceeds from the sales of marketable
securities classified as available for sale totaled $18.7 million. Loss on the
sales of these securities was immaterial.
INVENTORIES
Inventories are comprised principally of materials and supplies and are stated
at lower of cost or market. Cost is determined using the first-in, first-out
method for pressure pumping inventories and the average cost method for
production chemicals and offshore drilling rig inventories.
8
<PAGE> 9
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
PROPERTY AND EQUIPMENT
Except for offshore drilling rigs and associated equipment and a well
stimulation vessel and associated equipment, property and equipment is
depreciated or amortized using the straight-line method over their estimated
useful lives.
The Company uses the units-of-service method to calculate depreciation expense
associated with offshore drilling rigs and its well stimulation vessel. Under
this method, depreciation is reduced to 20% of its normal rate while the rigs
and the well stimulation vessel are not being utilized.
The Company capitalizes renewals and improvements which significantly enhance
the value or extend the useful life of an asset. Expenditures for normal
maintenance and repairs are charged to expense as incurred. The cost of pressure
pumping equipment retired or sold and related accumulated depreciation are
removed from the accounts, and gains and losses are reflected in operations.
Normal retirements of offshore drilling equipment are reflected in accumulated
depreciation accounts; gains or losses arising from unusual retirements are
reflected in earnings, and asset cost and related accumulated depreciation are
removed from the accounts.
INTEREST EXPENSE
The Company capitalizes interest expense applicable to significant capital
projects which require a period of time to construct. In 1994, 1993 and 1992,
total interest incurred was $10.0 million, $19.3 million and $14.0 million,
respectively, and interest of $5.8 million in 1993 and $2.3 million in 1992 was
capitalized. No interest was capitalized in 1994. Included in the 1992 income
from discontinued operations is $1.3 million of interest expense associated
with certain rig debt.
IMPAIRMENT OF LONG-LIVED ASSETS
An impairment writedown on long-lived assets is recorded whenever events or
changes in circumstances indicate that market value is less than net book value.
Market value is determined by either independent appraisals or calculation of
future undiscounted net cash flows.
A 1993 writedown of pressure pumping assets and other included a $3.5 million
writedown of older pressure pumping equipment and idle facilities to net
realizable value in anticipation of disposal.
GOODWILL
Goodwill represents the excess of cost of acquisitions over the fair value of
identifiable assets acquired less liabilities assumed. Goodwill is included as a
component of other assets and is amortized on a straight-line basis over 15
years. As of December 31, 1994 and 1993, goodwill was
$18.4 million and $1.2 million, respectively, net of accumulated amortization
of $1.4 million and $0.2 million, respectively. Impairment of goodwill is
evaluated in the same manner as other long-lived assets.
9
<PAGE> 10
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
ACCRUED LIABILITIES
At December 31, 1994 and 1993, accrued liabilities included the following:
<TABLE>
<CAPTION>
1994 1993
-------- -------
(In thousands)
<S> <C> <C>
Accrued extraordinary loss (see Note 5).................. $ -- $23,408
Accrued merger related expenses.......................... 10,386 --
Accrued payroll and related expenses..................... 11,371 10,356
Income taxes payable..................................... 4,495 5,806
Accrued interest......................................... 3,127 4,022
</TABLE>
ENVIRONMENTAL COSTS
Environmental costs that relate to current operations are expensed or
capitalized as appropriate. Expenditures that relate to an existing condition
caused by past operations and that do not contribute to current or future
revenue generation are expensed. Liabilities are recorded when remedial efforts
are probable and the costs can be reasonably estimated. Generally, the timing of
these accruals coincides with the completion of an environmental evaluation or
the Company's commitment to a formal plan of action. At December 31, 1994 and
1993, liabilities for environmental costs were $2.6 million and $2.4 million,
respectively.
INTEREST RATE SWAP
During 1993, the Company entered into an interest rate swap agreement to manage
its interest rate exposure. This agreement involves the exchange of fixed rate
interest payments for floating rate interest payments based on the six month
London Interbank Offering Rate ("LIBOR"). The estimated differential to be paid
or received at each semiannual settlement date is charged or credited to
interest expense as interest rates change.
This agreement was entered into with a major financial institution. Management
believes the risk of incurring losses related to nonperformance by the financial
institution is remote and any such losses would be immaterial.
FOREIGN CURRENCY TRANSLATION
The financial statements of certain foreign operations are translated from the
functional currencies to U.S. dollars. Adjustments resulting from the
translation process totaled $0.3 million in 1994 and are reflected as a
cumulative translation adjustment in stockholders' equity.
EARNINGS (LOSS) PER SHARE
Primary earnings (loss) per share is based on the weighted average number of
shares of Common Stock, $.10 par value ("Common Stock") and Common Stock
equivalent shares (when dilutive) outstanding during the year. Common stock
equivalent shares relate to options to purchase shares under various stock
option plans (see Note 9). Additionally, the fully diluted earnings per share
computation assumes the conversion of the Company's 7 1/4% Convertible
Subordinated Debentures (see Note 5).
10
<PAGE> 11
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The weighted average number of shares used in computing earnings (loss) per
share are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Primary........................................ 18,236 18,591 17,757
Fully diluted.................................. 23,958 23,794 23,136
</TABLE>
RESEARCH AND DEVELOPMENT
During the years ended December 31, 1994, 1993 and 1992, expenditures classified
as research and development costs incurred by the Company were $8.4 million,
$6.5 million and $5.5 million, respectively.
RECLASSIFICATIONS
Certain amounts in the prior years' consolidated financial statements and notes
thereto have been reclassified to conform to the current year's presentation
including the presentation of discontinued operations.
NOTE 2 - MERGER
In November 1994, the Company and BJ Services Company ("BJ Services") entered
into a definitive merger agreement. Subject to certain conditions and to
appraisal rights under Delaware law, this agreement provides that stockholders
of the Company will receive $20 in cash or in shares of BJ Services common stock
for each outstanding share of Company Common Stock they own. Additionally, for
each share of Common Stock they hold, each stockholder will receive .2 of a
five-year warrant to purchase one share of BJ Services common stock for $30 per
share. Pursuant to the merger agreement, stockholders may elect to receive any
proportion of cash and BJ Services common stock, provided that the total number
of shares of Common Stock for which such elections are made will be adjusted so
that the total shares for which each type of election is made will be
approximately equal. The transaction is subject to the approval of both
companies' stockholders, antitrust review and other customary closing
conditions, and is expected to close during the first half of 1995. Merger
related expenses of $21.1 million represent costs associated with the expected
merger with BJ Services and include investment banker, legal and accounting
fees, certain severance costs and other miscellaneous expenses. In addition to
the expenses recorded in 1994, additional legal fees and other expenses related
to the merger are expected to be incurred and recorded in 1995.
NOTE 3 - ACQUISITIONS
The Company completed the acquisitions, in February 1994, of substantially all
of the assets of the production and process chemical business of Unichem
International, Inc. ("Unichem") for $19.8 million in cash and in June 1994, of
substantially all of the oilfield chemicals business and assets of Betz Energy
Chemicals, Inc. ("Betz") for $4.8 million in cash. The businesses acquired from
Unichem and Betz are substantially the same. In July 1994, the Company completed
the
11
<PAGE> 12
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
acquisition of the coiled tubing business of Coiltech, Inc. ("Coiltech") for
$3.1 million in cash. All three acquisitions were accounted for using the
purchase method of accounting. Goodwill associated with these transactions
totaled $18.4 million (see Note 1). The Unichem, Betz and Coiltech results of
operations have been included in the consolidated financial statements since
January 1994, July 1994 and July 1994, respectively. In April 1993, the Company
completed a $10.4 million cash acquisition of the assets of the Smith Energy
Services division of Allied Products Corporation. This acquisition was accounted
for using the purchase method of accounting.
NOTE 4 - DISCONTINUED OPERATIONS
The Company formalized a plan in November 1994 (the "Measurement Date") to
dispose of the remaining assets of its offshore drilling segment. These assets
consisted primarily of two semi-submersible offshore drilling rigs and related
equipment and inventory. As a result, the offshore drilling segment has been
reclassified in the consolidated statements of operations as discontinued
operations.
The results of the discontinued operations were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
(In thousands)
<S> <C> <C> <C>
Revenues ..................................... $ 22,609 $ 64,676 $ 89,613
========= ========= =========
Income from discontinued operations:
Operating income ........................... $ 2,429 $ 4,161 $ 13,919
Other income (loss):
Gains on sales of offshore drilling
rigs .................................... -- 59,161 --
Writedowns of offshore drilling rigs ..... -- (18,328) --
Interest expense ......................... -- -- (1,333)
--------- --------- ---------
Income from discontinued operations before
income taxes .............................. 2,429 44,994 12,586
Provision for income taxes ................. 152 9,673 3,076
--------- --------- ---------
2,277 35,321 9,510
--------- --------- ---------
Loss on disposal, net of income tax benefit in
1994 of $(152) .............................. (6,474) -- --
--------- --------- ---------
$ (4,197) $ 35,321 $ 9,510
========= ========= =========
</TABLE>
The loss on disposal includes operating results subsequent to the Measurement
Date including shut-down expenses and gain (loss) from the disposal of the two
semi-submersible offshore drilling rigs, ALASKAN STAR and PACESETTER IV. In
December 1994, the Company completed the sale of the ALASKAN STAR for $11.8
million, of which $6.3 million is a bankers' acceptance drawn on a U.S. bank due
within one year. This rig sale resulted in a gain of $0.3 million. In December
1994, the Company signed a letter of intent to sell the PACESETTER IV. The
Company completed the sale in early February 1995 for $37.2 million which
resulted in a loss of $6.7 million (see Note 13). At December 31, 1994, Assets
held for sale, net - discontinued operations primarily consists of the net
realizable value of the PACESETTER IV.
12
<PAGE> 13
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Income from discontinued operations includes operating results prior to the
Measurement Date. Income from discontinued operations during 1993 included the
following sales of offshore drilling rigs and writedowns of offshore drilling
rigs. In March 1993, the Company completed the sale of the TRITON III jack-up
drilling rig for $17.8 million in cash. This sale resulted in a gain of $9.1
million. In July 1993, the Company completed the sale of the DELTA jack-up
drilling rig for $1.5 million in cash which resulted in a gain of $0.4 million.
In October 1993, the Company completed the sale of nine jack-up drilling rigs
and associated equipment and inventories for $150.0 million cash that resulted
in a 1993 fourth quarter gain of $49.7 million. The rigs sold were: APOLLO I,
APOLLO II, APOLLO IV, NIKE I, POLARIS I, POLARIS II, TRITON I, TRITON II and
TRITON IV. In March 1993, the Company wrote down the net book value of its three
mat-supported jack-up rigs by $8.8 million. This writedown reflected the low
utilization experienced by these types of rigs and the expectation of lower
future utilization for them. In December 1993, the Company wrote down the net
book value of the ALASKAN STAR semi-submersible drilling rig by $9.5 million.
This writedown reflected the Company's lower expectation of future operating
cash flow opportunities for second generation semi-submersibles like the ALASKAN
STAR.
Included in the 1992 income from discontinued operations is $1.3 million
of interest expense associated with certain rig debt.
NOTE 5 - LONG-TERM DEBT
At December 31, 1994 and 1993, long-term debt consisted of the following:
<TABLE>
<CAPTION>
1994 1993
-------- ---------
(In thousands)
<S> <C> <C>
Senior Unsecured:
12 7/8% Senior Notes................................ $ 2,212 $ 100,000
Subordinated Unsecured:
7 1/4% Convertible Subordinated Debentures.......... 88,746 88,746
-------- ---------
90,958 188,746
Less: Unamortized portion of original issue discount.. 49 52
-------- ---------
90,909 188,694
Less: Current portion................................. -- 97,784
-------- ---------
$ 90,909 $ 90,910
======== =========
</TABLE>
The 12 7/8% Senior Notes, Due 2002 (the "Notes"), are unsecured and were issued
in November 1992 in the face amount of $100 million. During March 1994, the
Company purchased, through a tender offer, and retired $97.8 million face amount
of the Notes. The aggregate purchase price of these Notes was $117.3 million,
resulting in an extraordinary loss of $25.7 million ($1.38 per share) including
unamortized original debt issuance costs of $3.2 million, unamortized original
issue discount of $2.3 million and offering costs of $0.7 million. This
extraordinary loss was recognized in December 1993. The carrying value of the
Notes represents the face amount less unamortized original issue discount.
Interest at 12 7/8% per annum is payable semiannually. The effective interest
rate associated with the Notes, after considering amortization of original issue
discount, is 13.33%.
13
<PAGE> 14
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The Notes mature December 1, 2002, and there are no sinking fund requirements.
The indenture governing the Notes contains restrictions and requirements
relating to mergers.
During the fourth quarter of 1992, the Company issued the Notes and used the net
proceeds to prepay secured debt totaling $94.6 million associated with bank loan
facilities, ship financing bonds and a note relating to an offshore drilling
rig. As a result, it incurred a $1.2 million ($0.07 per share) extraordinary
loss primarily representing prepayment penalties and the write-off of
unamortized debt issuance costs.
In 1990, the Company issued $90 million face amount of 7 1/4% Convertible
Subordinated Debentures, due January 15, 2015 (the "Debentures"). Interest at
7 1/4% per annum is payable semiannually. Annual payments equal to 5% of the
principal amount of the Debentures commence in 2001; such payments are
calculated to retire 70% of principal prior to maturity. The Debentures, unless
previously redeemed, are convertible into Common Stock at $17 per share at the
option of the holder at any time prior to maturity. The indenture governing the
Debentures contains restrictions and requirements relating to mergers.
The Company has a $30 million revolving credit facility which had no borrowings
outstanding at December 31, 1994 and 1993. Borrowings under this revolving
credit facility are secured by the Company's accounts receivable and are limited
to a percentage of such receivables. The revolving credit facility bears
interest at 1 1/2% over LIBOR or 1/2% over prime and matures December 31, 1995.
Commitment fees on the unused portion of the revolving credit facility are 1/2%
per annum. The revolving credit facility contains restrictions and requirements
relating to, among other things, mergers and maintenance of certain financial
ratios.
The Company has entered into an interest rate swap agreement which effectively
changes fixed-rate debt into floating-rate debt. Under the agreement, the
Company receives a fixed rate of 5.26% on a notional principal amount of $100
million and pays a floating rate based on LIBOR, as determined in six month
intervals. On June 1, 1995 the notional principal amount will be reduced from
$100 million to $75 million until the agreement expires on June 1, 1996. The
Company may elect from time to time to terminate the swap agreement. Had it
elected to do so at December 31, 1994, it would have been required to make a
termination payment of $4.1 million.
At December 31, 1994, there were no required principal payments associated with
long-term debt until 2001.
14
<PAGE> 15
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
At December 31, 1994, the fair value of the Company's long-term debt, determined
based on quoted market prices, was as follows:
<TABLE>
<CAPTION>
Amount
--------------
(In thousands)
<S> <C>
12 7/8% Senior Notes............................................ $ 2,349
7 1/4% Convertible Subordinated Debentures...................... 91,519
---------
$ 93,868
=========
</TABLE>
Such market prices are subject to changing market conditions; therefore, the
fair value of the Company's long-term debt at December 31, 1994 is not
indicative of future fair market value.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
The Company's operating leases include rental commitments associated with
office buildings, equipment and vehicles. As of December 31, 1994, the Company
had lease commitments for future minimum rental payments as follows:
<TABLE>
<CAPTION>
Amount
--------------
(In thousands)
<S> <C>
1995.............................................................. $ 7,570
1996.............................................................. 5,281
1997.............................................................. 3,070
1998.............................................................. 1,791
1999.............................................................. 1,528
Thereafter........................................................ 5,452
-------
$24,692
=======
</TABLE>
Rental expense for the years ended December 31, 1994, 1993 and 1992 was
approximately $9 million, $7 million and $7 million, respectively.
At December 31, 1994, the Company was contingently liable for outstanding
letters of credit, not reflected in the accompanying consolidated financial
statements, in the amount of $3.5 million.
Actions for well damage and loss of oil and gas production alleging negligence,
breach of contract and fraud, under common law as well as state and federal
statutes, are incidental to the pressure pumping business. Actions for personal
injury are also incidental to that business and the offshore drilling business
where federal statutes permit employees who work on rigs to sue their employers
instead of pursuing workmen's compensation remedies. Increasingly, plaintiffs in
both property damage and personal injury litigation allege damages for which
insurance coverage generally does not exist or is prohibited, such as punitive
damages, treble damages or damages for breach of contract. Numerous such
incidental lawsuits are pending against the Company which include claims covered
by insurance and which are being defended by the Company's insurance carriers.
To the extent a plaintiff is ultimately successful on an uninsured portion of a
claim, the Company would be responsible for satisfying such judgment. To date,
the Company has not, by judgment or through
15
<PAGE> 16
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
settlement, incurred a material uninsured liability arising out of personal
injury or property damage litigation.
From time to time it has been alleged by competitors of the Company that the use
by the Company of certain products or methods to perform particular pressure
pumping services constitutes infringement of patents they hold. Such claims
could result in payment by the Company of damages or royalties and the Company
could be enjoined from performing services in which such products or services
are used. To date, the Company has not experienced a material reduction in
revenues or incurred a material loss as a result of such allegations.
Shortly after the public announcement by BJ Services in September 1994 of a
proposal to acquire the Company ("BJS Proposal"), four actions were commenced
against the Company and its directors in the Delaware Court of Chancery styled
CROYDEN ASSOCIATES VS. SHELDON R. ERIKSON, ET AL. AND THE WESTERN COMPANY OF
NORTH AMERICA, C. A. No. 13740, filed September 13, 1994, REGGIE P. JUDICE VS.
SHELDON R. ERIKSON, ET AL. AND THE WESTERN COMPANY OF NORTH AMERICA, C. A. No.
13742, filed September 14, 1994, WILLIAM T. HENDERSON VS. SHELDON R. ERIKSON,
ET AL. AND THE WESTERN COMPANY OF NORTH AMERICA, C. A. No. 13743, filed
September 14, 1994, and RUSS SEGER VS. SHELDON R. ERIKSON, ET AL. AND THE
WESTERN COMPANY OF NORTH AMERICA, C. A. No. 13769, filed September 27, 1994.
The allegations in these lawsuits, all of which were filed as class action
complaints, are substantially the same and relate to the rejection of the BJS
Proposal by the Company's Board of Directors. The purported class of plaintiffs
on whose behalf the class action complaints were filed is all stockholders of
the Company. It is claimed in these lawsuits, INTER ALIA, that by failing to
accept the BJS Proposal the Company and its directors breached their fiduciary
duties to the stockholders of the Company. The plaintiffs seek equitable relief
to compel the Company and its directors to perform their fiduciary duties, as
such are construed by the plaintiffs, and unspecified damages. The Company
believes the allegations in these lawsuits are untrue and that the claims they
assert are totally without merit. A motion to consolidate the four actions is
pending.
16
<PAGE> 17
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 7 - INCOME TAXES
Components of the provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- ------
(In thousands)
<S> <C> <C> <C>
Current tax expense:
U.S. federal................................ $ -- $ -- $ --
Foreign..................................... 495 241 353
------- ------- ------
495 241 353
------- ------- ------
Noncash tax expense:
U.S. federal................................ -- 386 --
Foreign..................................... -- -- --
------- ------- ------
-- 386 --
------- ------- ------
$ 495 $ 627 $ 353
======= ======= ======
</TABLE>
The non-cash taxes are due primarily to the utilization of prereorganization tax
benefits which are recorded directly to stockholders' equity and, therefore, are
not reflected as a reduction of income tax expense.
The total provision for income taxes is reflected in the consolidated statements
of operations under the following components:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- ------
(In thousands)
<S> <C> <C> <C>
Continuing operations......................... $ 495 $ 627 $ 353
Discontinued operations........................ -- 9,673 3,076
------- ------- ------
$ 495 $10,300 $3,429
======= ======= ======
</TABLE>
The deferred tax assets (liabilities) consisted of the following:
<TABLE>
<CAPTION>
December 31,
----------------- January 1,
1994 1993 1993
-------- -------- -------
(In thousands)
<S> <C> <C> <C>
Gross deferred tax assets:
Loss carryforwards.......................... $144,388 $129,346 $157,080
Stock of foreign affiliates................. 28,055 23,247 20,625
Property and equipment...................... 7,433 6,202 5,800
Inventory reserves.......................... 3,201 4,818 5,637
Allowances for doubtful accounts receivable. -- -- 5,449
Other....................................... 16,010 13,566 10,614
-------- -------- -------
199,087 177,179 205,205
Gross deferred tax liabilities:
Property and equipment...................... (13,569) (10,301) (27,050)
Deferred tax asset valuation allowance......... (185,518) (166,878) (178,155)
-------- -------- --------
$ -- $ -- $ --
======== ======== ========
</TABLE>
17
<PAGE> 18
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The differences between the provision for income taxes and income taxes computed
using the U.S. federal income tax rate and income (loss) from continuing
operations before provision for income taxes and extraordinary losses were as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------ --------
(In thousands)
<S> <C> <C> <C>
Income taxes computed using the U.S. federal rate.. $(5,893) $ 1,402 $(2,547)
Losses not receiving income tax benefits........... 2,350 -- 2,491
Foreign taxes, net of foreign tax deduction taken.. 327 159 233
Merger related costs not deductible................ 2,720 -- --
Noncash taxes due to carryover tax benefits
recorded directly to stockholders' equity......... -- 386 --
Net benefit of operating loss carryforwards........ -- (1,605) --
Other, net......................................... 991 285 176
------- ------ -------
$ 495 $ 627 $ 353
======= ======= =======
</TABLE>
In 1993, current taxable income was reduced by $84.5 million of net operating
loss carryforwards. The financial statement impact was limited to $14.2 million
due to the change in deferred tax assets and liabilities.
The net change in the deferred tax asset valuation allowance was an increase of
$18.6 million in 1994 and a decrease of $11.3 million in 1993. The portion of
the deferred tax asset valuation allowance which, if realized, will be recorded
directly to stockholders' equity was $114 million at December 31, 1994, $114
million at December 31, 1993 and $120 million at January 1, 1993.
The Company has net operating loss carryforwards for federal income tax purposes
of $372 million. If not utilized, these carryforwards will expire between 2001
and 2009. As a result of the Company having experienced changes in control as
defined in Internal Revenue Code Section 382 in prior years, the usage of
approximately $219 million of these carryforwards is subject to an annual
limitation. The entire $372 million of carryforwards could be subject to an
annual limitation due to the pending merger with BJ Services (see Note 2). For
United Kingdom income tax purposes, the Company at December 31, 1994 had tax
attribute carryforwards amounting to (pound)43 million which are not subject to
an annual limitation. However, these United Kingdom tax benefits will be reduced
substantially as a result of the sale of the PACESETTER IV in 1995 (see Note
13).
Effective January 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). The Company
elected to adopt SFAS 109 prospectively. The initial adoption did not materially
affect results of operations.
18
<PAGE> 19
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Income (loss) before provision for income taxes and extraordinary items
consisted of the following:
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
(In thousands)
<S> <C> <C> <C>
Domestic income (loss)...................... $ (13,303) $ 37,245 $ (20,457)
Foreign income (loss)....................... (7,731) 11,756 25,553
--------- --------- ---------
$ (21,034) $ 49,001 $ 5,096
========= ========= =========
</TABLE>
NOTE 8 - RETIREMENT AND OTHER BENEFIT PROGRAMS
PENSION PLAN
The Company has a defined benefit pension plan (the "Pension Plan") covering all
employees with one year of service. Pension benefits are based on years of
service and average compensation for each employee's five consecutive highest
paid years during the last ten years worked. Pension benefits are fully vested
after five years of service.
Generally, the Company makes annual contributions to the Pension Plan to the
extent they are tax deductible and, at a minimum, funds the amount necessary to
meet minimum funding requirements under the Employees' Retirement Income
Security Act, as amended.
Net pension expense for 1994, 1993 and 1992 included the following components:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- ------
(In thousands)
<S> <C> <C> <C>
Service cost - benefits earned during the
period ...................................... $ 1,309 $ 1,153 $ 1,240
Interest cost on projected benefit obligation.. 2,822 2,697 2,513
Actual return on plan assets................... 448 (3,485) (1,614)
Net gain (loss) deferred....................... (3,132) 1,106 (566)
------- ------- -------
$ 1,447 $ 1,471 $ 1,573
======= ======= =======
</TABLE>
Assumptions used in determining 1994, 1993 and 1992 net pension expense were:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Discount rate..................................... 7.0% 7.75% 8.0%
Rate of increase in compensation levels........... 5.0% 5.0% 5.0%
Expected long-term rate of return on assets....... 9.0% 9.0% 9.0%
</TABLE>
Pension Plan assets consist primarily of government debt securities, corporate
equities, money market instruments and long-term corporate debt obligations,
both domestic and foreign.
The following table sets forth as of December 31, 1994 and 1993 the Pension
Plan's estimated funded status, amounts recognized in the Company's consolidated
balance sheets and actuarial present value of benefit obligations. The discount
rates used to determine all benefit obligations at December 31, 1994 and 1993
were 8.00% and 7.00%, respectively.
19
<PAGE> 20
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
<TABLE>
<CAPTION>
1994 1993
-------- --------
(In thousands)
<S> <C> <C>
Projected benefit obligation............................. $ 37,849 $ 39,732
Pension Plan assets at fair value........................ 28,994 29,675
-------- --------
Projected benefit obligation in excess of
Pension Plan assets .................................... 8,855 10,057
Net unrecognized prior service cost and gain/loss from
past experience......................................... (1,608) (1,879)
-------- --------
Accrued pension liability................................ $ 7,247 $ 8,178
======== ========
Accumulated benefit obligation, including vested benefits
of $33.4 million in 1994 and $36.5 million in 1993...... $ 34,684 $ 37,416
======== ========
</TABLE>
POSTRETIREMENT BENEFITS
The Company provides postretirement life insurance and medical benefits to
retired employees between the ages of 55 and 65. Certain life insurance benefits
are also provided to retired employees over 65 years of age. The life insurance
is funded by insurance premiums paid entirely by the Company. The medical
benefits are funded by a capped self insurance program with contributions made
by retirees for themselves and their covered dependents. Effective January 1,
1993, the Company adopted Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions," which
requires the accrual method of accounting for the expected costs of providing
such benefits. Under such accounting method, the future costs of postretirement
benefits are recorded during the years employees render service to earn
eligibility for such benefits.
Net periodic postretirement benefit cost for 1994 and 1993 included the
following components:
<TABLE>
<CAPTION>
1994 1993
------ ------
(In thousands)
<S> <C> <C>
Service cost - benefits attributed to service during
the period............................................ $ 282 $ 232
Actual return on plan assets............................. -- --
Interest cost on accumulated postretirement benefit
obligation........................................ 349 336
Amortization of transition obligation.................... 99 117
Other, net............................................... 21 214
------ ------
$ 751 $ 899
====== ======
</TABLE>
The discount rates used to determine postretirement benefit costs were 7% in
1994 and a weighted average of 7.75% in 1993.
20
<PAGE> 21
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The following table sets forth the status of postretirement benefit obligations
at December 31, 1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
------ -------
(In thousands)
<S> <C> <C>
Accumulated postretirement benefit obligation
Retirees.............................................. $ 1,741 $ 1,746
Other fully eligible participants..................... 1,160 1,134
Other active participants............................. 2,180 2,237
------- -------
Total accumulated postretirement benefit obligation...... 5,081 5,117
Unrecognized actuarial loss.............................. (44) (546)
Unrecognized transition obligation....................... (1,782) (1,881)
Plan assets at fair value................................ -- --
------- -------
Accrued postretirement benefit cost...................... $ 3,255 $ 2,690
======= =======
</TABLE>
The discount rate used to determine postretirement benefit obligations at
December 31, 1994 and 1993 were 8% and 7%, respectively. There were no plan
assets.
For measurement purposes, a 9% annual rate of increase for covered health care
benefits was assumed for 1994. The rate is assumed to decrease gradually to 5%
by 2026 and remain at that level thereafter.
Increasing the health care cost trend rates by one percentage point in each year
would increase the accumulated postretirement benefit obligation as of December
31, 1994 by $279,000 and the aggregate of the service and interest cost
components of net postretirement health care cost for fiscal year 1994 by
$59,000.
NON-EMPLOYEE DIRECTOR RETIREMENT PLAN
During 1994, the Company adopted an unfunded retirement plan for non-employee
directors. To be eligible for benefits under the plan, a director must have
retired from the Board of Directors after having served for at least 10
consecutive years and reached the age of 65. Benefits are payable for 10 years
and at December 31, 1994, the Company accrued $250,000 related to the plan.
RETIREMENT SAVINGS PLAN
All employees with one year of service are eligible to participate in the
Company's Retirement Savings Plan. Subject to certain Internal Revenue Code
limitations, participants may contribute up to 15% of their annual compensation.
Effective March 1, 1994, the Company began matching employee contributions to
the Plan up to 6% of compensation at the rate of 25 cents for each dollar the
employee contributes. In addition, the Company has the option of providing an
additional match at the end of each year at the rate of 1 cent to 25 cents for
each dollar the employee has contributed to the Plan during the year up to 6% of
compensation. In February 1995, the Company elected to make an additional match
at the 25 cents level for the 1994 plan year. Matching contributions made or
accrued in 1994 were $656,000.
21
<PAGE> 22
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
POSTEMPLOYMENT BENEFITS
Effective January 1, 1994, the Company adopted the Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits" which requires accrual accounting for
postemployment benefits such as disability-related and workers' compensation
payments. The effect of this adoption on 1994 operating income was immaterial,
as the Company has historically accrued for most of these costs incurred by the
Company. At December 31, 1994, the Company's liability for these benefits was
$5.1 million.
NOTE 9 - STOCK INCENTIVE PLANS
The Company maintains a long-term management incentive plan and a non-employee
Director stock option plan. Up to 1,837,500 shares of Common Stock may be or
have been issued under this long-term management incentive plan. Of such number,
1,112,500 shares were allocated to an employee stock option plan, 375,000 shares
were allocated for restricted stock awards and 350,000 shares were allocated for
performance share awards. Under the non-employee Director stock option plan,
75,000 shares of Common Stock were reserved for issuance.
Under the employee stock option plan, shares of Common Stock may be purchased at
a price determined by the Executive Development and Compensation Committee (the
"Committee") of the Board of Directors, but in no case less than 90% of market
price on date of grant for nonqualified options and 100% of market price on date
of grant for incentive stock options. Options which have been granted expire up
to ten years after date of grant and are exercisable on a cumulative basis equal
to either 25% or 33% for each year outstanding or such other basis as may be
determined by the Committee. At December 31, 1994, options to purchase 693,538
shares were outstanding under this plan at option prices ranging from $4.50 to
$19.00 per share.
Under the non-employee Director stock option plan, shares of Common Stock may be
purchased at 100% of market price on date of grant. During 1989, options to
purchase 2,500 shares were granted to each non-employee Director, thereafter,
pursuant to the plan options to purchase 1,250 shares have been granted to each
Director at each annual meeting of the Company's stockholders. This plan is, in
most other respects, similar in its operation to the employee stock option plan
discussed above. At December 31, 1994, options to purchase 37,500 shares were
outstanding under this plan at option prices ranging from $4.00 to $15.38 per
share; options to purchase 18,750 shares were exercisable at that date.
As a result of the merger agreement signed by BJ Services and the Company (see
Note 2), all stock options outstanding under the long-term management incentive
plan became fully vested and exercisable for a period of ninety days. At the end
of the ninety day period, all options still outstanding will revert back to the
original terms of the option plans until consummation of the merger, at which
time they will again become fully vested and exercisable.
22
<PAGE> 23
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
A summary of transactions relating to these stock option plans during 1994, 1993
and 1992 is as follows:
<TABLE>
<CAPTION>
Number of Total Option
Options Price
--------- ------------
(In thousands)
<S> <C> <C>
Outstanding at December 31, 1991........................ 320,700 $ 3,472
Granted ($4.00 to $7.00 per share)................... 251,125 1,257
Cancelled ($5.88 to $19.13 per share)................ (96,450) (1,348)
-------- --------
Outstanding at December 31, 1992........................ 475,375 3,381
Granted ($4.88 to $12.13 per share).................. 338,500 3,114
Exercised ($4.50 to $9.00 per share)................. (155,937) (898)
Cancelled ($7.00 to $18.25 per share)................ (11,281) (101)
-------- --------
Outstanding at December 31, 1993........................ 646,657 5,496
Granted ($12.50 to $14.50 per share)................. 238,500 3,076
Exercised ($4.50 to $12.13 per share)................ (69,994) (425)
Cancelled ($4.50 to $15.50 per share)................ (84,125) (777)
-------- --------
Outstanding at December 31, 1994........................ 731,038 $ 7,370
======== ========
</TABLE>
The number of shares of Common Stock available for future granting of options
under these stock option plans was 178,406, 332,781 and 60,000 at December 31,
1994, 1993 and 1992, respectively.
In addition to the stock options included in the preceding table, an executive
of the Company was granted an option to purchase 268,750 shares of Common Stock
at a price of $3.02 per share in connection with his employment in 1987.
Compensation associated with these options was recorded pursuant to
reorganization accounting. The option agreement expires December 31, 1998. At
December 31, 1994, such option was outstanding and exercisable for 248,750
shares.
During 1989, the 375,000 shares of Common Stock reserved for restricted stock
awards were issued. Compensation associated with such awards was recorded
pursuant to reorganization accounting. With one exception, 50% of the shares
issued were issued without forfeiture restrictions, and, generally, the
remaining restrictions lapsed as to 12.5% of the shares awarded on each of the
first four anniversaries of the date the restricted stock awards were issued. At
December 31, 1994, no shares remained subject to forfeiture restrictions.
The 350,000 performance shares were awarded during 1989 subject to vesting over
four years upon the attainment of specified performance objectives or at earlier
dates under certain conditions relating to the reduction of principal and
interest outstanding under a long-term debt agreement. During 1990, the
performance share awards became vested and 140,000 shares of Common Stock were
issued. The remainder of the performance share awards were converted into
options to purchase 298,945 shares of Common Stock based on the value of such
performance share awards. During 1993, all 298,945 options were exercised. This
resulted in a 1993 non-cash reclassification of the difference between $4.50,
the exercise price, and the value of the share awards when vested from other
long-term liabilities to additional paid-in capital.
23
<PAGE> 24
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 10 - STOCKHOLDER PROTECTION RIGHTS PLAN
In March 1990, the Company's Board of Directors (the "Board") adopted a
Stockholder Protection Rights Plan (the "Rights Plan") designed to protect
against attempts to acquire control of the Company that the Board believes are
not in the best interest of the stockholders. The Rights Plan provides for the
distribution of one Right for each outstanding share of Common Stock. Such
Rights will separate from the Common Stock upon the earlier of (i) the date any
person or group becomes the beneficial owner of 15% or more outstanding Common
Stock, or (ii) the tenth business day (or a later date designated by the Board)
after any person makes a tender or exchange offer for 15% or more of outstanding
Common Stock.
Upon separation from Common Stock, each Right will entitle the holder thereof to
purchase 1/100th share of Participating Preferred Stock at an exercise price of
$70, subject to adjustment (the "Exercise Price"). Each 1/100th share of the
Participating Preferred Stock is the economic and voting equivalent to one share
of Common Stock. Additionally, if any person or group becomes the beneficial
owner of 15% or more of outstanding Common Stock, each Right will entitle the
holder thereof to purchase, for the Exercise Price, Common Stock having a value
of twice the Exercise Price. Rights held by such person or group would become
void. Under certain circumstances, without action by the holders of Rights, the
Board may exchange each Right for one share of Common Stock or 1/100th share of
Participating Preferred Stock. The Board can terminate the Rights anytime before
a person or group acquires 15% or more of outstanding Common Stock.
The Company amended the Rights Plan in November 1994 to provide that BJ Services
would not be a beneficial owner of Company securities for purposes of the Rights
Plan by reason of entering into the merger agreement with the Company or
consummating the transactions contemplated therein (see Note 2).
24
<PAGE> 25
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 11 - SEGMENT INFORMATION AND FOREIGN OPERATIONS
Following is a summary of the Company's domestic and foreign operations by
business segment:
<TABLE>
<CAPTION>
PRESSURE PRODUCTION OFFSHORE ELIMINA-
PUMPING CHEMICALS DRILLING TIONS CONSOLIDATED
-------- ---------- -------- ------- ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
1994
REVENUES:
Domestic .................................... $ 291,441 $ 34,990 $ -- $ -- $ 326,431
Foreign and export sales .................... 16,070 -- -- -- 16,070
Intersegment sales .......................... -- 963 -- (963) --
---------- --------- ---------- ---------- ----------
$ 307,511 $ 35,953 $ -- $ (963) $ 342,501
========== ========= ========== ========== ==========
OPERATING INCOME:
Domestic .................................... $ 29,258 $ 1,861 $ -- $ -- $ 31,119
Foreign and export sales .................... (8,086) -- -- -- (8,086)
---------- --------- ---------- ---------- ----------
$ 21,172 $ 1,861 $ -- $ -- 23,033
---------- --------- ---------- ----------
General and administrative .................. (9,956)
----------
Operating income ............................ 13,077
Interest expense, net of interest
capitalized ................................ (10,032)
Interest income ............................. 1,236
Merger related expenses ..................... (21,118)
----------
Loss from continuing operations before
provision for income taxes ................. $ (16,837)
==========
IDENTIFIABLE ASSETS:
Domestic .................................... $ 234,031 $ 29,112 $ -- $ -- $ 263,143
Foreign ..................................... 25,517 -- 39,655 -- 65,172
---------- --------- ---------- ----------- ----------
$ 259,548 $ 29,112 $ 39,655 $ -- 328,315
---------- --------- ---------- -----------
Corporate assets ............................ 25,386
----------
$ 353,701
==========
1993
REVENUES:
Domestic..................................... $ 278,131 $ -- $ -- $ -- $ 278,131
Foreign and export sales..................... 15,942 -- -- -- 15,942
---------- --------- ---------- ---------- ----------
$ 294,073 $ -- $ -- $ -- $ 294,073
========== ========= ========== ========== ==========
OPERATING INCOME:
Domestic .................................... $ 35,409 $ -- $ -- $ -- $ 35,409
Foreign and export sales .................... (5,744) -- -- -- (5,744)
---------- --------- ---------- ---------- ----------
$ 29,665 $ -- $ -- $ -- 29,665
---------- --------- ---------- ----------
General and administrative ................ (9,674)
----------
Operating income .......................... 19,991
Interest expense, net of interest
capitalized .............................. (13,505)
Interest income ........................... 4,653
Writedown of pressure pumping assets
and other ................................ (7,132)
-----------
Income from continuing operations
before provision for income tax and
extraordinary loss ....................... $ 4,007
==========
IDENTIFIABLE ASSETS:
Domestic .................................. $ 157,031 $ -- $ 894 $ -- $ 157,925
Foreign ................................... 96,932 -- 62,311 -- 159,243
---------- --------- ---------- ---------- ----------
$ 253,963 $ -- $ 63,205 $ -- 317,168
---------- --------- ---------- ----------
Corporate assets .......................... 171,217
----------
$ 488,385
==========
</TABLE>
25
<PAGE> 26
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 11 - SEGMENT INFORMATION AND FOREIGN OPERATIONS - (CONTINUED)
<TABLE>
<CAPTION>
PRESSURE PRODUCTION OFFSHORE ELIMINA-
PUMPING CHEMICALS DRILLING TIONS CONSOLIDATED
---------- ---------- ---------- ---------- ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
1992
REVENUES:
Domestic................................... $ 211,576 $ -- $ -- $ -- $ 211,576
Foreign and export sales................... 13,777 -- -- -- 13,777
---------- --------- ---------- ---------- ----------
$ 225,353 $ -- $ -- $ -- $ 225,353
========== ========= ========== ========== ==========
OPERATING INCOME:
Domestic................................... $ 10,640 $ -- $ -- $ -- $ 10,640
Foreign and export sales................... 23 -- -- -- 23
---------- --------- ---------- ---------- ----------
$ 10,663 $ -- $ -- $ -- 10,663
---------- --------- ---------- ----------
General and administrative ................ (8,805)
----------
Operating income........................... 1,858
Interest expense, net of interest..........
capitalized.............................. (10,407)
Interest income............................ 1,059
----------
Loss from continuing operations before
provision for income taxes and
extraordinary loss....................... $ (7,490)
==========
IDENTIFIABLE ASSETS:
Domestic................................... $ 145,828 $ -- $ 27,990 $ -- $ 173,818
Foreign.................................... 64,969 -- 166,648 -- 231,617
---------- --------- ---------- ---------- ----------
$ 210,797 $ -- $ 194,638 $ -- 405,435
---------- --------- ---------- ----------
Corporate assets........................... 26,535
----------
$ 431,970
==========
</TABLE>
26
<PAGE> 27
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 11 - SEGMENT INFORMATION AND FOREIGN OPERATIONS - (CONTINUED)
In November 1994, the Company formalized a plan to dispose of the remaining
assets of its offshore drilling segment. These assets consisted primarily of two
semi-submersible offshore drilling rigs and related equipment and inventory. As
a result, the business segment data for 1993 and 1992 has been restated to
exclude the offshore drilling segment (see Note 4).
The results of operations for the offshore drilling segment for 1993 and 1992
were as follows:
<TABLE>
<CAPTION>
1993 1992
------- -------
(In thousands)
<S> <C> <C>
Revenues................................................... $64,676 $89,613
------- -------
Operating income........................................... $ 4,161 $13,919
Interest expense........................................... -- (1,333)
Gains on sales of offshore drilling rigs................... 59,161 --
Writedowns of offshore drilling rigs....................... (18,328) --
------- -------
Income before income taxes and extraordinary losses........ $44,994 $12,586
======= =======
</TABLE>
<TABLE>
<CAPTION>
1994 1993 1992
------------------------------ ------------------------------ -----------------------------
DEPRECIATION CAPITAL DEPRECIATION CAPITAL DEPRECIATION CAPITAL
AND AMORTIZATION EXPENDITURES AND AMORTIZATION EXPENDITURES AND AMORTIZATION EXPENDITURES
---------------- ------------ ---------------- ------------ ---------------- ------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Pressure pumping ................... $ 15,601 $ 21,353 $ 13,937 $ 50,166 $ 14,158 $ 29,921
Production chemicals ............... 2,103 5,722 -- -- -- --
Offshore drilling .................. -- 66 -- 11,526 -- 8,765
Corporate .......................... 1,110 861 652 2,020 729 87
-------- -------- -------- -------- -------- --------
$ 18,814 $ 28,002 $ 14,589 $ 63,712 $ 14,887 $ 38,773
======== ======== ======== ======== ======== ========
</TABLE>
27
<PAGE> 28
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 11 - SEGMENT INFORMATION AND FOREIGN OPERATIONS - (CONTINUED)
Amounts reported above for 1994, 1993 and 1992 foreign and export sales include
operations in the following geographic areas:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
(In thousands)
<S> <C> <C> <C>
Revenues:
Northwest Europe .......... $ 1,130 $ 434 $ --
West Africa ............... 3,280 3,995 5,997
South America ............. 4,420 1,171 2,014
Far East .................. 1,774 9,355 4,949
Eastern Europe and Former
Soviet Union ............. 5,231 814 602
Other ..................... 235 173 215
---------- ---------- ----------
$ 16,070 $ 15,942 $ 13,777
========== ========== ==========
Operating income (loss):
Northwest Europe .......... $ (4,362) $ (4,193) $ (1,260)
West Africa ............... (1,452) (1,029) 767
South America ............. 1,034 140 561
Far East .................. (1,016) (152) 327
Eastern Europe and Former
Soviet Union ............. (2,062) (408) (206)
Other ..................... (228) (102) (166)
---------- ---------- ----------
$ (8,086) $ (5,744) $ 23
========== ========== ==========
Identifiable assets:
Northwest Europe .......... $ 41,676 $ 116,232 $ 86,458
West Africa ............... 5,442 5,338 89,097
South America ............. 4,835 16,737 45,040
Far East .................. 5,975 11,982 9,886
Eastern Europe and Former
Soviet Union ............. 6,528 7,095 1,023
Other ..................... 716 1,859 113
---------- ---------- ----------
$ 65,172 $ 159,243 $ 231,617
========== ========== ==========
</TABLE>
The pressure pumping business provides two major services, stimulation and
cementing. During 1994, 1993 and 1992, stimulation services accounted for
approximately 71%, 73% and 68%, respectively, of the segment's revenues,
exclusive of export sales of equipment and products of approximately $5 million,
$9 million and $7 million in 1994, 1993 and 1992, respectively.
The production chemical business was acquired in 1994 (see Note 3). This segment
provides specialty chemicals and services to the upstream oil and gas industry
as well as downstream to the refinery, petrochemical, gas processing, pipeline
and power generation industries.
The Company's well stimulation vessel, WESTERN RENAISSANCE, moved from foreign
to domestic operations during the third quarter of 1994.
Offshore drilling foreign identifiable assets represent all assets associated
with offshore drilling rigs which are operating in foreign waters at the end of
each year (see Note 4).
Capital expenditures represent cash expended on property and equipment,
including interest capitalized.
Corporate assets are comprised principally of cash and other assets.
28
<PAGE> 29
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 12 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Company operating results by quarter for the year ended December 31, 1994 were
as follows:
<TABLE>
<CAPTION>
QUARTER
------------------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
-------- -------- -------- --------- ---------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
1994
Revenues:
Pressure pumping ................ $ 70,278 $ 70,901 $ 82,052 $ 84,280 $ 307,511
Production chemicals ............ 7,773 7,867 9,700 9,650 34,990
-------- -------- -------- --------- ---------
78,051 78,768 91,752 93,930 342,501
-------- -------- -------- --------- ---------
Operating costs and expenses:
Pressure pumping ................ 64,677 63,139 71,107 71,814 270,737
Production chemicals ............ 7,092 7,215 8,108 8,612 31,027
Depreciation and amortization ... 4,577 4,347 4,832 5,058 18,814
General and administrative ...... 2,234 2,366 1,953 2,293 8,846
-------- -------- -------- --------- ---------
78,580 77,067 86,000 87,777 329,424
-------- -------- -------- --------- ---------
Operating income (loss) ...... (529) 1,701 5,752 6,153 13,077
-------- -------- -------- --------- ---------
Other income (expense):
Interest expense ................ (3,746) (1,950) (1,954) (2,382) (10,032)
Interest income ................. 772 174 109 181 1,236
Merger related expenses(1) ...... -- -- -- (21,118) (21,118)
-------- -------- -------- --------- ---------
Total other income
(expense) .................. (2,974) (1,776) (1,845) (23,319) (29,914)
-------- -------- -------- --------- ---------
Income (loss) from continuing
operations before provision for
income taxes and extraordinary
loss .............................. (3,503) (75) 3,907 (17,166) (16,837)
Provision for income taxes ...... 103 2 205 185 495
-------- -------- -------- --------- ---------
Income (loss) from continuing
operations ........................ (3,606) (77) 3,702 (17,351) (17,332)
Discontinued operations ............ 318 978 1,142 (6,635) (4,197)
-------- -------- -------- --------- ---------
Net income (loss) .................. $ (3,288) $ 901 $ 4,844 $ (23,986) $ (21,529)
======== ======== ======== ========= =========
Earnings (loss) per share:
Income (loss) from continuing
operations ..................... $ (0.20) $ 0.00 $ 0.20 $ (0.95) $ (0.95)
Discontinued operations ......... 0.02 0.05 0.06 (0.36) (0.23)
-------- -------- -------- --------- ---------
Net income (loss) ............... $ (0.18) $ 0.05 $ 0.26 $ (1.31) $ (1.18)
======== ======== ======== ========= =========
</TABLE>
(1) Merger related expenses of $21.1 million represent costs associated with
the expected merger with BJ Services and include investment banker, legal
and accounting fees, certain severance costs and other miscellaneous
expenses. In addition to the expenses recorded in 1994, additional legal
fees and other expenses related to the merger are expected to be incurred
and recorded in 1995 (see Note 2).
29
<PAGE> 30
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 12- QUARTERLY FINANCIAL INFORMATION (UNAUDITED) - (CONTINUED)
The Company formalized a plan in November 1994 to dispose of the remaining
assets of its offshore drilling segment. These assets consisted primarily of two
semi-submersible offshore drilling rigs and related equipment and inventory. As
a result, the offshore drilling segment has been reclassified in the
consolidated statements of operations as discontinued operations (see Note 4).
The results of the discontinued operations by quarter for the year ended
December 31, 1994 were as follows:
<TABLE>
<CAPTION>
QUARTER
-------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
-------- -------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
Revenues ................................................. $ 5,495 $ 6,056 $ 6,115 $ 4,943 $ 22,609
======== ======== ======== ======== ========
Income from discontinued operations ...................... $ 345 $ 1,081 $ 1,172 (169) $ 2,429
Provision for income taxes ............................... 27 103 30 (8) 152
-------- -------- -------- -------- --------
318 978 1,142 (161) 2,277
-------- -------- -------- -------- --------
Loss on disposal, net of income tax benefit of $(152) .... -- -- -- (6,474) (6,474)
-------- -------- -------- -------- --------
$ 318 $ 978 $ 1,142 $ (6,635) $ (4,197)
======== ======== ======== ======== ========
</TABLE>
Income from discontinued operations includes operating results prior to the
Measurement Date.
The loss on disposal includes operating results subsequent to the Measurement
Date including shut-down expenses and gain (loss) from the disposal of the two
semi-submersible offshore drilling rigs, ALASKAN STAR and PACESETTER IV. In
December 1994, the Company completed the sale of the ALASKAN STAR for $11.8
million, of which $6.3 million is a bankers' acceptance drawn on a U.S. bank due
within one year. This rig sale resulted in a gain of $0.3 million. In December
1994, the Company signed a letter of intent to sell the PACESETTER IV. The
Company completed the sale in early February 1995 for $37.2 million (see Note
13). At December 31, 1994, Assets held for sale, net - discontinued operations
primarily consists of the net book value and inventory of the PACESETTER IV, net
of the loss on sale of such rig.
30
<PAGE> 31
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 12 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED) - (CONTINUED)
Company operating results by quarter for the year ended December 31, 1993 were
as follows:
<TABLE>
<CAPTION>
QUARTER
------------------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
-------- -------- -------- --------- ---------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
1993
Revenues:
Pressure pumping. . . . . . . . . . . . $ 74,901 $ 67,361 $ 71,545 $ 80,266 $ 294,073
Operating costs and expenses:
Pressure pumping. . . . . . . . . . . . 62,921 57,487 60,778 69,285 250,471
Depreciation and amortization . . . . . 3,508 3,984 3,596 3,501 14,589
General and administrative. . . . . . . 1,955 1,926 2,029 3,112 9,022
-------- -------- -------- --------- ---------
68,384 63,397 66,403 75,898 274,082
-------- -------- -------- --------- ---------
Operating income . . . . . . . . . . 6,517 3,964 5,142 4,368 19,991
-------- -------- -------- --------- ---------
Other income (expense):
Interest expense. . . . . . . . . . . . (3,631) (3,432) (2,962) (3,480) (13,505)
Interest income . . . . . . . . . . . . 146 1,575 383 2,549 4,653
Writedown of pressure pumping assets
and other (1) . . . . . . . . . . . . (248) -- -- (6,884) (7,132)
-------- -------- -------- --------- ---------
Total other income (expense). . . . . (3,733) (1,857) (2,579) (7,815) (15,984)
-------- -------- -------- --------- ---------
Income (loss) from continuing operations
before provision for income taxes and
extraordinary loss. . . . . . . . . . . 2,784 2,107 2,563 (3,447) 4,007
Provision for income taxes. . . . . . 180 309 538 (400) 627
-------- -------- -------- --------- ---------
Income (loss) from continuing operations
before extraordinary loss 2,604 1,798 2,025 (3,047) 3,380
Discontinued operations . . . . . . . . . (114) 166 2,131 33,138 35,321
Extraordinary loss (2). . . . . . . . . . -- -- -- (25,713) (25,713)
-------- -------- -------- --------- ---------
Net income . . . . . . . . . . . . . . . $ 2,490 $ 1,964 $ 4,156 $ 4,378 $ 12,988
======== ======== ======== ========= =========
Earnings (loss) per share:
Primary:
Income (loss) from continuing
operations. . . . . . . . . . . . . $ 0.15 $ 0.10 $ 0.11 $ (0.16) $ 0.18
Discontinued operations . . . . . . . (0.01) 0.01 0.11 1.77 1.90
Extraordinary loss. . . . . . . . . . -- -- -- (1.38) (1.38)
-------- -------- -------- --------- ---------
Net income (loss) . . . . . . . . . . $ 0.14 $ 0.11 $ 0.22 $ 0.23 $ 0.70
======== ======== ======== ========= =========
Fully diluted:
Income (loss) from continuing
operations. . . . . . . . . . . . . $ * $ * $ * $ * $ *
Discontinued operations . . . . . . . * * * 1.39 1.48
Extraordinary loss. . . . . . . . . . * * * * *
-------- -------- -------- --------- ---------
Net income (loss) . . . . . . . . . . $ * $ * $ * $ * $ *
======== ======== ======== ========= =========
</TABLE>
- -------------
*Fully diluted computation is not reflected because per share effect is
antidilutive.
(1) The writedown of pressure pumping assets and other totaled $7.1 million
and included a $3.5 million writedown of older pressure pumping equipment
and idle facilities to net realizable value in anticipation of disposal
and various other non-operating costs.
(2) During March 1994, the Company purchased through a tender offer $97.8
million face amount of Notes. The aggregate purchase price of these Notes
was $117.3 million, resulting in an extraordinary loss of $25.7 million
($1.38 per share) including unamortized original issue costs of $3.2
million, unamortized original issue discount of $2.3 million and offering
costs of $.7 million. The anticipated extraordinary loss was accrued
during the fourth quarter of 1993.
31
<PAGE> 32
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 12- QUARTERLY FINANCIAL INFORMATION (UNAUDITED) - (CONTINUED)
The Company formalized a plan in November 1994 to dispose of the remaining
assets of its offshore drilling segment. These assets consisted primarily of two
semi-submersible offshore drilling rigs and related equipment and inventory. As
a result, the offshore drilling segment has been reclassified in the
consolidated statements of operations as discontinued operations.
The results of the discontinued operations by quarters for the year ended
December 31, 1993 were as follows:
<TABLE>
<CAPTION>
QUARTER
----------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
-------- -------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
Revenues ....................................... $ 18,629 $ 19,186 $ 19,870 $ 6,991 $ 64,676
======== ======== ======== ======== ========
Income from discontinued operations
Operating income ............................. $ 462 $ 896 $ 2,406 $ 397 $ 4,161
-------- -------- -------- -------- --------
Other income (loss):
Gains on sales of offshore drilling rigs.... 9,076 -- 372 49,713 59,161
Writedowns of offshore drilling rigs ....... (8,828) -- -- (9,500) (18,328)
-------- -------- -------- -------- --------
248 -- 372 40,213 40,833
-------- -------- -------- -------- --------
Income from discontinued
operations before income taxes .............. 710 896 2,778 40,610 44,994
Provision for income taxes ..................... 824 730 647 7,472 9,673
-------- -------- -------- -------- --------
$ (114) $ 166 $ 2,131 $ 33,138 $ 35,321
======== ======== ======== ======== ========
</TABLE>
Income from discontinued operations includes operating results prior to the
Measurement Date. Income from discontinued operations during 1993 included the
following sales of offshore drilling rigs and writedowns of offshore drilling
rigs. In March 1993, the Company completed the sale of the TRITON III jack-up
drilling rig for $17.8 million in cash. This sale resulted in a gain of $9.1
million. In July 1993, the Company completed the sale of the DELTA jack-up
drilling rig for $1.5 million in cash which resulted in a gain of $0.4 million.
In October 1993, the Company completed the sale of nine jack-up drilling rigs
and associated equipment and inventories for $150.0 million cash that resulted
in a 1993 fourth quarter gain of $49.7 million. The rigs sold were: APOLLO I,
APOLLO II, APOLLO IV, NIKE I, POLARIS I, POLARIS II, TRITON I, TRITON II and
TRITON IV. In March 1993, the Company wrote down the net book value of its
three mat-supported jack-up rigs by $8.8 million. This writedown reflected the
low utilization experienced by these types of rigs and the expectation of lower
future utilization for them. In December 1993, the Company wrote down the net
book value of the ALASKAN STAR semi-submersible drilling rig by $9.5 million.
This writedown reflected the Company's lower expectation of future operating
cash flow opportunities for second generation semi-submersibles like the
ALASKAN STAR.
32
<PAGE> 33
THE WESTERN COMPANY OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 13 - SUBSEQUENT EVENT (UNAUDITED)
The Company completed the sale of the PACESETTER IV in early February 1995 for
$37.2 million which resulted in a loss of $6.7 million. At December 31, 1994,
Assets held for sale, net - discontinued operations primarily consists of the
net book value and inventory of the PACESETTER IV, net of the loss on sale of
such rig.
33
<PAGE> 34
(b) PRO FORMA FINANCIAL INFORMATION
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The pro forma financial statements are based on the historical financial
information of BJ Services and Western giving effect, under the purchase method
of accounting, to certain adjustments. The pro forma financial statements are
derived from BJ Services' and Western's historical consolidated financial data
for the indicated periods, which, in the case of the statement of operations of
Western, differ from those periods used for presentation of Western's financial
statements included in this Report on Form 8-K/A. In the case of Western, the
statement of operations for the year ended September 30, 1994 was derived by
combining the last three months of its fiscal year ended December 31, 1993 with
the first nine months of its fiscal 1994. The pro forma statement of financial
position was prepared as if the Merger occurred on March 31, 1995. The pro
forma statements of operations were prepared as if the Merger had occurred as
of October 1, 1993 and do not include any estimate for loss of revenue from
overlapping locations or the effect of any modifications in operations that
might have occurred had BJ Services owned and operated the businesses during
the periods presented except as described in the Notes to the Pro Forma
Financial Statements. The statements also do not reflect the disposition of
assets from BJ Services' Brighton, Colorado and Cortland, Ohio operations.
Revenue generated from these operations was $5.6 million for the year ended
September 30, 1994 and $4.7 million for the six months ended March 31, 1995. A
supplemental pro forma presentation of operating results for the year ended
September 30, 1994 was made to reflect the effects of eliminating certain
nonrecurring charges included in Western's historical financial statements so
that the results would, in management's opinion, be more reflective of normal
operations.
The pro forma financial statements should be read in conjunction with the Notes
to Pro Forma Financial Statements and with the Consolidated Financial
Statements of BJ Services and the related notes thereto as previously filed and
the Consolidated Financial Statements of Western and the related notes thereto,
contained elsewhere in this Report on Form 8-K/A. The pro
forma financial information has been prepared based upon assumptions deemed
appropriate by management of BJ Services. This information is prepared for
informational purposes only and is not necessarily indicative of the actual
results or financial condition that would have been achieved had the Merger and
related financing occurred at these dates or of future results. Actual results
of Western's operations will be included with BJ Services' results beginning
April 1, 1995.
34
<PAGE> 35
PRO FORMA STATEMENT OF FINANCIAL POSITION (UNAUDITED)
MARCH 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
Historical Pro Forma
-------------------------- ----------------------------
BJ Services Western Adjustments Combined
----------- ------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 5,698 $ 44,567 ($44,567)(2) $ 5,698
Receivables - net 98,053 63,926 161,979
Inventories 42,813 20,094 62,907
Deferred income taxes and other 14,260 4,535 18,795
-------- -------- -------- --------
Total current assets 160,824 133,122 (44,567) 249,379
Property - net 197,033 185,045 53,000 (1) 435,078
Goodwill 20,413 18,111 153,097 (1) 191,621
Deferred income taxes 22,690 60,000 (1) 82,690
Investments and other assets 12,658 3,043 15,701
-------- -------- -------- --------
$413,618 $339,321 $221,530 $974,469
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 48,913 $ 23,359 $ 72,272
Short-term borrowings and current
portion of long-term debt 29,291 (29,291)(2)
Accrued liabilities 36,568 33,492 17,398 (1)
22,000 (9) 109,458
-------- -------- -------- --------
Total current liabilities 114,772 56,851 10,107 181,730
Long-term debt 74,700 77,718 (75,554)(1)
234,851 (2) 311,715
Other long-term liabilities 27,000 14,751 41,751
Stockholders' equity 197,146 190,001 74,126 (1)
(22,000)(9) 439,273
-------- -------- -------- --------
$413,618 $339,321 $221,530 $974,469
======== ======== ======== ========
</TABLE>
See Notes to Pro Forma Financial Statements
35
<PAGE> 36
PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
SIX MONTHS ENDED MARCH 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------- -----------------------
BJ Services Western Adjustments Combined
----------- ------- ----------- --------
<S> <C> <C> <C> <C>
Revenue $226,083 $173,922 $400,005
Operating Expenses:
Cost of sales and services 202,490 164,660 $ 4,438 (3)
(13,500) (4) 358,088
General and administrative 12,453 5,033 (4,000) (4) 13,486
Amortization of goodwill 1,914 (6) 1,914
-------- -------- -------- --------
214,943 169,693 (11,148) 373,488
Operating income 11,140 4,229 11,148 26,517
Other income (expense):
Interest expense (4,618) (4,599) (3,900) (5) (13,117)
Interest income 334 362 696
Write-downs and other 940 (21,118) 21,118 (8) 940
-------- -------- -------- --------
Income (loss) from continuing operations
before income taxes 7,796 (21,126) 28,366 15,036
Income tax expense 1,674 285 2,919 (7) 4,878
-------- -------- -------- --------
Income (loss) from continuing
operations $ 6,122 $(21,411) $ 25,447 $ 10,158
======== ======== ======== ========
Weighted average shares outstanding 15,716 12,040 (1) 27,757
======== ======== ======== =========
Income per share from continuing
operations $ 0.39 $ 0.37
======== ======== ======== =========
</TABLE>
See Notes to Pro Forma Financial Statements
36
<PAGE> 37
PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
YEAR ENDED SEPTEMBER 30, 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Supplemental
Pro Forma
Historical Pro Forma --------------------------
----------------------- -------------------------- Non-recurring As
BJ Services Western Adjustments Combined Adjustments Adjusted
----------- ------- ----------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenue $434,476 $328,837 $763,313 $763,313
Operating Expenses:
Cost of sales and
services 391,022 306,947 $ 8,875 (3)
(27,000)(4) 679,844 679,844
General and administrative 22,709 10,598 (8,000)(4) 25,307 25,307
Amortization of goodwill 3,827 (6) 3,827 3,827
-------- -------- -------- -------- -------- --------
413,731 317,545 (22,298) 708,978 708,978
-------- -------- -------- -------- -------- --------
Operating income 20,745 11,292 22,298 54,335 54,335
Other income (expense):
Interest expense (7,383) (11,130) (4,325)(5) (22,838) (22,838)
Interest income 729 3,604 4,333 4,333
Write-downs and other (1,315) (6,884) (8,199) $ 6,884 (10) (1,315)
-------- -------- -------- -------- -------- --------
Income (loss) from continuing
operations before income taxes 12,776 (3,118) 17,973 27,631 6,884 34,515
Income tax expense (benefit) 2,006 (90) 6,630 (7) 8,546 2,409 (10) 10,955
-------- -------- -------- -------- -------- --------
Income (loss) from continuing
operations before
extraordinary loss and
cumulative effect of
accounting change $ 10,770 $ (3,028) $ 11,343 $ 19,085 $ 4,475 $ 23,560
======== ======== ======== ======== ======== ========
Weighted average shares
outstanding 15,665 12,040 (1) 27,705 27,705
======== ======== ======== ========
Income per share from continuing
operations before
extraordinary loss and
cumulative effect of
accounting change $ 0.69 $ 0.69 $ 0.85
========= ======== ======== ========= ======== ========
</TABLE>
See Notes to Pro Forma Financial Statements
37
<PAGE> 38
NOTES TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
(IN THOUSANDS)
(1) The pro forma financial statements reflect the purchase of 100% of the
outstanding shares of Western common stock in exchange for total
consideration of $514.3 million ($21.00 per share), consisting of 12.0
million shares of BJ Common Stock, cash of $240.1 million and warrants to
purchase 4.8 million shares of BJ Common Stock. For purposes of
determining Western's outstanding shares, it is assumed that such
debentures, which had a face value of $75.6 million at March 31, 1995 were
converted into 4.4 million shares of Western common stock prior to the
transaction (as of May 1995, substantially all of the debentures had been
converted). The BJ Common Stock to be issued was valued at $19.94, the
average closing price prior to the closing date calculated in accordance
with the Merger Agreement. In addition, BJ Services incurred transaction
costs of approximately $10.0 million, resulting in a total purchase price
of $514.3 million.
In accordance with purchase accounting, the assets and liabilities of
Western will be recorded on BJ Services' books at estimated fair market
value with the remaining purchase price reflected as goodwill. For
purposes of these Pro Forma Financial Statements, the allocation of the
purchase price has been made based upon valuations and other studies which
have not been finalized. Accordingly, the allocation of the purchase price
is preliminary. The following adjustments reflect management's estimates
of the necessary adjustments to Western's historical Statement of Financial
Position to reflect fair market value:
<TABLE>
<S> <C>
BJ Consideration Paid:
Cash $ 240,127
Stock 240,127
Warrants 24,000
Transaction costs 10,000
-----------
514,254
Less: Western stockholders' equity 190,001
Conversion of Western debentures 75,554
-----------
265,555
-----------
Net Adjustment $ 248,699
===========
</TABLE>
38
<PAGE> 39
<TABLE>
<S> <C>
Allocation of adjustment:
Property $ 53,000
Deferred tax asset - net operating loss carryforwards 60,000
Accrual for severance, facility closings and other
nonrecurring costs associated
with the acquisition (9,400)
Accrual for buyout of Western stock options (4,598)
Accrual of past service costs - benefit plans (3,400)
Goodwill 153,097
-------------
$ 248,699
=============
</TABLE>
(2) Assumes that immediately upon consummation of the Merger, BJ Services
will utilize a new credit facility to retire all of its then outstanding
debt and, after utilizing $44.6 million in available excess cash held by
Western, pay the cash portion of the merger consideration as discussed
in Note (1).
(3) Reflects increased depreciation expense due to the net write-up of
property depreciated over its average estimated remaining useful life.
(4) Reflects estimated consolidation savings from the elimination of
personnel and facility costs from overlapping operations, corporate
staff and other administrative and support functions.
(5) Reflects the interest expense on the borrowings under the new credit
facility described in Note (2) at an average assumed rate of 5.125% for
the fiscal year and 6.625% for the six-month period. The effect of each
.125% change in the assumed rate would change interest expense by
$390,000 per annum.
(6) Reflects amortization of increase to goodwill over a 40-year period.
(7) Adjustment to reflect 35% effective tax rate for Western and the tax
effect of the pro forma adjustments, with the exception of goodwill
amortization.
(8) Adjustment to eliminate expenses incurred by Western which are directly
attributable to the Merger.
(9) The pro forma statement of operations has not been adjusted for the
following nonrecurring charges which are estimated and are expected to
be incurred by BJ Services within the 12 month period following the
Merger:
Severance and special incentive costs $ 10,500
Facility closings, equipment relocation, etc. 8,000
Legal, accounting and other 3,500
---------
$ 22,000
=========
39
<PAGE> 40
These items have been reflected in the pro forma statement of financial
position as an addition to accrued liabilities and a reduction to
stockholders' equity.
(10) Adjustment to eliminate the following historical nonrecurring charge
(and the related tax effects) of Western:
(a) The writedown of pressure pumping assets and other which totaled
$6.9 million and included a $3.5 million writedown of older
pressure pumping equipment and idle facilities to net realizable
value in anticipation of disposal and various other non-operating
costs.
(b) Tax expense on the above at a 35% rate.
40
<PAGE> 41
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
10.1 Credit Agreement dated as of April 13, 1995, among BJ
Services Company, BJ Services Company, U.S.A., BJ Service
International, Inc., BJ Services Company Middle East,
Bank of America National Trust and Savings Association,
as agent, and the other financial institutions parties
thereto (the "Credit Agreement").
10.2 Parent Guaranty Agreement dated as of April 13, 1995, by
BJ Services Company, in favor of the banks and the agent
under the Credit Agreement.
10.3 Form of Guaranty Agreement dated as of April 13, 1995, by
each of BJ Services Company, U.S.A., BJ Service
International, Inc., BJ Services Company Middle East, and
Western Petroleum Services International Company, in
favor of the banks and the agent under the Credit
Agreement.
23.1 Consent of Price Waterhouse LLP.
</TABLE>
41
<PAGE> 42
SIGNATURE
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.
BJ SERVICES COMPANY
By /s/ MARGARET B. SHANNON
_______________________
Margaret B. Shannon
Vice President and
General Counsel
Date: May 30, 1995
42
<PAGE> 43
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
10.1 Credit Agreement dated as of April 13, 1995, among BJ
Services Company, BJ Services Company, U.S.A., BJ Service
International, Inc., BJ Services Company Middle East,
Bank of America National Trust and Savings Association,
as agent, and the other financial institutions parties
thereto (the "Credit Agreement").
10.2 Parent Guaranty Agreement dated as of April 13, 1995, by
BJ Services Company, in favor of the banks and the agent
under the Credit Agreement.
10.3 Form of Guaranty Agreement dated as of April 13, 1995, by
each of BJ Services Company, U.S.A., BJ Service
International, Inc., BJ Services Company Middle East, and
Western Petroleum Services International Company, in
favor of the banks and the agent under the Credit
Agreement.
23.1 Consent of Price Waterhouse LLP.
</TABLE>
<PAGE> 1
EXHIBIT 10.1
================================================================================
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
Dated as of April 13, 1995
among
BJ SERVICES COMPANY,
BJ SERVICES COMPANY, U.S.A.,
BJ SERVICE INTERNATIONAL, INC.,
BJ SERVICES COMPANY MIDDLE EAST,
THE OTHER SUBSIDIARY BORROWERS
FROM TIME TO TIME PARTIES HERETO,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent,
BANK OF AMERICA ILLINOIS,
Individually and as
Letter of Credit Issuing Bank,
THE CHASE MANHATTAN BANK, N.A.,
Individually and as Co-Agent,
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
Individually and as Co-Agent,
FIRST INTERSTATE BANK OF TEXAS, N.A.
Individually and as Co-Agent,
and
THE OTHER FINANCIAL INSTITUTIONS PARTIES HERETO
- - - - - - - - - - - -
Arranged by
BA SECURITIES, INC.
- --------------------------------------------------------------------------------
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Other Interpretive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.03 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE II THE CREDITS AND CERTAIN PRICING TERMS . . . . . . . . . . . . . . . . . . . . . 22
2.01 Amounts and Terms of Commitments . . . . . . . . . . . . . . . . . . . . . . . . 22
2.02 Certain Pricing Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.03 Procedure for Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.04 Conversion and Continuation Elections . . . . . . . . . . . . . . . . . . . . . 27
2.05 Special Provisions for Swing Loans . . . . . . . . . . . . . . . . . . . . . . . 28
2.06 Voluntary Termination or Reduction of Commitments; Certain Other
Terms Applicable to Termination or Reduction . . . . . . . . . . . . . . . . . . 29
2.07 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.08 Mandatory Prepayments of Loans . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.09 Mandatory Termination and Reduction of Commitments. . . . . . . . . . . . . . . 32
2.10 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.11 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.12 Computation of Fees and Interest . . . . . . . . . . . . . . . . . . . . . . . . 35
2.13 Payments by the Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.14 Payments by the Banks to the Agent . . . . . . . . . . . . . . . . . . . . . . . 36
2.15 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE III THE LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.01 The Letter of Credit Subfacility. . . . . . . . . . . . . . . . . . . . . . . . 37
3.02 Issuance, Amendment and Renewal of Letters of Credit . . . . . . . . . . . . . . 38
3.03 Risk Participations, Drawings and Reimbursements . . . . . . . . . . . . . . . . 40
3.04 Repayment of Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.05 Role of the Issuing Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.06 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.07 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.08 Cash Collateralization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3.09 Uniform Customs and Practice . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY . . . . . . . . . . . . . . . . . . . . . 45
4.01 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.02 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.03 Increased Costs and Reduction of Return . . . . . . . . . . . . . . . . . . . . 46
4.04 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.05 Inability to Determine Rates . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.06 Certificates of Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.07 Substitution of Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.08 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE V CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.01 Conditions of Initial Credit Extensions . . . . . . . . . . . . . . . . . . . . 48
5.02 Additional Conditions of Initial Credit Extension . . . . . . . . . . . . . . . 52
5.03 Conditions of Initial Advance to each Subsidiary Borrower . . . . . . . . . . . 52
5.04 Conditions to All Credit Extensions . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE VI REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.01 Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.02 Corporate Authorization; No Contravention . . . . . . . . . . . . . . . . . . . 54
6.03 Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.04 Other Debt Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.05 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.06 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.07 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.08 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.09 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . . . . . . . . 55
6.10 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.12 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.13 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.14 Regulated Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.15 No Burdensome Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.16 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.17 Copyrights, Patents, Trademarks and Licenses, etc. . . . . . . . . . . . . . . . 57
6.18 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.19 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.20 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.21 Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE VII AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.01 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.02 Certificates; Other Information . . . . . . . . . . . . . . . . . . . . . . . . 59
7.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.04 Preservation of Corporate Existence, Etc . . . . . . . . . . . . . . . . . . . . 60
7.05 Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.06 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.07 Payment of Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.08 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.09 Inspection of Property and Books and Records . . . . . . . . . . . . . . . . . . 61
7.10 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.11 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.12 Certain Waivers Under the Merger Agreement. . . . . . . . . . . . . . . . . . . 62
7.13 New Subsidiary Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
7.14 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE VIII NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.01 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.02 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
8.03 Consolidations and Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.04 Loans and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.05 Foreign Subsidiary Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 67
8.06 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.07 Use of Proceeds; Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.08 Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.09 Change in Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.10 Certain Other Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.11 Change in Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.12 Capitalization Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.13 Minimum Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.14 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.15 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.16 Subsidiary Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE IX EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.01 Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.02 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.03 Rights Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE X THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.01 Appointment and Authorization . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.02 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.03 Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.04 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.05 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.06 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.07 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.08 Agent in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.09 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.10 Withholding Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.11 Co-Agents; Arranger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
11.01 Renegotiation After May 15, 1995 . . . . . . . . . . . . . . . . . . . . . . . . 80
11.02 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
11.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.04 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.05 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.06 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.07 Payments Set Aside . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
11.08 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
11.09 Assignments, Participations, etc. . . . . . . . . . . . . . . . . . . . . . . . 83
11.10 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
11.11 Company as Subsidiary Borrower Representative . . . . . . . . . . . . . . . . . 86
11.12 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
11.13 Indemnity and Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
11.14 Notification of Addresses, Lending Offices, Etc. . . . . . . . . . . . . . . . . 87
</TABLE>
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<TABLE>
<S> <C> <C>
11.15 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.16 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.17 No Third Parties Benefitted . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.18 Governing Law and Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.19 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.20 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
</TABLE>
SCHEDULES:
Schedule 2.01 - Commitments
Schedule 6.08 - ERISA
Schedule 6.13 - Environmental Matters
Schedule 6.17 - Intellectual Property Matters
Schedule 6.18 - Subsidiaries and Minority Interests
Schedule 6.19 - Insurance Matters
Schedule 8.01 - Permitted Liens
Schedule 8.01(c) - Existing Liens
Schedule 8.02(e) - Disposition of Property
Schedule 8.02(g) - Consolidation Dispositions of Property
Schedule 11.03 - Lending Offices; Addresses for Notices
EXHIBITS:
Exhibit "A" - Form of Notice of Borrowing
Exhibit "B" - Form of Notice of Conversion/Continuation
Exhibit "C" - Form of Compliance Certificate
Exhibit "D" - Form of Legal Opinion of Company's Counsel
Exhibit "E" - Form of Assignment and Acceptance Agreement
Exhibit "F" - Form of Revolving Note
Exhibit "G" - Form of Term Note
Exhibit "H" - Form of Swing Loan Note
Exhibit "I" - Form of Parent Guaranty Agreement
Exhibit "J" - Form of Domestic Subsidiary Guaranty Agreement
Exhibit "K" - Form of Subsidiary Borrower Counterpart
Exhibit "L" - Form of Swing Loan Participation Certificate
Exhibit "M" - Form of Intercompany Subordination Agreement
Exhibit "N" - Form of BJ Note Agreement Waiver
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CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of April 13, 1995, among BJ
SERVICES COMPANY, a Delaware corporation (the "Company"), BJ SERVICES COMPANY,
U.S.A., a Delaware corporation and a Wholly-Owned Subsidiary of the Company
("BJ-USA"), BJ SERVICE INTERNATIONAL, INC., a Delaware corporation and a
Wholly-Owned Subsidiary of the Company ("BJ-International"), BJ SERVICES
COMPANY MIDDLE EAST, a Delaware corporation and a Wholly-Owned Subsidiary of
the Company ("BJ-Middle East"), the other Subsidiary Borrowers (as defined
below) from time to time parties to this Agreement (the Company, BJ-USA,
BJ-International, BJ-Middle East and the other Subsidiary Borrowers are
individually referred to herein as a "Borrower" and collectively as the
"Borrowers"), the several financial institutions from time to time parties to
this Agreement (collectively, the "Banks"; individually, a "Bank"), BANK OF
AMERICA ILLINOIS, as letter of credit issuing bank, BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as agent for the Banks, and THE CHASE MANHATTAN
BANK, N.A., CREDIT LYONNAIS CAYMAN ISLAND BRANCH and FIRST INTERSTATE BANK OF
TEXAS, N.A., as co-agents for the Banks.
WHEREAS, the Banks have agreed to make available to the Borrowers a
term loan and revolving credit facility with letter of credit and swingline
subfacilities upon the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms have the following
meanings:
"Acquisition" means any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in (a)
the acquisition of all or substantially all of the assets of a Person, or of
any business or division of a Person, (b) the acquisition of in excess of 50%
of the capital stock of a corporation (or similar entity), which stock has
ordinary voting power for the election of the members of the acquiree's board
of directors or persons exercising similar functions (other than stock having
such power only by reason of the happening of a contingency), or the
acquisition of in excess of 50% of the partnership interests or equity of any
Person not a corporation which acquisition gives the acquirer the power to
direct or cause the direction of the management and policies of the acquiree,
or (c) a merger or consolidation or any other combination with another Person
(other than a Person that is a Subsidiary) provided that the Company or a
Subsidiary of the Company is the surviving entity.
"Additional Proxy/Prospectus Documents" means all amendments
and exhibits to, and documents related to, the Proxy/Prospectus Documents filed
with the SEC or distributed to the stockholders of the Company or Western
Company, in each case to the extent delivered to the Banks after the Execution
Date.
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"Affected Bank" means a Bank to whom a Borrower is required to
make a payment pursuant to Section 4.01, 4.02 or 4.03.
"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. A Person shall be deemed to control another Person
if the controlling Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of the other
Person, whether through the ownership of voting securities, by contract, or
otherwise.
"Agent" means Bank of America National Trust and Savings
Association in its capacity as agent for the Banks hereunder, and any successor
agent arising under Section 10.09.
"Agent-Related Person" means each of the Agent, the Arranger,
the Swing Loan Bank and the Issuing Bank and each of their respective officers,
directors, employees, agents and attorneys-in-fact.
"Agent's Payment Office" means the address for payments set
forth on Schedule 11.03 in relation to the Agent, or such other address as the
Agent may from time to time specify.
"Agreement" means this Credit Agreement.
"Applicable Margin" means with respect to LIBOR Offshore Rate
Loans and Base Rate Loans, the specified percent per annum set forth in Section
2.02 of this Agreement.
"Arranger" means BA Securities, Inc., a Delaware corporation.
"Assignee" has the meaning specified in subsection 11.09(a).
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the reasonable
allocated cost of internal legal services and all reasonable disbursements of
internal counsel.
"Available Amount" means at any date an amount equal to (i)
50% of Consolidated Net Income on a cumulative basis since the Execution Date
plus (ii) 50% of the aggregate net cash proceeds from the issuance or sale
(other than to the Company or a Subsidiary) after the Execution Date of shares
of capital stock (other than Redeemable Preferred Stock) of the Company.
"Bank" has the meaning specified in the introductory clause
hereto. References to the "Banks" shall include Bank of America Illinois,
including in its capacity as Swing Loan Bank and its capacity as Issuing Bank;
for purposes of clarification only, to the extent that Bank of America Illinois
may have any rights or obligations in addition to those of the Banks due to its
status as Swing Loan Bank or as Issuing Bank, its status as such will be
specifically referenced.
"Bank of America NT & SA" means Bank of America National Trust
and Savings Association, a national banking association.
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"Bankruptcy Code" means the Federal Bankruptcy Reform Act of
1978 (11 U.S.C. Section 101, et seq.).
"Base Rate" means, for any day, the higher of: (a) 0.50% per
annum above the latest Federal Funds Rate; and (b) the rate of interest per
annum in effect for such day as publicly announced from time to time by Bank of
America NT & SA in San Francisco, California, as its "reference rate." (The
"reference rate" is a per annum rate set by Bank of America NT & SA based upon
various factors including its costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate.) Any
change in the reference rate announced by Bank of America NT & SA shall take
effect at the opening of business on the day specified in the public
announcement of such change.
"Base Rate Loan" means a Term Loan, a Revolving Loan, a Swing
Loan or a Letter of Credit Advance, that bears interest based on the Base Rate.
"BJ-International" has the meaning specified in the
introductory clause hereto.
"BJ-Middle East" has the meaning specified in the introductory
clause hereto.
"BJ Note Agreements" means the two Note Agreements, each dated
August 1, 1991, one being by and among the Company, BJ Services Company U.S.A.,
BJ Service International, Inc., BJ Services Company Middle East (collectively,
the "BJ Note Debtors") and Connecticut Mutual Life Insurance Company, and the
other being by and between the BJ Note Debtors and Principal Mutual Life
Insurance Company, collectively providing for the issuance of $30,000,000 of
9.2% Senior Notes due August 1, 1998, each as amended by an Amendment to Note
Agreement dated as of September 30, 1992.
"BJ Notes" means the 9.2% Senior Notes issued by the Company
and certain of its Subsidiaries pursuant to the BJ Note Agreements.
"BJ-USA" has the meaning specified in the introductory clause
hereto.
"Borrower" and "Borrowers" have the meaning specified in the
introductory clause hereto.
"Borrowing" means a borrowing hereunder consisting of
Revolving Loans, Swing Loans or Term Loans of the same Interest Rate Type made
to the Borrowers on the same day by the Banks under Article II, and, other than
in the case of Base Rate Loans, having the same Interest Period.
"Borrowing Date" means any date on which a Borrowing occurs
under Article II.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in Houston, Texas, New York, New York or
San Francisco, California are authorized or required by law to close and, if
the applicable Business Day relates to any LIBOR Offshore Rate Loan, means such
a day on which dealings are carried on in the applicable offshore dollar
interbank market.
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"Capital Adequacy Regulation" has the meaning set forth in
Section 4.03.
"Capital Lease" means a capital lease as determined in
accordance with GAAP.
"Capitalization Ratio" means, at any time, the ratio of
Consolidated Funded Indebtedness to Consolidated Total Capitalization.
"Cash Equivalents" means: (a) securities issued or fully
guaranteed or insured by the United States Government or any agency thereof and
backed by the full faith and credit of the United States having maturities of
not more than twelve (12) months from the date of acquisition; (b) certificates
of deposit, time deposits, Eurodollar time deposits, or bankers' acceptances
having in each case a tenor of not more than twelve (12) months from the date
of acquisition issued by any U.S. commercial bank or any branch or agency of a
non-U.S. commercial bank licensed to conduct business in the U.S. having
combined capital and surplus of not less than Five Hundred Million Dollars
($500,000,000) whose long term securities are rated at least A (or then
equivalent grade) by S&P and A2 (or then equivalent grade) by Moody's; (c)
commercial paper of an issuer rated at least A-1 by S&P or P-1 by Moody's and
in either case having a tenor of not more than twelve (12) months; and (d) debt
securities which are registered under the Securities Act of 1933, as amended
(the "Securities Act") (and not "restricted securities" in the Company's hands
as defined in Rule 144 under the Securities Act), traded on a national
securities exchange and issued by a corporation duly incorporated under the
laws of a state of the United States, provided, however, that such debt
securities are rated A2 by Moody's and A or better by S&P, and such debt
securities have a maturity not in excess of twelve (12) months from the date of
creation thereof.
"Change of Control" means (a) purchase or acquisition,
directly or indirectly, by any "person" or "group" within the meaning of
Section 13(d)(3) and 14(d)(2) of the Securities and Exchange Act of 1934 (a
"Group"), of "beneficial ownership" (as such term is defined in Rule 13d-3
under the Exchange Act) of securities of the Company which, together with any
securities owned beneficially by any "affiliates" or "associates" of such Group
(as such terms are defined in Rule 12b-2 under the Exchange Act), shall
represent more than fifty percent (50%) of the combined voting power of the
Company's securities which are entitled to vote generally in the election of
directors and which are outstanding on the date immediately prior to the date
of such purchase or acquisition; or (b) a sale of all or substantially all of
the assets of the Company and its Subsidiaries taken as a whole to any Person
or Group (other than to another Subsidiary Borrower(s)); or (c) the liquidation
or dissolution of the Company; or (d) the first day on which a majority of the
Board of Directors of the Company are not Continuing Directors (as herein
defined). As herein defined, "Continuing Directors" means any member of the
Board of Directors of the Company who (x) is a member of such Board of
Directors as of the date of this Agreement or (y) was nominated for election or
elected to such Board of Directors with the affirmative vote of two-thirds of
the Continuing Directors who were members of such Board of Directors at the
time of such nomination or election.
"Closing Date" means the date on which all conditions
precedent set forth in Sections 5.01 and 5.02 and 5.04 with respect to the
obligation of each Bank to make its initial Credit Extension and the obligation
of the Issuing Bank to issue the first Letter of Credit are satisfied or waived
by all Banks (or, in the case of subsection 5.01(h), waived by the Person
entitled to receive such payment).
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"Closing Date Pricing Certificate" has the meaning set forth
in Section 5.01(j).
"Code" means the Internal Revenue Code of 1986, and
regulations promulgated thereunder.
"Commitment" has the meaning set forth in subsection 2.01(b)
and means, for each Bank, the sum of its Revolving Commitment and its Term
Commitment.
"Commitment Fee" has the meaning set forth in subsection
2.11(b).
"Commitment Fee Percentage" means the specified percent per
annum set forth in Section 2.02.
"Commitment Percentage" means, for each Bank, the percentage
of the aggregate Commitments as set forth opposite such Bank's name in Schedule
2.01 under the heading "Commitment Percentage" as the same may be reduced as a
result of one or more assignments pursuant to Section 11.09.
"Compliance Certificate" means a certificate substantially in
the form of Exhibit "C".
"Consolidated EBIT" means, for the relevant period, the sum
of: (a) the Consolidated Net Income for such period, (b) Consolidated Interest
Expense and (c) all taxes measured by income to the extent included in the
determination of such Consolidated Net Income; provided, however, that
Consolidated Net Income shall be computed for the purposes of this definition
without regard to non-cash write-ups and write-downs, and without giving effect
to extraordinary losses or extraordinary gains for such period.
"Consolidated EBITDA" means, for the relevant period,
Consolidated EBIT plus all amounts treated as expenses for depreciation and the
amortization of intangibles of any kind for such period to the extent included
in the determination of such Consolidated Net Income for the relevant period.
"Consolidated Funded Indebtedness" means, for the Company and
its Consolidated Subsidiaries, at any time, without duplication, the sum of:
(a) liability for borrowed money (including the outstanding principal amount of
the Western Subordinated Debentures and the outstanding principal amount of the
BJ Notes) or for the deferred purchase price of property or services, (b)
obligations under leases which in accordance with GAAP should be recorded as
Capital Leases, and (c) all Redeemable Preferred Stock, valued at the
applicable redemption price.
"Consolidated Interest Expense" means, for the relevant
period, for the Company and its Consolidated Subsidiaries, without duplication,
the sum of: (a) all interest in respect of Indebtedness accrued or capitalized
during such period (whether or not actually paid during such period and
including fees payable in respect of letters of credit and bankers'
acceptances), (b) the net amount payable (or minus the net amount receivable)
under all Swap Contracts during such period (whether or not actually paid or
received during such period), and (c) all dividends paid, declared or otherwise
accrued in respect of preferred stock, minus (d) interest income.
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"Consolidated Net Income" means, for any period, the net
income (or net loss) of the Company and its Consolidated Subsidiaries for such
period taken as a single accounting period determined in accordance with GAAP.
"Consolidated Net Worth" means, at any date, an amount equal
to the consolidated stockholders' equity of the Company and its Consolidated
Subsidiaries determined in accordance with GAAP determined as of such date,
excluding any Redeemable Preferred Stock.
"Consolidated Subsidiary" means, at any date, any Subsidiary
the accounts of which, in accordance with GAAP, would be consolidated with
those of the Company in its consolidated financial statements if such
statements were prepared as of such date.
"Consolidated Total Capitalization" means, at any time, the
sum of (a) Consolidated Funded Indebtedness and (b) Consolidated Net Worth for
such period.
"Contingent Obligation" means, as to any Person, without
duplication, any direct or indirect liability of that Person, with or without
recourse, (a) with respect to any Indebtedness, lease, dividend, letter of
credit or other obligation (the "primary obligations") of another Person (the
"primary obligor"), including any obligation of that Person (i) to purchase,
repurchase or otherwise acquire such primary obligations or any security
therefor, (ii) to advance or provide funds for the payment or discharge of any
such primary obligation, or to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition 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 holder of any such primary obligation
against loss in respect thereof (each, a "Guaranty Obligation"); (b) with
respect to any Surety Instrument (other than any Letter of Credit) issued for
the account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings or payments; provided, however, that "Contingent
Obligations" shall not include (i) bid and performance bonds incurred in the
ordinary course of business of the Company or any Subsidiary, or (ii) any
liabilities or obligations (whether previously contingent, unliquidated or
otherwise) which have been accrued or reserved for and would be shown on the
Company's consolidated balance sheet for the relevant period in which such
reserve and concomitant accrual were effected. The amount of any Contingent
Obligation shall, in the case of Guaranty Obligations, be deemed equal to the
maximum stated or determinable amount of the primary obligation in respect of
which such Guaranty Obligation is made or, if not stated or if indeterminable,
the maximum reasonably anticipated liability in respect thereof, and in the
case of other Contingent Obligations, shall be equal to the maximum reasonably
anticipated liability in respect thereof.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other instrument,
document or agreement to which such Person is a party or by which it or any of
its property is bound.
"Conversion/Continuation Date" means any date on which, under
Section 2.04, the Company (a) converts Loans of one Interest Rate Type to
another Interest Rate Type, or (b)
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continues as Loans of the same Interest Rate Type, but with a new Interest
Period, Loans having Interest Periods expiring on such date.
"Credit Extension" means and includes (a) the making of any
Revolving Loans, Swing Loans or Term Loans hereunder, and (b) the Issuance of
any Letters of Credit hereunder.
"Debenture-Related Term Loans" means Term Loans in an
aggregate principal amount not in excess of $40,000,000, the proceeds of which
shall be used to repurchase or redeem the Western Subordinated Debentures.
"Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Default Rate" has the meaning set forth in subsection
2.10(d)(iii).
"Disposition" means the sale, lease, conveyance or other
disposition of property.
"Dollars", "dollars" and "$" each mean lawful money of the
United States.
"Domestic Subsidiary" means any Subsidiary other than a
Foreign Subsidiary.
"Effective Amount" means (a) with respect to any Revolving
Loans, Term Loans and Swing Loans on any date, the aggregate outstanding
principal amount thereof after giving effect to any Borrowings and prepayments
or repayments of Revolving Loans, Term Loans and Swing Loans occurring on such
date; and (b) with respect to any outstanding Letter of Credit Obligations on
any date, the amount of such Letter of Credit Obligations on such date after
giving effect to any Issuances of Letters of Credit occurring on such date and
any other changes in the aggregate amount of the Letter of Credit Obligations
as of such date, including as a result of any reimbursements of drawings under
any Letters of Credit or any reductions in the maximum amount available for
drawing under Letters of Credit taking effect on such date.
"Eligible Assignee" has the meaning set forth in subsection
11.09(b).
"Environmental Claims" means all claims, however asserted, by
any Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, requests, licenses, authorizations and permits
of, and agreements with, any Governmental Authorities, in each case relating to
environmental, health, safety and land use matters.
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and
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Sections 414(m) and (o) of the Code for purposes of provisions relating to
Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by the Company or any
ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer
Plan is in reorganization; (d) the filing of a notice of intent to terminate
(other than pursuant to Section 4041(b) of ERISA), the treatment of a Plan
amendment as a termination under Section 4041(c) or 4041A of ERISA, or the
commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Company or any ERISA Affiliate.
"Eurodollar Reserve Percentage" has the meaning specified in
the definition of "LIBOR Offshore Rate".
"Event of Default" means any of the events or circumstances
specified in Section 9.01.
"Execution Date" means the date this Agreement is executed
and delivered by the parties hereto.
"Existing Company Credit Agreement" means the Amended and
Restated Credit Agreement, dated as of August 11, 1992, among the Company, the
Subsidiary Borrowers as therein defined, the agent and the banks signatory
thereto, as amended by the First Amendment dated as of September 11, 1992 and
the Second Amendment dated September 30, 1992.
"Existing Western Credit Agreements" mean the First Amended
and Restated Credit Agreement dated as of May 18, 1992, and the First Amended
and Restated Revolving Credit Agreement dated as of May 18, 1992, each among
Western Company, the Agent therein named and the Banks signatory thereto.
"FDIC" means the Federal Deposit Insurance Corporation, and
any Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York
City time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.
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"Fee Letter" has the meaning specified in subsection 2.11(a).
"Financial Letter of Credit" has the meaning set forth in
subsection 3.02(a).
"Foreign Subsidiary" means, as of any date of determination, a
Subsidiary which is incorporated or organized under the laws of any
jurisdiction other than the District of Columbia or the United States of
America or any state thereof.
"Free Cash Flow" means, for any period, the excess, if any, of
(a) Consolidated EBITDA for such period, over (b) the sum of: (i) Consolidated
Interest Expense for such period, (ii) scheduled principal repayments, (iii)
any gain on sale which has been included in Net Proceeds which have been paid
as mandatory prepayments pursuant to subsection 2.08(b) of this Agreement to
the extent included in Consolidated EBITDA, (iv) consolidated capital
expenditures for such period, and (v) income taxes paid in cash by the Company
and its Consolidated Subsidiaries during such period.
"FRB" means the Board of Governors of the Federal Reserve
System, and any Governmental Authority succeeding to any of its principal
functions.
"Fronting Fees" has the meaning set forth in Section 3.07(b).
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of
the date of determination.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guaranty" means, collectively, the Parent Guaranty and the
Subsidiary Guaranties. "Parent Guaranty" means the Guaranty substantially in
the form of Exhibit "I" hereto executed by the Company, and "Subsidiary
Guaranties" means each of the Guaranties substantially in the form of Exhibit
"J" hereto executed by each of the Subsidiary Guarantors, each in favor of the
Agent and the Banks, as they may be amended, supplemented or otherwise modified
from time to time.
"Honor Date" has the meaning specified in subsection 3.03(b).
"Indebtedness" of any Person means, without duplication, (a)
all indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of business on ordinary
terms); (c) all non-contingent reimbursement or payment obligations with
respect to Surety Instruments; (d) all obligations evidenced by notes, bonds,
debentures or similar
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instruments, including obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses; (e) all indebtedness created or
arising under any conditional sale or other title retention agreement, or
incurred as financing, in either case with respect to property acquired by the
Person (even though the rights and remedies of the seller or bank under such
agreement in the event of default are limited to repossession or sale of such
property); (f) all obligations with respect to Capital Leases; (g) all
indebtedness referred to in clauses (a) through (f) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including accounts
and contracts rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness; provided,
however, that Indebtedness shall not include obligations for borrowed money
owed to the Company or to any Consolidated Subsidiary by any Consolidated
Subsidiary or by the Company.
"Indemnified Liabilities" has the meaning specified in Section
11.06.
"Indemnified Person" has the meaning specified in Section
11.06.
"Insolvency Proceeding" means (a) any case, action or
proceeding relating to bankruptcy, reorganization, insolvency, liquidation,
receivership, dissolution, winding-up or relief of debtors, or (b) any general
assignment for the benefit of creditors, composition, marshalling of assets for
creditors, or other, similar arrangement in respect of its creditors generally
or any substantial portion of its creditors, undertaken under U.S. Federal,
state or foreign law, including the Bankruptcy Code.
"Intercompany Subordination Agreement" means an Intercompany
Subordination Agreement substantially in the form of Exhibit "M" hereto.
"Interest Coverage Ratio" means, for any period, the ratio of
Consolidated EBIT to Consolidated Interest Expense.
"Interest Payment Date" means, as to any Loan other than a
Base Rate Loan, the last day of each Interest Period applicable to such Loan
and, as to any Base Rate Loan, the last Business Day of each calendar quarter
and each date such Loan is converted into another Interest Rate Type of Loan,
provided, however, that if any Interest Period for a LIBOR Offshore Rate Loan
exceeds three months, the date that falls three months after the beginning of
such Interest Period, and the date that falls three months after each Interest
Payment Date thereafter, is also an Interest Payment Date.
"Interest Period" means, as to any LIBOR Offshore Rate Loan,
the period commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or continued
as a LIBOR Offshore Rate Loan, and ending on the date one, two, three or six
months thereafter as selected by the Borrower in its Notice of Borrowing or
Notice of Conversion/Continuation;
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provided that:
(i) if any Interest Period would
otherwise end on a day that is not a Business Day, that Interest
Period shall be extended to the following Business Day unless, in the
case of a LIBOR Offshore Rate Loan, 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 preceding Business Day;
(ii) any Interest Period pertaining to a
LIBOR Offshore Rate Loan that begins on the last Business Day of a
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 the calendar month at
the end of such Interest Period;
(iii) no Interest Period for any Term Loan
shall extend beyond the Term Loan Maturity Date and no Interest Period
for any Revolving Loan shall extend beyond the Revolving Termination
Date; and
(iv) if any Interest Period for any Loan
would otherwise end beyond a scheduled principal payment date, then
(a) the Interest Period for the principal amount of Loans (if any)
that are required to be repaid on such principal payment date shall
end on such date and (b) the remainder (if any) of such Loans shall
have an Interest Period as set forth above.
"Interest Rate Type" means, with reference to Loans, a Base
Rate Loan or a LIBOR Offshore Rate Loan.
"Interim Adverse Action" is any action which Western is not
permitted to take without the Company's consent pursuant to the Merger
Agreement if the taking of such action would have resulted in a Default or
Event of Default under this Agreement if this Agreement were in effect at the
time such action is taken and Western were a Subsidiary of the Company at the
time such action is taken.
"Investment" has the meaning specified in Section 8.04.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Issuance Date" has the meaning specified in subsection
3.01(a).
"Issue" means, with respect to any Letter of Credit, to issue
or to extend the expiry of, or to renew or increase the amount of, such Letter
of Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding
meanings.
"Issuing Bank" means Bank of America Illinois in its capacity
as issuer of one or more Letters of Credit hereunder, together with any
successor letter of credit issuer pursuant to Section 11.09 and any replacement
letter of credit issuer.
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"Joint Venture" means a single-purpose corporation,
partnership, joint venture or other similar legal arrangement (whether created
by contract or conducted through a separate legal entity) now or hereafter
formed by the Company or any of its Subsidiaries with another Person in order
to conduct a common venture or enterprise with such Person, which is not to be
accounted for on a consolidated basis with the Company in accordance with GAAP.
"Lending Office" means, as to any Bank, the office or offices
of such Bank specified as its "Lending Office" or "Domestic Lending Office" or
"Offshore Lending Office", as the case may be, on Schedule 11.03, or such other
office or offices as such Bank may from time to time notify the Company and the
Agent.
"Letter of Credit" means any Financial Letter of Credit and
any Performance Letter of Credit Issued by the Issuing Bank pursuant to Article
III.
"Letter of Credit Advance" means each Bank's participation in
any Letter of Credit Borrowing in accordance with its Pro Rata Share.
"Letter of Credit Application" and "Letter of Credit Amendment
Application" means an application form for Issuance of, and for amendment of,
Letters of Credit as shall at any time be in use at the Issuing Bank, as the
Issuing Bank shall request.
"Letter of Credit Borrowing" means an extension of credit
resulting from a drawing under any Letter of Credit which shall not have been
reimbursed on the date when made in accordance with subsection 3.03(b) nor
converted into a Borrowing of Revolving Loans under subsection 3.03(c).
"Letter of Credit Commitment" means the commitment of the
Issuing Bank to Issue, and the commitment of the Banks severally to participate
in, Letters of Credit from time to time Issued or outstanding under Article
III, in an aggregate amount not to exceed on any date the amount of
$20,000,000; provided that the Letter of Credit Commitment is a part of the
combined Revolving Commitments, rather than a separate, independent commitment.
"Letter of Credit Obligations" means at any time the sum of
(a) the aggregate undrawn amount of all Letters of Credit then outstanding,
plus (b) the amount of all unreimbursed drawings under all Letters of Credit,
including all outstanding Letter of Credit Borrowings.
"Letter of Credit-Related Documents" means the Letters of
Credit, the Letter of Credit Applications, the Letter of Credit Amendment
Applications and any other document relating to any Letter of Credit, including
any of the Issuing Bank's standard form documents for letter of credit
issuances.
"LIBOR Offshore Rate" means, for any Interest Period, with
respect to LIBOR Offshore Rate Loans comprising part of the same Borrowing, the
rate of interest per annum (rounded upward to the next 1/16th of 1%) determined
by the Agent as follows:
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LIBOR Offshore Rate = LIBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any
Interest Period the maximum reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1%) in effect
on such day (whether or not applicable to any Bank) under
regulations issued from time to time by the FRB for
determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement)
with respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities"); and
"LIBOR" means the rate of interest per annum
determined by the Agent to be the arithmetic mean (rounded
upward to the next 1/16th of 1%) of the rate of interest per
annum notified to the Agent by the Reference Bank as the rate
of interest at which dollar deposits in the approximate amount
of the amount of the Loan to be made or continued as, or
converted into, a LIBOR Offshore Rate Loan by Bank of America
Illinois and having a maturity comparable to such Interest
Period would be offered to major banks in the London interbank
market at their request at approximately 11:00 a.m. (London
time) two Business Days prior to the commencement of such
Interest Period.
The LIBOR Offshore Rate shall be adjusted
automatically as to all LIBOR Offshore Rate Loans then
outstanding as of the effective date of any change in the
Eurodollar Reserve Percentage.
"LIBOR Offshore Rate Loan" means a Loan that bears interest
based on the LIBOR Offshore Rate.
"Lien" means any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance,
lien (statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising
under or evidenced by any conditional sale or other title retention agreement,
the interest of a lessor under a Capital Lease, or the filing of any financing
statement naming the owner of the asset to which such lien relates as debtor,
under the Uniform Commercial Code or any comparable law) and any contingent or
other agreement to provide any of the foregoing, but not in any event including
the interest of a lessor under an Operating Lease.
"Loan" means a Credit Extension by a Bank to the Borrowers
under Article II or Article III in the form of a Revolving Loan, Swing Loan,
Term Loan or Letter of Credit Advance.
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"Loan Documents" means this Agreement, the Notes, the
Guaranties, the Fee Letter, the Letter of Credit-Related Documents, and all
other documents executed by the Company or any Subsidiary with or in favor of
the Agent or any Bank in connection herewith.
"Majority Banks" means at any time Banks then holding at least
66-2/3% of the then aggregate unpaid principal amount of the Loans and the
Letter of Credit Obligations, or, if no such principal amount is then
outstanding, Banks then having at least 66-2/3% of the Commitments.
"Mandatory Prepayment Date" has the meaning set forth in
subsection 2.09(b) of this Agreement.
"Margin Stock" means "margin stock" as such term is defined in
Regulation U or X of the FRB.
"Material Adverse Credit Agreement Effect" means (a) a
material impairment of the ability of the Company or any Subsidiary to perform
its obligations under any Loan Document to which it is a party or (b) a
material adverse effect upon the legality, validity, binding effect or
enforceability in any material respect against the Company or any Subsidiary of
any Loan Document, in either case which occurs after the Execution Date.
"Material Adverse Effect" means a material adverse change in,
or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries taken as a whole (including Western Company and its Subsidiaries).
"Material Subsidiary" means (i) any Foreign Subsidiary with
assets having a book value of $750,000 or more and (ii) any Domestic
Subsidiary.
"Merger" means the merger of Western Company into the Company,
pursuant to the terms, provisions and conditions set forth in the Merger
Agreement.
"Merger Agreement" means that certain Agreement and Plan of
Merger, dated as of November 17, 1994, among the Company, WCNA Acquisition
Corp. and Western Company, as amended by First Amendment to Merger Agreement
dated March 7, 1995, as may be further amended with the approval of the Banks,
which approval the Banks hereby agree they shall not unreasonably withhold.
"Merger Effective Time" means the time and the date the Merger
becomes effective pursuant to Delaware law.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan", within the
meaning of Section 4001(a)(3) of ERISA, to which the Company or any ERISA
Affiliate makes, is making, or is obligated to make contributions or, during
the preceding three calendar years, has made, or been obligated to make,
contributions.
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"Net Proceeds" means, as to any Disposition by a Person,
proceeds as and when received by such Person, net of: (a) the direct costs
relating to such Disposition excluding amounts payable to such Person or any
Affiliate of such Person, (b) sales, use or other transaction taxes paid or
payable by such Person as a direct result thereof, and (c) amounts required to
be applied to repay principal, interest and prepayment premiums and penalties
on purchase money Indebtedness secured by a Lien on the asset which is the
subject of such Disposition.
"Note" means a Revolving Note, a Swing Loan Note or a Term
Note and "Notes" means the Revolving Notes, the Swing Loan Notes and the Term
Notes.
"Notice of Borrowing" means a notice in substantially the form
of Exhibit "A".
"Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit "B".
"Obligations" means all advances, debts, liabilities,
obligations, covenants and duties arising under any Loan Document owing by any
Borrower to any Bank, the Agent, or any Indemnified Person, whether direct or
indirect (including those acquired by assignment), absolute or contingent, due
or to become due, now existing or hereafter arising.
"Operating Lease" means an operating lease determined in
accordance with GAAP.
"Organization Documents" means, for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate of
determination or instrument relating to the rights of preferred shareholders of
such corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation.
"Other Debt Documents" means the BJ Notes, the BJ Note
Agreement, the Western Notes, the Western Note Agreement, the Western
Subordinated Debentures, and the Western Indenture, and all other documents
executed in connection therewith.
"Other Taxes" means any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan
Documents.
"Participant" has the meaning specified in subsection 11.09(e).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under
ERISA.
"Pension Plan" means a pension plan (as defined in Section
3(2) of ERISA) subject to Title IV of ERISA, other than a Multiemployer Plan,
which any Borrower or any Subsidiary of a Borrower sponsors, maintains, or to
which it makes, is making, or is obligated to make contributions, or in the
case of a multiple employer plan (as described in Section 4064(a) of ERISA) has
made contributions at any time during the immediately preceding five (5) plan
years.
"Performance Letter of Credit" has the meaning set forth in
subsection 3.02(a).
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"Permitted Business" has the meaning set forth in Section 8.09.
"Permitted Liens" has the meaning set forth in Section 8.01.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which is subject to ERISA, other than a Multiemployer Plan, and
which any Borrower or any Subsidiary of a Borrower sponsors or maintains or to
which any Borrower or any Subsidiary of a Borrower makes, is making, or is
obligated to make contributions and includes any Pension Plan.
"Pro Rata Share" means, as to any Bank at any time, the
percentage equivalent (expressed as a decimal, rounded to the ninth decimal
place) at such time of such Bank's Commitment divided by the combined
Commitments of all Banks.
"Proposed Amendment Due Date" has the meaning set forth in
Section 11.01 of this Agreement.
"Proxy/Prospectus Documents" means the Proxy Statement and the
Prospectus filed by the Company and/or Western Company in connection with the
Merger and all amendments and exhibits thereto and related documents filed with
the SEC or distributed to the stockholders of the Company or Western Company,
in each case to the extent delivered to the Banks prior to the Execution Date.
"Redeemable Preferred Stock" means preferred stock that has,
or is convertible into any security that has, mandatory redemption or
repurchase requirements (other than those exercisable solely at the option of
the issuer of said stock) on or prior to the later of (x) the Term Loan
Maturity Date or (y) the Revolving Termination Date.
"Reference Bank" means Bank of America National Trust and
Savings Association.
"Refinancing" means any renewal, extension, renewal and
extension, rearrangement, replacement or substitution, modification or other
amendment to or of any existing obligation involving the payment of money;
provided that the principal amount secured thereby is not greater than the
principal amount outstanding at the time of such Refinancing.
"Regulation U" and "Regulation X" mean Regulation U and
Regulation X, respectively, of the Board of Governors of the Federal Reserve
System from time to time in effect and shall include any successor or other
regulations or official interpretations of said Board of Governors relating to
the subject matter addressed therein.
"Related Agreements" means the Merger Agreement, all other
agreements executed by the Company or any of its Subsidiaries in connection
with the Merger Agreement, all consents and waivers granted by any party to the
Merger Agreement to another party thereto, and any notice of breach under the
Merger Agreement given by a party thereto to another party thereto.
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"Reportable Event" means, any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"Required Prepayment Amount" has the meaning set forth in
subsection 2.09(b) of this Agreement.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or
binding upon the Person or any of its property or to which the Person or any of
its property is subject.
"Responsible Officer" means the chief financial officer or the
treasurer of the Company, or any other officer having substantially the same
authority and responsibility.
"Restricted Fiscal Quarter" means each fiscal quarter of the
Company and its Consolidated Subsidiaries next following a fiscal quarter
ending date as of which the Capitalization Ratio, determined as of such fiscal
quarter ending date, is greater than 35%. For example, if the Capitalization
Ratio for the fiscal quarter ending June 30, 1995 (determined as of the end of
such fiscal quarter) were 36%, the fiscal quarter period beginning on July 1,
1995 and ending on September 30, 1995 would be a Restricted Fiscal Quarter.
"Restricted Payment" means, as to any Person, any dividend or
other distribution of assets, properties, cash, rights, obligations or
securities made by such Person or any Subsidiary of such Person on account of
shares of such Person's capital stock, or any partnership interest or similar
ownership interest in such Person, or any purchase, retirement, redemption or
other acquisition made by such Person or any Subsidiary of such Person of any
such capital stock, partnership interest or similar ownership interest or
warrants, rights or options evidencing a right to acquire such shares or
interests; provided, however, that neither dividends on preferred stock nor
redemptions of Redeemable Preferred Stock shall constitute Restricted Payments.
"Revolving Commitments" means the commitments of the Banks to
make Loans pursuant to subsection 2.01(b) in a maximum aggregate amount not to
exceed $175,000,000, as may be reduced pursuant to Section 2.06 of this
Agreement.
"Revolving Loan" has the meaning specified in subsection
2.01(b) of this Agreement.
"Revolving Note" means a promissory note in substantially the
form of Exhibit "F" hereto, duly executed and delivered to the Agent by a
Borrower and payable to the order of a Bank in the amount of its Revolving
Commitment, including any amendment, modification, renewal or replacement of
such promissory note.
"Revolving Termination Date" means the earlier to occur of:
(a) five years from the Execution Date; and (b) the date on which the Revolving
Commitments terminate in accordance with the provisions of this Agreement.
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"Risk Participation Fee-Financial Letter of Credit" and "Risk
Participation Fee-Performance Letter of Credit" mean the fees payable pursuant
to Section 3.07 of this Agreement, calculated as set forth in Section 2.02 of
this Agreement, and "Risk Participation Fees" means both such fees.
"S&P" means Standard & Poor's Corporation.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"Solvent" means, as to any Person at any time, that (a) the
fair value of all of the property of such Person is greater than the amount of
such Person's liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated for
purposes of Section 101(32) of the Bankruptcy Code; (b) the present fair
saleable value of all of the property of such Person is not less than the
amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured; (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature; and (d) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person's property would constitute
unreasonably small capital.
"Stock/Cash Consideration" means any one or more of the
following or a combination of any one or more of the following: Stock
Consideration (and cash in lieu of fractional shares of BJ Common Stock and
associated BJ Purchase Rights), Cash Consideration and Warrant Consideration,
in each case as defined in the Merger Agreement.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than 50% of
the voting stock or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the Person, or
one or more of the Subsidiaries of the Person, or a combination thereof.
Unless the context otherwise clearly requires, references herein to a
"Subsidiary" refer to a Subsidiary of the Company. As of the Closing Date,
"Subsidiaries" of the Company include Western Company and its Subsidiaries.
"Subsidiaries" of the Company shall include all Consolidated Subsidiaries.
"Subsidiary Borrower" means each Subsidiary which has executed
and delivered this Agreement (including by means of execution and delivery of a
Subsidiary Borrower Counterpart) and has satisfied the requirements of Section
5.03 of this Agreement, and its permitted successors and assigns.
"Subsidiary Borrower Counterpart" means a counterpart in
substantially the form of Exhibit "K" hereto.
"Subsidiary Guarantors" means the Subsidiary Borrowers,
Western Petroleum Services International Company, a Delaware corporation, and
any other Subsidiaries who execute a Guaranty in favor of the Agent and the
Banks, and "Subsidiary Guarantor" means a single such Subsidiary Guarantor.
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"Surety Instruments" means all letters of credit (including
standby), banker's acceptances, bank guaranties, shipside bonds, surety bonds
and similar instruments.
"Swap Contract" means any agreement (including any master
agreement and any agreement, whether or not in writing, relating to any single
transaction) that is an interest rate swap agreement, basis swap, forward rate
agreement, commodity swap, commodity option, equity or equity index swap or
option, bond option, interest rate option, forward foreign exchange agreement,
rate cap, collar or floor agreement, currency swap agreement, cross-currency
rate swap agreement, swaption, currency option or any other, similar agreement
(including any option to enter into any of the foregoing).
"Swing Loan" has the meaning set forth in Section 2.01(c).
"Swing Loan Bank" means Bank of America Illinois, its
successors and assigns.
"Swing Loan Commitment" means the commitment of the Swing Loan
Bank to make loans from time to time pursuant to subsection 2.01(c) in an
aggregate amount not to exceed on any date the amount of $20,000,000 (in
minimum increments of $1,000,000), as the same shall be reduced as a result of
a reduction in the Swing Loan Commitment pursuant to Section 2.06; provided
that the Swing Loan Commitment is a part of the combined Revolving Commitments,
rather than a separate, independent commitment.
"Swing Loan Note" means a promissory note in substantially the
form of Exhibit "H" hereto, duly executed and delivered to the Agent by a
Borrower and payable to the order of the Swing Loan Bank in the amount of its
Swing Loan Commitment, including any amendment, modification, renewal or
replacement of such promissory note.
"Swing Loan Participation Certificate" means a Participation
Certificate substantially in the form of Exhibit "L".
"Taxes" means any and all present or future taxes, levies,
imposts, deductions, charges or withholdings which arise from or are assessed
in connection with any payment made hereunder or under any Note or the
execution, delivery, or registration of, or otherwise with respect to, this
Agreement or any other Loan Documents, and all liabilities with respect
thereto, excluding, in the case of each Bank and the Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured by
each Bank's net income and/or assets by the jurisdiction (or any political
subdivision thereof) under the laws of which such Bank or the Agent, as the
case may be, is organized or maintains a lending office.
"Term Commitments" means the commitments of the Banks to make
Loans pursuant to Section 2.01(a) in a maximum aggregate amount not to exceed
$265,000,000, subject to reduction pursuant to Sections 2.06 and 2.09 of this
Agreement.
"Term Loan Availability Period" means the period from the
Closing Date through the earlier of (a) June 29, 1996 or (b) the date which is
365 days after the Closing Date.
"Term Loan Borrower" means the Company.
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"Term Loan Maturity Date" means March 31, 2001.
"Term Loans" has the meaning specified in subsection 2.01(a).
Term Loans includes Term Loans made on the Closing Date and other Term Loans
made during the remainder of the Term Loan Availability Period.
"Term Note" means a promissory note in substantially the form
of Exhibit "G" hereto, duly executed and delivered to the Agent by the Term
Loan Borrower and payable to the order of a Bank in the amount of its Term
Commitment, including any amendment, modification, renewal or replacement of
such promissory note.
"Unfunded Pension Liability" means the excess of the actuarial
present value of a Pension Plan's benefit liabilities, determined in the manner
provided in Section 4041 of ERISA, over the current value of that Pension
Plan's assets as reported in Schedule B to the Form 5500 for that Pension Plan.
"Western Company" and "Western" mean The Western Company of
North America, a Delaware corporation.
"Western Indenture" means the Indenture dated as of January
15, 1990 between Western Company as Issuer and Harris Trust and Savings Bank as
Trustee relating to the 7-1/4% Convertible Subordinated Debentures issued by
Western Company, as amended by Supplemental Indenture dated April 13, 1995.
"Western Note Agreement" means the Indenture dated as of
November 15, 1992 between Western Company and United States Trust Company of
New York as Trustee, as amended by First Amendment dated March 2, 1994, and as
amended by Supplemental Indenture dated April 13, 1995.
"Western Notes" means the 12-7/8% Senior Notes due 2002 issued
by Western pursuant to the Western Note Agreement.
"Western Subordinated Debentures" means the 7-1/4% Convertible
Subordinated Debentures due January 15, 2015 issued by Western Company pursuant
to the Western Indenture.
"Wholly-Owned Subsidiary" means any corporation in which
(other than directors' qualifying shares required by law) 100% of the capital
stock of each class having ordinary voting power, and 100% of the capital stock
of every other class, in each case, at the time as of which any determination
is being made, is owned, beneficially and of record, by the Company, or by one
or more of the other Wholly-Owned Subsidiaries, or both.
1.02 Other Interpretive Provisions. The meanings of defined terms
are equally applicable to the singular and plural forms of the defined terms.
Unless otherwise specified or the context clearly requires otherwise, the words
"hereof", "herein", "hereunder" and similar words refer to this Agreement as a
whole and not to any particular provision of this Agreement; and subsection,
Section, Schedule and Exhibit references are to this Agreement. The term
"documents" includes any and all instruments, documents, agreements,
certificates, indentures, notices and other writings, however evidenced. The
term "including" is not limiting and means
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"including without limitation." In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but excluding", and the
word "through" means "to and including." Unless otherwise expressly provided
herein, (i) references to agreements (including this Agreement) and other
contractual instruments shall be deemed to include all subsequent amendments
and other modifications thereto, and (ii) references to any statute or
regulation are to be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting
the statute or regulation. The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement. This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters.
All such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms. This Agreement and the other Loan
Documents are the result of negotiations among and have been reviewed by
counsel to the Agent, each Borrower and the other parties, and are the products
of all parties. Accordingly, they shall not be construed against the Banks or
the Agent merely because of the Agent's or Banks' involvement in their
preparation.
1.03 Accounting Principles. Unless the context otherwise clearly
requires, all accounting terms not expressly defined herein shall be construed,
and all financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied. References herein to "fiscal year"
and "fiscal quarter" refer to such fiscal periods of the Company. References
to "consolidated", when it precedes any accounting term, means such term as it
would apply to the Company and its Consolidated Subsidiaries on a consolidated
basis, determined in accordance with GAAP.
ARTICLE II
THE CREDITS AND CERTAIN PRICING TERMS
2.01 Amounts and Terms of Commitments.
(a) The Term Credit. Each Bank severally agrees, on the
terms and conditions set forth herein, to make loans to the Term Loan Borrower
(each such loan, a "Term Loan") during the Term Loan Availability Period in an
aggregate amount not to exceed such Bank's Pro Rata Share of the Term
Commitments as set forth on Schedule 2.01. (i) Term Loans in a maximum
aggregate amount of $225,000,000 may be made from time to time on any Business
Day during the period from the Closing Date through April 28, 1995. (ii) In
addition, Debenture-Related Term Loans may be made to the Term Loan Borrower on
or after the Closing Date and during the Term Loan Availability Period in an
aggregate amount not to exceed $40,000,000 (less a dollar amount equal to the
excess, if any, of (x) the dollar amount of any reduction of the Term
Commitments pursuant to Section 2.06 or 2.09 over (y) the aggregate principal
amount of Term Loans made during the period from the Closing Date through April
28, 1995). Amounts borrowed as Term Loans which are repaid or prepaid by the
Term Loan Borrower may not be reborrowed.
(b) The Revolving Credit. Each Bank severally agrees, on
the terms and conditions set forth herein, to make loans to the Borrowers (each
such loan, a "Revolving Loan")
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from time to time on any Business Day during the period from the Closing Date
to the Revolving Termination Date, in an aggregate amount not to exceed at any
time outstanding, such Bank's Pro Rata Share of the Revolving Commitments as
set forth on Schedule 2.01 (such Bank's Pro Rata Share of the Revolving
Commitment, together with such Bank's Pro Rata Share of the Term Commitments,
as the same may be reduced under Section 2.06 or as a result of one or more
assignments under Section 11.09, such Bank's "Commitment"); provided, however,
that, after giving effect to any Borrowing of Revolving Loans, the Effective
Amount of all outstanding Revolving Loans and all outstanding Swing Loans,
together with all Term Loans outstanding at such time and the Effective Amount
of all Letter of Credit Obligations, shall not at any time exceed the combined
Commitments; and provided further, that the (i) Effective Amount of any Bank's
Revolving Loans plus, (ii) the aggregate principal amount of such Bank's
participation in Swing Loans, plus (iii) if such Bank is the Swing Loan Bank,
the principal amount of Swing Loans in which other Banks have not participated,
plus (iv) the participation of such Bank in the Effective Amount of all Letter
of Credit Obligations, shall not at any time exceed such Bank's Revolving
Commitment. Within the limits of each Bank's Commitment, and subject to the
other terms and conditions hereof, the Company may borrow Revolving Loans under
this subsection 2.01(b), prepay Revolving Loans under Section 2.07 and reborrow
Revolving Loans under this subsection 2.01(b).
(c) Swing Loan Commitment. Subject to the terms and
conditions of this Agreement, the Swing Loan Bank agrees to make one or more
loans to the Borrowers (each such loan, a "Swing Loan") from time to time on
any Business Day during the period from the Closing Date to the Revolving
Termination Date, in an aggregate amount not to exceed the Swing Loan
Commitment; provided, however, that, after giving effect to any Borrowing of
Swing Loans, the Effective Amount of all outstanding Revolving Loans and all
outstanding Swing Loans, together with all Term Loans outstanding at such time
and the Effective Amount of all Letter of Credit Obligations, shall not at any
time exceed the combined Commitments; and provided further, that the (i)
Effective Amount of all outstanding Revolving Loans plus, (ii) the Effective
Amount of all outstanding Swing Loans, plus (iii) the Effective Amount of all
Letter of Credit Obligations, shall not at any time exceed the combined
Revolving Commitments. Within the limits of the Swing Loan Bank's Swing Loan
Commitment, and subject to the other terms and conditions hereof, the Company
may borrow Swing Loans under this subsection 2.01(c), prepay Swing Loans under
Section 2.07 and reborrow Swing Loans under this subsection 2.01(c).
2.02 Certain Pricing Terms.
(a) Pricing Based on Capitalization Ratio. The
Applicable Margin, the Risk Participation Fees, and the Commitment Fee shall be
equal to the specified percent per annum set forth below, in each case based
upon the Capitalization Ratio as measured at the end of the preceding fiscal
quarter of the Company.
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<PAGE> 28
PRICING CHART
<TABLE>
<CAPTION>
CR CR CR
greater greater greater
than than than
or equal or equal or equal CR
CR to 35% to 40% to 45% greater
less less less less than
than than than than or equal
35% 40% 45% 50% to 50%
------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Applicable Margin (LIBOR) .450% .500% .625% .750% .875%
Applicable Margin (Base Rate) 0 0 0 0 0
Risk Participation Fee- .350% .40% .525% .650% .775%
Financial Letter of Credit
Risk Participation Fee- .225% .250% .3125% .375% .4375%
Performance Letter of Credit
Commitment Fee .175% .200% .225% .250% .275%
</TABLE>
DEFINITION: "CR" is the abbreviation for Capitalization Ratio.
(b) Procedure for Adjustments. During the period from
the Execution Date through the last day of the fiscal quarter in which the
Closing Date occurs, for purposes of the pricing chart set forth above, the
Capitalization Ratio shall be assumed for interim calculation purposes to be
the amount set forth in the Closing Date Pricing Certificate. Thereafter, the
Applicable Margin, the Risk Participation Fees and the Commitment Fee shall be
calculated in reliance on the financial reports and Compliance Certificate
delivered pursuant to Sections 7.01 and 7.02 hereof with respect to the fiscal
quarter ending immediately before the fiscal quarter in question (e.g., the
financial statements for the first fiscal quarter of a fiscal year are used to
determine the Applicable Margin, Risk Participation Fees and Commitment Fee for
the second fiscal quarter). Because such financial statements are not required
to be delivered until 45 days (or 90 days in the case of annual reports) after
the end of a fiscal quarter, the Applicable Margin, Risk Participation Fees and
Commitment Fee for each fiscal quarter shall be assumed for interim calculation
and collection purposes, until delivery of such financial reports and
Compliance Certificate, to be the same as for the immediately preceding fiscal
quarter. The Applicable Margin, Risk Participation Fees and Commitment Fee
shall be adjusted automatically in accordance with the provisions of subsection
2.02(c) and shall apply to all Loans then outstanding (without regard to the
timing of Interest Periods) and as to all Letters of Credit then outstanding,
as of the effective date of any change in the Applicable Margin, Risk
Participation Fees and Commitment Fee.
(c) Quarterly Adjustments.
(i) If the financial reports delivered pursuant
to Section 7.01, and the certificate delivered pursuant to subsection 7.02(a)
when delivered with respect to any fiscal quarter indicate that the Applicable
Margin, Risk Participation Fee or Commitment Fee for any such period should
have been higher than the Applicable Margin, Risk Participation Fee or
Commitment Fee assumed for such period pursuant to Section 2.02(b) above, and
the interest or fee that would have been collected hereunder based upon the
actual Applicable Margin, Risk
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<PAGE> 29
Participation Fee or Commitment Fee exceeds the interest or fee actually
collected hereunder, then the Company shall pay an amount equal to such excess
Commitment Fee, and the applicable Borrower shall pay an amount equal to such
excess Risk Participation Fee and Applicable Margin. The Agent will provide a
statement to the Company of such amounts due within five (5) Business Days of
the Agent's receipt of such financial reports and certificate, and the Company
(and, if applicable, the other Borrower(s)) shall pay such amounts within three
(3) Business Days of receipt of such statement; provided that the failure of
the Agent to provide any such statement shall not limit or otherwise affect the
Company's or any other Borrower's obligations hereunder or under any Note.
(ii) If (A) the financial reports delivered
pursuant to Section 7.01 and the certificate delivered pursuant to subsection
7.02(a) when delivered with respect to any fiscal quarter indicate that the
Applicable Margin, Risk Participation Fee or Commitment Fee for any such period
should have been lower than the Applicable Margin, Risk Participation Fee or
Commitment Fee assumed for such period pursuant to the definitions of such
terms, and (B) the interest or fee actually collected hereunder exceeds the
interest or fee that would have been collected hereunder based upon the actual
Applicable Margin, Risk Participation Fee or Commitment Fee, then the Agent
shall credit such excess to interest and fees owing hereunder during the
calendar quarter when such financial reports and certificate were received. If
all such excess is not credited by the end of such calendar quarter, then the
Agent shall credit such excess to interest and fees owing hereunder during the
next succeeding calendar quarter or if the Company so requests, each Bank,
severally, if no Default or Event of Default exists, shall refund to the Agent
for distribution to the Company the amount of such excess actually received and
retained by such Bank.
(d) Senior Debt Rating. Notwithstanding the foregoing,
in the event senior debt issued by the Company is at any time rated BBB or
higher by S&P and Baa2 or higher by Moody's, the Applicable Margin, the Risk
Participation Fees and the Commitment Fee shall be determined as if the
Capitalization Ratio were ( 35%. The Company agrees to notify the Agent and
the Banks if any senior debt issued by the Company is rated BBB or higher by
S&P and Baa2 or higher by Moody's; and thereafter, the Company shall notify the
Agent and the Banks immediately if the S&P or the Moody's rating on such senior
debt is lowered below such level. Each such notice of changed senior debt
rating shall specify the new rating and the effective date thereof, and shall
be accompanied by a copy of the announcement issued by S&P or by Moody's, as
applicable. Each adjustment of the Applicable Margin, the Risk Participation
Fees and the Commitment Fee pursuant to this subsection 2.02(d) shall be made
by the Agent and shall be effective as to all outstanding Loans then
outstanding (without regard to the timing of Interest Periods) as of the date
the changed rating is effective (the "Effective Date"). The Agent shall not be
deemed to have notice of any change in rating unless it receives notice from
the Company or a Bank of such rating, together with a copy of the announcement
from S&P or Moody's.
2.03 Procedure for Borrowing.
(a) Notice of Borrowing.
(i) Revolving Loans or Term Loan. Each Borrowing
of Revolving Loans or Term Loans, respectively, shall be made upon the
irrevocable written notice by any Borrower delivered to the Agent in the form
of a Notice of Borrowing, which notice must be
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<PAGE> 30
received by the Agent prior to (x) 9:00 a.m. (San Francisco time) three (3)
Business Days prior to the requested Borrowing Date, in the case of LIBOR
Offshore Rate Loans, and (y) 11:00 a.m. (San Francisco time) one (1) Business
Day prior to the requested Borrowing Date, in the case of Base Rate Loans,
specifying: (A) the name of the Borrower; (B) the amount of the Borrowing,
which shall be in an aggregate minimum amount of $5,000,000 or any multiple of
$1,000,000 in excess thereof; (C) the requested Borrowing Date, which shall be
a Business Day; (D) the Interest Rate Type of Loans comprising the Borrowing;
and (E) the duration of the Interest Period applicable to any LIBOR Offshore
Rate Loans included in such notice. If the Notice of Borrowing fails to
specify the duration of the Interest Period for any Borrowing comprised of
LIBOR Offshore Rate Loans, such Interest Period shall be three months.
(ii) Swing Loans. Each Borrowing of Swing Loans
shall be made upon the irrevocable written notice by any Borrower delivered to
the Agent (with a copy to the Swing Loan Bank) in the form of a Notice of
Borrowing, which notice must be received by the Agent and the Swing Loan Bank
at or prior to 12:00 Noon (San Francisco time) on the requested Borrowing Date,
specifying: (A) the name of the Borrower; (B) the amount of the Borrowing,
which shall be in an aggregate minimum amount of $1,000,000 or any multiple of
$1,000,000; and (C) the requested Borrowing Date, which shall be a Business
Day. All Swing Loans shall be Base Rate Loans.
(b) Funding Mechanics.
(i) Revolving Loans and Term Loans. (A) The
Agent will promptly notify each Bank of its receipt of any Notice of Borrowing
and of the amount of such Bank's Pro Rata Share of that Borrowing and (B) each
Bank will make the amount of its Pro Rata Share of each Borrowing available to
the Agent for the account of the applicable Borrower, at the Agent's Payment
Office by 11:00 a.m. (San Francisco time) on the Borrowing Date requested in
the Notice of Borrowing in funds immediately available to the Agent. The
proceeds of all such Loans will then be made available by the Agent to the
Borrower specified in the Notice of Borrowing by wire transfer in accordance
with written instructions provided to the Agent by the Borrower of like funds
as received by the Agent.
(ii) Swing Loans. The Swing Loan Bank will make
available to the applicable Borrower at its account at the Swing Loan Bank, on
or before close of business on the requested Borrowing Date, in immediately
available funds, the proceeds of the Swing Loans being made on such date.
(c) Interest Rate Periods. After giving effect to any
Borrowing, there may not be more than 10 different Interest Periods in effect.
2.04 Conversion and Continuation Elections.
(a) Any Borrower may, upon irrevocable written notice to
the Agent in accordance with subsection 2.04(b): (i) elect, as of any Business
Day, in the case of Base Rate Loans, or as of the last day of the applicable
Interest Period, in the case of LIBOR Offshore Rate Loans, to convert any such
Revolving Loans or Term Loans (or any part thereof in an amount not less than
$5,000,000, or that is in an integral multiple of $1,000,000 in excess thereof)
into Loans of the other Interest Rate Type; or (ii) elect as of the last day of
the applicable Interest
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<PAGE> 31
Period, to continue any Revolving Loans or Term Loans having Interest Periods
expiring on such day (or any part thereof in an amount not less than
$5,000,000, or that is in an integral multiple of $1,000,000 in excess
thereof); provided, that if at any time the aggregate amount of LIBOR Offshore
Rate Loans in respect of any Borrowing is reduced, by payment, prepayment, or
conversion of part thereof to be less than $1,000,000, such LIBOR Offshore Rate
Loans shall automatically convert into Base Rate Loans, and on and after such
date the right of the Borrowers to continue such Loans as, and convert such
Loans into, LIBOR Offshore Rate Loans, as the case may be, shall terminate.
(b) A Borrower shall deliver a Notice of
Conversion/Continuation to be received by the Agent not later than (i) 9:00
a.m. (San Francisco time) at least three (3) Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or
continued as LIBOR Offshore Rate Loans, and (ii) 11:00 a.m. (San Francisco
time) one (1) Business Day in advance of the Conversion/Continuation Date, if
the Loans are to be converted into Base Rate Loans, specifying: (A) the
proposed Conversion/Continuation Date; (B) the aggregate amount of Loans to be
converted or renewed; (C) the Interest Rate Type of Loans resulting from the
proposed conversion or continuation; and (D) in the case of LIBOR Offshore Rate
Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period
applicable to LIBOR Offshore Rate Loans, a Borrower has failed to select timely
a new Interest Period to be applicable to such LIBOR Offshore Rate Loans, as
the case may be, or if any Default or Event of Default then exists, such
Borrower shall be deemed to have elected to convert such LIBOR Offshore Rate
Loans into Base Rate Loans effective as of the expiration date of such Interest
Period.
(d) The Agent will promptly notify each Bank of its
receipt of a Notice of Conversion/Continuation, or, if no timely notice is
provided by any Borrower, the Agent will promptly notify each Bank of the
details of any automatic conversion. All conversions and continuations shall
be made ratably according to the respective outstanding principal amounts of
the Loans with respect to which the notice was given held by each Bank.
(e) Unless the Majority Banks otherwise agree, during the
existence of a Default or Event of Default, no Borrower may elect to have a
Loan converted into or continued as a LIBOR Offshore Rate Loan.
(f) After giving effect to any conversion or continuation
of Loans, there may not be more than 10 different Interest Periods in effect.
(g) No Swing Loans may be converted to LIBOR Offshore
Rate Loans.
2.05 Special Provisions for Swing Loans.
(a) Banks to Make Revolving Loans.
(i) The Swing Loan Bank, at any time in its
discretion, upon written request to the Banks through the Agent (with a copy to
the applicable Borrower), may require each Bank (including the Swing Loan Bank)
to make a Revolving Loan, subject to the provisions of subsection 2.01(b)
hereof, in an amount equal to such Bank's Pro Rata Share of the
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<PAGE> 32
outstanding Swing Loans. The Swing Loan Bank shall deliver such request to the
Agent prior to 12:00 noon (San Francisco time) on the Business Day next
preceding the date (which shall be a Business Day) on which such Revolving
Loans are to be made. Promptly upon receipt of any such request, the Agent
shall give notice thereof to the Banks. The Agent shall apply the proceeds of
such Revolving Loans to prepay the Swing Loans of the Swing Loan Bank;
provided, however, that the Agent shall be obligated to make the proceeds of
such Revolving Loans available only to the extent received by it from the
Banks. All Revolving Loans made pursuant to this subsection 2.05(a) shall be
Base Rate Loans.
(ii) In the event the Agent advances proceeds of
any Revolving Loan to the Swing Loan Bank and one or more of the Banks (other
than the Swing Loan Bank) fail to fund all or any portion of such Revolving
Loan immediately upon receipt of notice from the Agent, then (I) such Bank
shall pay directly to Agent the amount thereof together with interest thereon
(A) at the Federal Funds Rate, if payment is received by the Agent on or before
the third Business Day following the date when due, and (B) at the Default
Rate, if payment is received after such third Business Day, and (II) if not
paid by such Bank, the Swing Loan Bank will repay directly to the Agent such
amount as will equal the amount such other Bank(s) failed to fund, together
with interest at a rate equal to the weighted average of the rates on Federal
Funds transactions with members of the Federal Reserve System arranged by
Federal Funds brokers, as published by the Federal Reserve Bank of New York (in
Weekly Release 11.15) for the day on which such Bank shall fail to make such
payments, or, if such rate is not so published for any such day, the average of
the quotations for such day on such transactions received by the Agent from
three Federal Funds brokers of recognized standing selected by the Agent,
whereupon the Swing Loans will be reinstated pro rata.
(b) Participations in Swing Loans.
(i) If, at any time prior to the making of
Revolving Loans pursuant to subsection 2.05(a)(i) hereof, any Event of Default
described in subsections 9.01(g) or (h) hereof shall have occurred, each Bank,
on the date such Revolving Loan was to have been made or, if no request for
Revolving Loans had been made pursuant to subsection 2.05(a)(i) hereof,
promptly upon request by the Swing Loan Bank delivered to the Agent, shall
purchase an undivided participation interest in all outstanding Swing Loans in
an amount equal to its Pro Rata Share times the outstanding amount of such
Swing Loans. Each Bank (other than the Swing Loan Bank) will transfer
immediately to the Swing Loan Bank, in immediately available funds, the amount
of its participation and, upon receipt thereof, the Swing Loan Bank will
deliver to such other Bank a Swing Loan Participation Certificate, dated the
date of receipt of such funds and in the amount of such Bank's participation.
(ii) Whenever, at any time after the Swing Loan
Bank has received from any other Bank such other Bank's participating interest
in a Swing Loan, the Swing Loan Bank receives any payment on account thereof,
the Swing Loan Bank will distribute to such other Bank its participating
interest in such amount (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Bank's participating
interest was outstanding and funded); provided, however, that in the event that
any payment received by the Swing Loan Bank is required to be returned, such
other Bank will return to the Swing Loan Bank any portion thereof previously
distributed to it.
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<PAGE> 33
(c) Acknowledged Privity. The Company expressly agrees
that, in respect of each Bank's funded participation interest in any Swing
Loan, such Bank shall be deemed to be in privity of contract with the
applicable Borrower and have the same rights and remedies against the
applicable Borrower under the Loan Documents as if such funded participation
interest in such Swing Loan were a Revolving Loan.
(d) Unconditional Obligation. Each Bank's obligation to
make the Revolving Loans or to purchase participation interests in the Swing
Loans as provided in this Section 2.05 shall be absolute and unconditional and
shall not be affected by any circumstance, including without limitation, (A)
any set-off, counterclaim, recoupment, defense or other right which such Bank
may have against the Swing Loan Bank, any Borrower or any other Person for any
reason whatsoever, (B) the existence of any Default or Event of Default at any
time, (C) the occurrence of any event or existence of any condition that might
have a Material Adverse Effect or a Material Adverse Credit Agreement Effect,
or (D) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
2.06 Voluntary Termination or Reduction of Commitments; Certain
Other Terms Applicable to Termination or Reduction.
(a) The Borrowers may, upon not less than five Business
Days' prior notice to the Agent, terminate the Commitments, or permanently
reduce the Commitments by an aggregate minimum amount of $5,000,000 or any
multiple of $1,000,000 in excess thereof; unless, after giving effect thereto
and to any prepayments of Loans made on the effective date thereof, (i) the
Effective Amount of all Revolving Loans, Swing Loans, Term Loans and Letter of
Credit Obligations together would exceed the amount of the combined Commitments
then in effect, or (ii) the Effective Amount of all Revolving Loans, Swing
Loans and Letter of Credit Obligations together would exceed the amount of the
combined Revolving Commitments then in effect, or (iii) the Effective Amount of
all Swing Loans would exceed the Swing Loan Commitment, or (iv) the Effective
Amount of all Letter of Credit Obligations then outstanding would exceed the
Letter of Credit Commitment. Once reduced in accordance with this Section, the
Commitments may not be increased. If and to the extent specified by the
Borrowers in the notice to the Agent, some or all of the reduction in the
combined Commitments shall be applied to reduce the Swing Loan Commitment
and/or the Letter of Credit Commitment.
(b) Any reduction of the Commitments, whether voluntary
or mandatory, shall be applied to each Bank according to its Pro Rata Share.
All accrued Commitment, Risk Participation and Fronting Fees to, but not
including, the effective date of any reduction or termination of Commitments,
whether voluntary or mandatory, shall be paid on the effective date of such
reduction or termination.
(c) In the event of any optional prepayment of Term Loans
pursuant to Section 2.07 of this Agreement, the Term Commitments automatically
shall reduce by the amount of such prepayment.
2.07 Optional Prepayments. Each Borrower may, at any time or from
time to time, upon not less than three (3) Business Days' irrevocable notice to
the Agent for LIBOR Offshore Rate Loans, and upon not less than one (1)
Business Days' irrevocable notice to the Agent for Base Rate Loans, ratably
prepay such Loans in whole or in part, in minimum amounts of
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<PAGE> 34
$5,000,000 or any multiple of $1,000,000 in excess thereof. Such notice of
prepayment shall specify the date and amount of such prepayment and the
Interest Rate Type(s) of Loans to be prepaid. The Agent will promptly notify
each Bank of its receipt of any such notice, and of such Bank's Pro Rata Share
of such prepayment. If such notice is given by a Borrower, such Borrower shall
make such prepayment and the payment amount specified in such notice shall be
due and payable on the date specified therein for Base Rate Loans, or on the
last day of the relevant Interest Period for LIBOR Offshore Rate Loans,
together with accrued interest to each such date on the amount prepaid and, if
such payment is made with respect to a LIBOR Offshore Rate Loans at a time
other than the last day of an Interest Period, any amount required pursuant to
Section 4.04. Optional prepayments of Term Loans shall be applied to the
principal payments required pursuant to Section 2.10 in inverse order of their
maturity.
2.08 Mandatory Prepayments of Loans.
(a) General. If on any date the Effective Amount of all
Revolving Loans, Swing Loans and Term Loans then outstanding plus the Effective
Amount of all Letter of Credit Obligations exceeds the combined Commitments,
each Borrower shall immediately, and without notice or demand, prepay the
outstanding principal amount of the Revolving Loans, Swing Loans, Letter of
Credit Advances and Term Loans owed by it to the extent necessary to eliminate
such excess over the Commitments. If on any date the Effective Amount of all
Revolving Loans and Swing Loans plus the Effective Amount of all Letter of
Credit Obligations exceeds the Revolving Commitments, each Borrower shall
immediately, without notice or demand, prepay the outstanding principal amount
of the Revolving Loans, Swing Loans and Letter of Credit Advances to the extent
necessary to eliminate such excess over the Revolving Commitments. If on any
date the Effective Amount of the Term Loans exceeds the Term Commitments, the
Term Loan Borrower shall immediately, without notice or demand, prepay the
outstanding principal amount of the Term Loans to the extent necessary to
eliminate such excess over the Term Commitments.
(b) Asset Dispositions. If (i) the Company or any
Subsidiary shall make during any Restricted Fiscal Quarter a Disposition (other
than an "Excluded Disposition" as defined in this subsection 2.08(b)) of any
property or asset (including capital stock of any Subsidiary), and (ii) (a) the
Net Proceeds of such Disposition exceeds $1,000,000, or (b) on a cumulative
basis during any fiscal year the Net Proceeds from all such Dispositions by the
Company and its Subsidiaries of property or assets exceed $2,000,000, then (x)
the Company or the Subsidiary making the Disposition shall promptly notify the
Agent of such Disposition (including the amount of the Net Proceeds received or
to be received by the Company or such Subsidiary in respect thereof), and (y)
if such Net Proceeds are received by the Company or a Subsidiary after the
Closing Date, then promptly upon, and in no event later than one Business Day
after receipt by the Company or the Subsidiary of, the Net Proceeds of such
Disposition, the Term Loan Borrower shall prepay the Term Loans in an aggregate
amount equal to the amount of such Net Proceeds; provided, however, that in the
event the consideration received by the Company (or the applicable Subsidiary)
is in the form of a promissory note or other extension of credit by the Company
(or the applicable Subsidiary) to the purchaser of the assets, such prepayments
shall be made promptly upon, and in no event later than one Business Day after
the Company (or the applicable Subsidiary) receives a payment pursuant to such
note or other extension of credit. As used in this subsection 2.08(b), the
term "Excluded Disposition" means any Disposition of the type permitted by
subsections (a), (b), (c), (d) or (f) of Section 8.02.
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<PAGE> 35
(c) From Free Cash Flow. If the Capitalization Ratio of
the Company is greater than thirty-five percent (35%) as measured at the end of
any fiscal quarter during any fiscal year, then the Term Loan Borrower shall
prepay the outstanding principal amount of the Term Loans by an amount equal to
fifty percent (50%) of the Free Cash Flow for such fiscal year. Such mandatory
prepayments, if any, shall be due once each fiscal year at the time the Company
is required to deliver its annual financial statements pursuant to subsection
7.01(a) of this Agreement. The Compliance Certificate delivered by the Company
pursuant to subsection 7.02(a) of this Agreement together with such financial
statements shall set forth the computation of such mandatory prepayment.
(d) Issuance of Stock. If the Company issues capital
stock for cash proceeds after the Execution Date and the Capitalization Ratio,
as at the end of the preceding fiscal quarter, is greater than thirty-five
percent (35%), the Term Loan Borrower shall prepay the outstanding principal of
the Term Loans from the net cash proceeds of such issuance, to the extent
necessary to reduce the Capitalization Ratio, adjusted for such issuance of
capital stock, to thirty-five percent (35%). For purposes of the foregoing,
"net cash proceeds" shall mean the gross cash proceeds received by the Company
from such issuance less (i) the transaction costs, fees and expenses (including
reasonable attorney's fees) incurred in connection with the issuance, less (ii)
any proceeds thereof applied toward any Acquisition(s) made within six (6)
months prior to or after the date of such issuance and less (iii) the
transaction costs, fees and expenses (including reasonable attorney's fees)
incurred in connection with any such Acquisition(s). Such prepayment shall be
made on or before that date which is six (6) months after the date of such
issuance.
(e) General. Any prepayments pursuant to this Section
2.08 shall reduce pro rata the principal installments of the Term Loans due
from June 30, 1996 to the Term Loan Maturity Date. Such prepayments shall be
applied first to any Base Rate Loans then outstanding and then to LIBOR
Offshore Rate Loans with the shortest Interest Periods remaining. The Term
Loan Borrower shall pay, together with each prepayment under this Section 2.08,
accrued interest on the amount prepaid and any amounts required pursuant to
Section 4.04. The requirements set forth in Section 2.07 requiring advance
notice for optional prepayments, and requiring that optional prepayments be in
the minimum amounts therein set forth, shall not apply to mandatory prepayments
made pursuant to this Section 2.08.
2.09 Mandatory Termination and Reduction of Commitments.
(a) Termination. The commitments of the Banks herein
contained to make the Term Loans (other than the Debenture-Related Term Loans)
shall automatically terminate at 5:00 p.m. Houston, Texas time on April 28,
1995, and the commitments of the Banks herein contained to make
Debenture-Related Term Loans shall automatically terminate at 5:00 p.m. Houston
time on the last day of the Term Loan Availability Period. The Revolving
Commitments shall automatically terminate at 5:00 p.m. Houston, Texas time on
the Revolving Termination Date.
(b) Reduction of Commitment: Asset Dispositions, Etc.
Upon the occurrence of a date upon which a prepayment would be required
pursuant to Section 2.08 (a "Mandatory Prepayment Date"), the Term Commitments
shall automatically be reduced by an amount equal to the Required Prepayment
Amount (as defined in this Section 2.09(b)), effective as of the earlier of the
date that such prepayment is made or the date by which such prepayment is due
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<PAGE> 36
and payable hereunder. If a Mandatory Prepayment Date occurs at a time when no
Term Loans are outstanding, the Term Commitments shall nevertheless be reduced
by an amount equal to the Required Prepayment Amount. "Required Prepayment
Amount" means the amount of principal required to be prepaid (or, if no Term
Loans are outstanding, the amount of principal of Term Loans which would have
been subject to prepayment if Term Loans had been outstanding as of such date)
pursuant to subsection 2.08(b), subsection 2.08(c) or subsection 2.08(d).
(c) Reduction of Commitment: Last Day of Term Loan
Availability Period. Upon the termination of the Term Loan Availability
Period, the Term Commitments shall be reduced to an amount equal to the total
dollar amount of Term Loans disbursed during the Term Loan Availability Period
(less any reductions made in the Term Commitment pursuant to Section 2.06 and
subsection 2.09(b)).
2.10 Repayment.
(a) The Term Loan. The Term Loan Borrower shall repay
the principal of the Term Loans as follows: On March 31, 1996, the Term Loan
Borrower shall pay principal in the amount of $15,000,000 and thereafter the
Term Loan Borrower shall make principal payments on each date set forth below
(each, a "Principal Payment Date"), in an amount equal to the dollar amount set
forth below opposite such date. The schedule of payments set forth below is
based upon the assumption that the outstanding principal amount of Term Loans
on June 30, 1996 will be $250,000,000. In the event the outstanding principal
amount of Term Loans on June 30, 1996 is less than $250,000,000, the amount of
principal due on each Principal Payment Date will be equal to the amount set
forth in the schedule below (the "Principal Repayment Schedule") opposite such
date minus an amount equal to (x) $250,000,000 minus the Effective Amount of
the Term Loans on June 30, 1996 (y) divided by 20 (or, if less than 20
Principal Payment Dates remain, by such lesser number).
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<TABLE>
<CAPTION>
Principal Payment Date Amount of Payment
---------------------- -----------------
<S> <C>
June 30, 1996 $ 7,500,000
September 30, 1996 $ 7,500,000
December 31, 1996 $ 10,000,000
March 31, 1997 $ 10,000,000
June 30, 1997 $ 10,000,000
September 30, 1997 $ 10,000,000
December 31, 1997 $ 13,000,000
March 31, 1998 $ 13,000,000
June 30, 1998 $ 13,000,000
September 30, 1998 $ 13,000,000
December 31, 1998 $ 14,300,000
March 31, 1999 $ 14,300,000
June 30, 1999 $ 14,300,000
September 30, 1999 $ 14,300,000
December 31, 1999 $ 14,300,000
March 31, 2000 $ 14,300,000
June 30, 2000 $ 14,300,000
September 30, 2000 $ 14,300,000
December 31, 2000 $ 14,300,000
March 31, 2001 $ 14,300,000
------------
Total: $250,000,000
</TABLE>
After each mandatory or optional prepayment of principal, the Agent shall
provide to the Company and the Banks a revised Principal Repayment Schedule.
(b) The Revolving Credit. Each Borrower shall repay to
the Banks on the Revolving Termination Date the aggregate principal amount of
Revolving Loans made to such Borrower outstanding on such date.
(c) Swing Loans. Each Borrower shall repay to the Swing
Loan Bank each Swing Loan made to such Borrower, no later than the earlier of
(i) the seventh (7th) day after the date such Swing Loan is made and (ii) the
Revolving Termination Date.
(d) Interest.
(i) Each Revolving Loan, Swing Loan and Term Loan
shall bear interest on the outstanding principal amount thereof from the
applicable Borrowing Date at a rate per annum equal to the LIBOR Offshore Rate
or the Base Rate, as the case may be (subject to the right of the Borrowers to
convert to other Interest Rate Types of Loans under Section 2.04), plus the
Applicable Margin.
(ii) Interest on each Revolving Loan, Swing Loan
and Term Loan shall be paid in arrears on each Interest Payment Date. Interest
shall also be paid on the date of any prepayment of Loans under Section 2.07 or
2.08 for the portion of the Loans so prepaid and upon
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payment (including prepayment) in full thereof and, during the existence of any
Event of Default, interest shall be paid on demand of the Agent at the request
of the Majority Banks.
(iii) Notwithstanding subsection (d)(i) of this
Section 2.10, while any Event of Default exists or after acceleration of all or
any portion of the Loans, the Borrowers shall pay interest (after as well as
before entry of judgment thereon to the extent permitted by law) on the
principal amount of all outstanding Obligations, at a rate per annum (the
"Default Rate") equal to the Base Rate plus two percent (2%) per annum.
(e) Highest Lawful Rate. Anything herein to the contrary
notwithstanding, the obligations of the Borrowers to any Bank hereunder shall
be subject to the limitation that payments of interest shall not be required
for any period for which interest is computed hereunder to the extent (but only
to the extent) that contracting for, charging or receiving such payment by such
Bank would be contrary to the provisions of any law applicable to such Bank
limiting the highest nonusurious rate of interest that may be contracted for,
charged or received by such Bank, and in such event the Borrowers shall pay
such Bank interest at the highest nonusurious rate permitted by applicable law.
2.11 Fees. In addition to certain fees described in Section 3.07:
(a) Arrangement, Agency Fees. The Company shall pay an
arrangement fee to the Arranger for the Arranger's own account, and shall pay
an agency fee to the Agent for the Agent's own account, as required by the
letter agreement ("Fee Letter") between the Company and the Arranger and Agent
dated December 14, 1994.
(b) Commitment Fees. The Company shall pay to the Agent
for the account of each Bank a commitment fee (the "Commitment Fee") based upon
the average daily unused portion of such Bank's Commitment, computed on a
quarterly basis in arrears on the last Business Day of each calendar quarter as
calculated by the Agent, equal to the per annum percentage designated as the
"Commitment Fee" in the "Pricing Chart" set forth in Section 2.02. For
purposes of calculating utilization under this subsection, the Commitments
shall be deemed used to the extent of the Effective Amount of Revolving Loans,
Swing Loans and Term Loans then outstanding, plus the Effective Amount of
Letter of Credit Obligations then outstanding. The Commitment Fee with respect
to the Term Commitments shall accrue from the earlier of (x) April 1, 1995 and
(y) the Execution Date, to the last day of the Term Loan Availability Period,
and the Commitment Fee with respect to the Revolving Commitment shall accrue
from the earlier of (x) April 1, 1995 and (y) the Execution Date, to the
Revolving Termination Date. The Commitment Fee shall be due and payable as
follows: the first payment shall be made on the Closing Date and each
subsequent payment shall be made quarterly in arrears on the last Business Day
of each fiscal quarter through the Term Loan Availability Period or the
Revolving Termination Date, as applicable, with the final payment to be made on
the last day of the Term Loan Availability Period or the Revolving Termination
Date, as applicable; provided that, in connection with any reduction or
termination of Commitments under Section 2.06 or Section 2.09, the accrued
Commitment Fee calculated for the period ending on the date of such reduction
or termination shall also be paid on the date of such reduction or termination,
with the payment due on the following quarterly payment date being calculated
on the basis of the period from such reduction or termination date to such
quarterly payment date; and provided, further that, in connection with any
termination of Commitments under Section 11.01 hereof, the accrued
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<PAGE> 39
Commitment Fee for the period ending on the Proposed Amendment Due Date (as
defined in Section 11.01) shall be paid on such date. The Commitment Fees
provided in this subsection shall accrue at all times after the above-mentioned
commencement date, including at any time during which one or more conditions in
Article V are not met.
2.12 Computation of Fees and Interest.
(a) All computations of interest for Base Rate Loans when
the Base Rate is determined by Bank of America NT & SA's "reference rate" shall
be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All other computations of fees and interest, including
those referred to in Article III, shall be made on the basis of a 360-day year
and actual days elapsed (which results in more interest being paid than if
computed on the basis of a 365-day year). Interest and fees shall accrue
during each period during which interest or such fees are computed from the
first day thereof to the last day thereof.
(b) Each determination of an interest rate by the Agent
shall be conclusive and binding on the Borrowers and the Banks in the absence
of manifest error. The Agent will, at the request of the Borrowers or any
Bank, deliver to the Borrowers or the Bank, as the case may be, a statement
showing the quotations used by the Agent in determining any interest rate and
the resulting interest rate.
2.13 Payments by the Borrowers.
(a) All payments to be made by the Borrowers shall be
made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Borrowers shall be made to the
Agent for the account of the Banks at the Agent's Payment Office, and shall be
made in dollars and in immediately available funds, no later than 11:00 a.m.
(San Francisco time) on the date specified herein. The Agent will promptly
distribute to each Bank its Pro Rata Share (or other applicable share as
expressly provided herein) of such payment in like funds as received. Any
payment received by the Agent later than 11:00 a.m. (San Francisco time) shall
be deemed to have been received on the following Business Day and any
applicable interest or fee shall continue to accrue. If the Agent fails to
send to any Bank its portion of any payment timely received by the Agent
hereunder by the close of business on the day such payment is deemed received
pursuant to this subsection 2.13(a), the Agent shall pay to such Bank interest
on its portion of such payment from the day such payment is deemed received by
the Agent until the date such Bank's portion of such payment is sent to such
Bank, at the Federal Funds Rate.
(b) Subject to the provisions set forth in the definition
of "Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and
such extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
(c) Unless the Agent receives notice from a Borrower
prior to the date on which any payment is due to the Banks that such Borrower
will not make such payment in full as and when required, the Agent may assume
that such Borrower has made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so required),
in reliance upon such assumption, distribute to each Bank on such due date an
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<PAGE> 40
amount equal to the amount then due such Bank. If and to the extent a Borrower
has not made such payment in full to the Agent, each Bank shall repay to the
Agent on demand such amount distributed to such Bank, together with interest
thereon at the Federal Funds Rate for each day from the date such amount is
distributed to such Bank until the date repaid.
2.14 Payments by the Banks to the Agent.
(a) Unless the Agent receives notice from a Bank on or
prior to the Closing Date or, with respect to any Borrowing after the Closing
Date, at least one (1) Business Day prior to the date of such Borrowing, that
such Bank will not make available as and when required hereunder to the Agent
for the account of a Borrower the amount of that Bank's Pro Rata Share of the
Borrowing, the Agent may assume that each Bank has made such amount available
to the Agent in immediately available funds on the Borrowing Date and the Agent
may (but shall not be so required), in reliance upon such assumption, make
available to the applicable Borrower on such date a corresponding amount. If
and to the extent any Bank shall not have made its full amount available to the
Agent in immediately available funds and the Agent in such circumstances has
made available to the applicable Borrower such amount, that Bank shall on the
Business Day following such Borrowing Date make such amount available to the
Agent, together with interest at the Federal Funds Rate for each day during
such period. A notice of the Agent submitted to any Bank with respect to
amounts owing under this subsection (a) shall be conclusive, absent manifest
error. If such amount is so made available, such payment to the Agent shall
constitute such Bank's Loan on the date of Borrowing for all purposes of this
Agreement. If such amount is not made available to the Agent on the Business
Day following the Borrowing Date, the Agent will notify the applicable Borrower
of such failure to fund and, upon demand by the Agent, such applicable Borrower
shall pay such amount to the Agent for the Agent's account, together with
interest thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the time to the Loans
comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any
Borrowing Date shall not relieve any other Bank of any obligation hereunder to
make a Loan on such Borrowing Date, but no Bank shall be responsible for the
failure of any other Bank to make the Loan to be made by such other Bank on any
Borrowing Date.
2.15 Sharing of Payments, Etc. If, other than as expressly
provided elsewhere herein, any Bank (or any Participant pursuant to subsection
11.09(e)) shall obtain on account of the Loans made by it any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its Pro Rata Share, such Bank shall immediately (a)
notify the Agent of such fact, and (b) purchase from the other Banks such
participations in the Loans made by them as shall be necessary to cause such
purchasing Bank to share the excess payment pro rata with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Bank, such purchase shall to that
extent be rescinded and each other Bank shall repay to the purchasing Bank the
purchase price paid therefor, together with an amount equal to such paying
Bank's ratable share (according to the proportion of (i) the amount of such
paying Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Borrowers
agree that any Bank so purchasing a participation from another Bank may, to the
fullest extent permitted by law, exercise all its rights
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<PAGE> 41
of payment (including the right of set-off, but subject to Section 11.10) with
respect to such participation as fully as if such Bank were the direct creditor
of the Borrower in the amount of such participation. The Agent will keep
records (which shall be conclusive and binding in the absence of manifest
error) of participation purchased under this Section and will in each case
notify the Banks following any such purchases or repayments.
ARTICLE III
THE LETTERS OF CREDIT
3.01 The Letter of Credit Subfacility.
(a) On the terms and conditions set forth herein (i) the
Issuing Bank agrees, (A) from time to time on any Business Day during the
period from the Closing Date to the Revolving Termination Date to issue Letters
of Credit for the account of any Borrower, and to amend or renew Letters of
Credit previously issued by it, in accordance with subsections 3.02(c),
3.02(d)and 3.02(e), and (B) to honor drafts under the Letters of Credit; and
(ii) the Banks severally agree to participate in Letters of Credit Issued for
the account of any Borrower; provided, that the Issuing Bank shall not be
obligated to Issue, and no Bank shall be obligated to participate in, any
Letter of Credit if, as of the date of Issuance of such Letter of Credit (the
"Issuance Date"): (1) the Effective Amount of all Letter of Credit Obligations
plus the Effective Amount of all Revolving Loans and all Swing Loans exceeds
the Revolving Commitments, (2) the participation of any Bank in the Effective
Amount of all Letter of Credit Obligations plus (w) the Effective Amount of the
Revolving Loans of such Bank plus (x) the aggregate principal amount of such
Bank's participation in Swing Loans, plus (y) if such Bank is the Swing Loan
Bank, the principal amount of all Swing Loans in which other Banks have not
participated, exceeds such Bank's Revolving Commitment, or (3) the Effective
Amount of Letter of Credit Obligations exceeds the Letter of Credit Commitment.
Within the foregoing limits, and subject to the other terms and conditions
hereof, the ability of a Borrower to obtain Letters of Credit shall be fully
revolving, and, accordingly, each Borrower may, during the foregoing period,
obtain Letters of Credit to replace Letters of Credit which have expired or
which have been drawn upon and reimbursed.
(b) The Issuing Bank is under no obligation to Issue any
Letter of Credit if: (i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or restrain the
Issuing Bank from Issuing such Letter of Credit, or any Requirement of Law
applicable to the Issuing Bank or any request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction over
the Issuing Bank shall prohibit, or request that the Issuing Bank refrain from,
the Issuance of letters of credit generally or such Letter of Credit in
particular or shall impose upon the Issuing Bank with respect to such Letter of
Credit any restriction, reserve or capital requirement (for which the Issuing
Bank is not otherwise compensated hereunder) not in effect on the Closing Date,
or shall impose upon the Issuing Bank any unreimbursed loss, cost or expense
which was not applicable on the Closing Date and which the Issuing Bank in good
faith deems material to it; (ii) the Issuing Bank has received written notice
from any Bank, the Agent or a Borrower, on or prior to the Business Day prior
to the requested date of Issuance of such Letter of Credit, that one or more of
the applicable conditions contained in Article V is not then satisfied; (iii)
the expiry date
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of any requested Letter of Credit is (A) more than 2 years (in the case of
Performance Letters of Credit) or 1 year (in the case of Financial Letters of
Credit) after the date of Issuance or (B) after the Revolving Termination Date,
unless all of the Banks have approved such expiry date in writing; (iv) any
requested Letter of Credit does not provide for drafts, or is not otherwise in
form and substance acceptable to the Issuing Bank, or the Issuance of a Letter
of Credit shall violate any applicable policies of the Issuing Bank; (v) such
Letter of Credit is in a face amount less than $1,000,000 or to be denominated
in a currency other than U.S. Dollars; provided, however, that clause (iii) of
this subsection 3.01(b) shall not be deemed to prohibit a Letter of Credit that
provides that it shall automatically renew unless the beneficiary thereof
receives notice from the Issuing Bank that such Letter of Credit shall not be
renewed.
3.02 Issuance, Amendment and Renewal of Letters of Credit.
(a) Each Letter of Credit shall be issued upon the
irrevocable written request of any Borrower received by the Issuing Bank (with
a copy sent by such Borrower to the Agent) at least three days (or such shorter
time as the Issuing Bank may agree in a particular instance in its sole
discretion) prior to the proposed date of issuance. Each such request for
issuance of a Letter of Credit shall be by facsimile, confirmed immediately in
an original writing, in the form of a Letter of Credit Application, and shall
specify in form and detail satisfactory to the Issuing Bank such matters as the
Issuing Bank may require. Each Letter of Credit (i) will be for the account of
the Company or other Borrower which makes the request in accordance with the
terms of this Agreement, (ii) will be a (A) nontransferable standby letter of
credit to support certain performance obligations of the Company (or, if
applicable, the other Borrower who is the account party) ("Performance Letters
of Credit"), or (B) non-transferable standby letter of credit to support
certain payment obligations of the Company (or, if applicable, the other
Borrower who is the account party) that are not prohibited by this Agreement
("Financial Letters of Credit"), (iii) will be for purposes reasonably
satisfactory to the Issuing Bank and (iv) will contain such terms and
provisions as may be customarily required by the Issuing Bank. Classification
of a Letter of Credit as a "Performance Letter of Credit" or a "Financial
Letter of Credit" shall be determined by the Issuing Bank in its sole
discretion.
(b) At least two Business Days prior to the Issuance of
any Letter of Credit, the Issuing Bank will confirm with the Agent (by
telephone or in writing) that the Agent has received a copy of the Letter of
Credit Application or Letter of Credit Amendment Application from the Borrower
and, if not, the Issuing Bank will provide the Agent with a copy thereof.
Unless the Issuing Bank has received notice on or before the Business Day
immediately preceding the date the Issuing Bank is to issue a requested Letter
of Credit from the Agent (A) directing the Issuing Bank not to issue such
Letter of Credit because such issuance is not then permitted under subsection
3.01(a) as a result of the limitations set forth in clauses (1) through (3)
thereof or subsection 3.01(b)(ii); or (B) that one or more conditions specified
in Article V are not then satisfied or waived; then, subject to the terms and
conditions hereof, the Issuing Bank shall, on the requested date, issue a
Letter of Credit for the account of such Borrower in accordance with the
Issuing Bank's usual and customary business practices.
(c) From time to time while a Letter of Credit is
outstanding and prior to the Revolving Termination Date, the Issuing Bank will,
upon the written request of a Borrower received by the Issuing Bank (with a
copy sent by such Borrower to the Agent) at least three days (or such shorter
time as the Issuing Bank may agree in a particular instance in its sole
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discretion) prior to the proposed date of amendment, amend any Letter of Credit
issued by it. Each such request for amendment of a Letter of Credit shall be
made by facsimile, confirmed immediately in an original writing, made in such
form as the Issuing Bank shall require. The Issuing Bank shall be under no
obligation to amend any Letter of Credit if: (A) the Issuing Bank would have
no obligation at such time to issue such Letter of Credit in its amended form
under the terms of this Agreement; or (B) the beneficiary of any such Letter of
Credit does not accept the proposed amendment to the Letter of Credit.
(d) Upon receipt of notice from the Issuing Bank, the
Agent will promptly notify the Banks of the Issuance of a Letter of Credit and
any amendment thereto.
(e) If any outstanding Letter of Credit shall provide
that it shall be automatically renewed unless the beneficiary thereof receives
notice from the Issuing Bank that such Letter of Credit shall not be renewed,
the Issuing Bank shall be permitted to allow such Letter of Credit to renew,
and the Borrowers and the Banks hereby authorize such renewal. The Issuing
Bank shall not be obligated to allow such Letter of Credit to renew if the
Issuing Bank would have no obligation at such time to issue or amend such
Letter of Credit under the terms of this Agreement.
(f) The Issuing Bank may, at its election (or as required
by the Agent at the direction of the Majority Banks), deliver any notices of
termination or other communications to any Letter of Credit beneficiary, and
take any other action as necessary or appropriate, at any time and from time to
time, in order to cause the expiry date of any Letter of Credit to be a date
not later than the Revolving Termination Date.
(g) This Agreement shall control in the event of any
conflict with any Letter of Credit-Related Document.
(h) The Issuing Bank will also deliver to the Agent,
concurrently or promptly following its delivery of a Letter of Credit, or
amendment to a Letter of Credit, to an advising bank or a beneficiary, a true
and complete copy of each such Letter of Credit or amendment to a Letter of
Credit.
3.03 Risk Participations, Drawings and Reimbursements.
(a) Immediately upon the Issuance of each Letter of
Credit, each Bank shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Issuing Bank a participation in
such Letter of Credit and each drawing thereunder in an amount equal to the
product of (i) the Pro Rata Share of such Bank, times (ii) the maximum amount
available to be drawn under such Letter of Credit and the amount of such
drawing, respectively. For purposes of subsection 2.01(b), each Issuance of a
Letter of Credit shall be deemed to utilize the Commitment of each Bank by an
amount equal to the amount of such participation.
(b) In the event of any request for a drawing under a
Letter of Credit by the beneficiary thereof, the Issuing Bank will promptly
notify the applicable Borrower. In the case of Letters of Credit under which
drawings are payable one or more Business Days after the drawing is made, the
Issuing Bank will give such notice to the applicable Borrower at least one
Business Day prior to the Honor Date. Such Borrower shall reimburse the
Issuing Bank prior
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to 10:00 a.m. (Chicago time), on each date that any amount is paid by the
Issuing Bank under any Letter of Credit (each such date, an "Honor Date"), in
an amount equal to the amount so paid by the Issuing Bank. In the event such
Borrower fails to reimburse the Issuing Bank for the full amount of any drawing
under any Letter of Credit by 10:00 a.m. (Chicago time) on the Honor Date, the
Issuing Bank will promptly notify the Agent and the Agent will promptly notify
each Bank thereof, and such Borrower shall be deemed to have requested that
Base Rate Loans be made by the Banks to be disbursed on the Honor Date under
such Letter of Credit, subject to the amount of the unutilized portion of the
Revolving Commitment and subject to the conditions set forth in Section 5.04.
Any notice given by the Issuing Bank or the Agent pursuant to this subsection
3.03(b) may be oral if immediately confirmed in writing (including by
facsimile); provided that the lack of such an immediate confirmation shall not
affect the conclusiveness or binding effect of such notice.
(c) Each Bank shall upon any notice pursuant to
subsection 3.03(b) make available to the Agent for the account of the relevant
Issuing Bank an amount in Dollars and in immediately available funds equal to
its Pro Rata Share of the amount of the drawing, whereupon the participating
Banks shall (subject to subsection 3.03(e)) each be deemed to have made a
Revolving Loan consisting of a Base Rate Loan to the Borrower in that amount.
If any Bank so notified fails to make available to the Agent for the account of
the Issuing Bank the amount of such Bank's Pro Rata Share of the amount of the
drawing by no later than 12:00 noon (San Francisco time) on the Honor Date,
then interest shall accrue on such Bank's obligation to make such payment, from
the Honor Date to the date such Bank makes such payment, at a rate per annum
equal to the Federal Funds Rate in effect from time to time during such period.
The Agent will promptly give notice to each Bank of the occurrence of the Honor
Date, but failure of the Agent to give any such notice on the Honor Date or in
sufficient time to enable any Bank to effect such payment on such date shall
not relieve such Bank from its obligations under this Section 3.03.
(d) With respect to any unreimbursed drawing that is not
converted into Revolving Loans consisting of Base Rate Loans to the Borrower in
whole or in part, because of failure of the Borrower to satisfy the conditions
set forth in Section 5.04 or for any other reason, the Borrower shall be deemed
to have incurred from the Issuing Bank a Letter of Credit Borrowing in the
amount of such drawing, which Letter of Credit Borrowing shall be due and
payable on demand (together with interest) and shall bear interest at a rate
per annum equal to the Base Rate plus two percent (2%) per annum, and each
Bank's payment to the Issuing Bank pursuant to subsection 3.03(c) shall be
deemed payment in respect of its participation in such Letter of Credit
Borrowing and shall constitute a Letter of Credit Advance from such Bank in
satisfaction of its participation obligation under this Section 3.03.
(e) Each Bank's obligation in accordance with this
Agreement to make the Revolving Loans or Letter of Credit Advances, as
contemplated by this Section 3.03, as a result of a drawing under a Letter of
Credit, shall be absolute and unconditional and without recourse to the Issuing
Bank and shall not be affected by any circumstance, including (i) any set-off,
counterclaim, recoupment, defense or other right which such Bank may have
against the Issuing Bank, the Borrower or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of a Default, an Event of
Default, a Material Adverse Effect or a Material Adverse Credit Agreement
Effect; or (iii) any other circumstance, happening or event whatsoever, whether
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or not similar to any of the foregoing; provided, however, that each Bank's
obligation to make Revolving Loans under this Section 3.03 is subject to the
conditions set forth in Section 5.04.
3.04 Repayment of Participation.
(a) When the Agent receives (and only if the Agent
receives), for the account of the Issuing Bank, immediately available funds
from a Borrower (i) in reimbursement of any payment made by the Issuing Bank
under the Letter of Credit with respect to which any Bank has paid the Agent
for the account of the Issuing Bank for such Bank's participation in the Letter
of Credit pursuant to Section 3.03 or (ii) in payment of interest thereon, the
Agent will pay to each Bank, in the same funds as those received by the Agent
for the account of the Issuing Bank, the amount of such Bank's Pro Rata Share
of such funds, and the Issuing Bank shall receive the amount of the Pro Rata
Share of such funds of any Bank that did not so pay the Agent for the account
of the Issuing Bank. If the Agent fails to send to any Bank its portion of any
payment timely received by the Agent hereunder by the close of business on the
day such payment is deemed received pursuant to subsection 2.13(a), the Agent
shall pay to such Bank interest on its portion of such payment from the day
such payment is deemed received by the Agent until the date such Bank's portion
of such payment is sent to such Bank, at the Federal Funds Rate.
(b) If the Agent or the Issuing Bank is required at any
time to return to a Borrower, or to a trustee, receiver, liquidator, custodian,
or any official in any Insolvency Proceeding, any portion of the payments made
by the Borrower to the Agent for the account of the Issuing Bank pursuant to
subsection 3.04(a) in reimbursement of a payment made under the Letter of
Credit or interest or fee thereon, each Bank shall, on demand of the Agent,
forthwith return to the Agent or the Issuing Bank the amount of its Pro Rata
Share of any amounts so returned by the Agent or the Issuing Bank plus interest
thereon from the date such demand is made to the date such amounts are returned
by such Bank to the Agent or the Issuing Bank, at a rate per annum equal to the
Federal Funds Rate in effect from time to time.
3.05 Role of the Issuing Bank.
(a) Each Bank and Borrower agrees that, in paying any
drawing under a Letter of Credit, the Issuing Bank shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and other documents, if any, expressly required by the Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document.
(b) Neither the Issuing Bank nor any of its
correspondents, participants or assignees shall be liable to any Bank for: (i)
any action taken or omitted in connection herewith at the request or with the
approval of the Banks (including the Majority Banks, as applicable); (ii) any
action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any Letter of Credit-Related Document.
(c) Each Borrower hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of any
Letter of Credit; provided, however, that this assumption is not intended to,
and shall not, preclude a Borrower from pursuing such rights and remedies as it
may have against the beneficiary or transferee at law or under any other
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agreement. Neither the Issuing Bank, nor any correspondents, participants or
assignees of the Issuing Bank, shall be liable or responsible for any of the
matters described in clauses (i) through (vii) of Section 3.06; provided,
however, that the Borrower for whose account the applicable Letter of Credit is
Issued may have a claim against the Issuing Bank, and the Issuing Bank may be
liable to Borrower, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered or incurred by such
Borrower which are caused by the Issuing Bank's willful misconduct or gross
negligence (i) in failing to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft, certificate(s) and
other documents, if any, strictly complying with the terms and conditions of
such Letter of Credit, (ii) in its paying under a Letter of Credit against
presentation of a sight draft, certificate(s) or other documents not complying
with the terms of such Letter of Credit or (iii) otherwise with respect to the
Letters of Credit; provided, however, that (i) the Issuing Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary;
and (ii) the Issuing Bank shall not be responsible for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason, provided that any such instrument appears on its
face to be in order.
3.06 Obligations Absolute. The obligations of the Borrowers under
this Agreement and any Letter of Credit-Related Document to reimburse the
Issuing Bank for a drawing under a Letter of Credit, and to repay any Letter of
Credit Borrowing and any drawing under a Letter of Credit converted into
Revolving Loans, shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement and each such other
Letter of Credit-Related Document under all circumstances, including the
following: (i) any lack of validity or enforceability of this Agreement or
any Letter of Credit-Related Document; (ii) any change in the time, manner or
place of payment of, or in any other term of, all or any of the obligations of
the Borrowers in respect of any Letter of Credit or any other amendment or
waiver of or any consent to departure from all or any of the Letter of
Credit-Related Documents; (iii) the existence of any claim, set-off, defense or
other right that the Borrower may have at any time against any beneficiary or
any transferee of any Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank or any
other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by the Letter of Credit-Related Documents or any
unrelated transaction; (iv) any draft, demand, certificate or other document
presented under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any Letter
of Credit; (v) any payment by the Issuing Bank under any Letter of Credit
against presentation of a draft or certificate that does not strictly comply
with the terms of any Letter of Credit; or any payment made by the Issuing Bank
under any Letter of Credit to any trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, liquidator, receiver or other
representative of or successor to any beneficiary or any transferee of any
Letter of Credit, including any arising in connection with any Insolvency
Proceeding; (vi) any exchange, release or non-perfection of any collateral, or
any release or amendment or waiver of or consent to departure from any other
guarantee, for all or any of the obligations of the Borrowers in respect of any
Letter of Credit; or (vii) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, a Borrower or a
guarantor.
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3.07 Letter of Credit Fees.
(a) Risk Participation Fees. Each Borrower for whose
account a Letter of Credit is Issued shall pay to the Agent for the account of
each of the Banks a letter of credit fee with respect to such Letters of Credit
equal to the Risk Participation Fees specified in Section 2.02 of this
Agreement multiplied by the average daily maximum amount available to be drawn
on such outstanding Letters of Credit.
(b) Fronting Fees. Each Borrower for whose account a
Letter of Credit is Issued shall pay to the Agent for the account of the
Issuing Bank a letter of credit fronting fee for each Letter of Credit Issued
by the Issuing Bank equal to 0.10% per annum multiplied by the average daily
maximum amount available to be drawn on such outstanding Letters of Credit.
(c) Calculation of Fees. The Risk Participation
Fee-Financial Standby Letter of Credit, the Risk Participation Fee-Performance
Standby Letter of Credit, and the Fronting Fee, each shall be computed on a
quarterly basis in arrears on the last Business Day of each calendar quarter
based upon Letters of Credit outstanding for that quarter as calculated by the
Agent. Such fees shall be due and payable quarterly in arrears on the last
Business Day of each calendar quarter during which Letters of Credit are
outstanding, commencing on the first such quarterly date to occur after the
Closing Date, through the Revolving Termination Date (or such later date upon
which the outstanding Letters of Credit shall expire), with the final payment
to be made on the Revolving Termination Date (or such later expiration date).
(d) Other. Each Borrower for whose account a Letter of
Credit is issued shall pay to the Issuing Bank from time to time on demand the
normal issuance, presentation, amendment and other processing fees, and other
standard costs and charges, of the Issuing Bank relating to letters of credit
as from time to time in effect.
3.08 Cash Collateralization.
(a) If any Event of Default shall occur and be
continuing, each Borrower agrees that it shall on the Business Day it receives
notice from the Agent, acting upon instructions of the Majority Banks, deposit
in an account (the "Cash Collateral Account") held by the Agent, for the
benefit of the Banks, an amount in cash equal to the Letter of Credit
Obligations as of such date. Such deposit shall be held by the Agent as
collateral for the payment and performance of the Obligations. The Agent shall
have exclusive dominion and control, including the exclusive right of
withdrawal, over such account. Cash collateral shall be held in a blocked,
non-interest bearing account held by the Agent or any Affiliate of the Agent
upon such terms and in such type of account as customary at that depository
institution. The Borrowers shall pay any fees charged by such depository
institution which fees are of the type customarily charged by such institution
with respect to such accounts. Moneys in such account shall (i) be applied by
the Agent to the payment of Letter of Credit Borrowings and interest thereon,
(ii) be held for the satisfaction of the reimbursement obligations of the
Borrowers in respect of Letters of Credit, and (iii) if the maturity of the
Loans has been accelerated, with the consent of the Majority Banks, be applied
to satisfy the Obligations.
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(b) As security for the payment of all Obligations, each
Borrower hereby grants, conveys, assigns, pledges, sets over and transfers to
the Agent, and creates in the Agent's favor a Lien on, and security interest
in, all money, instruments and securities at any time held in or acquired in
connection with the Cash Collateral Account, together with all proceeds
thereof. At any time and from time to time, upon the Agent's request, the
Borrowers promptly shall execute and deliver any and all such further
instruments and documents as may be necessary, appropriate or desirable in the
Agent's judgment to obtain the full benefits (including perfection and
priority) of the security interest created or intended to be created by this
subsection 3.08(b) and of the rights and powers herein granted.
3.09 Uniform Customs and Practice. The Uniform Customs and
Practice for Documentary Credits as published by the International Chamber of
Commerce ("UCP") most recently published in final form at the time of issuance
of any Letter of Credit shall (unless otherwise expressly provided in the
Letters of Credit) apply to the Letters of Credit.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 Taxes.
(a) Any and all payments by a Borrower to each Bank or
the Agent under this Agreement and any other Loan Document shall be made free
and clear of, and without deduction or withholding for, any Taxes. In
addition, the Borrowers shall pay all Other Taxes.
(b) Each Borrower agrees to indemnify and hold harmless
each Bank and the Agent for the full amount of Taxes or Other Taxes (including
any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
this Section) paid by the Bank or the Agent and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Payment under this indemnification shall be made within 30
days after the date the Bank or the Agent makes written demand therefor. In
the event the Agent or a Bank is required to pay Taxes or Other Taxes for which
the Agent or such Bank seeks indemnity hereunder, the Agent or such Bank, as
applicable, shall make written request to the Company within 60 days after
paying such Taxes or Other Taxes; provided, however, that a Bank's failure to
timely give notice of such Taxes or Other Taxes shall not impair the Borrowers'
obligations to indemnify such Bank against such Taxes or such Other Taxes.
(c) If a Borrower shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Bank or the Agent, then: (i) the sum payable shall be
increased as necessary so that after making all required deductions and
withholdings (including deductions and withholdings applicable to additional
sums payable under this Section) such Bank or the Agent, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made; (ii) such Borrower shall make such
deductions and withholdings; (iii) such Borrower shall pay the full amount
deducted or withheld to the relevant taxing authority or other authority in
accordance with applicable law; and (iv) such Borrower shall also pay to each
Bank or the Agent for the
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account of such Bank, at the time interest is paid, all additional reasonable
amounts which the respective Bank specifies as necessary to preserve the
after-tax yield the Bank would have received if such Taxes or Other Taxes had
not been imposed.
(d) Within 30 days after the date of any payment by a
Borrower of Taxes or Other Taxes, such Borrower shall furnish the Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Agent.
(e) If a Borrower is required to pay additional amounts
to any Bank or the Agent pursuant to subsection (c) of this Section, then, upon
the written request of the Borrower, such Bank shall use reasonable efforts
(consistent with legal and regulatory restrictions) to change the jurisdiction
of its Lending Office so as to eliminate any such additional payment by the
Borrowers which may thereafter accrue, if such change in the judgment of such
Bank is not otherwise disadvantageous to such Bank.
4.02 Illegality.
(a) If any Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Bank or its applicable Lending Office to make
LIBOR Offshore Rate Loans, then, on notice thereof by the Bank to the Borrowers
through the Agent, any obligation of that Bank to make LIBOR Offshore Rate
Loans shall be suspended until the Bank notifies the Agent and the Borrowers
that the circumstances giving rise to such determination no longer exist.
(b) If a Bank determines that it is unlawful to maintain
any LIBOR Offshore Rate Loan, the Borrowers shall, upon their receipt of notice
of such fact and demand from such Bank (with a copy to the Agent), prepay in
full such LIBOR Offshore Rate Loans of that Bank then outstanding, together
with interest accrued thereon and amounts required under Section 4.04, either
on the last day of the Interest Period thereof, if the Bank may lawfully
continue to maintain such LIBOR Offshore Rate Loans to such day, or
immediately, if the Bank may not lawfully continue to maintain such LIBOR
Offshore Rate Loan. If the Borrowers are required to so prepay any LIBOR
Offshore Rate Loan, then concurrently with such prepayment, the Borrowers shall
borrow from the affected Bank, in the amount of such repayment, a Base Rate
Loan.
(c) If the obligation of any Bank to make or maintain
LIBOR Offshore Rate Loans has been so terminated or suspended, all Loans which
would otherwise be made by such Bank as LIBOR Offshore Rate Loans shall be
instead Base Rate Loans.
(d) Before giving any notice to the Agent under this
Section, the affected Bank shall designate a different Lending Office with
respect to its LIBOR Offshore Rate Loans if such designation will avoid the
need for giving such notice or making such demand and will not, in the judgment
of the Bank, be illegal or otherwise disadvantageous to the Bank.
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4.03 Increased Costs and Reduction of Return.
(a) If any Bank determines that, due to either (i) the
introduction of or any change (other than any change by way of imposition of or
increase in reserve requirements included in the calculation of the LIBOR
Offshore Rate) in or in the interpretation of any law or regulation or (ii) the
compliance by that Bank with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to such Bank of agreeing to make or making,
funding or maintaining any LIBOR Offshore Rate Loans or participating in
Letters of Credit, or, in the case of the Issuing Bank, any increase in the
cost to the Issuing Bank of agreeing to issue, issuing or maintaining any
Letter of Credit or of agreeing to make or making, funding or maintaining any
unpaid drawing under any Letter of Credit, then the Borrowers shall be liable
for, and shall from time to time, upon demand (with a copy of such demand to be
sent to the Agent), pay to the Agent for the account of such Bank, additional
amounts as are sufficient to compensate such Bank for such increased costs.
(b) If any Bank shall have determined that (i) the
introduction of any guideline, request or directive of any central bank or
other Governmental Authority, or any other law, rule or regulation, whether or
not having the force of law, in each case, regarding capital adequacy of any
bank or of any corporation controlling a bank (each, a "Capital Adequacy
Regulation"), (ii) any change in any Capital Adequacy Regulation, (iii) any
change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by the Bank (or
its Lending Office) or any corporation controlling the Bank with any Capital
Adequacy Regulation, affects or would affect the amount of capital required or
expected to be maintained by the Bank or any corporation controlling the Bank
and (taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy and such Bank's desired return on capital)
determines that the amount of such capital is increased as a consequence of its
Commitment, loans, credits or obligations under this Agreement, then, upon
demand of such Bank to the Borrowers through the Agent, the Borrowers shall pay
to the Bank, from time to time as specified by the Bank, additional amounts
sufficient to compensate the Bank for such increase.
(c) In the event a Bank requests compensation under this
Section 4.03, it shall make such request to the Company within 90 days after
such Bank has actual knowledge of such increased costs or such increased
capital.
4.04 Funding Losses. Each Borrower shall reimburse each Bank and
hold each Bank harmless from any loss or expense which the Bank may sustain or
incur as a consequence of: (a) the failure of such Borrower to make on a timely
basis any payment of principal of any LIBOR Offshore Rate Loan; (b) the failure
of such Borrower to borrow, continue or convert a Loan after such Borrower has
given (or is deemed to have given) a Notice of Borrowing or a Notice of
Conversion/Continuation (including by reason of the failure to satisfy any
condition precedent thereto); (c) the failure of such Borrower to make any
prepayment in accordance with any notice delivered under Section 2.07; (d) the
prepayment (including pursuant to Section 2.07 or 2.08) or other payment
(including after acceleration thereof) of a LIBOR Offshore Rate Loan on a day
that is not the last day of the relevant Interest Period; or (e) the automatic
conversion under Section 2.04 of any LIBOR Offshore Rate Loan to a Base Rate
Loan on a day that is not the last day of the relevant Interest Period;
including in each instance any such loss or expense arising
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from the liquidation or reemployment of funds obtained by it to maintain its
LIBOR Offshore Rate Loans or from fees payable to terminate the deposits from
which such funds were obtained. For purposes of calculating amounts payable by
the Borrowers to the Banks under this Section and under subsection 4.03(a),
each LIBOR Offshore Rate Loan made by a Bank (and each related reserve, special
deposit or similar requirement) shall be conclusively deemed to have been
funded at the LIBOR used in determining the LIBOR Offshore Rate for such LIBOR
Offshore Rate Loan by a matching deposit or other borrowing in the interbank
eurodollar market for a comparable amount and for a comparable period, whether
or not such LIBOR Offshore Rate Loan is in fact so funded.
4.05 Inability to Determine Rates. If the Reference Bank
determines that for any reason adequate and reasonable means do not exist for
determining the LIBOR Offshore Rate for any requested Interest Period with
respect to a proposed LIBOR Offshore Rate Loan, or that the LIBOR Offshore Rate
applicable pursuant to subsection 2.10(d) for any requested Interest Period
with respect to a proposed LIBOR Offshore Rate Loan does not adequately and
fairly reflect the cost to the Banks of funding such Loan, the Agent will
promptly so notify the Borrowers and each Bank. Thereafter, the obligation of
the Banks to make or maintain LIBOR Offshore Rate Loans, hereunder shall be
suspended until the Agent upon the instruction of the Majority Banks revokes
such notice in writing. Upon receipt of such notice the Borrowers may revoke
any Notice of Borrowing or Notice of Conversion/Continuation then submitted by
it. If the Borrowers do not revoke such Notice, the Banks shall make, convert
or continue the Loans, as proposed by the Borrowers, in the amount specified in
the applicable notice submitted by the Borrowers, but such Loans shall be made,
converted or continued as Base Rate Loans instead of LIBOR Offshore Rate Loans.
4.06 Certificates of Banks. Any Bank claiming reimbursement or
compensation under this Article IV shall deliver to the Borrowers (with a copy
to the Agent) a certificate setting forth in reasonable detail the amount
payable to the Bank hereunder and such certificate shall be conclusive and
binding on the Borrowers in the absence of manifest error.
4.07 Substitution of Banks. Upon the occurrence of one or more of
the following events: (i) any Borrower is required to pay to a Bank any amounts
pursuant to Section 4.01 and such Bank does not change the jurisdiction of its
Lending Office; (ii) receipt by Borrowers (or any of them) of a notice by or on
behalf of a Bank pursuant to Section 4.02; or (iii) receipt by Borrowers (or
any of them), of a request by or on behalf of a Bank for compensation pursuant
to Section 4.03, the Company shall pay any applicable amount due, and the
Company may: (A) request the Affected Bank to use its best efforts to obtain a
replacement bank or financial institution satisfactory to the Agent to acquire
and assume all or a ratable part of all of such Affected Bank's Loans and
Commitment (a "Replacement Bank"); (B) request one more of the other Banks to
acquire and assume all or part of such Affected Bank's Loans and Commitment,
but none of the Banks shall have any obligation to do so; or (C) designate a
Replacement Bank satisfactory to the Agent. Any such designation of a
Replacement Bank under clause (A) or (C) shall be subject to the prior written
consent of the Agent, which consent shall not be unreasonably withheld.
4.08 Survival. The agreements and obligations of the Borrowers in
this Article IV shall survive the payment of all other Obligations.
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ARTICLE V
CONDITIONS PRECEDENT
5.01 Conditions of Initial Credit Extensions. The obligation of
each Bank to make its initial Credit Extension, and the obligation of the
Issuing Bank to issue the first Letter of Credit, hereunder is subject to the
condition that the Agent shall have received on or before the Closing Date all
of the following, in form and substance satisfactory to the Agent and each
Bank, and in sufficient copies for each Bank:
(a) Credit Agreement and Notes. This Agreement, the
Notes, the Guaranties, and the Intercompany Subordination Agreement executed by
each party thereto;
(b) Certificate (Merger). A certificate signed by a
Responsible Officer of the Company, in form and substance reasonably
satisfactory to the Agent and each Bank, representing and warranting that:
(i) On and as of the Closing Date, (w) the Merger
of Western into the Company has been consummated in accordance with the terms
and conditions of the Merger Agreement (including any consents pursuant to
Section 7.1 of the Merger Agreement to actions taken by Western prior to the
Closing Date not constituting Interim Adverse Actions) and in compliance with
all material Requirements of Law, and all of the assets of Western have been
transferred by the Company to BJ-USA, and attaching thereto a true and correct
copy of (A) the Certificate of Merger issued by the Secretary of State of the
State of Delaware evidencing that the Merger is effective as of such date, (B)
all amendments to the Merger Agreement subsequent to the First Amendment
thereto, if any, and (C) the Contribution Agreement evidencing the transfer by
the Company to BJ-USA of all of the assets acquired by the Company pursuant to
the Merger; (x) all shareholder approvals required for consummation of the
Merger have been obtained; (y) all third party approvals required for
consummation of the Merger have been obtained, except such approvals the
failure of which to obtain would not have a Material Adverse Effect; and (z)
all necessary material consents and approvals of and filings and registration
with, and all other material actions in respect of, all Governmental
Authorities required for consummation of the Merger have been obtained, given,
filed or taken and are in full effect and all waiting periods relating thereto
have expired without, in any such case, any action being taken by any competent
authority which restrains, prevents or imposes materially adverse conditions
upon the consummation of the Merger pursuant to the Merger Agreement;
(ii) On and as of the Closing Date, there does not
exist any judgment, order, injunction or other restraint issued or filed with
respect to the making of Loans or which could reasonably be expected to impair
materially the right or ability of the Company to consummate the Merger;
(iii) The Company has not consented to Western's or
any of its Subsidiaries' (as such term is used in the Merger Agreement) taking
any Interim Adverse Action, without the written approval of the Banks;
(iv) At the time of their mailing to the
shareholders of the Company, the Proxy/Prospectus Documents and the Additional
Proxy/Prospectus Documents, if any, taken
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as a whole prepared by or on behalf of the Company and/or its Subsidiaries, did
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein contained, in
light of the circumstances under which made, not misleading;
(v) A true and correct list of all Related
Agreements (true and correct copies of which have been delivered to the Agent
and the Banks to the extent requested by any of them) is attached to the
Certificate, which list shall include the Proxy/Prospectus Documents and the
Additional Proxy/Prospectus Documents, which Additional Proxy/Prospectus
Documents (other than any Additional Proxy/Prospectus Documents consisting
solely of an amendment to the date of the special shareholders meeting) shall
be reasonably satisfactory to the Majority Banks; and
(vi) The Merger Agreement has not been amended,
except as consented to by the Banks; all material conditions precedent
described in the Merger Agreement have been fulfilled in all material respects
in accordance with the terms and provisions thereof, and all amendments to the
Merger Agreement, and waivers to any conditions precedent described in the
Merger Agreement, have been consented to by the Banks, and the Company (and any
other Subsidiary who is a party to the Merger Agreement) have complied with the
Merger Agreement in all material respects;
(c) Existing Indebtedness. Evidence that all
Indebtedness of the Company and its Subsidiaries under (i) the Existing Company
Credit Agreement, and (ii) the Existing Western Credit Agreement, shall have
been (or shall simultaneously be) repaid, all liens, if any, securing the same
shall have been (or shall simultaneously be) terminated and all commitments
thereunder shall have been (or shall simultaneously be) cancelled; provided,
however, that the parties acknowledge that existing letters of credit may
remain outstanding (subject, however, to the limitations set forth in Article
VIII); and provided, further, that the Borrowers may be required to pay at a
later date break-funding or similar losses or costs required pursuant to the
Existing Company Credit Agreement by reason of repayment of advances thereunder
prior to maturity thereof, which amounts are estimated to be less than $10,000
in the aggregate;
(d) Certificate (Other Debt). In the event that
indebtedness will remain outstanding after the Closing Date under any of the
Other Debt Documents, a certificate signed by a Responsible Officer of the
Company stating that such Other Debt Documents have been amended, pursuant to
amendment agreements satisfactory to the Majority Banks, to the extent
necessary so that execution and delivery of and compliance with this Agreement
and the other Loan Documents will not result in a default under the Other Debt
Documents; or, in the case of the BJ Notes and the BJ Note Agreements, that
such default has been waived pursuant to a waiver substantially in the form
attached hereto as Exhibit "N"; and attaching thereto a true and correct copy
of any such waiver and a true and correct copy of all amendments to the Other
Debt Documents;
(e) Resolutions; Incumbency; Organization Documents. (i)
Copies of the resolutions of the board of directors of each Borrower and each
Guarantor authorizing the transactions contemplated hereby, certified as of the
Closing Date by the Secretary or an Assistant Secretary of such Person; (ii)
certificate of the Secretary or Assistant Secretary of each Borrower and each
Guarantor, certifying the names and true signatures of the officers of such
Person authorized to execute this Agreement, and all other Loan Documents to be
delivered by
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<PAGE> 54
it hereunder; and (iii) the articles or certificate of incorporation and the
bylaws of each Borrower and each Guarantor as in effect on the Closing Date,
certified by the Secretary or Assistant Secretary of such Person as of the
Closing Date; and
(f) Good Standing. Each of the following documents: (i) a
good standing certificate for each Borrower and each Guarantor from the
Secretary of State of its state of incorporation as of a recent date, together
with a bring-down certificate by facsimile, dated the Closing Date; and (ii)
evidence of qualification and for those states where available, a good standing
certificate, for each Borrower and each Guarantor from the Secretary of State
(or similar applicable Governmental Authority) of each state where such Person
is qualified to do business as a foreign corporation, dated as of a recent
date;
(g) Legal Opinions. (i) an opinion of Andrews & Kurth,
L.L.P., special United States counsel to the Company and its Subsidiaries, and
an opinion of Margaret B. Shannon, General Counsel of the Company, and
addressed to the Agent and the Banks, substantially in the form of Exhibit "D"
to be delivered as of Closing Date; and (ii) an opinion of Butler & Binion,
L.L.P., special counsel to the Agent;
(h) Payment of Fees. Evidence of payment by the
Borrowers of all accrued and unpaid fees, costs and expenses owed pursuant to
this Agreement and the Fee Letter to the extent then due and payable on the
Closing Date, together with Attorney Costs of the Agent to the extent such
Attorney Costs are invoiced at least three Business Days prior to the Closing
Date, which invoice may include such additional amounts of Attorney Costs as
shall constitute the Agent's reasonable estimate of Attorney Costs incurred or
to be incurred by it through the closing proceedings (provided that such
estimate shall not thereafter preclude final settling of accounts between the
Company and the Agent); including any such costs, fees and expenses arising
under or referenced in Sections 2.11 and 11.05;
(i) Certificate (Representations and Warranties; No
Default; No Material Adverse Effect; Conditions Precedent). A certificate
signed by a Responsible Officer, dated as of the Closing Date, stating that (i)
the representations and warranties contained in Article VI are true and correct
on and as of such date, as though made on and as of such date, taking into
account the Merger, (ii) no Default or Event of Default exists or would result
from the Credit Extension being made on the Closing Date, (iii) there has
occurred since December 31, 1994 no event or circumstance that has resulted or
would reasonably be expected to result in a Material Adverse Effect and (iv)
all of the conditions precedent set forth in Section 5.02 have been satisfied;
(j) Financial Statements; Certificate (Pricing). A
certificate (the "Closing Date Pricing Certificate") signed by a Responsible
Officer, dated the Closing Date (i) stating that a copy of the financial
statements of the Company and its Consolidated Subsidiaries referred to in
Section 6.12 previously has been delivered to the Agent and each of the Banks;
and (ii) setting forth the estimated Capitalization Ratio for purposes of
Section 2.02(b) of this Agreement;
(k) CT Corporation Letter. A letter confirming that CT
Corporation System has accepted appointment by each Borrower and each
Guarantor, and by each other Subsidiary of the Company who is a party to the
Intercompany Subordination Agreement, as its agent for service of process in
New York; and
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(l) Other Documents. Such other approvals, opinions,
documents or materials as the Agent or the Majority Banks (through the Agent)
may reasonably request.
5.02 Additional Conditions of Initial Credit Extension. The
obligation of each Bank to make its initial Credit Extension, and the
obligation of the Issuing Bank to issue the first Letter of Credit, hereunder
is subject to the following additional conditions:
(a) Western Actions Under Merger Agreement. Neither
Western nor any of its subsidiaries (as such term is used in the Merger
Agreement) shall have taken any Interim Adverse Action at any time from and
after the date of execution of the Merger Agreement through the Closing Date;
(b) Litigation. To the best knowledge of the Borrowers,
no litigation shall be pending or threatened against any of the Borrowers, the
Subsidiary Guarantors, Western Company or any material Subsidiary of the
Company or Western Company in which there is a reasonable probability of an
adverse decision which would result in a Material Adverse Effect;
(c) Western Debt Documents. The terms of the Western
Indenture and the Western Debentures shall not have been amended or modified,
except as may have been consented to by the Majority Banks;
(d) Additional Matters. All legal matters in connection
with the transactions contemplated by this Agreement shall be reasonably
satisfactory to the Majority Banks; and
(e) Closing Date. The Closing Date shall occur no later
than August 31, 1995.
5.03 Conditions of Initial Advance to each Subsidiary Borrower.
After the Closing Date, any Subsidiary (other than a Foreign Subsidiary) may
become a Subsidiary Borrower. The Banks shall not be required to make an
initial Advance to a Subsidiary Borrower hereunder unless such Subsidiary
Borrower has furnished to the Agent with sufficient copies for the Banks:
(a) A Subsidiary Borrower Counterpart together with a
schedule of litigation as may be necessary in connection with such Subsidiary
making the representations and warranties set forth in Section 6.06(a) of this
Agreement, such schedule to be in form and substance reasonably satisfactory to
the Agent and each of the Banks in their sole discretion, executed by such
Subsidiary and acknowledged by each of the Company and Subsidiary Guarantors;
(b) A current certificate of existence and, for the
states where available, a certificate of good standing, both certified by the
appropriate governmental officer, in its jurisdiction of incorporation;
(c) Copies, certified by the Secretary or Assistant
Secretary of such Subsidiary Borrower, of its Articles of Incorporation, Bylaws
and Board of Directors' resolutions authorizing the execution of the Loan
Documents to which it is a party;
(d) An incumbency certificate, executed by the Secretary
or Assistant Secretary of such Subsidiary Borrower, which shall identify by
name and title and bear the signature of the
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officers of the Subsidiary Borrower authorized to sign the Loan Documents to
which it is a party and to make borrowings hereunder, upon which certificates
the Agent and the Banks shall be entitled to rely until informed of any change
in writing by such Subsidiary Borrower;
(e) A written opinion of counsel to such Subsidiary
Borrower in form and substance satisfactory to the Agent and the Banks,
substantially in the form set forth in Exhibit "D" hereto, with such additional
provisions and revisions as the Majority Banks may reasonably request;
(f) Notes executed by such Subsidiary Borrower and
payable to the order of each of the Banks;
(g) Guaranty executed by such Subsidiary Borrower; and
(h) Such other documents as the Majority Banks through
the Agent may have reasonably requested.
5.04 Conditions to All Credit Extensions. The obligation of each
Bank to make the Term Loan and any Revolving Loan to be made by it (including
its initial Revolving Loan) or to continue or convert any Revolving Loan under
Section 2.04, and the obligation of the Swing Loan Bank to make any Swing Loan,
and the obligation of the Issuing Bank to Issue any Letter of Credit (including
the initial Letter of Credit) is subject to the satisfaction of the following
conditions precedent on the relevant Borrowing Date, Conversion/Continuation
Date or Issuance Date:
(a) Notice, Application. The Agent shall have received
(with, in the case of the initial Revolving Loan only, a copy for each Bank) a
Notice of Borrowing or a Notice of Conversion/Continuation, as applicable, or
in the case of any Issuance of any Letter of Credit, the Issuing Bank and the
Agent shall have received a Letter of Credit Application or Letter of Credit
Amendment Application as required under Section 3.02;
(b) Continuation of Representations and Warranties. The
representations and warranties in Article VI shall be true and correct on and
as of such Borrowing Date or Conversion/Continuation Date with the same effect
as if made on and as of such Borrowing Date or Conversion/Continuation Date
(except to the extent such representations and warranties expressly refer to an
earlier date, in which case they shall be true and correct as of such earlier
date);
(c) No Existing Default. No Default or Event of Default
shall exist or shall result from such Borrowing or continuation or conversion;
and
(d) Illegality. The making of the Loans and the issuance
of Letters of Credit shall be permitted by the laws and regulations of each
applicable jurisdiction to which the Agent, the Banks, the Company or any of
its Subsidiaries are subject (including, without limitation, Regulations U or
X), and shall not subject Banks or the Agent to any penalty.
Each Notice of Borrowing, Notice of Conversion/Continuation and Letter of
Credit Application or Letter of Credit Amendment Application submitted by a
Borrower hereunder shall constitute
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a representation and warranty by such Borrower hereunder, as of the date of
each such notice and as of each Borrowing Date, Conversion/Continuation Date,
or Issuance Date, as applicable, that the conditions in Section 5.01, 5.02 and
5.03, if applicable, and 5.04 are satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Each of the Borrowers represent and warrant to the Agent and each Bank
that:
6.01 Corporate Existence and Power. The Company and each of its
Subsidiaries: (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; (b) has the
power and authority and all material governmental licenses, authorizations,
consents and approvals to own its assets, carry on its business and to execute,
deliver, and perform its obligations under the Loan Documents; (c) is duly
qualified as a foreign corporation and is licensed 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 or license;
and (d) is in compliance in all material respects with all Requirements of Law;
except, in each case referred to in clause (c), to the extent that the failure
to do so would not reasonably be expected to have a Material Adverse Effect or
a Material Adverse Credit Agreement Effect.
6.02 Corporate Authorization; No Contravention. The execution,
delivery and performance by the Company, the Subsidiary Borrowers and the
Subsidiary Guarantors of their respective obligations under this Agreement and
each other Loan Document to which such Person is party, the Borrowings
hereunder, the issuance of Letters of Credit, and the use of proceeds of
Borrowings have been duly authorized by all necessary corporate action, and do
not and will not: (a) contravene the terms of any of that Person's Organization
Documents; (b) conflict with or result in any breach or contravention of, in
any material respect, any document evidencing any material Contractual
Obligation to which such Person is a party, or result in the creation of any
Lien under any such document except for Permitted Liens, or (c) conflict with
or result in any breach or contravention of any material order, injunction,
writ or decree of any Governmental Authority to which such Person or its
property is subject; or (d) violate any material Requirement of Law.
6.03 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Borrowers or
any of their Subsidiaries of this Agreement or any other Loan Document to which
any one or more of them is a party.
6.04 Other Debt Documents. Execution and delivery of, and
compliance with, this Agreement and the other Loan Documents will not result in
a default under the Other Debt Documents which has not been waived.
6.05 Binding Effect. This Agreement and each other Loan Document
to which the Borrowers or any of their Subsidiaries is a party constitute the
legal, valid and binding
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obligations of the Borrowers and any of their Subsidiaries to the extent they
are a party thereto, enforceable against such Person in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles.
6.06 Litigation.
(a) To the best knowledge of the Borrowers, there are no
actions, suits, proceedings, claims or disputes pending, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, against any of the Borrowers, or any of their Subsidiaries or any of
their respective properties, or with respect to any Plan or any Multiemployer
Plan to which the Company or any of its Subsidiaries makes, is making or is
obligated to make contributions: (i) which purport to affect or pertain to this
Agreement or any other Loan Document, or any of the transactions contemplated
hereby or thereby; or (ii) in which there is a reasonable probability of an
adverse decision which would reasonably be expected to have a Material Adverse
Effect or a Material Adverse Credit Agreement Effect.
(b) No injunction, writ, temporary restraining order or
any order of any nature has been issued by any court or other Governmental
Authority purporting to enjoin or restrain the consummation of the Merger, or
execution, delivery or performance of this Agreement or any other Loan
Document, or directing that the transactions provided for herein or therein not
be consummated as herein or therein provided.
6.07 No Default. No Default or Event of Default exists or will
result from the incurring of any Obligations by the Borrowers.
6.08 ERISA Compliance. Each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law, except to the extent that the failure to be in compliance would not
reasonably be expected to have a Material Adverse Effect. Each Plan which is
intended to qualify under Section 401(a) of the Code has received, or filed (or
is still within the applicable remedial amendment period for filing) with the
IRS a request for, a favorable determination letter from the IRS and to the
best knowledge of the Company, nothing has occurred which would cause the loss
of such qualification. Except as set forth in Schedule 6.08, (i) the Company
and each ERISA Affiliate has made all required contributions to any Plan and
Multiemployer Plan subject to Section 412 of the Code, and (ii) neither the
Company nor any ERISA Affiliate has made an application for a funding waiver or
an extension of any amortization period pursuant to Section 412 of the Code
with respect to any Plan or any Multiemployer Plan. There has been no
prohibited transaction or violation of the fiduciary responsibility rules with
respect to any Plan which has resulted or would reasonably be expected to
result in a Material Adverse Effect or a Material Adverse Credit Agreement
Effect.
6.09 Use of Proceeds; Margin Regulations. The proceeds of the
Loans are to be used solely for the purposes set forth in and permitted by
Section 7.11. None of the Borrowers nor any of their Subsidiaries is generally
engaged in the business of purchasing or selling Margin Stock or extending
credit for the purpose of purchasing or carrying Margin Stock.
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6.10 Title to Properties. Each of the Borrowers and their
Subsidiaries have good record and indefeasible title in fee simple to, or valid
leasehold interests in, all real property necessary or used in the ordinary
conduct of their respective businesses, except for such defects in title as
would not, individually or in the aggregate, have a Material Adverse Effect.
As of the Closing Date, the property of each of the Borrowers and their
Subsidiaries is subject to no Liens, other than Permitted Liens.
6.11 Taxes. Each of the Borrowers and their Subsidiaries have
filed all Federal and other material tax returns and reports required to be
filed, and have paid all Federal and other material taxes, assessments, fees
and other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been provided in accordance with GAAP. To the knowledge of the
Borrowers and their Subsidiaries, there is no proposed tax assessment against
any of the Borrowers or any of their Subsidiaries that would, if made, have a
Material Adverse Effect.
6.12 Financial Condition.
(a) The audited consolidated financial statements of BJ
Services Company and its Consolidated Subsidiaries dated September 30, 1994,
and the audited consolidated financial statements of Western Company and its
Consolidated Subsidiaries dated December 31, 1994, including the respective
consolidated statements of financial position and related consolidated
statements of operations, shareholders' equity and cash flows for the fiscal
year ended on each such date, and the unaudited financial statements dated
December 31, 1994 of BJ Services Company and its Consolidated Subsidiaries: (i)
were prepared in accordance with GAAP consistently applied throughout the
period covered thereby, except as otherwise expressly noted therein; and (ii)
fairly present the financial condition of the Company and its Consolidated
Subsidiaries, and Western Company and its Consolidated Subsidiaries, as of the
respective dates thereof and results of operations for the respective periods
covered thereby.
(b) Since December 31, 1994, there has been no Material
Adverse Effect.
6.13 Environmental Matters. Each of the Borrowers and their
Subsidiaries conduct in the ordinary course of business a review of the effect
of existing Environmental Laws and existing Environmental Claims on their
businesses, operations and properties, and as a result thereof the Borrowers
and their Subsidiaries have reasonably concluded that, except as specifically
disclosed in Schedule 6.13, such Environmental Laws and Environmental Claims
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
6.14 Regulated Entities. None of the Borrowers, any Person
controlling the Borrowers, or any of their Subsidiaries, is an "Investment
Company" within the meaning of the Investment Company Act of 1940. None of the
Borrowers is subject to regulation under the Public Utility Holding Company Act
of 1935, the Federal Power Act, the Interstate Commerce Act, any state public
utilities code, or any other Federal or state statute or regulation, in each
case limiting its ability to incur Indebtedness or Contingent Obligations, as
applicable.
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6.15 No Burdensome Restrictions. None of the Borrowers nor any of
their Subsidiaries is a party to or bound by any Contractual Obligation, or
subject to any restriction in any Organization Document, or any Requirement of
Law, which could reasonably be expected to have a Material Adverse Effect.
6.16 Solvency. The Company and its Subsidiaries, taken as a whole,
and the Company, individually, each of the other Borrowers and each of the
Guarantors individually, is Solvent.
6.17 Copyrights, Patents, Trademarks and Licenses, etc. The
Company and its Subsidiaries own or are licensed or otherwise have the right to
use all of the material patents, trademarks, service marks, trade names,
copyrights, contractual franchises, authorizations and other rights that are
reasonably necessary for the operation of their respective businesses, without
conflict in any material respect with the rights of any other Person. To the
best knowledge of the Company and each of the Borrowers, no material slogan or
other advertising device, product, process, method, substance, part or other
material now employed, or now contemplated to be employed, by the Company or
any of its Subsidiaries infringes in any material respect upon any material
rights held by any other Person. Except as specifically disclosed in Schedule
6.17, no claim or litigation regarding any of the foregoing is pending or, to
the knowledge of the Company or any of its Subsidiaries, threatened, in which
there is a reasonable probability of an adverse decision which would reasonably
be expected to have a Material Adverse Effect.
6.18 Subsidiaries. As of the Closing Date and taking into account
the Merger, the Borrowers have no Subsidiaries, and have no equity investments
in any other corporation or entity, other than those specifically disclosed in
Schedule 6.18. Each of the Borrowers and their Subsidiaries is the owner, free
and clear of all liens and encumbrances, of all of the issued and outstanding
voting stock of each of their Subsidiaries (except where ownership of less than
100% is indicated on Schedule 6.18 and except for directors' qualifying
shares). All shares of such stock have been validly issued and are fully paid
and nonassessable, and no rights to subscribe to additional shares have been
granted to exist.
6.19 Insurance. Except as specifically disclosed in Schedule 6.19,
the properties of the Company and its Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Company, in such
amounts, with such deductibles or such self-insured retention levels, and
covering such risks, as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where the Company or
such Subsidiary operates.
6.20 Full Disclosure. The representations or warranties made by
the Borrowers or any of their Subsidiaries in the Loan Documents as of the date
such representations and warranties are made or deemed made, and the statements
contained in all exhibits, reports, statements and certificates furnished by or
on behalf of the Borrowers or any of their Subsidiaries in connection with the
Loan Documents (including the offering and disclosure materials delivered by or
on behalf of the Borrowers to the Banks prior to the Closing Date), taken as a
whole, do not contain any untrue statement of a material fact or omit any
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they are made, not
misleading as of the time when made or delivered.
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6.21 Merger Agreement. At all times prior to the consummation of
the Merger, the Merger Agreement shall constitute a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with
its terms.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Majority Banks waive compliance in
writing:
7.01 Financial Statements. The Company shall maintain, for itself
and each Subsidiary, a system of accounting established and administered in
accordance with GAAP and deliver to the Agent, with sufficient copies for each
Bank:
(a) As soon as available, but no later than 90 days after
the close of each fiscal year, for the Company and its Subsidiaries (i) a copy
of the audited consolidated statement of financial position as at the end of
such fiscal year and the related consolidated statement of operations,
statement of cash flows, and statement of stockholders equity for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, and accompanied by the opinion of independent nationally
recognized certified public accountants (the "Independent Auditor"), which
report shall state that such consolidated financial statements present fairly
the financial position for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years; such opinion shall not be
qualified or limited because of a restricted or limited examination by the
Independent Auditor of any material portion of the Company's or any
Subsidiary's records; and (ii) a consolidating statement of financial position
and consolidating statement of operations for the Company and its Subsidiaries,
such statements consolidating by major geographic areas;
(b) As soon as available, but no later than 45 days after
the close of each of the first three (3) quarterly periods of each fiscal year,
for the Company and its Subsidiaries for the quarterly period then ended (i) an
unaudited consolidated statement of financial position and related consolidated
statement of operations, statement of cash flows and statement of stockholders
equity, and (ii) an unaudited consolidating statement of financial position and
related consolidated statement of operations for the Company and its
Subsidiaries, such statements consolidating by major geographic areas, all such
statements to be certified by a Responsible Officer of the Company as fairly
presenting, in accordance with GAAP (subject to year-end audit adjustments),
the financial position and the results of operations of the Company and its
Subsidiaries;
(c) As soon as available, but no later than 120 days
after the close of each fiscal year, Company-prepared annual projections for
the next succeeding 3 fiscal years setting forth a financial forecast in
substantially the same form as the projections provided to the Banks prior to
the Closing Date; and
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(d) As soon as possible after the delivery thereof to the
Company, a copy of any annual management letter prepared by the Independent
Auditor in connection with the annual audit of the Company and its
Subsidiaries.
7.02 Certificates; Other Information. The Company shall furnish to
the Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial
statements referred to in subsections 7.01(a) and (b), a Compliance Certificate
executed by a Responsible Officer;
(b) promptly, copies of all financial statements and
reports that the Company sends to its shareholders, and, promptly after the
filing thereof, copies of all financial statements and regular, periodical or
special reports (including Forms 10K, 10Q and 8K) that the Company or any
Subsidiary may make to, or file with, the SEC; and
(c) promptly, such additional information regarding the
business, financial or corporate affairs of the Company or any Subsidiary as
the Agent (at the request of any Bank) may from time to time reasonably
request.
7.03 Notices. The Company shall promptly notify the Agent:
(a) of the occurrence of any Default or Event of Default,
promptly upon the chief executive officer, president or any other officer
having substantially the same authority and responsibility or a Responsible
Officer of the Company becoming aware of same;
(b) of any development or event that has resulted or
would reasonably be expected to result in a Material Adverse Effect or Material
Adverse Credit Agreement Effect, including any of the following if it has
resulted or would reasonably be expected to result in a Material Adverse Effect
or a Material Adverse Credit Agreement Effect: (i) breach or non-performance
of, or any default under, a Contractual Obligation of the Company or any
Subsidiary; (ii) any dispute, litigation, investigation, proceeding or
suspension between the Company or any Subsidiary and any Governmental
Authority; or (iii) the commencement of, or any material development in, any
litigation or proceeding affecting the Company or any Subsidiary; including
pursuant to any applicable Environmental Laws;
(c) of the occurrence of any of the following events
affecting the Company or any ERISA Affiliate (but in no event more than 10 days
after the Company obtains knowledge of such event), and deliver to the Agent
and each Bank a copy of any notice with respect to such event that is filed
with a Governmental Authority and any notice delivered by a Governmental
Authority to the Company or any ERISA Affiliate with respect to such event: (i)
an ERISA Event; (ii) a material increase in the Unfunded Pension Liability of
any Pension Plan; (iii) the adoption of, or the commencement of contributions
to, any Plan or Multiemployer Plan subject to Section 412 of the Code by the
Company or any ERISA Affiliate; or (iv) the adoption of any amendment to a Plan
or Multiemployer Plan subject to Section 412 of the Code, if such amendment
results in a material increase in annual contributions; and
(d) prior to the Closing Date, of the giving or receipt
by the Company (or any Subsidiary) of a notice of breach given by any Person
pursuant to the Merger Agreement.
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Each notice under this Section shall be accompanied by a
written statement by a Responsible Officer setting forth details of the
occurrence referred to therein, and stating what action the Company or any
affected Subsidiary proposes to take with respect thereto and at what time.
Each notice under subsection 7.03(a) shall describe with particularity any and
all clauses or provisions of this Agreement or other Loan Document that have
been breached or violated.
7.04 Preservation of Corporate Existence, Etc. Each of the Company
and the other Borrowers shall, and except as otherwise permitted under
Sections 8.02 and 8.03, shall cause each of their respective Subsidiaries to:
(a) preserve and maintain in full force and effect its corporate existence and
good standing under the laws of its state or jurisdiction of incorporation; and
(b) preserve and maintain in full force and effect all governmental rights,
privileges, qualifications, permits, licenses and franchises necessary in the
normal conduct of its business, in the case of clause (a) (with respect to
Persons other than the Company and the other Borrowers) or clause (b) (with
respect to all such Persons), the non-preservation or maintenance of which
could reasonably be expected to have a Material Adverse Effect.
7.05 Maintenance of Property. Each of the Company and the other
Borrowers shall, and shall cause each of their respective Subsidiaries to,
maintain and preserve all material property which is used or useful in its
business in good working order and condition, ordinary wear and tear excepted,
so that its business carried on in connection therewith may be properly
conducted at all times, except where the maintenance and preservation of such
property, in the good faith business judgment of the Company or the applicable
Subsidiary, is no longer in the best interests of the Company and its
Subsidiaries, taken as a whole. The Company and each Subsidiary shall use the
standard of care typical in the industry in the operation and maintenance of
its facilities.
7.06 Insurance. The Company and the other Borrowers shall
maintain, and shall cause each of their respective Subsidiaries to maintain,
with financially sound and reputable independent insurers, insurance with
respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons.
7.07 Payment of Certain Obligations. Each of the Company and the
other Borrowers shall, and shall cause each of their respective Subsidiaries
to, pay and discharge as the same shall become due and payable, all their
respective taxes, assessments and other governmental charges imposed upon it or
any of its properties or assets or in respect of any of its franchises,
business, income or profits, and all claims for sums which have become due and
payable and which by law would become a Lien upon any of its properties or
assets; provided, however, that no such tax, assessment, charge or claim need
be paid or reimbursed if the same is being contested in good faith by
appropriate proceedings diligently conducted and if such reserves, if any, as
shall be required by GAAP shall have been made therefor.
7.08 Compliance with Laws. Each of the Company and the other
Borrowers shall (a) comply, and shall cause each of their respective
Subsidiaries to comply, with all material Requirements of Law of any
Governmental Authority having jurisdiction over it or its business, (b)
maintain, and cause each of its ERISA Affiliates to maintain, each Plan in
compliance in all material respects with the applicable provisions of ERISA,
the Code and other federal or state
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law, and cause each Plan which is qualified under Section 401(a) of the Code to
maintain such qualification; and (c) refrain from engaging in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA, in the case of each
of the preceding clauses (a), (b) and (c), if failure to do so could reasonably
be expected to have a Material Adverse Effect.
7.09 Inspection of Property and Books and Records. Each of the
Company and the other Borrowers shall maintain and shall cause each of their
respective Subsidiaries to maintain proper books of record and account in
conformity with GAAP. The Company and the other Borrowers shall permit, and
shall cause each of their respective Subsidiaries to permit, representatives
and independent contractors of the Agent or any Bank to visit and inspect any
of their respective properties, to examine their respective corporate,
financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective directors, officers, and independent public accountants, all
at such reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to the Company; provided,
however, when an Event of Default exists the Agent or any Bank may do any of
the foregoing at the expense of the Company at any time during normal business
hours and without advance notice, and, provided, further, that if no Event of
Default shall then exist, such inspection shall be at the expense of the Agent
or Bank, as applicable.
7.10 Environmental Laws. Each of the Company and the other
Borrowers shall, and shall cause each Subsidiary to, conduct its operations and
keep and maintain its property in material compliance with all material
Environmental Laws.
7.11 Use of Proceeds. Each of the Company and the other Borrowers
shall use the proceeds of the Loans for only the following purposes:
(a) Term Loans. The proceeds of the Term Loans may be
used only for the following purposes: (i) to pay cash consideration to
shareholders of Western pursuant to Section 3.1(a) of the Merger Agreement,
(ii) to pay cash consideration to holders of Western Options pursuant to
Section 3.2 of the Merger Agreement, (iii) to pay transaction costs, fees and
expenses relating to the Merger, (iv) to repay Indebtedness owing under or
pursuant to the BJ Note Agreements and the BJ Notes, (v) to repay Indebtedness
owing under or pursuant to the Western Note Agreement and the Western Notes,
(vi) to repay Indebtedness owing under or pursuant to the Existing Company
Credit Agreement, the Existing Western Credit Agreements and any promissory
notes issued pursuant thereto, and (vii) the repurchase or redemption of
Western Subordinated Debentures.
(b) Revolving Loans. The proceeds of the Revolving Loans
may be used only for the following purposes: (i) subject to Section 8.07, for
working capital and general corporate purposes, including, without limitation,
the issuance of Letters of Credit, the making of Restricted Payments permitted
by Section 8.15 of this Agreement and the making of Investments permitted by
Section 8.04 of this Agreement, (ii) for each of the purposes described in
subsection 7.11(a) hereinabove, and (iii) to pay Cash Consideration (as defined
in the Merger Agreement) to holders of Western Subordinated Debentures who
convert Western Subordinated Debentures pursuant to Section 3.1(e) of the
Merger Agreement.
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(c) Swing Loans. The proceeds of the Swing Loans may be
used only for working capital and general corporate purposes, including,
without limitation, the issuance of Letters of Credit.
(d) All Loans. No Loans shall be used for any purpose
which would be in contravention of any Requirement of Law.
7.12 Certain Waivers Under the Merger Agreement. Prior to the
Closing Date, the Company shall provide to the Agent copies of (a) all waivers,
if any, which the Company grants to Western Company pursuant to Article VII of
the Merger Agreement, promptly after the granting thereof, and (b) all notices
of a breach under the Merger Agreement given to or received by the Company (or
any Subsidiary). This Section 7.12 shall not be deemed to authorize the giving
of any waivers not permitted by subsection 5.01(b)(i) of this Agreement.
7.13 New Subsidiary Guarantors. If, at any time after the date of
this Agreement, there exists any Subsidiary incorporated under the laws of any
state in the United States of America with total assets with a book value of
$3,000,000 or more, then the Company shall cause each such Subsidiary to do the
following: (i) execute and deliver a Guaranty to the Agent substantially in the
form of Exhibit "J" hereto and (ii) furnish the Agent with a written opinion of
counsel for each such Subsidiary Guarantor in substantially the form set forth
in Exhibit "D"; in each case with such revisions as may be reasonably requested
by the Agent or the Banks.
7.14 Further Assurances.
(a) Each of the Company and the other Borrowers will
ensure and will cause each of their Subsidiaries to ensure, that all written
information, exhibits and reports furnished to the Agent and the Banks do not
and will not contain any untrue statement of a material fact and do not and
will not omit to state any material fact or any fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which made, and will, and will cause each of their Subsidiaries to, promptly
disclose to the Agent and the Banks and correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement
or recordation thereof.
(b) Promptly upon request by the Majority Banks or the
Agent, each of the Company and the other Borrowers will, and will cause each of
their Subsidiaries to, do, execute, acknowledge, deliver, record, re-record,
file, and re-file, any and all such further acts, certificates, assurances and
other instruments as the Agent or such Banks may reasonably require from time
to time in order (i) to carry out more effectively the purposes of this
Agreement or any other Loan Document, and (ii) to better assure, convey, grant,
assign, transfer, preserve, protect and confirm to the Agent and the Banks the
rights granted or now or hereafter intended to be granted to the Agent and the
Banks under any Loan Document or under any other instrument executed in
connection therewith.
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ARTICLE VIII
NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Majority Banks waive compliance in
writing:
8.01 Limitation on Liens. Each of the Company and the other
Borrowers agrees that it shall not, and shall not permit any Subsidiary to,
directly or indirectly, make, create, incur, assume or suffer to exist any Lien
upon or with respect to any part of its property, whether now owned or
hereafter acquired, other than the following ("Permitted Liens"):
(a) (1) Liens for taxes, assessments and other
governmental charges or levies arising by operation of law in the ordinary
course of business for sums which are not yet due and payable, or such Liens
the enforcement of which are, at all times, effectively and fully stayed and
are being contested in good faith by appropriate proceedings diligently
conducted, and for which reserves as required under United States generally
accepted accounting principles shall have been established, (2) Liens created
by this Agreement and the other Loan Documents, (3) deposits or pledges made in
the ordinary course of business to secure the payment of (A) workmen's
compensation, unemployment insurance, pensions or other social security
benefits or obligations or public or statutory obligations, (B) to the extent
any such Contingent Obligations are permitted hereunder, contingent obligations
on surety, appeal, bid or performance bonds or other obligations of a like
general nature incurred in the ordinary course of business, (4) cash deposits
or cash pledges to secure the payment of Contingent Obligations (to the extent
any such Contingent Obligations are permitted hereunder), to issuers of appeal
bonds or supersedeas bonds (including, without limitation, surety bonds and
letters of credit and other instruments serving a similar purpose) arising in
connection with judicial or administrative proceedings, (5) zoning
restrictions, easements, licenses, restrictions, conditions and permits, and
other similar encumbrances, on or with respect to, the use of real property or
minor irregularities in title thereto which do not materially impair the use of
such property in the operation of the business of the Company or the
Subsidiaries or the value of such property, (6) inchoate liens arising under
ERISA to secure current service pension liabilities as they are incurred under
the provisions of Pension Plans from time to time in effect, (7) Liens arising
in the ordinary course of business in respect of claims or demands of
landlords, carriers, warehousemen, vendors, mechanics, laborers, materialmen,
mechanics, workers, repairmen and other similar Persons, whether arising by
operation of law, contractually or otherwise, provided that the amounts
respectively secured thereby are not past due or if past due, the enforcement
of any such Liens are, at all times, stayed, and such Liens are being contested
in good faith by appropriate proceedings diligently conducted and reserves as
required under GAAP shall have been established therefor, (8) Liens arising by
operation of law for master's and crew's wages and other maritime liens arising
by operation of law which are incurred in the ordinary course of business, (9)
rights of lessees or sublessees under leases or subleases of property, whether
real, personal or mixed, to other Persons, if such leases or subleases are not
prohibited by Section 8.02, and (10) Liens existing on the date hereof and
described in Schedule 8.01 hereto and any Refinancings of such Liens described
in this clause (10); provided that the principal amount secured thereby is not
increased above the principal amount outstanding at the time of such
Refinancing;
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(b) purchase money security interests on any property
acquired or held by the Company or its Subsidiaries 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 and
Refinancings thereof; provided that, (i) such Lien attaches solely to the
property so acquired in such transaction, and (ii) the principal amount of the
Indebtedness secured by any and all such purchase money security interests
shall not at any time exceed $20,000,000;
(c) Liens existing on property acquired in the Merger,
which Liens were in existence immediately prior to the Merger, described in
Schedule 8.01(c) hereto; provided that such Liens shall relate solely to the
property subject thereto as of the Closing Date and shall secure only the
payment of the Indebtedness so secured as of such date and Refinancings
thereof;
(d) Liens arising in respect of any sale and lease-back
transactions permitted within the dollar limits set forth in subsection 8.02(h)
of this Agreement;
(e) statutory and common law rights of setoff, and rights
of setoff under general depository agreements and under reimbursement
agreements executed in connection with letters of credit issued for the account
of the Company or a Subsidiary of the Company, with respect to financial
institution depository accounts maintained by the Company and its Subsidiaries
in the ordinary course of business, which accounts (i) remain (subject to such
rights of setoff) at all times under the dominion and control of the Company
and its Subsidiaries, and (ii) are not at any time subject to any balance
requirements or other Liens of any kind;
(f) any attachment or other judgment Lien, provided that
the judgment secured by such attachment or other Lien shall, within forty-five
(45) days after the entry thereof, have been discharged or execution thereof
stayed pending appeal, or shall have been discharged within forty-five (45)
days after expiration of such stay and provided further that the aggregate
amount so secured will not at any time exceed $10,000,000;
(g) contractual rights of set-off in general depository
accounts granted to financial institutions pursuant to guarantees of
Indebtedness (or other obligations) of the Company or any Subsidiary of the
Company otherwise permitted by this Agreement, provided that (i) the aggregate
dollar amount on deposit in depository accounts subject to such rights of
set-off does not at any time exceed $5,000,000 in the aggregate, and (ii) the
Company (or the applicable Subsidiary) maintains (subject to such right of
set-off) dominion and control over such account(s); and
(h) Liens on assets other than current assets (as defined
under GAAP) of the Company or any Subsidiary and other than stock of
Subsidiaries; provided, that the aggregate consolidated book value of all such
assets encumbered at any one time shall not exceed $10,000,000.
8.02 Disposition of Assets. Each of the Company and the other
Borrowers agrees that it shall not, and shall not permit any Subsidiary to,
permit any Disposition (whether in one or a series of transactions) of any
property or assets (including accounts and notes receivable, with or without
recourse) or enter into any agreement so to do, except:
(a) Dispositions of inventory in the ordinary course of
business;
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(b) sales of capital stock of any Subsidiary by the
parent company thereof to members of the board of directors (or other analogous
governing body under the laws of the jurisdiction under which such Subsidiary
is incorporated) or officers of such Subsidiary in the minimum amount required
to qualify such person by the laws of the jurisdiction under which such
Subsidiary is incorporated;
(c) Dispositions of assets, properties or businesses by
the Company or any of its Subsidiaries or Affiliates to any other Subsidiary or
to the Company, including the transfer after the Merger by the Company to
BJ-USA of the assets of Western and its Subsidiaries acquired by the Company as
a result of the Merger;
(d) Dispositions of property in connection with any
consolidation, merger or dissolution or liquidation permitted by Section 8.03
hereof;
(e) Dispositions of the property described in Schedule
8.02(e) attached hereto;
(f) Dispositions of equipment which is obsolete, worn out
or no longer used or useful in such Person's business, all in the ordinary
course of business;
(g) Dispositions, during the one-year period following
the effective date of the Merger, of any property or assets (other than stock
of a Subsidiary) having an aggregate book value not in excess of $10,000,000
when in the judgment of the Company the disposition of such property is
determined to be useful to achieve consolidation (or avoid duplication),
achieve reduction of expenses or costs and/or maximize the potential for
profits in respect of its and its Subsidiaries' business and operations taken
together after the Merger including, but not limited to, the property described
in Schedule 8.02(g) hereto; and
(h) Dispositions of any property, assets (including
capital stock of Subsidiaries and Affiliates) or businesses of the Company or
any Subsidiary not otherwise permitted by clauses (a) through (g) of this
Section 8.02; provided, that the aggregate book value of all such property,
assets or businesses sold, leased or otherwise disposed of during the term of
this Agreement shall not at any time exceed 15% of the total book value of the
assets of the Company (determined on a consolidated basis in accordance with
GAAP, as of the end of the immediately preceding fiscal quarter), and,
provided, further, that for any such property, asset or business other than
capital stock that is sold, leased or otherwise disposed of, for purposes of
determining compliance with this subsection (h), the value of any such
property, asset or business shall be equal to the book value of such property,
asset or business as of the date of such Disposition; and provided, further,
that for purposes of determining compliance with this subsection (h), the value
of any capital stock sold or disposed of shall be determined by multiplying the
number of shares of such capital stock sold by the net book value per share of
such capital stock; and provided, further that this subsection 8.02(h) does not
authorize Dispositions of accounts receivable, with or without recourse.
8.03 Consolidations and Mergers. Each of the Company and the other
Borrowers agree that it shall not, and shall not permit any Subsidiary to,
merge, consolidate with or into, or convey, transfer, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person, except:
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(a) any Subsidiary may merge with the Company, provided
that the Company shall be the continuing or surviving corporation, or with any
one or more Subsidiaries, provided that if any transaction shall be between a
Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be
the continuing or surviving corporation;
(b) any Subsidiary may sell or transfer all or
substantially all of its assets (upon voluntary liquidation, dissolution or
otherwise), to the Company or a Wholly-Owned Subsidiary, and
(c) any Subsidiary or the Company may merge or
consolidate with another Person; provided that such transaction is not
prohibited by Section 8.04 and (x) the Company or the Subsidiary involved in
the merger or the consolidation is the surviving corporation, and (y)
immediately prior to and after giving effect to such merger or consolidation,
there exists no Default or Event of Default.
8.04 Loans and Investments. Each of the Company and the other
Borrowers agrees that it shall not own, purchase or acquire, or permit any
Subsidiary to own, purchase or acquire, or make any commitment therefor, any
capital stock, equity interest, or any obligations or other securities of, or
any interest in, any Person, or make or commit to make any Acquisitions, or
make or commit to make any advance, loan, extension of credit or capital
contribution to or any other investment (collectively, an "Investment") in, any
Person including any Affiliate of the Company, except for:
(a) Investments in Cash Equivalents;
(b) extensions of credit in the nature of accounts
receivable or notes receivable arising from the sale or lease of goods or
services in the ordinary course of business and extensions of credit arising
from Dispositions permitted by Section 8.02;
(c) Investments by the Company in any Consolidated
Subsidiary, whether now or hereafter existing, Investments by any of the
Company's Consolidated Subsidiaries in the Company or in another Consolidated
Subsidiary, whether now or hereafter existing, or Investments by any of the
Company's unconsolidated Subsidiaries in the Company or another Subsidiary,
whether now or hereafter existing; provided, however, that in the event any
loans or extensions of credit are made by the Company or by a Subsidiary to a
Borrower or to a Guarantor, the obligee of such loans or extensions of credit
shall have executed an Intercompany Debt Subordination Agreement in the form of
Exhibit "M" hereto; provided, however, it is agreed that accounts payable and
accounts receivable among the Company and its Consolidated Subsidiaries arising
or created in the ordinary course of business in connection with the
centralized cash management system or centralized purchasing policies of the
Company shall not be deemed loans or extensions of credit for purposes of this
subsection 8.04(c);
(d) Investments in Margin Stock, and other Investments,
in each case which constitute Acquisitions provided that the acquired Person,
division or business is not engaged in any material line of business
substantially different from the Permitted Business;
(e) Investments (other than Acquisitions) in Margin Stock
of any corporation provided that the aggregate book value of the Margin Stock
issued by such corporation and
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owned by the Company or its Subsidiaries does not exceed five percent (5%) of
the total book value of the assets owned by the Company and its Subsidiaries
(determined on a consolidated basis in accordance with GAAP);
(f) Investments made prior to the Execution Date in
Subsidiaries and Joint Ventures described on Schedule 6.18 hereto; or
(g) (i) Investments in Joint Ventures and other
Investments not permitted by subsection 8.04(a) through subsection 8.04(f)
hereinabove, made in fiscal year 1995 after the Execution Date, which when
aggregated with all such Investments made in fiscal year 1995 prior to the
Execution Date (including any such Investments described on Schedule 6.18
hereto), do not exceed 5% of Consolidated Net Worth as of the Closing Date
(giving effect to the Merger), and (ii) Investments in Joint Ventures and other
Investments not permitted by subsection 8.04(a) through subsection 8.04(f)
hereinabove, in each case made during any fiscal year after fiscal year 1995,
in an amount not to exceed in the aggregate at any time during such fiscal year
5% of Consolidated Net Worth as of the end of the fiscal quarter immediately
preceding the fiscal quarter in which the Investment is made.
8.05 Foreign Subsidiary Indebtedness. Each of the Company and the
other Borrowers agrees that it shall not permit any Foreign Subsidiary to
create, incur or suffer to exist any Indebtedness, except Indebtedness in an
aggregate amount for all such Foreign Subsidiaries at no time to exceed 10% of
Consolidated Net Worth at such time. For purposes of determining the amount of
"Indebtedness" under this Section 8.05, any guaranties issued by a Foreign
Subsidiary with respect to Indebtedness of a Borrower or Guarantor shall
constitute "Indebtedness" of such Foreign Subsidiary.
8.06 Transactions with Affiliates. Each of the Company and the
other Borrowers agrees that it shall not, and shall not permit any Subsidiary
to, be a party to or enter into any transaction (including the purchase or sale
of any property or service) with, or make any payment or transfer to, any
Affiliate of the Company, except in the ordinary course of business and upon
fair and reasonable terms no less favorable to such Borrower or Subsidiary than
such Borrower or Subsidiary would obtain in a comparable arm's-length
transaction with a Person not an Affiliate of the Company or such Subsidiary.
8.07 Use of Proceeds; Margin Stock. The Borrowers shall not,
and shall not permit any Subsidiary to, use any portion of the Loan proceeds or
any Letter of Credit, directly or indirectly, (i) to purchase or carry Margin
Stock, (ii) to repay or otherwise refinance indebtedness of the Company or
others incurred to purchase or carry Margin Stock, or (iii) to extend credit
for the purpose of purchasing or carrying any Margin Stock.
8.08 Contingent Obligations. Each of the Company and the other
Borrowers agrees that it shall not, and shall not permit any Subsidiary to,
create, incur, assume or suffer to exist any Contingent Obligations except:
(a) endorsements for collection or deposit in the
ordinary course of business;
(b) this Agreement and the Guaranties; and
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(c) other Contingent Obligations in addition to the
foregoing, not at any time to exceed an aggregate outstanding amount equal to
10% of Consolidated Net Worth.
For purposes of this Section 8.08, "Contingent Obligations" shall not include
guarantees issued by the Company guaranteeing Indebtedness of a Consolidated
Subsidiary of the Company, or guarantees issued by a Consolidated Subsidiary of
the Company guaranteeing Indebtedness of the Company or another Consolidated
Subsidiary.
8.09 Change in Business. Each of the Company and the other
Borrowers agrees that it shall not, and shall not permit any Subsidiary to,
engage in any material line of business substantially different from the
"Permitted Business", which term means those lines of business in which the
Company and its Subsidiaries are engaged on the Execution Date and the
technologies related to such lines of business, those lines of business which
now or hereafter are complementary to the existing lines of business of the
Company and its Subsidiaries and those lines of business which now or hereafter
are complementary to the technologies related to such complementary lines of
business.
8.10 Certain Other Debt.
(a) Each of the Company and the other Borrowers agrees
that it shall not, and shall not permit any Subsidiary to: (i) amend, modify or
change, or consent or agree to any amendment, modification or change to, any of
the terms of the Western Indenture, the Western Subordinated Debentures, the BJ
Note Agreements or the BJ Notes, other than (A) any such amendment or
modification which would extend the maturity or reduce the amount of any
payment of principal thereof or which would reduce the rate or extend the date
of payment of interest thereon, (B) amendments and modifications permitted by
subsection 8.10(b), and (C) such other amendments and modifications reasonably
acceptable to the Majority Banks; or (ii) make any payments to the holders of
the Western Debentures or to any trustee acting under the Western Indenture
which is prohibited by Article XI of the Western Indenture.
(b) The Company may make amendments and modifications to
the BJ Note Agreements and the BJ Notes as necessary or appropriate so that no
defaults or "Events of Default" as therein defined occur as a result of the
execution, delivery or performance hereof or as a result of the making of any
Loans hereunder, provided that (i) the terms of the BJ Notes and the BJ Note
Agreements as amended shall not be more restrictive than the terms of this
Credit Agreement and (ii) not less than ten (10) Business Days prior to
entering into any such amendment, the Company shall provide written notice to
the Agent, together with a copy of the proposed amendment.
8.11 Change in Structure. Each of the Company and the other
Borrowers agrees that it shall not, and, except as permitted by Section 8.02 or
8.03, shall not permit any Subsidiary to, make any changes in its capital
structure (including, without limitation, in the terms of its outstanding
stock) or amend its articles or certificate of incorporation or by-laws if, as
a result, a Material Adverse Effect or a Material Adverse Credit Agreement
Effect would occur.
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8.12 Capitalization Ratio.
(a) From and after the Closing Date the Company shall not
permit the Capitalization Ratio to be greater than the amounts specified at any
time during the periods specified in subsections 8.12(b) and (c) below.
(b) The following amounts shall apply from and after the
Merger Effective Time in the event that any of the Western Subordinated
Debentures have been or are converted into or exchanged for common stock of
Western Company after December 31, 1994, or in the event any of the Western
Subordinated Debentures are converted into or exchanged for common stock of the
Company or cash (or a combination of common stock and cash) on or after the
Merger Effective Time pursuant to Section 3.1(e) of the Merger Agreement:
<TABLE>
<CAPTION>
Period: Capitalization Ratio
------- --------------------
<S> <C>
April 1, 1995 through 50.0%
March 31, 1996
April 1, 1996 through 42.5%
March 31, 1997
April 1, 1997 and 40.0%
thereafter
</TABLE>
(c) The following amounts shall apply from and after the
Merger Effective Time in the event none of the Western Subordinated Debentures
have been or are converted into or exchanged for common stock of Western
Company after December 31, 1994, or converted into or exchanged for Company
common stock or cash (or a combination of common stock and cash) pursuant to
Section 3.1(e) of the Merger Agreement on or after the Merger Effective Time:
<TABLE>
<CAPTION>
Period: Capitalization Ratio
------- --------------------
<S> <C>
April 1, 1995 through 52.5%
March 31, 1996
April 1, 1996 through 45.0%
March 31, 1997
April 1, 1997 and 40.0%
thereafter
</TABLE>
In the event that any of the Western Subordinated Debentures are converted into
or exchanged for common stock of the Company or cash (or a combination of
common stock and cash) pursuant to Section 3.1(e) of the Merger Agreement at
any time after the Merger Effective Time, the amounts set forth in subsection
8.12(b) shall apply from and after the date of the first such conversion.
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8.13 Minimum Net Worth.
(a) From and after the Closing Date, the Company will
maintain at all times Consolidated Net Worth in an amount not less than the sum
of (i) the "Net Worth Base" in the amount specified in subsection (b) below,
plus (ii) 50% of Consolidated Net Income computed on a cumulative basis for the
period beginning June 30, 1995 and ending on the date of determination
(provided that no negative adjustment will be made in the event that
Consolidated Net Income is a deficit figure for such period), plus (iii) 50% of
the aggregate amount of the net assets (cash or otherwise) received by the
Company from the issuance of any class of capital stock after December 31, 1994
(excluding stock issued to Western Company stockholders and holders of Western
Subordinated Debentures in exchange for their shares (or debentures, as
applicable) in connection with the Merger).
(b) The Net Worth Base shall be determined on the Closing
Date, after giving effect to the funding of the Term Loans on such date, and
shall be re-determined on each date that Western Subordinated Debentures are
converted into Stock/Cash Consideration pursuant to Section 3.1(e) of the
Merger Agreement. In the event none of the Western Subordinated Debentures are
converted into or exchanged for common stock of Western Company after December
31, 1994, or converted into or exchanged for Company common stock or cash (or a
combination of common stock and cash) pursuant to Section 3.1(e) of the Merger
Agreement, the Net Worth Base shall be $380,000,000. In the event any Western
Subordinated Debentures are converted into or exchanged for common stock of
Western Company after December 31, 1994, or converted into or exchanged for
Company common stock or cash (or a combination of common stock and cash)
pursuant to Section 3.1(e) of the Merger Agreement, the Net Worth Base shall be
increased by an amount equal to 50% of the principal amount of such Debentures
so converted to stock and/or cash, up to a maximum Net Worth Base of
$400,000,000. By way of example, the Net Worth Base shall be $400,000,000 if
(x) $40,000,000 in principal amount of Western Subordinated Debentures are
converted into stock and/or cash or (y) $80,000,000 in principal amount of
Western Subordinated Debentures are converted into stock and/or cash.
8.14 Interest Coverage Ratio.
(a) The Company shall not permit (as of the end of any
fiscal quarter) the Interest Coverage Ratio for any period of four consecutive
fiscal quarters to be less than the ratio set forth below:
<TABLE>
<CAPTION>
Four Fiscal Quarters Ending: Ratio
---------------------------- -----
<S> <C>
June 30, 1995 through 1.75 to 1.00
September 30, 1995
December 31, 1995 through 2.00 to 1.00
September 30, 1996
December 31, 1996 and 2.50 to 1.00
thereafter
</TABLE>
(b) For purposes of determining compliance with this
Section 8.14 for the four fiscal quarters ending on each of June 30, 1995 and
September 30, 1995, the following shall apply: in calculating net income for
purposes of clause (a) of the definition of Consolidated
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EBIT, the Company may exclude costs and expenses paid to third parties not
Affiliates of the Company (not to exceed $40,000,000) which were incurred in
connection with the Merger.
8.15 Restricted Payments. Each of the Company and the other
Borrowers agrees that it shall not, and shall not permit any Subsidiary to,
declare or make any Restricted Payment, except that the Company and any
Subsidiary may make the following Restricted Payments provided that, in the
case of clauses (a), (c) and (d) below, immediately prior to and after giving
effect to the declaration of any dividend, and immediately prior to and after
giving effect to the payment of any Restricted Payment, there exists no Default
or Event of Default:
(a) the Company and any Subsidiary may declare and make
dividend payments or other distributions payable solely in its capital stock;
(b) any Subsidiary may declare and make Restricted
Payments to the Company or to any Consolidated Subsidiary;
(c) the Company and any Subsidiary may declare and pay
cash dividends on its capital stock, provided, that (1) the Capitalization
Ratio is equal to or less than 35% immediately prior to and after giving effect
to the declaration of dividends, and (2) the aggregate cash dividends paid by
the Company during any fiscal quarter of the Company shall not exceed an amount
equal to 50% of Consolidated Net Income for the preceding four fiscal quarters;
and
(d) the Company and any Subsidiary may purchase, redeem
or otherwise acquire shares of its capital stock or warrants, rights or options
to acquire any such shares provided that (1) the Capitalization Ratio is equal
to or less than 35% immediately prior to and after giving effect thereto and
(2) the aggregate dollar amount of consideration paid for such repurchases,
redemptions or other acquisitions during the period from the Execution Date to
and excluding the making of the purchase, redemption or other acquisition in
question, when aggregated with all other Restricted Payments made by the
Company and its Subsidiaries after the Closing Date in accordance with
subsection 8.15(c) above, does not exceed the Available Amount.
8.16 Subsidiary Dividends. The Company will not, and it will not
permit any of its Subsidiaries to, be a party to or enter into any agreement,
instrument or other document which prohibits or restricts in any way, or to
otherwise, directly or indirectly, create or cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Subsidiary of
the Company to (i) pay dividends or make any other distributions in respect of
its capital stock or any other equity interest or participation in any
Subsidiary, or pay or repay any Indebtedness owed to the Company or any
Subsidiary, (ii) make loans or advances to the Company or (iii) transfer any of
its properties or assets to the Company or any Subsidiary (subject to the
rights of any holder of a Lien on any such properties or assets which Lien is a
Permitted Lien). Notwithstanding the foregoing, this Section 8.16 shall not
prohibit a Foreign Subsidiary from entering into or being a party to agreements
of the type customarily entered into by Persons engaged in the same or similar
business under similar circumstances in such countries.
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ARTICLE IX
EVENTS OF DEFAULT
9.01 Event of Default. Any of the following shall constitute an
"Event of Default":
(a) Non-Payment. The Company or any other Borrower fails
to pay (i) when and as the same becomes due, any amount of principal of any
Loan, or (ii) within five (5) Business Days after the same becomes due, any
Letter of Credit Borrowing or any interest, fee or other amount payable
hereunder or under any other Loan Document; or
(b) Representation or Warranty. Any representation or
warranty by the Company, any other Borrower, or any Subsidiary made, or deemed
pursuant to Section 5.04 to be made, herein or made in any other Loan Document,
certificate, document or financial or other statement by the Company, any other
Borrower, any Subsidiary, or any Responsible Officer and furnished at any time
under this Agreement or under any other Loan Document, is incorrect in any
material respect on or as of the date made or deemed made pursuant to Section
5.04; or
(c) Specific Defaults. The Company or any other Borrower
fails to perform or observe any term, covenant or agreement contained in any of
Sections 7.03(a) or 7.11 or in Article VIII (other than Sections 8.01, 8.04,
8.05, 8.06, 8.08 and 8.09); or
(d) Certain Other Defaults. The Company or any other
Borrower fails to perform or observe any term, covenant or agreement contained
in any of Sections 7.01, 7.02, 7.03 (other than subsection 7.03(a)), 8.01,
8.04, 8.05, 8.06, 8.08 or 8.09, and such default shall continue unremedied for
a period of 20 days after the earlier of (x) the date upon which a Responsible
Officer of the Company reasonably should have known of such default, or (y) the
date upon which written notice thereof is given to the Company by the Agent or
any Bank; or
(e) Other Defaults. The Company, any other Borrower, or
any Subsidiary party thereto fails to perform or observe any other term or
covenant contained in this Agreement or any other Loan Document, and such
default shall continue unremedied for a period of 30 days after the date upon
which written notice thereof is given to the Company by the Agent or any Bank;
or
(f) Cross-Default. (i) the Company, any other Borrower,
or any Subsidiary fails to make any payment in respect of any Indebtedness or
Contingent Obligation having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than $10,000,000
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) and such failure continues after the applicable grace or
notice period, if any, specified in the relevant document on the date of such
failure; or (ii) the Company, any other Borrower, or any Subsidiary fails to
perform or observe any other condition or covenant, or any other event shall
occur or condition exist, under any agreement or instrument relating to any
such Indebtedness or Contingent Obligation, if the effect of such failure,
event or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee
or agent on behalf of such holder or holders or beneficiary or beneficiaries)
to cause such Indebtedness to be declared to be due and payable prior to its
stated
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maturity, or such Contingent Obligation to become payable or cash collateral in
respect thereof to be demanded; or (iii) any Indebtedness or Contingent
Obligations of the Company, any other Borrower or any Subsidiary in excess of
$10,000,000 shall be declared due and payable prior to its stated maturity or
cash collateral is demanded in respect of such Contingent Obligations; or
(g) Insolvency; Voluntary Proceedings. The Company, any
other Borrower or any Material Subsidiary (i) generally fails to pay, or admits
in writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or otherwise; (ii)
commences any Insolvency Proceeding with respect to itself; or (iii) takes any
action to effectuate or authorize any of the foregoing; or
(h) Involuntary Proceedings. (i) Any involuntary
Insolvency Proceeding is commenced or filed against the Company, any other
Borrower or any Material Subsidiary, or any writ, judgment, warrant of
attachment, execution or similar process, is issued or levied against all or a
substantial part of any Borrower's properties, or all or substantially all of
any Material Subsidiary's properties, and any such involuntary Insolvency
Proceeding or petition shall not be dismissed, or such writ, judgment, warrant
of attachment, execution or similar process shall not be released, vacated or
fully bonded within 60 days after commencement, filing or levy; (ii) the
Company, any other Borrower or any Material Subsidiary admits the material
allegations of a petition against it in any Insolvency Proceeding, or an order
for relief (or similar order under non-U.S. law) is ordered in any Insolvency
Proceeding; or (iii) the Company, any other Borrower or any Material Subsidiary
acquiesces in the appointment of a receiver, trustee, custodian, conservator,
liquidator, mortgagee in possession (or agent therefor), or other similar
Person for itself or a substantial portion of its property or business; or
(i) ERISA. (i) An ERISA Event shall occur with respect
to a Pension Plan or Multiemployer Plan which has resulted in liability of the
Company or a Subsidiary under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $5,000,000
and such liability is not paid when due; or (ii) the aggregate amount of
Unfunded Pension Liability among all Pension Plans is in an amount which would
reasonably be expected to cause a Material Adverse Effect; or
(j) Monetary Judgments. One or more non-interlocutory
judgments, non-interlocutory orders, decrees or arbitration awards is entered
against the Company or any Subsidiary involving in the aggregate a liability
(to the extent not covered by independent third-party insurance as to which the
insurer does not dispute coverage) as to any single or related series of
transactions, incidents or conditions, of $10,000,000 or more, and the same
shall remain unsatisfied, unvacated and unstayed pending appeal for a period of
30 days after the entry thereof; or
(k) Change of Control. There occurs any Change of
Control; or
(l) Adverse Change. There occurs a Material Adverse
Effect; or
(m) Guarantor Defaults. A Subsidiary Guarantor fails in
any material respect to perform or observe any term, covenant or agreement in
the Guaranty executed by it; or any Guaranty is for any reason partially
(including with respect to future advances) or wholly revoked or invalidated,
or otherwise ceases to be in full force and effect, or the Guarantor or any
other
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Person contests in any manner the validity or enforceability thereof or denies
that it has any further liability or obligation thereunder; or any event
described at subsections (g) or (h) of this Section occurs with respect to a
Subsidiary Guarantor.
9.02 Remedies. If any Event of Default has occurred and is
continuing, the Agent shall, at the request of, or may, with the consent of,
the Majority Banks:
(a) declare the commitment of each Bank to make Loans and
any obligation of the Issuing Bank to Issue Letters of Credit to be terminated,
whereupon such Commitments shall be terminated;
(b) declare the unpaid principal amount of all
outstanding Loans, all interest accrued and unpaid thereon, and all other
amounts owing or payable hereunder or under any other Loan Document to be
immediately due and payable, without presentment, demand, protest, notice of
intention to accelerate, notice of acceleration or any other notice of any
kind, all of which are hereby expressly waived by the Company and each other
Borrower;
(c) require cash collateral as set forth in Section 3.08;
and
(d) exercise on behalf of itself and the Banks all rights
and remedies available to it and the Banks under the Loan Documents or
applicable law;
provided, however, that upon the occurrence of any event specified in
subsection (g)(ii) or (h) of Section 9.01 (in the case of clause (i) of
subsection (h) upon the expiration of the 60-day period mentioned therein), the
obligation of each Bank to make Loans and any obligation of the Issuing Bank to
Issue Letters of Credit shall automatically terminate and (x) the unpaid
principal amount of all outstanding Loans and all interest and other amounts as
aforesaid shall automatically become due and payable and (y) cash collateral as
set forth in Section 3.08 shall automatically be due and payable, in each case
without further act of the Agent, the Issuing Bank or any Bank and without
presentment, demand, protest, notice of intention to accelerate, notice of
acceleration or any other notice of any kind, all of which are hereby expressly
waived by the Company and each other Borrower.
9.03 Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers, privileges or remedies provided by law or in equity,
or under any other instrument, document or agreement now existing or hereafter
arising.
ARTICLE X
THE AGENT
10.01 Appointment and Authorization.
(a) Each Bank hereby irrevocably (subject to Section
10.09) appoints, designates and authorizes the Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties
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as are expressly delegated to it by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the Agent
have or be deemed to have any fiduciary relationship with any Bank, 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 Agent.
(b) The Issuing Bank shall act on behalf of the Banks
with respect to any Letters of Credit Issued by it and the documents associated
therewith until such time and except for so long as the Agent may agree at the
request of the Majority Banks to act for such Issuing Bank with respect
thereto; provided, however, that the Issuing Bank shall have all of the
benefits and immunities (i) provided to the Agent in this Article X with
respect to any acts taken or omissions suffered by the Issuing Bank in
connection with Letters of Credit Issued by it or proposed to be Issued by it
and the application and agreements for letters of credit pertaining to the
Letters of Credit as fully as if the term "Agent", as used in this Article X,
included the Issuing Bank with respect to such acts or omissions, and (ii) as
additionally provided in this Agreement with respect to the Issuing Bank.
10.02 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
10.03 Liability of Agent. None of the Agent-Related Persons shall
(i) be liable for any action taken or omitted to be taken by any of them under
or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any of the Banks
for any recital, statement, representation or warranty made by the Company or
any Subsidiary or Affiliate of the Company, or any officer thereof, contained
in this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document,
or the validity, effectiveness (other than such Agent-Related Person's own due
execution and delivery), genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of the Company or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Bank
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 Company or any
of the Subsidiaries or Affiliates of the Company.
10.04 Reliance by Agent.
(a) The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement 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
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advice and statements of legal counsel, independent accountants and other
experts selected by the Agent. The 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 Banks
as it deems appropriate and, if it so requests, it shall first be indemnified
to its satisfaction by the Banks 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 Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Majority Banks and such request and
any action taken or failure to act pursuant thereto shall be binding upon all
of the Banks.
(b) For purposes of determining compliance with the
conditions precedent to the initial Credit Extension or a subsequent Credit
Extension specified in Article V, each Bank that has made available to the
Agent its Pro Rata Share of the initial Credit Extension or subsequent Credit
Extension, as the case may be, shall be deemed to have consented to, approved
or accepted or to be satisfied with, each document or other matter either sent
by the Agent to such Bank for consent, approval, acceptance or satisfaction, or
required thereunder to be consented to or approved by or acceptable or
satisfactory to the Bank as a condition precedent to such initial Credit
Extension or subsequent Credit Extension, as applicable.
10.05 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Agent for the account of the Banks, unless the Agent
shall have received written notice from a Bank or a Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". The Agent will notify the Banks of its
receipt of any such notice. Subject to subsection 10.04(a), the Agent shall
take such action with respect to such Default or Event of Default as may be
requested by the Majority Banks in accordance with Article IX; provided,
however, that unless and until the Agent has received any such request, the
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 or in the best interest of the Banks.
10.06 Credit Decision. Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by any Agent-Related Person hereafter taken, including any review of the
affairs of the Company and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Bank. Each Bank
represents to the Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to the Borrowers
hereunder. Each Bank also represents that it will, independently and without
reliance upon any Agent-Related Person 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 investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrowers.
Except for notices, reports and other documents expressly herein required to be
furnished to the Banks by the Agent,
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the Agent shall not have any duty or responsibility to provide any Bank with
any credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of the Borrowers
which may come into the possession of any of the Agent-Related Persons.
10.07 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Banks shall indemnify upon demand (to the extent
not reimbursed by or on behalf of the Company or other Borrowers and without
limiting the obligation of the Company and the other Borrowers to do so as set
forth in Section 11.06 of this Agreement), pro rata, each Agent-Related Person,
from and against any and all Indemnified Liabilities; provided, however, that
no Bank shall be liable for the payment to the Agent-Related Persons of any
portion of such Indemnified Liabilities to the extent the same arise from such
Person's gross negligence or willful misconduct. Without limitation of the
foregoing, each Bank shall reimburse the Agent upon demand for its ratable
share of any costs and out-of-pocket expenses (including Attorney Costs)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that the
Agent is not reimbursed for such expenses by or on behalf of the Company or
other Borrowers. The undertaking in this Section shall survive the payment of
all Obligations hereunder and the resignation or replacement of the Agent.
10.08 Agent in Individual Capacity. Bank of America NT & SA and its
Affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business with
the Company and its Subsidiaries and Affiliates as though Bank of America NT &
SA were not the Agent hereunder and without notice to or consent of the Banks.
The Banks acknowledge that, pursuant to such activities, Bank of America NT &
SA or its Affiliates may receive information regarding the Company or its
Affiliates (including information that may be subject to confidentiality
obligations in favor of the Company or such Subsidiary or Affiliate) and
acknowledge that the Agent-Related Persons shall be under no obligation to
provide such information to them. With respect to its Loans, Bank of America
NT & SA shall have the same rights and powers under this Agreement as any other
Bank and may exercise the same as though it were not the Agent.
10.09 Successor Agent. The Agent may, and at the request of the
Majority Banks shall, resign as Agent upon 30 days notice to the Banks. If the
Agent resigns under this Agreement, the Majority Banks shall appoint from among
the Banks a successor agent for the Banks. If no successor agent is appointed
prior to the effective date of the resignation of the Agent, the Agent may
appoint, after consulting with the Banks and the Company, a successor agent
from among the Banks. Upon the acceptance of its appointment as successor
agent hereunder, such successor agent shall succeed to all the rights, powers
and duties of the retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article X and Sections 11.05 and 11.06 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent
by the date which is 30 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and
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the Banks shall perform all of the duties of the Agent hereunder until such
time, if any, as the Majority Banks appoint a successor agent as provided for
above. Notwithstanding the foregoing, however, for so long as Bank of America
Illinois or Bank of America NT & SA (referred to interchangeably as "Bank of
America" in this sentence) is the Issuing Bank, then Bank of America may not be
removed as the Agent at the request of the Majority Banks unless Bank of
America shall also simultaneously be replaced as "Issuing Bank" hereunder
pursuant to documentation in form and substance reasonably satisfactory to Bank
of America.
10.10 Withholding Tax.
(a) If any Bank is a "foreign corporation, partnership or
trust" within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code,
such Bank agrees with and in favor of the Agent, to deliver to the Agent: (i)
if such Bank claims an exemption from, or a reduction of, withholding tax under
a United States tax treaty, properly completed IRS Forms 1001 and W-8 before
the payment of any interest in the first calendar year and before the payment
of any interest in each third succeeding calendar year during which interest
may be paid under this Agreement; (ii) if such Bank claims that interest paid
under this Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such Bank, two
properly completed and executed copies of IRS Form 4224 before the payment of
any interest is due in the first taxable year of such Bank and in each
succeeding taxable year of such Bank during which interest may be paid under
this Agreement, and IRS Form W-9; and (iii) such other form or forms as may be
required under the Code or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding tax. Such Bank
agrees to promptly notify the Agent of any change in circumstances which would
modify or render invalid any claimed exemption or reduction.
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Bank sells, assigns, grants a participation in, or otherwise transfers all
or part of the Obligations of the Borrowers to such Bank, such Bank agrees to
notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Borrowers to such Bank. To the extent
of such percentage amount, the Agent will treat such Bank's IRS Form 1001 as no
longer valid.
(c) If any Bank claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Borrowers to such Bank, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Bank is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from any interest payment to
such Bank an amount equivalent to the applicable withholding tax after taking
into account such reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to the Agent, then the Agent
may withhold from any interest payment to such Bank not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
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(e) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered, was not properly executed, or
because such Bank failed to notify the Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason) such Bank shall indemnify the Agent fully for all amounts
paid, directly or indirectly, by the Agent as tax or otherwise, including
penalties and interest, and including any taxes imposed by any jurisdiction on
the amounts payable to the Agent under this Section, together with all costs
and expenses (including Attorney Costs). The obligation of the Banks under
this subsection shall survive the payment of all Obligations and the
resignation or replacement of the Agent.
10.11 Co-Agents; Arranger. None of the Banks identified on the
facing page or signature pages of this Agreement as a "co-agent" shall have any
right, power, obligation, liability, responsibility or duty under this
Agreement other than those applicable to all Banks as such. The Arranger shall
not have any obligations, liabilities, responsibilities or duties under this
Agreement or the other Loan Documents. Without limiting the foregoing, none of
the Banks so identified as a "co-agent", nor the Arranger, shall have or be
deemed to have any fiduciary relationship with any Bank. Each Bank
acknowledges that it has not relied, and will not rely, on any of the Banks so
identified or on the Arranger in deciding to enter into this Agreement or in
taking or not taking action hereunder.
ARTICLE XI
MISCELLANEOUS
11.01 Renegotiation After May 15, 1995. In the event the Closing
Date has not occurred on or before May 15, 1995, then, subject to the terms of
Section 11.02, the Majority Banks (with the consent of all Banks, the Issuing
Bank and/or the Agent, in each case as may be required by Section 11.02), at
their discretion, may elect to request amendments to the terms of this
Agreement and the other Loan Documents. In order to request such amendments,
the Majority Banks (through the Agent) shall provide to the Company, on or
before June 15, 1995 (or such later date as may be agreed to by the Company and
the Majority Banks) a form of proposed First Amendment to Credit Agreement (and
amendments to other Loan Documents, to the extent applicable) (collectively,
"Proposed Amendment"). If no Proposed Amendment is furnished to the Company on
or before 5:00 p.m. (Houston, Texas time) on June 15, 1995, then this
Agreement, and any Loan Documents which may have been executed, shall continue
in full force and effect in accordance with their respective terms. If a
Proposed Amendment is timely furnished to the Company, and the Agent does not
receive, on or before 5:00 p.m. (San Francisco time) on the tenth (10th)
Business Day after the Company receives said Proposed Amendment (or such later
date as may be agreed to by the Company and the Majority Banks) (the "Proposed
Amendment Due Date"), from the Company executed counterparts of the Proposed
Amendment, then the Commitments, this Agreement and all other Loan Documents
shall terminate at 5:00 p.m. (San Francisco time) on the Proposed Amendment Due
Date.
11.02 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by the Company or any applicable Subsidiary of the
Company therefrom, shall be effective unless the
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same shall be in writing and signed by the Majority Banks (or by the Agent at
the written request of the Majority Banks) and the Company and acknowledged by
the Agent, and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in writing
and signed by all the Banks and the Company and acknowledged by the Agent, do
any of the following:
(a) increase or extend the Commitment of any Bank or
reinstate any Commitment terminated pursuant to Section 9.02;
(b) postpone or delay any date fixed by this Agreement or
any other Loan Document for any payment of principal, interest, fees or other
amounts due to the Banks (or any of them) hereunder or under any other Loan
Document;
(c) reduce the principal of, or the rate of interest
specified herein on any Loan, or (subject to clause (iii) below) any fees or
other amounts payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the Banks
or any of them to take any action hereunder; or
(e) amend this Section, or Section 2.15, or any provision
herein providing for consent or other action by all Banks;
and, provided further, that (i) no amendment, waiver or consent shall, unless
in writing and signed by the Issuing Bank in addition to the Majority Banks or
all the Banks, as the case may be, affect the rights or duties of the Issuing
Bank under this Agreement or any Letter of Credit-Related Document relating to
any Letter of Credit Issued or to be Issued by it, (ii) no amendment, waiver or
consent shall, unless in writing and signed by the Agent in addition to the
Majority Banks or all the Banks, as the case may be, affect the rights or
duties of the Agent under this Agreement or any other Loan Document, and (iii)
the Fee Letter may be amended, or rights or privileges thereunder waived, only
in a writing executed by the parties thereto.
11.03 Notices.
(a) All notices, requests and other communications shall
be in writing (including, unless the context expressly otherwise provides, by
facsimile transmission, provided that any matter transmitted by the Company or
any other Borrower by facsimile (i) shall be immediately confirmed by a
telephone call to the recipient at the number specified on Schedule 11.03, and
(ii) shall be followed promptly by delivery of a hard copy original thereof)
and mailed, faxed or delivered, to the address or facsimile number specified
for notices on Schedule 11.03; or, as directed to the Company or the Agent, to
such other address as shall be designated by such party in a written notice to
the other parties, and as directed to any other party, at such other address as
shall be designated by such party in a written notice to the Company and the
Agent.
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(b) All such notices, requests and communications shall,
when transmitted by overnight delivery, or faxed, be effective when delivered
for overnight (next Business Day) delivery, or transmitted in legible form by
facsimile machine, respectively, or if mailed, upon the third Business Day
after the date deposited into the U.S. mail, or if delivered, upon delivery;
except that notices pursuant to Article II, III or X shall not be effective
until actually received by the Agent, and notices pursuant to Article III to
the Issuing Bank shall not be effective until actually received by the Issuing
Bank at the address specified for the "Issuing Bank" on the applicable
signature page hereof.
(c) Any agreement of the Agent and the Banks herein to
receive certain notices by telephone or facsimile is solely for the convenience
and at the request of the Borrowers. The Agent and the Banks shall be entitled
to rely on the authority of any Person purporting to be a Person authorized by
the Company or any other Borrower to give such notice and the Agent and the
Banks shall not have any liability to the Company or any other Borrower or
other Person on account of any action taken or not taken by the Agent or the
Banks in reliance upon such telephonic or facsimile notice, except to the
extent that such action or inaction constitutes willful misconduct or gross
negligence. The obligation of the Borrowers to repay the Loans and Letter of
Credit Obligations shall not be affected in any way or to any extent by any
failure by the Agent and the Banks to receive written confirmation of any
telephonic or facsimile notice or the receipt by the Agent and the Banks of a
confirmation which is at variance with the terms understood by the Agent and
the Banks to be contained in the telephonic or facsimile notice.
11.04 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Bank, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
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.
11.05 Costs and Expenses. Each of the Company and the other
Borrowers, jointly and severally, shall:
(a) whether or not the transactions contemplated hereby
are consummated, pay or reimburse the Agent and the Issuing Bank within ten
(10) Business Days after demand (subject to subsection 5.01(h)) for all
reasonable costs and expenses incurred by the Agent and the Issuing Bank in
connection with the development, preparation, delivery, administration and
execution of, and any amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Agreement, any Loan Document and any
other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including
Attorney Costs incurred by the Agent and the Issuing Bank with respect thereto;
and
(b) pay or reimburse the Agent, the Arranger and each
Bank within ten (10) Business Days after demand (subject to subsection 5.01(h))
for all reasonable costs and expenses (including Attorney Costs) incurred by
each of them in connection with the enforcement, attempted enforcement, or
preservation of any rights or remedies under this Agreement or any other Loan
Document during the existence of an Event of Default or after acceleration of
the Loans (including in connection with any "workout" or restructuring
regarding the Loans, and including in any Insolvency Proceeding or appellate
proceeding).
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11.06 Indemnity. Whether or not the transactions contemplated
hereby are consummated, the Borrowers, jointly and severally, shall indemnify
and hold each of the Agent-Related Persons and each Bank and each of their
respective officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, and reasonable costs, charges, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever which may at any
time (including at any time following repayment of the Loans, the termination
of the Letters of Credit and the termination, resignation or replacement of the
Agent or replacement of any Bank) be imposed on or incurred by any such Person
and relating to or arising out of this Agreement or any of the other Loan
Documents or the transactions contemplated hereby, or any action taken or
omitted by any such Person under or in connection with any of the foregoing,
including with respect to any investigation, litigation or proceeding
(including any Insolvency Proceeding or appellate proceeding) related to or
arising out of this Agreement or the Loans or Letters of Credit or the use of
the proceeds thereof, whether or not any Indemnified Person is a party thereto
(all the foregoing, collectively, the "Indemnified Liabilities"); provided,
that the Borrowers shall have no obligation hereunder to any Indemnified Person
with respect to Indemnified Liabilities to the extent the same arise from the
gross negligence or willful misconduct of such Indemnified Person. The
agreements in this Section shall survive payment of all other Obligations.
11.07 Payments Set Aside. To the extent that one or more of the
Borrowers makes a payment to the Agent or the Banks, or the Agent or the Banks
exercise their right of set-off, and such payment or the proceeds of such
set-off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Agent or such Bank in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
Insolvency Proceeding or otherwise, then (a) to the extent of such recovery the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such set-off had not occurred, and (b) each Bank severally agrees to pay to the
Agent upon demand its pro rata share of any amount so recovered from or repaid
by the Agent.
11.08 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that no Borrower may assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of the Agent and each Bank.
11.09 Assignments, Participations, etc.
(a) Any Bank (including the Issuing Bank) may, with the
written consent of the Company (provided that such consent shall not be
required during the existence of an Event of Default) and with the written
consent of the Agent and the Issuing Bank, which consents of the Company, the
Agent and the Issuing Bank, as applicable, shall not be unreasonably withheld,
at any time assign and delegate to one or more Eligible Assignees (as defined
in subsection 11.09(b) below) (provided that no written consent of the Company,
the Agent or the Issuing Bank shall be required in connection with any
assignment and delegation by a Bank to an Eligible Assignee that is an
Affiliate of such Bank) (each an "Assignee") all, or any ratable part of all,
of the Loans, the Commitments, the Letter of Credit Obligations and the other
rights and obligations of such Bank hereunder, in a minimum amount of
$10,000,000, divided pro rata
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between the Revolving Commitment and the Term Commitment, provided, however,
that in the event a Bank assigns less than all of its interests hereunder, it
shall retain a Commitment of not less than $10,000,000 after the consummation
of the assignment; provided, further, that the Company and the Agent may
continue to deal solely and directly with an assigning Bank in connection with
the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the Company
and the Agent by such Bank and the Assignee; (ii) such Bank and its Assignee
shall have delivered to the Company and the Agent an Assignment and Acceptance
in the form of Exhibit "E" ("Assignment and Acceptance") together with any Note
or Notes subject to such assignment and (iii) the assignor Bank or Assignee has
paid to the Agent a processing fee in the amount of $2,500.
(b) As used herein, an "Eligible Assignee" means (i) a
commercial bank organized under the laws of the United States, or any state
thereof, and having a combined capital and surplus of at least $200,000,000;
(ii) a commercial bank organized under the laws of any other country which is a
member of the Organization for Economic Cooperation and Development (the
"OECD"), or a political subdivision of any such country, and having a combined
capital and surplus of at least $200,000,000 which makes or participates in
commercial loans in the ordinary course of business, provided that such bank is
acting through a branch or agency located in the United States; and (iii) a
Person with a combined capital and surplus of at least $200,000,000 that is
primarily engaged in the business of commercial banking and which makes or
participates in commercial loans in the ordinary course of business and that is
(A) a Subsidiary of a Bank, (B) a Subsidiary of a Person of which a Bank is a
Subsidiary, or (C) a Person of which a Bank is a Subsidiary.
(c) From and after the date that the Agent notifies the
assignor Bank that it has received (and provided its consent with respect to)
an executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Loan Documents, and (iii)
this Agreement shall be deemed to be amended to the extent, but only to the
extent, necessary to reflect the addition of the Assignee and the resulting
adjustment of the Commitments arising therefrom. The Commitment allocated to
each Assignee shall reduce such Commitments of the assigning Bank pro tanto.
(d) Within five (5) Business Days after its receipt of
notice by the Agent that it has received an executed Assignment and Acceptance
and payment of the processing fee (and provided that it consents to such
assignment in accordance with subsection 11.09(a)), the Borrowers shall execute
and deliver to the Agent, new Notes evidencing such Assignee's assigned Loans
and Commitment and, if the assignor Bank has retained a portion of its Loans
and its Commitment, replacement Notes in the principal amount of the Loans
retained by the assignor Bank (such Notes to be in exchange for, but not in
payment of, the Notes held by such Bank).
(e) Any Bank may at any time sell to one or more
commercial banks or other Persons not Affiliates of the Company (a
"Participant") participating interests in any Loans, the
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Commitment of that Bank and the other interests of that Bank (the "originating
Bank") hereunder and under the other Loan Documents; provided, however, that
(i) the originating Bank's obligations under this Agreement shall remain
unchanged, the originating Bank shall remain a Bank for all purposes hereof and
of the other Loan Documents to which such originating Bank is a party, and the
Participant shall not become a Bank for purposes hereof or for purposes of any
other of the Loan Documents, (ii) the originating Bank shall remain solely
responsible for the performance of such obligations, (iii) the Company, the
Issuing Bank and the Agent shall continue to deal solely and directly with the
originating Bank in connection with the originating Bank's rights and
obligations under this Agreement and the other Loan Documents, and (iv) no Bank
shall transfer or grant any participating interest under which the Participant
has rights to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment, consent or waiver would require unanimous consent of the Banks as
described in the first proviso to Section 11.02. In the case of any such
participation, the Participant shall not have any rights under this Agreement
or any of the other Loan Documents (the Participant's rights against the
granting Bank in respect of such participation being those set forth in the
agreement creating or evidencing such participation with such Bank), and all
amounts payable by the Borrowers hereunder shall be determined as if such Bank
had not sold such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Bank under
this Agreement.
(f) Each Bank agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
information identified as "confidential" or "secret" by the Company and
provided to it by the Company or any of its Subsidiaries, or by the Agent on
such Company's or Subsidiary's behalf, under or in connection with this
Agreement or any other Loan Document, and neither it nor any of its Affiliates
shall use any such information other than in connection with or in enforcement
of this Agreement and the other Loan Documents; except to the extent such
information (i) was or becomes generally available to the public other than as
a result of disclosure by the Bank, or (ii) was or becomes available on a
non-confidential basis from a source other than the Company, provided that such
source is not bound by a confidentiality agreement with the Company known to
the Bank; provided, however, that any Bank may disclose such information (A) at
the request or pursuant to any requirement of any Governmental Authority to
which the Bank is subject or in connection with an examination of such Bank by
any such authority; (B) pursuant to subpoena or other court process; (C) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; (D) to the extent reasonably required in connection with
any litigation or proceeding to which the Agent, any Bank or their respective
Affiliates may be party; (E) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Loan Document; (F)
to such Bank's independent auditors and other professional advisors in the
exercise of their professional duties; (G) to any Affiliate of such Bank, or to
any Participant or Assignee, actual or potential, provided that such Affiliate,
Participant or Assignee agrees to keep such information confidential to the
same extent required of the Banks hereunder, and (H) as to any Bank, as
expressly permitted under the terms of any other document or agreement
regarding confidentiality to which the Company is party or is deemed party with
such Bank.
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(g) Notwithstanding any other provision in this
Agreement, any Bank may at any time create a security interest in, or pledge,
all or any portion of its rights under and interest in this Agreement and the
Notes held by it in favor of any Federal Reserve Bank in accordance with
Regulation A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and
such Federal Reserve Bank may enforce such pledge or security interest by any
such Bank in any manner permitted under applicable law.
11.10 Set-off. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without
prior notice to the Borrowers, any such notice being waived by each of the
Borrowers to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, such Bank to or for
the credit or the account of any one or more of the Borrowers against any and
all Obligations owing to such Bank, now or hereafter existing, irrespective of
whether or not the Agent or such Bank shall have made demand under this
Agreement or any Loan Document and although such Obligations may be contingent
or unmatured. Each Bank agrees promptly to notify the Company and the Agent
after any such set-off and application made by such Bank; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application.
11.11 Company as Subsidiary Borrower Representative. Each
Subsidiary Borrower hereby irrevocably designates and appoints the Company as
the agent of such Subsidiary Borrower under this Agreement and the other Loan
Documents for the purpose of giving notices and taking other actions delegated
to the Company pursuant to the terms of this Agreement and the other Loan
Documents. In furtherance of the foregoing, each Subsidiary Borrower hereby
irrevocably grants to the Company such Subsidiary Borrower's power-of-
attorney, and hereby authorizes the Company, to act in place of such Subsidiary
Borrower with respect to matters delegated to the Company pursuant to the terms
of this Agreement and the other Loan Documents and to take such other actions
as are reasonably incidental thereto. The Company hereby agrees to provide
prompt notice to the relevant Subsidiary Borrower of any action taken by the
Company under this Agreement and the other Loan Documents in place of such
Subsidiary Borrower, provided that the failure to so provide such notice shall
not affect the obligations of such Subsidiary Borrower hereunder. The Agent is
hereby authorized to direct to the Company all invoices and similar statements
showing amounts due by the Borrowers hereunder and under the Notes.
11.12 Interest. It is the intention of the parties hereto to comply
strictly with applicable usury laws; accordingly, notwithstanding any provision
to the contrary in this Agreement, the Notes or in any of the other Loan
Documents securing the payment hereof or otherwise relating hereto, in no event
shall this Agreement, the Notes or such other Loan Documents require or permit
the payment, charging, taking, reserving, or receiving of any sums constituting
interest under applicable laws which exceed the maximum nonusurious amount
permitted by such laws. If any such excess interest is contracted for,
charged, taken, reserved, or received in connection with the Loans evidenced by
the Notes or in any of the Loan Documents securing the payment hereof or
otherwise relating hereto, or in any communication by Agent or the Banks or any
other person to any Borrower or any other person, or in the event all or part
of the principal or interest thereof shall be prepaid or accelerated, so that
under any of such circumstances or under any other circumstance whatsoever the
amount of interest contracted for, charged, taken, reserved, or
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received on the amount of principal actually outstanding from time to time
under the Notes shall exceed the maximum nonusurious amount of interest
permitted by applicable usury laws, then in any such event it is agreed as
follows: (i) the provisions of this paragraph shall govern and control, (ii)
any such excess shall be deemed an accidental and bona fide error and canceled
automatically to the extent of such excess, and shall not be collected or
collectible, (iii) any such excess which is or has been paid or received
notwithstanding this paragraph shall be credited against the then unpaid
principal balance of the Notes, or, if no principal balance is then
outstanding, refunded to the applicable Borrower, and (iv) the effective rate
of interest shall be automatically reduced to the maximum nonusurious rate
allowed under applicable laws as construed by courts having jurisdiction
thereof or hereof. Without limiting the foregoing, all calculations of the
rate of interest contracted for, charged, taken, reserved, or received in
connection with the Notes or this Agreement which are made for the purpose of
determining whether such rate exceeds the maximum nonusurious rate shall be
made to the extent permitted by applicable laws by amortizing, prorating,
allocating and spreading during the period of the full term of the Loans,
including all prior and subsequent renewals and extensions, all interest at any
time contracted for, charged, taken, reserved, or received. The terms of this
paragraph shall be deemed to be incorporated in every document and
communication relating to the Notes, the Loans or any other Loan Document.
11.13 Indemnity and Subrogation. In addition to all such rights of
indemnity and subrogation as the Guarantors may have under applicable law, each
Borrower agrees that in the event a payment shall be made by any Guarantor
under a Guaranty in respect of a Loan to such Borrower, such Borrower shall
indemnify such Guarantor for the full amount of such payment and such Guarantor
shall be subrogated to the rights of the person to whom such payment shall have
been made to the extent of such payment subject to the provisions of the
Guaranty executed by such Guarantor. Notwithstanding any provision of this
Agreement to the contrary, all rights of the Guarantors under this Section
11.13 and all other rights of indemnity, contribution or subrogation under
applicable law or otherwise shall be fully subordinated to the indefeasible
payment in full of the Obligations. No failure on the part of a Borrower to
make the payments required by this Section (or any other payments required
under applicable law or otherwise) shall in any respect limit the obligations
and liabilities of any Guarantor with respect to any Guaranty, and each
Guarantor shall remain liable for the full amount of the obligations of such
Guarantor under each such Guaranty in accordance therewith.
11.14 Notification of Addresses, Lending Offices, Etc. Each Bank
shall notify the Agent in writing of any changes in the address to which
notices to the Bank should be directed, of addresses of any Lending Office, of
payment instructions in respect of all payments to be made to it hereunder and
of such other administrative information as the Agent shall reasonably request.
11.15 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
11.16 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
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11.17 No Third Parties Benefitted. This Agreement is made and
entered into for the sole protection and legal benefit of the Borrowers, the
Banks, the Agent and the Agent-Related Persons, and their permitted successors
and assigns, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any of the other Loan Documents.
11.18 Governing Law and Jurisdiction.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS, EXCEPT Section 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK); PROVIDED THAT THE AGENT AND THE
BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWERS, THE AGENT
AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-
EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH BORROWER HEREBY IRREVOCABLY
DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION WITH OFFICES ON THE DATE
HEREOF AT 1633 BROADWAY, NEW YORK, NEW YORK 10019, AS ITS DESIGNEE, APPOINTEE
AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN
RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES
AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY
REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS
SUCH, EACH BORROWER AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN
NEW YORK ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO
THE AGENT. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH BORROWER FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS SET FORTH
IN SCHEDULE 11.03, SUCH SERVICE TO BECOME EFFECTIVE TEN DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR ANY BANK TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY BORROWER IN ANY OTHER
JURISDICTION. EACH OF THE BORROWERS, THE AGENT AND THE BANKS EACH WAIVE
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
(c) EACH OF THE BORROWERS, THE AGENT AND THE BANKS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
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WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING
IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED
HERETO.
11.19 WAIVER OF JURY TRIAL. EACH OF THE BORROWERS, THE BANKS AND
THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN
ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR
ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
EACH OF THE BORROWERS, THE BANKS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM
OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, EACH OF THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
11.20 Entire Agreement. This Agreement supersedes in its entirety
the commitment letter dated December 14, 1994 among the Company, the Arranger
and Bank of America NT & SA, which letter is hereby terminated. The Fee Letter
remains in full force and effect in accordance with the terms thereof. This
Agreement, together with the other Loan Documents, embodies the entire
agreement and understanding among the Borrowers, the Banks and the Agent, and
supersedes all prior or contemporaneous agreements and understandings of such
Persons, verbal or written, relating to the subject matter hereof and thereof.
THIS WRITTEN LOAN AGREEMENT, TOGETHER WITH THE OTHER WRITTEN LOAN
DOCUMENTS EXECUTED IN CONNECTION HEREWITH, REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 92
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.
BJ SERVICES COMPANY
By: /s/ Taylor M. Whichard III
----------------------------------
Taylor M. Whichard III
Treasurer
BJ SERVICES COMPANY, U.S.A.
By: /s/ Taylor M. Whichard III
----------------------------------
Taylor M. Whichard III
Treasurer
BJ SERVICES COMPANY MIDDLE EAST
By: /s/ Taylor M. Whichard III
----------------------------------
Taylor M. Whichard III
Treasurer
BJ SERVICE INTERNATIONAL, INC.
By: /s/ Taylor M. Whichard III
----------------------------------
Taylor M. Whichard III
Treasurer
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<PAGE> 93
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as
Agent
By: /s/ Frank H. Woo
----------------------------------
Name: Frank H. Woo
Title: Assistant Vice President
BANK OF AMERICA ILLINOIS, as a Bank and
as Issuing Bank
By: /s/ C. Paige DiMaggio
----------------------------------
Name: C. Paige DiMaggio
Title: Vice President
THE CHASE MANHATTAN BANK, N.A., as
Co-Agent and as a Bank
By: /s/ Bettylou J. Robert
----------------------------------
Name: Bettylou Robert
Title: Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
as Co-Agent and as a
Bank
By: /s/ Xavier Ratouis
----------------------------------
Name: Xavier Ratouis
Title: Authorized Signature
FIRST INTERSTATE BANK OF TEXAS, N.A., as
Co-Agent and as a Bank
By: /s/ Frank W. Schageman
----------------------------------
Name: Frank Schageman
Title: Assistant Vice President
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<PAGE> 94
BANK OF MONTREAL
By /s/ Donald G. Skipper
----------------------------------
Don Skipper
Director
THE BANK OF NEW YORK
By /s/ Alan Lyster Jr.
----------------------------------
Alan F. Lyster, Jr.
Vice President
CHRISTIANIA BANK OG KREDITKASSE
By /s/ C B Moise
----------------------------------
Name: C. B. Moise
Title: Manager
By /s/ N. M. Hagnussen
----------------------------------
Name: N. M. Hagnussen
Title: Sr. Mgr.
CORESTATES BANK, N.A.
By /s/ R. Bart Brown, Jr.
----------------------------------
R. Bart Brown, Jr.
Vice President
DEN NORSKE BANK AS
By /s/ Fran Meyers
----------------------------------
Name: Fran Meyers
Title: Vice President
By /s/ Nelvin Farstad
----------------------------------
Name: Nelvin Farstad
Title: Senior Vice President
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DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By /s/ B. Craig Erickson
----------------------------------
B. Craig Erickson
Vice President
By /s/ J. M. Leffler
----------------------------------
Name: J. Michael Leffler
Title: Senior Vice President
THE FUJI BANK, LIMITED
By /s/ David Kelley
----------------------------------
David Kelley
Vice President and
Senior Manager
THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY
By /s/ R. W. Ramage, Jr.
----------------------------------
Name: R. W. Ramage, Jr.
Title: Senior Vice President
THE MITSUBISHI BANK, LTD.
HOUSTON AGENCY
By /s/ Takeshi Yokohawa
----------------------------------
Mr. Takeshi Yokokawa
Joint General Manager
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<PAGE> 96
THE YASUDA TRUST AND BANKING
COMPANY LIMITED
By /s/ Gerald Gill
----------------------------------
Gerald Gill
Vice President
THE DAI-ICHI KANGYO BANK, LTD.
By /s/ Koji Fujiwara
----------------------------------
Koji Fujiwara
Assistant Vice President
FIRST NATIONAL BANK OF COMMERCE
By /s/ Cory Armand
----------------------------------
Cory Armand
Assistant Vice President
THE BANK OF TOKYO, LTD., DALLAS AGENCY
By /s/ John McIntyre
----------------------------------
John McIntyre
Vice President
-91-
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Exhibits and Schedules Omitted
Copies of exhibits and schedules
provided upon request.
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EXHIBIT 10.2
PARENT GUARANTY AGREEMENT
THIS PARENT GUARANTY AGREEMENT (this "Guaranty") by BJ SERVICES
COMPANY, a Delaware corporation (the "Guarantor"), is effective as of April 13,
1995, and is in favor of each of the Banks (herein defined) from time to time
parties to the Credit Agreement (herein defined) and in favor of BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (together with its successors
and assigns herein called the "Agent"), as the Agent for and on behalf of the
financial institutions (the "Banks") now or hereafter party to that certain
Credit Agreement (as the same may be amended, modified or restated from time to
time and at any time, the "Credit Agreement") among the Guarantor, the
Subsidiary Borrowers (as defined in the Credit Agreement) (the Guarantor and
the Subsidiary Borrowers who are from time to time parties to the Credit
Agreement are herein referred to individually, as a "Borrower", and
collectively, as "Borrowers"), the Banks, BANK OF AMERICA ILLINOIS, as letter
of credit issuing bank, the Agent, and the Co-Agents therein named. All
capitalized terms used but not defined herein shall have the meaning assigned
to them in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Credit Agreement, the Banks have
agreed to make certain Loans and to issue or participate in Letters of Credit
to or for the benefit of the Borrowers;
WHEREAS, the obligation of the Banks to make the Loans and to issue or
participate in Letters of Credit is conditioned upon, among other things, the
execution and delivery by the Guarantor of this Guaranty;
WHEREAS, the Guarantor and the other Borrowers are members of the same
consolidated group of companies and are engaged in related businesses and the
Guarantor will derive substantial direct and indirect economic benefit from the
Loans and the issuance of Letters of Credit;
NOW, THEREFORE, (i) in consideration of the premises and to induce the
Banks to enter into the Credit Agreement and to make the Loans and to issue or
participate in the Letters of Credit, (ii) at the special insistence and
request of the Agent and the Banks, and (iii) for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Guarantor, for the benefit of the Agent and the Banks, hereby agrees as
follows:
Section 1. Defined Terms. Unless otherwise defined herein, terms
defined in the Credit Agreement are used herein as therein defined.
Section 2. Guaranty. The Guarantor hereby, unconditionally and
irrevocably, guarantees the prompt performance and payment in full in Dollars
by each of the Borrowers when due
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(whether at stated maturity, by acceleration or otherwise) of the Obligations
of each of the Borrowers, and the Guarantor further agrees to pay all
reasonable costs, fees and expenses (including, without limitation, reasonable
counsel fees, and the allocated cost of in-house counsel) incurred by the Agent
or any Bank in enforcing any rights under this Guaranty.
Section 3. Guaranty Absolute.
(a) The obligations of the Guarantor hereunder are those
of a primary obligor, and not merely a surety, and are independent of the
Obligations. A separate action or actions may be brought against the Guarantor
whether or not an action is brought against the Borrowers, any other guarantor
or other obligor in respect of the Obligations or whether the Borrowers, any
other guarantor or any other obligor in respect of the Obligations are joined
in any such action or actions.
(b) The Guarantor guarantees that the Obligations will be
paid and performed strictly in accordance with the terms of the Credit
Agreement and the other Loan Documents regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of the Agent or the Banks with respect thereto. Guarantor
agrees that its guarantee constitutes a guarantee of payment when due and not
of collection. The liability of the Guarantor under this Guaranty shall be
absolute and unconditional irrespective of:
(i) any lack of genuineness, validity, legality
or enforceability of the Credit Agreement, any other Loan Document or
any other document, agreement or instrument relating thereto or any
assignment or transfer of any thereof;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations
(including, without limitation, the possible extension of the
Revolving Termination Date, Term Loan Maturity Date and increase of
the amount of the Commitments all on the terms and conditions set
forth in the Credit Agreement), or any waiver, indulgence, compromise,
renewal, extension, amendment, modification of, or addition, consent,
supplement to, or consent to departure from, or any other action or
inaction under or in respect of, the Credit Agreement or any other
Loan Document or any document, instrument or agreement relating to the
Obligations or any other instrument or agreement referred to therein
or any assignment or transfer of any thereof;
(iii) any release or partial release of any other
guarantor or other obligor in respect of the Obligations;
(iv) any exchange, release or non-perfection of
any collateral for all or any of the Obligations, or any release, or
amendment or waiver of, or consent to departure from, any guaranty or
security, for all or any of the Obligations;
(v) any furnishing of any additional security
for any of the Obligations;
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(vi) the liquidation, bankruptcy, insolvency or
reorganization of any Borrower, any other guarantor or other obligor
in respect of the Obligations or any action taken with respect to this
Guaranty by any trustee or receiver, or by any court, in any such
proceeding;
(vii) any modification or termination of any
intercreditor or subordination agreement pursuant to which the claims
of other creditors of the Borrowers or the Guarantor are subordinated
to those of the Banks; or
(viii) any other circumstance which might otherwise
constitute a defense available to, or a legal or equitable discharge
of, the Borrower or the Guarantor.
(c) This Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time payment or performance of the
Obligations, or any part thereof, is, upon the insolvency, bankruptcy or
reorganization of one or more of the Borrowers or the Guarantor or otherwise
pursuant to applicable law, rescinded or reduced in amount or must otherwise be
restored or returned by the Agent or any Bank, all as though such payment or
performance had not been made.
(d) If an event permitting the acceleration of any of the
Obligations shall at any time have occurred and be continuing and such
acceleration shall at such time be prevented by reason of the pendency against
one or more of the Borrowers of a case or proceeding under any bankruptcy or
insolvency law, the Guarantor agrees that, for purposes of this Guaranty and
its obligations hereunder, the Obligations shall be deemed to have been
accelerated and the Guarantor shall forthwith pay such Obligations (including,
without limitation, interest which but for the filing of a petition in
bankruptcy with respect to the Borrowers, would accrue on such Obligations),
and the other obligations hereunder, without any further notice or demand.
Section 4. Waivers. The Guarantor hereby waives promptness,
diligence, notice of intention to accelerate, notice of acceleration, notice of
acceptance and any and all other notices with respect to any of the Obligations
and this Guaranty and any requirement that the Agent or any Bank protect,
secure, perfect or insure any security interest in or any Lien on any property
subject thereto or exhaust any right or take any action against the Borrowers,
any other guarantor or any other Person or any collateral or security or to any
balance of any deposit accounts or credit on the books of any Bank in favor of
the Borrowers or the Guarantor.
Section 5. Subrogation.
(a) The Guarantor will not exercise any rights of
subrogation, reimbursement and contribution, contractual statutory or otherwise
which it may acquire by way of subrogation under this Guaranty, by any payment
hereunder or otherwise, until all of the Obligations of all of the Borrowers
have been paid, all Commitments have terminated and all Letters of Credit have
expired.
(b) If, in the exercise of any of its rights and
remedies, the Agent or any Bank shall forfeit any of its rights or remedies,
including its right to enter a deficiency judgment against the Borrowers or any
other Person, whether because of any applicable laws pertaining to
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"election of remedies" or the like, the Guarantor hereby consents to such
action by the Agent or such Bank and waives any claim based upon such action,
even if such action by the Agent or such Bank shall result in a full or partial
loss of any rights of subrogation which the Guarantor might otherwise have had
but for such action by the Agent or such Bank. Any election of remedies which
results in the denial or impairment of the right of the Agent or such Bank to
seek a deficiency judgment against the Borrowers shall not impair the
Guarantor's obligation to pay the full amount of the Obligations. In the event
the Agent or any Bank shall bid at any foreclosure or trustee's sale or at any
private sale permitted by law or under the Loan Documents, the Agent or such
Bank may bid all or less than the amount of the Obligations and the amount of
such bid need not be paid by the Agent or such Bank but shall be credited
against the Obligations. The amount of the successful bid at any such sale,
whether the Agent or such Bank or any other party is the successful bidder,
shall be conclusively deemed to be the fair market value of the Collateral and
the difference between such bid amount and the remaining balance of the
Obligations shall be conclusively deemed to be the amount of the Obligations
guaranteed under this Guaranty, notwithstanding that any present or future law
or court decision or ruling may have the effect of reducing the amount of any
deficiency claim to which the Agent or any Bank might otherwise be entitled but
for such bidding at any such sale.
Section 6. Further Assurances.
(a) The Guarantor agrees that at any time and from time
to time, at the expense of the Guarantor, the Guarantor will promptly execute
and deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that the Agent may reasonably request,
to enable the Agent to protect and to exercise and enforce its rights and
remedies hereunder.
(b) All representations and warranties, including, but
not limited to, as to due authorization and enforceability of the Guaranty, set
forth in the Credit Agreement are incorporated herein by reference and shall
have the same effect as if fully stated herein.
Section 7. Application of Payments. Any payment received by the Agent
from the Guarantor (or from any Bank pursuant to Section 12 below), shall be
applied by the Agent as follows:
First, to the payment of reasonable costs and expenses of
collection and all reasonable expenses (including, without limitation,
any reasonable legal fees and disbursements and the reasonable
allocated cost of in-house counsel), liabilities and advances made or
incurred by the Agent in connection therewith;
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Next, to the Banks pro rata, based on the then outstanding
amount of the Obligations owed to each in payment in full of the
Obligations; and
Finally, after payment in full of all Obligations and the
termination of the Commitments and expiration of all outstanding
Letters of Credit, the payment to the Guarantor, or its successors and
assigns, or to whomsoever may be lawfully entitled to receive the same
or as a court of competent jurisdiction may direct, of any surplus
then remaining from such proceeds.
Section 8. Decisions Relating to Exercise of Remedies.
Notwithstanding anything in this Guaranty to the contrary, the Agent may
exercise, and at the request of the Majority Banks shall exercise or refrain
from exercising, all rights and remedies provided for herein and provided by
law.
Section 9. No Waiver. No failure on the part of the Agent or any Bank
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
Section 10. Amendments, Etc. No amendment or waiver of any provision
of this Guaranty, nor consent to any departure by the Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed, in
the case of amendments, by the Guarantor and by the Agent and, in the case of
consent or waivers, by the Agent and then such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which made or given.
Section 11. Notices. All notices, requests and other communications
provided for hereunder shall be in writing and given as provided in Section
11.03 of the Credit Agreement.
Section 12. Right to Set-off.
(a) Upon the occurrence and during the continuance of any
Event of Default under the Credit Agreement, each Bank is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to
set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Bank to or for the credit or the account of the Guarantor against any
and all of the Obligations, irrespective of whether or not such Bank shall have
made any demand under this Guaranty and although such Obligations may be
contingent and unmatured. Each Bank which sets-off pursuant to this Section
12(a) shall give prompt notice to the Guarantor following the
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occurrence thereof; provided that the failure to give such notice shall not
affect the validity of the set-off.
(b) Any payment obtained pursuant to Section 12(a) above
(or in any other manner directly from the Guarantor) by any Bank shall be
remitted to the Agent and distributed among the Banks in accordance with the
provisions of Section 7 above.
Section 13. Continuing Guaranty. This Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until payment in full
(after the termination of the Commitments and expiration of all outstanding
Letters of Credit) of the Obligations and all other amounts payable under this
Guaranty; (b) be binding upon the Guarantor, its successors and assigns; and
(c) inure to the benefit of the Agent, the Banks and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), any Bank may assign or otherwise transfer its rights and
obligations under the Credit Agreement to any other Person or entity, and such
other Person or entity shall thereupon become vested with all the benefits in
respect thereof granted to the Bank herein or otherwise, all as provided in,
and to the extent set forth in, Sections 11.08 and 11.09 of the Credit
Agreement.
Section 14. Subordination of the Credit Parties' Obligations to the
Guarantor. The Guarantor hereby expressly covenants and agrees for the benefit
of the Agent and the Banks that all obligations and liabilities of the
Borrowers and their Subsidiaries to the Guarantor of whatsoever description
(including, without limitation, all intercompany receivables of the Guarantor
from the Borrowers) shall be subordinated and junior in right of payment to the
Obligations. Following the occurrence of an Event of Default, any indebtedness
of the Borrowers to the Guarantor shall, if the Agent shall so request, be
collected and received by the Guarantor as trustee for the Agent and the Banks
and paid over to the Agent and the Banks on account of the Obligations.
Section 15. Other Guarantors. The Guarantor acknowledges that
Subsidiaries of Guarantor (collectively, the "Other Guarantors") have
guaranteed the payment and performance of the Obligations pursuant to other
guaranty agreements executed in connection with the Credit Agreement (the
"Other Guaranty Agreements"). The Guarantor agrees that in the event a payment
shall be made by any Other Guarantor under any Other Guaranty Agreement, the
Other Guarantor (the "Claiming Guarantor") shall have and be entitled to rights
of contribution against the Guarantor pursuant to and in accordance with
applicable law. In the event the Guarantor makes any such payment to a Claiming
Guarantor, the Guarantor shall be subrogated to the rights of such Claiming
Guarantor to the extent of such payment. Notwithstanding any provision of this
Agreement to the contrary, all rights of the Other Guarantors under this
Section and all other rights of indemnity, contribution or subrogation under
applicable law or otherwise shall be fully subordinated to the indefeasible
payment in full of the Obligations. No failure on the part of the Guarantor or
any Other Guarantor to make the payments required by this Section (or any other
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payments required under applicable law or otherwise) shall in any respect limit
the obligations and liabilities of the Guarantor or any Other Guarantor with
respect to any Guaranty, and the Guarantor and each Other Guarantor shall
remain liable for the full amount of the obligations under the guaranty
agreement executed by it. This Section 15 is intended only to confirm the
relative rights of the Guarantor and all Other Guarantors, and nothing set
forth in this sentence is intended to or shall impair the obligations of the
Guarantor and Other Guarantors, jointly and severally, to pay to the Agent and
the Banks, or any one or more of them, as the case may be, the Obligations as
and when the same shall become due and payable in accordance with the terms of
this Guaranty.
Section 16. Severability. If for any reason any provision or
provisions hereof are determined to be invalid and contrary to any existing or
future law, such invalidity shall not impair the operation of or affect those
portions of this Guaranty which are valid.
Section 17. Taxes.
(a) Any and all payments by the Guarantor to each Bank or
the Agent under this Guaranty and any other Loan Document shall be made free
and clear of, and without deduction or withholding for, any Taxes. In
addition, the Guarantor shall pay all Other Taxes.
(b) The Guarantor agrees to indemnify and hold harmless
each Bank and the Agent for the full amount of Taxes or Other Taxes (including
any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
this Section) paid by the Bank or the Agent and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Payment under this indemnification shall be made within 30
days after the date the Bank or the Agent makes written demand therefor. In
the event the Agent or a Bank is required to pay Taxes or Other Taxes for which
the Agent or such Bank seeks indemnity hereunder, the Agent or such Bank, as
applicable, shall make written request to the Guarantor within 60 days after
paying such Taxes or Other Taxes; provided, however, that a Bank's failure to
timely give notice of such Taxes or Other Taxes shall not impair the
Guarantor's obligations to indemnify such Bank against such Taxes or such Other
Taxes.
(c) If Guarantor shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Bank or the Agent, then: (i) the sum payable shall be
increased as necessary so that after making all required deductions and
withholdings (including deductions and withholdings applicable to additional
sums payable under this Section) such Bank or the Agent, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made; (ii) the Guarantor shall make such
deductions and withholdings; (iii) the Guarantor shall pay the full amount
deducted or withheld to the relevant taxing authority or other authority in
accordance
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with applicable law; and (iv) the Guarantor shall also pay to each Bank or the
Agent for the account of such Bank, at the time interest is paid, all
additional reasonable amounts which the respective Bank specifies as necessary
to preserve the after-tax yield the Bank would have received if such Taxes or
Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment by the
Guarantor of Taxes or Other Taxes, the Guarantor shall furnish the Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Agent.
SECTION 18. GOVERNING LAW AND JURISDICTION.
(a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS, EXCEPT Section 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK); PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL
RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
GUARANTY OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
BY EXECUTION AND DELIVERY OF THIS GUARANTY, THE GUARANTOR CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. THE GUARANTOR HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT
CORPORATION, WITH OFFICES ON THE DATE HEREOF AT 1633 BROADWAY, NEW YORK, NEW
YORK 10019, AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND
ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF
ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED
IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE
AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE GUARANTOR AGREES TO
DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK ON THE TERMS AND FOR
THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THE GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO IT AT ITS ADDRESS SET FORTH IN SCHEDULE 11.03 OF THE CREDIT
AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE TEN DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR ANY BANK TO SERVE
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PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS
OR OTHERWISE PROCEED AGAINST THE GUARANTOR IN ANY OTHER JURISDICTION. THE
GUARANTOR WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS,
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
(c) THE GUARANTOR IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS GUARANTY OR ANY
DOCUMENT RELATED HERETO.
SECTION 19. WAIVER OF JURY TRIAL. THE GUARANTOR WAIVES ITS RIGHTS TO
A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS GUARANTY, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION
OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY
AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE. THE GUARANTOR AGREES THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE GUARANTOR FURTHER AGREES THAT ITS RIGHT TO A TRIAL
BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM
OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY
OR ENFORCEABILITY OF THIS GUARANTY OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY AND THE OTHER LOAN
DOCUMENTS.
Section 20. ENTIRE AGREEMENT. THIS WRITTEN GUARANTY AND THE
INSTRUMENTS AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH, REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
BJ SERVICES COMPANY
By: /s/ Taylor M. Whichard, III
----------------------------------
Taylor M. Whichard, III
Treasurer
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EXHIBIT 10.3
GUARANTY AGREEMENT
[DOMESTIC SUBSIDIARIES]
THIS GUARANTY AGREEMENT (this "Guaranty") by _______________________,
a _____________ corporation (the "Guarantor"), is effective as of
____________________ , and is in favor of each of the Banks (herein defined)
from time to time parties to the Credit Agreement (herein defined) and in favor
of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, (together with its
successors and assigns herein called the "Agent"), as the Agent for and on
behalf of the financial institutions (the "Banks") now or hereafter party to
that certain Credit Agreement (as the same may be amended, modified or restated
from time to time and at any time, the "Credit Agreement") among BJ SERVICES
COMPANY, a Delaware corporation (the "Company"), the Subsidiary Borrowers (as
defined in the Credit Agreement) (the Company and the Subsidiary Borrowers who
are from time to time parties to the Credit Agreement are herein referred to
individually, as a "Borrower", and collectively, as "Borrowers"), the Banks,
BANK OF AMERICA ILLINOIS, as letter of credit issuing bank, the Agent, and the
Co-Agents therein named. All capitalized terms used but not defined herein
shall have the meaning assigned to them in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Credit Agreement, the Banks have
agreed to make certain Loans and to issue or participate in Letters of Credit
to or for the benefit of the Borrowers;
WHEREAS, the obligation of the Banks to make the Loans and to issue or
participate in Letters of Credit is conditioned upon, among other things, the
execution and delivery by the Guarantor of this Guaranty;
WHEREAS, the Guarantor is a wholly-owned subsidiary of the Company and
the Borrowers are members of the same consolidated group of companies and are
engaged in related businesses and the Guarantor may receive a portion of the
Loans or the benefit of the issuances of the Letters of Credit and will derive
other substantial direct and indirect economic benefit therefrom;
NOW, THEREFORE, (i) in consideration of the premises and to induce the
Banks to enter into the Credit Agreement and to make the Loans and to issue or
participate in the Letters of Credit, (ii) at the special insistence and
request of the Agent and the Banks, and (iii) for other
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good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Guarantor, for the benefit of the Agent and the Banks,
hereby agrees as follows:
Section 1. Defined Terms. Unless otherwise defined herein, terms
defined in the Credit Agreement are used herein as therein defined.
Section 2. Guaranty. The Guarantor hereby, unconditionally and
irrevocably, guarantees the prompt performance and payment in full in Dollars
by each of the Borrowers when due (whether at stated maturity, by acceleration
or otherwise) of the Obligations of each of the Borrowers, and the Guarantor
further agrees to pay all reasonable costs, fees and expenses (including,
without limitation, reasonable counsel fees, and the allocated cost of in-house
counsel) incurred by the Agent or any Bank in enforcing any rights under this
Guaranty.
Section 3. Guaranty Absolute.
(a) The obligations of the Guarantor hereunder are those
of a primary obligor, and not merely a surety, and are independent of the
Obligations. A separate action or actions may be brought against the Guarantor
whether or not an action is brought against the Borrowers, any other guarantor
or other obligor in respect of the Obligations or whether the Borrowers, any
other guarantor or any other obligor in respect of the Obligations are joined
in any such action or actions.
(b) The Guarantor guarantees that the Obligations will be
paid and performed strictly in accordance with the terms of the Credit
Agreement and the other Loan Documents regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of the Agent or the Banks with respect thereto. Guarantor
agrees that its guarantee constitutes a guarantee of payment when due and not
of collection. The liability of the Guarantor under this Guaranty shall be
absolute and unconditional irrespective of:
(i) any lack of genuineness, validity, legality
or enforceability of the Credit Agreement, any other Loan Document or
any other document, agreement or instrument relating thereto or any
assignment or transfer of any thereof;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations
(including, without limitation, the possible extension of the
Revolving Termination Date, Term Loan Maturity Date and increase of
the amount of the Commitments all on the terms and conditions set
forth in the Credit Agreement), or any waiver, indulgence, compromise,
renewal, extension, amendment, modification of, or addition, consent,
supplement to, or consent to departure from, or any other action or
inaction under
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or in respect of, the Credit Agreement or any other Loan Document or
any document, instrument or agreement relating to the Obligations or
any other instrument or agreement referred to therein or any
assignment or transfer of any thereof;
(iii) any release or partial release of any other
guarantor or other obligor in respect of the Obligations;
(iv) any exchange, release or non-perfection of
any collateral for all or any of the Obligations, or any release, or
amendment or waiver of, or consent to departure from, any guaranty or
security, for all or any of the Obligations;
(v) any furnishing of any additional security
for any of the Obligations;
(vi) the liquidation, bankruptcy, insolvency or
reorganization of any Borrower, any other guarantor or other obligor
in respect of the Obligations or any action taken with respect to this
Guaranty by any trustee or receiver, or by any court, in any such
proceeding;
(vii) any modification or termination of any
intercreditor or subordination agreement pursuant to which the claims
of other creditors of the Borrowers or the Guarantor are subordinated
to those of the Banks; or
(viii) any other circumstance which might otherwise
constitute a defense available to, or a legal or equitable discharge
of, the Borrower or the Guarantor.
(c) This Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time payment or performance of the
Obligations, or any part thereof, is, upon the insolvency, bankruptcy or
reorganization of one or more of the Borrowers or the Guarantor or otherwise
pursuant to applicable law, rescinded or reduced in amount or must otherwise be
restored or returned by the Agent or any Bank, all as though such payment or
performance had not been made.
(d) If an event permitting the acceleration of any of the
Obligations shall at any time have occurred and be continuing and such
acceleration shall at such time be prevented by reason of the pendency against
one or more of the Borrowers of a case or proceeding under any bankruptcy or
insolvency law, the Guarantor agrees that, for purposes of this Guaranty and
its obligations hereunder, the Obligations shall be deemed to have been
accelerated and the
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Guarantor shall forthwith pay such Obligations (including, without limitation,
interest which but for the filing of a petition in bankruptcy with respect to
the Borrowers, would accrue on such Obligations), and the other obligations
hereunder, without any further notice or demand.
Section 4. Waivers. To the extent permitted by applicable law, the
Guarantor hereby waives promptness, diligence, notice of intention to
accelerate, notice of acceleration, notice of acceptance and any and all other
notices with respect to any of the Obligations and this Guaranty and any
requirement that the Agent or any Bank protect, secure, perfect or insure any
security interest in or any Lien on any property subject thereto or exhaust any
right or take any action against the Borrowers, any other guarantor or any
other Person or any collateral or security or to any balance of any deposit
accounts or credit on the books of any Bank in favor of the Borrowers or the
Guarantor.
Section 5. Subrogation.
(a) The Guarantor will not exercise any rights of
subrogation, reimbursement and contribution, contractual statutory or
otherwise, which it may acquire by way of subrogation under this Guaranty, by
any payment hereunder or otherwise, until all of the Obligations of all of the
Borrowers have been paid, all Commitments have terminated and all Letters of
Credit have expired.
(b) If, in the exercise of any of its rights and
remedies, the Agent or any Bank shall forfeit any of its rights or remedies,
including its right to enter a deficiency judgment against the Borrowers or any
other Person, whether because of any applicable laws pertaining to "election of
remedies" or the like, the Guarantor hereby consents to such action by the
Agent or such Bank and waives any claim based upon such action, even if such
action by the Agent or such Bank shall result in a full or partial loss of any
rights of subrogation which the Guarantor might otherwise have had but for such
action by the Agent or such Bank. Any election of remedies which results in
the denial or impairment of the right of the Agent or such Bank to seek a
deficiency judgment against the Borrowers shall not impair the Guarantor's
obligation to pay the full amount of the Obligations. In the event the Agent
or any Bank shall bid at any foreclosure or trustee's sale or at any private
sale permitted by law or under the Loan Documents, the Agent or such Bank may
bid all or less than the amount of the Obligations and the amount of such bid
need not be paid by the Agent or such Bank but shall be credited against the
Obligations. The amount of the successful bid at any such sale, whether the
Agent or such Bank or any other party is the successful bidder, shall be
conclusively deemed to be the fair market value of the Collateral and the
difference between such bid amount and the remaining balance of the Obligations
shall be conclusively deemed to be the amount of the Obligations guaranteed
under this Guaranty, notwithstanding that any present or future law or court
decision or ruling
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may have the effect of reducing the amount of any deficiency claim to which the
Agent or any Bank might otherwise be entitled but for such bidding at any such
sale.
Section 6. Representations and Warranties. The Guarantor represents
and warrants to the Agent and the Banks as of the date hereof as follows:
(a) Corporate Existence and Power. The Guarantor (i) is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation; (ii) has the power and authority
and all material governmental licenses, authorizations, consents and approvals
to own its assets, carry on its business and to execute, deliver, and perform
its obligations under the Loan Documents; (iii) is duly qualified as a foreign
corporation and is licensed 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 or license; and (iv) is in
compliance in all material respects with all Requirements of Law; except, in
each case referred to in clause (iii), to the extent that the failure to do so
would not reasonably be expected to have a Material Adverse Effect.
(b) Corporate Authorization; No Contravention. The
execution, delivery and performance by the Guarantor of this Guaranty and every
other Loan Document to which the Guarantor is party, has been duly authorized
by all necessary corporate action, and do not and will not: (i) contravene the
terms of any of the Guarantor's Organization Documents; (ii) conflict with or
result in any breach or contravention of, in any material respect, or the
creation of any Lien (except Permitted Liens) under, any document evidencing
any material Contractual Obligation to which the Guarantor is a party or any
material order, injunction, writ or decree of any Governmental Authority to
which the Guarantor or its property is subject; or (iii) violate any material
Requirement of Law.
(c) Governmental Authorization. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Guarantor of
this Guaranty or any other Loan Document to which the Guarantor is a party.
(d) Binding Effect. This Guaranty and the other Loan
Documents to which the Guarantor is a party constitute the legal, valid and
binding obligations of the Guarantor to the extent it is a party thereto,
enforceable against the Guarantor in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
or similar laws affecting the enforcement of creditors' rights generally or by
equitable principles.
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(e) Litigation.
(i) To the best knowledge of the Guarantor, there
are no actions, suits, proceedings, claims or disputes pending,
threatened or contemplated, at law, in equity, in arbitration or
before any Governmental Authority, against the Guarantor or any of its
respective properties: (A) which purport to affect or pertain to this
Guaranty or any other Loan Document, or any of the transactions
contemplated hereby or thereby; or (B) if determined adversely to the
Guarantor, would reasonably be expected to have a Material Adverse
Effect.
(ii) No injunction, writ, temporary restraining
order or any order of any nature has been issued by any court or other
Governmental Authority purporting to enjoin or restrain the execution,
delivery or performance of this Guaranty or any other Loan Document,
or directing that the transactions provided for herein or therein not
be consummated as herein or therein provided.
(f) No Default. No Default or Event of Default exists or
would result from the incurring of any Obligations by the Guarantor.
(g) Use of Proceeds; Margin Regulations. The Guarantor
is not generally engaged in the business of purchasing or selling Margin Stock
or extending credit for the purpose of purchasing or carrying Margin Stock.
(h) Title to Properties. The Guarantor has good record
and indefeasible title in fee simple to, or valid leasehold interests in, all
real property necessary or used in the ordinary conduct of its respective
businesses, except for such defects in title as would not, individually or in
the aggregate, have a Material Adverse Effect. The property of the Guarantor
is subject to no Liens, other than Permitted Liens.
(i) Taxes. The Guarantor has filed all Federal and other
material tax returns and reports required to be filed, and has paid all Federal
and other material taxes, assessments, fees and other governmental charges
levied or imposed upon it or its properties, income or assets otherwise due and
payable, except those which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been provided in accordance
with GAAP. To Guarantor's knowledge, there is no proposed tax assessment
against the Guarantor that would, if made, have a Material Adverse Effect.
(j) Environmental Matters. The Guarantor conducts in the
ordinary course of business a review of the effect of existing Environmental
Laws and existing Environmental Claims on their businesses, operations and
properties, and as a result thereof the Guarantor has reasonably concluded
that, except as specifically disclosed in Schedule 6.13 of the Credit
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Agreement, such Environmental Laws and Environmental Claims could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(k) Regulated Entities. Neither the Guarantor, any
Person controlling the Guarantor or any of its Subsidiaries is an "Investment
Company" within the meaning of the Investment Company Act of 1940. The
Guarantor is not subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state
public utilities code or any other Federal or state statute or regulation
limiting its ability to incur Indebtedness.
(l) No Burdensome Restrictions. Neither the Guarantor
nor any of its Subsidiaries is a party to or bound by any Contractual
Obligation, or subject to any restriction in any Organization Document, or any
Requirement of Law, which could reasonably be expected to have a Material
Adverse Effect.
(m) Solvency. The Guarantor is, and after giving effect
to this Guaranty will be, Solvent, on a going concern basis and taking into
account its rights of contribution and subrogation.
(n) Copyrights, Patents, Trademarks and Licenses, etc.
The Guarantor and its Subsidiaries own or are licensed or otherwise have the
right to use all of the material patents, trademarks, service marks, trade
names, copyrights, contractual franchises, authorizations and other rights that
are reasonably necessary for the operation of their respective businesses,
without conflict with the rights of any other Person. To the best knowledge of
the Guarantor, no material slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Guarantor or any of its Subsidiaries
infringes in any material respect upon any material rights held by any other
Person. Except as disclosed in Schedule 6.17 to the Credit Agreement, which
Schedule 6.17 is incorporated herein by this reference, no claim or litigation
regarding any of the foregoing is pending or threatened in which there is a
reasonable probability of an adverse decision which would reasonably be
expected to have a Material Adverse Effect.
(o) Subsidiaries. The Guarantor has no Subsidiaries, and
has no equity investments in any other corporation or entity, other than those
specifically disclosed in Schedule 6.18 of the Credit Agreement, which
Schedule 6.18 is incorporated herein by this reference. Each of the Guarantor
and its Subsidiaries is the owner, free and clear of all liens and
encumbrances, of all of the issued and outstanding voting stock of each of its
Subsidiaries (except where ownership of less than 100% is indicated on
Schedule 6.18 of the Credit Agreement
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and except for directors' qualifying shares). All shares of such stock have
been validly issued and are fully paid and nonassessable, and no rights to
subscribe to additional shares have been granted to exist.
(p) Insurance. Except as disclosed in Schedule 6.19 to
the Credit Agreement, which Schedule 6.19 is incorporated herein by this
reference, the properties of the Guarantor and its Subsidiaries are insured
with financially sound and reputable insurance companies not Affiliates of the
Guarantor, in such amounts, with such deductibles and self-insured retention
levels and covering such risks as are customarily carried by companies engaged
in similar businesses and owning similar properties in localities where the
Guarantor or such Subsidiary operates.
(q) Full Disclosure. None of the representations or
warranties made by the Guarantor or any of its Subsidiaries in the Loan
Documents as of the date such representations and warranties are made or deemed
made, and none of the statements contained in any exhibit, report, statement or
certificate furnished by or on behalf of the Guarantor or any of its
Subsidiaries in connection with the Loan Documents (including the offering and
disclosure materials delivered by or on behalf of the Guarantor to the Banks
prior to the Closing Date), taken as a whole, contains any untrue statement of
a material fact or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading as of the time when made or
delivered.
(r) Benefit to Guarantor. The Guarantor has determined
that its liability and obligation under this Guaranty will substantially
benefit it directly, and its board of directors has made that determination.
The Borrower, the Guarantor and the other Subsidiaries of the Company are
mutually dependent on each other in the conduct of their respective businesses
and do business together as an integrated business enterprise. The maintenance
and improvement of the Company's financial condition is vital to sustaining the
Guarantor's business and the transactions contemplated in the Credit Agreement
produce distinct and identifiable financial and economic direct and indirect
benefits to the Guarantor.
The representations and warranties set forth in this Section 6 shall survive
the execution and delivery of this Guaranty.
Section 7. Further Assurances.
(a) As long as any of the Obligations remain outstanding,
the Commitments have not expired and there are Letters of Credit outstanding,
the Guarantor shall, unless the Majority Banks waive compliance in writing,
comply with all the covenants related to the Guarantor contained in the Credit
Agreement.
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(b) The Guarantor agrees that at any time and from time
to time, at the expense of the Guarantor, the Guarantor will promptly execute
and deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that the Agent may reasonably request,
to enable the Agent to protect and to exercise and enforce its rights and
remedies hereunder.
Section 8. Application of Payments. Any payment received by the
Agent from the Guarantor (or from any Bank pursuant to Section 13 below), shall
be applied by the Agent as follows:
First, to the payment of reasonable costs and expenses of
collection and all reasonable expenses (including, without limitation,
any legal fees and disbursements and the reasonable allocated cost of
in-house counsel), liabilities and advances made or incurred by the
Agent in connection therewith;
Next, to the Banks pro rata, based on the then outstanding
amount of the Obligations owed to each in payment in full of the
Obligations; and
Finally, after payment in full of all Obligations and the
termination of the Commitments and expiration of all outstanding
Letters of Credit, the payment to the Guarantor, or its successors and
assigns, or to whomsoever may be lawfully entitled to receive the same
or as a court of competent jurisdiction may direct, of any surplus
then remaining from such proceeds.
Section 9. Decisions Relating to Exercise of Remedies.
Notwithstanding anything in this Guaranty to the contrary, the Agent may
exercise, and at the request of the Majority Banks shall exercise or refrain
from exercising, all rights and remedies provided for herein and provided by
law.
Section 10. No Waiver. No failure on the part of the Agent or any
Bank to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
Section 11. Amendments, Etc. No amendment or waiver of any provision
of this Guaranty, nor consent to any departure by the Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed, in
the case of amendments, by the Guarantor and by the Agent and, in the case of
consent or waivers, by the Agent and then such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which made or given.
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Section 12. Notices. All notices, requests and other communications
provided for hereunder shall be in writing and given to Agent as provided in
Section 11.03 of the Credit Agreement. All communications and notices
hereunder to Guarantor shall be given to the Guarantor c/o BJ Services Company
at the following address:
5500 Northwest Central Drive
Houston, Texas 77092
Attention: Mr. Trey Whichard
Treasurer
Telephone: (713) 895-5847
Facsimile: (713) 895-5851
with a copy to:
Margaret Shannon, Esq.
General Counsel
BJ Services Company
5500 Northwest Central Drive
Houston, Texas 77092
Telephone: (713) 895-5867
Facsimile: (713) 895-5603
or, at such other address as shall be designated by Guarantor in a written
notice to Agent.
Section 13. Right to Set-off.
(a) Upon the occurrence and during the continuance of any
Event of Default under the Credit Agreement, each Bank is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to
set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Bank to or for the credit or the account of the Guarantor against any
and all of the Obligations, irrespective of whether or not such Bank shall have
made any demand under this Guaranty and although such Obligations may be
contingent and unmatured. Each Bank which sets-off pursuant to this Section
13(a) shall give prompt notice to the Guarantor following the occurrence
thereof; provided that the failure to give such notice shall not affect the
validity of the set-off.
(b) Any payment obtained pursuant to Section 13(a) above
(or in any other manner directly from the Guarantor) by any Bank shall be
remitted to the Agent and distributed among the Banks in accordance with the
provisions of Section 8 above.
Section 14. Continuing Guaranty. This Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until payment in full
(after the termination of the Commitments and expiration of all outstanding
Letters of Credit) of the Obligations and all other amounts payable under this
Guaranty; (b) be binding upon the Guarantor, its successors and assigns; and
(c) inure to the benefit of the Agent, the Banks and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), any Bank may assign or otherwise transfer its rights and
obligations under the Credit Agreement to any other Person or entity, and such
other Person or entity shall thereupon become vested with all the benefits in
respect thereof granted to the Bank herein or otherwise, all as provided in,
and to the extent set forth in, Sections 11.08 and 11.09 of the Credit
Agreement.
Section 15. Subordination of the Credit Parties' Obligations to the
Guarantor. The Guarantor hereby expressly covenants and agrees for the benefit
of the Agent and the Banks that all obligations and liabilities of each of the
Borrowers, the Other Guarantors (as defined in Section 17 of this Guaranty) and
each of their respective Subsidiaries to the Guarantor of whatsoever
description (including, without limitation, all intercompany receivables of the
Guarantor from the Borrowers, other Guarantors and Subsidiaries) shall be
subordinated and junior in right of payment to the Obligations. Following the
occurrence of an Event of Default,
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any indebtedness of the Borrowers, Other Guarantors and their Subsidiaries to
the Guarantor shall, if the Agent shall so request, be collected and received
by the Guarantor as trustee for the Agent and the Banks and paid over to the
Agent and the Banks on account of the Obligations.
Section 16. Financial Reporting. Guarantor shall furnish to the
Agent all such financial statements and other information relating to the
financial condition, properties and affairs of Guarantor as any Bank, acting
through the Agent, may from time to time reasonably request.
Section 17. Other Guarantors. Guarantor acknowledges that other
Subsidiaries of the Company (collectively, the "Other Guarantors") have
guaranteed the payment and performance of the Obligations pursuant to other
guaranty agreements executed in connection with the Credit Agreement (the
"Other Guaranty Agreements"), and to the extent Guarantor is required to
satisfy all or any part of the Obligations pursuant to the terms of this
Guaranty, Guarantor shall have and be entitled to rights of contribution
against the Other Guarantors. The Guarantor agrees that in the event a
payment shall be made by any Other Guarantor under any Other Guaranty
Agreement, the Other Guarantor (the "Claiming Guarantor") shall have and be
entitled to rights of contribution against the Guarantor pursuant to and in
accordance with applicable law. In the event the Guarantor makes any such
payment to a Claiming Guarantor, the Guarantor shall be subrogated to the
rights of such Claiming Guarantor to the extent of such payment.
Notwithstanding any provision of this Agreement to the contrary, all rights of
the Other Guarantors under this Section and all other rights of indemnity,
contribution or subrogation under applicable law or otherwise shall be fully
subordinated to the indefeasible payment in full of the Obligations. No
failure on the part of the Guarantor or any Other Guarantor to make the
payments required by this Section (or any other payments required under
applicable law or otherwise) shall in any respect limit the obligations and
liabilities of the Guarantor or any Other Guarantor with respect to any
Guaranty, and the Guarantor and each Other Guarantor shall remain liable for
the full amount of the obligations under the guaranty agreement executed by it.
This Section 17 is intended only to confirm the relative rights of the
Guarantor and all Other Guarantors, and nothing set forth in this sentence is
intended to or shall impair the obligations of the Guarantor and Other
Guarantors, jointly and severally, to pay to the Agent and the Banks, or any
one or more of them, as the case may be, the Obligations as and when the same
shall become due and payable in accordance with the terms of this Guaranty.
Section 18. Severability. If for any reason any provision or
provisions hereof are determined to be invalid and contrary to any existing or
future law, such invalidity shall not impair the operation of or affect those
portions of this Guaranty which are valid.
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Section 19. Taxes.
(a) Any and all payments by the Guarantor to each Bank or
the Agent under this Guaranty and any other Loan Document shall be made free
and clear of, and without deduction or withholding for, any Taxes. In
addition, the Guarantor shall pay all Other Taxes.
(b) The Guarantor agrees to indemnify and hold harmless
each Bank and the Agent for the full amount of Taxes or Other Taxes (including
any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
this Section) paid by the Bank or the Agent and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Payment under this indemnification shall be made within 30
days after the date the Bank or the Agent makes written demand therefor. In
the event the Agent or a Bank is required to pay Taxes or Other Taxes for which
the Agent or such Bank seeks indemnity hereunder, the Agent or such Bank, as
applicable, shall make written request to the Guarantor within 60 days after
paying such Taxes or Other Taxes; provided, however, that a Bank's failure to
timely give notice of such Taxes or Other Taxes shall not impair the
Guarantor's obligations to indemnify such Bank against such Taxes or such Other
Taxes.
(c) If the Guarantor shall be required by law to deduct
or withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Bank or the Agent, then: (i) the sum payable shall be
increased as necessary so that after making all required deductions and
withholdings (including deductions and withholdings applicable to additional
sums payable under this Section) such Bank or the Agent, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made; (ii) the Guarantor shall make such
deductions and withholdings; (iii) the Guarantor shall pay the full amount
deducted or withheld to the relevant taxing authority or other authority in
accordance with applicable law; and (iv) the Guarantor shall also pay to each
Bank or the Agent for the account of such Bank, at the time interest is paid,
all additional reasonable amounts which the respective Bank specifies as
necessary to preserve the after-tax yield the Bank would have received if such
Taxes or Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment by the
Guarantor of Taxes or Other Taxes, the Guarantor shall furnish the Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Agent.
SECTION 20. GOVERNING LAW AND JURISDICTION.
(a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS, EXCEPT Section 5-1401 OF THE
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GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK); PROVIDED THAT THE AGENT AND
THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
GUARANTY OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
BY EXECUTION AND DELIVERY OF THIS GUARANTY, THE GUARANTOR CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON- EXCLUSIVE JURISDICTION OF THOSE
COURTS. THE GUARANTOR HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT
CORPORATION, WITH OFFICES ON THE DATE HEREOF AT 1633 BROADWAY NEW YORK, NEW
YORK 10019, AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND
ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF
ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED
IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE
AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE GUARANTOR AGREES TO
DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK ON THE TERMS AND FOR
THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THE GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO IT AT ITS ADDRESS SET FORTH IN SCHEDULE 11.03 OF THE CREDIT
AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE TEN DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR ANY BANK TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE GUARANTOR IN ANY OTHER JURISDICTION. THE
GUARANTOR WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS,
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
(c) THE GUARANTOR IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS GUARANTY OR ANY
DOCUMENT RELATED HERETO.
SECTION 21. WAIVER OF JURY TRIAL. THE GUARANTOR WAIVES ITS RIGHTS TO
A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
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OR ARISING OUT OF OR RELATED TO THIS GUARANTY, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE GUARANTOR AGREES THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE GUARANTOR FURTHER AGREES THAT ITS RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS GUARANTY OR THE OTHER LOAN DOCUMENTS OR
ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY AND THE
OTHER LOAN DOCUMENTS.
SECTION 22. ENTIRE AGREEMENT. THIS WRITTEN GUARANTY AND THE
INSTRUMENTS AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH, REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
_____________________________________
By: _________________________________
Taylor M. Whichard III
Treasurer
Page 14
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-36754, 33-52506, 33-62098, 33-58637 and
33-58639) of BJ Services Company and in the Registration Statement on Form S-4
(No. 33-58017) of BJ Services Company of our report dated February 22, 1995
relating to the financial statements of The Western Company of North America,
which appears in this Current Report on Form 8-K/A of BJ Services Company.
PRICE WATERHOUSE LLP
Houston, Texas
May 28, 1995
