<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ______ to ______.
COMMISSION FILE NUMBER 1-10570
BJ SERVICES COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 63-0084140
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
5500 NORTHWEST CENTRAL DRIVE, HOUSTON, TEXAS 77092
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 462-4239
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
----- -----
There were 38,003,928 shares of the registrant's common stock, $.10 par value,
outstanding as of August 9, 1996.
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<PAGE> 2
BJ SERVICES COMPANY
INDEX
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Condensed Statement of Operations (Unaudited) - Three
and nine months ended June 30, 1996 and 1995 3
Consolidated Condensed Statement of Financial Position -
June 30, 1996 (Unaudited) and September 30, 1995 4
Consolidated Condensed Statement of Cash Flows (Unaudited) -
Nine months ended June 30, 1996 and 1995 5
Notes to Unaudited Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 20
PART II - OTHER INFORMATION 26
</TABLE>
2
<PAGE> 3
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BJ SERVICES COMPANY
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Revenue $220,960 $199,542 $628,255 $425,625
Operating expenses:
Cost of sales and services 178,415 166,645 512,664 356,909
Research and engineering 3,992 4,115 11,594 8,393
Marketing 9,837 9,271 27,720 17,219
General and administrative 9,027 7,864 25,749 20,317
Goodwill amortization 1,354 1,236 4,025 1,814
Unusual charge 3,539 16,000 3,539 16,000
----------- ----------- ---------- ----------
Total operating expenses 206,164 205,131 585,291 420,652
----------- ----------- ----------- ----------
Operating income (loss) 14,796 (5,589) 42,964 4,973
Interest expense (5,654) (4,884) (16,749) (9,502)
Interest income 217 322 543 656
Other income - net 1,664 480 3,003 1,998
----------- ----------- ---------- ----------
Income (loss) before income taxes 11,023 (9,671) 29,761 (1,875)
Income taxes 1,951 (3,823) 7,121 (2,149)
----------- ----------- ---------- ----------
Net income (loss) $ 9,072 $ (5,848) $ 22,640 $ 274
=========== =========== ========== ==========
Net income (loss) per share
Primary $ .31 $ (.22) $ .79 $ .01
Fully diluted $ .31 $ (.22) $ .77 $ .01
Average shares outstanding
Primary 29,651 26,416 28,705 19,283
Fully diluted 29,663 26,416 29,573 19,408
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
3
<PAGE> 4
BJ SERVICES COMPANY
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1996 1995
----------------- -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,012 $ 1,842
Receivables - net 249,858 168,771
Inventories:
Finished goods 68,663 50,665
Work in process 1,758 2,394
Raw materials 17,690 13,792
------------ ------------
Total inventories 88,111 66,851
Deferred income taxes 7,036 9,370
Other current assets 22,574 10,101
------------ ------------
Total current assets 369,591 256,935
Property - net 545,114 416,810
Deferred income taxes 125,328 107,889
Goodwill and other assets 635,118 208,049
------------ ------------
$ 1,675,151 $ 989,683
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 133,299 $ 85,675
Short-term borrowings and current
portion of long-term debt 329,708 37,600
Accrued employee compensation and benefits 22,781 24,885
Income and other taxes 14,751 11,375
Accrued insurance 8,644 12,867
Other accrued liabilities 52,979 31,869
------------ ------------
Total current liabilities 562,162 204,271
Long-term debt 563,864 259,566
Deferred income taxes 13,291 11,496
Accrued post retirement benefits and other 41,104 47,555
Stockholders' equity 494,730 466,795
------------ ------------
$ 1,675,151 $ 989,683
============ ============
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
4
<PAGE> 5
BJ SERVICES COMPANY
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 22,640 $ 274
Adjustments to reconcile net income to cash
provided by operating activities:
Amortization of unearned compensation 819 660
Unusual charge (noncash) 3,539 3,646
Depreciation and amortization 44,288 25,178
Deferred income taxes (benefit) 697 (8,637)
Net gain on disposal of property (2,266) (740)
Changes in:
Receivables (9,448) 494
Inventories (2,246) (4,361)
Accounts payable (47) (1,280)
Other current assets and liabilities (23,187) 677
Other, net (14,407) 8,292
------------ ------------
Net cash provided by operating activities 20,382 24,203
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (34,372) (24,346)
Proceeds from disposal of assets 4,458 5,121
Acquisition of business, net of cash acquired (586,535) (202,858)
------------ ------------
Net cash used for investing activities (616,449) (222,083)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings - net 591,701 193,293
Proceeds from issuance of stock 4,536 2,752
------------ ------------
Net cash provided by financing activities 596,237 196,045
Increase in cash and cash equivalents 170 (1,835)
Cash and cash equivalents at beginning of period 1,842 3,218
------------ ------------
Cash and cash equivalents at end of period $ 2,012 $ 1,383
============ ============
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
5
<PAGE> 6
BJ SERVICES COMPANY
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1 GENERAL
In the opinion of management, the unaudited consolidated condensed financial
statements for BJ Services Company (the "Company") include all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation of the financial position as of June 30, 1996, and the results of
operations and cash flows for each of the nine-month periods ended June 30,
1996 and 1995. The consolidated condensed statement of financial position at
September 30, 1995 is derived from the September 30, 1995 audited consolidated
financial statements. Although management believes the disclosures in these
financial statements are adequate to make the information presented not
misleading, certain information and footnote disclosures normally included in
annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. The results of
operations and the cash flows for the nine-month period ended June 30, 1996 are
not necessarily indicative of the results to be expected for the full year.
Certain amounts for fiscal 1995 have been reclassified in the accompanying
consolidated condensed financial statements to conform to the current year
presentation.
NOTE 2 EARNINGS PER SHARE
Primary earnings per share are based on the weighted average number of shares
outstanding during each period and the assumed exercise of dilutive stock
options and warrants less the number of treasury shares assumed to be purchased
from the proceeds using the average market price of the Company's common stock
for each of the periods presented.
Fully diluted earnings per share are based on the weighted average number of
shares outstanding during each period and the assumed exercise of dilutive
stock options and warrants less the number of treasury shares assumed to be
purchased from the proceeds using the closing market price of the Company's
common stock for each of the periods presented.
6
<PAGE> 7
The following table presents information necessary to calculate earnings per
share for the periods presented (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Net income $ 9,072 $ (5,848) $ 22,640 $ 274
=========== =========== ========== ==========
Average primary common and common
equivalent shares outstanding:
Common stock 28,190 26,115 28,100 19,170
Common stock equivalents from
assumed exercise of stock options 771 605 113
Common stock equivalents from
assumed exercise of warrants 690
----------- ----------- ----------- ----------
29,651 26,115 28,705 19,283
=========== =========== ========== ==========
Primary earnings per share $ .31 $ (.22) $ .79 $ .01
=========== =========== ========== ==========
Average fully diluted common and common
equivalent shares outstanding:
Common stock 28,190 26,115 28,100 19,170
Common stock equivalents from
assumed exercise of stock options 774 774 238
Common stock equivalents from
assumed exercise of warrants 699 699
----------- ----------- ---------- ----------
29,663 26,115 29,573 19,408
=========== =========== ========== ==========
Fully diluted earnings per share $ .31 $ (.22) $ .77 $ .01
=========== =========== ========== ==========
</TABLE>
NOTE 3 ACQUISITIONS OF BUSINESSES
Effective December 1, 1995, the Company acquired the remaining 60% ownership of
its previously unconsolidated joint venture in Brazil, for total consideration
of $5.4 million consisting of $3.7 million in cash and $1.7 million in debt
assumed by the Company. This acquisition was accounted for as a purchase and,
accordingly, the acquired assets and liabilities have been recorded at their
estimated fair values at the date of acquisition. The consolidated statement
of operations includes operating results of the subsidiary acquired since the
date of acquisition. This acquisition is not material to the Company's
financial statements and therefore pro forma information is not presented.
7
<PAGE> 8
On June 28, 1996, the Company completed the acquisition of Nowsco Well Service
Ltd. ("Nowsco" and the "Nowsco Acquisition") for a total purchase price of
$583.4 million (including transaction costs of $7.0 million) in cash. The
transaction may be summarized as follows (in thousands):
<TABLE>
<S> <C>
Cash $ 576,361
Transaction costs 7,000
------------
Total consideration 583,361
Net assets acquired 176,515
------------
Goodwill $ 406,846
============
</TABLE>
This acquisition was accounted for using the purchase method of accounting.
Accordingly, the results of Nowsco's operations will be included in the
statement of operations beginning July 1, 1996. The assets and liabilities of
Nowsco have been recorded in the Company's statement of financial position at
estimated fair market value on June 30, 1996 with the remaining purchase price
reflected as goodwill, which will be amortized on a straight line basis over 40
years. The allocation of the purchase price is preliminary, as valuation and
other studies have not been finalized. The specific nature and timing of other
costs related to the Nowsco Acquisition are being reviewed and have not been
finalized. The following unaudited pro forma summary presents the consolidated
results of operations of the Company as if the April 1995 acquisition of The
Western Company of North America, the Nowsco Acquisition and the related
issuance of common stock discussed in Note 7 had occurred at the beginning of
fiscal year 1995:
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
1996 1995
----------- -----------
(In thousands, except
per share amounts)
<S> <C> <C>
Revenue $ 891,026 $ 851,132
Net income (loss) 13,612 (6,119)
Net income (loss) per share - primary and fully diluted .35 (.16)
</TABLE>
NOTE 4 UNUSUAL CHARGE
During the third quarter of 1996, the Company recorded an unusual charge of
$3.5 million ($.08 per share after-tax) in connection with the Nowsco
Acquisition. The unusual charge consisted of $1.9 million in interest relating
to borrowings incurred to finance the Nowsco Acquisition (prior to the issuance
of common stock discussed in Note 7) and a $1.6 million write-off of bank fees
in connection with the Company's previous bank facility.
8
<PAGE> 9
NOTE 5 LONG-TERM DEBT
In June 1996, in connection with the Nowsco Acquisition, the Company, BJ
Services Company, U.S.A., BJ Services Company Middle East, BJ Service
International, Inc. and Nowsco Well Service, Ltd. entered into a new bank
credit facility ("Bank Credit Facility") with a major commercial bank. The
Bank Credit Facility provided for up to $850.0 million in unsecured borrowings,
including a one-year bridge loan facility of $285.0 million, a six-year term
loan facility of $315.0 million and a five-year revolving credit facility of
$250.0 million. On July 7, 1996 the bridge loan was repaid in full and the
term loan was partially repaid from the proceeds of the Company's stock
offering (see Note 7). On August 7, 1996, the Bank Credit Facility was
amended and restated. The Bank Credit Facility now consists of a six-year
term facility with an initial 364-day loan of Cdn $320 million repayable in 22
quarterly installments beginning in March 1997 (convertible to approximately
U.S. $234 million at the option of the banks) and a five-year revolving credit
facility of $325.0 million (including letters of credit). The Bank Credit
Facility includes various customary covenants, including the maintenance of
certain financial ratios and net worth and restrictions on dividend payments.
Pursuant to such dividend restrictions, based on its debt to capitalization
ratio at June 30, 1996, the Company is currently unable to pay dividends on its
common stock. At June 30, 1996, after giving effect to the August amendment,
principal reductions of the term loan are due in aggregate installments of
$25,765,000, $34,353,000, $43,923,000, $47,113,000, $47,113,000 and $35,334,000
in the years ended September 30, 1997, 1998, 1999, 2000, 2001 and 2002,
respectively.
On February 20, 1996, BJ Services Company ("Parent") issued $125.0 million of
7% notes due 2006 ("7 % Notes") as to which its direct wholly owned
subsidiaries BJ Services Company, U.S.A., BJ Service International, Inc., and
BJ Services Company Middle East (collectively "Guarantor Subsidiaries" and
individually "Guarantor") have fully and unconditionally guaranteed, on a joint
and several basis, its obligation to pay principal and interest with respect to
the 7% Notes. In August 1996, the 7% Notes were exchanged for 7% Series B
Notes due 2006 which were issued in a transaction registered under the
Securities Act. The form and terms of the 7% Series B Notes are identical in
all material respects to the form and terms of the 7% Notes. Each of the
guarantees is an unsecured obligation of the Guarantor providing such guarantee
and ranks pari passu with the guarantees provided by and the obligations of
such Guarantor under the Bank Credit Facility and the obligations of such
Guarantor Subsidiaries under the Company's 9.2% Notes due August 1, 1998 (the
"9.2% Notes") and with all existing and future unsecured funded indebtedness of
such Guarantor for borrowed money that is not, by its terms, expressly
subordinated in right of payment to such guarantee.
The 9.2% Notes were amended on August 7, 1996 to include financial covenants
comparable to those in the Bank Credit Facility.
9
<PAGE> 10
NOTE 6 SUPPLEMENTAL GUARANTOR INFORMATION
As discussed in Note 5, each of the Guarantors has fully and unconditionally
guaranteed, on a joint and several basis, the obligation to pay principal and
interest with respect to the Notes.
Substantially all of the Company's operating income and cash flow is generated
by its subsidiaries. As a result, funds necessary to meet the Company's debt
service obligations are provided in part by distributions or advances from its
subsidiaries. Under certain circumstances, contractual and legal restrictions,
as well as the financial condition and operating requirements of the Company's
subsidiaries, could limit the Company's ability to obtain cash from its
subsidiaries for the purpose of meeting its debt service obligations, including
the payment of principal and interest on the Notes. Although holders of the 7%
Notes will be direct creditors of the Company's principal direct subsidiaries
by virtue of the guarantees, the Company has subsidiaries ("Non-Guarantor
Subsidiaries") that are not included among the Guarantor Subsidiaries, and such
subsidiaries will not be obligated with respect to the 7% Notes. As a result,
the claims of creditors of the Non-Guarantor Subsidiaries will effectively have
priority with respect to the assets and earnings of such companies over the
claims of creditors of the Company, including the holders of the Notes.
The following supplemental consolidating condensed financial statements
present:
1. Consolidating condensed statements of financial position as of
June 30, 1996 and September 30, 1995, consolidating condensed statements of
operations for each of the three and nine month periods ended June 30, 1996 and
1995 and consolidating condensed statements of cash flows for each of the nine
month periods ended June 30, 1996 and 1995.
2. The Parent and combined Guarantor Subsidiaries and combined
Non-Guarantor Subsidiaries with their investments in subsidiaries accounted for
using the equity method.
3. Elimination entries necessary to consolidate the Parent and all of
its subsidiaries.
Management does not believe that separate financial statements of the
Guarantors of the Notes are material to investors in the Notes.
10
<PAGE> 11
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT
OF OPERATIONS
(IN THOUSANDS)
THREE MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Revenue $ $ 144,063 $ 83,991 $ (7,094) $ 220,960
Operating expenses:
Cost of sales and services 121,775 63,734 (7,094) 178,415
Research and engineering 3,789 203 3,992
Marketing 7,567 2,270 9,837
General and administrative 5,731 3,296 9,027
Goodwill amortization 1,179 175 1,354
Unusual charge 3,539 3,539
------------ ------------- ------------- ------------- -------------
Total operating expenses 143,580 69,678 (7,094) 206,164
------------ ------------- ------------- ------------- -------------
Operating income 483 14,313 14,796
Interest income 348 217 (348) 217
Interest expense (6,392) 390 348 (5,654)
Income from equity investees 9,072 13,203 (22,275)
Other income-net 329 1,335 1,664
------------ ------------- ------------- ------------- -------------
Income before income taxes 9,072 7,971 16,255 (22,275) 11,023
Income tax expense (benefit) (1,101) 3,052 1,951
------------ ------------- ------------- ------------- -------------
Net income $ 9,072 $ 9,072 $ 13,203 $ (22,275) $ 9,072
============ ============= ============= ============= =============
</TABLE>
11
<PAGE> 12
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT
OF OPERATIONS
(IN THOUSANDS)
THREE MONTHS ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Revenue $ $ 134,237 $ 73,583 $ (8,278) $ 199,542
Operating expenses:
Cost of sales and services 118,860 56,063 (8,278) 166,645
Research and engineering 3,898 217 4,115
Marketing 7,234 2,037 9,271
General and administrative 4,639 3,225 7,864
Goodwill amortization 1,068 168 1,236
Unusual charge 16,000 16,000
------------ ------------- ------------- ------------- -------------
Total operating expenses 151,699 61,710 (8,278) 205,131
------------ ------------- ------------- ------------- -------------
Operating income (loss) (17,462) 11,873 (5,589)
Interest income 51 322 (51) 322
Interest expense (3,939) (996) 51 (4,884)
Income (loss) from
equity investees (5,848) 8,289 (2,441)
Other income-net 782 (302) 480
------------ ------------- -------------- ------------- -------------
Income (loss) before income taxes (5,848) (12,279) 10,897 (2,441) (9,671)
Income tax expense (benefit) (6,431) 2,608 (3,823)
------------ ------------- ------------- ------------- -------------
Net income (loss) $ (5,848) $ (5,848) $ 8,289 $ (2,441) $ (5,848)
============ ============= ============= ============= =============
</TABLE>
12
<PAGE> 13
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT
OF OPERATIONS
(IN THOUSANDS)
NINE MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Revenue $ $ 417,185 $ 236,038 $ (24,968) $ 628,255
Operating expenses:
Cost of sales and services 358,415 179,217 (24,968) 512,664
Research and engineering 10,985 609 11,594
Marketing 21,214 6,506 27,720
General and administrative 15,829 9,920 25,749
Goodwill amortization 3,501 524 4,025
Unusual charge 3,539 3,539
------------ ------------- ------------- ------------- -------------
Total operating expenses 413,483 196,776 (24,968) 585,291
------------ ------------- ------------- ------------- -------------
Operating income 3,702 39,262 42,964
Interest income 1,077 537 (1,071) 543
Interest expense (16,001) (1,819) 1,071 (16,749)
Income from equity investees 22,640 29,776 (52,416)
Other income-net 1,949 1,054 3,003
------------ ------------- ------------- ------------- -------------
Income before income taxes 22,640 20,503 39,034 (52,416) 29,761
Income tax expense (benefit) (2,137) 9,258 7,121
------------ ------------- ------------- ------------- -------------
Net income $ 22,640 $ 22,640 $ 29,776 $ (52,416) $ 22,640
============ ============= ============= ============= =============
</TABLE>
13
<PAGE> 14
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT
OF OPERATIONS
(IN THOUSANDS)
NINE MONTHS ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Revenue $ $ 260,627 $ 185,315 $ (20,317) $ 425,625
Operating expenses:
Cost of sales and services 233,632 143,594 (20,317) 356,909
Research and engineering 7,652 741 8,393
Marketing 11,937 5,282 17,219
General and administrative 11,430 8,887 20,317
Goodwill amortization 1,304 510 1,814
Unusual charge 16,000 16,000
------------ ------------- ------------- ------------- -------------
Total operating expenses 281,955 159,014 (20,317) 420,652
------------ ------------- ------------- ------------- -------------
Operating income (loss) (21,328) 26,301 4,973
Interest income 811 640 (795) 656
Interest expense (7,064) (3,233) 795 (9,502)
Income from equity investees 274 16,849 (17,123)
Other income-net 2,179 (181) 1,998
------------ ------------- ------------- ------------- -------------
Income (loss) before income taxes 274 (8,553) 23,527 (17,123) (1,875)
Income tax expense (benefit) (8,827) 6,678 (2,149)
------------ ------------- ------------- ------------- -------------
Net income $ 274 $ 274 $ 16,849 $ (17,123) $ 274
============ ============= ============= ============= =============
</TABLE>
14
<PAGE> 15
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT
OF FINANCIAL POSITION
(IN THOUSANDS)
JUNE 30, 1996
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ $ 2,012 $ $ $ 2,012
Receivables - net 90,007 159,851 249,858
Inventories - net 37,912 50,199 88,111
Deferred income taxes 7,036 7,036
Other current assets 7,152 15,422 22,574
------------ ------------- ------------- ------------- -------------
Total current assets 144,119 225,472 369,591
Investment in subsidiaries 195,072 137,369 (332,441)
Intercompany advances - net 300,409 162,011 (462,420)
Property - net 249,014 296,093 7 545,114
Deferred income taxes 98,139 27,189 125,328
Goodwill and other assets 223,692 411,426 635,118
------------ ------------- ------------- ------------- -------------
Total assets $ 495,481 $ 1,014,344 $ 960,180 $ (794,854) $ 1,675,151
============ ============= ============= ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ $ 60,360 $ 72,939 $ $ 133,299
Short-term borrowings and
current portion of long-term debt 326,100 3,608 329,708
Accrued employee
compensation and benefits 13,155 9,626 22,781
Income and other taxes 7 (873) 15,617 14,751
Other accrued liabilities 744 14,489 46,390 61,623
------------ ------------- ------------- ------------- -------------
Total current liabilities 751 413,231 148,180 562,162
Long-term debt 365,240 198,624 563,864
Deferred income taxes 13,291 13,291
Accrued post retirement
benefits and other 40,801 303 41,104
Intercompany advances - net 462,413 (462,413)
Stockholders' equity 494,730 195,072 137,369 (332,441) 494,730
------------ ------------- ------------- ------------- -------------
Total liabilities and
stockholders' equity $ 495,481 $ 1,014,344 $ 960,180 $ (794,854) $ 1,675,151
============ ============= ============= ============= =============
</TABLE>
15
<PAGE> 16
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT
OF FINANCIAL POSITION
(IN THOUSANDS)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,842 $ 1,842
Receivables - net 87,118 81,653 168,771
Inventories - net 38,463 28,388 66,851
Deferred income taxes 9,370 9,370
Other current assets 3,163 6,938 10,101
------------ ------------- ------------- ------------- -------------
Total current assets 139,956 116,979 256,935
Investment in subsidiaries 171,612 107,653 (279,265)
Intercompany advances 296,156 (296,156)
Property - net 261,713 155,097 416,810
Deferred income taxes 92,447 15,442 107,889
Goodwill and other assets 205,403 2,646 208,049
------------ ------------- ------------- ------------- -------------
Total assets $ 467,768 $ 807,172 $ 290,164 $ (575,421) $ 989,683
============ ============= ============= ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 60,677 $ 24,998 $ 85,675
Short-term borrowings and
current portion of long-term debt 37,600 37,600
Accrued employee
compensation and benefits 16,277 8,608 24,885
Income and other taxes 7 4,097 7,271 11,375
Other accrued liabilities 966 29,959 16,648 (2,837) 44,736
------------ ------------- ------------- ------------- -------------
Total current liabilities 973 148,610 57,525 (2,837) 204,271
Long-term debt 222,566 37,000 259,566
Deferred income taxes 2,248 9,248 11,496
Accrued post retirement
benefits and other 46,902 653 47,555
Intercompany advances-net 215,234 78,085 (293,319)
Stockholders' equity 466,795 171,612 107,653 (279,265) 466,795
------------ ------------- ------------- ------------- -------------
Total liabilities and
stockholders' equity $ 467,768 $ 807,172 $ 290,164 $ (575,421) $ 989,683
============ ============= ============= ============= =============
</TABLE>
16
<PAGE> 17
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT
OF CASH FLOWS
(IN THOUSANDS)
NINE MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 22,640 $ 22,640 $ 29,776 $ (52,416) $ 22,640
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation and amortization 27,153 17,135 44,288
Net gain on disposal of assets (10) (2,256) (2,266)
Recognition of unearned compensation 819 819
Deferred income taxes (benefit) 697 697
Unusual charge (noncash) 3,539 3,539
Income of equity investees (22,640) (29,776) 52,416
Changes in:
Receivables (2,889) (6,559) (9,448)
Accounts payable (317) 270 (47)
Inventories 551 (2,797) (2,246)
Other current assets and liabilities (222) (25,217) (788) 3,040 (23,187)
Intercompany advance and other, net (4,314) (416,538) 409,485 (3,040) (14,407)
------------ ------------- ------------- ------------- -------------
Net cash provided by (used for)
operating activities (4,536) (420,045) 444,963 20,382
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (12,591) (21,781) (34,372)
Proceeds from disposal of assets 1,632 2,826 4,458
Acquisition of business,
net of cash acquired (586,535) (586,535)
------------ ------------- ------------- ------------- -------------
Net cash used for
investing activities (10,959) (605,490) (616,449)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of stock 4,536 4,536
Proceeds from (reduction of)
borrowings-net 431,174 160,527 591,701
------------ ------------- ------------- ------------- -------------
Net cash provided by
financing activities 4,536 431,174 160,527 596,237
Increase in cash and cash equivalents 170 170
Cash and cash equivalents
at beginning of period 1,842 1,842
------------ ------------- ------------- ------------- -------------
Cash and cash equivalents
at end of period $ $ 2,012 $ $ $ 2,012
============ ============= ============= ============= =============
</TABLE>
17
<PAGE> 18
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT
OF CASH FLOWS
(IN THOUSANDS)
NINE MONTHS ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 274 $ 274 $ 16,849 $ (17,123) $ 274
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation and amortization 11,333 13,845 25,178
Net gain on disposal of assets (45) (695) (740)
Recognition of unearned compensation 660 660
Deferred income taxes (benefit) (8,637) (8,637)
Unusual charge 3,646 3,646
Income of equity investees (274) (16,849) 17,123
Changes in:
Receivables 18,353 (17,859) 494
Accounts payable (10,809) 9,529 (1,280)
Inventories (18,800) 14,439 (4,361)
Other current assets and liabilities 34,479 (34,432) 630 677
Intercompany advance and other, net (2,752) (3,287) 14,961 (630) 8,292
------------ ------------- ------------- ------------- -------------
Net cash provided by (used for)
operating activities (2,752) 10,318 16,637 24,203
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (7,587) (16,759) (24,346)
Proceeds from disposal of assets 2,689 2,432 5,121
Acquisition of business,
net of cash acquired (202,858) (202,858)
------------ ------------- ------------- ------------- -------------
Net cash used for
investing activities (2,752) (207,756) (14,327) (222,083)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of stock 2,752 2,752
Proceeds from (reduction of)
borrowings-net 195,603 (2,310) 193,293
------------ ------------- ------------- ------------- -------------
Net cash provided by (used for)
financing activities 2,752 195,603 (2,310) 196,045
Increase in cash and cash equivalents (1,835) (1,835)
Cash and cash equivalents
at beginning of period 3,218 3,218
------------ ------------- ------------- ------------- -------------
Cash and cash equivalents
at end of period $ $ 1,383 $ $ $ 1,383
============ ============= ============= ============= =============
</TABLE>
18
<PAGE> 19
NOTE 6 SUBSEQUENT EVENT
In July 1996, the Company issued 9,775,000 shares of common stock in a public
offering generating net proceeds of $323.1 million. The net proceeds were used
to repay the one-year bridge loan portion and other borrowings under the Bank
Credit Facility.
19
<PAGE> 20
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The Company's operations are primarily driven by the number of oil and gas
wells being drilled, the depth and drilling conditions of such wells, the
number of well completions and the level of workover activity worldwide.
Drilling activity, in turn, is largely dependent on the price of oil and
natural gas. This is especially true in the United States, where the Company
is expected to generate approximately one-half of its revenues during the next
twelve months.
Due to "aging" oilfields and lower-cost sources of oil internationally,
drilling activity in the United States has declined more than 75% from its peak
in 1981. Record low drilling activity levels were experienced in 1986 and
1992. As a result, pumping service companies have been unable to recapitalize
their aging U.S. fleets due to the inability, under current market conditions,
to generate adequate returns on new capital investments. The Company believes
it is important to operate with a greater "critical mass" in the key U.S.
markets to improve returns in this environment. This conclusion led to the
decision to withdraw from certain low activity areas in the past several years
and to consolidate its remaining operations with those acquired in April 1995
from The Western Company of North America ("Western"), which had a larger
presence in the United States. The Company's U.S. critical mass was further
increased through the acquisition of Nowsco Well Service Ltd. ("Nowsco") in
June 1996 which added operations in the mid-continental and northeastern U.S.,
the latter being an area in which the Company did not have an existing
presence.
The rig count in the United States averaged 760 and 744 active drilling rigs
during the respective three and nine-month periods ended June 30, 1996.
Compared with the same periods of the prior fiscal year, active U.S. drilling
rigs increased by 12% and 1%, respectively, due to increased natural gas
related drilling. Drilling for natural gas increased by 35% and 11% during the
respective three and nine-month periods. Due to relatively stronger oil and
natural gas prices currently being realized, management expects U.S. drilling
activity levels for the last quarter of the fiscal year to be above prior year
levels.
International drilling activity (excluding Canada) has historically been less
volatile than domestic drilling activity. Active international drilling rigs
increased by 4% in each of the most recent three and nine-month periods,
respectively, compared with the same prior year periods on the strength of
development work in Latin America, especially Venezuela, and renewed
exploration programs in the United Kingdom North Sea.
In both the United States and internationally, there has been a continuing
trend by oil and gas companies toward "alliances" with the service companies.
These alliances take various forms including packaged or integrated services,
single source suppliers and turnkey agreements. Approximately 20% of the
Company's revenues were generated under such alliances during the first nine
months of fiscal 1996.
20
<PAGE> 21
EXPANSIONS AND ACQUISITIONS
Management believes the primary opportunities for geographic and service line
expansion remain in international markets. As a result, other than the
acquisition of Western (the "Western Acquisition"), the Company's capital
spending and expansion efforts have been primarily focused outside the United
States. The Company's expansion efforts during the past year have included the
expansion of pumping services into several key international markets, including
Saudi Arabia and Vietnam; expanding tubular services and commissioning and leak
detection services into geographic regions outside the North Sea; adding
additional pumping service capacity in key Latin American markets and the
acquisition of the remaining 60% of the Company's Brazilian joint venture in
December 1995.
On April 13, 1995, the Company completed the Western Acquisition for a total
purchase price of $511.4 million (including transaction costs of $7.2 million),
consisting of 12.0 million shares of common stock, cash of $247.9 million from
borrowings under the Company's then-existing bank credit facility and warrants
to purchase 4.8 million shares of common stock at an exercise price of $30.00
per share, exercisable until the close of business on April 13, 2000. The
Western Acquisition provides the Company with a greater critical mass with
which to compete in domestic and international markets and the opportunity to
realize significant consolidation benefits. The Western Acquisition increased
the Company's existing total revenue base by approximately 75% and more than
doubled the Company's domestic revenue base beginning in the June 1995 quarter.
In addition, in excess of $40 million of overhead and redundant operating costs
have been eliminated annually by combining the two companies.
On June 28, 1996, the Company completed the acquisition of Nowsco Well Service
Ltd. ("Nowsco" and the "Nowsco Acquisition") for a total purchase price of
$583.4 million (including transaction costs of $7.0 million) in cash. The
Nowsco Acquisition accomplishes three primary objectives: (i) it gives the
Company the number one pumping services market position in Canada, where the
Company has not operated since 1992, and adds to the Company's existing market
positions in several key U.S. and international markets; (ii) provides a
technological leadership position in the high-growth coiled tubing service
line; and (iii) provides the opportunity for further cost savings through
consolidation of redundant overhead and operating bases. The consolidation of
Nowsco is expected to add approximately 40% to the Company's existing revenue
base beginning in the quarter ending September 30, 1996.
RESULTS OF OPERATIONS
Revenue: Revenue for the quarter ended June 30, 1996 was $221.0 million, an 11%
increase from the prior year's third quarter. For the nine months ended June
30, 1996, revenue was $628.3 million, a 48% increase over the same period of
the previous year. For the quarter, the increase was due primarily to activity
increases in both U.S. and international operations. For the nine-month
period, such increase was primarily driven by increased international activity
and expansions, and the acquisition of Western.
21
<PAGE> 22
For the quarter, U.S. and international operations showed revenue increases of
10% and 12%, respectively over the same period of the prior year. U.S.
activity was strong in the natural gas drilling regions, most significantly
South Texas and the Gulf of Mexico, as indicated by a 35% increase in active
gas-targeted drilling rigs. U.S. oil-related drilling activity, however,
declined by 11% resulting in the overall active rig count increase of 12%. The
Company's international operations continued their recent trend having their
fourteenth consecutive quarter of year over year revenue increases. Each of
the Company's international regions, most significantly the Far East and Middle
East regions, and service lines showed revenue increases. While overall growth
in the Company's Latin America operations continued, activity in Argentina
decreased, partially offsetting increases being realized in other Latin
American countries. A decrease in equipment sales also impacted revenue
comparisons as some expected deliveries have been postponed into future
quarters.
Operating Income: The Company's operating income increased substantially during
both the three and nine month periods as a result of the previously mentioned
revenue increases. Both years' results were impacted by an unusual charge for
acquisition-related expenditures, $3.5 million in the third quarter of 1996
related to the Nowsco Acquisition and $16.0 million in the prior year's third
quarter related to the Western Acquisition. A further charge of approximately
$5 to $10 million is expected in the fourth quarter of 1996 as the
consolidation of the overlapping operating locations resulting from the Nowsco
Acquisition is completed.
Operating expenses for the quarter were higher when compared to the prior year
periods primarily as a result of the revenue growth and, for the nine-month
period, the Western acquisition; however, the cost of sales and services as a
percentage of revenue declined by 2.8% and 2.3% for the three and nine-month
periods, respectively, primarily as a result of cost reduction efforts
implemented after the acquisition of Western and the economies of scale in
having a larger U.S. operation. Marketing expenses in the three months ended
June 30, 1996 also increased due to commissions on international business. For
the nine-month period, marketing expenses represent a higher percentage of
revenue than the prior year due to the higher concentration of the additional
revenues from the Western Acquisition being in the U.S., which requires a
relatively greater marketing effort. General and administrative expenses
increased during the three-month period primarily due to higher incentive
accruals, legal and information systems costs and, for the nine-month period,
also from the Western Acquisition. The increase in goodwill amortization for
the nine-month period also resulted from the Western Acquisition, which was
accounted for under the purchase method with the resulting goodwill being
amortized over a 40-year period. All of the operating expenses are expected to
increase beginning in the fourth quarter as a result of the Nowsco Acquisition.
Other: Interest expense increased by $.8 million and $7.2 million,
respectively, over the same three and nine-month periods of the previous year
as a result of increased borrowings to fund the Western Acquisition. See
"Financial Condition -Capital Resources and Liquidity." Other income was a
net gain in both the three and nine-month periods primarily as a result of
royalty income from one of the Company's proprietary products, a $.5 million
realized gain from an interest rate futures contract in the second quarter and,
in the most recent quarter, a $1.2 million net gain from asset sales.
22
<PAGE> 23
The year-to-date effective tax rate decreased to 24% from the second quarter's
year-to-date rate of 28% as a result of a favorable tax settlement in Norway
during the quarter.
FINANCIAL CONDITION
Capital Resources and Liquidity: Net cash provided from operating activities
for the nine months ended June 30, 1996 decreased by $3.8 million from the
prior year's figure. Higher profitability and depreciation was offset by the
payment of merger-related and various other expenses previously accrued for.
Management strives to maintain low cash balances while utilizing available
credit facilities to meet the Company's capital needs. Excess cash generated is
used to pay down outstanding borrowings. In June 1996, in connection with the
Nowsco Acquisition, the Company, BJ Services Company, U.S.A., BJ Services
Company Middle East, BJ Service International, Inc. and Nowsco Well Service,
Ltd. entered into a new bank credit facility ("Bank Credit Facility") with a
major commercial bank. The Bank Credit Facility provided for up to $850.0
million in unsecured borrowings, including a one-year bridge loan facility of
$285.0 million, a six-year term loan facility of $315.0 million and a five-year
revolving credit facility of $250.0 million. At June 30, 1996, borrowings
outstanding under the Bank Credit Facility amounted to $733.0 million consisting
of $285.0 million under the one-year bridge loan, $315.0 million under the term
loan and $133.0 million borrowed under the revolver. Interest under the Bank
Credit Facility is determined, at the Company's option as follows A) with
respect to borrowings outstanding under the revolving credit facility by
reference to (i) the higher of the reference rate announced from time to time by
the lender or the federal funds rate plus .5% per annum or (ii) the London
interbank offered rate (LIBOR) plus a spread depending on the Company's debt to
capitalization ratio or (iii) U.S. prime, and B) with respect to borrowings
outstanding in Canadian dollars under the term loan facility by reference to (i)
the Bankers Acceptance rate or (ii) Canadian prime. On July 7, 1996, the bridge
loan was repaid in full and the term loan was partially repaid from the proceeds
of the Company's stock offering (see Note 7 of Notes to Unaudited Consolidated
Condensed Financial Statements). On August 7, 1996 the Bank Credit Facility was
amended and restated. The Bank Credit Facility now consists of a six-year term
facility with an initial 364-day loan of Cdn $320 million repayable in 22
quarterly installments beginning in March 1997 (convertible into approximately
U.S. $234 million at the option of the banks) and a five-year revolving credit
facility of $325.0 million (including letters of credit). At June 30, 1996
after giving effect to the August amendment, principal reductions of the term
loan are due in aggregate installments of $25,765,000, $34,353,000, $43,923,000,
$47,113,000, $47,113,000 and $35,334,000 in the years ended September 30, 1997,
1998, 1999, 2000, 2001 and 2002, respectively.
On February 20, 1996, the Company issued $125.0 million of 7% Notes in a
transaction exempt from the registration requirements of the Securities Act of
1933 (the "Securities Act"). Three of the Company's subsidiaries that are
obligors with respect to the Bank Credit Facility and the Company's 9.2% Notes
due August 1, 1998 (the "9.2% Notes"), BJ Services Company, U.S.A., BJ Service
International, Inc. and BJ Services Company Middle East, were full and
unconditional guarantors
23
<PAGE> 24
on a joint and several basis of the 7% Notes. In August 1996, the 7% Notes
were exchanged for 7% Series B Notes due 2006 which were issued in a
transaction registered under the Securities Act. The form and terms of the 7%
Series B Notes are identical in all material respects to the form and terms of
the 7% Notes. The net proceeds from the issuance of the 7% Notes ($123.3
million) were used by the Company to repay indebtedness outstanding under the
term loan portion of the then-existing bank credit facility.
The outstanding balance of the 9.2% Notes, issued in 1991, was $18.0 million at
June 30, 1996. Principal reductions of $6.0 million are required annually each
August until maturity on August 1, 1998.
As a result of borrowings to fund the Nowsco Acquisition, the Company's
interest-bearing debt represented 64.4% of its total capitalization at June 30,
1996, compared to 38.9% at September 30, 1995. The interest-bearing debt was
subsequently reduced to approximately 41% of total capitalization in July when
the Company used the net proceeds from its common stock offering ($323.1
million) to repay the bridge loan and other borrowings under the Bank Credit
Facility. The Bank Credit Facility and 9.2% Notes include various customary
covenants and other provisions that are substantially similar to those under
the previous bank credit facility, including the maintenance of certain
financial ratios and net worth and restrictions on dividend payments.
Pursuant to such dividend restrictions, based on its debt to capitalization
ratio at June 30, 1996, the Company is currently unable to pay dividends on its
common stock. The 9.2% Notes were amended on August 7, 1996, to include
financial covenants comparable to those in the Bank Credit Facility.
Management believes that the Bank Credit Facility, combined with other
discretionary credit facilities and cash flow from operations, provides the
Company with sufficient capital resources and liquidity to manage its routine
operations and fund projected capital expenditures.
At September 30, 1995, the Company had approximately $512 million of United
States tax net operating loss carryforwards expiring between 2000 and 2011.
With the Western Acquisition, the company acquired approximately $375 million
of tax net operating loss carryforwards, subject to certain limitations,
expiring between 2000 and 2008. Under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"), the Company is
required to record a deferred tax asset for the future tax benefit of these tax
net operating loss carryforwards, as well as other items, if realization is
"more likely than not." As previously discussed, the Western Acquisition gives
the Company a greater critical mass with which to compete in the United States
as it has more than doubled the Company's United States revenue base. In
addition, with the combination of the Company and Western, the Company has
realized significant consolidation benefits. Management estimates that in
excess of $40 million of overhead and redundant operating costs have been
eliminated annually as a result of the combination of the two companies.
Management has concluded that the Company's future U.S. taxable income will be
sufficient over the remaining carryforward periods to realize the tax benefits
represented by approximately $332 million of tax net operating loss
carryforwards acquired with Western and generated by the Company's operations
prior to the Western Acquisition. The tax benefits resulting from the Western
Acquisition have been included in the approximately $84 million net deferred
tax asset recognized
24
<PAGE> 25
in the purchase price allocation at the acquisition date. Valuation allowances
have been established for the benefits of the tax net operating loss
carryforwards that are estimated to expire prior to their utilization.
Requirements for Capital. Excluding acquisitions, capital expenditures during
the nine months ended June 30, 1996 were $34.4 million, or $10.0 million
higher than the spending in the comparable period of the prior year. The
current year's spending related primarily to international expansion
opportunities (primarily in Latin America) and offshore cementing skids. Other
investing activities included the acquisition of the remaining 60% interest in
the Company's joint venture in Brazil for total consideration of $5.4 million
consisting of $3.7 million of cash and $1.7 million of debt assumed by the
Company and the acquisition of Nowsco for $583.4 million in cash.
Capital expenditures for fiscal 1997 are projected to be approximately $60 to
70 million, excluding acquisitions, and are expected to include spending for
continued geographic expansions of all service lines, construction of an
additional coiled tubing vessel, additional capacity in certain high-margin
locations and normal levels of replacement capital. The actual amount of
fiscal 1997 capital expenditures will be primarily dependent upon the
availability of expansion opportunities and will be funded by cash flows from
operating activities and available credit facilities. Management believes cash
flow from operating activities and available lines of credit, if necessary,
will be sufficient to fund projected capital expenditures.
When used in this document, the words "expect," "estimate," "project" and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks, uncertainties and assumptions. Should
one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
expected, estimated or projected.
25
<PAGE> 26
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
<TABLE>
<S> <C>
10.1 Credit Agreement dated as of August 7, 1996, among the Company, BJ Services Company, U.S.A., BJ
Service International, Inc., BJ Services Company Middle East, Nowsco Well Service Ltd., and Bank
of America National Trust and Savings Association and Bank of America Canada, as agents.
10.2 Indenture dated as of February 1, 1996, among the Company, BJ Services Company, U.S.A., BJ
Service International, Inc. and BJ Services Company Middle East, as guarantors, and Bank of
Montreal Trust Company, as trustee, with respect to $125,000,000 aggregate principal Amount of 7%
Notes due 2006.
10.3 Fourth Amendment dated as of August 7, 1996, by and among the Company, BJ Services Company,
U.S.A., BJ Service International, Inc. and BJ Services Company Middle East with respect to the
9.2% Notes due August 1, 1998.
12.1 Statement re computation of ratio of earnings to fixed charges.
27.1 Financial Data Schedule
</TABLE>
26
<PAGE> 27
(b) Reports on Form 8-K.
A Current Report on Form 8-K was filed by the Company on
April 16, 1996, with respect to the Company's tender offer
for the outstanding common shares of Nowsco Well Service
Ltd.
A Current Report on Form 8-K/A was filed by the Company on
May 23, 1996, to include conforming changes to the pro forma
financial statements of the Company reflecting the
acquisition of The Western Company of North America.
A Current Report on Form 8-K/A was filed by the Company on
May 30, 1996, to provide updated quarterly financial
information regarding The Western Company of North America.
A Current Report on Form 8-K was filed by the Company on
June 28, 1996, to report the acquisition of all of the
outstanding common shares of Nowsco Well Service Ltd.
("Nowsco") by the Company; the entering into a new bank
credit facility by the Company and certain of its
subsidiaries; the filing of a registration statement with
the Securities and Exchange Commission to report the
proposed offering of 8,500,000 shares of the Company's
common stock and an over-allotment option of up to 1,275,000
additional shares; the effectiveness of a registration
statement with respect to the proposed exchange of $125
million of 7% Notes which were not registered under the
Securities Act of 1933 (the "Securities Act") with up to
$125 million of 7% Series B Notes which are registered under
the Securities Act; and the consolidated financial
statements and unaudited consolidated condensed financial
statements of the Company were set forth for the purposes of
providing supplemental information regarding the guarantors
of the 7% Notes and the 7% Series B Notes.
27
<PAGE> 28
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BJ Services Company
(Registrant)
Date: August 14, 1996 BY: \s\ Michael McShane
----------------------------------
Michael McShane
Vice President - Finance and Chief
Financial Officer
Date: August 14, 1996 BY: \s\ Matthew D. Fitzgerald
----------------------------------
Matthew D. Fitzgerald
Controller and Chief
Accounting Officer
28
<PAGE> 29
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Description
-- -----------
<S> <C>
10.1 Credit Agreement dated as of August 7, 1996, among the Company, BJ Services Company, U.S.A., BJ
Service International, Inc., BJ Services Company Middle East, Nowsco Well Service Ltd., and Bank
of America National Trust and Savings Association and Bank of America Canada, as agents.
10.2 Indenture dated as of February 1, 1996, among the Company, BJ Services Company, U.S.A., BJ
Service International, Inc. and BJ Services Company Middle East, as guarantors, and Bank of
Montreal Trust Company, as trustee, with respect to $125,000,000 aggregate principal Amount of 7%
Notes due 2006.
10.3 Fourth Amendment dated as of August 7, 1996, by and among the Company, BJ Services Company,
U.S.A., BJ Service International, Inc. and BJ Services Company Middle East with respect to the
9.2% Notes due August 1, 1998.
12.1 Statement re computation of ratio of earnings to fixed charges.
27.1 Financial Data Schedule
</TABLE>
29
<PAGE> 1
EXHIBIT 10.1
================================================================================
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of August 7, 1996
among
BJ SERVICES COMPANY,
BJ SERVICES COMPANY, U.S.A.,
BJ SERVICE INTERNATIONAL, INC.,
BJ SERVICES COMPANY MIDDLE EAST,
NOWSCO WELL SERVICE LTD.
THE OTHER SUBSIDIARY BORROWERS
FROM TIME TO TIME PARTIES HERETO,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
Individually, as U.S. Agent, as
Letter of Credit Issuing Bank and as Swing Loan Bank,
BANK OF AMERICA CANADA,
Individually, and as Canadian Agent,
THE CHASE MANHATTAN BANK,
Individually, and as Senior Co-Agent,
BANK OF MONTREAL,
ROYAL BANK OF CANADA,
TORONTO DOMINION (TEXAS), INC.,
CREDIT LYONNAIS NEW YORK BRANCH, and
WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION,
each Individually, and as Co-Agent,
and
THE OTHER FINANCIAL INSTITUTIONS PARTIES HERETO
- - - - - - - - - - - -
Arranged by
BA SECURITIES, INC.
================================================================================
<PAGE> 2
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of August
7, 1996 (together with all amendments, renewals, extensions and other
modifications, if any, from time to time, this "Agreement"), 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"), NOWSCO WELL SERVICE LTD., an Alberta, Canada corporation
and a Wholly-Owned Subsidiary of the Company ("BJ-Canada" or the "Canadian
Borrower"), the other Subsidiary Borrowers (as defined below) from time to time
parties to this Agreement (the Company, BJ-USA, BJ-International, BJ-Middle
East, BJ-Canada 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 NATIONAL
TRUST AND SAVINGS ASSOCIATION, as letter of credit issuing bank and swing loan
bank, BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as agent for the
U.S. Banks, BANK OF AMERICA CANADA, as agent for the Canadian Banks, THE CHASE
MANHATTAN BANK, as senior co-agent for the Banks, and BANK OF MONTREAL, ROYAL
BANK OF CANADA, TORONTO DOMINION (TEXAS), INC., CREDIT LYONNAIS NEW YORK BRANCH
and WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, as co-agents for the Banks.
WHEREAS, the Borrowers (or in the case of BJ-Canada, its predecessor in
interest), certain of the Banks, the Swing Loan Bank, the Issuing Bank, the
U.S. Agent and the Canadian Agent have entered into that certain Credit
Agreement, dated as of June 10, 1996, and that certain First Amendment to
Credit Agreement, dated as of July 23, 1996 (as so amended, the "Existing
Credit Agreement"), pursuant to which the U.S. Banks agreed to make available
to the U.S. Borrower a term loan, a bridge loan and a revolving credit
facility with letter of credit and swingline subfacilities (collectively, the
"Existing U.S. Loans") and the Canadian Banks agreed to make available to the
Canadian Borrower a term loan in the form of "Bankers' Acceptances"
(hereinafter defined) or "Prime Rate Loans" (hereinafter defined)
(collectively, the "Existing Canadian Loans" and, together with the Existing
U.S. Loans, the "Existing Loans"), upon the terms and conditions set forth
therein;
WHEREAS, the Borrowers have requested that the Banks, the Swing Loan
Bank, the Issuing Bank, the U.S. Agent and the Canadian Agent restructure the
Existing Loans and other indebtedness, obligations and liabilities incurred by
the Borrowers to the Banks pursuant to the Existing Credit Agreement;
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WHEREAS, the Banks, the Swing Loan Bank, the Issuing Bank, the U.S. Agent
and the Canadian Agent have agreed to restructure the Existing Loans and other
indebtedness, obligations and liabilities incurred by the Borrowers pursuant to
the Existing Credit Agreement;
WHEREAS, the U.S. Banks have agreed to make available to the U.S.
Borrowers a term loan and a revolving credit facility with letter of credit and
swingline subfacilities upon the terms and conditions set forth in this
Agreement;
WHEREAS, the Canadian Banks have agreed to make available to the Canadian
Borrower a term loan in the form of "Bankers' Acceptances" (hereinafter
defined) or "Prime Rate Loans" (hereinafter defined) upon the terms and
conditions set forth in this Agreement;
WHEREAS, any Existing Loans outstanding under the Existing Credit
Agreement on the Closing Date bearing interest at a LIBOR Offshore Rate or
outstanding Bankers' Acceptances shall be deemed continued as a Loan under this
Agreement at such LIBOR Offshore Rate or as a Bankers' Acceptance, in each case
for the interest period applicable thereto under the Existing Credit 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 hereby
amend the Existing Credit Agreement and restate the Existing Credit Agreement
in its entirety 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.
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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, as applicable, either the U.S. Agent or the
Canadian Agent and "Agents" mean the U.S. Agent and the Canadian Agent.
"Agent-Related Person" means each of the U.S. Agent, the Canadian
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 U.S. Agent or the Canadian Agent, as the
case may be, or such other address as such Agent may from time to time specify
pursuant to Section 11.03.
"Agreement" means this Amended and Restated Credit Agreement, as
it may be amended, supplemented, renewed, extended or otherwise modified from
time to time.
"Applicable Margin" means, with respect to LIBOR Offshore Rate
Loans, Prime Rate Loans, Base Rate Loans and Bankers' Acceptances, 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.
"BA Reference Bank" means Bank of America Canada.
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<PAGE> 5
"BA Reference Proceeds" means, with respect to any Bankers'
Acceptance, funds in an amount calculated on the applicable Borrowing Date
equal to the product of (x) the face amount of such Bankers' Acceptance times
(y) the price (rounded to the nearest fifth decimal place) thereof; where the
price thereof is calculated as follows:
1
--------------------------------
( Term)
1 + (BA Reference Rate x ----)
( 365 )
where Term is the term in days of such Bankers' Acceptance.
"BA Reference Rate" means, relative to any term for any Bankers'
Acceptance, the rate per annum equal to the rate per annum (rounded upwards to
the nearest multiple of 1/100 of 1% and expressed as a decimal) calculated on
the basis of a year of 365 days and determined by the Canadian Agent in
accordance with normal market practice at or about 10:00 a.m. (Toronto, Canada
time) as being the discount rate announced by the BA Reference Bank one
Business Day prior to the applicable Borrowing Date, for the creation of
bankers' acceptances having a comparable face amount and term to the face
amount and term of such Bankers' Acceptance.
"BA Rollover Notice" has the meaning specified in Section
2.03(d)(ii).
"Bank" has the meaning specified in the introductory clause
hereto. References to the "Banks" shall include Bank of America NT & SA,
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 NT & SA
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.
"Bankers' Acceptance" and "BA" each means a non-interest bearing
bill of exchange payable in Canadian Dollars having a term no less than 30 days
nor more than 180 days, or such other term mutually acceptable to the Canadian
Borrower, the Canadian Agent and the Canadian Banks, and maturing on a Business
Day drawn by the Canadian Borrower and accepted by a Canadian Bank, pursuant to
this Agreement as evidenced by a Canadian Bank's endorsement thereof at the
direction of the Canadian Borrower, in the form of bankers' acceptance
prescribed by the Canadian Agent.
"Bankers' Acceptance Fee" means, on any date and with respect to
any Bankers' Acceptance for any term, a fee, in an amount equal to the product
of (x) the face amount of such Bankers' Acceptance times (y) the Applicable
Margin times (z) a fraction, the numerator of which is the term (in days) of
such Bankers' Acceptance and the denominator of which is 365 or 366, if
applicable.
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<PAGE> 6
"Bank of America Canada" means Bank of America Canada, a bank
chartered under and referred to in Schedule II of the Bank Act (Canada).
"Bank of America NT & SA" means Bank of America National Trust and
Savings Association, a national banking association.
"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 U.S. Term Loan, a Revolving Loan, a Swing
Loan or a Letter of Credit Advance, that bears interest based on the Base Rate.
"BJ-Canada" has the meaning specified in the introductory clause
hereto.
"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, by a Second Amendment to Note
Agreement dated as of September 19, 1995 and by a Third Amendment executed as
of February 13, 1996 to be effective as of September 19, 1995.
"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.
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<PAGE> 7
"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 and Canadian Term 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 (with respect to U.S. Borrowings) or Toronto, Ontario
or Calgary, Alberta (with respect to Canadian Borrowings) 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.
"Canadian Agent" means Bank of America Canada in its capacity as
agent for the Canadian Banks hereunder, and any successor agent arising under
Section 10.09.
"Canadian Banks" means the Banks chartered under the Bank Act
(Canada) and identified in Schedule 1.01-2 and any successors or assigns
thereof permitted pursuant to Section 11.09.
"Canadian Borrower" has the meaning specified in the introductory
clause hereto.
"Canadian Borrowing" means an availment by the Canadian Borrower
by way of (i) a Bankers' Acceptance, or (ii) a Prime Rate Loan, or any
combination of the borrowings described in the foregoing clauses (i) and (ii),
as the case may be.
"Canadian Dollars" and "C$" each mean lawful money of Canada.
"Canadian Term Commitments" means the commitments of the Canadian
Banks to make Canadian Borrowings pursuant to subsection 2.01(a) in a maximum
aggregate amount not to exceed the amount of C$320,000,000, subject to
reduction pursuant to Sections 2.06 and 2.09 of this Agreement and expiration
pursuant to subsection 2.01(a)(ii).
"Canadian Term Loan" has the meaning specified in subsection
2.01(a). Canadian Term Loans include Canadian Term Loans made, and the
Existing Loans deemed continued as term loans, on the Closing Date and other
Canadian Term Loans made during the remainder of the Term Loan Availability
Period.
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<PAGE> 8
"Capital Adequacy Regulation" has the meaning specified 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 the Canadian
Government or any agency thereof and backed by the full faith and credit of the
United States or Canadian Governments, respectively, 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; (d)
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 Canadian commercial bank or any
branch or agency of a non-Canadian commercial bank licensed to conduct business
in Canada 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 DBRS and A (or then equivalent grade) by CBRS;
(e) commercial paper of an issuer rated at least R-1 (Low) by DBRS or A1 by
CBRS and in either case having a tenor of not more than twelve (12) months; and
(f) 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.
"CBRS" means C.B.R.S. Inc. carrying on business as "Canadian Bond
Rating Service," and its successors.
"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
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<PAGE> 9
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.
"Circular" means the Circular in connection with the Offer dated
April 12, 1996 by BJ Canada as amended through and including June 3, 1996 by
amendments dated May 17, 1996, May 27, 1996 and June 3, 1996.
"Closing Date" means the date and time at which all conditions
precedent set forth in Sections 5.01, 5.02 and 5.05 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(e), waived by the Person
entitled to receive such payment).
"Closing Date Pricing Certificate" has the meaning specified in
Section 5.01(g).
"Code" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"Commitment" means, for each Bank, the sum of its Pro Rata Share
of the Revolving Commitments, its Pro Rata Share of the Canadian Term
Commitments and its Pro Rata Share of the U.S. Term Commitments, as the same
may be reduced pursuant to the terms hereof or as a result of one or more
assignments under Section 11.09.
"Commitment Fee" has the meaning specified in subsection 2.11(b).
"Commitment Fee Percentage" means the specified percent per annum
set forth in the pricing chart set forth in Section 2.02.
"Company" has the meaning specified in the introductory clause
hereto.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit "C".
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<PAGE> 10
"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 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 fees and discounts payable or
incurred in respect of 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.
"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.
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<PAGE> 11
"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 or any
Bankers' Acceptance) 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, a Borrower (a) converts Loans of one Interest Rate Type to
another Interest Rate Type, or (b) 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.
"DBRS" means Dominion Bond Rating Service Limited and its
successors.
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<PAGE> 12
"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 specified 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,
U.S. 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, U.S. Term Loans and Swing Loans occurring on
such date; (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 and (c) with respect
to any Canadian Borrowings, means the aggregate outstanding principal amount
thereof (or, in the case of Bankers' Acceptances, the full undiscounted face
amount thereof) after giving effect to any Borrowings and prepayments or
repayments of Canadian Borrowings occurring on such date.
"Eligible Assignee" has the meaning specified 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.
"Equivalent Amount" in one currency (the "first currency") of an
amount in another currency (the "other currency") means, as of the date of
determination, the amount of the first currency which would be required to
purchase such amount of the other currency at the Bank of Canada noon mid-point
spot rate on such date of determination (as quoted or published from time to
time by the Bank of Canada) or, if such date of determination is not a Business
Day, on the
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<PAGE> 13
Business Day immediately preceding such date of determination, or at such other
rate as may have been agreed to by the Borrower and the Majority Banks.
"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 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 Credit Agreement" has the meaning specified in the first
recital.
"Existing Canadian Loans" has the meaning specified in the first
recital.
"Existing Loans" has the meaning specified in the first recital.
"Existing U.S. Loans" has the meaning specified in the first
recital.
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"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 U.S. 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 U.S. Agent.
"Fee Letter" has the meaning specified in subsection 2.11(a).
"Financial Letter of Credit" has the meaning specified 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.
"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 specified 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 "L" hereto executed by the Company, and "Subsidiary
Guaranties" means each of the Guaranties substantially in the form of Exhibit
"M" hereto executed by each of the Subsidiary Guarantors, each in favor of the
Agents and the Banks, as they may be amended, supplemented or otherwise
modified from time to time.
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"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 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, the Bankruptcy and Insolvency Act
(Canada) and the Companies' Creditors Arrangement Act (Canada).
"Intercompany Subordination Agreement" means any Intercompany
Subordination Agreement substantially in the form of Exhibit "M" hereto, as it
may be amended, supplemented or otherwise modified from time to time.
"Interest Coverage Ratio" means, for any period, the ratio of
Consolidated EBITDA to Consolidated Interest Expense.
"Interest Payment Date" means, (i) as to any Loan (other than a
Base Rate Loan or a Prime Rate Loan), the last day of each Interest Period
applicable to such Loan, (ii) with respect to any Bankers' Acceptance, the last
day of the term of such Bankers' Acceptance, (iii) as
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<PAGE> 16
to any Base Rate Loan, the last Business Day of each calendar quarter, (iv) as
to any Prime Rate Loan, the last Business Day of each calendar month, and (v)
as to any Base Rate Loan or Prime Rate Loan, 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 after
each Interest Payment Date thereafter is also an Interest Payment Date.
"Interest Period" means, as to any LIBOR Offshore Rate Loan or
Bankers' Acceptance, the period commencing on the Borrowing Date of such LIBOR
Offshore Rate Loan or Bankers' Acceptance or on the Conversion/Continuation
Date on which the LIBOR Offshore Rate Loan or Bankers' Acceptance, as the case
may be, is converted into or continued as a LIBOR Offshore Rate Loan or a
Bankers' Acceptance, and ending, in the case of LIBOR Offshore Rate Loans 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 and in the
case of Bankers' Acceptances ending on the last day of the term selected by the
Borrower in its Notice of Borrowing or Notice of Conversion/Continuation;
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 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.
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<PAGE> 17
"Interest Rate Type" means, with reference to Loans, a Base Rate
Loan, a Prime Rate Loan, a LIBOR Offshore Rate Loan or Bankers' Acceptances.
"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 National Trust and Savings
Association 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.
"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" or "Canadian 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 Agents.
"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 U.S. 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
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<PAGE> 18
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 U.S. 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
$40,000,000; 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
U.S. Agent as follows:
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 U.S. 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 U.S. 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 U.S. 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
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<PAGE> 19
Offshore Rate Loan by Bank of America NT&SA 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 one or more of the
Borrowers under Article II or Article III in the form of a Revolving Loan,
Swing Loan, U.S. Term Loan, Bankers' Acceptances, Prime Rate Loan or Letter of
Credit Advance.
"Loan Documents" means this Agreement, the Notes, the Bankers'
Acceptances, any Guaranty, the Fee Letter, the Letter of Credit-Related
Documents, any Intercompany Subordination Agreement and all other documents
executed by the Company or any Subsidiary with or in favor of any 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 (other than
Swing Loans), or in the case of the Canadian Borrowings, the Equivalent Amount
of U.S. Dollars, 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.
"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
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<PAGE> 20
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 Nowsco and its Subsidiaries).
"Material Subsidiary" means any Subsidiary with assets having a
book value equal to or greater than 5% of Consolidated Net Worth as of any time
of determination and (ii) any Borrower (other than the Company).
"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.
"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, (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, a U.S. Term Note
or a Prime Rate 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".
"Nowsco" means Nowsco Well Service Ltd., a corporation organized
under the laws of Alberta, Canada.
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"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by any Borrower to
any Bank, any Agent, the Issuing Bank, 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.
"Offer" means, as applicable, the Offer to: The Holders of Common
Shares of Nowsco Well Service Ltd. dated April 12, 1996 made by BJ Canada as
amended through and including June 3, 1996 by amendments dated May 17, 1996,
May 27, 1996 and June 3, 1996, and includes the Circular.
"Operating Lease" means an operating lease determined in
accordance with GAAP.
"Organization Documents" means, for any corporation, the
certificate or articles of incorporation, or both, the certificate or articles
of amalgamation, or both, 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, for
any partnership, its partnership agreement and for any limited liability
company, its limited liability agreement.
"Other Debt Documents" means the BJ Notes, the BJ Note Agreement,
the Western Notes and the Western Note Agreement, 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 ERISA Affiliate 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 specified in
subsection 3.02(a).
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"Permitted Business" has the meaning specified in Section 8.09.
"Permitted Liens" has the meaning specified in Section 8.01.
"Person" means an individual, partnership, corporation, limited
liability company, joint venture, 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 ERISA Affiliate of a Borrower sponsors or maintains or to
which any Borrower or any ERISA Affiliate of a Borrower makes, is making, or is
obligated to make contributions and includes any Pension Plan.
"Prime Rate" means on any date, the greater of: (i) a fluctuating
rate per annum equal to the rate of interest per annum most recently announced
by the Canadian Agent at its Lending Office as the reference rate it will use
to determine rates of interest on Canadian Dollar commercial loans made by it
to borrowers in Canada and referred to by it as its "prime rate"; and (ii) the
rate of interest publicly announced from time to time by the Canadian Agent as
its rate in respect of Banker's Acceptances accepted by it having a term of 30
days plus the Application Margin for Banker's Acceptances. Changes in the rate
of interest on the Prime Rate Loans will take effect simultaneously with each
change in the Prime Rate. The Prime Rate referred to in subclause (i) is a
rate per annum set by the Canadian Agent 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.
"Prime Rate Loan" has the meaning specified in subsection 2.01(a).
Prime Rate Loans include Prime Rate Loans made on the Closing Date and other
Prime Rate Loans made during the remainder of the Term Loan Availability
Period.
"Prime Rate Note" means a promissory note in substantially the
form of Exhibit "G-2" hereto, duly executed and delivered to the Canadian Agent
by BJ Canada and payable to the order of a Canadian Bank in the amount of its
Canadian Term Commitment, including any amendment, modification, renewal or
replacement of such promissory note.
"Pro Rata Share" means, (i) as to any U.S. Bank at any time, the
percentage equivalent (expressed as a decimal, rounded to the ninth decimal
place) at such time of such Bank's Revolving Commitment divided by the combined
Revolving Commitments of all U.S. Banks and (ii) as to any Canadian Bank, or
any assignee thereof as contemplated by the last sentence of the first
paragraph of subsection 2.01(a)(ii), at any time, the percentage equivalent
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<PAGE> 23
(expressed as a decimal, rounded to the ninth decimal place) at such time of
such Bank's Term Commitment divided by the combined Term Commitments.
"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 Term Loan Maturity 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.
"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.
"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 Payment" means, as to any Person, any dividend or
other distribution of assets (including, without limitation, cash, obligations
owing to such Person and securities owned by such Person), properties or rights
associated with such assets or properties 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.
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<PAGE> 24
"Revolving Commitments" means the commitments of the U.S. Banks to
make Loans pursuant to subsection 2.01(b) in a maximum aggregate amount not to
exceed $325,000,000, as may be reduced pursuant to Section 2.06 or 2.09 of this
Agreement.
"Revolving Loan" has the meaning specified in subsection 2.01(b)
of this Agreement and shall include Existing Loans deemed continued as
revolving loans on the Closing Date.
"Revolving Note" means a promissory note in substantially the form
of Exhibit "F" hereto, duly executed and delivered to the U.S. Agent by a U.S.
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)
June 30, 2001; and (b) the date on which the Revolving Commitments terminate in
accordance with the provisions of this Agreement.
"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, 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.
"7% Indenture" means the Indenture dated as of February 1, 1996 by
and among the Company, BJ-USA, BJ-International, and BJ-Middle East, and Bank
of Montreal Trust Company, as trustee.
"7% Notes" means the Company's 7% Notes due 2006 issued pursuant
to the 7% Indenture of which $125,000,000 aggregate principal amount is
outstanding.
"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
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<PAGE> 25
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.
"Subsidiary" of a Person means any Person 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. "Subsidiaries" of the
Company shall include all Consolidated Subsidiaries (except to the extent
otherwise specifically provided herein).
"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 "I" hereto.
"Subsidiary Guarantors" means BJ-USA, BJ-International and
BJ-Middle East, and "Subsidiary Guarantor" means a single such Subsidiary
Guarantor.
"Surety Instruments" means all letters of credit (including
standby), bankers' 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, swap option, currency option or any other, similar
agreement (including any option to enter into any of the foregoing).
"Swing Loan" has the meaning specified in Section 2.01(c).
"Swing Loan Bank" means Bank of America National Trust and Savings
Association, 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;
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<PAGE> 26
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 U.S. Agent by a
U.S. 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 "J".
"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 each Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured by
each Bank's net income, assets or capital by the jurisdiction (or any political
subdivision thereof) under the laws of which such Bank or such Agent, as the
case may be, is organized or maintains a lending office.
"Term Commitment" means the commitment of the Canadian Banks to
make Term Loans, which commitment shall be denominated in Canadian Dollars
until such time, if any, that the Canadian Term Commitment expires, at which
time the Term Commitment shall be denominated in Dollars, all as further set
forth in subsection 2.01(a).
"Term Loans" means the term loans made pursuant to subsection
2.01(a), which shall be denominated in Canadian Dollars, or upon the expiration
of the Canadian Term Commitments, in accordance with subsection 2.01(a)(ii) (if
there shall be any such expiration), Dollars.
"Term Loan Availability Period" means the period from the Closing
Date through December 31, 1996.
"Term Loan Borrower" means either the U.S. Term Loan Borrower or
the Canadian Borrower, as the case may be.
"Term Loan Maturity Date" means June 30, 2002, except with respect
to the Canadian Term Loans which shall mature upon the earlier expiration of
the Canadian Term Commitments (if there shall be any such earlier expiration)
pursuant to subsection 2.01(a)(ii).
"Term Note" means either a U.S. Term Note or a Prime Rate Note, as
the case may be.
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"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.
"United States" or "U.S." means the United States of America, its
fifty states and the District of Columbia.
"U.S. Agent" means Bank of America National Trust and Savings
Association in its capacity as agent for the U.S. Banks hereunder, and any
successor agent arising under Section 10.09.
"U.S. Bank" means the Banks identified as U.S. Banks on Schedule
1.01-1 and any successors or assigns thereof.
"U.S. Borrower" means any Borrower other than BJ-Canada.
"U.S. Borrowing" means any Borrowing which is not a Canadian
Borrowing.
"U.S. Lending Office" means, as to any Bank, the office or offices
of such Bank specified as its "U.S. Lending Office" or "Domestic 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 Agents.
"U.S. Term Commitments" means the commitments of the Canadian
Banks to make Term Loans denominated in Dollars upon the expiration of the
Canadian Term Commitment (if there shall be any such expiration) pursuant to
subsection 2.01(a)(ii) in a maximum aggregate amount not to exceed the
Equivalent Amount in Dollars of the Canadian Term Commitment as in effect
immediately prior to such expiration, subject to reduction pursuant to Sections
2.06 and 2.09 of this Agreement.
"U.S. Term Loan Borrower" means the Company.
"U.S. Term Loans" has the meaning specified in subsection
2.01(a)(ii).
"U.S. Term Note" means a promissory note in substantially the form
of Exhibit "G-1" hereto, duly executed and delivered to the Canadian Agent by
the U.S. Term Loan Borrower and payable to the order of a Canadian Bank in the
amount of its U.S. Term Commitment, including any amendment, modification,
renewal or replacement of such promissory note.
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"Western Company" means The Western Company of North America, a
Delaware corporation.
"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 Company pursuant to the Western Note Agreement.
"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 "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 Agents, each
Borrower and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Banks or the Agents merely
because of the Agents' or Banks' involvement in their preparation.
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<PAGE> 29
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.
1.04 Currency References. Unless otherwise specified herein, all
dollar amounts expressed herein shall refer to U.S. Dollars. Except as
otherwise herein specified, for purposes of calculating compliance with the
terms of this Agreement and the other Loan Documents (including for purposes of
calculating compliance with the covenants), any other obligation or calculation
shall be converted to its Equivalent Amount in U.S. Dollars.
ARTICLE II
THE CREDITS AND CERTAIN PRICING TERMS
2.01 Amounts and Terms of Commitments.
(a) The Term Credit.
(i) Each Canadian Bank severally agrees, on the terms and
conditions set forth herein, to make loans to BJ-Canada (each such loan, a
"Canadian Term Loan") during the Term Loan Availability Period in an aggregate
amount not to exceed such Bank's Pro Rata Share of the Canadian Term
Commitments. BJ-Canada may, at its sole option, elect that the Canadian Term
Loans be made to it in the form of a loan in Canadian Dollars bearing interest
at the Prime Rate (each such loan, a "Prime Rate Loan"), and/or by the Canadian
Banks' accepting and funding Bankers' Acceptances drawn and requested by
BJ-Canada with a Borrowing Date and term provided in the relevant Notice of
Borrowing and in an aggregate undiscounted face amount equal to such Canadian
Bank's Pro Rata Share of the aggregate face amount of all Canadian Borrowings
requested to be made on such day by BJ-Canada in the form of Bankers'
Acceptances.
(ii) The Canadian Term Commitments shall expire on June 9,
1997; provided, however, that the term of the Canadian Term Commitments may be
extended by the Canadian Banks, at their sole option, upon the written request
of the Company no later than 10 Business Days prior to each such potential
expiration date, for successive periods of 364 days each, by notice from the
Canadian Agent to the Company no later than 5 Business Days prior to each such
potential expiration date. Upon the expiration of the Canadian Term Commitment
in accordance with the foregoing sentence, if there shall be any such
expiration, (i) BJ-Canada shall immediately, without notice or demand, repay
all Canadian Borrowings, (ii) after such repayment,
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the Term Commitment shall be automatically denominated in Dollars, and as a
result thereof, the U.S. Term Commitment shall automatically be established in
an amount equal to the Equivalent Amount in Dollars of the Canadian Term
Commitment as in effect immediately prior to such expiration, and (iii) on or
prior to the date of such expiration and subject to satisfaction of the
conditions set forth in Sections 5.04 and 5.05, the U.S. Term Loan Borrower may
request a Term Loan in the form of term loans denominated in Dollars (each such
loan, a "U.S. Term Loan") from each Canadian Bank, and, subject to the terms
and conditions set forth herein, each Canadian Bank severally agrees to make
such Loan to the U.S. Term Loan Borrower, in an aggregate amount not to exceed
such Bank's Pro Rata Share of the U.S. Term Commitment. In the event that the
Canadian Banks elect not to extend the Canadian Term Commitment, each Canadian
Bank shall use all reasonable efforts to assign, pursuant to Section 11.09, its
U.S. Term Loan to an affiliate of such Canadian Bank prior to or upon the
expiration of the Canadian Term Commitment which assignment shall not require
the consent of the Company, the Agents, or the Issuing Bank and,
notwithstanding anything to the contrary herein contained, such assignee shall
be deemed an Eligible Assignee; provided that such assignee is a U.S. resident
for tax purposes or such assignee complies with Section 10.10.
Amounts borrowed as Term Loans which are repaid or prepaid may not
be reborrowed. For clarity, the election of the Canadian Borrower to convert
or continue a Canadian Borrowing pursuant to Sections 2.03 or 2.04 shall not
constitute a repayment or reborrowing thereof.
(b) The Revolving Credit. Each U.S. Bank severally agrees, on
the terms and conditions set forth herein, to make loans to the U.S. Borrowers
(each such loan, a "Revolving 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 at any time outstanding, such Bank's Pro Rata
Share of the Revolving Commitments as set forth in Schedule 2.01; 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 the Effective Amount of all Letter of Credit Obligations,
shall not at any time exceed the combined Revolving 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
U.S. Borrowers (each such loan, a "Swing Loan") from time to time on any
Business Day during the period from the
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<PAGE> 31
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 the Effective
Amount of all Letter of Credit Obligations, shall not at any time exceed the
combined Revolving 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.
PRICING CHART
<TABLE>
<CAPTION>
=================================================================================================================
CR CR CR CR
<35% greater than greater than
or equal to or equal to
35% 40% greater than
and and or equal to
<40% <47.5% 47.5%
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Applicable Margin (LIBOR) .40% .50% .625% .750%
- -----------------------------------------------------------------------------------------------------------------
Applicable Margin (Base Rate) 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------
Applicable Margin (Prime Rate) 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------
Applicable Margin (to be multiplied by face
amount of Bankers' Acceptances) .40% .50% .625% .750%
- -----------------------------------------------------------------------------------------------------------------
Risk Participation Fee-Financial Letter of
Credit .30% .40% .525% .650%
- -----------------------------------------------------------------------------------------------------------------
Risk Participation Fee-Performance Letter of
Credit .20% .25% .3125% .375%
- -----------------------------------------------------------------------------------------------------------------
Commitment Fee Percentage .15% .20% .225% .250%
=================================================================================================================
</TABLE>
DEFINITION: "CR" is the abbreviation for Capitalization Ratio.
(b) Procedure for Adjustments. During the period from the
Closing Date through the first day following the Closing Date on which the
Agents receive the financial statements required pursuant to Section 7.01(b),
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
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<PAGE> 32
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 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 relevant Agent will provide a statement to the Company of such
amounts due within five (5) Business Days of the relevant 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 relevant 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 relevant
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
relevant Agent shall
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<PAGE> 33
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
relevant Agent for distribution to the Company the amount of such excess
actually received and not so credited by such Bank.
(d) Senior Debt Rating. Notwithstanding the foregoing, (i) in
the event senior unsecured 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% and, in the event senior unsecured debt issued
by the Company is at any time rated BBB- by S&P and Baa3 by Moody's, the
Applicable Margin, the Risk Participation Fees and the Commitment Fee shall be
determined as if the Capitalization Ratio were greater than or equal to 35% and
< 40% unless the Company otherwise qualifies for pricing under the
Capitalization Ratio column of < 35%. The Company agrees to notify the Agents
and the Banks if any senior debt issued by the Company is rated BBB- or higher
by S&P and Baa3 or higher by Moody's; and thereafter, the Company shall notify
the Agents 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 U.S. Agent and shall be effective as to all Loans then
outstanding (without regard to the timing of Interest Periods) as of the date
the changed rating is effective (the "Effective Date"). The U.S. 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 Loans. Except in connection
with the initial Borrowing, each Borrowing of Revolving Loans shall be made
upon the irrevocable written notice by any Borrower delivered to the U.S. Agent
or, in the case only of Term Loans, to the Canadian Agent in the form of a
Notice of Borrowing, which notice must be received by such 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 and Prime Rate Loans, and (z) 11:00 a.m.
(Toronto time) two (2) Business Days prior to the requested Borrowing Date in
the case of Bankers' Acceptances, 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 (or, in the case
only of Canadian Borrowings, Canadian $5,000,000 and Canadian $1,000,000,
respectively); (C) the requested
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<PAGE> 34
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 or the term of Bankers'
Acceptances, as the case may be, 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. If the Notice of Borrowing for a Bankers' Acceptance fails to
specify the duration of the term of any Bankers' Acceptance, such notice shall
be deemed a request for a Prime Rate Loan.
(ii) Swing Loans. Each Borrowing of Swing Loans shall be
made upon the irrevocable written notice by any U.S. Borrower delivered to the
U.S. Agent (with a copy to the Swing Loan Bank) in the form of a Notice of
Borrowing, which notice must be received by the U.S. 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. Except in connection
with the initial Borrowing, (A) the U.S. Agent or the Canadian Agent, as the
case may be, will promptly notify each U.S. Bank or Canadian Bank, as the case
may be, 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 (in the case of accepted Bankers'
Acceptances, the BA Reference Proceeds net of the Bankers' Acceptance Fee
payable to such Bank in respect of such Bankers' Acceptance) available to the
relevant Agent in the relevant currency for the account of the applicable
Borrower, at the relevant Agent's Lending Office by 11:00 a.m. (San Francisco
time) on the Borrowing Date requested in the Notice of Borrowing in funds
immediately available to such Agent. The proceeds of all such Loans will then
be made available by such Agent to the Borrower specified in the Notice of
Borrowing by wire transfer in accordance with written instructions provided to
such Agent by the Borrower of like funds as received by such Agent.
(ii) Swing Loans. The Swing Loan Bank will make available
to the applicable U.S. 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.
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<PAGE> 35
(d) Additional Provisions Concerning Bankers' Acceptances.
(i) Presentation and Form of Bankers' Acceptances. All
drafts presented by BJ Canada to a Canadian Bank for acceptance by such Bank as
Bankers' Acceptances pursuant to this Agreement shall be properly executed and
drawn by such Borrower. To facilitate the acceptance of Bankers' Acceptances
hereunder, such Borrower shall from time to time as required by the Canadian
Agent provide to the Canadian Agent (which shall then distribute to each
Canadian Bank) an appropriate number of executed drafts drawn in blank by such
Borrower in the form prescribed by the Canadian Agent. BJ Canada may, at its
option, execute any draft so presented by the facsimile signature or signatures
of any one or more designated signing officers of such Borrower, and such
Borrower and the Canadian Agent and each of the Canadian Banks are hereby
authorized to accept or pay, as the case may be, any draft of such Borrower
which purports to bear such facsimile signature or signatures notwithstanding
that any such individual has ceased to be a designated signing officer of such
Borrower and any such draft or Bankers' Acceptance shall be as valid as if such
individual were a designated signing officer of such Borrower at the date of
issue of such Bankers' Acceptance. Any such draft or Bankers' Acceptance may
be dealt with by the Canadian Agent or any Canadian Bank for all intents and
purposes and shall bind such Borrower as if duly signed in the signing
officer's own handwriting and issued by such Borrower, and such Borrower and
the Company will and hereby do undertake to hold the Canadian Agent and each
Canadian Bank harmless against, and to indemnify, and such Borrower and the
Company hereby do agree to indemnify, the Canadian Agent and each Canadian Bank
from, all losses, costs, damages and expenses arising out of the payment or
negotiation of any such draft or Bankers' Acceptance on which a facsimile
signature has been wrongly affixed, except to the extent caused by the gross
negligence or willful misconduct of the Canadian Agent or such Canadian Bank.
No Canadian Bank shall be liable for its failure to accept a Bankers'
Acceptance as required hereunder if the cause of such failure is, in whole or
in part, due to the failure of BJ Canada to provide executed drafts to the
Canadian Agent on a timely basis. Without creating any obligation to effect
such a purchase, Bankers' Acceptances may be purchased by a Canadian Bank and
may be held by it for its own account until maturity or sold by it at any time
prior thereto in any relevant market therefore in Canada or elsewhere, in such
Bank's sole discretion.
(ii) Maturity of Bankers' Acceptances. Each Bankers'
Acceptance shall mature on the last day of the term for such Bankers'
Acceptance as specified in the relevant Notice of Borrowing (provided no
Bankers' Acceptance issued may mature on a date later than the then potential
expiration date of the Canadian Term Commitments). The principal amount of a
Banker's Acceptance may be paid by the Canadian Borrower at its maturity, or,
pursuant to all the other terms and conditions of this Agreement (including
without limitation Section 5.05), on the maturity of any Bankers' Acceptances,
the Canadian Borrower may make another Canadian Borrowing by way of Bankers'
Acceptances by giving the Canadian Agent the appropriate notice under Section
2.04(a) (a "BA Rollover Notice"). The BA Reference Proceeds of the new
Bankers' Acceptances, less the Bankers' Acceptance Fees payable in respect of
such Bankers'
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<PAGE> 36
Acceptances, shall be retained by the Canadian Agent to be applied by it to the
payment of the principal amount of the maturing Bankers' Acceptances paid by
the Canadian Banks and the Canadian Borrower shall pay to the Canadian Agent on
the maturity date of the maturing Bankers' Acceptances an amount equal to the
difference between (x) the principal amount at maturity of the maturing
Bankers' Acceptances and (y) the BA Reference Proceeds of the replacement
Bankers' Acceptances, less the Bankers' Acceptance Fees payable in respect of
such Bankers' Acceptances. If the Canadian Borrower fails to pay the principal
amount of a maturing Banker's Acceptance or to deliver a BA Rollover Notice,
then the maturing Bankers' Acceptances paid by each Canadian Bank shall be
deemed, upon such payment, to be converted into a Prime Rate Loan pursuant to
Section 2.03(d)(vi). Anything herein or in any other Loan Document contained
to the contrary notwithstanding, Bankers' Acceptances may not be prepaid prior
to their respective maturity dates. Each Bankers' Acceptance which form an
availment under one Borrowing shall mature on the same Business Day.
(iii) Drawdown Procedures; Pro Rata Borrowings by Way of
Bankers' Acceptances. The Canadian Agent, promptly following receipt of a
Notice of Borrowing from the Canadian Borrower requesting a Canadian Borrowing
by way of Bankers' Acceptances, shall (i) advise each Canadian Bank of the
aggregate face amount of the Bankers' Acceptances to be accepted by it, (ii)
advise each Canadian Bank of the applicable term and maturity date of the
Bankers' Acceptances to be accepted (which term and maturity date shall be
identical for all such Banks) and (iii) advise each Canadian Bank of the amount
to be made available to the Canadian Agent by such Bank in respect to such
Bankers' Acceptance. The aggregate of the face amount of Bankers' Acceptances
to be accepted by a Canadian Bank on a Borrowing Date shall be the product of
such Bank's Pro Rata Share times the aggregate face amount of the Bankers'
Acceptances requested by the Canadian Borrower to be accepted on such Borrowing
Date except that, if the face amount of a Bankers' Acceptance would not equal
C$100,000 or a whole multiple thereof, such face amount shall be increased or
reduced by the Canadian Agent in its sole discretion to the nearest whole
multiple of C$100,000.
(iv) [Intentionally omitted].
(v) Payment of Bankers' Acceptances. Unless the Canadian
Borrower shall have given a BA Rollover Notice, on the date of maturity of each
Bankers' Acceptance, the Canadian Borrower shall pay to the Canadian Agent for
the account of each Canadian Bank which has accepted Bankers' Acceptances the
full undiscounted face amount of each Bankers' Acceptance accepted by such Bank
with such maturity date.
(vi) Deemed Prime Rate Loan On Account of Unpaid Bankers'
Acceptances. If the Canadian Borrower shall fail to give a BA Rollover Notice
or to pay to the Canadian Agent for the account of any Canadian Bank the
aggregate face amount of all Bankers' Acceptances accepted by such Bank upon
the maturity date of such Bankers' Acceptances which are not continued or
converted as provided for herein, the aggregate amount which the Canadian
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Borrower shall have so failed to pay to the Canadian Agent for the account of
each such Bank shall be deemed to be a Prime Rate Loan made to the Canadian
Borrower by such Bank on such maturity date, and such Bank shall be entitled to
all of the covenants and conditions and representations and warranties in favor
of each Bank and the Agents contained in this Agreement; provided, however,
that if the conditions to Borrowing of a Prime Rate Loan are not satisfied on
such maturity date of the relevant Bankers' Acceptance, then the resulting
Prime Rate Loan shall be payable on demand and shall accrue interest from the
date made until paid in full at the rate set forth in subsection 2.10(d)(iii).
Each Canadian Bank shall make such payments to the other Canadian Banks and
shall cooperate with the other Canadian Banks and the Agents to ensure that any
such amount the Canadian Borrower shall so fail to pay and any out-of-pocket
costs and expenses arising in connection therewith are shared by each Canadian
Bank pro rata in accordance with each Canadian Bank's Pro Rata Share.
(vii) Prohibited Use of Bankers' Acceptances. The Canadian
Borrower shall not enter into any agreement or arrangement of any kind with any
Person to whom Bankers' Acceptances have been delivered whereby such Borrower
undertakes to replace such Bankers' Acceptances on a continuing basis with
other Bankers' Acceptances nor will such Borrower directly or indirectly take,
use or provide Bankers' Acceptances as security for loans or advances from any
other Person.
(viii) No Waiver With Respect to Bankers' Acceptances. The
Canadian Borrower shall not claim from a Canadian Bank any days of grace for
the payment at maturity of any Bankers' Acceptances presented to and accepted
by such Canadian Bank pursuant to this Agreement. Further, the Canadian
Borrower waives any defense to payment which might otherwise exist if for any
reason a Bankers' Acceptance shall be held by a Canadian Bank in its own right
at the maturity thereof.
(ix) Degree of Care With Respect to Bankers' Acceptances.
Any executed drafts to be used as Bankers' Acceptances which are delivered by
the Canadian Borrower to a Canadian Bank or the Canadian Agent shall be held in
safekeeping with the same degree of care as if they were the Canadian Bank's or
the Canadian Agent's property, as applicable.
(x) Indemnity With Respect to Bankers' Acceptances. In
addition to, and not by way of limitation of, all other indemnities contained
in this Agreement and/or in any other Loan Document, the Canadian Borrower and
the Company agree to indemnify and hold each Canadian Bank and the Canadian
Agent harmless from any loss or expense with respect to any Bankers' Acceptance
dealt with by such Canadian Bank or the Canadian Agent, as the case may be, in
accordance with this Agreement, arising from any act by or the failure to act
on the part of the Canadian Borrower.
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(xi) Borrower's Absolute Obligations to Repay Bankers'
Acceptances. The obligations of the Canadian Borrower with respect to Bankers'
Acceptances under this Agreement shall be unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation, any lack of validity or
enforceability of any draft accepted by a Canadian Bank as a Bankers'
Acceptance, or the existence of any claim, set-off, defense or other right
which such Canadian Borrower may have at any time against the holder of a
Bankers' Acceptance, any Canadian Agent or any other Canadian Bank or Person,
whether in connection with this Agreement or otherwise.
2.04 Conversion and Continuation Elections.
(a) Any Borrower may, upon irrevocable written notice to the
applicable 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 U.S. 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 such other Interest Rate Types;
(ii) elect as of the last day of the applicable Interest Period, to continue
any Revolving Loans or U.S. 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); (iii) in the case of a
Bankers' Acceptance, elect as of the day of its maturity, to convert such
Bankers' Acceptance into a Prime Rate Loan; (iv) elect, as of the last day of
the term of a Bankers' Acceptance to continue such Bankers' Acceptance for a
new term of a duration specified in such notice; (v) elect, as of any Business
Day, in the case of Prime Rate Loans, to convert such Prime Rate Loans (or any
part thereof in an amount not less than Canadian $5,000,000 or that is in an
integral multiple of Canadian $1,000,000 in excess thereof) to a Bankers'
Acceptance Borrowing; or provided that no such notice shall be effective unless
the Canadian Borrower shall have delivered all agreements, documents and other
information and all funds required to be delivered upon the issuance of a
Bankers' Acceptance; 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. In the absence of delivery of such notice with respect to any
Bankers' Acceptance at least two (2) Business Days before the last day of the
term with respect thereto, such Bankers' Acceptance shall, on such last day,
automatically convert to a Prime Rate Loan to be outstanding to the Canadian
Borrower if all conditions for the making of any such Loan are then satisfied.
Notwithstanding anything in this paragraph or in this Agreement to the
contrary, the Borrower may not (i) convert Loans denominated in U.S. Dollars to
Loans denominated in Canadian Dollars or (ii) convert Loans denominated in
Canadian Dollars to Loans denominated in U.S. Dollars.
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(b) A Borrower shall deliver a Notice of Conversion/Continuation
to be received by the U.S. 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 or continued into Base Rate Loans, and by the
Canadian Agent not later than 11:00 a.m., Toronto time, one (1) Business Day in
advance of the Conversion/Continuation Date, if the Loans to be converted are
Prime Rate Loans or two (2) Business Days in advance of the
Conversion/Continuation Date, if the Loans to be converted or continued are
Bankers' Acceptances, as the case may be, in each case 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 and with respect to
Bankers' Acceptances, the requested term thereof.
(c) If upon the expiration of any Interest Period applicable to
LIBOR Offshore Rate Loans, a U.S. 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 relevant Agent will promptly notify each applicable Bank
of its receipt of a Notice of Conversion/Continuation, or, if no timely notice
is provided by any Borrower, the relevant Agent will promptly notify each
applicable 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 or as Bankers'
Acceptances.
(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.
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(i) The Swing Loan Bank, at any time in its discretion,
upon written request to the U.S. Banks through the U.S. 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 outstanding
Swing Loans. The Swing Loan Bank shall deliver such request to the U.S. 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 U.S. Agent shall give
notice thereof to the U.S. Banks. Each U.S. Bank shall make available its Pro
Rata Share of such Revolving Loans to the U.S. Agent by 11:00 a.m. (San
Francisco time) on the requested date for such Revolving Loans. The U.S. Agent
shall apply the proceeds of such Revolving Loans to prepay the Swing Loans of
the Swing Loan Bank; provided, however, that the U.S. 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 U.S. Agent advances proceeds of any
Revolving Loan to the Swing Loan Bank and one or more of the U.S. 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 U.S. Agent, then (I) such Bank
shall pay directly to such Agent the amount thereof together with interest
thereon (A) at the Federal Funds Rate, if payment is received by such 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 such 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 such
Agent from three Federal Funds brokers of recognized standing selected by such
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 U.S. 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 U.S. 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 U.S. Bank (other than the Swing Loan Bank) will transfer
immediately to the U.S. Agent for credit to the Swing Loan Bank, in immediately
available funds, the amount of its participation. Upon receipt thereof, the
Swing
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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
U.S. Agent 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.
(c) Acknowledged Privity. Each Borrower 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 U.S. 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 Agents, terminate the Commitments, or permanently reduce
the Commitments by an aggregate minimum amount (in the applicable currency) 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, (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, (iii)
the Effective Amount of all Swing Loans would exceed the Swing Loan Commitment,
(iv) the Effective Amount of all Letter of Credit Obligations then outstanding
would exceed the Letter of Credit Commitment, (v) the Effective Amount of all
U.S. Term Loans would exceed the
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U.S. Term Commitments or (vi) the Effective Amount of all Canadian Term Loans
would exceed the Canadian Term Commitments. 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 prepayment of Term Loans pursuant to
Section 2.07 or Section 2.08 of this Agreement, the relevant 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
U.S. Agent for LIBOR Offshore Rate Loans, and upon not less than one (1)
Business Days' irrevocable notice to the U.S. Agent for Base Rate Loans or to
the Canadian Agent for Prime Rate Loans, ratably prepay such Loans in whole or
in part, in minimum amounts of $5,000,000 or any multiple of $1,000,000 in
excess thereof, or in the case of Prime Rate Loans, Canadian $5,000,000 or any
multiple of Canadian $1,000,000, without premium or penalty, but with payment
of such amounts as are required to be paid pursuant to Article IV. 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 relevant Agent will promptly
notify each relevant 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 Prime 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 made on or
after April 1, 1997 of Term Loans shall be applied to the principal payments
required pursuant to Section 2.10 in inverse order of their maturity and
optional prepayments of Term Loans made prior to April 1, 1997 shall be applied
in reduction of the principal balance then outstanding of the Term Loans.
Optional prepayments of Bankers' Acceptances are not permitted at any time.
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2.08 Mandatory Prepayments of Loans.
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 (or in the case of Letters of
Credit or Bankers' Acceptances outstanding, deposit cash collateral with the
U.S. Agent or the Canadian Agent, respectively, pursuant to Section 3.08 to
secure the Obligations of the U.S. Borrower or the Canadian Borrower,
respectively, with respect to all Letters of Credit or Bankers' Acceptances,
respectively, then outstanding, such collateral to be applied to pay such
Obligations when matured) 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 U.S. Borrower shall immediately, without notice or demand, prepay (or in
the case of Letters of Credit outstanding, deposit cash collateral with the
U.S. Agent pursuant to Section 3.08 to secure the Obligations of the U.S.
Borrower with respect to all Letters of Credit then outstanding, such
collateral to be applied to pay such Obligations when matured) 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 Canadian Borrowings
exceeds the Canadian Term Commitments or, if on any date after the expiration
of the Canadian Term Commitments pursuant to subsection 2.01(a)(ii) (if there
shall be any such expiration), the Effective Amount of the U.S. Term Loans
exceeds the U.S. Term Commitments, the relevant Term Loan Borrower shall
immediately, without notice or demand, prepay (or in the case of Bankers'
Acceptances outstanding, deposit cash collateral with the Canadian Agent
pursuant to Section 3.08 to secure the Obligations of the Canadian Borrower
with respect to all Bankers' Acceptances then outstanding, such collateral to
be applied to pay such Obligations when matured) the outstanding principal
amount of such Term Loans to the extent necessary to eliminate such excess over
the U.S. Term Commitments or the Canadian Term Commitments, as the case may be.
Prepayments pursuant to this Section 2.08 shall be applied first
to any Base Rate Loans and Prime Rate Loans then outstanding and then to LIBOR
Offshore Rate Loans with the shortest Interest Periods remaining. As among
Borrowers, the Company and the Borrowers shall determine who shall make such
prepayments; provided that if the Company and the Borrowers shall determine
that such prepayments shall be made by the Canadian Borrower, then such
Borrower shall prepay to the Canadian Bank an Equivalent Amount of Canadian
Dollars to the amount of such required prepayment. The relevant 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
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amounts therein set forth, shall not apply to mandatory prepayments made
pursuant to this Section 2.08.
2.09 Mandatory Termination.
(a) Termination. Subject to the provisions of subsection
2.01(a)(ii), commitments of the Banks herein contained to make 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 and the Swing Loan
Commitment shall automatically terminate at 5:00 p.m. Houston, Texas time on
the Revolving Termination Date.
(b) 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 Canadian 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).
2.10 Repayment.
(a) The Term Loan. The Term Loan Borrowers shall repay the
principal of the Term Loans as follows: The Term Loan Borrowers shall make
principal payments on the last Business Day of each March, June, September and
December, commencing March 31, 1997 to and including June 30, 2002 (each, a
"Principal Payment Date") in the amounts hereinafter set forth. The amount of
principal due on each Principal Payment Date shall be equal to an amount equal
to (i) for the first eight Principal Payment Dates, 3.676470588% and (ii) for
the next thirteen Principal Payment Dates, 5.042016806% of the outstanding
principal amount of such Term Loans on March 31, 1997, followed by a final
payment equal to the remaining principal amount outstanding of the Term Loans
on June 30, 2002. After each optional prepayment of principal and Principal
Payment Date, the Agents shall provide to the Company and the Banks a revised
Principal Repayment Schedule.
(b) The Revolving Credit. Each U.S. Borrower shall repay to the
U.S. 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 U.S. Borrower shall repay to the U.S.
Agent for the account of 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.
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(d) Interest.
(i) Each Revolving Loan, Swing Loan and Term Loan (other
than a Bankers' Acceptance) 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, the Prime 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 (other than a Bankers' Acceptance) shall be paid in arrears on each
Interest Payment Date. Interest shall also be paid on the date of any
prepayment of such Loans under Sections 2.07 or 2.08 for the portion of the
Loans so prepaid and upon payment (including prepayment) in full thereof and,
during the existence of any Event of Default, interest shall be paid on demand
of the relevant 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, in the case of Revolving Loans, Swing Loans and the Term Loan, to the
Base Rate plus two percent (2%) per annum and equal, in the case of the Prime
Rate Loans, to the Prime 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 and non-criminal 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 and
non-criminal rate permitted by applicable law.
2.11 Fees. In addition to certain fees described in Section 3.07:
(a) Agency Fees. The Company shall pay an agency fee to the
U.S. Agent for the U.S. Agent's own account, as required by the letter
agreement ("Fee Letter") between the Company and the Arranger and U.S. Agent
dated May 31, 1996.
(b) Commitment Fees. The Company shall pay to the U.S. Agent
for the account of each U.S. Bank and the Canadian Borrower shall pay to the
Canadian Agent for the account of each Canadian 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
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arrears on the last Business Day of each calendar quarter as calculated by such
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, Bankers'
Acceptances and Term Loans then outstanding, plus the Effective Amount of
Letter of Credit Obligations then outstanding. The Commitment Fee with respect
to (i) the Term Commitments shall accrue from the Closing Date to the last day
of the Term Loan Availability Period, and (ii) the Revolving Commitment shall
accrue from the Closing 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. 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.
(c) Bankers' Acceptance Fee. The Canadian Borrower agrees to
pay to the Canadian Agent for the account of each Canadian Bank in respect of
each Bankers' Acceptance accepted by such Canadian Bank, a fee in Canadian
Dollars equal to the Bankers' Acceptance Fee. Such Bankers' Acceptance Fees
shall be payable by the Canadian Borrower by deduction from the BA Reference
Proceeds (including any issuance on account of outstanding Borrowings pursuant
to a Continuation/Conversion Notice) of each Bankers' Acceptance including on
account of outstanding Borrowings pursuant to a Notice of
Continuation/Conversion.
2.12 Computation of Fees and Interest.
(a) All computations of interest for Base Rate Loans and all
computations of interest for Prime Rate Loans 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). Where interest is calculated pursuant to this Agreement at a
rate based on a 360-day period, that rate or percentage of interest on a yearly
basis is equivalent to such rate or percentage times the number of days in such
year divided by 360. 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.
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(b) Each determination of an interest rate by an Agent shall be
conclusive and binding on the Borrowers and the Banks in the absence of
manifest error. Each 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 such 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 relevant
Agent for the account of the relevant Banks at such Agent's Payment Office, and
shall be made in U.S. dollars or Canadian dollars, as applicable, and in
immediately available funds, no later than 11:00 a.m. (San Francisco time) on
the date specified herein. Each 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 either 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 an Agent fails to send to any Bank its portion of any
payment timely received by such Agent hereunder by the close of business on the
day such payment is deemed received pursuant to this subsection 2.13(a), such
Agent shall pay to such Bank interest on its portion of such payment from the
day such payment is deemed received by such Agent until the date such Bank's
portion of such payment is sent to such Bank, at the Canadian Agent's cost of
borrowing rate, for payments on Canadian Borrowings, and at the Federal Funds
Rate, for payments on any Loan other than a Canadian Borrowing.
(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 an 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, such Agent may assume that such
Borrower has made such payment in full to such Agent on such date in
immediately available funds and such Agent may (but shall not be so required),
in reliance upon such assumption, distribute to each Bank on such due date an
amount equal to the amount, if any, then due such Bank. If and to the extent a
Borrower has not made such payment in full to the relevant Agent, each Bank
shall repay to the relevant Agent on demand such amount distributed to such
Bank, together with interest thereon at the Canadian Agent's cost of borrowing
rate, for payments on Canadian Borrowings, and at the Federal Funds Rate, for
payments on any Loan other than a Canadian Borrowing, for each day from the
date such amount is distributed to such Bank until the date repaid.
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2.14 Payments by the Banks to an Agent.
(a) Unless an 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 such Agent for the
account of a Borrower the amount of that Bank's Pro Rata Share of the
Borrowing, such Agent may assume that each Bank has made such amount available
to such Agent in immediately available funds on the Borrowing Date and such
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 applicable Agent in immediately available funds and such 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 such Agent, together with interest at the Canadian Agent's cost of
borrowing rate, for Canadian Borrowings, and at the Federal Funds Rate, for any
Borrowing other than Canadian Borrowings, for each day during such period. A
notice of an 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 such 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 such Agent on the Business Day following the
Borrowing Date, such Agent will notify the applicable Borrower of such failure
to fund and, upon demand by such Agent, such applicable Borrower shall pay such
amount to such Agent for such 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 or accept any
Banker's Acceptance 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 or Bankers' Acceptances
accepted 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 Agents 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
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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 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 Agents will keep
records (which shall be conclusive and binding in the absence of manifest
error) of participations purchased under this Section and will in each case
notify the Banks following any such purchases or repayments.
ARTICLE III
THE LETTERS OF CREDIT; CASH COLLATERAL
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 U.S. 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 U.S.
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 U.S. Borrower to obtain Letters of Credit shall be
fully revolving, and, accordingly, each U.S. 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
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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, an 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
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 U.S. 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 is 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 U.S. 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 U.S. Agent (by
telephone followed in writing) that the U.S. Agent has received a copy of the
Letter of Credit Application or Letter of Credit Amendment
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Application from the Borrower and, if not, the Issuing Bank will provide the
U.S. 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 U.S. 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 U.S. 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 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 U.S. Agent
will promptly notify the U.S. 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
U.S. 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.
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(h) The Issuing Bank will also deliver to the U.S. 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
U.S. 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 subsections 2.01(b) and 3.01(a), each Issuance of a Letter of
Credit shall be deemed to utilize the Commitment of each U.S. 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
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 U.S. Agent and such Agent will promptly
notify each U.S. Bank thereof, and such Borrower shall be deemed to have
requested that Base Rate Loans be made by the U.S. 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 5.05. Any notice given by the Issuing Bank or the U.S. 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 U.S. Bank shall upon any notice pursuant to subsection
3.03(b) make available to the U.S. 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 such 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 payable to the Issuing Bank shall accrue on
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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 U.S. Agent will
promptly give notice to each U.S. Bank of the occurrence of the Honor Date, but
failure of such 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 5.05 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 U.S.
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 U.S. 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
or not similar to any of the foregoing; provided, however, that each U.S.
Bank's obligation to make Revolving Loans under this Section 3.03 is subject to
the conditions set forth in Section 5.05.
3.04 Repayment of Participation.
(a) When the U.S. Agent receives (and only if the U.S. 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 such 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, such
Agent will pay to each Bank, in the same funds as those received by such 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 such Agent for the account
of the Issuing Bank. If such Agent fails to send to any Bank its portion of
any payment timely received by such Agent hereunder by the close of business
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on the day such payment is deemed received pursuant to subsection 2.13(a), such
Agent shall pay to such Bank interest on its portion of such payment from the
day such payment is deemed received by such Agent until the date such Bank's
portion of such payment is sent to such Bank, at the Federal Funds Rate.
(b) If the U.S. 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 U.S. 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 U.S. Bank shall, on demand of such
Agent, forthwith return to such Agent or the Issuing Bank the amount of its Pro
Rata Share of any amounts so returned by such Agent or the Issuing Bank plus
interest thereon from the date such demand is made to the date such amounts are
returned by each such Bank to such 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 U.S. Bank for: (i) any action
taken or omitted in connection herewith at the request or with the approval of
the U.S. 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 this
Agreement or 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
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
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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 this Agreement or 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.
3.07 Letter of Credit Fees.
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(a) Risk Participation Fees. Each Borrower for whose account a
Letter of Credit is Issued shall pay to the U.S. Agent for the account of each
of the U.S. 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 U.S. Agent for the account of the Issuing
Bank a letter of credit fronting fee (the "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 U.S. 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 an
Agent, acting upon instructions of the Majority Banks, deposit in an account
(the "Cash Collateral Account") held by such Agent, for the benefit of the U.S.
Banks or the Canadian Banks, as the case may be, an amount in cash equal to the
Letter of Credit Obligations as of such date or the aggregate liabilities
(contingent or otherwise) of the Canadian Banks in connection with each
Bankers' Acceptance then outstanding, as the case may be. Such deposit shall
be held by such Agent as collateral for the payment and performance of the
Obligations. Such 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 such Agent or any
Affiliate of such 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
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such Agent to the payment of Letter of Credit Borrowings and interest thereon,
(ii) be held and used for the satisfaction of the reimbursement obligations of
the Borrowers in respect of Letters of Credit or Bankers' Acceptances, as the
case may be, and (iii) if the maturity of the Loans has been accelerated, with
the consent of the Majority Banks, be applied to satisfy the Obligations.
(b) As security for the payment of all Obligations, each
Borrower hereby grants, conveys, assigns, pledges, sets over and transfers to
the Agents, and creates in each 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 of such Agent, together with all
proceeds thereof. At any time and from time to time, upon an 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 such
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, ILLEGALITY AND CURRENCY CONVERSIONS
4.01 Taxes.
(a) Any and all payments by a Borrower to each Bank or an 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. The foregoing sentences of this
subsection 4.01(a) shall not impair the obligation of any Bank or Agent
pursuant to subsection 4.01(g).
(b) Each Borrower agrees to indemnify and hold harmless each
Bank and each 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 such Bank or such 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 such Bank or such Agent makes written demand therefor. In
the event an Agent or a Bank is required to pay Taxes or Other Taxes for which
such Agent or such Bank seeks indemnity hereunder, such Agent or such Bank, as
applicable, shall make written request to the Company, together with evidence
to
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substantiate the same, no later than 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. The foregoing sentences of
this subsection 4.01(b) shall not impair the obligation of any Bank or Agent
pursuant to subsection 4.01(g).
(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 any 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 such 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 an 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. The
foregoing sentence of this subsection 4.01(c) shall not impair the obligation
of any Bank or Agent pursuant to subsection 4.01(g).
(d) Within 30 days after the date of any payment by a Borrower
of Taxes or Other Taxes, such Borrower shall furnish the relevant Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to such Agent.
(e) If a Borrower is required to pay additional amounts to any
Bank or any 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.
(f) Notwithstanding anything contained herein or elsewhere to
the contrary, the foregoing subsections (a)-(e) shall in no event be applicable
to Taxes or Other Taxes arising or imposed as a result of any assignment to a
Person who is not an Eligible Assignee of, as the case may be, any U.S.
Borrowing or any part of the Revolving Commitment or any Canadian Borrowing or
any part of the Canadian Term Commitment. Without limiting the generality of
the foregoing, Borrowers shall not be liable for, or be required to indemnify
any Person for, any such taxes so arising as a result of any such assignment to
a Person who is not an Eligible Assignee of the Borrowing or the Commitment
being assigned.
(g) If a Borrower at any time pays any amount under Sections
4.01(a), (b) or (c) to any Bank or any Agent, and such payee receives a refund
of or credit for any part of any
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Taxes or Other Taxes with respect to which such amount was paid by the
Borrower, such Bank or Agent, as the case may be, shall pay to such Borrower
the amount of such refund or credit promptly, and in any event within 60 days,
following the receipt of such refund or credit by such payee. Additionally
such payee shall, within 60 days following the receipt of such refund or
credit, furnish to such Borrower a calculation of such refund or credit.
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, or accept Bankers' Acceptances then, on notice
thereof by the Bank to the Borrowers through an Agent, any obligation of that
Bank to make LIBOR Offshore Rate Loans or accept Bankers' Acceptances shall be
suspended until the Bank notifies the Agents 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 or Bankers' Acceptance, the Borrowers shall, upon
their receipt of notice of such fact and demand from such Bank (with a copy to
the relevant Agent), prepay in full such LIBOR Offshore Rate Loans or Bankers'
Acceptance 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 or term thereof, as the case may be, if the Bank may lawfully
continue to maintain such LIBOR Offshore Rate Loans or Bankers' Acceptance to
such day, or immediately, if the Bank may not lawfully continue to maintain
such LIBOR Offshore Rate Loan or Bankers' Acceptance. If the Borrowers are
required to so prepay any LIBOR Offshore Rate Loan or Bankers' Acceptance, then
concurrently with such prepayment, the Borrowers shall borrow from the affected
Bank, in the amount of such repayment, a Base Rate Loan or Prime Rate Loan.
(c) If the obligation of any Bank to make or maintain LIBOR
Offshore Rate Loans or Bankers' Acceptances has been so terminated or
suspended, all Loans which would otherwise be made or Bankers' Acceptances
which would otherwise be accepted by such Bank as LIBOR Offshore Rate Loans or
Bankers' Acceptances, as the case may be, shall be instead Base Rate Loans or
Prime Rate Loans, as the case may be.
(d) Before giving any notice to an 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 accepting a Bankers' Acceptance, 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 relevant Agent), pay to
the relevant 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 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, acceptances or obligations under this Agreement, then, upon demand of
such Bank to the Borrowers through an 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
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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 from the liquidation or reemployment of funds
obtained by it to maintain its LIBOR Offshore Rate Loans or Bankers'
Acceptances 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 U.S. 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 U.S. 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 Agents) 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) any Canadian Bank does not take the actions set forth in
subsection 2.01(a)(ii) upon the Canadian Banks' election in accordance
therewith not to extend the term of the Canadian Term Commitment to assign its
U.S. Term Loan to an U.S. affiliate of such Bank; (iii) receipt by Borrowers
(or any of them) of a notice by or on
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behalf of a Bank pursuant to Section 4.02; or (iv) 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 reasonable efforts to obtain a
replacement bank or financial institution satisfactory to the Agents 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 reasonably satisfactory to the Agents. Any such designation
of a Replacement Bank under clause (A) or (C) shall be subject to the prior
written consent of the Agents, which consent shall not be unreasonably
withheld.
4.08 Currency Conversion and Indemnity.
(i) Payments in Agreed Currency. Each Borrower shall
make payment relative to each Borrowing in the currency (the "Agreed Currency")
in which the Borrowing was effected. If any payment is received on account of
any Borrowing in any currency (the "Other Currency") other than the Agreed
Currency (whether voluntarily or pursuant to an order or judgment or the
enforcement thereof or the realization of any security or the liquidation of
the Borrower or otherwise howsoever), such payment shall constitute a discharge
of the liability of such Borrower hereunder and under the other Loan Documents
in respect of such obligation only to the extent of the amount of the Agreed
Currency which the relevant Bank or Agent, as the case may be, is able to
purchase with the amount of the Other Currency received by it on the Business
Day next following such receipt in accordance with its normal procedures and
after deducting any premium and costs of exchange.
(ii) Conversion of Agreed Currency into Judgment Currency.
If, for the purpose of obtaining or enforcing judgment in any court in any
jurisdiction, it becomes necessary to convert into a particular currency (the
"Judgment Currency") any amount due in the Agreed Currency then the conversion
shall be made on the basis of the rate of exchange prevailing on the Business
Day next preceding the day on which judgment is given and in any event the
Borrower shall be obligated to pay the Agents and the Banks any deficiency in
accordance with subsection 4.08(i). For the foregoing purposes "rate of
exchange" means the rate at which the relevant Bank or Agent, as applicable, in
accordance with its normal banking procedures is able on the relevant date to
purchase the Agreed Currency with the Judgment Currency after deducting any
premium and costs of exchange.
(iii) Circumstances Giving Rise to Payment. If (i) any
Bank or Agent receives any payment or payments on account of the liability of a
Borrower hereunder pursuant to any judgment or order in any Other Currency, and
(ii) the amount of the Agreed Currency which the relevant Bank or Agent, as
applicable, is able to purchase on the Business Day next following such receipt
with the proceeds of such payment or payments in accordance with its normal
procedures and after deducting any premiums and costs of exchange is less than
the
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amount of the Agreed Currency due in respect of such obligations immediately
prior to such judgment or order, then such Borrower on demand shall, and each
Borrower hereby agrees to, pay to the Banks and the Agents amounts equal to the
deficiency and any loss, cost or expense arising out of or in connection with
such deficiency.
(iv) Indemnity Separate Obligation. The agreement of
indemnity provided for in subsection 4.08(iii) shall constitute an obligation
separate and independent from all other obligations contained in this Agreement,
shall give rise to a separate and independent cause of action, shall apply
irrespective of any indulgence granted by the Banks or the Agents or any of them
from time to time, and shall continue in full force and effect notwithstanding
any judgment or order for a liquidated sum in respect of an amount due hereunder
or under any judgment or order.
4.09 Survival. The agreements and obligations of the Borrowers in this
Article IV shall survive the payment of all other Obligations.
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 Agents shall have received on or before the Closing Date all of the
following, in form and substance satisfactory to the Agents and each Bank, and
in sufficient copies for each Bank:
(a) Amended and Restated Credit Agreement, Notes, Etc. This
Agreement, the Notes (other than the U.S. Term Notes), the Bankers'
Acceptances, the Guaranties, and the Intercompany Subordination Agreement
executed by each party thereto;
(b) 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 it hereunder; and (iii) the articles or certificate of
incorporation, or both 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
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(c) Good Standing. Each of the following documents: (i) a good
standing certificate for each Borrower and each Guarantor from the Secretary of
State (or similar applicable Governmental Authority) of its jurisdiction of
incorporation as of a recent date (except in the case of the Canadian
Borrower); and (ii) evidence of qualification and for those jurisdictions where
available, a good standing certificate, for each Borrower and each Guarantor
from the Secretary of State (or similar applicable Governmental Authority) of
each jurisdiction where such Person is qualified to do business as a foreign
corporation, dated as of a recent date;
(d) Legal Opinions. (i) An opinion of Andrews & Kurth, L.L.P.,
special United States counsel to the Company and its Subsidiaries, an opinion
of Margaret B. Shannon, General Counsel of the Company, and an opinion of
Osler, Hoskin & Harcourt, Canadian counsel to the Borrower and its
Subsidiaries, and addressed to the Agents and the Banks, substantially in the
form of Exhibit "D-1," "D-2" and "D-3", respectively, to be delivered as of
Closing Date; and (ii) an opinion of Mayer, Brown & Platt, special counsel to
the U.S. Agent;
(e) 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 Agents 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 such 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 Agents); including any such costs, fees and expenses arising under or
referenced in Sections 2.11 and 11.05;
(f) 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, (ii) no Default or
Event of Default exists or would result from the Credit Extension being made on
the Closing Date (except as may have been waived), (iii) there has occurred
since December 31, 1995 no event or circumstance that has resulted or would
reasonably be expected to result in a Material Adverse Effect with respect to
the Company and its Subsidiaries taken as a whole, excluding, however, Nowsco
and its Subsidiaries and (iv) all of the conditions precedent set forth in
Section 5.02 have been satisfied;
(g) 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 (excluding, however, Nowsco and its
Subsidiaries) referred to in Section 6.12 previously has been delivered to the
Agents and each of the Banks; and (ii) setting forth the estimated
Capitalization Ratio for purposes of Section 2.02(b) of this Agreement;
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(h) Existing Indebtedness. Evidence that all Indebtedness of
the Company and its Subsidiaries under the Existing Credit Agreement shall have
been (or shall simultaneously be) repaid, and all commitments thereunder shall
have been (or shall simultaneously with the initial Borrowing 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 Credit Agreement by reason of repayment of advances thereunder
prior to maturity thereof; and
(i) Other Documents. Such other approvals, opinions, documents
or materials as either Agent or the Majority Banks (through an 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) Litigation. To the best knowledge of the Borrowers, no
litigation shall be pending or threatened against any of the Borrowers, the
Subsidiary Guarantors, or any Material Subsidiary of the Company (excluding
Nowsco and its Subsidiaries) in which there is a reasonable probability of an
adverse decision which would result in a Material Adverse Effect on the Company
and its Subsidiaries (excluding Nowsco and its Subsidiaries);
(b) Additional Matters. All legal matters in connection with
the transactions contemplated by this Agreement shall be reasonably
satisfactory to the Majority Banks; and
(c) Closing Date. The Closing Date shall occur no later than
11:59 p.m. on September 3, 1996.
5.03 Conditions of Initial Credit Extension to each Subsidiary
Borrower. After the Closing Date, any Subsidiary (other than a Foreign
Subsidiary) may become a Subsidiary Borrower and obtain Credit Extensions from
U.S. Banks. The U.S. Banks shall not be required to make an initial Credit
Extension to a Subsidiary Borrower hereunder unless such Subsidiary Borrower
has furnished to the U.S. Agent with sufficient copies for the U.S. 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 U.S.
Agent and each of the U.S. Banks in their sole discretion, executed by such
Subsidiary and acknowledged by each of the Company and Subsidiary Guarantors;
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(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 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 U.S. Agent and the U.S. 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 U.S. Agent and the U.S. 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 U.S. Banks;
(g) Guaranty executed by such Subsidiary Borrower; and
(h) Such other documents as the Majority Banks through the U.S.
Agent may have reasonably requested.
5.04 Conditions to Extension of U.S. Term Loans. The obligation of
each Canadian Bank to make any U.S. Term Loan upon the expiration of the
Canadian Term Commitments in accordance with subsection 2.01(a)(ii) (if there
shall be any such expiration) is subject to the condition that the Canadian
Agent shall have received the U.S. Term Notes, dated the date of such
expiration and payable to the order of each Canadian Bank in each such Canadian
Bank's Pro Rata Share of the U.S. Term Commitment.
5.05 Conditions to All Credit Extensions. The obligation of each Bank
to make any Term Loan and any Revolving Loan to be made by it (including its
initial Revolving Loan) to accept any Bankers' Acceptance or to continue or
convert any 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 or Issuance Date, as applicable:
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(a) Notice, Application. The relevant Agent shall have received
(with, in the case of the initial Revolving Loan only, a copy for each U.S.
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 U.S. 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 each Borrowing Date or Issuance Date with the same effect as if made on
and as of such Borrowing 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); provided that for purposes of any
Borrowing Date or Issuance Date on or prior to June 14, 1997 (including the
initial Borrowings hereunder) such representations and warranties are, and
shall be deemed, made without giving effect to the transactions contemplated in
the Offer and as if Nowsco and its Subsidiaries were not Subsidiaries (whether
direct or indirect) of the Company.
(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 any Bank or Agent to any penalty.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Subject to the last paragraph of this Article VI, each of the Borrowers
represents and warrants to each 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
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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 or any shareholder of the Company or its Subsidiaries 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 obligations of the Borrowers and 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
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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 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 other than any failures
that would not reasonably be expected to have a Material Adverse Effect, and
(ii) neither the Company nor any ERISA Affiliate has pending 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
and the Bankers' Acceptances 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.
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. 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
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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, 1995, 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 March 31, 1996 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 as of the respective dates thereof and results of operations for
the respective periods covered thereby.
(b) Since December 31, 1995, there has been no Material Adverse
Effect with respect to the Company and its Subsidiaries.
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 with respect to the Company and its Subsidiaries.
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.
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.
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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. 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 or 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 Offer Complete; Ownership of Nowsco. BJ Canada has completed in
accordance with all Requirements of Law all necessary actions, and made and
obtained all necessary filings and Governmental Approvals and other approvals
and consents, with respect to the acquisition of all shares of Nowsco not
acquired pursuant to the Offer. The Company directly or indirectly owns 100%
of the shares of Nowsco.
6.21 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
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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.
Notwithstanding anything contained herein or in any other Loan Document
to the contrary, it is expressly agreed, understood and acknowledged by the
Banks and the Agents that each of the foregoing representations and warranties
made or deemed to be made as of the Execution Date, Closing Date and at all
times thereafter prior to June 14, 1997 shall be made or deemed to be made
without giving effect to the transactions contemplated by the Offer and as if
Nowsco and its Subsidiaries were not Subsidiaries (whether direct or indirect)
of the Company but that on and after June 14, 1997 all such representations and
warranties made or deemed to be made shall give effect to the Offer and as if
Nowsco and its Subsidiaries and Subsidiaries (whether direct or indirect) of
the Company; and further that, solely for purposes of each of the foregoing
representations and warranties made or deemed to be made prior to June 14,
1997, the definition of "Material Adverse Effect" shall be deemed to be: "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 (but excluding Nowsco and its
Subsidiaries)."
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan,
Bankers' Acceptance or other Obligation shall remain unpaid, unsatisfied or
outstanding, 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 Agents, 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
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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; and
(c) 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
Agents, 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 an
Agent (at the request of any Bank) may from time to time reasonably request.
7.03 Notices. The Company shall promptly notify the Agents:
(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,
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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; and
(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 Agents 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.
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
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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 in similar
locations, 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 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 either 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 any 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
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Default shall then exist, such inspection shall be at the expense of such 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. Subject to Section 8.07, the proceeds of the
Term Loans may be used only for working capital, general corporate purposes
(including capital expenditures) and repayment of existing indebtedness,
including, without limitation, the Existing Loans.
(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 and (ii) for each of the purposes described in
subsection 7.11(a) hereinabove.
(c) Swing Loans. Subject to Section 8.07, 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 or Bankers' Acceptances shall be used
for any purpose which would be in contravention of any Requirement of Law.
7.12 [Intentionally Omitted].
7.13 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 Agents 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 Agents
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.
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(b) Promptly upon request by the Majority Banks or an 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 such 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 Agents and the Banks the rights
granted or now or hereafter intended to be granted to the Agents and the Banks
under any Loan Document or under any other instrument executed in connection
therewith.
ARTICLE VIII
NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
Bankers' Acceptance 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 (or in the case of
BJ-Canada, Canadian) 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
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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, 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;
(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 aggregate 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 or interests of Nowsco; provided
that such Liens shall relate solely to the property or interests 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(i)
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
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forty-five (45) days after expiration of such stay, and provided further that
the aggregate amount so secured will not at any time exceed $20,000,000;
(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 $10,000,000 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);
(h) Liens in favor of the Bank of Montreal Trust Company, as
Trustee and any successor trustee in respect of the 7% Notes;
(i) Liens on cash collateral in respect of letters of credit and
agreements pursuant to which the same are issued; and
(j) Liens on assets or other property of the Company or any
Subsidiary, other than stock of Subsidiaries, not permitted by the foregoing
clauses (a)-(i); provided, that the aggregate consolidated book value of all
such assets encumbered at any one time shall not exceed $35,000,000.
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;
(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 (including capital stock of
Subsidiaries), 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 consummation of the Offer of the assets of Nowsco and
its Subsidiaries;
(d) Dispositions of property in connection with any
consolidation, merger or dissolution or liquidation permitted by Section 8.03
hereof;
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(e) [Intentionally omitted];
(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 date
hereof, 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 completion of
the acquisition of Nowsco;
(h) Disposition of any property, assets (including capital stock
of Subsidiaries and Affiliates other than Subsidiaries which are Borrowers or
Guarantors) or businesses of the Company or any Subsidiary to the extent the
Net Proceeds thereof are used by the Company to prepay the Loans and
permanently reduce the Commitments pursuant to Section 2.06; and
(i) 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 (h) 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 (i), 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 (i), 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(i) 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, amalgamate, enter into a plan or arrangement, 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:
(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
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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 Subordination Agreement substantially in the form of
Exhibit "K" hereto; provided, however, it is agreed that accounts payable and
accounts receivable among the Company and its 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);
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(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 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 1996 after the Execution Date, which when aggregated with all such
Investments made in fiscal year 1996 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
transactions described in the Offer and in Section 6.20), 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 1996, 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 and except for the Indebtedness of
BJ-Canada under this Agreement. 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.
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8.07 Use of Proceeds; Margin Stock. The Borrowers shall not, and shall
not permit any Subsidiary to, use any portion of the Loan or Bankers'
Acceptance 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 other than the purchase of the shares of Nowsco pursuant to the Offer or
the transactions contemplated by Section 6.20, 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;
(c) Contingent Obligations in respect of performance
obligations; and
(d) 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: amend, modify or change, or
consent or agree to any amendment, modification or change to, any of the terms
of 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
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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.
(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 or as a result of any amendment, modification, restatement,
waiver, other change hereof or hereunder or of or under any other of the Loan
Documents, 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
Amended and Restated 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 Agents, 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.
8.12 Capitalization Ratio. From and after the Closing Date the Company
shall not permit the Capitalization Ratio as of the last day of any fiscal
quarter ending during the periods specified below to be greater than the
amounts specified below:
<TABLE>
<CAPTION>
Period: Capitalization Ratio
------ --------------------
<S> <C>
Closing Date through 50.0%
June 30, 1997
July 1, 1997 through 45.0%
June 30, 1998
July 1, 1998 and 40.0%
thereafter
</TABLE>
8.13 Minimum Net Worth. From and after the Closing Date, the Company
will not permit Consolidated Net Worth as of the last day of each fiscal
quarter to be less than the sum of (i) $700,000,000 plus (ii) 50% of
Consolidated Net Income on a cumulative basis for all quarters subsequent to
March 31, 1996 (provided that no negative adjustment will be made in the event
that Consolidated Net Income for any quarter is a deficit figure), plus (iii)
50% of the aggregate amount of the net assets (cash or otherwise) received by
the Company from the issuance of capital stock after August 7, 1996.
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8.14 Interest Coverage Ratio. 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>
Fiscal Quarters Ending: Ratio
---------------------- -----
<S> <C>
June 30, 1996 through 3.00 to 1.00
September 30, 1997
December 31, 1997 through 3.75 to 1.00
September 30, 1998
December 31, 1998 and 4.25 to 1.00
thereafter
</TABLE>
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 the Capitalization Ratio is
equal to or less than 35% immediately prior to and after giving effect to the
declaration of dividends; 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 the Capitalization Ratio is equal to or
less than 35% immediately prior to and after giving effect thereto.
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
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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.
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
Bankers' Acceptance, 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 5.05 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
5.05; 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 either 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 an Agent or any Bank; or
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(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 $35,000,000
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 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 $35,000,000 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 $25,000,000
and such liability is not paid when due; or (ii) the aggregate amount of
Unfunded
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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 $35,000,000 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) 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 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,
either 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 accept
Bankers' Acceptances and any obligation of the Issuing Bank to Issue Letters of
Credit and any obligation of the Swing Loan Bank to make Swing Loans to be
terminated, whereupon such Commitments shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans
and Bankers' Acceptances, 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;
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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 accept Bankers' Acceptances 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
Bankers' Acceptances 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 either 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 AGENTS
10.01 Appointment and Authorization.
(a) Each Bank hereby irrevocably (subject to Section 10.09)
appoints, designates and authorizes the U.S. Agent and the Canadian 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 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 U.S. Agent and the Canadian Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall either 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 either 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 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 either 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
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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. Each 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. Neither Agent shall be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
10.03 Liability of Agents. 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 an
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 Agents.
(a) The Agents 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 advice and statements of legal counsel, independent
accountants and other experts selected by such Agent. The Agents 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 Agents 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
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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 relevant 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 relevant 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. Neither Agent shall 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 such Agent for the account of the Banks, unless such
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". Each Agent will notify the Banks of its
receipt of any such notice. Subject to subsection 10.04(a), the Agents 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 Agents have received any such request, the
Agents 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 Agents 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 Agents, the Agents shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning
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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 each Agent upon demand for its ratable
share of any costs and out-of-pocket expenses (including Attorney Costs)
incurred by such 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 such
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 such Agent.
10.08 Agent in Individual Capacity. Bank of America NT & SA, Bank of
America Canada and their respective 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 and Bank of America Canada were
not the Agents hereunder and without notice to or consent of the Banks. The
Banks acknowledge that, pursuant to such activities, Bank of America NT & SA,
Bank of America Canada or their respective 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, Bankers' Acceptances and Letters of Credit, Bank of America NT & SA
and Bank of America Canada shall each have the same rights and powers under
this Agreement as any other Bank and may exercise the same as though it were
not an Agent.
10.09 Successor Agent. Either Agent may, and at the request of the
Majority Banks shall, resign as Agent upon 30 days notice to the Banks. If an
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 such Agent, such 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
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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 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 NT & SA
(referred to 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 U.S. Bank is a "foreign corporation, partnership or
trust" within the meaning of the Code and such U.S. Bank claims exemption from,
or a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the
Code, such U.S. Bank agrees with and in favor of each Agent, to deliver to such
Agent: (i) if such U.S. 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 U.S. 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 U.S. 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 U.S. Bank and in each succeeding taxable year of such U.S. 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 U.S. Bank agrees to promptly notify such Agent of
any change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any U.S. Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such U.S. Bank sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of the Borrowers owing to such U.S.
Bank, such U.S. Bank agrees to notify the Agents and the Borrowers of the
percentage amount in which it is no longer the beneficial owner of Obligations
of the Borrowers to such U.S. Bank. To the extent of such percentage amount,
the Agents will treat such U.S. Bank's IRS Form 1001 as no longer valid.
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(c) If any U.S. Bank claiming exemption from United States
withholding tax by filing IRS Form 4224 with either Agent sells, assigns,
grants a participation in, or otherwise transfers all or part of the
Obligations of the Borrowers owing to such U.S. Bank, such U.S. 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 U.S. Bank is entitled to a reduction in the
applicable withholding tax, each Agent may withhold from any interest payment
to such U.S. 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 Agents,
then the Agents may withhold from any interest payment to such U.S. Bank not
providing such forms or other documentation an amount equivalent to the
applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that an Agent did not properly
withhold tax from amounts paid to or for the account of any U.S. Bank (because
the appropriate form was not delivered, was not properly executed, or because
such U.S. Bank failed to notify such Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason) such U.S. Bank shall indemnify such Agent fully for all
amounts paid, directly or indirectly, by such Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to such Agent under this Section, together
with all costs and expenses (including Attorney Costs). The obligation of the
U.S. Banks under this subsection shall survive the payment of all Obligations
and the resignation or replacement of each Agent.
(f) Each Canadian Bank represents and warrants to the Agents and
the Borrowers that it is, and it (and any Person to whom it assigns all or part
of its interest or to whom it grants a participation) shall be at all times
that any Canadian Borrowing is outstanding, not a non-resident person within
the meaning of the Income Tax Act (Canada).
10.11 Co-Agents; Arranger. None of the Banks identified on the facing
page or signature pages of this Agreement as a "senior co-agent" or "co-agent"
shall have any right, power, obligation, liability, responsibility or duty
under this Agreement other than those applicable to all Banks as Banks. 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 "senior co-agent" or
"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.
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ARTICLE XI
MISCELLANEOUS
11.01 [Intentionally Omitted].
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 same shall be in writing and signed by
the Majority Banks (or by an Agent at the written request of the Majority
Banks) and the Company and acknowledged by the Agents, 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 Agents, 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 and Bankers' Acceptances which is required
for the Banks or any of them to take any action hereunder;
(e) release or termination of a Guaranty; or
(f) 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 Agents in addition to the
Majority Banks or all the Banks, as the case may be, affect the rights or
duties of either Agent under this
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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, if directed to the Company or an Agent, to
such other address as shall be designated by such party in a written notice to
the other party, and if 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
Agents.
(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 Agents, 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 or such other address as shall be designated by the
Issuing Bank pursuant to subsection 11.03(a).
(c) Any agreement of the Agents 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 Agents 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 Agents 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 either 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
either Agent and the Banks to receive written confirmation of any telephonic or
facsimile notice or the receipt by the Agents and the Banks of a confirmation
which is at variance with the terms understood by the Agents 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 either 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,
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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 Agents and the Issuing Bank within ten (10)
Business Days after demand (subject to subsection 5.01(e)) for all reasonable
costs and expenses incurred by such 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 such Agent and the Issuing Bank with respect thereto; and
(b) pay or reimburse each Agent, the Arranger and each Bank
within ten (10) Business Days after demand (subject to subsection 5.01(e)) 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).
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 either Agent or replacement
of any Bank) be imposed on or incurred by any such Person and relating to or
arising out of this Agreement, the Offer 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, the Bankers' Acceptances 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
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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 either Agent or the Banks, or an 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 an 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
Agents upon demand its pro rata share of any amount so recovered from or repaid
by such 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 each 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
Agents and the Issuing Bank, which consents of the Company, the Agents 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 Agents 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
Bankers' Acceptances, 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, 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 Agents 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 Agents by such Bank and the Assignee; (ii) such
Bank and its Assignee shall have delivered to the Company and the Agents 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 U.S. Agent a processing fee
in the amount of $2,500.
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(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 or Canada; 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; provided that an
assignee which would otherwise be an Eligible Assignee hereunder is not an
Eligible Assignee of any Canadian Borrowing or of any part of the Canadian Term
Commitments or the U.S. Term Commitments if established pursuant to subsection
2.01(a)(iii) if such assignee is not able to represent and warrant as provided
in Section 10.10 (f) hereof and provided further that an assignee which would
otherwise be an Eligible Assignee hereunder is not an Eligible Assignee of any
U.S. Borrowing or of any part of the Revolving Commitment unless either such
assignee is a U.S. resident for U.S. tax purposes or such assignee complies
with Section 10.10 hereof.
(c) From and after the date that either 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
either 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 such 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).
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(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 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 Agents 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; provided,
however, notwithstanding the foregoing, no Participant shall be entitled to
receive any greater payment pursuant to Section 4.01 than the originating Bank
would have been entitled to receive with respect thereto if it had not sold
such participation.
(f) Each Bank agrees to take normal and reasonable precautions
and exercise due care to maintain the confidentiality of all information
provided to it by the Company or any of its Subsidiaries, or by either 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
99
<PAGE> 101
litigation or proceeding to which either 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, attorneys 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.
(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 either 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 each 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
100
<PAGE> 102
hereunder. Each 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 and other Loan Documents.
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 or
non-criminal amount permitted by such laws applicable to the payee. 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 any Agent or any Bank 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 received on the amount of
principal actually outstanding from time to time under the Notes shall exceed
the maximum nonusurious and non-criminal amount of interest permitted by
applicable 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 and non-criminal 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 and non-criminal 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 and
the Bankers' Acceptances, and the case may be, 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, the Bankers' Acceptances 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 or Bankers' Acceptance to, or other
Obligation of, such Borrower, such Borrower shall indemnify such Guarantor for
the full amount of such payment and such Guarantor shall be subrogated to
101
<PAGE> 103
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 each 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 either 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.
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
Agents 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 LAWS OF THE STATE OF NEW YORK; PROVIDED THAT
THE AGENTS 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
102
<PAGE> 104
SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH OF THE BORROWERS, THE AGENTS 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 AGENTS. 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 ANY 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 AGENTS 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 AGENTS AND THE BANKS 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 AGREEMENT OR ANY DOCUMENT RELATED HERETO.
11.19 WAIVER OF JURY TRIAL. EACH OF THE BORROWERS, THE GUARANTORS, THE
BANKS AND THE AGENTS 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
103
<PAGE> 105
CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH OF THE BORROWERS, THE GUARANTORS, THE
BANKS AND THE AGENTS 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 (i)
the commitment letter dated April 12, 1996 among the Company, the Arranger and
Bank of America NT & SA, which letter is hereby terminated and (ii) the
Existing Credit Agreement. 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 Agents, 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.
104
<PAGE> 106
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:
-----------------------------------
Taylor M. Whichard III
Treasurer
BJ SERVICES COMPANY, U.S.A.
By:
-----------------------------------
Taylor M. Whichard III
Treasurer
BJ SERVICES COMPANY MIDDLE EAST
By:
-----------------------------------
Taylor M. Whichard III
Treasurer
NOWSCO WELL SERVICE LTD.
By:
-----------------------------------
Taylor M. Whichard III
Treasurer
BJ SERVICE INTERNATIONAL, INC.
By:
-----------------------------------
Taylor M. Whichard III
Treasurer
S - 1
<PAGE> 107
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as U.S. Agent
By:
-----------------------------------
Name:
Title:
S - 2
<PAGE> 108
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Issuing Bank
By:
-----------------------------------
Name:
Title:
S - 3
<PAGE> 109
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Swing Loan Bank
By:
-----------------------------------
Name:
Title:
S - 4
<PAGE> 110
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a U.S. Bank
By:
-----------------------------------
Name:
Title:
S - 5
<PAGE> 111
BANK OF AMERICA CANADA, as Canadian
Agent
By:
-----------------------------------
Name:
Title:
S - 6
<PAGE> 112
BANK OF AMERICA CANADA, as a Canadian
Bank
By:
-----------------------------------
Name:
Title:
S - 7
<PAGE> 113
THE CHASE MANHATTAN BANK, as Senior
Co-Agent
By:
-----------------------------------
Name:
Title:
S - 8
<PAGE> 114
THE CHASE MANHATTAN BANK, as a U.S. Bank
By:
-----------------------------------
Name:
Title:
S - 9
<PAGE> 115
THE CHASE MANHATTAN BANK OF CANADA, as
a Canadian Bank
By:
-----------------------------------
Name:
Title:
S - 10
<PAGE> 116
ROYAL BANK OF CANADA, as Co-Agent
By:
-----------------------------------
Name:
Title:
S - 11
<PAGE> 117
ROYAL BANK OF CANADA, as a U.S. Bank
By:
-----------------------------------
Name:
Title:
S - 12
<PAGE> 118
ROYAL BANK OF CANADA, as a Canadian Bank
By:
-----------------------------------
Name:
Title:
S - 13
<PAGE> 119
TORONTO DOMINION (TEXAS), INC., as
Co-Agent
By:
-----------------------------------
Name:
Title:
S - 14
<PAGE> 120
TORONTO DOMINION (TEXAS), INC., as a
U.S. Bank
By:
-----------------------------------
Name:
Title:
S - 15
<PAGE> 121
THE TORONTO-DOMINION BANK, as a
Canadian Bank
By:
-----------------------------------
Name:
Title:
S - 16
<PAGE> 122
BANK OF MONTREAL, as Co-Agent
By:
-----------------------------------
Name:
Title:
S - 17
<PAGE> 123
BANK OF MONTREAL, as a U.S. Bank
By:
-----------------------------------
Name:
Title:
S - 18
<PAGE> 124
BANK OF MONTREAL, as a Canadian Bank
By:
-----------------------------------
Name:
Title:
S - 19
<PAGE> 125
CREDIT LYONNAIS NEW YORK BRANCH, as
Co-Agent
By:
-----------------------------------
Name:
Title:
S - 20
<PAGE> 126
CREDIT LYONNAIS NEW YORK BRANCH, as a
U.S. Bank
By:
-----------------------------------
Name:
Title:
S - 21
<PAGE> 127
CREDIT LYONNAIS CANADA, CALGARY BRANCH,
as a Canadian Bank
By:
-----------------------------------
Name:
Title:
S - 22
<PAGE> 128
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION, as Co-Agent
By:
-----------------------------------
Name:
Title:
S - 23
<PAGE> 129
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION, as a U.S. Bank
By:
-----------------------------------
Name:
Title:
S - 24
<PAGE> 130
THE INDUSTRIAL BANK OF JAPAN TRUST
COMPANY, as a U.S. Bank
By:
-----------------------------------
Name:
Title:
S - 25
<PAGE> 131
THE INDUSTRIAL BANK OF JAPAN (CANADA),
as a Canadian Bank
By:
-----------------------------------
Name:
Title:
S - 26
<PAGE> 132
THE FUJI BANK, LIMITED, as a U.S. Bank
By:
-----------------------------------
Name:
Title:
S - 27
<PAGE> 133
FUJI BANK CANADA, as a Canadian Bank
By:
-----------------------------------
Name:
Title:
S - 28
<PAGE> 134
THE BANK OF TOKYO-MITSUBISHI, LTD.,
HOUSTON AGENCY, as a U.S. Bank
By:
-----------------------------------
Name:
Title:
S - 29
<PAGE> 135
BANK OF TOKYO-MITSUBISHI (CANADA), as
a Canadian Bank
By:
-----------------------------------
Name:
Title:
S - 30
<PAGE> 136
THE YASUDA TRUST AND BANKING COMPANY
LIMITED, NEW YORK BRANCH, as a U.S. Bank
By:
-----------------------------------
Name:
Title:
S - 31
<PAGE> 137
DRESDNER BANK AG, NEW YORK BRANCH AND
GRAND CAYMAN BRANCH, as a U.S. Bank
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
S - 32
<PAGE> 138
CORESTATES BANK, N.A., as a U.S. Bank
By:
-----------------------------------
Name:
Title:
S - 33
<PAGE> 139
CHRISTIANIA BANK OG KREDITKASSE, as a
U.S. Bank
By:
-----------------------------------
Name:
Title:
S - 34
<PAGE> 140
THE BANK OF NEW YORK, as a U.S. Bank
By:
-----------------------------------
Name:
Title:
S - 35
<PAGE> 141
ABN-AMRO BANK, N.V. - HOUSTON AGENCY,
as a U.S. Bank
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
S - 36
<PAGE> 142
ABN AMRO BANK CANADA, as a Canadian Bank
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
S - 37
<PAGE> 143
STANDARD CHARTERED BANK, as a U.S. Bank
By:
-----------------------------------
Name:
Title:
S - 38
<PAGE> 144
FIRST NATIONAL BANK OF COMMERCE, as a
U.S. Bank
By:
-----------------------------------
Name:
Title:
S - 39
<PAGE> 145
DEN NORSKE BANK AS, as a U.S. Bank
By:
-----------------------------------
Name:
Title:
S - 40
<PAGE> 146
THE DAI-ICHI KANGYO BANK, LTD., as a
U.S. Bank
By:
-----------------------------------
Name:
Title:
S - 41
<PAGE> 1
EXHIBIT 10.2
================================================================================
BJ SERVICES COMPANY,
AS ISSUER,
THE GUARANTORS NAMED HEREIN,
AS GUARANTORS,
and
BANK OF MONTREAL TRUST COMPANY,
TRUSTEE
INDENTURE
Dated as of February 1, 1996
--------------------------------
$125,000,000
SERIES A AND SERIES B
7% NOTES DUE 2006
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . 1
SECTION 1.01 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02 Other Definitions. . . . . . . . . . . . . . . . . . . . . . 7
SECTION 1.03 Incorporation by Reference of Trust Indenture Act . . . . . 7
SECTION 1.04 Rules of Construction. . . . . . . . . . . . . . . . . . . . 8
ARTICLE 2 THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.01 Form and Dating. . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.02 Execution and Authentication. . . . . . . . . . . . . . . . 9
SECTION 2.03 Registrar and Paying Agent. . . . . . . . . . . . . . . . 10
SECTION 2.04 Paying Agent to Hold Money in Trust. . . . . . . . . . . . 10
SECTION 2.05 Holder Lists. . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.06 Transfer and Exchange. . . . . . . . . . . . . . . . . . . 11
SECTION 2.07 Replacement Securities. . . . . . . . . . . . . . . . . . 19
SECTION 2.08 Outstanding Securities. . . . . . . . . . . . . . . . . . 19
SECTION 2.09 Treasury Securities. . . . . . . . . . . . . . . . . . . . 20
SECTION 2.10 Temporary Securities. . . . . . . . . . . . . . . . . . . 20
SECTION 2.11 Cancellation. . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.12 Defaulted Interest. . . . . . . . . . . . . . . . . . . . 20
SECTION 2.13 Persons Deemed Owners. . . . . . . . . . . . . . . . . . . 21
ARTICLE 3 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.01 Payment of Securities. . . . . . . . . . . . . . . . . . . 21
SECTION 3.02 Maintenance of Office or Agency. . . . . . . . . . . . . . 21
SECTION 3.03 SEC Reports; Financial Statements. . . . . . . . . . . . . 22
SECTION 3.04 Compliance Certificate. . . . . . . . . . . . . . . . . . 23
SECTION 3.05 Corporate Existence. . . . . . . . . . . . . . . . . . . . 23
SECTION 3.06 Maintenance of Properties. . . . . . . . . . . . . . . . . 23
SECTION 3.07 Payment of Taxes and Other Claims. . . . . . . . . . . . . 24
SECTION 3.08 Waiver of Stay, Extension or Usury Laws. . . . . . . . . . 24
SECTION 3.09 Limitation on Sale/Leaseback Transactions. . . . . . . . . 24
SECTION 3.10 Limitation on Liens. . . . . . . . . . . . . . . . . . . . 25
SECTION 3.11 Registration Rights Agreement. . . . . . . . . . . . . . . 26
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE 4 SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.01 Limitations on Mergers and Consolidations. . . . . . . . . 27
SECTION 4.02 Successor Corporation Substituted. . . . . . . . . . . . . 27
ARTICLE 5 DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . 28
SECTION 5.01 Events of Default. . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.02 Acceleration. . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.03 Other Remedies. . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.04 Waiver of Existing Defaults. . . . . . . . . . . . . . . . 30
SECTION 5.05 Control by Majority. . . . . . . . . . . . . . . . . . . . 31
SECTION 5.06 Limitations on Suits. . . . . . . . . . . . . . . . . . . 31
SECTION 5.07 Rights of Holders to Receive Payment. . . . . . . . . . . 32
SECTION 5.08 Collection Suit by Trustee. . . . . . . . . . . . . . . . 32
SECTION 5.09 Trustee May File Proofs of Claim. . . . . . . . . . . . . 32
SECTION 5.10 Priorities. . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.11 Undertaking for Costs. . . . . . . . . . . . . . . . . . . 33
ARTICLE 6 TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.01 Duties of Trustee. . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.02 Rights of Trustee. . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.03 Individual Rights of Trustee. . . . . . . . . . . . . . . 35
SECTION 6.04 Trustee's Disclaimer. . . . . . . . . . . . . . . . . . . 35
SECTION 6.05 Notice of Defaults. . . . . . . . . . . . . . . . . . . . 35
SECTION 6.06 Reports by Trustee to Holders. . . . . . . . . . . . . . . 35
SECTION 6.07 Compensation and Indemnity. . . . . . . . . . . . . . . . 36
SECTION 6.08 Replacement of Trustee. . . . . . . . . . . . . . . . . . 37
SECTION 6.09 Successor Trustee by Merger, etc. . . . . . . . . . . . . 38
SECTION 6.10 Eligibility; Disqualification. . . . . . . . . . . . . . . 38
SECTION 6.11 Preferential Collection of Claims Against Company. . . . . 38
ARTICLE 7 DISCHARGE OF INDENTURE . . . . . . . . . . . . . . . . . . 39
SECTION 7.01 Termination of Company's Obligations. . . . . . . . . . . 39
SECTION 7.02 Application of Trust Money. . . . . . . . . . . . . . . . 41
SECTION 7.03 Repayment to Company. . . . . . . . . . . . . . . . . . . 41
SECTION 7.04 Reinstatement. . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 8 AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.01 Without Consent of Holders. . . . . . . . . . . . . . . . 42
SECTION 8.02 With Consent of Holders. . . . . . . . . . . . . . . . . . 43
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 8.03 Compliance with Trust Indenture Act. . . . . . . . . . . . 44
SECTION 8.04 Revocation and Effect of Consents. . . . . . . . . . . . . 45
SECTION 8.05 Notation on or Exchange of Securities. . . . . . . . . . . 45
SECTION 8.06 Trustee to Sign Amendments, etc. . . . . . . . . . . . . . 45
ARTICLE 9 GUARANTEES OF SECURITIES . . . . . . . . . . . . . . . . . 46
SECTION 9.01 Unconditional Guarantees. . . . . . . . . . . . . . . . . 46
SECTION 9.02 Limitation of Guarantor's Liability . . . . . . . . . . . 48
SECTION 9.03 Contribution. . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.04 Execution and Delivery of Guarantees. . . . . . . . . . . 48
SECTION 9.05 Addition of Guarantors. . . . . . . . . . . . . . . . . . 49
SECTION 9.06 Release of Guarantee. . . . . . . . . . . . . . . . . . . 49
SECTION 9.07 Consent to Jurisdiction and Service of Process. . . . . . 49
SECTION 9.08 Waiver of Immunity. . . . . . . . . . . . . . . . . . . . 50
SECTION 9.09 Judgment Currency. . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 10 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.01 Trust Indenture Act Controls. . . . . . . . . . . . . . . 51
SECTION 10.02 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.03 Communication by Holders with Other Holders. . . . . . . . 52
SECTION 10.04 Certificate and Opinion as to Conditions Precedent. . . . 52
SECTION 10.05 Statements Required in Certificate or Opinion. . . . . . . 53
SECTION 10.06 Rules by Trustee and Agents. . . . . . . . . . . . . . . . 53
SECTION 10.07 Legal Holidays. . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.08 No Recourse Against Others. . . . . . . . . . . . . . . . 53
SECTION 10.09 Governing Law. . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.10 No Adverse Interpretation of Other Agreements. . . . . . . 54
SECTION 10.11 Successors. . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.12 Severability. . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.13 Counterpart Originals. . . . . . . . . . . . . . . . . . . 54
SECTION 10.14 Table of Contents, Headings, etc. . . . . . . . . . . . . 54
</TABLE>
-iii-
<PAGE> 5
INDENTURE dated as of February 1, 1996 between BJ Services Company, a
Delaware corporation (the "Company"), the Guarantors named herein and Bank of
Montreal Trust Company, a New York banking corporation (the "Trustee").
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Company's 7% Series A
Notes due 2006 (the "Series A Securities") and the Company's 7% Series B Notes
due 2006 (the "Series B Securities"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"Adjusted Net Assets" of a Guarantor at any date means the lesser of (x)
the amount by which the fair value of the property of such Guarantor at such
date exceeds the total amount of liabilities, including, without limitation, the
probable amount of contingent liabilities (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date) of such
Guarantor at such date, but excluding liabilities under the Guarantee of such
Guarantor, and (y) the amount by which the present fair saleable value of the
assets of such Guarantor at such date exceeds the amount that will be required
to pay the probable liability of such Guarantor on its debts (after giving
effect to all other fixed and contingent liabilities incurred or assumed on such
date and after giving effect to any collection from any Subsidiary of such
Guarantor in respect of any obligation of such Subsidiary under the Guarantee of
such Guarantor), excluding debt in respect of the Guarantee of such Guarantor,
as they become absolute and matured.
"Affiliate" of any specified Person means any Person directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, such specified Person. For purposes of this definition, "control"
of a Person shall mean the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing. The Trustee may
request and may conclusively rely upon an Officers' Certificate to determine
whether any Person is an Affiliate of any specified Person.
"Agent" means any Registrar or Paying Agent.
"Attributable Indebtedness," when used with respect to any
Sale/Leaseback Transaction, means, as at the time of determination, the present
value (discounted at the rate set forth or implicit in the terms of the lease
included in such transaction) of the total obligations of the lessee for rental
payments (other than amounts required to be paid on account of property taxes,
maintenance, repairs, insurance, assessments, utilities, operating and labor
costs and other items which do not constitute payments for property rights)
during the remaining term of the lease
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included in such Sale/Leaseback Transaction (including any period for which
such lease has been extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal, state
or foreign law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized, with respect to any particular matter, to act
by or on behalf of the Board of Directors of the Company.
"Business Day" means any day that is not a Legal Holiday.
"Capital Stock" of any Person means and includes any and all shares,
interests, rights to purchase, warrants or options (whether or not currently
exercisable), participations or other equivalents of or interests in (however
designated) the equity (which includes, but is not limited to, common stock,
preferred stock and partnership and joint venture interests) of such Person
(excluding any debt securities that are convertible into, or exchangeable for,
such equity).
"Capitalized Lease Obligation" of any Person means any obligation of
such Person to pay rent or other amounts under a lease of property, real or
personal, that is required to be capitalized for financial reporting purposes in
accordance with GAAP; and the amount of such obligation shall be the capitalized
amount thereof determined in accordance with GAAP.
"Common Equity" of any Person means and includes all Capital Stock of
such Person that is generally entitled to (i) vote in the election of directors
of such Person, or (ii) if such Person is not a corporation, vote or otherwise
participate in the selection of the governing body, partners, managers or others
that will control the management and policies of such Person.
"Company" means the Person named as the "Company" in the first paragraph
of this instrument until a successor corporation shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter "Company" shall
mean such successor corporation; provided, however, that for purposes of any
provision contained herein which is required by the TIA, "Company" shall also
mean each Guarantor, if any.
"Consolidated Net Worth" of the Company means the consolidated
stockholders' equity of the Company and its Subsidiaries, as determined in
accordance with GAAP.
"Corporate Trust Office of the Trustee" means the office of the Trustee
in the Borough of Manhattan, The City of New York at which the corporate trust
business of the Trustee shall be principally administered, which office shall
initially be located at the address of the Trustee specified in Section 3.02
hereof and may be located at such other address as the Trustee may give notice
to the Company.
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"Default" means any event, act or condition that is, or after notice or
the passage of time or both would be, an Event of Default.
"Definitive Securities" means Securities that are in the form of Exhibit
A attached hereto (but without including the text referred to in footnote 1
thereto).
"Depositary" means, with respect to the Securities issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Securities, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any successor statute.
"Exchange Offer" means the offer by the Company to the Holders of all
outstanding Transfer Restricted Securities to exchange all such outstanding
Transfer Restricted Securities held by such Holders for Series B Securities, in
an aggregate principal amount equal to the aggregate principal amount of the
Transfer Restricted Securities tendered in such exchange offer by such Holders.
"Exchange Offer Registration Statement" means the registration statement
under the Securities Act relating to the Exchange Offer, including the related
prospectus.
"Funded Indebtedness" means all Indebtedness (including Indebtedness
incurred under any revolving credit, letter of credit or working capital
facility) that matures by its terms, or that is renewable at the option of any
obligor thereon to a date, more than one year after the date on which such
Indebtedness is originally incurred.
"GAAP" means generally accepted accounting principles in the United
States set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, as in effect from time to time.
"Global Security" means a Security that is issued in global form in
the name of Cede & Co. or such other name as may be requested by an authorized
representative of the Depositary, and that contains the paragraph referred to in
footnote 1 and the additional schedule referred to in the form of Security
attached hereto as Exhibit A.
"Guarantor" means (i) each Subsidiary of the Company executing this
Indenture, (ii) each Subsidiary of the Company that becomes a guarantor of the
Securities pursuant to Section 9.05 hereof, (iii) each Subsidiary of the Company
that executes a supplemental indenture
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<PAGE> 8
in which such Subsidiary agrees to be bound by Article 9 hereof and (iv) any
Subsidiary of the Company that is a successor corporation of any Subsidiary of
the Company referred to in clauses (i) through (iii). The term "Guarantor"
shall not include any Subsidiary of the Company referred to in clauses (i)
through (iv) that shall have been released from its obligations under Article 9
pursuant to Section 9.06 hereof.
"Hedging Obligations" of any Person means the net obligations (not the
notional amount) of such Person pursuant to any interest rate swap agreement,
foreign currency exchange agreement, interest rate collar agreement, option or
futures contract or other similar agreement or arrangement relating to interest
rates or foreign exchange rates.
"Holder" means a Person in whose name a Security is registered.
"Indebtedness" of any Person at any date means, without duplication, (i)
all indebtedness or obligations of such Person for borrowed money (whether or
not the recourse of the lender is to the whole of the assets of such Person or
only to a portion thereof), (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person in respect of letters of credit or other similar instruments (or
reimbursement obligations with respect thereto), other than standby letters of
credit and performance bonds issued by such Person in the ordinary course of
business, to the extent not drawn or, to the extent drawn, if such drawing is
reimbursed not later than the third Business Day following demand for
reimbursement, (iv) all obligations of such Person to pay the deferred and
unpaid purchase price of property or services, except trade payables and accrued
expenses incurred in the ordinary course of business, (v) all Capitalized Lease
Obligations of such Person, (vi) all Indebtedness of others secured by a Lien on
any asset of such Person, whether or not such Indebtedness is assumed by such
Person, (vii) all Indebtedness of others guaranteed by such Person to the extent
of such guarantee and (viii) all Hedging Obligations of such Person.
"Indenture" means this Indenture as amended or supplemented from time to
time.
"Initial Purchasers" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated, CS First Boston Corporation, BA Securities, Inc. and Chase
Securities, Inc., as initial purchasers in the Offering.
"Interest Payment Date" shall have the meaning assigned to such term in
the Securities.
"Issue Date" means the date on which the Securities are originally
issued under this Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in any of The City of New York, Houston, Texas or a place of
payment are authorized or obligated by law, regulation or executive order to
remain closed.
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<PAGE> 9
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law, but
excluding agreements to refrain from granting Liens. For the purposes of this
Indenture, the Company or any Subsidiary of the Company shall be deemed to own
subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, Capitalized
Lease Obligation or other title retention agreement relating to such asset.
"Net Proceeds" means, with respect to any Sale/Leaseback Transaction
entered into by the Company or any Subsidiary of the Company, the aggregate net
proceeds received by the Company or such Subsidiary from such Sale/Leaseback
Transaction after payment of expenses, taxes, commissions and similar amounts
incurred in connection therewith, whether such proceeds are in cash or in
property (valued at the fair market value thereof at the time of receipt, as
determined by the Board of Directors).
"Non-Recourse Indebtedness" means, at any date, the aggregate amount at
such date of Indebtedness of the Company or a Subsidiary of the Company in
respect of which the recourse of the holder of such Indebtedness, whether direct
or indirect and whether contingent or otherwise, is effectively limited to
specified assets, and with respect to which neither the Company nor any of its
Subsidiaries provides any credit support.
"Offering" means the Offering of the Series A Securities pursuant to the
Offering Memorandum.
"Offering Memorandum" means the Offering Memorandum of the Company,
dated February 14, 1996, relating to the Offering.
"Officer" means the Chairman of the Board, the President, any Vice
Chairman of the Board, any Vice President, the chief financial officer, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary or any
Assistant Secretary of a Person.
"Officers' Certificate" means a certificate signed by two Officers of a
Person, one of whom must be the Person's chief executive officer, chief
financial officer or chief accounting officer.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. Such counsel may be an employee of or counsel to the
Company, a Guarantor or the Trustee.
"Pari Passu Indebtedness" means any Indebtedness of the Company, whether
outstanding on the Issue Date or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall be subordinated in right of payment to the
Securities.
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<PAGE> 10
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, incorporated or unincorporated association,
joint-stock company, trust, unincorporated organization or government or other
agency or political subdivision thereof or other entity of any kind.
"Registrable Securities" shall have the meaning assigned to such term in
the Registration Rights Agreement.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of February 20, 1996, among the Company, the Guarantors
party thereto and the Initial Purchasers.
"Sale/Leaseback Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Subsidiary of the Company, for a
period of more than three years, of any real or tangible personal property,
which property has been or is to be sold or transferred by the Company or such
Subsidiary to such Person in contemplation of such leasing.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Series A Securities and the Series B Securities
treated as a single class of Securities. For purposes of this Indenture, the
term "Securities" shall, except where the context otherwise requires, include
the Guarantees.
"Securities Act" means the Securities Act of 1933, as amended, and any
successor statute.
"Security Custodian" means the Trustee, as custodian with respect to the
Securities in global form, or any successor entity thereto.
"Series A Securities" means the Company's 7% Series A Notes due 2006 to
be issued pursuant to this Indenture.
"Series B Securities" means the Company's 7% Series B Notes due 2006 to
be issued pursuant to this Indenture in the Exchange Offer.
"Subsidiary" of any Person means (i) any corporation of which at least a
majority of the aggregate voting power of all classes of the Common Equity is
owned by such Person directly or through one or more other Subsidiaries of such
Person, and (ii) any entity other than a corporation at least a majority of the
Common Equity of which is owned by such Person directly or through one or more
other Subsidiaries of such Person.
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<PAGE> 11
"TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C.
Sections 77aaa-77bbbb), as in effect on the Issue Date.
"Transfer Restricted Securities" means the Registrable Securities under
the Registration Rights Agreement.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.
"Trustee" means the party named as such above until a successor replaces
it in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
"U.S. Government Obligations" means direct obligations of the United
States of America for the payment of which the full faith and credit of the
United States of America is pledged.
SECTION 1.02 Other Definitions.
<TABLE>
<CAPTION>
Defined
in
Term Section
---- -------
<S> <C>
"Authorized Agent"............................................................................... 9.07
"Custodian"...................................................................................... 5.01
"DTC"............................................................................................ 2.03
"Event of Default"............................................................................... 5.01
"Funding Guarantor".............................................................................. 9.03
"Guarantees"..................................................................................... 9.01(a)
"Judgment Currency".............................................................................. 9.09
"Non-U.S. Guarantor"............................................................................. 9.07
"Paying Agent"................................................................................... 2.03
"Registrar"...................................................................................... 2.03
"Significant Subsidiary"......................................................................... 5.01
"Successor"...................................................................................... 4.01
</TABLE>
SECTION 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
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<PAGE> 12
"indenture securities" means the Securities.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and each
Guarantor.
All terms used in this Indenture that are defined by the TIA, defined by
a TIA reference to another statute or defined by an SEC rule under the TIA have
the meanings so assigned to them.
SECTION 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular; and
(5) provisions apply to successive events and transactions.
ARTICLE 2
THE SECURITIES
SECTION 2.01 Form and Dating.
The Securities, the notations thereon relating to the Guarantees and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A to this Indenture, which is hereby incorporated into this Indenture.
The Securities may have notations, legends or endorsements required by law,
securities exchange rule, the Company's certificate of incorporation or bylaws,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company).
Each Security shall be
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<PAGE> 13
dated the date of its authentication. The Securities shall be in registered
form without coupons and only in denominations of $1,000 and any integral
multiples thereof.
The terms and provisions contained in the Securities shall constitute,
and are hereby expressly made, a part of this Indenture and to the extent
applicable, the Company, the Guarantors and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms and provisions and to
be bound thereby.
The Securities will initially be issued in global form, substantially in
the form of Exhibit A attached hereto (including footnote 1 thereto) and in
definitive form, substantially in the form of Exhibit A hereto (not including
footnote 1 thereto). A Global Security shall represent such of the outstanding
Securities as shall be specified therein and shall provide that it shall
represent the aggregate amount of outstanding Securities from time to time
endorsed thereon and that the aggregate amount of outstanding Securities
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of Global
Securities to reflect the amount of any increase or decrease in the amount of
outstanding Securities represented thereby shall be made by the Trustee in
accordance with instructions given by the Holder thereof as required by Section
2.06 hereof.
SECTION 2.02 Execution and Authentication.
Two Officers of the Company shall sign the Securities on behalf of the
Company, and two Officers of each Guarantor shall sign the notation on the
Securities relating to the Guarantees on behalf of such Guarantor, in each case
by manual or facsimile signature. The Company's seal shall be impressed,
affixed, imprinted or reproduced on the Securities and may be in facsimile form.
If an Officer of the Company or any Guarantor whose signature is on a
Security no longer holds that office at the time the Security is authenticated,
the Security shall be valid nevertheless.
A Security shall not be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose until authenticated by the manual
signature of an authorized signatory of the Trustee, which signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee shall authenticate Securities for original issue up to the
aggregate principal amount of $125,000,000, upon a written order of the Company
signed by two Officers of the Company. Such order shall specify the amount of
the Securities to be authenticated and the date on which the original issue of
Securities is to be authenticated. The aggregate principal amount of Securities
outstanding at any time may not exceed such amount except as provided in Section
2.07 hereof.
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<PAGE> 14
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company, the Guarantors or an Affiliate
of any of them.
SECTION 2.03 Registrar and Paying Agent.
The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or exchange ("Registrar") and an office
or agency where Securities may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and the
term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with any
Registrar or Paying Agent not a party to this Indenture. The agreement shall
implement the provisions of this Indenture that relate to such Agent. The
Company shall notify the Trustee of the name and address of any Agent not a
party to this Indenture. The Company may change any Paying Agent or Registrar
without notice to any Holder. If the Company fails to appoint or maintain
another entity as Registrar or Paying Agent, the Trustee shall act as such. The
Company or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints the Trustee as Registrar and Paying
Agent.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Security.
SECTION 2.04 Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal of or interest on the Securities, whether such money shall have been
paid to it by the Company or any Guarantor, and will notify the Trustee of any
default by the Company or any Guarantor in making any such payment. While any
such default continues, the Trustee may require a Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed. The Company at
any time may require a Paying Agent to pay all money held by it to the Trustee
and to account for any funds disbursed. Upon payment over to the Trustee and
upon accounting for any funds disbursed, the Paying Agent (if other than the
Company or a Subsidiary of the Company) shall have no further liability for the
money. If the Company or a Subsidiary of the Company acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the Holders
all money held by it as Paying Agent.
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<PAGE> 15
SECTION 2.05 Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders and shall otherwise comply with TIA Section 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each Interest Payment Date, and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Holders, and the
Company shall otherwise comply with TIA Section 312(a).
SECTION 2.06 Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When
Definitive Securities are presented to the Registrar with the request:
(x) to register the transfer of the Definitive Securities,
or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirement for such transactions are met; provided, however, that the
Definitive Securities presented or surrendered for registration of transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the
Registrar duly executed by the Holder thereof or by
his attorney, duly authorized in writing; and
(ii) in the case of Transfer Restricted Securities that are
Definitive Securities, shall be accompanied by the
following additional information and documents, as
applicable, upon which the Registrar may conclusively
rely:
(A) if such Transfer Restricted Securities are
being delivered to the Registrar by a Holder
for registration in the name of such Holder,
without transfer, a certification from such
Holder to that effect (in substantially the
form of Exhibit B hereto); or
(B) if such Transfer Restricted Securities are
being transferred (1) to a "qualified
institutional buyer" (as defined in Rule 144A
under the Securities Act) in accordance with
Rule 144A under the Securities Act or (2)
pursuant to an exemption from registration in
accordance with Rule 144 under the Securities
Act (and based upon an opinion of counsel if
the Company so
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requests) or (3) pursuant to an effective
registration statement under the Securities
Act, a certification to that effect from such
Holder (in substantially the form of Exhibit B
hereto); or
(C) if such Transfer Restricted Securities are
being transferred to an institutional
"accredited investor," within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the
Securities Act pursuant to a private placement
exemption from the registration requirements
of the Securities Act (and based upon an
opinion of counsel if the Company so
requests), a certification to that effect from
such Holder (in substantially the form of
Exhibit B hereto) and a certification from the
applicable transferee (in substantially the
form of Exhibit C hereto);
(D) if such Transfer Restricted Securities are
being transferred pursuant to an exemption
from registration in accordance with Rule 904
under the Securities Act (and based upon an
opinion of counsel if the Company so
requests), certifications to that effect from
such Holder (in substantially the form of
Exhibits B and D hereto); or
(E) if such Transfer Restricted Securities are
being transferred in reliance on another
exemption from the registration requirements
of the Securities Act (and based upon an
opinion of counsel if the Company so
requests), a certification to that effect from
such Holder (in substantially the form of
Exhibit B hereto).
(b) Restriction on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee of
a Definitive Security, duly endorsed or accompanied by appropriate instruments
of transfer, in form satisfactory to the Trustee, together with:
(i) if such Definitive Security is a Transfer Restricted
Security, certification, substantially in the form of
Exhibit B hereto, upon which the Trustee may
conclusively rely, that such Definitive Security is
being transferred to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act; or
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<PAGE> 17
(ii) if such Definitive Security is a Transfer Restricted
Security and is being transferred pursuant to an
exemption from registration in accordance with Rule
904 under the Securities Act (and based upon an
opinion of counsel if the Company so requests),
certifications to that effect from such Holder (in
substantially the form of Exhibits B and D hereto);
and
(iii) whether or not such Definitive Security is a Transfer
Restricted Security, written instructions directing
the Trustee to make, or direct the Security Custodian
to make, an endorsement on the Global Security to
reflect an increase in the aggregate principal amount
of the Securities represented by the Global Security;
then the Trustee shall cancel such Definitive Security in accordance with
Section 2.11 hereof and cause, or direct the Security Custodian to cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Security Custodian, the aggregate principal amount of
Securities represented by the Global Security to be increased accordingly. If
no Global Securities are then outstanding, the Company shall issue and the
Trustee shall authenticate a new Global Security in the appropriate principal
amount.
(c) Transfer and Exchange of Global Securities. The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depositary, in accordance with this Indenture (including the
restrictions on transfer set forth herein) and the procedures of the Depositary
therefor, which shall include restrictions on transfer comparable to those set
forth herein to the extent required by the Securities Act.
(d) Transfer of a Beneficial Interest in a Global Security for a
Definitive Security.
(i) Any Person having a beneficial interest in a Global
Security may upon request exchange such beneficial
interest for a Definitive Security. Upon receipt by
the Trustee of written instructions or such other form
of instructions as is customary for the Depositary,
from the Depositary or its nominee on behalf of any
Person having a beneficial interest in a Global
Security, and in the case of a Transfer Restricted
Security, the following additional information and
documents (all of which may be submitted by
facsimile), upon which the Trustee may conclusively
rely:
(A) if such beneficial interest is being
transferred to the Person designated by the
Depositary as being the beneficial owner, a
certification from such Person to that effect
(in substantially the form of Exhibit B
hereto); or
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<PAGE> 18
(B) if such beneficial interest is being
transferred (1) to a "qualified institutional
buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A
under the Securities Act or (2) pursuant to an
exemption from registration in accordance with
Rule 144 under the Securities Act (and based
upon an opinion of counsel if the Company so
requests) or (3) pursuant to an effective
registration statement under the Securities
Act, a certification to that effect from the
transferor (in substantially the form of
Exhibit B hereto); or
(C) if such beneficial interest is being
transferred to an institutional "accredited
investor," within the meaning of Rule
501(a)(1), (2), (3) or (7) under the
Securities Act pursuant to a private placement
exemption from the registration requirements
of the Securities Act (and based upon an
opinion of counsel if the Company so
requests), a certification to that effect from
such transferor (in substantially the form of
Exhibit B hereto) and a certification from the
applicable transferee (in substantially the
form of Exhibit C hereto); or
(D) if such beneficial interest is being
transferred pursuant to an exemption from
registration in accordance with Rule 904 under
the Securities Act (and based upon an opinion
of counsel if the Company so requests),
certifications to that effect from such
transferor (in substantially the form of
Exhibits B and D hereto); or
(E) if such beneficial interest is being
transferred in reliance on another exemption
from the registration requirements of the
Securities Act (and based upon an opinion of
counsel if the Company so requests), a
certification to that effect from such
transferor (in substantially the form of
Exhibit B hereto);
the Trustee or the Security Custodian, at the
direction of the Trustee, shall, in accordance with
the standing instructions and procedures existing
between the Depositary and the Security Custodian,
cause the aggregate principal amount of Global
Securities to be reduced accordingly and, following
such reduction, the Company shall execute and the
Trustee shall authenticate and deliver to the
transferee a Definitive Security in the appropriate
principal amount.
(ii) Definitive Securities issued in exchange for
a beneficial interest in a Global Security
pursuant to this Section 2.06(d) shall be
registered in
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<PAGE> 19
such names and in such authorized
denominations as the Depositary, pursuant to
instructions from its direct or indirect
participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such
Definitive Securities to the Persons in whose
names such Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.06), a Global Security
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Authentication of Definitive Securities in Absence of
Depositary. If at any time:
(i) the Depositary for the Securities notifies the Company
that the Depositary is unwilling or unable to continue
as Depositary for the Global Securities and a
successor Depositary for the Global Securities is not
appointed by the Company within 90 days after delivery
of such notice; or
(ii) the Company, at its sole discretion, notifies the
Trustee in writing that it elects to cause the
issuance of Definitive Securities under this
Indenture,
then the Company will execute, and the Trustee will authenticate and deliver
Definitive Securities, in an aggregate principal amount equal to the principal
amount of the Global Securities, in exchange for such Global Securities and
registered in such names as the Depositary shall instruct the Trustee or the
Company in writing.
(g) Legends.
(i) Except as permitted by the following paragraph (ii),
each Security certificate evidencing the Global
Securities and the Definitive Securities (and all
Securities issued in exchange therefor or substitution
thereof) shall bear a legend in substantially the
following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
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<PAGE> 20
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY,
PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE")
WHICH IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE
DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
"AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR
ANY PREDECESSOR OF THIS SECURITY) ONLY (A) TO THE COMPANY, (B)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT
THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3)
OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING
THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR
(F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT TO
THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR (F) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii)
IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE
OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS
SECURITY IS
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<PAGE> 21
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
Each Security certificate evidencing the Global Securities also
shall bear the paragraph referred to in footnote 1 in the form
of Security attached hereto as Exhibit A.
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security
represented by a Global Security) pursuant to Rule 144
under the Securities Act or an effective registration
statement under the Securities Act:
(A) in the case of any Transfer Restricted
Security that is a Definitive Security, the
Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for
a Definitive Security that does not bear the
legend set forth in (i) above and rescind any
restriction on the transfer of such Transfer
Restricted Security; and
(B) in the case of any Transfer Restricted
Security represented by a Global Security,
such Transfer Restricted Security shall not be
required to bear the legend set forth in (i)
above if all other interests in such Global
Security have been or are concurrently being
sold or transferred pursuant to Rule 144 under
the Securities Act or pursuant to an effective
registration statement under the Securities
Act, but such Transfer Restricted Security
shall continue to be subject to the provisions
of Section 2.06(c) hereof; provided, however,
that with respect to any request for an
exchange of a Transfer Restricted Security
that is represented by a Global Security for a
Definitive Security that does not bear a
legend set forth in (i) above, which request
is made in reliance upon Rule 144 under the
Securities Act, the Holder thereof shall
certify in writing to the Registrar that such
request is being made pursuant to Rule 144
under the Securities Act (such certification
to be substantially in the form of Exhibit B
hereto).
(iii) Notwithstanding the foregoing, upon consummation of
the Exchange Offer, the Company shall issue and, upon
receipt of an authentication order in accordance with
Section 2.02 hereof, the Trustee shall authenticate
Series B Securities in exchange for Series A
Securities accepted for exchange in the Exchange
Offer, which Series B
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<PAGE> 22
Securities shall not bear the legend set forth in (i)
above, and the Registrar shall rescind any restriction
on the transfer of such Securities, in each case
unless the Holder of such Series A Securities is
either (A) a broker-dealer, (B) a Person participating
in the distribution of the Series A Securities or (C)
a Person who is an affiliate (as defined in Rule 144
under the Securities Act) of the Company. The Company
shall identify to the Trustee such Holders of the
Securities in a written certification signed by an
Officer of the Company and, absent certification from
the Company to such effect, the Trustee shall assume
that there are no such Holders.
(h) Cancellation and/or Adjustment of Global Security. At such time
as all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, redeemed, repurchased or canceled, such Global Security
shall be returned to or retained and canceled by the Trustee. At any time prior
to such cancellation, if any beneficial interest in a Global Security is
exchanged for Definitive Securities, redeemed, repurchased or canceled, the
principal amount of Securities represented by such Global Security shall be
reduced and an endorsement shall be made on such Global Security, by the Trustee
or the Security Custodian, at the direction of the Trustee to reflect such
reduction.
(i) General Provisions with respect to Transfer and
Exchanges.
(i) To permit registrations of transfers and
exchanges, the Company shall execute and the
Trustee shall authenticate Definitive
Securities and Global Securities at the
Registrar's request.
(ii) No service charge shall be made to a Holder
for any registration of transfer or exchange
(except as otherwise expressly permitted
herein), but the Company may require payment
of a sum sufficient to cover any transfer tax
or similar governmental charge payable in
connection therewith (other than such transfer
tax or similar governmental charge payable
upon exchanges pursuant to Section 8.05
hereof).
(iii) The Trustee shall authenticate Definitive
Securities and Global Securities in accordance
with the provisions of Section 2.02 hereof.
(iv) Notwithstanding any other provisions of this
Indenture to the contrary, the Company shall
not be required to register the transfer or
exchange of a Security between the record date
and the next succeeding Interest Payment Date.
(v) Neither the Company nor the Trustee will have
any responsibility or liability for any aspect
of the records relating to, or payments made
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on account of, Securities by the Depositary,
or for maintaining, supervising or reviewing
any records of the Depositary relating to such
Securities. Neither the Company nor the
Trustee shall be liable for any delay by the
related Global Security Holder or the
Depositary in identifying the beneficial
owners of the related Securities and each such
Person may conclusively rely on, and shall be
protected in relying on, instructions from
such Global Security Holder or the Depositary
for all purposes (including with respect to
the registration and delivery, and the
respective principal amounts, of the
Securities to be issued).
SECTION 2.07 Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or the Company
and the Trustee receive evidence to their satisfaction of the destruction, loss
or theft of any Security, the Company shall issue and the Trustee shall
authenticate a replacement Security if the Trustee's requirements are met. If
required by the Trustee, the Company or any Guarantor, such Holder must furnish
an indemnity bond that is sufficient in the judgment of the Trustee, the
Company and the Guarantors to protect the Company, the Guarantors, the Trustee,
any Agent or any authenticating agent from any loss which any of them may
suffer if a Security is replaced. The Company, the Trustee and the Guarantors
may charge for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company
and the Guarantors.
SECTION 2.08 Outstanding Securities.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it, those delivered
to it for cancellation, those reductions in the interest in a Global Security
effected by the Trustee hereunder and those described in this Section 2.08 as
not outstanding.
If a Security is replaced pursuant to Section 2.07 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the principal amount of any Security is considered paid under
Section 3.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
A Security does not cease to be outstanding because the Company, a
Guarantor or an Affiliate of any of them holds the Security.
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SECTION 2.09 Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company, a Guarantor or an Affiliate of any of them shall be
disregarded, except that for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded.
SECTION 2.10 Temporary Securities.
Until Definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of Definitive Securities, but may
have variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate Definitive Securities in exchange for temporary
Securities. Until so exchanged, the temporary Securities shall in all respects
be entitled to the same benefits under this Indenture as Definitive Securities.
SECTION 2.11 Cancellation.
The Company or any Guarantor at any time may deliver Securities to the
Trustee for cancellation. The Registrar and the Paying Agent shall forward to
the Trustee any Securities surrendered to them for registration of transfer,
exchange or payment. The Trustee shall cancel all Securities surrendered for
registration of transfer, exchange, payment, replacement or cancellation.
Unless the Company shall direct that canceled Securities be returned to it,
after written notice to the Company all canceled Securities held by the Trustee
shall be disposed of in accordance with the usual disposal procedures of the
Trustee, and the Trustee shall maintain a record of their disposal. The Company
may not issue new Securities to replace Securities that have been paid or that
have been delivered to the Trustee for cancellation.
SECTION 2.12 Defaulted Interest.
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest on the defaulted interest, in each case at the rate provided
in the Securities and in Section 3.01 hereof. The Company may pay the defaulted
interest to the Persons who are Holders on a subsequent special record date. At
least 15 days before any special record date, the Company (or the Trustee, in
the name of and at the expense of the Company) shall mail to Holders a notice
that states the special record date, the related payment date and the amount of
such interest to be paid.
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SECTION 2.13 Persons Deemed Owners.
The Company, the Trustee, any Agent and any authenticating agent may
treat the Person in whose name any Security is registered as the owner of such
Security for the purpose of receiving payments of principal of or interest on
such Security and for all other purposes. None of the Company, the Trustee, any
Agent or any authenticating agent shall be affected by any notice to the
contrary.
ARTICLE 3
COVENANTS
SECTION 3.01 Payment of Securities.
The Company shall pay the principal of and interest on the Securities
on the dates and in the manner provided in the Securities and in this
Indenture. Principal and interest shall be considered paid on the date due if
the Paying Agent, other than the Company or a Subsidiary of the Company, holds
on that date money deposited by the Company designated for and sufficient to
pay all principal and interest then due.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at a rate equal to
the then applicable interest rate on the Securities to the extent lawful; and
it shall pay interest (including post-petition interest in any proceeding under
any Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace period) at the same rate to the extent lawful.
SECTION 3.02 Maintenance of Office or Agency.
The Company will maintain, in the Borough of Manhattan, The City of New
York, an office or agency (which may be an office of the Trustee, the Registrar
or the Paying Agent) where Securities may be presented for registration of
transfer or exchange, where Securities may be presented for payment and where
notices and demands to or upon the Company in respect of the Securities and
this Indenture may be served. Unless otherwise designated by the Company by
written notice to the Trustee, such office or agency shall be the principal
office of the Trustee, in The City of New York which, on the date hereof, is
located at 77 Water Street, 4th Floor, New York, New York 10005. The Company
will give prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency. If at any time the Company shall
fail to maintain any such required office or agency or shall fail to furnish
the Trustee with the address thereof, such presentations, surrenders, notices
and demands may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for
any or all such purposes and may
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from time to time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, The
City of New York for such purposes. The Company will give prompt written notice
to the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency. The Company hereby designates the
Corporate Trust Office of the Trustee as one such office or agency of the
Company in accordance with Section 2.03 hereof.
SECTION 3.03 SEC Reports; Financial Statements.
(a) The Company shall file with the Trustee, within 15 days after
it files the same with the SEC, copies of the annual reports and the
information, documents and other reports (or copies of such portions of any of
the foregoing as the SEC may by rules and regulations prescribe) that the
Company is required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act. If the Company is not subject to the requirements of such Section
13 or 15(d), the Company shall file with the Trustee, within 15 days after it
would have been required to file the same with the SEC, financial statements,
including any notes thereto (and with respect to annual reports, an auditors'
report by a firm of established national reputation), and a "Management's
Discussion and Analysis of Financial Condition and Results of Operations," both
comparable to that which the Company would have been required to include in
such annual reports, information, documents or other reports if the Company had
been subject to the requirements of such Section 13 or 15(d). The Company shall
also comply with the provisions of TIA Section 314(a).
(b) If the Company is required to furnish annual or quarterly
reports to its stockholders pursuant to the Exchange Act, the Company shall
cause any annual report furnished to its stockholders generally and any
quarterly or other financial reports furnished by it to its stockholders
generally to be filed with the Trustee and mailed to the Holders at their
addresses appearing in the register of Securities maintained by the Registrar.
If the Company is not required to furnish annual or quarterly reports to its
stockholders pursuant to the Exchange Act, the Company shall cause its
financial statements referred to in Section 3.03(a) hereof, including any notes
thereto (and with respect to annual reports, an auditors' report by a firm of
established national reputation), and a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" to be so mailed to the
Holders within 90 days after the end of each of the Company's fiscal years and
within 60 days after the end of each of the Company's first three fiscal
quarters.
(c) For so long as any Transfer Restricted Securities remain
outstanding, the Company shall furnish to all Holders and prospective
purchasers of the Securities designated by the Holders of Transfer Restricted
Securities, promptly upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
(d) The Company shall provide the Trustee with a sufficient number
of copies of all reports and other documents and information that the Trustee
may be required to deliver to Holders under this Section 3.03.
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SECTION 3.04 Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company, a statement signed by two Officers
of the Company, which need not constitute an Officers' Certificate, complying
with TIA Section 314(a)(4) and stating that in the course of performance by the
signing Officers of the Company of their duties as such Officers of the Company
they would normally obtain knowledge of the keeping, observing, performing and
fulfilling by the Company of its obligations under this Indenture, and further
stating, as to each such Officer signing such statement, that to the best of
his knowledge the Company and each Guarantor has kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions hereof (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which such Officer may
have knowledge and what action the Company or such Guarantor, as the case may
be, is taking or proposes to take with respect thereto).
(b) The Company and the Guarantors shall, so long as any of the
Securities are outstanding, deliver to the Trustee, forthwith upon any Officer
of the Company or any Guarantor becoming aware of any Default or Event of
Default under this Indenture, an Officers' Certificate specifying such Default
or Event of Default and what action the Company or such Guarantor is taking or
proposes to take with respect thereto.
SECTION 3.05 Corporate Existence.
Subject to Article 4 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate, partnership and other existence of each
of its Subsidiaries and all rights (charter and statutory) and franchises of
the Company and its Subsidiaries, provided that the Company shall not be
required to preserve the corporate existence of any Subsidiary of the Company
or any such right or franchise if the Board of Directors shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of the Company and its Subsidiaries taken as a whole and that the loss thereof
would not have a material adverse effect on the business, prospects, assets or
financial condition of the Company and its Subsidiaries taken as a whole and
would not have any material adverse effect on the payment and performance of
the obligations of the Company and the Guarantors under the Securities and this
Indenture.
SECTION 3.06 Maintenance of Properties.
The Company shall cause all material properties owned by or leased to
the Company or any Subsidiary of the Company or used or held for use in the
conduct of its business or the business of any such Subsidiary to be maintained
and kept in good condition, repair and working order (reasonable wear and tear
excepted) and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may
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be necessary so that the business carried on in connection therewith may be
properly conducted at all times; provided that nothing in this Section 3.06
shall prevent the Company from discontinuing the operation or maintenance of
any of such properties if such discontinuance is, in the judgment of the
Company, desirable in the conduct of its business or the business of any such
Subsidiary and not disadvantageous in any material respect to the Holders.
SECTION 3.07 Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments
and governmental charges levied or imposed upon the Company or any of its
Subsidiaries or upon the income, profits or property of the Company or any of
its Subsidiaries, and (ii) all material lawful claims for labor, materials and
supplies which, if unpaid, might by law become a Lien upon the property of the
Company or any of its Subsidiaries; provided that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith, and, if necessary, by appropriate proceedings.
SECTION 3.08 Waiver of Stay, Extension or Usury Laws.
The Company and each Guarantor covenant (to the extent that they may
lawfully do so) that they will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law, which would prohibit or forgive
the Company or any Guarantor from paying all or any portion of the principal of
or interest on the Securities as contemplated herein, wherever enacted, now or
at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that they may lawfully do so)
the Company and each Guarantor hereby expressly waive all benefit or advantage
of any such law, and covenant that they will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been
enacted.
SECTION 3.09 Limitation on Sale/Leaseback Transactions.
The Company shall not, and shall not permit any Subsidiary of the
Company to, enter into any Sale/Leaseback Transaction with any Person (other
than the Company or a Subsidiary of the Company) unless:
(a) the Company or such Subsidiary would be entitled to incur
Indebtedness, in a principal amount equal to the Attributable Indebtedness with
respect to such Sale/Leaseback Transaction, secured by a Lien on the property
subject to such Sale/Leaseback Transaction pursuant to Section 3.10 hereof
without equally and ratably securing the Securities pursuant to such Section;
(b) after the Issue Date and within a period commencing six months
prior to the consummation of such Sale/Leaseback Transaction and ending six
months after the consummation
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thereof, the Company or such Subsidiary shall have expended for property used
or to be used in the ordinary course of business of the Company and its
Subsidiaries an amount equal to all or a portion of the Net Proceeds of such
Sale/Leaseback Transaction and the Company shall have elected to designate such
amount as a credit against such Sale/Leaseback Transaction (with any such
amount not being so designated to be applied as set forth in clause (c) below);
or
(c) the Company, during the 12-month period after the effective
date of such Sale/Leaseback Transaction, shall have applied to the voluntary
defeasance or retirement of Securities or any Pari Passu Indebtedness an amount
equal to the greater of the Net Proceeds of the sale or transfer of the
property leased in such Sale/Leaseback Transaction and the fair value, as
determined by the Board of Directors, of such property at the time of entering
into such Sale/Leaseback Transaction (in either case adjusted to reflect the
remaining term of the lease and any amount expended by the Company as set forth
in clause (b) above), less an amount equal to the principal amount of
Securities and Pari Passu Indebtedness voluntarily defeased or retired by the
Company within such 12-month period and not designated as a credit against any
other Sale/Leaseback Transaction entered into by the Company or any Subsidiary
of the Company during such period.
SECTION 3.10 Limitation on Liens.
The Company shall not, and shall not permit any Subsidiary of the
Company to, issue, assume or guarantee any Indebtedness for borrowed money
secured by any Lien on any property or asset now owned or hereafter acquired by
the Company or such Subsidiary without making effective provision whereby any
and all Securities then or thereafter outstanding will be secured by a Lien
equally and ratably with any and all other obligations thereby secured for so
long as any such obligations shall be so secured. Notwithstanding the
foregoing, the Company or any Subsidiary of the Company may, without so
securing the Securities, issue, assume or guarantee Indebtedness for borrowed
money secured by the following Liens:
(a) Liens existing on the Issue Date or provided for under the
terms of agreements existing on the Issue Date securing Indebtedness existing
on the Issue Date (including, without limitation, the Lien provided for
pursuant to Section 6.07 hereof);
(b) Liens on property securing (i) all or any portion of the cost
of acquiring, constructing, altering, improving or repairing any property or
assets, real or personal, or improvements used or to be used in connection with
such property or (ii) Indebtedness incurred by the Company or any Subsidiary of
the Company prior to or within one year after the later of the acquisition, the
completion of construction, alteration, improvement or repair or the
commencement of commercial operation thereof, which Indebtedness is incurred
for the purpose of financing all or any part of the purchase price thereof or
construction or improvements thereon;
(c) Liens securing Indebtedness owed by a Subsidiary of the
Company to the Company or to any other Subsidiary of the Company;
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(d) Liens on the property of any Person existing at the time such
Person becomes a Subsidiary of the Company and not incurred as a result of (or
in connection with or in anticipation of) such Person's becoming a Subsidiary
of the Company, provided that such Liens do not extend to or cover any property
or assets of the Company or any of its Subsidiaries other than the property
encumbered at the time such Person becomes a Subsidiary of the Company and do
not secure Indebtedness with a principal amount in excess of the principal
amount outstanding at such time;
(e) Liens on any property securing (i) Indebtedness incurred in
connection with the construction, installation or financing of pollution
control or abatement facilities or other forms of industrial revenue bond
financing or (ii) Indebtedness issued or guaranteed by the United States or any
State thereof or any department, agency or instrumentality of either;
(f) any Lien extending, renewing or replacing (or successive
extensions, renewals or replacements of) any Lien of any type permitted under
clause (a), (b), (d) or (e) above, provided that such Lien extends to or covers
only the property that is subject to the Lien being extended, renewed or
replaced and that the principal amount of the Indebtedness secured thereby
shall not exceed the principal amount of Indebtedness so secured at the time of
such extension, renewal or replacement; or
(g) Liens (exclusive of any Lien of any type otherwise permitted
under clauses (a) through (f) above) securing Indebtedness for borrowed money
of the Company or any Subsidiary of the Company in an aggregate principal
amount which, together with the aggregate amount of Attributable Indebtedness
deemed to be outstanding in respect of all Sale/Leaseback Transactions entered
into pursuant to clause (a) of Section 3.09 hereof (exclusive of any such
Sale/Leaseback Transactions otherwise permitted under clauses (a) through (f)
above), does not at the time such Indebtedness is incurred exceed 10% of the
Consolidated Net Worth of the Company (as shown in the most recent audited
consolidated balance sheet of the Company and its Subsidiaries).
SECTION 3.11 Registration Rights Agreement.
The Company shall perform its obligations under the Registration
Rights Agreement and shall comply in all material respects with the terms and
conditions contained therein including, without limitation, the payment of
additional interest (as described in Section 2(e) of the Registration Rights
Agreement).
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ARTICLE 4
SUCCESSORS
SECTION 4.01 Limitations on Mergers and Consolidations.
Neither the Company nor any Guarantor shall consolidate with or merge
into any Person, or sell, lease, convey, transfer or otherwise dispose of all
or substantially all of its assets to any Person, unless:
(i) the Person formed by or surviving such
consolidation or merger (if other than the
Company or such Guarantor, as the case may
be), or to which such sale, lease,
conveyance, transfer or other disposition
shall be made (collectively, the
"Successor"), is a corporation organized and
existing under the laws of the United States
or any State thereof or the District of
Columbia (or, alternatively, in the case of a
Guarantor organized under the laws of a
jurisdiction outside the United States, a
corporation organized and existing under the
laws of such foreign jurisdiction), and the
Successor assumes by supplemental indenture
in a form satisfactory to the Trustee all of
the obligations of the Company or such
Guarantor, as the case may be, under this
Indenture and the Securities;
(ii) immediately after giving effect to such
transaction, no Default or Event of Default
shall have occurred and be continuing; and
(iii) the Company shall have delivered to the
Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that the
transaction and such supplemental indenture
comply with this Indenture.
SECTION 4.02 Successor Corporation Substituted.
Upon any consolidation or merger of the Company or any Guarantor, or
any sale, lease, conveyance, transfer or other disposition of all or
substantially all of the assets of the Company or any Guarantor in accordance
with Section 4.01 hereof, the Successor formed by such consolidation or into or
with which the Company or such Guarantor is merged or to which such sale,
lease, conveyance, transfer or other disposition or assignment is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company or such Guarantor, as the case may be, under this Indenture and the
Securities with the same effect as if such Successor had
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been named as the Company or such Guarantor herein and the predecessor Company
or Guarantor, in the case of a sale, conveyance, transfer or other disposition,
shall be released from all obligations under this Indenture and the Securities.
ARTICLE 5
DEFAULTS AND REMEDIES
SECTION 5.01 Events of Default.
An "Event of Default" occurs if:
(1) the Company or any Guarantor defaults in the payment of
interest on any Security when the same becomes due and payable and such
default continues for a period of 30 days;
(2) the Company or any Guarantor defaults in the payment of
the principal of any Security when the same becomes due and payable at
maturity, upon acceleration or otherwise;
(3) the Company or any Guarantor fails to comply with any of
its other agreements or covenants in, or provisions of, the Securities,
the Guarantees or this Indenture and such failure continues for the
period and after the notice specified in the last paragraph of this
Section 5.01;
(4) any default shall occur which results in the
acceleration of the maturity of any Indebtedness of the Company or any
Subsidiary of the Company (other than the Securities or any
Non-Recourse Indebtedness) having an outstanding principal amount of
$20 million or more individually or, taken together with all other such
Indebtedness that has been so accelerated, in the aggregate; or any
default shall occur in the payment of any principal or interest in
respect of any Indebtedness of the Company or any Subsidiary of the
Company (other than the Securities or any Non-Recourse Indebtedness)
having an outstanding principal amount of $20 million or more
individually or, taken together with all other such Indebtedness with
respect to which any such payment has not been made, in the aggregate
and such default shall be continuing for a period of 30 days without
the Company or such Subsidiary, as the case may be, effecting a cure of
such default;
(5) a judgment or order for the payment of money in excess
of $20 million (net of applicable insurance coverage) shall be rendered
against the Company, any Guarantor or any other "significant
subsidiary" (as such term is defined in Regulation S-X under the
Exchange Act; a "Significant Subsidiary") of the Company and such
judgment or order shall continue unsatisfied and unstayed for a period
of 30 days;
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(6) the Company, any Guarantor or any other Significant
Subsidiary of the Company pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it
in an involuntary case,
(C) consents to the appointment of a Custodian of it or for
all or for a substantial part of its property, or
(D) makes a general assignment for the benefit of its
creditors; or
(7) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that remains unstayed and in effect for
60 days and that:
(A) is for relief against the Company, any Guarantor or any
other Significant Subsidiary of the Company as debtor in an involuntary
case,
(B) appoints a Custodian of the Company, any Guarantor or
any other Significant Subsidiary of the Company or a Custodian for all
or for a substantial part of the property of the Company, any Guarantor
or any other Significant Subsidiary of the Company, or
(C) orders the liquidation of the Company, any Guarantor or
any other Significant Subsidiary of the Company.
The term "Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.
The Trustee shall not be deemed to know of a Default unless a Trust
Officer at the Corporate Trust Office of the Trustee has actual knowledge of
such Default or the Trustee receives written notice at the Corporate Trust
Office of the Trustee of such Default with specific reference to such Default.
When a Default is cured, it ceases.
A Default under clause (3) of this Section is not an Event of Default
until the Trustee notifies the Company and, in the case of a Default by a
Guarantor, such Guarantor, or the Holders of at least 25% in principal amount
of the then outstanding Securities notify the Company, such Guarantor (where
applicable) and the Trustee, of the Default, and neither the Company nor such
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Guarantor cures the Default within 60 days after receipt of the notice. The
notice must specify the Default, demand that it be remedied and state that the
notice is a "Notice of Default."
SECTION 5.02 Acceleration.
If an Event of Default (other than an Event of Default specified in
clause (6) or (7) of Section 5.01 hereof with respect to the Company or any
Guarantor) occurs and is continuing, the Trustee by notice to the Company, or
the Holders of at least 25% in principal amount of the then outstanding
Securities by notice to the Company and the Trustee, may declare the principal
of and accrued and unpaid interest on all then outstanding Securities to be due
and payable immediately. Upon any such declaration the amounts due and payable
on the Securities, as determined in accordance with the next succeeding
paragraph, shall be due and payable immediately. If an Event of Default
specified in clause (6) or (7) of Section 5.01 hereof with respect to the
Company or any Guarantor occurs, such amounts shall ipso facto become and be
immediately due and payable without any declaration, notice or other act on the
part of the Trustee or any Holder. The Holders of a majority in principal
amount of the then outstanding Securities by written notice to the Trustee may
rescind an acceleration and its consequences (other than nonpayment of
principal of or interest on the Securities) if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived, except nonpayment of principal or interest that has
become due solely because of the acceleration.
In the event that the maturity of the Securities is accelerated
pursuant to this Section 5.02, 100% of the principal amount thereof shall
become due and payable plus accrued interest to the date of payment.
SECTION 5.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal of or interest on the
Securities or to enforce the performance of any provision of the Securities,
this Indenture or the Registration Rights Agreement.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
SECTION 5.04 Waiver of Existing Defaults.
Subject to Sections 5.07 and 8.02 hereof, the Holders of a majority in
principal amount of the then outstanding Securities by notice to the Trustee
may waive an existing Default or Event of Default and its consequences
(including waivers obtained in connection with a tender offer or exchange offer
for Securities or a solicitation of consents in respect of Securities, provided
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that in each case such offer or solicitation is made to all Holders of then
outstanding Securities on equal terms), except (1) a continuing Default or
Event of Default in the payment of the principal of or interest on any Security
or (2) a continued Default in respect of a provision that under Section 8.02
hereof cannot be amended without the consent of each Holder affected. Upon any
such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default
or impair any right consequent thereon.
SECTION 5.05 Control by Majority.
The Holders of a majority in principal amount of the then outstanding
Securities may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it hereunder. However, the Trustee may refuse to follow any
direction that conflicts with applicable law or this Indenture, that the
Trustee determines may be unduly prejudicial to the rights of other Holders, or
that may involve the Trustee in personal liability; provided, however, that the
Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction. Prior to taking any action hereunder, the
Trustee shall be entitled to indemnification satisfactory to it in its sole
discretion against all losses and expenses caused by taking or not taking such
action.
SECTION 5.06 Limitations on Suits.
Subject to Section 5.07 hereof, a Holder may pursue a remedy with
respect to this Indenture (including the Guarantees) or the Securities only if:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(2) the Holders of at least 25% in principal amount of the then
outstanding Securities make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee indemnity
reasonably satisfactory to the Trustee against any loss, liability or
expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority in
principal amount of the Securities do not give the Trustee a direction
inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
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SECTION 5.07 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment of principal of and interest on the
Security, on or after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such payment on or after such respective
dates, is absolute and unconditional and shall not be impaired or affected
without the consent of the Holder.
SECTION 5.08 Collection Suit by Trustee.
If an Event of Default specified in clause (1) or (2) of Section 5.01
hereof occurs and is continuing, the Trustee is authorized to recover judgment
in its own name and as trustee of an express trust against the Company and any
Guarantor for the amount of principal and interest remaining unpaid on the
Securities, and interest on overdue principal and, to the extent lawful,
interest on overdue interest, and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
SECTION 5.09 Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other papers
or documents and to take such actions, including participating as a member,
voting or otherwise, of any committee of creditors, as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and the Holders allowed in any judicial
proceedings relative to the Company and any Guarantor or their respective
creditors or properties and shall be entitled and empowered to collect, receive
and distribute any money or other property payable or deliverable on any such
claims and any Custodian in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 6.07 hereof. To the extent
that the payment of any such compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 6.07 hereof out of the estate in any such proceeding, shall be
denied for any reason, payment of the same shall be secured by a Lien on, and
shall be paid out of, any and all distributions, dividends, money, securities
and other properties which the Holders of the Securities may be entitled to
receive in such proceeding whether in liquidation or under any plan of
reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
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SECTION 5.10 Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee for amounts due under Section 6.07 hereof;
Second: to Holders for amounts due and unpaid on the Securities for
principal and interest ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for principal
and interest, respectively; and
Third: to the Company.
The Trustee, upon prior written notice to the Company, may fix a record
date and payment date for any payment to Holders pursuant to this Article.
SECTION 5.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 5.07 hereof, or a suit by a Holder or Holders of more than
10% in principal amount of the then outstanding Securities.
ARTICLE 6
TRUSTEE
SECTION 6.01 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in such exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
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(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine such certificates and opinions to determine
whether or not, on their face, they appear to conform to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b) and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee may refuse to
perform any duty or exercise any right or power unless it receives indemnity
reasonably satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law. All money received by the Trustee shall,
until applied as herein provided, be held in trust for the payment of the
principal of and interest on the Securities.
SECTION 6.02 Rights of Trustee.
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The
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Trustee may consult with counsel and the written advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights
or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company or any Guarantor shall be
sufficient if signed by an Officer of the Company or such Guarantor.
SECTION 6.03 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company, the
Guarantors or any of their Affiliates with the same rights it would have if it
were not Trustee. Any Agent may do the same with like rights. However, the
Trustee is subject to Sections 6.10 and 6.11 hereof.
SECTION 6.04 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities or any money paid to the Company or
upon the Company's direction under any provision hereof, it shall not be
responsible for the use or application of any money received by any Paying
Agent other than the Trustee and it shall not be responsible for any statement
or recital herein or any statement in the Securities other than its certificate
of authentication.
SECTION 6.05 Notice of Defaults.
If a Default or Event of Default occurs and is continuing and it is
known to the Trustee, the Trustee shall mail to Holders a notice of the Default
or Event of Default within 45 days after it occurs. Except in the case of a
Default or Event of Default in payment of principal of or interest on any
Security, the Trustee may withhold the notice if and so long as a committee of
its Trust Officers in good faith determines that withholding the notice is in
the interests of Holders.
SECTION 6.06 Reports by Trustee to Holders.
Within 60 days after each January 31, beginning with January 31, 1996,
and in any event prior to March 31 in each year, the Trustee shall mail to
Holders a brief report dated as of such
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reporting date that complies with TIA Section 313(a); provided, however, that if
no event described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted. The Trustee also
shall comply with TIA Section 313(b). The Trustee shall also transmit by mail
all reports as required by TIA Sections 313(c) and 313(d).
A copy of each report at the time of its mailing to Holders shall be
filed with the SEC and each securities exchange, if any, on which the
Securities are listed. The Company shall notify the Trustee if and when the
Securities are listed on any stock exchange.
SECTION 6.07 Compensation and Indemnity.
The Company and the Guarantors jointly and severally agree to pay to
the Trustee from time to time reasonable compensation for its acceptance of
this Indenture and services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The
Company and the Guarantors jointly and severally agree to reimburse the Trustee
upon request for all reasonable disbursements, advances and expenses incurred
by it. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents and counsel.
The Company and the Guarantors jointly and severally agree to indemnify
the Trustee against any loss, liability or expense incurred by it arising out
of or in connection with the acceptance or administration of its duties under
this Indenture, except as set forth in the next paragraph. The Trustee shall
notify the Company and the Guarantors promptly of any claim for which it may
seek indemnity. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Company
and the Guarantors shall pay the reasonable fees and expenses of such counsel.
The Company need not pay for any settlement made without its consent.
Neither the Company nor the Guarantors shall be obligated to reimburse
any expense or indemnify against any loss or liability incurred by the Trustee
through negligence or bad faith.
To secure the payment obligations of the Company and the Guarantors in
this Section 6.07, the Trustee shall have a Lien prior to the Securities on all
money or property held or collected by the Trustee, except that held in trust
to pay principal of and interest on the Securities. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.01(6) or (7) hereof occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
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SECTION 6.08 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 6.08.
The Trustee may resign and be discharged from the trust hereby created
by so notifying the Company and the Guarantors. The Holders of a majority in
principal amount of the then outstanding Securities may remove the Trustee by
so notifying the Trustee and the Company. The Company may remove the Trustee
if:
(1) the Trustee fails to comply with Section 6.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(3) a Custodian or public officer takes charge of the Trustee or its
property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company and the Guarantors shall promptly
appoint a successor Trustee. Within one year after the successor Trustee takes
office, the Holders of a majority in principal amount of the Securities may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of at least 10% in principal amount of the then outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 6.10 hereof, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company and the Guarantors.
Thereupon the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. The successor Trustee shall mail a
notice of its succession to Holders. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, subject
to the Lien provided for in Section 6.07 hereof. Notwithstanding replacement of
the Trustee pursuant to this Section 6.08 hereof, the obligations of the
Company and the Guarantors under Section 6.07 hereof shall continue for the
benefit of the retiring Trustee.
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SECTION 6.09 Successor Trustee by Merger, etc.
Subject to Section 6.10 hereof, if the Trustee consolidates, merges or
converts into, or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation without any further
act shall be the successor Trustee; provided, however, that in the case of a
transfer of all or substantially all of its corporate trust business to another
corporation, the transferee corporation expressly assumes all of the Trustee's
liabilities hereunder.
In case any Securities shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion
or consolidation to such authenticating Trustee may adopt such authentication
and deliver the Securities so authenticated; and in case at that time any of
the Securities shall not have been authenticated, any successor to the Trustee
may authenticate such Securities either in the name of any predecessor
hereunder or in the name of the successor to the Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the
Securities or in this Indenture provided that the certificate of the Trustee
shall have.
SECTION 6.10 Eligibility; Disqualification.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia and authorized under
such laws to exercise corporate trust power, shall be subject to supervision or
examination by Federal or State (or the District of Columbia) authority and
shall have, or be a Subsidiary of a bank or bank holding company having, a
combined capital and surplus of at least $50 million as set forth in its most
recent published annual report of condition.
The Indenture shall always have a Trustee who satisfies the
requirements of TIA Sections 310(a)(1), 310(a)(2) and 310(a)(5). The Trustee is
subject to and shall comply with the provisions of TIA Section 310(b) during the
period of time required by this Indenture. Nothing in this Indenture shall
prevent the Trustee from filing with the SEC the application referred to in the
penultimate paragraph of TIA Section 310(b).
SECTION 6.11 Preferential Collection of Claims Against Company.
The Trustee is subject to and shall comply with the provisions of TIA
Section 311(a), excluding any creditor relationship listed in TIA Section
311(b). A Trustee who has resigned or been removed shall be subject to TIA
Section 311(a) to the extent indicated therein.
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ARTICLE 7
DISCHARGE OF INDENTURE
SECTION 7.01 Termination of Company's Obligations.
(a) This Indenture shall cease to be of further effect (except that
the Company's and the Guarantors' obligations under Section 6.07 hereof and the
Trustee's and Paying Agent's obligations under Section 7.03 hereof shall
survive), and the Trustee, on demand of the Company, shall execute proper
instruments acknowledging the satisfaction and discharge of this Indenture,
when:
(1) either
(A) all outstanding Securities theretofore authenticated and
issued (other than destroyed, lost or stolen Securities that have been
replaced or paid) have been delivered to the Trustee for cancellation;
or
(B) all outstanding Securities not theretofore delivered to
the Trustee for cancellation:
(i) have become due and payable, or
(ii) will become due and payable at their stated
maturity within one year,
and the Company, in the case of clause (i) or (ii) above, has deposited
or caused to be deposited with the Trustee as funds (immediately
available to the Holders in the case of clause (i)) in trust for such
purpose an amount which, together with earnings thereon, will be
sufficient to pay and discharge the entire indebtedness on such
Securities for principal and interest to the date of such deposit (in
the case of Securities which have become due and payable) or to the
stated maturity, as the case may be;
(2) the Company has paid all other sums payable by it hereunder; and
(3) the Company has delivered to the Trustee an Officers'
Certificate stating that all conditions precedent to satisfaction and
discharge of this Indenture have been complied with, together with an
Opinion of Counsel to the same effect.
(b) The Company and the Guarantors may, subject as provided herein,
terminate all of their obligations under this Indenture if:
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(1) the Company has irrevocably deposited or caused to be
irrevocably deposited with the Trustee as trust funds in trust for the
purpose of making the following payments, specifically pledged as security
for and dedicated solely to the benefit of the Holders, (i) cash in an
amount, or (ii) U.S. Government Obligations, maturing as to principal and
interest at such times and in such amounts as will insure the availability
of cash in an amount or (iii) a combination thereof, sufficient, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to
pay, without consideration of the reinvestment of any such amounts and
after payment of all taxes or other charges or assessments in respect
thereof payable by the Trustee, the principal and interest on all
Securities on each date that such principal or interest is due and payable
and to pay all other sums payable by it hereunder; provided that the
Trustee shall have been irrevocably instructed to apply such money and/or
the proceeds of such U.S. Government Obligations to the payment of said
principal and interest with respect to the Securities as the same shall
become due;
(2) the Company has delivered to the Trustee an Officers'
Certificate stating that all conditions precedent to satisfaction and
discharge of this Indenture have been complied with, and an Opinion of
Counsel to the same effect;
(3) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or, insofar as clauses (6) and (7)
of Section 5.01 hereof are concerned, at any time during the period ending
on the 91st day after the date of such deposit (it being understood that
this condition shall not be deemed satisfied until the expiration of such
period);
(4) the Company shall have delivered to the Trustee an Opinion of
Counsel from a nationally recognized counsel acceptable to the Trustee or a
tax ruling to the effect that the Holders will not recognize income, gain
or loss for Federal income tax purposes as a result of the Company's
exercise of its option under this Section 7.01(b) and will be subject to
Federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such option had not been
exercised;
(5) such deposit and discharge will not result in a breach or
violation of, or constitute a default under, any other agreement or
instrument to which the Company is a party or by which it is bound;
(6) such deposit and discharge shall not cause the Trustee to have
a conflicting interest as defined in TIA Section 310(b); and
(7) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that after the passage of 91 days following the
deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally.
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In such event, this Indenture shall cease to be of further effect
(except as provided in the next succeeding paragraph), and the Trustee, on
demand of the Company, shall execute proper instruments acknowledging
satisfaction and discharge under this Indenture.
However, the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06,
2.07, 3.01, 4.01, 6.07, 6.08 and 7.04 hereof, the Company's and the Guarantors'
obligations in Sections 4.01, 6.07, 7.04 and 9.01 hereof and the Trustee's and
Paying Agent's obligations in Section 7.03 hereof shall survive until the
Securities are no longer outstanding. Thereafter, only the Company's and the
Guarantors' obligations in Section 6.07 hereof and the Trustee's and Paying
Agent's obligations in Section 7.03 hereof shall survive.
After such irrevocable deposit made pursuant to this Section 7.01(b)
and satisfaction of the other conditions set forth herein, the Trustee upon
request shall acknowledge in writing the discharge of the Company's obligations
under this Indenture except for those surviving obligations specified above.
In order to have money available on a payment date to pay principal of
or interest on the Securities, the U.S. Government Obligations shall be payable
as to principal or interest on or before such payment date in such amounts as
will provide the necessary money. U.S. Government Obligations shall not be
callable at the issuer's option.
SECTION 7.02 Application of Trust Money.
The Trustee or a trustee satisfactory to the Trustee and the Company
shall hold in trust money or U.S. Government Obligations deposited with it
pursuant to Section 7.01 hereof. It shall apply the deposited money and the
money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal of and interest on
the Securities.
SECTION 7.03 Repayment to Company.
The Trustee and the Paying Agent shall promptly pay to the Company upon
written request any excess money or securities held by them at any time.
Subject to the requirements of any applicable abandoned property laws,
the Trustee and the Paying Agent shall pay to the Company upon written request
any money held by them for the payment of principal or interest that remains
unclaimed for two years after the date upon which such payment shall have
become due; provided, however, that the Company shall have either caused notice
of such payment to be mailed to each Holder entitled thereto no less than 30
days prior to such repayment or within such period shall have published such
notice in a financial newspaper of widespread circulation published in The City
of New York. After payment to the Company, Holders entitled to the money must
look to the Company for payment as general creditors unless an
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applicable abandoned property law designates another Person, and all liability
of the Trustee and the Paying Agent with respect to such money shall cease.
SECTION 7.04 Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with Section 7.01 hereof by reason
of any legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the obligations of the Company and the Guarantors under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 7.01 hereof until such time as the
Trustee or the Paying Agent is permitted to apply all such money or U.S.
Government Obligations in accordance with Section 7.01 hereof; provided,
however, that if the Company or any Guarantor has made any payment of principal
of or interest on any Securities because of the reinstatement of its
obligations, the Company or such Guarantor shall be subrogated to the rights of
the Holders of such Securities to receive such payment from the money or U.S.
Government Obligations held by the Trustee or the Paying Agent.
ARTICLE 8
AMENDMENTS
SECTION 8.01 Without Consent of Holders.
The Company, the Guarantors and the Trustee may amend or supplement
this Indenture or the Securities or waive any provision hereof or thereof
without the consent of any Holder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Section 4.01 hereof;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(4) to reflect the release of any Guarantor from its Guarantee, or
the addition of any Subsidiary of the Company as a Guarantor, in the manner
provided by this Indenture;
(5) to comply with any requirement in order to effect or maintain
the qualification of this Indenture under the TIA;
(6) to add guarantees of the Securities;
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(7) to comply with any requirements of the SEC in connection with
qualifying this Indenture under the TIA;
(8) to add to the covenants of the Company or any Guarantor for the
benefit of the Holders or to surrender any right or power herein conferred
upon the Company or any Guarantor; or
(9) to make any change that does not adversely affect the rights
hereunder and under the Registration Rights Agreement of any Holder in any
material respect.
Upon the request of the Company and the Guarantors, accompanied by a
resolution of the Board of Directors and of the board of directors, board of
trustees or managing partners of each Guarantor authorizing the execution of
any such supplemental indenture, and upon receipt by the Trustee of the
documents described in Section 8.06 hereof, the Trustee shall join with the
Company and the Guarantors in the execution of any supplemental indenture
authorized or permitted by the terms of this Indenture and make any further
appropriate agreements and stipulations that may be therein contained. After an
amendment, supplement or waiver under this Section 8.01 becomes effective, the
Company shall mail to the Holders of each Security affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
SECTION 8.02 With Consent of Holders.
Except as provided below in this Section 8.02, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture or the
Securities with the written consent (including consents obtained in connection
with a tender offer or exchange offer for Securities or a solicitation of
consents in respect of Securities, provided that in each case such offer or
solicitation is made to all Holders of then outstanding Securities on equal
terms) of the Holders of at least a majority in principal amount of the then
outstanding Securities.
Upon the request of the Company and the Guarantors, accompanied by a
resolution of the Board of Directors and of the board of directors, board of
trustees or managing partners of each Guarantor authorizing the execution of
any such supplemental indenture, and upon the filing with the Trustee of
evidence of the consent of the Holders as aforesaid, and upon receipt by the
Trustee of the documents described in Section 8.06 hereof, the Trustee shall
join with the Company and the Guarantors in the execution of such supplemental
indenture.
It shall not be necessary for the consent of the Holders under this
Section 8.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
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The Holders of a majority in principal amount of the then outstanding
Securities may waive compliance in a particular instance by the Company or the
Guarantors with any provision of this Indenture or the Securities (including
waivers obtained in connection with a tender offer or exchange offer for
Securities or a solicitation of consents in respect of Securities, provided
that in each case such offer or solicitation is made to all Holders of then
outstanding Securities on equal terms).
However, without the consent of each Holder affected, an amendment,
supplement or waiver under this Section may not:
(1) reduce the amount of Securities whose Holders must consent to
an amendment, supplement or waiver;
(2) reduce the rate of or change the time for payment of interest,
including default interest, on any Security;
(3) reduce the principal of or change the fixed maturity of any
Security;
(4) make any Security payable in money other than that stated in the
Security;
(5) impair the right to institute suit for the enforcement of any
payment of principal of or interest on any Security pursuant to Sections
5.07 and 5.08 hereof, except as limited by Section 5.06 hereof;
(6) make any change in the percentage of principal amount of
Securities necessary to waive compliance with certain provisions of this
Indenture pursuant to Section 5.04 or 5.07 hereof or this clause of this
Section 8.02; or
(7) waive a continuing Default or Event of Default in the payment
of principal of or interest on the Securities.
The right of any Holder to participate in any consent required or
sought pursuant to any provision of this Indenture (and the obligation of the
Company to obtain any such consent otherwise required from such Holder) may be
subject to the requirement that such Holder shall have been the Holder of
record of any Securities with respect to which such consent is required or
sought as of a date identified by the Trustee in a notice furnished to Holders
in accordance with the terms of this Indenture.
SECTION 8.03 Compliance with Trust Indenture Act.
Every amendment to this Indenture or the Securities shall comply in
form and substance with the TIA as then in effect.
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SECTION 8.04 Revocation and Effect of Consents.
Until an amendment (which includes any supplement) or waiver becomes
effective, a consent to it by a Holder is a continuing consent by the Holder
and every subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security, even if notation
of the consent is not made on any Security. However, any such Holder or
subsequent Holder may revoke the consent as to his or her Security or portion
of a Security if the Trustee receives written notice of revocation before the
date the amendment or waiver becomes effective. An amendment, supplement or
waiver becomes effective in accordance with its terms and thereafter binds
every Holder.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment or
waiver or to take any other action under this Indenture. If a record date is
fixed, then notwithstanding the provisions of the immediately preceding
paragraph, those Persons who were Holders at such record date (or their duly
designated proxies), and only those Persons, shall be entitled to consent to
such amendment, supplement or waiver or to revoke any consent previously given,
whether or not such Persons continue to be Holders after such record date. No
consent shall be valid or effective for more than 90 days after such record
date unless consents from Holders of the principal amount of Securities
required hereunder for such amendment or waiver to be effective shall have also
been given and not revoked within such 90-day period.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder, unless it is of the type described in any of clauses (1)
through (7) of Section 8.02 hereof. In such case, the amendment or waiver shall
bind each Holder who has consented to it and every subsequent Holder that
evidences the same debt as the consenting Holder's Security.
SECTION 8.05 Notation on or Exchange of Securities.
If an amendment changes the terms of a Security, the Trustee may
require the Holder of the Security to deliver it to the Trustee. The Trustee
may place an appropriate notation on the Security regarding the changed terms
and return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.
Failure to make the appropriate notation or to issue a new Security shall not
affect the validity of such amendment.
SECTION 8.06 Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article if the amendment or supplemental indenture
does not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may, but need not, sign it. In signing or
refusing to sign such amendment or supplemental indenture, the Trustee shall be
entitled to receive and subject to Section 6.01 hereof, shall be fully
protected in relying upon, an Opinion of
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Counsel as conclusive evidence that such amendment or supplemental indenture is
authorized or permitted by this Indenture, that it is not inconsistent
herewith, and that it will be valid and binding upon the Company and the
Guarantors in accordance with its terms.
ARTICLE 9
GUARANTEES OF SECURITIES
SECTION 9.01 Unconditional Guarantees.
(a) For value received, the Guarantors, jointly and severally,
hereby fully, unconditionally and absolutely guarantee (the "Guarantees") to
the Holders and to the Trustee the due and punctual payment of the principal of
and interest on the Securities and all other amounts due and payable under this
Indenture and the Securities by the Company, when and as such principal and
interest shall become due and payable, whether at the stated maturity or by
declaration of acceleration or otherwise, according to the terms of the
Securities and this Indenture.
(b) Failing payment when due of any amount guaranteed pursuant to
the Guarantees, for whatever reason, each Guarantor will be obligated to pay
the same immediately. Each Guarantee hereunder is intended to be a general,
unsecured, senior obligation of each Guarantor and will rank pari passu in
right of payment with all Indebtedness of each such Guarantor that is not, by
its terms, expressly subordinated in right of payment to the Guarantee of such
Guarantor. Each of the Guarantors hereby agrees that its obligations hereunder
shall be full, unconditional and absolute, irrespective of the validity,
regularity or enforceability of the Securities, the Guarantees or this
Indenture, the absence of any action to enforce the same, any waiver or consent
by any Holder with respect to any provisions hereof or thereof, any release of
any other Guarantor, the recovery of any judgment against the Company, any
action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a Guarantor. Each of
the Guarantors hereby agrees that in the event of a default in payment of the
principal of or interest on the Securities, whether at the stated maturity or
by declaration of acceleration or otherwise, legal proceedings may be
instituted by the Trustee on behalf of the Holders or, subject to Section 5.06
hereof, by the Holders, on the terms and conditions set forth in this
Indenture, directly against each of the Guarantors to enforce the Guarantees
without first proceeding against the Company.
(c) The obligations of each Guarantor under this Article 9 shall be
as aforesaid full, unconditional and absolute and shall not be impaired,
modified, released or limited by any occurrence or condition whatsoever,
including, without limitation, (i) any compromise, settlement, release, waiver,
renewal, extension, indulgence or modification of, or any change in, any of the
obligations and liabilities of the Company or any Guarantor contained in the
Securities or this Indenture, (ii) any impairment, modification, release or
limitation of the liability of the Company, any Guarantor or any of their
estates in bankruptcy, or any remedy for the enforcement thereof, resulting
from the operation of any present or future provision of any applicable
Bankruptcy Law, as amended, or other statute or from the decision of any court,
(iii) the assertion or exercise by the
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Company, any Guarantor or the Trustee of any rights or remedies under the
Securities or this Indenture or their delay in or failure to assert or exercise
any such rights or remedies, (iv) the assignment or the purported assignment of
any property as security for the Securities, including all or any part of the
rights of the Company or any Guarantor under this Indenture, (v) the extension
of the time for payment by the Company or any Guarantor of any payments or
other sums or any part thereof owing or payable under any of the terms and
provisions of the Securities or this Indenture or of the time for performance
by the Company or any Guarantor of any other obligations under or arising out
of any such terms and provisions or the extension or the renewal of any
thereof, (vi) the modification or amendment (whether material or otherwise) of
any duty, agreement or obligation of the Company or any Guarantor set forth in
this Indenture, (vii) the voluntary or involuntary liquidation, dissolution,
sale or other disposition of all or substantially all of the assets, marshaling
of assets and liabilities, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of, or other similar proceeding affecting, the Company or any of
the Guarantors or any of their respective assets, or the disaffirmance of the
Securities, the Guarantees or this Indenture in any such proceeding, (viii) the
release or discharge of the Company or any Guarantor from the performance or
observance of any agreement, covenant, term or condition contained in any of
such instruments by operation of law, (ix) the unenforceability of the
Securities, the Guarantees or this Indenture or (x) any other circumstance
which might otherwise constitute a legal or equitable discharge of a surety or
guarantor.
(d) Each of the Guarantors hereby (i) waives diligence, presentment,
demand of payment, filing of claims with a court in the event of the merger,
insolvency or bankruptcy of the Company or a Guarantor, and all demands
whatsoever, (ii) acknowledges that any agreement, instrument or document
evidencing the Guarantees may be transferred and that the benefit of its
obligations hereunder shall extend to each holder of any agreement, instrument
or document evidencing the Guarantees without notice to them and (iii)
covenants that its Guarantee will not be discharged except by complete
performance of the Guarantees. Each Guarantor further agrees that if at any
time all or any part of any payment theretofore applied by any Person to any
Guarantee is, or must be, rescinded or returned for any reason whatsoever,
including without limitation, the insolvency, bankruptcy or reorganization of
any Guarantor, such Guarantee shall, to the extent that such payment is or must
be rescinded or returned, be deemed to have continued in existence
notwithstanding such application, and the Guarantees shall continue to be
effective or be reinstated, as the case may be, as though such application had
not been made.
(e) Each Guarantor shall be subrogated to all rights of the Holders
and the Trustee against the Company in respect of any amounts paid by such
Guarantor pursuant to the provisions of this Indenture; provided, however, that
no Guarantor shall be entitled to enforce or to receive any payments arising
out of, or based upon, such right of subrogation until all of the Securities
and the Guarantees shall have been paid in full or discharged.
(f) A director, officer, employee or stockholder, as such, of any
Guarantor shall not have any liability for any obligations of such Guarantor
under this Indenture or for any claim based on, in respect of or by reason of
such obligations or their creation.
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SECTION 9.02 Limitation of Guarantor's Liability.
Each Guarantor and by its acceptance hereof each Holder hereby confirms
that it is the intention of all such parties that the guarantee by such
Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or
conveyance for purposes of any federal, state or foreign law. To effectuate the
foregoing intention, the Holders and each Guarantor hereby irrevocably agree
that the obligations of each Guarantor under its Guarantee shall be limited to
the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Guarantor and after giving effect to any collections
from or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guarantee or pursuant to Section
9.03 hereof, result in the obligations of such Guarantor under its Guarantee
not constituting a fraudulent conveyance or fraudulent transfer under federal,
state or foreign law.
SECTION 9.03 Contribution.
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under its
Guarantee, such Funding Guarantor shall be entitled to a contribution from each
other Guarantor in a pro rata amount based on the Adjusted Net Assets of each
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by the Funding Guarantor in discharging the Company's
obligations with respect to the Securities or any other Guarantor's obligations
with respect to its Guarantee.
SECTION 9.04 Execution and Delivery of Guarantees.
To further evidence the Guarantees, each Guarantor hereby agrees that a
notation relating to such Guarantees shall be endorsed on each Security
authenticated and delivered by the Trustee and executed by either manual or
facsimile signature of two Officers of each Guarantor.
Each of the Guarantors hereby agrees that its Guarantee shall remain in
full force and effect notwithstanding any failure to endorse on each Security a
notation relating to such Guarantee.
If an Officer of a Guarantor whose signature is on this Indenture or a
Security no longer holds that office at the time the Trustee authenticates such
Security or at any time thereafter, such Guarantor's Guarantee of such Security
shall be valid nevertheless.
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Guarantee set forth in
this Indenture on behalf of the Guarantor.
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SECTION 9.05 Addition of Guarantors.
(a) If any Subsidiary of the Company guarantees (or becomes a
co-obligor on) any Funded Indebtedness of the Company other than the Securities
at any time subsequent to the Issue Date (including, without limitation,
following any release of such Subsidiary pursuant to Section 9.06 hereof from
any Guarantee previously provided by it under this Article 9), then the Company
shall (i) cause the Securities to be equally and ratably guaranteed by such
Subsidiary, but only to the extent that the Securities are not already
guaranteed by such Subsidiary on reasonably comparable terms and (ii) cause
such Subsidiary to execute and deliver a supplemental indenture evidencing its
provision of a Guarantee in accordance with clause (b) below.
(b) Any Person that was not a Guarantor on the Issue Date may become
a Guarantor by executing and delivering to the Trustee (i) a supplemental
indenture in form and substance satisfactory to the Trustee, which subjects
such Person to the provisions (including the representations and warranties) of
this Indenture as a Guarantor and (ii) an Opinion of Counsel and Officers'
Certificate to the effect that such supplemental indenture has been duly
authorized and executed by such Person and constitutes the legal, valid,
binding and enforceable obligation of such Person (subject to such customary
exceptions concerning creditors' rights and equitable principles as may be
acceptable to the Trustee in its discretion and provided that no opinion need
be rendered concerning the enforceability of the Guarantee).
SECTION 9.06 Release of Guarantee.
Notwithstanding anything to the contrary in this Article 9, in the
event that any Guarantor shall no longer be a guarantor of (or co-obligor on)
any Funded Indebtedness of the Company other than the Securities and other than
Funded Indebtedness of the Company (i) subject to a release provision
substantially similar to this Section 9.06 and (ii) the related guarantee (or
obligation) of which will be released substantially concurrently with the
release of the Guarantee of such Guarantor pursuant to this Section 9.06, and
so long as no Default or Event of Default shall have occurred or be continuing,
such Guarantor, upon giving notice to the Trustee to the foregoing effect,
shall be deemed to be released from all of its obligations under this Indenture
and the Guarantee of such Guarantor shall be of no further force or effect.
Following the receipt by the Trustee of any such notice, the Company shall
cause this Indenture to be amended as provided in Section 8.01 hereof;
provided, however, that the failure to so amend this Indenture shall not affect
the validity of the termination of the Guarantee of such Guarantor.
SECTION 9.07 Consent to Jurisdiction and Service of Process.
Each Guarantor that is not organized under the laws of the United
States (including the States and the District of Columbia) (each a "Non-U.S.
Guarantor") hereby appoints the principal office of CT Corporation System in
The City of New York which, on the date hereof, is located at 1633 Broadway,
New York, New York 10019, as the authorized agent thereof (the "Authorized
Agent") upon whom process may be served in any action, suit or proceeding
arising out of or based
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on this Indenture or the Securities which may be instituted in the Supreme
Court of the State of New York or the United States District Court for the
Southern District of New York, in either case in The Borough of Manhattan, The
City of New York, by the Holder of any Security, and each Non-U.S. Guarantor
hereby waives any objection which it may now or hereafter have to the laying of
venue of any such proceeding and expressly and irrevocably accepts and submits,
for the benefit of the Holders from time to time of the Securities, to the
nonexclusive jurisdiction of any such court in respect of any such action, suit
or proceeding, for itself and with respect to its properties, revenues and
assets. Such appointment shall be irrevocable unless and until the appointment
of a successor authorized agent for such purpose, and such successor's
acceptance of such appointment, shall have occurred. Each Non-U.S. Guarantor
agrees to take any and all actions, including the filing of any and all
documents and instruments, that may be necessary to continue such appointment
in full force and effect as aforesaid. Service of process upon the Authorized
Agent with respect to any such action shall be deemed, in every respect,
effective service of process upon any such Non-U.S. Guarantor. Notwithstanding
the foregoing, any action against any Non-U.S. Guarantor arising out of or
based on any Security may also be instituted by the Holder of such Security in
any court in the jurisdiction of organization of such Non-U.S. Guarantor, and
such Non-U.S. Guarantor expressly accepts the jurisdiction of any such court in
any such action. The Company shall require the Authorized Agent to agree in
writing to accept the foregoing appointment as agent for service of process.
SECTION 9.08 Waiver of Immunity.
To the extent that any Non-U.S. Guarantor or any of its properties,
assets or revenues may have or may hereafter become entitled to, or have
attributed to it, any right of immunity, on the grounds of sovereignty or
otherwise, from any legal action, suit or proceeding, from the giving of any
relief in any thereof, from set-off or counterclaim, from the jurisdiction of
any court, from service of process, from attachment upon or prior to judgment,
from attachment in aid of execution of judgment, or from execution of judgment,
or other legal process or proceeding for the giving of any relief or for the
enforcement of any judgment, in any jurisdiction in which proceedings may at
any time be commenced, with respect to its obligations, liabilities or any
other matter under or arising out of or in connection with this Indenture or
the Securities, such Non-U.S. Guarantor, to the maximum extent permitted by
law, hereby irrevocably and unconditionally waives, and agrees not to plead or
claim, any such immunity and consents to such relief and enforcement.
SECTION 9.09 Judgment Currency.
Each Non-U.S. Guarantor agrees to indemnify the Trustee and each Holder
against any loss incurred by it as a result of any judgment or order being
given or made and expressed and paid in a currency (the "Judgment Currency")
other than United States dollars and as a result of any variation as between
(i) the rate of exchange at which the United States dollar amount is converted
into the Judgment Currency for the purpose of such judgment or order and (ii)
the spot rate of exchange in The City of New York at which the Trustee or such
Holder on the date of payment of such judgment or order is able to purchase
United States dollars with the amount of the Judgment
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Currency actually received by the Trustee or such Holder. The foregoing
indemnity shall constitute a separate and independent obligation of each
Non-U.S. Guarantor and shall continue in full force and effect notwithstanding
any such judgment or order as aforesaid. The term "spot rate of exchange" shall
include any premiums and costs of exchange payable in connection with the
purchase of, or conversion into, United States dollars.
ARTICLE 10
MISCELLANEOUS
SECTION 10.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by operation of TIA Section 318(c), the imposed duties shall
control.
SECTION 10.02 Notices.
Any notice or communication by the Company, the Guarantors or the
Trustee to the others is duly given if in writing and delivered in person or
mailed by first-class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the other's address:
If to the Company or the Guarantors:
BJ Services Company
5500 Northwest Central Drive
Houston, Texas 77092
Attention: General Counsel
If to the Trustee:
Bank of Montreal Trust Company
77 Water Street, 4th Floor
New York, New York 10005
Attention: Corporate Trust Department
The Company, the Guarantors or the Trustee by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications shall be deemed to have been duly given:
at the time delivered by hand, if personally delivered; five Business Days
after being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; when receipt acknowledged, if
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telecopied; and the next Business Day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first-class
mail, postage prepaid, to the Holder's address shown on the register kept by
the Registrar. Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company or any Guarantor mails a notice or communication to
Holders, it shall mail a copy to the Trustee and each Agent at the same time.
All notices or communications, including without limitation notices to
the Trustee or the Company or any Guarantor by Holders, shall be in writing,
except as set forth below.
In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice required
by this Indenture, then such method of notification as shall be made with the
approval of the Trustee shall constitute a sufficient mailing of such notice.
SECTION 10.03 Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Securities. The
Company, the Guarantors, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 10.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company or any Guarantor to the
Trustee to take any action under this Indenture, the Company or such Guarantor
shall, if requested by the Trustee, furnish to the Trustee:
(1) an Officers' Certificate (which shall include the statements set
forth in Section 10.05 hereof) stating that, in the opinion of the signers,
all conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel (which shall include the statements set
forth in Section 10.05 hereof) stating that, in the opinion of such
counsel, all such conditions precedent and covenants have been complied
with.
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<PAGE> 57
SECTION 10.05 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with.
SECTION 10.06 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or the Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 10.07 Legal Holidays.
If a payment date is a Legal Holiday at a place of payment, payment may
be made at that place on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue for the intervening period.
SECTION 10.08 No Recourse Against Others.
A director, officer, employee or stockholder of the Company or any
Guarantor, as such, shall not have any liability for any obligations of the
Company or such Guarantor under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Security waives and releases all such
liability. The waiver and release shall be part of the consideration for the
issue of Securities.
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<PAGE> 58
SECTION 10.09 Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUCTED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
SECTION 10.10 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company, any Guarantor or any other Subsidiary of the
Company. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 10.11 Successors.
All agreements of the Company and the Guarantors in this Indenture and
the Securities shall bind their respective successors. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 10.12 Severability.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 10.13 Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 10.14 Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
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<PAGE> 59
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
BJ SERVICES COMPANY
By:
-----------------------------------
Name:
Title:
Address:
BANK OF MONTREAL TRUST COMPANY
By:
-----------------------------------
Name:
Title:
Address:
BJ SERVICES COMPANY, U.S.A.
By:
-----------------------------------
Name:
Title:
Address:
BJ SERVICE INTERNATIONAL, INC.
By:
-----------------------------------
Name:
Title:
Address:
BJ SERVICES COMPANY MIDDLE EAST
By:
-----------------------------------
Name:
Title:
Address:
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<PAGE> 60
EXHIBIT A
[FACE OF SECURITY]
BJ SERVICES COMPANY
7% SERIES [A/B] NOTE DUE 2006
CUSIP _________(1)
No. $_________
BJ Services Company, a Delaware corporation (the "Company"), for value
received promises to pay to _______________ or registered assigns, the
principal sum of _______________ Dollars on February 1, 2006.
Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
Dated:
[SEAL] BJ SERVICES COMPANY
By:
-----------------------------------
By:
-----------------------------------
Certificate of Authentication:
BANK OF MONTREAL TRUST COMPANY,
as Trustee, certifies that this
is one of the Securities referred
to in the within-mentioned
Indenture.
By:
-----------------------------------
Authorized Signature
- ---------------
(1) So long as the restrictive legend is included on a Definitive
Security, a CUSIP number is not needed for a Definitive
Security transferred to an institutional "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act of 1933).
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[Unless and until it is exchanged in whole or in part for Securities in
definitive form, this Security may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. The Depository Trust Company shall act as the Depositary until a
successor shall be appointed by the Company and the Registrar. Unless this
certificate is presented by an authorized representative of The Depository
Trust Company (55 Water Street, New York, New York) ("DTC"), to the issuer or
its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or such other name
as may be requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or such other entity as may be requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.](2)
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
"AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR
OF THIS SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1),
(2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS
SECURITY FOR ITS OWN ACCOUNT,
- ---------------
(2) This paragraph should be included only if the Security is
issued in global form.
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<PAGE> 62
OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY
OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY
TO EACH OF THEM, AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
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<PAGE> 63
[REVERSE OF SECURITY]
BJ SERVICES COMPANY
7% SERIES [A/B] NOTE DUE 2006
This Security is one of a duly authorized issue of 7% [Series A/Series
B] Notes due 2006 (the "Securities") of BJ Services Company, a Delaware
corporation (the "Company").
1. Interest. The Company promises to pay interest on the principal
amount of this Security at 7% per annum from February 20, 1996 until maturity.
The Company will pay interest semiannually on February 1 and August 1 of each
year (each an "Interest Payment Date"), or if any such day is not a Business
Day, on the next succeeding Business Day. Interest on the Securities will
accrue from the most recent Interest Payment Date on which interest has been
paid or, if no interest has been paid, from February 20, 1996; provided that if
there is no existing Default in the payment of interest, and if this Security
is authenticated between a record date referred to on the face hereof and the
next succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be August 1, 1996. The Company shall pay interest on overdue
principal from time to time on demand at a rate equal to the interest rate then
in effect; it shall pay interest on overdue installments of interest (without
regard to any applicable grace periods) from time to time on demand at the same
rate to the extent lawful. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Securities
(except defaulted interest) to the Persons who are registered Holders of
Securities at the close of business on the record date next preceding the
Interest Payment Date, even if such Securities are canceled after such record
date and on or before such Interest Payment Date. The Holder must surrender
this Security to a Paying Agent to collect principal payments. The Company will
pay the principal of and interest on the Securities in money of the United
States of America that at the time of payment is legal tender for payment of
public and private debts. The Company, however, may pay such amounts by check
payable in such money. It may mail an interest check to a Holder's registered
address.
3. Ranking and Guarantees. The Securities are senior unsecured
obligations of the Company. The Company's obligations to pay principal and
interest with respect to the Securities are unconditionally guaranteed on a
joint and several basis (the "Guarantees") by the guarantors (the
"Guarantors"), parties to the Indenture. Each of the Guarantees is an unsecured
obligation of the Guarantor providing such Guarantee. Certain limitations to
the obligations of the Guarantors are set forth in further detail in the
Indenture. References herein to the Indenture or the Securities shall be deemed
also to refer to the Guarantees set forth in the Indenture except where the
context otherwise requires.
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<PAGE> 64
4. Paying Agent and Registrar. Initially, Bank of Montreal Trust
Company (the "Trustee"), the Trustee under the Indenture, will act as Paying
Agent and Registrar. The Company may change any Paying Agent, Registrar,
co-registrar or additional paying agent without notice to any Holder. The
Company may act in any such capacity.
5. Indenture. The Company issued the Securities under an Indenture
dated as of February 1, 1996 (the "Indenture") among the Company, the
Guarantors and the Trustee. The terms of the Securities include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb), as in
effect on the date of execution of the Indenture. The Securities are subject to
all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. The Securities are unsecured general obligations of
the Company limited to $125,000,000 in aggregate principal amount.
6. Denominations, Transfer, Exchange. The Securities are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Securities may be registered and Securities may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted
by the Indenture. The Registrar need not exchange or register the transfer of
any Securities during the period between a record date and the corresponding
Interest Payment Date.
7. Persons Deemed Owners. The registered Holder of a Security shall be
treated as its owner for all purposes.
8. Amendments and Waivers. Subject to certain exceptions and
limitations, the Indenture or the Securities may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Securities, and any existing Default under, or compliance
with any provision of, the Indenture may be waived (other than any continuing
Default or Event of Default in the payment of the principal of or interest on
the Securities) by the Holders of at least a majority in principal amount of
the Securities then outstanding in accordance with the terms of the Indenture.
Without the consent of any Holder, the Company, the Guarantors and the Trustee
may amend or supplement the Indenture or the Securities to cure any ambiguity,
omission, defect or inconsistency; to provide for uncertificated Securities in
addition to or in place of certificated Securities; to provide for the
assumption of the obligations of the Company and each Guarantor under the
Indenture to Holders in the case of the merger, consolidation or sale or other
disposition of all or substantially all of the assets of the Company or any
Guarantor; to reflect the release of any Guarantor from its Guarantee to the
extent permitted by the Indenture; to add guarantees to the Securities; to add
to the covenants of the Company or the Guarantors or to surrender any right of
the Company or any Guarantor; to make any change that does not materially
adversely affect the rights of any Holder; or to comply with the qualification
of the Indenture under the Trust Indenture Act of 1939, as amended.
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<PAGE> 65
The right of any Holder to participate in any consent required or
sought pursuant to any provision of the Indenture (and the obligation of the
Company to obtain any such consent otherwise required from such Holder) may be
subject to the requirement that such Holder shall have been the Holder of
record of any Securities with respect to which such consent is required or
sought as of a date identified by the Trustee in a notice furnished to Holders
in accordance with the terms of the Indenture.
Without the consent of each Holder affected, the Company may not (i)
reduce the amount of Securities whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the rate of or change the time for payment of
interest, including default interest, on any Security, (iii) reduce the
principal of or change the fixed maturity of any Security, (iv) make any
Security payable in money other than that stated in the Security, (v) impair
the right to institute suit for the enforcement of any payment of principal of
or interest on any Security, (vi) make any change in the percentage of
principal amount of Securities necessary to waive compliance with certain
provisions of the Indenture or (vii) waive a continuing Default or Event of
Default in the payment of principal of or interest on the Securities.
9. Defaults and Remedies. Events of Default include: default in payment
of interest on the Securities for 30 days; default in payment of principal of
the Securities; failure by the Company or any Guarantor for 60 days after
written notice by the Trustee or by the Holders of at least 25% of the
aggregate principal amount of the Securities then outstanding to it to comply
with any of its other covenants or agreements in the Indenture, the Guarantees
or the Securities; the acceleration of the maturity of any Indebtedness of the
Company or any Subsidiary of the Company (other than the Securities or any
Non-Recourse Indebtedness) that has an outstanding principal amount of $20
million or more individually or in the aggregate; a default in the payment of
principal or interest in respect of any Indebtedness of the Company or any
Subsidiary of the Company (other than the Securities or any Non-Recourse
Indebtedness) having an outstanding principal amount of $20 million or more
individually or in the aggregate, and such default shall be continuing for a
period of 30 days without the Company or such Subsidiary, as the case may be,
effecting a cure of such default; a judgment or order for the payment of money
in excess of $20 million (net of applicable insurance coverage) having been
rendered against the Company, any Guarantor or any other "significant
subsidiary" (as such term is defined in Regulation S-X under the Securities
Exchange Act of 1934, as amended; a "Significant Subsidiary") of the Company
and such judgment or order shall continue unsatisfied and unstayed for a period
of 30 days; or certain events involving bankruptcy, insolvency or
reorganization of the Company, any Guarantor or any other Significant
Subsidiary of the Company. If an Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Securities may declare the principal of and interest on all the
Securities to be immediately due and payable, except that in the case of an
Event of Default arising from certain events of bankruptcy, insolvency or
reorganization of the Company or any Guarantor, all outstanding Securities
become due and payable immediately without further action or notice. The amount
due and payable upon the acceleration of any Security is equal to 100% of the
principal amount thereof plus accrued interest to the date of payment. Holders
may not enforce the Indenture or the Securities except as provided in the
Indenture. The
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<PAGE> 66
Trustee may require indemnity reasonably satisfactory to it before it enforces
the Indenture or the Securities. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Securities may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interests. The Company must furnish an annual compliance certificate to the
Trustee.
10. Discharge Prior to Maturity. The Indenture shall be discharged and
canceled upon the payment of all of the Securities and shall be discharged
except for certain obligations upon the irrevocable deposit with the Trustee of
funds or U.S. Government Obligations sufficient for such payment.
11. Trustee Dealings with Company and Guarantors. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company, the Guarantors or their respective
Affiliates, and may otherwise deal with the Company, the Guarantors or their
respective Affiliates, as if it were not Trustee.
12. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company or any Guarantor shall not have any
liability for any obligations of the Company or such Guarantor under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Securities.
13. Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
14. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Securities as a convenience to the Holders
of the Securities. No representation is made as to the accuracy of such numbers
as printed on the Securities and reliance may be placed only on the other
identification numbers printed thereon.
15. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
16. Additional Rights of Holders of Transfer Restricted Securities. In
addition to the rights provided by Holders of Securities under the Indenture,
Holders of Transfer Restricted Securities shall have all the rights set forth
in the Registration Rights Agreement, dated as of the Issue Date (the
"Registration Rights Agreement"), among the Company and the Initial Purchasers.
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<PAGE> 67
THE COMPANY WILL FURNISH TO ANY HOLDER UPON WRITTEN REQUEST AND WITHOUT
CHARGE A COPY OF THE INDENTURE. REQUEST MAY BE MADE TO:
BJ SERVICES COMPANY
5500 NORTHWEST CENTRAL DRIVE
HOUSTON, TEXAS 77092
ATTENTION: GENERAL COUNSEL
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<PAGE> 68
FORM OF NOTATION ON SECURITY
RELATING TO GUARANTEES
Each Guarantor (which term includes any successor Person under the
Indenture), has fully, unconditionally and absolutely guaranteed, to the extent
set forth in the Indenture and subject to the provisions in the Indenture, the
due and punctual payment of the principal of and interest on the Securities and
all other amounts due and payable under the Indenture and the Securities by the
Company.
The obligations of the Guarantors to the Holders of Securities and to
the Trustee pursuant to the Guarantees and the Indenture are expressly set
forth in Article 9 of the Indenture and reference is hereby made to the
Indenture for the precise terms of the Guarantees.
BJ SERVICES COMPANY, U.S.A.
By:
-----------------------------------
By:
-----------------------------------
BJ SERVICE INTERNATIONAL, INC.
By:
-----------------------------------
By:
-----------------------------------
BJ SERVICES COMPANY MIDDLE EAST
By:
-----------------------------------
By:
-----------------------------------
A-9
<PAGE> 69
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and
transfer this Security to_______________________________________________________
(Insert assignee's social security or tax I.D. number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
as agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
________________________________________________________________________________
Date:_____________ Your Signature:______________________________________
(Sign exactly as your name appears on
the face of this Security)
Signature Guarantee:____________________________________________________________
(Participant in a Recognized Signature
Guaranty Medallion Program)
A-10
<PAGE> 70
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITY*
The following exchanges of a part of this Global Security for Definitive
Securities have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of Amount of of this Global Signature of
decrease in increase in Security following authorized officer
Principal Amount Principal Amount such decrease of Trustee or
Date of Exchange of this Global Security of this Global Security (or increase) Security Custodian
---------------- ----------------------- ----------------------- ----------------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
- ------------------------------------------------
* This should be included only if the Security is issued in global form.
A-11
<PAGE> 71
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: 7% Series [A/B] Notes due 2006 of BJ Services Company
This Certificate relates to $_____ principal amount of Securities
held in *______ book-entry or *______ definitive form by _____________________
(the "Transferor").
The Transferor**:
/ / has requested the Trustee by written order to deliver in exchange
for its beneficial interest in the Global Securities held by the Depositary a
Security or Securities in definitive, registered form equal to its beneficial
interest in such Global Securities (or the portion thereof indicated above); or
/ / has requested the Trustee by written order to exchange or register
the transfer of a Security or Securities.
In connection with such request and in respect of each such Security,
the Transferor does hereby certify that the Transferor is familiar with the
Indenture relative to the above captioned Securities and that the transfer of
this Security does not require registration under the Securities Act (as
defined below) because:*
/ / Such Security is being acquired for the Transferor's own account
without transfer (in satisfaction of Section 2.06(a)(ii)(A) or Section
2.06(d)(i)(A) of the Indenture).
/ / Such Security is being transferred (i) to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act of 1933,
as amended (the "Securities Act")), in reliance on Rule 144A under the
Securities Act or (ii) pursuant to an exemption from registration in accordance
with Rule 904 under the Securities Act (and in the case of clause (ii), based
on an opinion of counsel if the Company so requests and together with a
certification in substantially the form of Exhibit D to the Indenture).
/ / Such Security is being transferred (i) in accordance with Rule 144
under the Securities Act (and based on an opinion of counsel if the Company so
requests) or (ii) pursuant to an effective registration statement under the
Securities Act.
- ---------------
**Check applicable box.
B-1
<PAGE> 72
/ / Such Security is being transferred to an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act pursuant to a private placement exemption from the registration
requirements of the Securities Act (and based on an opinion of counsel if the
Company so requests) together with a certification in substantially the form of
Exhibit C to the Indenture.
/ / Such Security is being transferred in reliance on and in compliance
with another exemption from the registration requirements of the Securities Act
(and based on an opinion of counsel if the Company so requests).
--------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
-----------------------------------
Name:
Title:
Address:
Date:
---------------
B-2
<PAGE> 73
EXHIBIT C
FORM OF TRANSFEREE LETTER OF REPRESENTATION
TO BE DELIVERED BY INSTITUTIONAL ACCREDITED INVESTORS
BJ Services Company,
c/o Bank of Montreal Trust Company, as Trustee
77 Water Street, 4th Floor
New York, New York 10005
Dear Sirs:
In connection with the proposed transfer to us of $___________
aggregate principal amount of the 7% Notes due 2006 (the "Notes") of BJ
SERVICES COMPANY, a Delaware corporation (the "Company"), we confirm that:
1. We understand that the Notes have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or other applicable
securities laws, and may not be offered, sold or otherwise transferred except
as permitted in the following sentence. We agree on our behalf and on behalf of
any investor account for which we are purchasing Notes to offer, sell or
otherwise transfer such Notes prior to the date which is three years after the
later of the date of original issue thereof and the last date on which the
Company or any "affiliate" of the Company was the owner of such Notes (or any
predecessor thereto) (the "Resale Restriction Termination Date") only (a) to
the Company, (b) pursuant to a registration statement which has been declared
effective under the Securities Act, (c) so long as the Notes are eligible for
resale pursuant to Rule 144A under the Securities Act, to a person we
reasonably believe is a "qualified institutional buyer" (a "QIB") as defined in
Rule 144A under the Securities Act that purchases for its own account or for
the account of a QIB to whom notice is given that the transfer is being made in
reliance on Rule 144A, (d) pursuant to offers and sales to non-U.S. persons
that occur outside the United States within the meaning of Regulation S under
the Securities Act, (e) to an institutional "accredited investor" (an
"Institutional Accredited Investor") within the meaning of subparagraph (a)(1),
(2), (3) or (7) of Rule 501 under the Securities Act that is acquiring the
Notes for its own account or for the account of such an Institutional
Accredited Investor for investment purposes and not with a view to, or for
offer or sale in connection with, any distribution in violation of the
Securities Act or (f) pursuant to any other available exemption from the
registration requirements of the Securities Act, subject to the Company's and
the Trustee's right prior to any such offer, sale or transfer (i) pursuant to
clause (d), (e) or (f) above to require the delivery of an opinion of counsel,
certifications and/or other information satisfactory to each of them and (ii)
in each of the foregoing cases to require that a certificate of transfer in the
form appearing on the Notes is completed and delivered by the transferor to the
Trustee.
C-1
<PAGE> 74
2. We are an Institutional Accredited Investor purchasing for our own
account or for the account of such an Institutional Accredited Investor for
investment purposes and not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act or any other
applicable securities laws and we have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of our investment in the Notes, and we and any accounts for which we are
acting are each able to bear the economic risk of our or its investment for an
indefinite period.
3. We are acquiring the Notes purchased by us for our own account or
for one or more accounts as to each of which we exercise sole investment
discretion.
4. You are entitled to rely upon this letter and you are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
Name of Transferee:
-----------------
By:
------------------------------
Date:
------------------------------
Upon transfer the Notes would be registered in the name of the new
beneficial owner as follows:
Name:
------------------------------
Address:
------------------------------
------------------------------
Taxpayer ID No:
------------------------------
C-2
<PAGE> 75
EXHIBIT D
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
-------------, ----
Bank of Montreal Trust Company, as Registrar
Attention: Corporate Trust Department
Ladies and Gentlemen:
In connection with our proposed sale of certain 7% Series [A/B] Notes
due 2006 (the "Securities") of BJ Services Company, a Delaware corporation (the
"Company"), we represent that:
(i) the offer of the Securities was not made to a person in the
United States;
(ii) at the time the buy order was originated, the transferee
was outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States;
(iii) no directed selling efforts have been made by us in the
United States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S under the U.S. Securities Act of 1933, as
applicable; and
(iv) the transaction is not part of a plan or scheme to evade
the registration requirements of the U.S. Securities Act of 1933.
You and the Company are entitled to rely upon this letter and you are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S under the U.S. Securities Act of 1933.
D-1
<PAGE> 76
Very truly yours,
--------------------------------------
[Name]
By:
-----------------------------------
Name:
Title:
Address:
D-2
<PAGE> 1
EXHIBIT 10.3
August 7, 1996
________________________________________________________________________________
BJ SERVICES COMPANY
BJ SERVICES COMPANY, USA
BJ SERVICE INTERNATIONAL, INC.
BJ SERVICES COMPANY MIDDLE EAST
FOURTH AMENDMENT TO NOTE AGREEMENT
Dated as of August 7, 1996
Re: Note Agreement Dated As of August 1, 1991
and
$30,000,000 9.20% Senior Notes
Due August 1, 1998
________________________________________________________________________________
<PAGE> 2
BJ SERVICES COMPANY
BJ SERVICES COMPANY, USA
BJ SERVICE INTERNATIONAL, INC.
BJ SERVICES COMPANY MIDDLE EAST
FOURTH AMENDMENT TO NOTE AGREEMENT
Re: Note Agreement Dated as of August 1, 1991
and
$30,000,000 9.20% Senior Notes
Due August 1, 1998
Dated as of
August 7, 1996
Principal Mutual Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0800
Connecticut Mutual Life Insurance Company
140 Garden Street
Hartford, Connecticut 06154
Ladies and Gentlemen:
Reference is made to the separate Note Agreements each dated as of
August 1, 1991, as amended to the date hereof (collectively, the "Note
Agreement"), between and among BJ Services Company, BJ Services Company, USA,
BJ Service International, Inc., BJ Services Company Middle East, each a
Delaware corporation (collectively, the "Constituent Companies"), and you,
under and pursuant to which $30,000,000 aggregate principal amount of Senior
Notes Due August 1, 1998 (the "Notes") were originally issued.
The Constituent Companies desire to amend certain provisions of the
Note Agreement in connection with the acquisition of the shares of stock issued
by Nowsco Well Service Ltd., an
-1-
<PAGE> 3
Alberta, Canada corporation and the amalgamation of BJ Services Canada, Inc.,
an Alberta, Canada corporation with said Nowsco Well Service Ltd., and the
entry by the Constituent Companies into an Amended and Restated Credit
Agreement dated as of August 7, 1996, among the Constituent Companies, Nowsco
Well Service Ltd., and the other Subsidiary Borrowers from time to time party
thereto, Bank of America National Trust and Savings Association, Individually,
as U.S. Agent, Letter of Credit Issuing Bank, and Swing Loan Bank; Bank of
America Canada, Individually and as Canadian Agent; The Chase Manhattan Bank,
N.A., individually and as Senior Co-Agent; Bank of Montreal, Royal Bank of
Canada, Toronto Dominion (Texas), Inc., Credit Lyonnais New York Branch, and
Wells Fargo Bank (Texas), National Association, each Individually and as
Co-Agent; and the other financial institutions from time to time parties
thereto. The Constituent Companies hereby request that you accept the
amendments as set forth below in the manner herein provided. All capitalized
terms used herein without definition shall have the same meanings respectively
assigned to such terms in the Note Agreement.
SECTION 1. AMENDMENTS TO SECTION 5 OF THE NOTE AGREEMENT.
(a) Section 5 of the Note Agreement shall be and is hereby amended
by deleting therefrom the following Sections: Sections 5.5 through 5.14, both
inclusive.
(b) Section 5.1 of the Note Agreement shall be, and is hereby
amended to read, as follows:
"Each of the Constituent Companies will preserve and keep in
full force and effect, and will cause each Restricted Subsidiary to
preserve and keep in full force and effect, its respective corporate
existence and all licenses and permits except where the failure to
preserve or keep such licenses and permits would not have a materially
adverse effect upon the properties, business or financial condition of
the Company and its Restricted Subsidiaries, taken as a whole,
provided that the foregoing shall not prevent any transaction
otherwise permitted by this Agreement."
-2-
<PAGE> 4
(c) Section 5.3 of the Note Agreement shall be, and is hereby
amended to read, as follows:
"Each of the Constituent Companies will promptly pay and
discharge, and will cause each Restricted Subsidiary promptly to pay
and discharge, all lawful taxes, assessments and governmental charges
or levies imposed upon such Constituent Company or such Restricted
Subsidiary, respectively, or upon or in respect of all or any part of
the property or business of such Constituent Company or such
Restricted Subsidiary, all trade accounts payable in accordance with
usual and customary business terms, and all claims for work, labor or
materials, which if unpaid might become a Lien upon any property of
such Constituent Company or such Restricted Subsidiary; provided such
Constituent Company or such Restricted Subsidiary shall not be
required to pay any such tax, assessment, charge, levy, account
payable or claim if (i) the validity, applicability or amount thereof
is being contested in good faith by appropriate actions or proceedings
which will prevent the forfeiture or sale of any property of such
Constituent Company or such Restricted Subsidiary or any material
interference with the use thereof by such Constituent Company or such
Restricted Subsidiary, and (ii) such Constituent Company or such
Restricted Subsidiary shall set aside on its books, reserves deemed by
it to be adequate with respect thereto. Each of the Constituent
Companies will promptly comply and will cause each Restricted
Subsidiary to comply with all laws, ordinances or governmental rules
and regulations to which it is subject including, without limitation,
the Occupational Safety and Health Act of 1970, as amended, ERISA and
all laws, ordinances, governmental rules and regulations relating to
environmental protection in all applicable jurisdictions, the
violation of which could materially and adversely affect the
properties, business or financial condition of the Company and its
Restricted Subsidiaries, taken as a whole, or would result in any
"Lien" (as defined for purposes of Section 8.01 of the Bank Credit
Agreement, which Section 8.01 is incorporated into this Agreement by
reference pursuant to the Fourth Amendment to Note Agreement) not
permitted by said Section 8.01."
-3-
<PAGE> 5
SECTION 2. INCORPORATION OF CERTAIN COVENANTS.
"The following provisions of the Bank Credit Agreement in the form
attached hereto as the same may be subsequently modified or amended provided
that any such amendments or modifications are consented to in writing by the
holders of at least seventy percent (70%) of the aggregate outstanding
principal amount of the Notes are hereby incorporated by reference into the
Note Agreement with the same force and effect as though therein set forth in
full, in each case together with all related definitions set forth in the Bank
Credit Agreement as the same may be subsequently modified or amended provided
that any such amendments or modifications are consented to in writing by the
holders of at least seventy percent (70%) of the aggregate outstanding
principal amount of the Notes: Sections 8.01 through 8.05, both inclusive,
Sections 8.08, 8.09 and Sections 8.12 through 8.16, both inclusive; provided,
however, that the terms"Default" and "Event of Default" referred to in Section
8.03 and Section 8.15 incorporated herein by reference shall refer to such
terms as defined in the Note Agreement. All provisions incorporated by
reference shall remain effective for purposes of the Note Agreement unless and
until the Notes shall no longer remain outstanding."
SECTION 3. AMENDMENTS TO SECTION 5.18 OF THE NOTE AGREEMENT.
Section 5.18(f) of the Note Agreement shall be and is hereby amended
to read as follows:
"(f) Officer's Certificates. Within the periods provided
in paragraphs (a) and (b) above, a certificate of an authorized
financial officer of the Company stating that such officer has
reviewed the provisions of this Agreement and setting forth: (i) a
compliance certificate in the form attached to the Bank Credit
Agreement, and (ii) whether there existed as of the date of such
financial statements and whether, to the best of such officer's
knowledge, there exists on the date of the certificate or existed at
any time during the period covered by such financial statements any
Default or Event of Default and, if any such condition or event exists
on the date of the certificate, specifying the nature and period of
existence thereof and the action the Company is taking and proposes to
take with respect thereto;"
-4-
<PAGE> 6
SECTION 4. AMENDMENTS TO SECTION 6.1 OF THE NOTE AGREEMENT.
(a) Sections 6.1(d) and (e) of the Note Agreement shall be and are
hereby revised to change the references therein to "$1,000,000" from
"$1,000,000" to "$35,000,000."
(b) Section 6.1(f) of the Note Agreement shall be and is hereby
deleted, and the following language shall be substituted therefor:
"(f)(i) The Constituent Companies or any other Borrower (as
defined in the Bank Credit Agreement) shall fail to perform or observe
any term, covenant or agreement contained in Sections 8.02, 8.03,
8.10, 8.12 through 8.16, both inclusive, of the Bank Credit Agreement
and incorporated herein by reference pursuant to the Fourth Amendment
to Note Agreement or (ii) the Constituent Companies or any other
Borrower shall fail to perform or observe any other term, covenant or
agreement contained in any of Sections 8.01, 8.04, 8.05, 8.08 or 8.09
of the Bank Credit Agreement and incorporated herein by reference
pursuant to the Fourth Amendment to Note Agreement, 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 Constituent
Companies reasonably should have known of such default, or (y) the
date upon which written notice thereof is given to the Constituent
Companies by any holder of the Notes."
(c) Section 6.1(i) of the Note Agreement shall be and is hereby
revised to change the reference therein to $500,000" from "$500,000" to
"$35,000,000."
SECTION 5. AMENDMENTS TO DEFINITIONS.
The following definitions shall be added to Section 8.1 of the Note
Agreement to read as follows:
-5-
<PAGE> 7
"Bank Credit Agreement" shall mean that certain Amended and
Restated Credit Agreement dated as of August 7, 1996 among the
Constituent Companies, Nowsco Well Service Ltd., and the other
Subsidiary Borrowers from time to time Parties thereto; Bank of
America National Trust and Savings Association, Individually, as U.S.
Agent, Letter of Credit Issuing Bank and Swing Loan Bank; Bank of
America Canada, Individually and as Canadian Agent; The Chase
Manhattan Bank, N.A., individually and as Senior Co-Agent; Bank of
Montreal, Royal Bank of Canada, Toronto Dominion (Texas), Inc., Credit
Lyonnais New York Branch, and Wells Fargo Bank (Texas), National
Association, each Individually and as Co-Agent; and the other
financial institutions parties thereto, in the form attached hereto
(and without amendment or modification, except as may be subsequently
consented to in writing by the holders of at least seventy percent
(70%) of the aggregate outstanding principal amount of the Notes.
"Second Amendment to Note Agreement" shall mean that certain
Second Amendment to Note Agreement dated September 19, 1995 by and
among the Constituent Companies and the Purchasers.
"Third Amendment to Note Agreement" shall mean that certain
Third Amendment to Note Agreement executed to be effective as of
September 19, 1995 by and among the Constituent Companies and the
Purchasers.
"Fourth Amendment to Note Agreement" shall mean that certain
Fourth Amendment to Note Agreement dated August 7, 1996 by and among
the Constituent Companies and the Purchasers.
SECTION 6. MISCELLANEOUS.
Section 2.1 Effective Date; Replacement of Second Amendment and
Third Amendment; Ratification. The amendments contemplated by this Fourth
Amendment to Note Agreement shall be effective as of August 7, 1996. This
Fourth Amendment shall supersede and replace the terms
-6-
<PAGE> 8
and provisions of the Second Amendment to Note Agreement and Third Amendment to
Note Agreement. Except as amended herein, the terms and provisions of the Note
Agreement are hereby ratified, confirmed and approved in all respects.
Section 2.2 Ratification of Original Note Agreements; Condition
Precedent. Except as amended herein, the terms and provisions of the Note
Agreement and the Notes are hereby ratified, confirmed and approved in all
respects.
Section 2.3 Successors and Assigns. This Fourth Amendment to
Note Agreement shall be binding upon the Constituent Companies and their
successors and assigns and shall inure to the benefit of the holders of the
Notes and to the benefit of their successors and assigns, including each
successive holder or holders of any Notes.
Section 2.4 Counterparts. This Fourth Amendment to Note
Agreement may be executed in any number of counterparts, each executed
counterpart constituting an original but all together one and the same
instrument.
Section 2.5 No Legend Required. Any and all notices, requests,
certificates and other instruments including, without limitation, the Notes,
may refer to the Note Agreement without making specific reference to this
Fourth Amendment to Note Agreement, but nevertheless all such references shall
from and after the date hereof be deemed to include this Fourth Amendment to
Note Agreement unless the context shall otherwise require.
Section 2.6 No Defaults or Events of Default; Representations and
Warranties are True and Correct. Each of the Constituent Companies jointly and
severally represents and warrants that no Default or Event of Default, in
either case which has not been waived, has occurred and is continuing. The
representations and warranties made by the Constituent Companies in Exhibit B
of the Note Agreement are true and correct in all material respects as of the
date hereof, except such representations and warranties, if any, which
expressly refer to an earlier date, which representations and warranties are
true and correct in all material respects as of such earlier date.
-7-
<PAGE> 9
Section 2.7 Governing Law. This Fourth Amendment to Note
Agreement shall be construed in accordance with and governed by the laws of the
State of Connecticut.
IN WITNESS WHEREOF, the parties hereto have executed this Fourth
Amendment to Note Agreement to be effective as of August 7, 1996.
BJ SERVICES COMPANY
By:
-------------------------------
Its Treasurer
BJ SERVICES COMPANY, USA
By:
-------------------------------
Its Treasurer
BJ SERVICE INTERNATIONAL, INC.
By:
-------------------------------
Its Treasurer
BJ SERVICES COMPANY MIDDLE EAST
By:
-------------------------------
Its Treasurer
-8-
<PAGE> 10
Accepted on the ______ day of August, 1996.
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By:
-------------------------------
Its:
--------------------------
By:
-------------------------------
Its:
--------------------------
-9-
<PAGE> 11
Accepted on the ______ day of August, 1996.
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY
By:
-------------------------------
Its:
--------------------------
-10-
<PAGE> 1
EXHIBIT 12.1
BJ Services Company
Computation of Ratio of Earnings to Fixed Charges
(In thousands, except ratios)
<TABLE>
<CAPTION>
Nine Months Ended
June 30, Year Ended September 30,
1996 1995 1995 1994 1993 1992 1991
---------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS:
Pretax earnings from continuing operations $30,089 ($1,774) $ 8,758 $12,908 $16,838 ($4,192) $31,133
Minority interest (328) (101) 29 (132) (684) (569) (1,541)
Minority interest income in subsidiaries with
fixed charges 292 674 595 1,373 858 1,122 1,486
Minority interest - losses (649) (1,023) (1,344) (1,921) (644) (711) (148)
---------------- -------------------------------------------
Earnings (loss) 29,404 (2,224) 8,038 12,228 16,368 (4,350) 30,930
Add:
Interest on indebtedness 16,749 9,502 15,164 7,383 5,414 2,977 3,135
Portion of rents representative of the
interest factor 4,989 4,148 5,530 5,141 3,637 2,488 2,697
---------------- -------------------------------------------
Earnings as adjusted $51,142 $11,426 $28,732 $24,752 $25,419 $ 1,115 $36,762
================ ===========================================
FIXED CHARGES:
Interest on indebtedness $16,749 $9,502 $15,164 $ 7,383 $ 5,414 $ 2,977 $ 3,135
Capitalized interest 150 150 216 541 167 800 750
Portion of rents representative of the
interest factor 4,989 4,148 5,530 5,141 3,637 2,488 2,697
---------------- -------------------------------------------
Fixed charges $21,888 $13,800 $20,910 $13,065 $ 9,218 $ 6,265 $ 6,582
================ ===========================================
---------------- -------------------------------------------
RATIO OF EARNINGS TO FIXED CHARGES (1) 2.34 -(2) 1.37 1.89 2.76 -(2) 5.59
================ ===========================================
</TABLE>
(1) For purposes of calculating this ratio, earnings consist of earnings
before income taxes and fixed charges (excluding capitalized interest). Fixed
charges consist of interest expense, capitalized interest, and the portion of
operating lease rental expense that is representative of the interest factor
(deemed to be one-third of the lease rentals.)
(2) For the year ended September 30, 1992 and for the nine months ended June
30, 1995, earnings were inadequate to cover fixed charges by $5,150 and $2,374,
respectively, because of the unusual charges recorded in those fiscal periods.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 2,012
<SECURITIES> 0
<RECEIVABLES> 249,858
<ALLOWANCES> 6,645
<INVENTORY> 88,111
<CURRENT-ASSETS> 369,591
<PP&E> 762,936
<DEPRECIATION> 350,737
<TOTAL-ASSETS> 1,675,151
<CURRENT-LIABILITIES> 562,162
<BONDS> 0
<COMMON> 2,819
0
0
<OTHER-SE> 491,911
<TOTAL-LIABILITY-AND-EQUITY> 1,675,151
<SALES> 628,255
<TOTAL-REVENUES> 628,255
<CGS> 0
<TOTAL-COSTS> 512,664
<OTHER-EXPENSES> 72,667
<LOSS-PROVISION> 1,272
<INTEREST-EXPENSE> 16,749
<INCOME-PRETAX> 29,761
<INCOME-TAX> 7,121
<INCOME-CONTINUING> 22,640
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,640
<EPS-PRIMARY> .79
<EPS-DILUTED> .77
</TABLE>
