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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Commission File Number 1-13884
COOPER CAMERON CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 76-0451843
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
515 Post Oak Boulevard,
Suite 1200
Houston, Texas
(Address of principal 77027
executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 513-3300
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of Each Exchange on
Title of Each Class Which Registered
------------------- ----------------
Common Stock, Par Value $0.01 Per Share New York Stock Exchange
Junior Participating Preferred Stock
Purchase Rights
Par Value $0.01 Per Share
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
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in a definitive proxy or information
statement incorporated by reference in Part III of this Form 10-K of any
amendment to this Form 10-K. [X]
The number of shares of Common Stock, par value $.01 per share,
outstanding as of March 14, 1997 was 25,641,585. The aggregate market value of
the Common Stock, par value $0.01 per share, held by non-affiliates of the
Registrant as of March 14, 1997 was approximately $1,746,540,073. For the
purposes of the determination of the above statement amount only, all directors
and executive officers of the Registrant are presumed to be affiliates.
--------------------
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Annual Report to Stockholders for 1996 are
incorporated by reference into Part II.
Portions of Registrant's Proxy Statement for the 1997 Annual Meeting
of Stockholders to be held May 8, 1997 are incorporated by reference into Part
III.
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TABLE OF CONTENTS
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PAGE
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1996 1996 MARCH 21, 1997
ITEM FORM 10-K ANNUAL REPORT PROXY STATEMENT
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PART I
1. BUSINESS ............................................................... 1 - -
Markets and Products................................................ 2 - -
Aftermarket Services................................................ 7 - -
Market Issues....................................................... 7 - -
New Product Development............................................. 8 - -
Competition......................................................... 9 - -
Manufacturing....................................................... 9 - -
Backlog............................................................. 10 - -
Patents, Trademarks and Other Intellectual Property................. 10 - -
Employees........................................................... 11 - -
2. PROPERTIES.............................................................. 11 - -
3. LEGAL PROCEEDINGS....................................................... 12 - -
Environmental Matters............................................... 12 - -
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................... 13 - -
PART II
5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS................................................. 13 - -
6. SELECTED FINANCIAL DATA................................................. 14 50-51 -
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS............................................... 14 17-24 -
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA............................. 14 25-49
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE............................................ 14 - -
PART III
10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT...................... 14 - 4,5,13
11. EXECUTIVE COMPENSATION.................................................. 16 - 16-19
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.......................................................... 16 - 3,14
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................... 16 - 15
PART IV
14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K............................................................ 16 - -
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PART I
ITEM 1. BUSINESS.
Cooper Cameron Corporation ("Cooper Cameron" or the "Company") is a
leading international manufacturer of oil and gas pressure control equipment,
including valves, wellheads, chokes, blowout preventers and assembled systems
for oil and gas drilling, production and transmission used in onshore, offshore
and subsea applications. Cooper Cameron is also a leading manufacturer of gas
turbines, centrifugal gas and air compressors, integral and separable
reciprocating engines, compressors and turbochargers.
Cooper Cameron, a Delaware corporation, was incorporated on November
10, 1994. The Company operated as a wholly-owned subsidiary of Cooper
Industries, Inc. ("Cooper") until June 30, 1995, the effective date of the
completion of an exchange offer with Cooper's stockholders resulting in the
Company becoming a separate stand-alone company. The common stock of Cooper
Cameron is trading on the New York Stock Exchange under the symbol "RON".
In June 1996, Cooper Cameron purchased the assets and assumed certain
operating liabilities of Ingram Cactus Company for approximately $100 million
in cash. The business acquired manufactures and sells wellheads, surface
systems, valves and actuators used primarily in onshore oil and gas production
operations, and operates manufacturing facilities in Houston, TX, Oklahoma
City, OK and Broussard, LA, as well in the United Kingdom and Austria. The
Company also acquired interests in Ingram Cactus joint ventures in Venezuela
and Malaysia. The operations have been combined with those of the Cameron
division.
In October 1996, Cooper Cameron acquired for its Cameron division
certain assets and assumed certain liabilities of Tundra Valve & Wellhead
Corp., a Canadian manufacturer of wellheads, trees and valves, for
approximately Canadian $9.8 million. Also during October 1996, Cooper Cameron
acquired for its Cooper Energy Services division, for approximately $6.1
million, certain assets of ENOX Technologies, Inc., a developer and provider of
ignition systems for gas engines, particularly those used in large-scale gas
transmission installations.
Cooper Cameron's business of manufacturing petroleum production
equipment and compression and power equipment began in the mid-1800's with the
manufacture of steam engines that provided power for plants and textile or
rolling mills. By 1900, with the discovery of oil and gas, Cooper Cameron
moved into the production of natural gas internal combustion engines and gas
compressors. The Company added to its product offering through various
acquisitions, in particular the acquisitions of The Bessemer Gas Engine Company
(gas engines and compressors); Pennsylvania Pump and Compressor (reciprocating
air and gas compressors); Ajax Iron Works (compressors); Superior (engines and
compressors); Joy Petroleum Equipment Group (valves, couplings and wellheads);
Joy Industrial Compressor Group (compressors); and Cameron Iron Works (blowout
preventers, ball valves, control equipment and McEvoy-Willis wellhead equipment
and choke valves).
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BUSINESS SEGMENTS
MARKETS AND PRODUCTS
The Company operates in two industry segments, petroleum production
equipment and compression and power equipment.
For additional industry segment information for each of the three
years in the three-year period ended December 31, 1996, see Note 16 of the
Notes to Consolidated Financial Statements, which Notes are incorporated herein
by reference in Part II, Item 8 hereof ("Notes to Consolidated Financial
Statements.")
Petroleum Production Equipment Segment
The Company manufactures pressure control equipment used at the
wellhead in the drilling for and production and transmission of oil and gas,
both onshore and offshore. The primary products include wellheads, gate valves
and ball valves, blowout preventers ("BOPs") and control systems and are
marketed under the well-known brand names Cameron(R), W-K-M(R), McEvoy(R),
Demco(R), Willis(TM) and Thornhill Craver(TM). The equipment is manufactured
in a variety of sizes and to various specifications with working pressure
ratings up to 30,000 pounds per square inch ("p.s.i."). The wellhead equipment
is designed to support the casing and production pipe and includes casing head
housings, casing heads and tubing heads. Valves of different sizes and design
are assembled with other components into an assembly known as a "christmas
tree," which is mounted on the wellhead equipment and is used to control the
flow of oil and gas from a producing well. Most christmas trees are custom
designed to meet individual customer requirements.
The Company also manufactures subsea production systems, which consist
of equipment used to complete an oil or gas well on the sea floor. Subsea
systems tend to be sophisticated and generally require a high degree of
technological innovation.
In 1993, the Company introduced its patented SpoolTree(TM) subsea
production system for use in oil and gas fields with subsea completions that
require frequent retrieval of downhole equipment. With the SpoolTree(TM)
system, well completion and workover activities can be performed without a
workover riser and removal of the christmas tree and under conventional blowout
preventer control, thereby reducing the time and equipment needed to perform
such activities.
Cooper Cameron's drilling-related equipment includes ram and annular
BOPs. The drilling of an oil or gas well is done through BOPs located under
the rig floor and on top of the wellhead. The primary function of a BOP is to
maintain well control under all conditions. Ram-type preventers have two
hydraulically actuated steel rams with rubber inserts that are designed to
close around the drill pipe, sealing off the space below or, in the case of
blind rams, to close off the open hole. The annular-type BOP is attached above
the ram BOPs and is used to close off the well-bore using a donut-shaped rubber
packer with steel inserts that are compressed together by a hydraulically
actuated piston. The workover-type preventer is attached to the top of
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completed oil or gas wells to control pressures when a variety of work is being
performed through christmas trees. Cooper Cameron manufactures BOPs to meet
pressure requirements of up to 30,000 p.s.i. and in diameters from 3 1/16 to 26
3/4 inches.
Cooper Cameron also produces other drilling-related equipment, the
most important of which are choke manifolds and control systems. Choke
manifolds are arrangements of piping, valves and special valves, called chokes,
which control pressures during drilling and, in the event of BOP closure, bleed
off excessive pressures. Control systems monitor well pressures and activate
the chokes, valves and BOPs.
Cooper Cameron also manufactures ball valves and underwater pipeline
tie-in and pipeline repair equipment. A ball valve consists of a spherical
plug, or ball, with a hole running axially through it to allow the passage of
gas or fluid. Sealing surfaces are arranged so that a 90-degree turn of the
plug will shut off the flow. Ball valve sizes range from 1/4 inch to 60 inches
in diameter with working pressures of up to 2,500 p.s.i. Large diameter valves
are used primarily in natural gas transmission lines. Smaller valves are used
in oil and gas gathering and processing systems and in various types of
industrial processes in refineries and petrochemical plants. Subsea pipeline
tie-in systems are used in the connection of subsea pipelines to one another
and to offshore platforms. Pipeline repair systems are used in the repair of
subsea pipelines.
Cooper Cameron manufactures gate valves and butterfly valves for use
in oil and gas gathering and processing systems such as refineries and
petrochemical plants. Sizes range from 2 to 56 inches and pressures range up
to 2,500 p.s.i. Cooper Cameron recently introduced the Cameron(R) Hi-Lo Trip
Mechanical Pilot for Emergency Shutdown valves that are designed for use in oil
and gas production, pipelines, plants and other areas where emergency shutdown
is required.
Cooper Cameron manufactures production chokes, control valves,
drilling choke systems, actuators, and pigging and production automation
systems. A choke is a type of valve which restricts and regulates the flow of
a product through a flowline or pipeline. Designs include a multiple orifice
valve, needle and seat chokes, cage style control chokes, rotary chokes and
subsea chokes and actuators. The unique multiple orifice valve design uses two
adjacent discs, each with a pair of openings. Cage style control chokes are
used to solve erosion problems while improving the precision of flow control.
In 1995, Cooper Cameron introduced its new Willis(TM) Stepping Linear Control
Actuator, which is designed to provide remote operation of certain Willis(TM)
control chokes. Cooper Cameron produces subsea chokes and actuators used on
subsea production equipment, including state-of-the-art subsea retrievable
chokes. Choke sizes range from 1 inch to 6 inches in diameter with working
pressures of up to 20,000 p.s.i. Cooper Cameron recently introduced two new
actuators, the Cameron(R) AP and Compact Modular Actuators, designed for use on
its line of subsea gate valves. These valves are fail-close hydraulically
activated and are manufactured for operating pressures between 1,500 p.s.i. and
3,000 p.s.i.
Cooper Cameron provides complete integrated elastomer research,
development and manufacturing. These products are used in pressure and flow
control equipment in the Petroleum Production Equipment segment. This
technology also supports the petroleum, petrochemical,
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rubber molding and plastics industries in the development and testing of
elastomer and plastic products.
The Cameron Controls business was created in 1996 with a primary goal
of expanding Cameron's role as a provider of controls equipment. Drilling and
production equipment used on the ocean floor operates from a platform or other
remote location through hydraulic or electronic connections that allow the
operator to measure and control the pressures and throughput associated with
these installations.
Cooper Cameron markets approximately 80% of its petroleum production
equipment products directly to end-users through a worldwide network of sales
and marketing employees, supported by agents in some international locations.
Due to the extremely technical nature of many of the products, the marketing
effort is further supported by a staff of engineering employees. The balance
of Cooper Cameron's products are sold through established independent
distributors.
The Petroleum Production Equipment segment's primary customers include
major oil and gas exploration and production companies, independent oil and gas
exploration and production companies, foreign national oil and gas companies,
engineering and construction companies, pipeline companies, drilling
contractors and rental equipment companies. Some valves are sold to various
types of process plants, such as refining and petrochemical, chemical and power
generation.
Compression and Power Equipment Segment
Cooper Cameron's Compression and Power Equipment segment provides
products and services to the oil and gas production and transmission,
industrial, process and non-utility power generation markets. The primary
products include engines, reciprocating compressors, centrifugal air and gas
compressors, gas turbines, turbochargers, control systems and aftermarket parts
and service. Cooper Cameron markets its products worldwide under the
well-known brand names Ajax(R), Superior(R), Cooper-Bessemer(R), Coberra(R),
Pennsylvania Process(TM), En-Tronic(R) and Joy(R).
Manufactured under the Cooper-Bessemer(R), Ajax(R) and Superior(R)
brand names, Cooper Cameron's reciprocating products include both "integral"
and "separable" units. The integral gas engine-compressor concept, pioneered
by the Company in the 1930s, is a unique two-cycle design that combines the
unit's engine and compressor on a single crankshaft. Integral
engine-compressors can accommodate wide swings in gas transmission pressure
conditions and are frequently used in single-stage transmission, multiple-stage
boosting or gas injection/withdrawal applications. Cooper Cameron's
Cooper-Bessemer(R) and Ajax(R) integral units range in power from 140 to 13,500
horsepower. Over the past 50 years, more than 4,400 Cooper-Bessemer(R)
integral engine-compressors, totaling over 6,500,000 horsepower, have been
installed in 35 countries worldwide.
Cooper Cameron manufactures four-cycle reciprocating power engines
ranging from small, six-cylinder "in-line" units, to large, 20-cylinder "V"
configuration models. They are
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available in spark-ignited (gas-fueled), diesel and dual-fuel (gas and
diesel-fueled) versions. Marketed under the Cooper-Bessemer(R) and Superior(R)
brand names, Cooper Cameron power engines are used to drive reciprocating
separable compressors in natural gas gathering, boosting, injecting, processing
and storage/withdrawal applications. Cooper Cameron's four-cycle engines range
in power from 500 to 8,700 horsepower. Cooper Cameron also manufactures its
own lines of Superior(R) and Pennsylvania Process(TM) reciprocating separable
gas compressors. In addition, Cooper Cameron power engines drive electric
generators in industrial, commercial, municipal and government-operated
independent power (non-utility) applications, and pumps in both oil and gas
related services. In 1988, the Company acquired the Enterprise(R) engine
aftermarket product line from IMO Delaval Inc., and today provides parts,
maintenance, overhaul and engineering services for previously installed
Enterprise(R) power engines in nuclear, oil and gas, marine and municipal power
applications.
All Cooper Cameron integral gas engine-compressors and power engines
are available with state-of-the-art technology designed for reduced emissions
to meet or exceed government-regulated clean air standards. The CleanBurn(TM)
concept, which was first developed and introduced by the Company in 1977,
features a pre-ignition firing chamber to reduce engine exhaust emissions
without sacrificing fuel economy. CleanBurn(TM) "conversion kits" are also
available to enable Cooper Cameron customers to maximize their original
equipment investment by incorporating these latest technological advancements
into their previously installed Ajax(R), Cooper-Bessemer(R), Enterprise(R) and
Superior(R) engines.
For natural gas applications, Cooper Cameron manufactures two types of
rotating gas compressors under the Cooper-Bessemer(R) brand name: pipeline
centrifugal compressors, which handle pressures up to 2,200 p.s.i.; and multi-
stage barrel compressors, designed for pressures to 6,500 p.s.i. The
Cooper-Bessemer(R) pipeline centrifugal compressor is recognized worldwide as
one of the most efficient high-flow compressors in gas transmission service.
Cooper-Bessemer(R) multi-stage barrel compressors are vertically split and
sized to meet a wide combination of flow and pressure requirements at
continuous, full-load operation in natural gas gathering, production, storage,
artificial lift and re-injection applications.
Cooper Cameron provides gas turbines and gas turbine-driven
compression and power generation packages to the worldwide oil and gas related
markets through Cooper Rolls, its joint venture company with Rolls-Royce plc of
London, England. Marketed under the Coberra(R) brand name, Cooper Rolls(TM)
gas turbines combine a Rolls-Royce industrial gas generator and a
Cooper-Bessemer(R) power turbine to provide a compact, aero-derivative power
source with high horsepower-to-weight ratios. With over 23,000,000 hours of
operating experience, Coberra(R) gas turbines are one of the world market
leaders in their size range for oil and gas related applications. They provide
up to 40,000 horsepower with high, simple-cycle thermal efficiencies and are
commonly installed both onshore and offshore as drivers for Cooper-Bessemer(R)
rotating gas compressors, water and oil pumps and electric generators.
Cooper Cameron manufactures turbochargers under the Cooper-Bessemer(R)
brand name for new Cooper Cameron reciprocating engines and also provides
factory repair of its own and other manufacturers' turbochargers in a dedicated
facility. High performance turbochargers are necessary to achieve required
exhaust emissions while maintaining desired efficiency and
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operations flexibility. Cooper Cameron is one of the few engine manufacturers
to design, produce and repair turbochargers.
Cooper Cameron manufactures En-Tronic(R) control and analysis
equipment for many of its compression and power products, as well as for
products produced by other manufacturers. En-Tronic(R) controls provide
state-of-the-art solutions to advanced system requirements such as calculating
and controlling low emissions on gas turbines and engines, and all-electronic
fuel control of gas turbine and engine packages. En-Tronic(R) products use
advanced, field-proven hardware and software technology, utilizing
microprocessors, cathode ray tubes and liquid crystal displays, to optimize
equipment reliability, safety and efficiency.
Cooper Cameron manufactures Joy(R) integrally geared centrifugal air
compressors used by industrial plants as a source of power for the operation of
hand tools, actuation of control devices and to power automatic and
semi-automatic production equipment. These compressors are used in industries
such as automotive, container, textile, chemical, food and beverage and general
manufacturing. Cooper Cameron serves the plant air market with two product
lines of compressors. The C-8 series covers the 300 to 1,250 horsepower range
at discharge pressures from 50 to 150 p.s.i. Cooper Cameron's newest machine
designed specifically for industrial air applications is the Turbo-Air(R) 2000,
which was introduced in 1994. This machine provides the centrifugal compressor
advantage of higher efficiency with reliable and unattended operation down to a
150 horsepower unit. The larger Turbo-Air(R) series covers a horsepower range
from 350 to 4,500 and is for plant air applications above 1,250 horsepower or
where the customer requires greater customization to meet particular
specifications. All components of the Turbo-Air(R) and C-8 series machines,
including the compressor, driver, lubrication system, control system and
intercoolers, are grouped on a common base into a ready-to-install package.
This configuration provides easy installation on a simple slab foundation at
the customer's plant location.
Cooper Cameron's Compression and Power Equipment segment manufactures
integral gear centrifugal compressors for process applications where the air is
used for its content of oxygen, nitrogen, argon or other elements. In these
cases, the compressor is an integral part of the industrial process in
industries, such as air separation, pharmaceutical, fermentation,
petrochemical, refining and synthetic fuel. Cooper Cameron services the
process air market with two product lines of centrifugal compressors. The
Joy(R) MSG(R) or Multi Stage Geared(TM) series covers a range of 700 to 20,000
horsepower, handling air or nitrogen to pressures up to 750 p.s.i. and volume
flows up to 70,000 cubic feet per minute. The Joy(R) MSG(R) series is a
flexible modular design that can be customized in aerodynamic components,
materials of construction and packaging scope, thereby providing an optimized
compressor to meet a customer's unique requirements. The Turbo-Air(R) series
is a fully packaged unit that uses the modular and customizing concepts of the
Joy(R) MSG(R) series in the process air market from 350 to 4,500 horsepower.
The process and plant air centrifugal compressors manufactured by
Cooper Cameron deliver oil-free compressed air to the customer, thus preventing
oil contamination of the manufactured products. Industrial markets worldwide
increasingly prefer oil-free air for safety, operational and environmental
reasons.
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Cooper Cameron primarily sells its compression and power equipment
direct to end-users through a worldwide network of sales and marketing
employees supported by agents in some international locations. Due to the
extremely technical nature of many of the products, the marketing effort is
further supported by a staff of engineers. In addition, Ajax(R) integral
engine-compressor units are sold through independent distributors in North
America and to rental companies. Superior(R) engines and compressors are sold
to independent packagers and distributors in North America. Some Joy(R) and
Turbo-Air(R) industrial compressors are sold through sales representatives and
independent distributors.
Cooper Cameron's primary customers for compression and power equipment
include the major oil and gas companies, large independent oil and gas
producers, gas transmission companies, equipment leasing companies,
petrochemical and refining divisions of oil companies and chemical companies.
Industrial and process compressors are sold to durable goods manufacturers and
process industries.
Cooper Cameron also markets technology acquired from ENOX
Technologies, Inc. ENOX technology provides patented electrical plasma
discharge ignition systems and engine management systems for large internal
combustion engines used, for example, in the natural gas pipeline industry.
AFTERMARKET SERVICES
Cooper Cameron has a comprehensive worldwide aftermarket organization
that provides replacement parts, field service, major repairs and overhauls,
unit installation assistance and total vendor maintenance contracts. Customer
requirements are satisfied around the clock through a worldwide network of
service and repair centers and parts warehouses. As customers have drastically
reduced their staffing and shifted more responsibility to vendors, total vendor
maintenance contracts have become increasingly popular and Cooper Cameron's
aftermarket organizations have responded. Cooper Cameron provides all
maintenance services for a customer's equipment in a particular area from one
service center. Cooper Cameron also provides an inventory of repair parts,
service personnel, planning services and inventory and storage of customers'
idle equipment. Cooper Cameron's large population of installed equipment
results in aftermarket services constituting approximately 29% of Cooper
Cameron's total sales in 1996.
MARKET ISSUES
Cooper Cameron is one of the market leaders in the global market for
petroleum production equipment. Cooper Cameron believes that it is well
positioned to serve these markets. Plant and service center facilities around
the world in major oil producing regions provide a broad, global breadth of
market coverage.
The international market is expected to be a major source of growth
for the Cooper Cameron Compression and Power Equipment segment. The desire of
both the developed and the developing countries to expand their respective oil
and gas transmission capacity for both economic and political reasons will be
one of the primary factors affecting market demand.
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Additional establishment of industrial infrastructure in the developing
countries will necessitate the growth of basic industries that require process
compression equipment for air separation facilities. Production and service
facilities in North and South America, Europe and the Far East provide this
business segment with the ability to serve the global marketplace.
In both of Cooper Cameron's business segments, a large population of
installed engines, compression, and gas and oil production equipment exists in
both the U.S. and international market segments. The rugged, long-lived nature
of the equipment that exists in the field provides a predictable and profitable
repair parts and service business. The Company expects that as increasing
quantities of new units are sold into the international markets, there should
be a continuing growth in market demand for aftermarket parts and service.
NEW PRODUCT DEVELOPMENT
As petroleum exploration activities have increasingly been focused on
subsea locations, Cooper Cameron's Petroleum Production Equipment segment has
directed much of its new product development efforts toward this market. In
subsea exploration, customers are particularly concerned about safety,
environmental protection and ease of installation and maintenance. Cooper
Cameron's reputation for high quality and high dependability has given it a
competitive advantage in the areas of safety and environmental protection. A
patented subsea production system called the SpoolTree(TM), which was
introduced in 1993, offers substantial cost reduction to the customer as it is
based upon a novel concept that eliminates the need for a workover riser or
removal of the christmas tree during workover. Cooper Cameron has pioneered
this concept and has developed similar products for land and platform
applications, which significantly reduce customer costs. In another
development, Cooper Cameron has introduced modular subsea production systems
consisting of several standard modules that can be assembled into a
customer-specific system, significantly reducing engineering costs for a
project.
In the Compression and Power Equipment segment, Cooper Cameron has
developed a number of new products to serve the oil and gas transmission market
and the industrial air compression market. An area of increasing importance in
the oil and gas transmission market is the reduction of environmentally harmful
emissions from the engines and turbines that drive the compression equipment.
Building on its experience with its CleanBurn(TM) technology, and in
conjunction with Rolls-Royce plc, Cooper Cameron has developed and is in the
process of marketing new Dry Low Emissions(TM) gas turbines, as well as
conversion kits for the existing Cooper Rolls(TM) units in the field. This
technology significantly reduces the level of emissions produced by gas turbine
drivers. Additionally, in 1995, a new line of En-Tronic(R) performance and
monitoring control systems was introduced to aid in optimizing the performance
and emission parameters of engines and turbines. Over the past three years,
Cooper Cameron has also introduced new high speed reciprocating engines and
compressors with improved reliability, fuel efficiency and emissions
performance. These new units utilize En-Tronic(R) state-of-the-art
CleanBurn(TM)III microprocessor-based control systems. In late 1994, Cooper
Cameron's centrifugal air compressor product line was expanded to include the
Turbo-Air(R) 2000 compressor, which extended the product line down to the 150
horsepower range. Cooper Cameron is able to offer lower horsepower users the
technological advantages of a centrifugal
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compressor. Chief among these advantages are low energy consumption, low cost
package installation and maintenance, ease of automation and environmentally
friendly oil-free air delivery.
COMPETITION
Cooper Cameron competes in all areas of its operations with a number
of other companies, some of which have financial and other resources comparable
to or greater than those of Cooper Cameron.
Cooper Cameron believes it has a leading position in the petroleum
production equipment markets, particularly with respect to its high pressure
products. In these markets, Cooper Cameron competes principally with Vetco
Gray Inc. (a subsidiary of Asea Brown Boveri) and FMC Corp. The principal
competitive factors in the petroleum production equipment markets are
technology, quality, service and price. Cooper Cameron believes that several
factors give it a strong competitive position in these markets. Most
significant are Cooper Cameron's broad product offering, its worldwide presence
and reputation, its service and repair capabilities, its expertise in high
pressure technology and its experience in alliance and partnership arrangements
with customers and other suppliers.
Cooper Cameron believes it also has a leading position in the
compression and power equipment markets. In these markets, Cooper Cameron
competes principally with General Electric Company, Dresser-Rand Company,
European Gas Turbines Inc., Ariel Corporation, Caterpillar Inc.,
Waukesha-Pearce Industries Inc., Atlas-Copco AB, Mannesmann Demag AG and
Ingersoll-Rand Company. The principal competitive factors in the compression
and power equipment markets are engineering and design capabilities, product
performance, reliability and quality, service and price. Cooper Cameron
believes that its competitive position is based on several factors. Cooper
Cameron has a broad product offering and, unlike any of its competitors,
manufactures and sells both engines and compressors (both as separate units and
packaged together as a single unit). Cooper Cameron led the industry in the
introduction of low engine emission technology and continues today as an
industry leader in this technology. Cooper Cameron has a highly competent
engineering staff and skilled technical and service representatives, with
service centers located throughout the world.
In all of its markets, Cooper Cameron has strong brand recognition and
an established reputation for quality and service. Cooper Cameron has a
significant base of previously-installed products, which provides a strong
demand for aftermarket parts and service. Cooper Cameron has modern
manufacturing facilities and state-of-the-art testing capabilities.
MANUFACTURING
Cooper Cameron has manufacturing facilities in 13 countries that
conduct a broad variety of processes, including machining, fabrication,
assembly and testing using a variety of forged and cast alloyed steels and
stainless steel as the primary raw materials. In recent years, Cooper Cameron
has rationalized plants and products, closed six manufacturing facilities,
moved product lines to achieve economies of scale, and upgraded the remaining
facilities. Manufacturing
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processes have been dramatically improved and significant capital
expenditures have been made since 1991. Cooper Cameron maintains advanced
manufacturing, quality assurance and testing equipment geared to the specific
products that it manufactures and uses extensive process automation in its
manufacturing operations. The manufacturing facilities utilize computer aided
numerical control tools and manufacturing techniques that concentrate the
equipment necessary to produce similar products in one area of the plant in a
configuration commonly known as a manufacturing cell. One operator in a
manufacturing cell can monitor and operate several machines, as well as
assemble and test products made by such machines, thereby improving operating
efficiency and product quality while reducing the amount of work-in-process and
finished product inventories.
Cooper Cameron believes that its test capabilities are critical to its
overall process. Cooper Cameron has capabilities to test most equipment at
full load, measuring all operating parameters, efficiency and emissions. All
process compressors for air separation and all plant air compressors are given
a mechanical and aerodynamic test in a dedicated test center prior to shipment.
All of Cooper Cameron's European manufacturing plants are ISO
certified and API licensed. Most of the U.S. plants are ISO certified or, if
not, such certification is in process. ISO is an internationally recognized
verification system for quality management.
BACKLOG
Cooper Cameron's backlog was approximately $728 million at December
31, 1996, as compared to $588 million at December 31, 1995, and approximately
$465 million at December 31, 1994. Backlog consists of firm customer orders
for which a purchase order has been received, satisfactory credit or financing
arrangements exist and delivery is scheduled.
PATENTS, TRADEMARKS AND OTHER INTELLECTUAL PROPERTY
Cooper Cameron believes that the success of its business depends more
on the technical competence, creativity and marketing abilities of its
employees than on any individual patent, trademark or copyright. Nevertheless,
as part of its ongoing research, development and manufacturing activities,
Cooper Cameron has a policy of seeking patents when appropriate on inventions
concerning new products and product improvements. Cooper Cameron owns 387
unexpired United States patents and 725 unexpired foreign patents.
Although in the aggregate these patents and Cooper Cameron's
trademarks are of considerable importance to the manufacturing and marketing of
many of its products, Cooper Cameron does not consider any single patent or
trademark or group of patents or trademarks to be material to its business as a
whole, except the Cameron(R), Cooper-Bessemer(R), Coberra(R) and Cooper
Rolls(TM) trademarks. Other important trademarks used by Cooper Cameron
include Ajax(R), Superior(R), En-Tronic(R), Enterprise(R), W-K-M(R), McEvoy(R),
Willis(TM), Demco(R), Pennsylvania Process(TM) and Thornhill Craver(TM).
Cooper Cameron has the right to use the trademark Joy(R) on aftermarket parts
until November 2027. Cooper Cameron has registered its trademarks in the
countries where such registration is deemed material.
10
<PAGE> 13
Cooper Cameron also relies on trade secret protection for its
confidential and proprietary information. Cooper Cameron routinely enters into
confidentiality agreements with its employees and suppliers. There can be no
assurance, however, that others will not independently obtain similar
information or otherwise gain access to Cooper Cameron's trade secrets.
EMPLOYEES
As of December 31, 1996, Cooper Cameron had approximately 8,500
employees, of which approximately 3,200 were represented by labor unions.
Cooper Cameron believes its current relations with employees are good. The
only significant labor contracts expiring during 1997 cover employees at the
Cooper Cameron Valve plant in Missouri City, Texas (April), the Compression and
Power Equipment plant in Springfield, Ohio (August), and the Cooper Cameron
plant in Leeds, England.
ITEM 2. PROPERTIES
The Company operates manufacturing plants ranging in size from
approximately 14,000 square feet to approximately 858,000 square feet of
manufacturing space. The Company also owns and leases warehouses, distribution
centers, aftermarket and storage facilities, and sales offices. The Company
leases its corporate headquarters and Cameron division office space in Houston,
Texas.
The Company manufactures, markets and sells its products and provides
services throughout the world, operating facilities in over 30 countries. On
December 31, 1996, the significant facilities used by Cooper Cameron throughout
the world for manufacturing, distribution, aftermarket services, machining,
storage and warehousing contained an aggregate of approximately 6,609,800
square feet of space, of which approximately 5,956,600 square feet (90%) was
owned and 653,200 (10%) was leased. Of this total, approximately 4,794,100
square feet (73%) are located in the United States and 1,395,400 square feet
(21%) are located in Europe. The table below lists the significant
manufacturing, warehouse and distribution facilities by industry segment and
geographic area.
<TABLE>
<CAPTION>
Asia/Pacific
Western Eastern and
Hemisphere Hemisphere Mideast Total
---------- ---------- ------- -----
<S> <C> <C> <C> <C>
Petroleum Production Equipment 13 9 3 25
Compression and Power
Equipment 16 7 1 24
</TABLE>
Cooper Cameron believes its facilities are suitable for their present
and intended purposes and are adequate for the Company's current and
anticipated level of operations.
11
<PAGE> 14
ITEM 3. LEGAL PROCEEDINGS
Cooper Cameron is a party to various legal proceedings and
administrative actions, including certain environmental matters discussed
below, all of which are of an ordinary or routine nature incidental to the
operations of Cooper Cameron. In the opinion of Cooper Cameron's management,
such proceedings and actions should not, individually or in the aggregate, have
a material adverse effect on Cooper Cameron's results of operations or
financial condition.
Environmental Matters
Cooper Cameron is subject to numerous federal, state, local and
foreign laws and regulations relating to the storage, handling, emission and
discharge of materials into the environment, including the Comprehensive
Environmental Response Compensation and Liability Act ("CERCLA"), the Clean
Water Act, the Clean Air Act (including the 1990 Amendments) and the Resource
Conservation and Recovery Act. Cooper Cameron believes that its existing
environmental control procedures are adequate and it has no current plans for
substantial capital expenditures in this area. Cooper Cameron has an active
environmental management program aimed at compliance with existing
environmental regulations and elimination or significant reduction in the
generation of pollutants in its manufacturing processes. Cooper Cameron
management intends to continue these policies and programs.
Cooper Cameron has been identified as a potentially responsible party
("PRP") with respect to ten sites designated for cleanup under CERCLA or
similar state laws, which impose liability for cleanup of certain waste sites
and for related natural resource damages without regard to fault or the
legality of waste generation or disposal. Persons liable for such costs and
damages generally include the site owner or operator and persons that disposed
or arranged for the disposal of hazardous substances found at those sites.
Although CERCLA imposes joint and several liability on all PRPs, in
application, the PRPs typically allocate the investigation and cleanup costs
based upon the volume of waste contributed by each PRP. Settlements often can
be achieved through negotiations with the appropriate environmental agency or
the other PRPs. PRPs that contributed less than one percent of the waste are
often given the opportunity to settle as a "de minimis" party, resolving
liability for a particular site.
Cooper Cameron does not own or operate any of the sites with respect
to which it has been identified as a PRP; in each case, Cooper Cameron is
identified as a party that disposed of waste at the site. With respect to nine
of the sites, Cooper Cameron's share of the waste volume is estimated to be
less than one percent. Cooper Cameron is the major PRP at one site, the
Osborne Landfill in Grove City, Pennsylvania. Cooper Cameron's facility in
Grove City disposed of wastes at the Osborne Landfill from the early 1950s
until 1978. A remedial plan was developed and accepted by the U.S.
Environmental Protection Agency (the "EPA") as the preferred remedy for the
site. The EPA issued an order in 1991 and remediation is in process. Cooper
Cameron has responsibility for the remediation plan and compliance with the EPA
order.
Cooper Cameron has accruals in its balance sheet to the extent costs
are known for the ten sites. Although estimates of the cleanup costs have not
yet been made for certain of these sites,
12
<PAGE> 15
Cooper Cameron believes, based on its preliminary review and other factors,
that the costs to Cooper Cameron relating to these sites will not have a
material adverse effect on its results of operations, financial condition or
liquidity. However, no assurance can be given that the actual costs will not
exceed the estimates of the cleanup costs once determined.
Cooper Cameron does not currently anticipate any material adverse
effect on its results of operations, financial condition or competitive
position as a result of compliance with Federal, state, local or foreign
environmental laws or regulations or cleanup costs of the sites discussed
above. However, some risk of environmental liability and other costs is
inherent in the nature of Cooper Cameron's business, and there can be no
assurance that material environmental costs will not arise. Moreover, it is
possible that future developments, such as promulgation of regulations
implementing the 1990 amendments to the Clean Air Act and other increasingly
strict requirements of environmental laws and enforcement policies thereunder,
could lead to material costs of environmental compliance and cleanup by Cooper
Cameron.
The cost of environmental remediation and compliance generally has not
been an item of material expense for Cooper Cameron during any of the periods
presented, other than with respect to the Osborne Landfill described above.
Cooper Cameron's balance sheet at December 31, 1996, includes accruals totaling
approximately $5.6 million for environmental remediation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
the fourth quarter of 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The common stock of Cooper Cameron, par value $.01 per share (together
with the associated Rights to Purchase Series A Junior Participating Preferred
Stock), is traded on The New York Stock Exchange ("NYSE"). No dividends were
paid during 1996. The following table indicates the range of trading prices on
the NYSE from January 2 through December 31, 1996.
<TABLE>
<CAPTION>
Price Range
------------------------------
High Low Last
----- --- ----
<S> <C> <C> <C>
1996
First Quarter . . . . . . . . . . . . . . . $42 31 7/8 42
Second Quarter . . . . . . . . . . . . . . . $46 1/2 40 1/2 43 3/4
Third Quarter . . . . . . . . . . . . . . . $57 3/8 42 1/2 57 3/8
Fourth Quarter . . . . . . . . . . . . . . . $76 1/2 57 1/4 76 1/2
</TABLE>
The approximate number of holders of Cooper Cameron common stock was 18,000 as
of March 14, 1997. The number of record holders as of the same date was 1,482.
13
<PAGE> 16
ITEM 6. SELECTED FINANCIAL DATA
The information set forth under the caption "Selected Consolidated
Historical Financial Data of Cooper Cameron Corporation" on pages 50-51 in the
1996 Annual Report to Stockholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION.
The information set forth under the caption "Management's Discussion
and Analysis of Results of Operations and Financial Condition of Cooper Cameron
Corporation" on pages 17-24 in the 1996 Annual Report to Stockholders is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The following consolidated financial statements of the Company and the
independent auditors' report set forth on pages 25-49 in the 1996 Annual Report
to Stockholders are incorporated herein by reference:
Report of Independent Auditors.
Consolidated Results of Operations for each of the three years
in the period ended December 31, 1996.
Consolidated Balance Sheets as of December 31, 1996 and 1995.
Consolidated Cash Flows for each of the three years in the
period ended December 31, 1996.
Consolidated Changes in Stockholders' Equity for the period
from June 30, 1995 to December 31, 1995 and the year ended
December 31, 1996.
Notes to Consolidated Financial Statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information on Directors of the Company is set forth in the
section entitled "Election of Directors" on pages 4, 5 and 13 in the Proxy
Statement of the Company for the Annual Meeting of Stockholders to be held May
8, 1997, which section is incorporated herein by reference.
14
<PAGE> 17
Information regarding executive officers of the Company is set forth below.
There was no late filing or failure by an insider to file a report required by
Section 16 of the Exchange Act.
There are no family relationships among the officers listed, and there
are no arrangements or understandings pursuant to which any of them were
elected as officers. Officers are appointed or elected annually by the Board
of Directors at its first meeting following the Annual Meeting of Stockholders,
each to hold office until the corresponding meeting of the Board in the next
year or until a successor shall have been elected, appointed or shall have
qualified.
CURRENT EXECUTIVE OFFICERS OF THE REGISTRANT
Present Principal Position and Other Material
Name and Age Positions Held During Last Five Years
- ------------ ---------------------------------------------
Sheldon R. Erikson (55) Chairman of the Board since May 1996,
President and Chief Executive Officer since
January 1995. Chairman of the Board from 1988
to 1995 and President and Chief Executive
Officer from 1987 to 1995 of The Western
Company of North America.
Thomas R. Hix (49) Senior Vice President of Finance and Chief
Financial Officer since January 1995. Senior
Vice President of Finance, Treasurer and
Chief Financial Officer of The Western
Company of North America from 1993 to 1995.
Executive Vice President and Chief Financial
Officer from 1992 to 1993 and Vice President,
Finance and Chief Financial Officer from 1986
to 1992 of Oceaneering International.
Franklin Myers (44) Senior Vice President, General Counsel and
Secretary since April 1995. Vice President
and General Counsel from 1988 to 1994,
Secretary from 1988 to 1992, and Senior Vice
President and General Counsel from 1994 to
April 1995 of Baker Hughes Incorporated.
Joseph D. Chamberlain (50) Vice President and Corporate Controller since
April 1995. Controller - Financial Reporting
from 1994 to 1995, Assistant Controller and
Manager-Financial Reporting from 1979 to 1994
of Cooper Industries, Inc.
Michael L. Grimes (46) Vice President since November 1996.
President, Cooper Energy Services Division
since April 1996. General Manager, Quality
and Information Management of GE Power
Systems from 1995 to 1996, General Manager,
Apparatus Service Department from 1994 to
1995, General Manager, Power Generation
Services Department from 1993 to 1994 and
General Manager of Marketing, GE Power
Generation from 1992 to 1993 of General
Electric Company.
15
<PAGE> 18
E. Fred Minter (61) Vice President since November 1996.
President, Cooper Turbocompressor Division
since 1988.
ITEM 11. EXECUTIVE COMPENSATION.
The information for this item is set forth in the section entitled
"Compensation of Executive Management" on pages 16-19 in the Proxy Statement of
the Company for the Annual Meeting of Stockholders to be held May 8, 1997,
which section is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information concerning security ownership of certain beneficial
owners and management is set forth in the sections entitled "Voting Securities
and Principal Holders Thereof" on page 3 and "Security Ownership of Management"
on page 14 in the Proxy Statement of the Company for the Annual Meeting of
Stockholders to be held May 8, 1997, which sections are incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information regarding certain relationships and related
transactions is set forth in the section entitled "Certain Transactions" on
page 15 in the Proxy Statement of the Company for the Annual Meeting of
Stockholders to be held May 8, 1997, which section is incorporated herein by
reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K.
(A) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT:
(1) FINANCIAL STATEMENTS:
All financial statements of the Registrant as set forth under
Item 8 of this Annual Report on Form 10-K.
(2) FINANCIAL STATEMENT SCHEDULES:
Financial statement schedules are omitted because of the
absence of conditions under which they are required or because
all material information required to be reported is included
in the consolidated financial statements and notes thereto.
16
<PAGE> 19
(3) EXHIBITS:
3.1 Amended and Restated Certificate of Incorporation of
Cooper Cameron Corporation, dated June 30, 1995,
filed as Exhibit 4.2 to the Registration Statement on
Form S-8 of Cooper Cameron Corporation (Commission
File No. 33-94948), and incorporated herein by
reference.
3.2 First Amended and Restated Bylaws of Cooper Cameron
Corporation, as amended December 12, 1996.
4.1 Form of Rights Agreement, dated as of May 1, 1995,
between Cooper Cameron Corporation and First Chicago
Trust Company of New York, as Rights Agent, filed as
Exhibit 4.1 to the Registration Statement on Form S-8
of Cooper Cameron Corporation (Commission File No.
33-94948), and incorporated herein by reference.
10.1 Cooper Cameron Corporation Long-Term Incentive Plan
(Registration Statement No. 33-95004), incorporated
herein by reference.
10.2 Cooper Cameron Corporation Stock Option Plan for
Non-Employee Directors (Registration Statement No.
33-95000), incorporated herein by reference.
10.3 Second Amendment to the Cooper Cameron Corporation
Stock Option Plan for Non-Employee Directors.
10.4 Cooper Cameron Corporation Retirement Savings Plan
(Registration Statement No. 33-95002), incorporated
herein by reference.
10.5 Cooper Cameron Corporation Employee Stock Purchase
Plan (Registration Statement No. 33-94948),
incorporated herein by reference.
17
<PAGE> 20
10.6 Cooper Cameron Corporation Supplemental Excess
Defined Benefit Plan, filed as Exhibit 10.4 to the
Registration Statement on Form S-4 of Cooper Cameron
Corporation (Commission File No. 33-90288), and
incorporated herein by reference.
10.7 First Amendment to Cooper Cameron Corporation
Supplemental Excess Defined Benefit Plan, effective
as of January 1, 1996.
10.8 Cooper Cameron Corporation Supplemental Excess
Defined Contribution Plan, filed as Exhibit 10.5 to
the Registration Statement on Form S-4 of Cooper
Cameron Corporation (Commission File No. 33-90288),
and incorporated herein by reference.
10.9 First Amendment to Cooper Cameron Corporation
Supplemental Excess Defined Contribution Plan,
effective April 1, 1996.
10.10 Cooper Cameron Corporation Compensation Deferral Plan
(formerly the Cooper Cameron Corporation Management
Incentive Compensation Deferral Plan), effective
January 1, 1996.
10.11 Cooper Cameron Corporation Directors Deferred
Compensation Plan, filed as Exhibit 10.7 to the
Registration Statement on Form S-4 of Cooper Cameron
Corporation (Commission File No. 33-90288), and
incorporated herein by reference.
10.12 Employment Agreement by and between Sheldon R.
Erikson and Cooper Cameron Corporation, effective as
of November 30, 1995, filed as Exhibit 10.9 to the
Annual Report on Form 10-K for 1995 of Cooper Cameron
Corporation, and incorporated herein by reference.
10.13 Employment Agreement by and between Thomas R. Hix and
Cooper Cameron Corporation, effective as of November
30, 1995, filed as Exhibit 10.10 to the Annual Report
on Form 10-K for 1995 of Cooper Cameron Corporation,
and incorporated herein by reference.
10.14 Employment Agreement by and between Franklin Myers
and Cooper Cameron Corporation, effective as of
November 30, 1995, filed as Exhibit 10.11 to the
Annual Report on Form 10-K for 1995 of Cooper Cameron
Corporation, and incorporated herein by reference.
10.15 1995 Management Incentive Compensation Plan of Cooper
Cameron Corporation, dated as of November 14, 1995,
as amended.
10.16 1996 Management Incentive Compensation Plan of Cooper
Cameron Corporation, dated as of February 19, 1996.
10.17 1997 Management Incentive Compensation Plan of Cooper
Cameron Corporation, dated as of December 9, 1996.
10.18 Change in Control Policy of Cooper Cameron
Corporation, approved February 19, 1996.
10.19 Executive Severance Program of Cooper Cameron
Corporation, approved February 19, 1996.
10.20 Credit Agreement, dated as of June 30, 1995, among
Cooper Cameron Corporation and certain of its
subsidiaries and the banks named therein and First
National Bank of Chicago, as agent, filed as Exhibit
4.5 to the Registration Statement on Form S-8 of
Cooper Cameron Corporation (Commission File No.
33-94948), and incorporated herein by reference.
10.21 Amended and Restated Credit Agreement dated as of
March 20, 1997, among Cooper Cameron Corporation and
certain of its subsidiaries and the banks named
therein and First National Bank of Chicago, as agent.
<PAGE> 21
13.1 Portions of 1996 Annual Report to Stockholders are
included as an exhibit to this report and have been
specifically incorporated by reference elsewhere
herein.
21 Subsidiaries of registrant.
23 Consent of Independent Auditors.
27 Financial Data Schedule
(B) REPORTS ON FORM 8-K
The Company filed no reports on Form 8-K during the fourth quarter of
1996 and through March 15, 1997.
19
<PAGE> 22
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) 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, ON THIS 19TH DAY
OF MARCH, 1997.
COOPER CAMERON CORPORATION
REGISTRANT
BY: /s/ Joseph D. Chamberlain
---------------------------------------
(JOSEPH D. CHAMBERLAIN)
Vice President and Corporate Controller
(Principal Accounting Officer)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED ON THIS 19TH DAY OF MARCH, 1997, BELOW BY THE
FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ C. Baker Cunningham Director
- -----------------------------------
(C. Baker Cunningham)
/s/ Grant A. Dove Director
- -----------------------------------
(Grant A. Dove)
/s/ Sheldon R. Erikson Chairman, President and Chief Executive
- ----------------------------------- Officer (principal executive officer)
(Sheldon R. Erikson)
/s/ Michael E. Patrick Director
- -----------------------------------
(Michael E. Patrick)
/s/ David Ross III Director
- -----------------------------------
(David Ross III)
/s/ Michael J. Sebastian Director
- -----------------------------------
(Michael J. Sebastian)
/s/ Thomas R. Hix Senior Vice President of Finance and
- ----------------------------------- Chief Financial Officer
(Thomas R. Hix) (principal financial officer)
</TABLE>
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- ------ ------------------------------------------------------------- --------
<S> <C> <C>
3.1 Amended and Restated Certificate of Incorporation of Cooper
Cameron Corporation, dated June 30, 1995, filed as Exhibit 4.2
to the Registration Statement on Form S-8 of Cooper Cameron
Corporation (Commission File No. 33-94948), and incorporated
herein by reference.
3.2 First Amended and Restated Bylaws of Cooper Cameron
Corporation, as amended December 12, 1996.
4.1 Form of Rights Agreement, dated as of May 1, 1995, between
Cooper Cameron Corporation and First Chicago Trust Company of
New York, as Rights Agent, filed as Exhibit 4.1 to the
Registration Statement on Form S-8 of Cooper Cameron
Corporation (Commission File No. 33-94948), and incorporated
herein by reference.
10.1 Cooper Cameron Corporation Long-Term Incentive Plan
(Registration Statement No. 33-95004), incorporated herein by
reference.
10.2 Cooper Cameron Corporation Stock Option Plan for Non-Employee
Directors (Registration Statement No. 33-95000), incorporated
herein by reference.
</TABLE>
<PAGE> 24
EXHIBIT INDEX
(Continued)
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- ------ ------------------------------------------------------------- --------
<S> <C> <C>
10.3 Second Amendment to the Cooper Cameron Corporation Stock
Option Plan for Non-Employee Directors.
10.4 Cooper Cameron Corporation Retirement Savings Plan
(Registration Statement No. 33-95002), incorporated herein by
reference.
10.5 Cooper Cameron Corporation Employee Stock Purchase Plan
(Registration Statement No. 33-94948), incorporated herein by
reference.
10.6 Cooper Cameron Corporation Supplemental Excess Defined Benefit
Plan, filed as Exhibit 10.4 to the Registration Statement on
Form S-4 of Cooper Cameron Corporation (Commission File No.
33-90288), and incorporated herein by reference.
10.7 First Amendment to Cooper Cameron Corporation Supplemental
Excess Defined Benefit Plan, effective as of January 1, 1996.
10.8 Cooper Cameron Corporation Supplemental Excess Defined
Contribution Plan, filed as Exhibit 10.5 to the Registration
Statement on Form S-4 of Cooper Cameron Corporation
(Commission File No. 33-90288), and incorporated herein by
reference.
10.9 First Amendment to Cooper Cameron Corporation Supplemental
Excess Defined Contribution Plan, effective April 1, 1996.
10.10 Cooper Cameron Corporation Compensation Deferral Plan
(formerly the Cooper Cameron Corporation Management Incentive
Compensation Deferral Plan), effective January 1, 1996.
10.11 Cooper Cameron Corporation Directors Deferred Compensation
Plan, filed as Exhibit 10.7 to the Registration Statement on
Form S-4 of Cooper Cameron Corporation (Commission File No.
33-90288), and incorporated herein by reference.
</TABLE>
<PAGE> 25
EXHIBIT INDEX
(Continued)
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- ------ ------------------------------------------------------------- --------
<S> <C> <C>
10.12 Employment Agreement by and between Sheldon R. Erikson and
Cooper Cameron Corporation, effective as of November 30, 1995,
filed as Exhibit 10.9 to the Annual Report on Form 10-K for
1995 of Cooper Cameron Corporation, and incorporated herein by
reference.
10.13 Employment Agreement by and between Thomas R. Hix and Cooper
Cameron Corporation, effective as of November 30, 1995, filed
as Exhibit 10.10 to the Annual Report on Form 10-K for 1995 of
Cooper Cameron Corporation, and incorporated herein by
reference.
10.14 Employment Agreement by and between Franklin Myers and Cooper
Cameron Corporation, effective as of November 30, 1995, filed
as Exhibit 10.11 to the Annual Report on Form 10-K for 1995 of
Cooper Cameron Corporation, and incorporated herein by
reference.
10.15 1995 Management Incentive Compensation Plan of Cooper Cameron
Corporation, dated as of November 14, 1995, as amended.
10.16 1996 Management Incentive Compensation Plan of Cooper Cameron
Corporation, dated as of February 19, 1996.
10.17 1997 Management Incentive Compensation Plan of Cooper Cameron
Corporation, dated as of December 9, 1996.
10.18 Change in Control Policy of Cooper Cameron
Corporation, approved February 19, 1996.
10.19 Executive Severance Program of Cooper Cameron
Corporation, approved February 19, 1996.
10.20 Credit Agreement, dated as of June 30, 1995, among
Cooper Cameron Corporation and certain of its
subsidiaries and the banks named therein and First
National Bank of Chicago, as agent, filed as Exhibit
4.5 to the Registration Statement on Form S-8 of
Cooper Cameron Corporation (Commission File No.
33-94948), and incorporated herein by reference.
10.21 Amended and Restated Credit Agreement dated as of
March 20, 1997, among Cooper Cameron Corporation and
certain of its subsidiaries and the banks named
therein and First National Bank of Chicago, as agent.
13.1 Portions of 1996 Annual Report to Stockholders are included as
an exhibit to this report and have been specifically
incorporated by reference elsewhere herein.
21 Subsidiaries of registrant.
23 Consent of Independent Auditors.
27 Financial Data Schedule (for SEC purposes only)
</TABLE>
<PAGE> 1
EXHIBIT 3.2
FIRST
AMENDED AND RESTATED
BYLAWS
OF
COOPER CAMERON CORPORATION
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
Corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware or at such other place within the State of Delaware as the Board of
Directors of the Corporation (the "Board of Directors") may at any time and
from time to time designate.
Section 2. Other Offices. The Corporation may also have
offices at such other places both within and without the State of Delaware as
the Board of Directors may at any time and from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders
for the election of directors or for any other purpose shall be held at such
time and place, either within or without the State of Delaware, as shall be
designated from time to time by the Board of Directors and stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. The annual meetings of
stockholders shall be held on such date and at such time as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting, at which meetings the stockholders shall elect by a plurality vote a
Board of Directors and transact such other business as may properly be brought
before the meeting. Except as otherwise required by law, written notice of the
annual meeting stating the place, date and hour of the meeting shall be given
not less than ten nor more than sixty days before the date of the meeting to
each stockholder entitled to vote at such meeting at such address as shall
appear on the books of the Corporation.
Section 3. Special Meetings. Unless otherwise prescribed by
law or by the Certificate of Incorporation of the Corporation (the "Certificate
of Incorporation"), special meetings of stockholders, for any purpose or
purposes, may be called by (i) the Chairman, (ii) the President, or (iii) a
majority of the entire Board of Directors. Special meetings of stockholders
may not be called by any other person or persons. Such request shall state the
purpose or purposes of the proposed meeting, and the business transacted at a
special meeting of stockholders shall be confined to the purpose or purposes
specified in
<PAGE> 2
the notice therefor. Written notice of a special meeting stating the place,
date and hour of the meeting and the purpose or purposes for which the meeting
is called shall be given not less than ten nor more than sixty days before the
date of the meeting to each stockholder entitled to vote at such meeting at
such address as shall appear on the books of the Corporation.
Section 4. Quorum. Except as otherwise provided by law or by
the Certificate of Incorporation, the holders of a majority of the capital
stock issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum shall be present
or represented, any business may be transacted which might have been transacted
at the meeting as originally noticed. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder entitled to vote at the meeting.
Section 5. Voting. Except as otherwise provided by law, the
Certificate of Incorporation or these Bylaws, any question brought before any
meeting of stockholders shall be decided by the vote of the holders of a
majority of the stock represented and entitled to vote thereat. Except as
otherwise provided pursuant to the Certificate of Incorporation as to any
series or class of Preferred Stock, each stockholder represented at a meeting
of stockholders shall be entitled to cast one vote for each share of the
capital stock entitled to vote thereat held by such stockholder. Such votes
may be cast in person or by proxy, but no proxy shall be voted on or after
three years from its date unless such proxy provides for a longer period. The
Board of Directors, in its sole discretion, or the officer of the Corporation
presiding at a meeting of stockholders, in his discretion, may require that any
votes cast at such meeting shall be cast by written ballot; provided, that,
notwithstanding the foregoing, elections of directors at an annual or special
meeting of stockholders shall be written ballot.
Section 6. No Written Consent. Except as otherwise provided
by the Certificate of Incorporation, any action required or permitted to be
taken at any annual or special meeting of stockholders may be taken only upon
the vote of the stockholders at an annual or special meeting duly noticed and
called as provided in these Bylaws, and may not be taken by written consent of
stockholders pursuant to the General Corporation Law of the State of Delaware.
Section 7. List of Stockholders Entitled to Vote. The
officer of the Corporation who has charge of the stock ledger of the
Corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder of the Corporation who is present.
Section 8. Stock Ledger. The stock ledger of the Corporation
shall be the only evidence as to who are the stockholders entitled to examine
the stock ledger, the list required by Section 7 of this Article II or the
books of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
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Section 9. Advance Notice for Business at Annual Meeting.
No business may be transacted at an annual meeting of stockholders, other than
business that is either (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors (or
any duly authorized committee thereof), (b) otherwise properly brought before
the annual meeting by or at the direction of the Board of Directors (or any
duly authorized committee thereof) or (c) otherwise properly brought before the
annual meeting by any stockholder of the Corporation (i) who is a stockholder
of record on the date of the giving of the notice provided for in this Section
9 and on the record date for the determination of stockholders entitled to vote
at such annual meeting and (ii) who complies with the notice procedures set
forth in this Section 9.
In addition to any other applicable requirements, for business
to be properly brought before an annual meeting by a stockholder, such
stockholder must have given timely notice thereof in proper written form to the
Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than sixty (60) days nor more than ninety (90) days prior
to the anniversary date of the immediately preceding annual meeting of
stockholders; provided, however, that in the event that the annual meeting is
called for a date that is not within thirty (30) days before or after such
anniversary date, notice by the stockholder in order to be timely must be so
received not later than the close of business on the tenth (10th) day following
the day on which notice of the date of the annual meeting was mailed to
stockholders or public disclosure of the date of the annual meeting was made,
whichever first occurs.
To be in proper written form, a stockholder's notice to the
Secretary must set forth as to each matter such stockholder proposes to bring
before the annual meeting (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and record address of such stockholder,
(iii) the class or series and number of shares of capital stock of the
Corporation which are owned beneficially and of record by such stockholder,
(iv) a description of all arrangements or understandings between such
stockholder and any other person or persons (including their names) in
connection with the proposal of such business by such stockholder and any
material interest of such stockholder in such business, and (v) a
representation that such stockholder intends to appear in person or by proxy at
the annual meeting to bring such business before the meeting.
No business shall be conducted at the annual meeting of
stockholders except business brought before the annual meeting in accordance
with the procedures set forth in this Section 9; provided, however, that, once
business has been properly brought before the annual meeting in accordance with
such procedures, nothing in this Section 9 shall be deemed to preclude
discussion by any stockholder of any such business. If the Chairman of an
annual meeting determines that business was not properly brought before the
annual meeting in accordance with the foregoing procedures, the Chairman shall
declare to the meeting that the business was not properly brought before the
meeting and such business shall not be transacted.
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors. The Board of
Directors shall consist of not less than five nor more than fifteen members,
the exact number of directors to be determined from time to time by resolution
adopted by a majority of the entire Board of Directors. The directors shall be
divided into three classes, designated Class I, Class II and Class III. Each
class shall consist, as nearly as
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may be possible, of one-third of the total number of directors constituting the
entire Board of Directors. The term of the initial Class I directors shall
terminate on the date of the 1996 annual meeting of stockholders; the term of
the initial Class II directors shall terminate on the date of the 1997 annual
meeting of stockholders; and the term of the initial Class III directors shall
terminate on the date of the 1998 annual meeting of the stockholders. At each
annual meeting of stockholders beginning in 1996, successors to the class of
directors whose term expires at that annual meeting shall be elected for a
three-year term. If the number of directors is changed, any increase or
decrease shall be apportioned among the classes so as to maintain the number of
directors in each class as nearly equal as possible, and any additional
directors of any class elected to fill a vacancy resulting from an increase in
such class shall hold office for a term that shall coincide with the remaining
term of that class, but in no case will a decrease in the number of directors
shorten the term of any incumbent director. A director shall hold office until
the annual meeting for the year in which his term expires and until his
successor shall be elected and shall qualify, subject, however, to prior death,
resignation, retirement, disqualification or removal from office. Any vacancy
on the Board of Directors, however resulting, may be filled by a majority of
the directors then in office, even if less than a quorum, or by a sole
remaining director. Any director elected to fill a vacancy shall hold office
for a term that shall coincide with the term of the class to which such
director shall have been elected. Any director may resign at any time upon
notice to the Corporation. Directors need not be stockholders.
Section 2. Advance Notice of Director Nominations. Only
persons who are nominated in accordance with the following procedures shall be
eligible for election as directors of the Corporation, except as may be
otherwise provided in the Certificate of Incorporation of the Corporation with
respect to the right of holders of Preferred Stock of the Corporation to
nominate and elect a specified number of directors in certain circumstances.
Nominations of persons for election to the Board of Directors may be made at
any annual meeting of stockholders (a) by or at the direction of the Board of
Directors (or any duly authorized committee thereof) or (b) by any stockholder
of the Corporation (i) who is a stockholder of record on the date of the giving
of the notice provided for in this Section 2 and on the record date for the
determination of stockholders entitled to vote at such annual meeting and (ii)
who complies with the notice procedures set forth in this Section 2.
In addition to any other applicable requirements, for a
nomination to be made by a stockholder, such stockholder must have given timely
notice thereof in proper written form to the Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than sixty (60) days nor more than ninety (90) days prior
to the anniversary date of the immediately preceding annual meeting of
stockholders; provided, however, that in the event that the annual meeting is
called for a date that is not within thirty (30) days before or after such
anniversary date, notice by the stockholder in order to be timely must be so
received not later than the close of business on the tenth (10th) day following
the day on which notice of the date of the annual meeting was mailed to
stockholders or public disclosure of the date of the annual meeting was made,
whichever first occurs.
To be in proper written form, a stockholder's notice to the
Secretary must set forth (a) as to each person whom the stockholder proposes
to nominate for election as a director (i) the name, age, business address and
residence address of the person, (ii) the principal occupation or employment of
the person, (iii) the class or series and number of shares of capital stock
of the Corporation which are owned beneficially and of record by the person and
(iv) any other information relating to the person that would be required to be
disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of directors pursuant to
Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder;
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and (b) as to the stockholder giving the notice (i) the name and record address
of such stockholder, (ii) the class or series and number of shares of capital
stock of the Corporation which are owned beneficially or of record by such
stockholder, (iii) a description of all arrangements or understandings between
such stockholder and each proposed nominee and any other person or persons
(including their names) pursuant to which the nomination(s) are to be made by
such stockholder, (iv) a representation that such stockholder intends to appear
in person or by proxy at the annual meeting to nominate the persons named in
its notice and (v) any other information relating to such stockholder that
would be required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Exchange Act and the rules and
regulations promulgated thereunder. Such notice must be accompanied by a
written consent of each proposed nominee to being named as a nominee and to
serve as a director if elected.
No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in
this Section 2. If the Chairman of the annual meeting determines that a
nomination was not made in accordance with the foregoing procedures, the
Chairman shall declare to the meeting that the nomination was defective and
such defective nomination shall be disregarded.
Section 3. Duties and Powers. The business and affairs of
the Corporation shall be managed by or under the direction of the Board of
Directors which may exercise all such powers of the Corporation and do all such
lawful acts and things as are not by statute or by the Certificate of
Incorporation or by these Bylaws directed or required to be exercised or done
by the stockholders.
Section 4. Meetings. The Board of Directors may hold
meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held without
notice at such time and at such place as may from time to time be determined by
the Board of Directors. Special meetings of the Board of Directors may be
called by the Chairman, if there be one, the President, or any director.
Notice thereof stating the place, date and hour of the meeting shall be given
to each director either by mail not less than forty-eight (48) hours before
the date of the meeting, by telephone, facsimile transmission or telegram
on twenty-four (24) hours' notice, or on such shorter notice as the person or
persons calling such meeting may deem necessary or appropriate in the
circumstances.
Section 5. Quorum. Except as may be otherwise specifically
provided by law, the Certificate of Incorporation or these Bylaws, at all
meetings of the Board of Directors, a majority of the entire Board of Directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors. If a quorum shall not be present
at any meeting of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement
at the meeting, until a quorum shall be present.
Section 6. Actions of Board Unless otherwise provided by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting, if all the members of the Board of
Directors or committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board of
Directors or committee.
Section 7. Meetings by Means of Conference Telephone. Unless
otherwise provided by the Certificate of Incorporation or these Bylaws, members
of the Board of Directors, or any committee designated by the Board of
Directors, may participate in a meeting of the Board of Directors or such
committee by means of a conference telephone or similar communications
equipment by means of
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which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this Section 7 shall constitute presence
in person at such meeting.
Section 8. Committees. The Board of Directors may, by
resolution passed by a majority of the entire Board of Directors, designate one
or more committees, each committee to consist of one or more of the directors
of the Corporation. Any committee, to the extent allowed by law and provided
in the resolution establishing such committee, shall have and may exercise all
the powers and authority of the Board of Directors in the management of the
business and affairs of the Corporation. Each committee shall keep regular
minutes and report to the Board of Directors when required.
Section 9. Compensation. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
Section 10. Interested Directors. No contract or transaction
between the Corporation and one or more of its directors or officers, or
between the Corporation and any other corporation, partnership, association, or
other organization in which one or more of its directors or officers are
directors or officers, or have a financial interest, shall be void or voidable
solely for this reason, or solely because the director or officer is present at
or participates in the meeting of the Board of Directors or committee thereof
which authorizes the contract or transaction, or solely because his or their
votes are counted for such purpose if (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of
Directors or committee in good faith authorizes the contract or transaction by
the affirmative vote of a majority of the disinterested directors, even
though the disinterested directors be less than a quorum; or (ii) the material
facts as to his or their relationship or interest and as to the contract or
transaction are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good faith
by vote of the stockholders; or (iii) the contract or transaction is fair as to
the Corporation as of the time it is authorized, approved or ratified, by the
Board of Directors, a committee thereof or the stockholders. Common or
interested directors may be counted in determining the presence of a quorum at
a meeting of the Board of Directors or of a committee which authorizes the
contract or transaction.
Section 11. Advisory Directors. The Chairman of the Board of
Directors may appoint one or more individuals to serve as advisory directors to
the Corporation for a term of one year or less. Any Advisory Director may be
reappointed annually. An Advisory Director appointed by the Chairman shall be
paid the consideration paid to Directors unless otherwise agreed to between the
Chairman and any such Advisory Director. The Advisory Directors shall be
invited to attend meetings of the Board of Directors, but shall not serve on
any committee nor shall have the ability to vote on any action taken by the
Board of Directors. The Advisory Director shall attend for purposes of
advising and counseling the members of the Board of Directors on matters that
come before the Board of Directors.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be
chosen by the Board of Directors and shall be a Chairman of the Board of
Directors, a Chief Executive Officer, a President, a Secretary and a Treasurer.
The Board of Directors, in its discretion, may also choose one or more Vice
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Presidents, Assistant Secretaries, Assistant Treasurers and other officers.
Any number of offices may be held by the same person, unless otherwise
prohibited by law, the Certificate of Incorporation or these Bylaws. The
officers of the Corporation need not be stockholders of the Corporation.
Section 2. Election. The Board of Directors at its first
meeting held after each Annual Meeting of Stockholders shall elect the
officers of the Corporation who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the Board of Directors; and all officers of the Corporation
shall hold office until their successors are chosen and qualified, or until
their earlier resignation or removal. Any officer elected by the Board of
Directors may be removed at any time by the affirmative vote of a majority of
the entire Board of Directors. Any vacancy occurring in any office of the
Corporation shall be filled by a majority of the entire Board of Directors.
The salaries of all officers of the Corporation shall be fixed by the Board of
Directors.
Section 3. Voting Securities Owned by the Corporation.
Powers of attorney, proxies, waivers of notice of meeting, consents and other
instruments relating to securities owned by the Corporation may be executed in
the name of and on behalf of the Corporation by the President or any Vice
President, the Treasurer or the Secretary and any such officer may, in the
name of and on behalf of the Corporation, take all such action as any such
officer may deem advisable to vote in person or by proxy at any meeting of
security holders of any corporation in which the Corporation may own securities
and at any such meeting shall possess and may exercise any and all rights and
power incident to the ownership of such securities and which, as the owner
thereof, the Corporation might have exercised and possessed if present. The
Board of Directors may, by resolution, from time to time confer like powers
upon any other person or persons.
Section 4. Chairman of the Board of Directors. The Chairman
of the Board of Directors shall preside at all meetings of the Board of
Directors and shall be chairman of all meetings of stockholders, and shall do
and perform such other duties and may exercise such other powers as from time
to time may be assigned to him by these Bylaws or by the Board of Directors.
During the absence or disability of the President, the Chairman of the Board of
Directors shall exercise all the powers and discharge all the duties of the
President.
Section 5. Chief Executive Officer. The Chief Executive
Officer of the Corporation, subject to the approval or direction or
authorization of the Board of Directors, shall have general executive charge of
the business and property of the Corporation, sign and execute, or delegate to
the President or any Vice President the signing and execution of, all
authorized contracts, certificates and other instruments of the Corporation,
and do and perform such additional duties as shall be ordered by the Board of
Directors. Either the Chairman of the Board or the President of the
Corporation shall be chosen Chief Executive Officer by the Board of Directors.
Section 6. President. The President shall, subject to the
control of the Board of Directors, have general supervision of the business of
the Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. In the absence or disability of the
Chairman of the Board of Directors, the President shall perform the duties of
the Chairman of the Board of Directors and, when so acting, shall have all the
powers of and be subject to all the restrictions of the Chairman of the Board
of Directors. The President shall also perform such other duties and may
exercise such other powers as from time to time may be assigned to him by these
Bylaws or by the Board of Directors.
Section 7. Vice Presidents. At the request of the President
or, subject to Section 4 of this Article IV, in the President's absence or
inability or refusal to act, the Vice President or the Vice
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Presidents if there is more than one (in the order designated by the Board of
Directors) shall perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. Each Vice President shall perform such other duties and have such
other powers as the Board of Directors from time to time may prescribe,
including, in the absence of the President or in the event of the inability or
refusal of the President to act, the duties of the President, and when so
acting, shall have all the powers of and be subject to all the restrictions
upon the President.
Section 8. Secretary. The Secretary shall attend all
meetings of the Board of Directors and all meetings of stockholders and record
all the proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors,
and shall perform such other duties as may be prescribed by the Board of
Directors or President, under whose supervision he or she shall be. If the
Secretary shall be unable or shall refuse to cause to be given notice of all
meetings of the stockholders and special meetings of the Board of Directors,
and if there be no Assistant Secretary, then either the Board of Directors or
the President may choose another officer to cause such notice to be given. The
Secretary shall have custody of the seal of the Corporation and the Secretary
or any Assistant Secretary, if there be one, shall have authority to affix the
same to any instrument requiring it and when so affixed, it may be attested by
the signature of the Secretary or by the signature of any such Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the Corporation and to attest the affixing by his
signature. The Secretary shall see that all books, reports, statements,
certificates and other documents and records required by law to be kept or
filed are properly kept or filed, as the case may be.
Section 9. Treasurer. The Treasurer shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors,
at its regular meetings, or when the Board of Directors so requires, an account
of all such officer's transactions as Treasurer and of the financial condition
of the Corporation. If required by the Board of Directors, the Treasurer shall
give the Corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors for the faithful performance of
the duties of his or her office and for the restoration to the Corporation, in
case of his or her death, resignation, retirement or removal from office of
all books, papers, vouchers, money and other property of whatever kind in his
or her possession or under his or her control belonging to the Corporation.
Section 10. Assistant Secretaries. Except as may be otherwise
provided in these Bylaws, Assistant Secretaries, if there be any, shall perform
such duties and have such powers as from time to time may be assigned to them
by the Board of Directors, the President, any Vice President, if there be one,
or the Secretary, and in the absence of the Secretary or in the event of his or
her disability or refusal to act, shall perform the duties of the Secretary,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the Secretary.
Section 11. Assistant Treasurers. Assistant Treasurers, if
there be any, shall perform such duties and have such powers as from time to
time may be assigned to them by the Board of Directors, the President, any
Vice President, if there be one, or the Treasurer, and in the absence of the
Treasurer, or in the event of his or her disability or refusal to act, shall
perform the duties of the Treasurer, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the Treasurer. If
required by the Board of Directors, an Assistant Treasurer shall give the
Corporation a
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bond in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of his or her
office and for the restoration to the Corporation, in case of his or her death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his or her possession or under his
or her control belonging to the Corporation.
Section 12. Other Officers Such other officers as the Board
of Directors may choose shall perform such duties and have such powers as from
time to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman of the Board of Directors, the President or a
Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the number of
shares owned by him in the Corporation.
Section 2. Signatures. Where a certificate is countersigned
by (i) a transfer agent other than the Corporation or its employee or (ii) a
registrar other than the Corporation or its employee, any other signature on a
certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he or she were such officer, transfer agent or registrar at
the date of issue.
Section 3. Lost Certificates. The Board of Directors may
direct a new certificate to be issued in place of any certificate theretofore
issued by the Corporation alleged to have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming the certificate
of stock to be lost, stolen or destroyed. When authorizing such issue of a new
certificate, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate, or his legal representative, to advertise the same in
such manner as the Board of Directors shall require and/or to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate
alleged to have been lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these Bylaws. Transfers of
stock shall be made on the books of the Corporation only by the person named in
the certificate or by his attorney lawfully constituted in writing and upon the
surrender of the certificate therefor, which shall be cancelled before a new
certificate shall be issued.
Section 5. Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty days nor less
than ten days before the date of such meeting, nor more than sixty days prior
to any other action. A determination of stockholders of record entitled to
notice of or to vote at a meeting of
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stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned
meeting.
Section 6. Beneficial Owners. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such owner, and to
hold liable for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by
law, the Certificate of Incorporation or these Bylaws, to be given to any
director, member of a committee or stockholder, such notice may be given by
mail, addressed to such director, member of a committee or stockholder, at his
or her address as it appears on the records of the Corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Written notice may also
be given personally or by telegram, telex, facsimile transmission or cable, in
which event notice shall be deemed given upon receipt.
Section 2. Waivers of Notice. Whenever any notice is
required by law, the Certificate of Incorporation or these Bylaws, to be given
to any director, member of a committee or stockholder, a waiver thereof in
writing, signed, by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent thereto.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of
the Corporation, subject to the provisions of the Certificate of Incorporation,
if any, may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, in property, or in shares of the capital
stock. Before payment of any dividend, there may be set aside out of any funds
of the Corporation available for dividends such sum or sums as the Board of
Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for any proper
purpose, and the Board of Directors may modify or abolish any such reserve.
Section 2. Disbursements. All checks or demands for money
and notes of the Corporation shall be signed by such officer or officers or
such other person or persons as the Board of Directors may from time to time
designate.
Section 3. Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its organization and
the words "Corporate Seal, Delaware." The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
10
<PAGE> 11
Section 5. "Entire Board of Directors." As used in these
Bylaws, the term "Entire Board of Directors" shall mean the total number of
directors fixed by the Board of Directors from time to time which the
Corporation would have if there were no vacancies.
ARTICLE VIII
INDEMNIFICATION
The power, right and obligation of the Corporation to
indemnify any director or officer of the Corporation and employees and agents
of the Corporation shall be as set forth in Article TWELFTH of the Certificate
of Incorporation. All directors and officers of the Corporation shall be
entitled to indemnification as set forth in the Certificate of Incorporation.
ARTICLE IX
AMENDMENTS
These Bylaws may be altered, amended or repealed, in whole or
in part, or new Bylaws may be adopted by the stockholders or by the Board of
Directors; provided, however, that notice of such alteration, amendment,
repeal or adoption be contained in the notice of such meeting of stockholders
or Board of Directors, as the case may be. All such amendments must be
approved by either the holders of two-thirds (2/3) of the outstanding voting
stock of the Corporation thereon or by a majority of the entire Board of
Directors then in office; provided, however, notwithstanding any other
provisions of these Bylaws or any provision of law which might otherwise permit
a lesser vote or no vote, but in addition to any vote of the holders of any
particular class or series of stock required by law, the Certificate of
Incorporation or these Bylaws, the favorable vote, at a meeting of stockholders
of the Corporation, of the holders of at least eighty percent (80%) of the
outstanding voting stock of the Corporation entitled to vote shall be required
for any alteration, amendment or repeal of Article II, Sections 3 and 6;
Article III, Section 1, Article VII, Section 5 and this Article IX.
FIRST ADOPTED 6/28/95
AMENDED 12/2/96
11
<PAGE> 1
EXHIBIT 10.3
SECOND AMENDMENT TO
COOPER CAMERON CORPORATION
AMENDED AND RESTATED
1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
WHEREAS, COOPER CAMERON CORPORATION (the "Company") has heretofore
adopted the COOPER CAMERON CORPORATION AMENDED AND RESTATED 1995 STOCK OPTION
PLAN FOR NON-EMPLOYEE DIRECTORS (the "Plan"); and
WHEREAS, the Company desires to amend the Plan in certain respects;
NOW, THEREFORE, the Plan shall be amended as follows, effective as of
December 11, 1996:
1. The phrase "and advisory director" shall be added after the
word "director" in the first sentence of Section 1 of the Plan.
2. The phrase "and advisory director" shall be added after the
word "director" in Section 3 of the Plan.
3. The phrase "or advisory director" shall be added after the
word "director" in each place that it appears in Section 17 of the Plan.
4. As amended hereby, the Plan is specifically ratified and
reaffirmed.
<PAGE> 1
EXHIBIT 10.7
FIRST AMENDMENT TO
COOPER CAMERON CORPORATION
SUPPLEMENTAL EXCESS DEFINED BENEFIT PLAN
WHEREAS, COOPER CAMERON CORPORATION (the "COMPANY") has heretofore
adopted the COOPER CAMERON CORPORATION SUPPLEMENTAL EXCESS DEFINED BENEFIT PLAN
(the "PLAN") for the benefit of its eligible employees; and
WHEREAS, the Company desires to amend the Plan;
NOW, THEREFORE, in consideration of the premises, the Plan shall be
and is hereby amended as follows, effective as of 1996:
1. The reference to "Cooper Cameron Corporation Management Incentive
Compensation Deferral Plan" in Section 1.1(h) of the Plan shall be deleted and
the reference "Cooper Cameron Corporation Compensation Deferral Plan" shall be
substituted therefor.
2. Article IV of the Plan shall be deleted and the following shall be
substituted therefor:
"ARTICLE IV
PAYMENT OF PLAN BENEFITS
The supplemental benefits determined under Article III payable
on account of a Participant's death shall be paid to the same
recipient(s) in the same manner and form as, and coincident with the
payment of the death benefits payable on behalf of such Participant
under the Cooper Cameron Salaried Plan, utilizing the factor or
conditions applicable to such recipient's benefit under the Cooper
Cameron Salaried Plan. The supplemental benefits determined under
Article III payable other than on account of the Participant's death
shall be paid to the Participant in the form of a benefit for the life
of the Participant beginning as of the date he attains age 65 or, if
later, his termination of employment with the Company; provided,
however, the Compensation Committee of the Board may, in its sole
discretion, direct that such supplemental benefits be paid to or on
behalf of a Participant to the same recipient(s) in the same manner
and form as, and
1
<PAGE> 2
coincident with, the payment of the retirement benefits of such
Participant under the Cooper Cameron Salaried Plan, utilizing the
factor or conditions applicable to such Participant's benefit under
the Cooper Cameron Salaried Plan. Notwithstanding the foregoing, any
supplemental benefit payable to or on behalf of a Participant under
the Plan in accordance with provisions of the Plan previously in
effect shall be paid to or on behalf of such Participant in the same
manner and form as provided under such prior provisions."
3. As amended hereby, the Plan is specifically ratified and reaffirmed.
EXECUTED at Houston, Texas, this 20th day of February, 1996.
COOPER CAMERON CORPORATION
BY: /s/ Franklin Myers
---------------------------------
Name: FRANKLIN MYERS
Title: SENIOR VICE PRESIDENT, GENERAL
COUNSEL AND SECRETARY
2
<PAGE> 1
EXHIBIT 10.9
FIRST AMENDMENT TO
COOPER CAMERON CORPORATION
SUPPLEMENTAL EXCESS DEFINED CONTRIBUTION PLAN
WHEREAS, COOPER CAMERON CORPORATION (THE "COMPANY") has heretofore adopted
the COOPER CAMERON CORPORATION SUPPLEMENTAL EXCESS DEFINED CONTRIBUTION PLAN
(THE "PLAN") for the benefit of the eligible employees of the Employer (as
defined in the Plan); and
WHEREAS, the Company desires to amend the Plan;
NOW, THEREFORE, in consideration of the premises, the Plan shall be and is
hereby amended as follows, effective as of April 1, 1996:
1. The references to "Section 401(a)(17) or Section 415" in the first
"WHEREAS" clause and in Article II of the Plan shall be deleted and the
references "Section 401(a)(17), 401(k)(3), 401(m), 402(g)(l) or 415" shall be
substituted therefor.
2. The reference to "Cooper Cameron Corporation Management Incentive
Compensation Deferral Plan" in Section 1.1(g) of the Plan shall be deleted and
the reference "Cooper Cameron Corporation Compensation Deferral Plan" shall be
substituted therefor.
3. The references to "Sections 401(a)(17) and 415" in Sections 3.1(a) and
(b) of the Plan shall be deleted and the references "Section 401(a)(17),
401(k)(3), 401(m), 402(g)(1) and 415" shall be substituted therefor.
4. The following shall be added to Section 3.1 of the Plan:
"Notwithstanding the foregoing, the credits pursuant to paragraph (a)
above respecting the provisions of Sections 401 (a)(17), 401(m), and 415
of the Code and pursuant to paragraph (b) above are contingent upon such
Member electing the maximum cash or deferred contributions under the
Cooper Cameron Savings Plan pursuant to Section 402(g) of the Code or as
permitted under the terms of the Cooper Cameron Savings Plan."
5. The references to "Sections 401(a)(17) and 415" in Section 3.2 of the
Plan shall be deleted and the references "Section 401(a)(17), 401(k)(3),
402(g)(1) and 415" shall be substituted therefor.
6. The reference to "6%" in Section 3.2 of the Plan shall be deleted and
the reference "10%" shall be substituted there for.
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<PAGE> 2
7. The following shall be added after the phrase "as of the last day of
each month" in the second sentence of Section 3.3 of the Plan:
"preceding April 1, 1996,"
8. The reference to "Supplemental Matching and Supplemental Basic
Accounts" in the first sentence of Section 5.1 of the Plan shall be deleted and
the reference "Supplemental Matching, Supplemental Basic and Supplemental
Post-Tax Accounts" shall be substituted therefor.
9. The reference to "Section 3.3" in the second sentence of Section 5.1
of the Plan shall be deleted and the reference "Section 3.4" shall be
substituted therefor.
10. The first sentence of Section 5.2 of the Plan shall be deleted and
the following shall be substituted therefor:
"The benefits payable under the Plan from a Participant's Supplemental
Matching, Supplemental Basic and Supplemental Post-Tax Accounts shall be
paid to the Participant, or in the event of his death to his Beneficiary,
in one lump sum payment; provided, however, the Compensation Committee of
the Board may, in its sole discretion, direct that such benefits be paid
to or on behalf of a Participant to the same recipient(s) in the same
manner and form as, and coincident with, the payment of the benefits of
such Participant under the Cooper Cameron Savings Plan."
11. As amended hereby, the Plan is specifically ratified and reaffirmed.
EXECUTED at Houston, Texas, this 20th day of February, 1996.
COOPER CAMERON CORPORATION
BY: /s/ Franklin Myers
----------------------------------
NAME: Franklin Myers
TITLE: Senior Vice President,
General Counsel and Secretary
2
<PAGE> 1
EXHIBIT 10.10
COOPER CAMERON CORPORATION
COMPENSATION DEFERRAL PLAN
<TABLE>
<S> <C>
ARTICLE I - DEFINITIONS 1
1.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 1
(a) AFFILIATE . . . . . . . . . . . . . . . . . 1
(b) BASE SALARY . . . . . . . . . . . . . . . . 1
(c) BENEFICIARY . . . . . . . . . . . . . . . . 1
(d) BOARD . . . . . . . . . . . . . . . . . . . 1
(e) CHANGE OF CONTROL . . . . . . . . . . . . . 1
(f) CODE . . . . . . . . . . . . . . . . . . . . 1
(g) COMMITTEE . . . . . . . . . . . . . . . . . 1
(h) COMPANY . . . . . . . . . . . . . . . . . . 1
(i) COMPANY DEFERRAL . . . . . . . . . . . . . . 1
(j) DEFERRED COMPENSATION . . . . . . . . . . . 2
(k) EFFECTIVE DATE . . . . . . . . . . . . . . . 2
(l) EMPLOYER . . . . . . . . . . . . . . . . . . 2
(m) INCENTIVE AWARD . . . . . . . . . . . . . . 2
(n) PARTICIPANT . . . . . . . . . . . . . . . . 2
(o) PLAN . . . . . . . . . . . . . . . . . . . . 2
(p) PLAN ACCOUNT . . . . . . . . . . . . . . . . 2
(q) UNFORSEEABLE FINANCIAL EMERGENCY . . . . . . 2
1.2 CONSTRUCTION . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II - ELIGIBILITY FOR PLAN PARTICIPATION . . . . . . . . . . . . 3
2.1 ELIGIBLE CLASS . . . . . . . . . . . . . . . . . . . 3
2.2 ELIGIBLE EMPLOYEES . . . . . . . . . . . . . . . . . 3
2.3 PARTICIPATION . . . . . . . . . . . . . . . . . . . . 3
(a) BASE SALARY . . . . . . . . . . . . . . . . 3
(b) INCENTIVE AWARD . . . . . . . . . . . . . . 3
(c) COMPANY DEFERRAL . . . . . . . . . . . . . . 3
2.4 TIME OF MAKING ELECTIONS . . . . . . . . . . . . . . 3
2.5 NATURE OF ELECTIONS . . . . . . . . . . . . . . . . . 3
ARTICLE III - CREDITING OF DEFERRED COMPENSATION TO PLAN ACCOUNTS . . . 4
3.1 ESTABLISHMENT OF PLAN ACCOUNTS . . . . . . . . . . . 4
3.2 CREDITING OF INTEREST EQUIVALENTS . . . . . . . . . . 4
</TABLE>
i
<PAGE> 2
<TABLE>
<S> <C>
ARTICLE IV - PAYMENT OF DEFERRED COMPENSATION AMOUNTS . . . . . . . . . 4
4.1 PAYMENT OF DEFERRED COMPENSATION. . . . . . . . . . . 4
4.2 UNFORESEEABLE FINANCIAL EMERGENCY . . . . . . . . . . 5
4.3 CHANGE IN PURPOSE . . . . . . . . . . . . . . . . . . 5
4.4 CHANGE OF CONTROL . . . . . . . . . . . . . . . . . . 5
4.5 NO FORFEITURE OF DEFERRED COMPENSATION. . . . . . . . 5
4.6 DEBITING OF PLAN ACCOUNTS . . . . . . . . . . . . . . 5
ARTICLE V - BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE VI - ADMINISTRATIVE PROVISIONS . . . . . . . . . . . . . . . . 6
6.1 POWERS AND RESPONSIBILITIES OF THE BOARD . . . . . . 6
6.2 ACTIONS OF THE BOARD . . . . . . . . . . . . . . . . . 6
6.3 EXPENSES . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE VII - AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . 6
ARTICLE VIII - ADOPTION BY SUBSIDIARIES .... . . . . . . . . . . . . . 7
ARTICLE IX - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 7
9.1 NON-ALIENATION OF BENEFITS . . . . . . . . . . . . . . 7
9.2 PAYMENT OF BENEFITS TO OTHERS . . . . . . . . . . . . 7
9.3 PLAN NON-CONTRACTUAL . . . . . . . . . . . . . . . . . 7
9.4 FUNDING . . . . . . . . . . . . . . . . . . . . . . . 7
9.5 CLAIMS OF OTHER PERSONS . . . . . . . . . . . . . . . 7
9.6 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . 8
9.7 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
ii
<PAGE> 3
COOPER CAMERON CORPORATION
COMPENSATION DEFERRAL PLAN
COOPER CAMERON CORPORATION (hereinafter referred to as the "COMPANY")
hereby restates the COOPER CAMERON CORPORATION MANAGEMENT INCENTIVE
COMPENSATION DEFERRAL PLAN into the form herein and hereby renames such plan as
the "COOPER CAMERON CORPORATION COMPENSATION DEFERRAL PLAN" (hereinafter
referred to as the "PLAN"), effective as of January 1, 1996, to provide a
method of attracting and retaining key employees of the Employer (as defined
herein) and to encourage such key employees to remain with and devote their
best efforts to the business of the Employer, thereby advancing the interests
of the Employer.
iii
<PAGE> 4
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. Except as otherwise required by the context, the
terms used in the Plan shall have the meaning hereinafter set forth.
(a) AFFILIATE. The term "AFFILIATE" shall mean any member of a controlled
group of corporations (as determined under section 414(b) of the Code)
of which the Company is a member, any member of a group of trades or
businesses under common control (as determined under section 414(c) of
the Code) with the Company, and any member of an affiliated service
group (as determined under section 414(m) of the Code) of which the
Company is a member.
(b) BASE SALARY. The term "BASE SALARY" shall mean the base salary from
the Employer earned by a Participant for services rendered or labor
performed during a calendar year, which, except to the extent of
participation in this Plan, would become payable as of the Employer's
payroll dates during such calendar year.
(c) BENEFICIARY. The term "BENEFICIARY" shall mean the person who, in
accordance with the provisions of Article V of the Plan, shall be
entitled to receive payment of the Participant's Deferred Compensation
in the event the Participant dies before his interest under the Plan
has been distributed to him in full.
(d) BOARD. The term "BOARD" shall mean the Board of Directors of the
Company.
(e) CHANGE OF CONTROL. The term "CHANGE OF CONTROL" with respect to the
Company shall have the same meaning as such term has in the Cooper
Cameron Corporation Long-Term Incentive Plan.
(f) CODE. The term "CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time. Reference to a section of the Code shall
include such section and any comparable section or sections of any
future legislation that amends, supplements, or supersedes such
section.
(g) COMMITTEE. The term "COMMITTEE" shall mean (1) for the period
preceding a Change in Control, the Compensation Committee of the
Board, (2) for the two-year period following a Change in Control, the
individuals who comprised the Compensation Committee of the Board
immediately prior to the Change in Control, acting in their individual
capacities, and (3) thereafter, the Committee appointed by the
Company.
(h) COMPANY. The term "COMPANY" shall mean Cooper Cameron Corporation, its
corporate successors, and the surviving corporation resulting from any
merger of Cooper Cameron Corporation with any other corporation or
corporations.
(i) COMPANY DEFERRAL. The term "COMPANY DEFERRAL" shall mean the deferred
compensation benefits authorized in the sole discretion of the
Company, on behalf of a Participant pursuant to Section 2.3(c) of the
Plan.
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<PAGE> 5
(j) DEFERRED COMPENSATION. The term "DEFERRED COMPENSATION" shall mean,
with respect to a Participant for a calendar year, the sum of (1) the
amount of Base Salary deferred by such Participant for such calendar
year, (2) the amount of an Incentive Award deferred by such
Participant for such calendar year, (3) the amount of any Company
Deferral made on behalf of such Participant for such calendar year,
and (4) the amount of interest equivalents credited on behalf of such
Participant for such calendar year, all in accordance with the
provisions of Sections 2.3 and 3.2 of the Plan.
(k) EFFECTIVE DATE. The term "EFFECTIVE DATE" shall mean January 1, 1996,
as to this restatement of the Plan.
(l) EMPLOYER. The term "EMPLOYER" shall mean the Company, as well as any
Affiliate that may adopt the Plan in accordance with the provisions of
Article VIII of the Plan.
(m) INCENTIVE AWARD. The term "INCENTIVE AWARD" shall mean compensation or
bonus earned from the Employer by a Participant during, and awarded to
the Participant for, a calendar year under the Cooper Cameron
Corporation Management Incentive Plan, which, except to the extent of
participation in this Plan, would become payable in one lump sum in
the calendar year next following such calendar year.
(n) PARTICIPANT. The term "PARTICIPANT" shall mean any employee of an
Employer who is eligible to participate in the Plan and who elects to
participate in the Plan pursuant to Article II of the Plan.
(o) PLAN. The term "PLAN" shall mean the Cooper Cameron Corporation
Compensation Deferral Plan as set forth herein.
(p) PLAN ACCOUNT. The term "PLAN ACCOUNT" shall mean the account
established and maintained on behalf of a Participant under the Plan
pursuant to the provisions of Article III.
(q) UNFORESEEABLE FINANCIAL EMERGENCY. An unexpected need for cash that
(1) arises from an illness, casualty loss, sudden financial reversal,
or such other unforeseeable occurrence that is caused by an event
beyond the control of such individual, (2) would result in severe
financial hardship to such individual, and (3) is not reasonably
satisfiable from other resources. Cash needs arising from foreseeable
events, such as the purchase of a house or education expenses for
children, shall not be considered to be the result of an Unforeseeable
Financial Emergency.
1.2 CONSTRUCTION. Except as otherwise indicated by context,
masculine terminology used herein also includes the feminine and neuter, and
terms used in the singular may also include the plural.
2
<PAGE> 6
ARTICLE II
ELIGIBILITY FOR PLAN PARTICIPATION
2.1 ELIGIBLE CLASS. Key employees of the Employer (including
those employees who are eligible to receive Incentive Awards for a calendar
year) shall be within the class of employees eligible to participate in the
Plan.
2.2 ELIGIBLE EMPLOYEES. Those employees within the eligible class
described in Section 2.1 above who have been selected for eligibility by the
Board, from time to time, shall be eligible employees for purposes of the Plan.
2.3 PARTICIPATION. Participation in the Plan shall be as follows:
(a) BASE SALARY. An eligible employee may elect to become
a Participant in the Plan with respect to the Base Salary to be earned
by such employee during a calendar year by filing with the Company an
election to defer the receipt of all or a portion of his Base Salary
for that calendar year. The election to participate in the Plan shall
specify (1) the integral percentage (from 1% to 100%) or (2) a certain
dollar amount for the calendar year.
(b) INCENTIVE AWARD. An eligible employee may elect to
become a Participant in the Plan with respect to the Incentive Award
to be earned by such employee during a calendar year by filing with
the Company an election to defer the receipt of all or a portion of
his Incentive Award for that calendar year. The election to
participate in the Plan shall specify (1) the integral percentage
(from 1% to 100%), (2) a certain dollar amount, or (3) the amount in
excess of a certain dollar amount for the calendar year.
(c) COMPANY DEFERRAL. An eligible employee shall become a
Participant in the Plan with respect to any Company Deferrals
authorized on behalf of such employee for a calendar year. Any such
Company Deferrals shall be in the sole discretion of the Company and
may apply to selected employees for selected calendar years.
2.4 TIME OF MAKING ELECTIONS. Any election which may be made by a
Participant under this Article II must be made not later than December 31 of
the calendar year preceding the calendar year during which the Base Salary
and/or Incentive Award to which such election relates is earned.
Notwithstanding the foregoing, for any calendar year during which an employee
first becomes eligible to participate in the Plan, elections as to the
Participant's Base Salary and/or Incentive Award must be made within 30 days of
such employee first becoming so eligible and (i) with respect to such Base
Salary, shall apply to the first payroll period following such election and
(ii) with respect to such Incentive Award, shall apply to the entire Incentive
Award for such calendar year; provided, the amount of such Incentive Award is
not reasonably ascertainable at the time of such initial eligibility. All
elections shall be made in the manner and form prescribed by the Company.
2.5 NATURE OF ELECTIONS. Any election which may be made by a
Participant under Article II with respect to the Participant's Base Salary
and/or Incentive Award for a calendar year shall be irrevocable once made. A
Participant's election for any calendar year shall not automatically carry over
to subsequent calendar years.
3
<PAGE> 7
ARTICLE III
CREDITING OF DEFERRED COMPENSATION TO PLAN ACCOUNTS
3.1 ESTABLISHMENT OF PLAN ACCOUNTS. The Company shall establish a
Plan Account for each Participant in the Plan, and the Company shall credit to
the Participant's Plan Account the Participant's Deferred Compensation for each
calendar year. Deferred Compensation pursuant to Section 2.3(a) shall be
credited as such Base Salary is deferred as of the end of each payroll period
within such calendar year. Deferred Compensation pursuant to Section 2.3(b)
shall be credited as of the date such Incentive Award would have been payable
in the calendar year following such calendar year. Deferred Compensation
pursuant to Section 2.3(c) shall be credited as of the date determined by the
Company during such calendar year.
3.2 CREDITING OF INTEREST EQUIVALENTS. As of the last day of each
calendar year, Deferred Compensation credited to a Participant's Plan Account
shall be credited with interest equivalents, as additional Deferred
Compensation, in an amount equal to simple interest, at a rate of interest
equal to the average of the Chase Manhattan Bank Average Quarterly Prime Rates
for such calendar year. Such interest equivalents shall be credited (i) on the
amount of Deferred Compensation (including any interest equivalents previously
credited pursuant to this Section 3.2) credited as of the last day of the
calendar year preceding such calendar year, (ii) on 50% of the Deferred
Compensation credited during such calendar year pursuant to Section 2.3(a), and
(iii) on the Deferred Compensation credited during such calendar year pursuant
to Sections 2.3(b) and 2.3(c) multiplied by a fraction, the numerator of which
is the number of days between the date(s) such Deferred Compensation was
credited during such calendar year and the end of such calendar year and the
denominator of which is 365.
ARTICLE IV
PAYMENT OF DEFERRED COMPENSATION AMOUNTS
4.1 PAYMENT OF DEFERRED COMPENSATION. Payment of the Deferred
Compensation of a Participant for all calendar years shall be made following
such Participant's termination of employment with the Employer, with the time
and manner of such payment to be determined in the sole discretion of the
Compensation Committee of the Board. The time of commencement of payment shall
be as of such termination, as of a specified age following such termination, or
as of a specified date following such termination. The manner of such payment
shall be a lump sum or installments for a five-, ten-, or fifteen-year period,
or a combination thereof. In making its determination as to time and manner of
payment, the Committee may consider the age, family status, health, financial
status, or such other factors as it deems relevant respecting the Participant.
The Participant may, but shall not be required to, express his preference to
the Committee as to the time and manner of payment of his Deferred
Compensation, but the Committee shall be under no obligation to follow such
preference. All Deferred Compensation shall be paid in cash. In the event the
Participant is to receive Deferred Compensation in installments, the amount of
each such installment shall be equal to a fraction of the amount of the
Deferred Compensation remaining to be paid with respect to such Deferred
Compensation, the numerator
4
<PAGE> 8
of which is one and the denominator of which is the number of installments of
such Deferred Compensation remaining to be paid. The installments of the
Deferred Compensation remaining to be paid shall continue to be credited with
interest equivalents as provided in Section 3.2.
4.2 UNFORESEEABLE FINANCIAL EMERGENCY. Plan provisions to the
contrary notwithstanding, in the event of an Unforeseeable Financial Emergency
of the Participant or his Beneficiary, as determined in the sole discretion of
the Committee, payment of Deferred Compensation shall be accelerated by being
made in one lump sum as soon as practicable following the Committee's
determination of such Unforeseeable Financial Emergency. The amount of such
Deferred Compensation so accelerated shall be the amount the Committee
determines as necessary to meet the needs created by the Unforeseeable
Financial Emergency.
4.3 CHANGE IN PURPOSE. Plan provisions to the contrary
notwithstanding, in the event of a major tax law change or other reason, as
determined in the sole discretion of the Committee, which makes the continued
deferral of payment of Deferred Compensation undesirable, payment of all of the
Participants' Deferred Compensation shall be accelerated by being made in one
lump sum as soon as practicable following the Committee's determination to
discontinue deferrals.
4.4 CHANGE OF CONTROL. Plan provisions to the contrary
notwithstanding, if there is a Change of Control, the Committee may, in its
sole discretion, fix a date, on or prior to the effective date of such Change
of Control, as of which all remaining Deferred Compensation then credited to
Participants' Plan Accounts may be paid in one lump sum or in installments, as
determined in the sole discretion of the Committee.
4.5 NO FORFEITURE OF DEFERRED COMPENSATION. All Deferred
Compensation credited to a Participant's Plan Account shall, in all cases, be
nonforfeitable.
4.6 DEBITING OF PLAN ACCOUNTS. Once an amount of Deferred
Compensation has been paid, such amount shall be debited from the Participant's
Plan Account and shall cease to exist.
ARTICLE V
BENEFICIARIES
A Participant, by written instrument filed with the Company in such
manner and form as the Company may prescribe, may designate one or more
beneficiaries to receive payment of the Participant's Deferred Compensation in
the event the Participant dies before his interest under the Plan is
distributed to him in full. Any such beneficiary designation may be changed
from time to time prior to the death of the Participant. In the absence of a
beneficiary designation on file with the Company at the time of the
Participant's death, the Deferred Compensation remaining to be paid to the
Participant shall be paid as it becomes due under the Plan to the executors or
administrator of the Participant's estate.
5
<PAGE> 9
ARTICLE VI
ADMINISTRATIVE PROVISIONS
6.1 POWERS AND RESPONSIBILITIES OF THE BOARD. The Board shall
have full power and authority to interpret, construe, and administer the Plan
and its interpretations and constructions hereof, and actions hereunder,
including the timing, form, amount, or recipient of any payment to be made
hereunder, shall be binding and conclusive on all persons for all purposes. In
exercising such powers, authorities, and responsibilities, the Board shall at
all times exercise good faith and refrain from arbitrary action. The Board may
delegate any of its powers, authorities, or responsibilities for the operation
and administration of the Plan to a person or committee other than itself and
may employ such attorneys, agents, or accountants as it may deem necessary or
advisable to assist it in carrying out its duties hereunder. The Board has, to
the extent provided herein, delegated certain of such powers and
responsibilities to the Committee.
6.2 ACTIONS OF THE BOARD. Any act authorized, permitted, or
required to be taken by the Board under the Plan, which has not been delegated
in accordance with the provisions of Section 6.1, may be taken by a majority of
the members of the Board, either by vote at a meeting, or in writing without a
meeting. All notices, advice, directions, certifications, approvals, and
instructions required or authorized to be given by the Company under the Plan
shall be in writing and signed by either (i) a majority of the members of the
Board, or by such member or members as may be designated in writing, signed by
all the members thereof, as having authority to execute such documents on its
behalf, or (ii) a person or committee who becomes authorized to act for the
Board in accordance with the provisions of Section 6.1. Any action which is
taken by the Board under the Plan shall be final, conclusive, and binding upon
the Company, all persons who have a claim or interest under the Plan, and all
third parties dealing with the Company or Board.
6.3 EXPENSES. Any expenses properly incurred incident to the
administration, termination, or protection of the Plan, including the cost of
furnishing any bond or security, shall be paid by the Company.
ARTICLE VII
AMENDMENT AND TERMINATION
The Company reserves the right to amend or terminate the Plan at any
time by action of the Board; provided, however, that (i) no such action shall
adversely affect the rights of any Participant with respect to Deferred
Compensation thereto credited to such Participant's Plan Account, unless an
equivalent benefit is provided under another plan or program sponsored by an
Employer, and (ii) no change may be made in the Committee's power and
responsibility to determine the time and manner of payment of Deferred
Compensation pursuant to Section 4.1 following a Change in Control.
6
<PAGE> 10
ARTICLE VIII
ADOPTION BY SUBSIDIARIES
Any Subsidiary of the Company which is not an Employer may, with the
consent of the Company, adopt the Plan and become an Employer hereunder by
causing an appropriate written instrument evidencing such adoption to be
executed pursuant to the authority of its Board of Directors and filed with the
Company.
ARTICLE IX
MISCELLANEOUS
9.1 NON-ALIENATION OF BENEFITS. No benefit under the Plan shall
at any time be subject in any manner to alienation or encumbrance. If any
Participant or Beneficiary shall attempt to, or shall alienate or in any way
encumber his benefits under the Plan, or any part thereof, or if by reason of
his bankruptcy or other event happening at any time, any such benefits would
otherwise be received by anyone else or would not be enjoyed by him, his
interest in all such benefits shall automatically terminate and the same shall
be held or applied to or for the benefit of such person, his spouse, children,
or other dependents as the Company may select
9.2 PAYMENT OF BENEFITS TO OTHERS. If any Participant or
Beneficiary to whom a benefit is payable is unable to care for his affairs
because of illness or accident, any payment due (unless prior claim therefor
shall have been made by a duly qualified guardian or other legal
representative) may be paid to the spouse, parent, brother, or sister, or any
other individual deemed by the Company to be maintaining or responsible for the
maintenance of such person. Any payment made in accordance with the provisions
of this Section 9.2 shall be a complete discharge of any liability of the
Plan with respect to the benefit so paid.
9.3 PLAN NON-CONTRACTUAL. Nothing herein contained shall be
construed as a commitment or agreement on the part of any person employed by an
Employer to continue his employment with an Employer, and nothing herein
contained shall be construed as a commitment on the part of an Employer to
continue the employment or the annual rate of compensation of any such person
for any period, and all Participants shall remain subject to discharge to the
same extent as if the Plan had never been established.
9.4 FUNDING. In order to provide a source of payment for its
obligations under the Plan, the Company may establish a trust fund. Subject to
the provisions of the trust agreement governing such trust fund, the obligation
of an Employer under the Plan to provide a Participant or a Beneficiary with a
benefit constitutes the unsecured promise of such Employer to make payments as
provided herein, and no person shall have an interest in, or a lien or prior
claim upon, any property of the Employer.
9.5 CLAIMS OF OTHER PERSONS. The provisions of the Plan shall in
no event be construed as giving any person, firm, or corporation any legal or
equitable right as against an Employer, its officers, employees, or directors,
except any such rights as are specifically provided for in the Plan or are
hereafter credited in accordance with the terms and provisions of the Plan.
7
<PAGE> 11
9.6 SEVERABILITY. The invalidity or unenforceability of any
particular provision of the Plan shall not affect any other provision hereof,
and the Plan shall be construed in all respects as if such invalid or
unenforceable provisions were omitted herefrom.
9.7 GOVERNING LAW. The provisions of the Plan shall be governed
and construed in accordance with the laws of the State of Texas.
EXECUTED at Houston, Texas this 20th day of February, 1996.
COOPER CAMERON CORPORATION
BY: /s/ Franklin Myers
---------------------------------
NAME: Franklin Myers
TITLE: Senior Vice President, General
Counsel and Secretary
<PAGE> 1
EXHIBIT 10.15
COOPER CAMERON CORPORATION
1995 MANAGEMENT INCENTIVE COMPENSATION PLAN
I. PURPOSE
The Cooper Cameron Management Incentive Compensation Plan (the "Plan"), has
been designed to motivate and reward key management employees whose efforts
impact the performance of Cooper Cameron Corporation (the "Company") and its
subsidiaries through the achievement of pre-established financial and
individual objectives.
Performance under the Plan is measured on the fiscal (calendar) year and
payments under the Plan are made annually.
II. ELIGIBILITY
Officers and key management employees may be eligible to participate in the
plan, upon the recommendation of their manager and approval by the Chief
Executive Officer of the Company. An employee who is eligible to participate
in any other cash incentive plan of the company is not eligible to participate
in this Plan.
III. AWARD CRITERIA
The Compensation Committee of the Board of Directors is responsible for
approving the Company performance objectives that are used to determine awards
paid for Company objectives under this plan. Performance objectives for
operating units below the corporate level will be established by the
appropriate manager subject to overall approval of the Chief Executive Officer.
For 1995, performance under the Plan will be determined based on:
Earnings Before Interest, Taxes and Depreciation (EBITDA)
A target award percentage is established for each position eligible to
participate in the Plan. For 1995, the actual target award will be determined
by applying this percentage to your base pay in effect at January 1, 1995,
multiplied by 12, if you were a participant in the Plan for the full year. If
you became eligible to participate in the Plan after January 1, 1995, your
target award percentage will be applied to your base pay in effect at the date
you became a participant, multiplied by the number of months in 1995 in which
you were a plan participant.
Generally, target award is paid when performance under the Plan meets, but does
not exceed pre-established performance objectives.
V. AWARD CATEGORIES
For 1995, a participant may have Company Objectives, Division Objectives,
Business Unit Objectives and/or Individual Objectives, each of which is
assigned by the immediate manager and provided a weighting in determining the
Target Award.
<PAGE> 2
Excluding individual objectives, which are optional, the following weightings
will apply:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
PERFORMANCE WEIGHTING
- ------------------------------------------------------------------------------------------------
CORPORATE OBJECTIVE DIVISION OBJECTIVE BUSINESS UNIT
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Corporate Participants 100% - -
- ------------------------------------------------------------------------------------------------
Divisions:
Division President 20% 80%
- ------------------------------------------------------------------------------------------------
Staff Managers 20% 80% -
- ------------------------------------------------------------------------------------------------
Business Unit Managers 20% 30% 50%
- ------------------------------------------------------------------------------------------------
All Other Eligible Positions Weighting To be Determined by Immediate Manager
- ------------------------------------------------------------------------------------------------
</TABLE>
VI. PERFORMANCE MEASUREMENT
Entry This is the level of performance at or below
which no award will be generated for this
particular objective of the plan.
Target Award This is the expected level of performance
based on the current year's financial plan.
Overachievement (OA) This is the level at which the maximum award
under the plan will be paid and the maximum
award is limited to 150% of TA.
Performance above or below target will be prorated down/up to the
entry/overachievement levels established for each financial objective.
VII. AWARD CALCULATION
Following are examples of how awards are calculated under the Plan:
A. Assume the following financial objectives:
Cooper Cameron Target EBITDA Objective $100 million
Entry Level Objective $ 90 million
Overachievement (OA) Objective $125 million
Division Target EBITDA Objective $ 25 million
Entry Level Objective $ 20 million
Overachievement (OA) Objective $ 31 million
B. Assume actual EBITDA performance as follows:
Cooper Cameron $110m
Division $ 22m
Then Corporate Attainment = 120% ($110m prorated between $100m target
and $125m OA)
And Division Attainment = 40% ($22m prorated between $25m target and
$20m entry)
<PAGE> 3
C. Corporate Participant
January 1, 1995 base pay = $6,000 per month
Target Award Percentage = 20%
Target Award = $14,400 ($6000 x 12 x 20%)
Award based 100% on total Cooper Cameron performance
Actual payment = Target Award x 120% Attainment = $14,400 x 120% = $17,280
D. Division Participant
January 1, 1995 Base Pay = $6,000 per month
Target Award Percentage = 30%
Target Award = $21,600
Award Weighting:
20% Cooper Cameron Performance
80% Division Performance
Actual Payment = Target Award x 20% x Corporate Attainment
Plus
Target Award x 80% x Division Attainment
$21,600 x 20% x 120% = $ 5,184
Plus +
$21,600 x 80% x 40% = 6,912
--------
Total = $ 12,096
VII. Any awards generated under the 1995 MICP must be approved by the
Compensation Committee. It is anticipated that 1995 MICP Awards will be
paid in February 1996. Employees terminating prior to the end of the
fiscal year are not eligible for payment of any award under this plan.
<PAGE> 1
EXHIBIT 10.16
COOPER CAMERON CORPORATION
1996 MANAGEMENT INCENTIVE COMPENSATION PLAN
I. PURPOSE
The Cooper Cameron Management Incentive Compensation Plan (the "Plan"), has
been designed to motivate and reward key management employees whose efforts
impact the performance of Cooper Cameron Corporation (the "Company") and its
subsidiaries through the achievement of pre-established financial and
individual objectives.
Performance under the Plan is measured on the fiscal (calendar) year and
payments under the Plan are made annually.
II. ELIGIBILITY
Officers and key management employees may be eligible to participate in the
plan, upon the recommendation of their manager and approval by the Chief
Executive Officer of the Company. An employee who is eligible to participate
in any other cash incentive plan of the company is not eligible to participate
in this Plan.
III. AWARD CRITERIA
The Compensation Committee of the Board of Directors is responsible for
approving the Company performance objectives that are used to determine awards
paid for Company objectives under this plan. Performance objectives for
operating units below the corporate level will be established by the
appropriate manager subject to overall approval of the Chief Executive Officer.
For 1996, performance under the Plan will be determined based on:
Earnings Before Interest, Taxes and Depreciation (EBITDA)
Return on Equity (ROE)
The basic measure of financial performance under this Plan will be EBITDA. In
addition, ROE will be used as an attainment hurdle, which must be reached
before bonuses are paid in full. For 1996, the Board has established a 7% ROE
hurdle. If this ROE target is not achieved for the year, bonuses, to the
extent earned, will be reduced by 50%.
In addition, up to 25% of an individual's award may, at the discretion of the
individual's immediate manager, be based on individual objectives established
at the beginning of the calendar year.
IV. TARGET AWARDS
A target award percentage is established for each position eligible to
participate in the Plan. Target awards (TA's) may range from 10% to 75%,
depending on position, of the participants' January 1 base pay (or pay at the
time of becoming a participant, if later), depending on position.
Generally, the participating employee receives the TA when performance under
the plan meets, but does not exceed, the pre-established performance
objectives.
<PAGE> 2
V. AWARD CATEGORIES
A participant may have Company Objectives, Division Objectives, Business Unit
Objectives and/or Individual Objectives, each of which is assigned by the
immediate manager and provided a weighting in determining the TA.
Excluding individual objectives, which are optional, the following weightings
will apply:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
PERFORMANCE WEIGHTING
- ------------------------------------------------------------------------------------------------
CORPORATE OBJECTIVE DIVISION OBJECTIVE BUSINESS UNIT
- ------------------------------------------------------------------------------------------------
<S> <C>
Corporate Participants 100% - -
- ------------------------------------------------------------------------------------------------
Divisions:
- ------------------------------------------------------------------------------------------------
Division Presidents 20% 80% -
- ------------------------------------------------------------------------------------------------
All Other Participants Weighting To be Determined by Immediate Manager
- ------------------------------------------------------------------------------------------------
</TABLE>
VI. PERFORMANCE MEASUREMENT
<TABLE>
<S> <C>
Minimum This is the lowest level of performance at which an award will be generated for this
particular objective of the plan. The award paid for performance at the minimum level
is 50% of TA. There will be no payment for performance below the minimum level.
Target Performance This is the expected level of performance based on the current year's financial plan.
Maximum This is the performance level for which the maximum award under the plan will be paid.
The maximum award under the plan is limited to 150% of TA.
----------------------------------------------------------
</TABLE>
VII. AWARD CALCULATION
Attainment on the financial objectives of the Plan is measured based on actual
results versus Plan targets, with performance above or below Plan targets
prorated up/down to the maximum/minimum levels established for each financial
objective.
For example, assume :
Cooper Cameron EBITDA Objective $120 million
Minimum Level $102 million
Maximum Level $138 million
At EBITDA performance of $130 million, attainment = 127.7% (Prorated between
$120 million objective and $138 million maximum).
At EBITDA performance of $108 million, attainment = 66.7% (Prorated between
$120 million objective and $102 million minimum objective).
<PAGE> 3
Following are examples of how payouts are calculated under the Plan once
attainment has been determined:
A. Corporate Participant:
<TABLE>
<S> <C>
o If EBITDA Attainment = 110% and ROE hurdle is achieved, Participant receives 110% of TA
o If EBITDA Attainment = 110% and ROE hurdle is not achieved, Participant receives 55% of TA.
o If EBITDA Attainment = 85% and ROE hurdle is achieved, Participant receives 85% of TA.
o If EBITDA Attainment = 85% and ROE hurdle is not achieved, Participant receives 42.5% of TA.
o If EBITDA Attainment = 180% and ROE hurdle is achieved, Participant receives 150% of TA
</TABLE>
B. Division Business Unit Participant without Individual Objectives:
Assume ROE hurdle is achieved
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
EBITDA ATTAINMENT WEIGHTING PERFORMANCE LEVEL
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Corporate 100% 20% 20%
- -------------------------------------------------------------------------------------------------
Division 110% 30% 33%
- -------------------------------------------------------------------------------------------------
Business Unit 85% 50% 42.5%
- -------------------------------------------------------------------------------------------------
TOTAL 95.5%
- -------------------------------------------------------------------------------------------------
</TABLE>
Participant receives 95.5% of TA.
C. Division Business Unit Participant with Individual Objectives:
Assume ROE hurdle is achieved
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
EBITDA ATTAINMENT WEIGHTING PERFORMANCE LEVEL
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Corporate 100% 20% 20%
- ------------------------------------------------------------------------------------------------
Division 110% 30% 33%
- ------------------------------------------------------------------------------------------------
Business 85% 25% 21.25%
- ------------------------------------------------------------------------------------------------
INDIVIDUAL OBJECTIVE ATTAINMENT
- ------------------------------------------------------------------------------------------------
Working Capital 40% 15% 6%
- ------------------------------------------------------------------------------------------------
Bookings 100% 10% 10%
- ------------------------------------------------------------------------------------------------
TOTAL 90.25%
- ------------------------------------------------------------------------------------------------
</TABLE>
For example, if the participant's salary is $80,000, target award is 20%
($16,000) = payout of $16,000 x 90.25% = $14,440.
VIII. DISCRETIONARY AWARDS
There may be unusual situations where a manager feels that the reward generated
under this plan do not properly reflect the contribution of the participant.
In this situation, the participant's immediate manager has the right to
recommend an adjustment either up or down, of up to 25% of the participant's
TA.
<PAGE> 4
IX. INDIVIDUAL OBJECTIVES
A participant's immediate manager has the discretion to set individual
objectives as part of the employee's performance criteria under the incentive
plan. The use of individual objectives is subject to the following
requirements:
The manager must specify the weighting of the individual objectives in
the overall TA, not to exceed 25% of the total award.
Individual objectives must be specifically identified at the beginning
of the plan year and must be quantifiable in terms of both the targeted
achievement and the time frame in which the objective is to be
completed.
The portion of the award payment generated from individual objectives may be
adjusted up or down based on the manager's assessment of the individual's
results on the established objectives.
X. ALTERNATIVE CALCULATIONS
There may be circumstances under which the financial performance of the Company
does not generate an award under this program. The nature and scope of the
Company's operations are such that at times unanticipated economic and market
conditions may render pre-established financial objectives unattainable in any
given plan year. If, in the opinion of the Committee, such circumstances
should arise, an alternative bonus calculation may be performed. Such
calculation will rank the Company's EBITDA against a pre-established peer group
of companies. If the Company's performance is at or above 60th percentile,
then a bonus payment equal to 50% of target award may be paid.
XI. MODIFICATIONS
If, during a Plan Year, there has occurred or should occur, in the opinion of
the Company, a significant beneficial or adverse change in economic conditions,
the indicators of growth or recession in the Company's business segments, the
nature of the operations of the Company, or applicable laws, regulations or
accounting practices, or other matters which were not anticipated by the
Company when it approved Company and Division Objectives for the Plan Year and
which, in the Company's judgment, had or have or are expected to have a
substantial positive or negative effect on the performance of the Company as a
whole, the Compensation Committee, subject to ratification by the Board, may
modify or revise the Performance Objectives for the Plan Year in such manner as
it may deem appropriate in its sole judgment. By way of illustration, and not
limitation, such significant changes might result from sales of assets, or
mergers, acquisitions, divestitures, or spin-offs.
XII. PAYMENT
Any awards generated under the 1996 MICP must be approved by the Compensation
Committee of the Board of Directors. It is anticipated that any MICP awards
generated in 1996 will be paid during February 1997.
Employees terminating prior to the end of the fiscal year are not eligible for
payment of any award under this plan unless termination is due to retirement or
economic reduction in force. In such cases, any bonus payments will be
prorated to the date of termination and determined on the basis of bonuses
actually paid to similarly situated employees.
<PAGE> 1
EXHIBIT 10.17
COOPER CAMERON CORPORATION
1997 MANAGEMENT INCENTIVE COMPENSATION PLAN
I. PURPOSE
The Cooper Cameron Management Incentive Compensation Plan (the "Plan"),
has been designed to motivate and reward key management employees whose
efforts impact the performance of Cooper Cameron Corporation (the
"Company") and its subsidiaries through the achievement of
pre-established financial and individual objectives.
Performance under the Plan is measured on the fiscal (calendar) year and
payments under the Plan are made annually.
II. ELIGIBILITY
Officers and key management employees may be eligible to participate in
the plan, upon the recommendation of their manager and approval by the
Chief Executive Officer of the Company. An employee who is eligible to
participate in any other cash incentive plan of the company is not
eligible to participate in this Plan.
III. AWARD CRITERIA
The Compensation Committee of the Board of Directors is responsible for
approving the Company performance objectives that are used to determine
awards paid for Company objectives under this plan. Performance
objectives for operating units below the corporate level will be
established by the appropriate manager subject to overall approval of the
Chief Executive Officer. For 1997, performance under the Plan will be
determined based on:
Earnings Before Interest, Taxes and Depreciation (EBITDA)
Return on Equity (ROE)
The basic measure of financial performance under this Plan will be
EBITDA. In addition, ROE will be used as an attainment hurdle, which
must be reached before bonuses are paid in full. For 1997, the Board has
established a 7% ROE hurdle. If this ROE target is not achieved for the
year, bonuses, to the extent earned, will be reduced by 50%.
In addition, up to 25% of an individual's award may, at the discretion of
the individual's immediate manager, be based on individual objectives
established at the beginning of the calendar year.
IV. TARGET AWARDS
A target award percentage is established for each position eligible to
participate in the Plan. Target awards (TA's) may range from 10% to 75%,
depending on position, of each participant's January 1 base pay (or pay
at the time of becoming a participant, if later).
Generally, the participating employee receives the Target Award when
performance under the plan meets, but does not exceed, the
pre-established performance objectives.
<PAGE> 2
V. AWARD CATEGORIES
A participant may have Company Objectives, Division Objectives, Operating
Unit Objectives and/or Individual Objectives, each of which is assigned
by the immediate manager and provided a weighting in determining the
Target Award.
VI. PERFORMANCE MEASUREMENT
<TABLE>
<S> <C>
Minimum This is the lowest level of performance at which an award will be generated for this
particular objective of the plan. The award paid for performance at the minimum level
is 50% of Target Award. There will be no payment for performance below the minimum
level.
Target Performance This is the expected level of performance based on the current year's financial plan.
Maximum This is the performance level for which the maximum award under the plan will be paid.
The maximum award under the plan is limited to 200% of the Target Award.
</TABLE>
VII. AWARD CALCULATION
Attainment on the financial objectives of the Plan is measured based on
actual results versus Plan targets, with performance above or below Plan
targets prorated up/down to the maximum/minimum levels established for
each financial objective.
For example, assume the following hypothetical objectives:
Minimum Level $180 million
Company EBITDA Target $200 million
Maximum Level $230 million
At EBITDA performance of $220 million, attainment = 166.6% (Prorated
between $200 million objective and $230 million maximum).
At EBITDA performance of $185 million, attainment = 62.5% (Prorated
between $200 million objective and $180 million minimum objective).
Following are examples of how payouts are determined under the Plan once
attainment has been calculated:
A. Corporate Participant:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
EBITDA ATTAINMENT ROE HURDLE ACHIEVED PARTICIPANT AWARD
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
110% YES 110.0%
- ------------------------------------------------------------------------------------------------
110% NO 55.0%
- ------------------------------------------------------------------------------------------------
85% YES 85.0%
- ------------------------------------------------------------------------------------------------
85% NO 42.5%
- ------------------------------------------------------------------------------------------------
180% YES 180.0%
- ------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
B. Division Operating Unit Participant without Individual Objectives:
Assume ROE hurdle is achieved
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
ATTAINMENT WEIGHT PERFORMANCE LEVEL
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Division EBITDA 110% 30% 33.0%
- ----------------------------------------------------------------------------------------------------
Operating Unit EBITDA 85% 50% 42.5%
- ----------------------------------------------------------------------------------------------------
Individual Objective 100% 20% 20.0%
- ----------------------------------------------------------------------------------------------------
PARTICIPANT AWARD 95.5%
- ----------------------------------------------------------------------------------------------------
</TABLE>
C. Division Operating Unit Participant with Individual Objectives:
Assume ROE hurdle is achieved
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
EBITDA ATTAINMENT WEIGHT PERFORMANCE LEVEL
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Division 110% 40% 44.0%
- ----------------------------------------------------------------------------------------------------
Operating Unit 85% 40% 34.0%
- ----------------------------------------------------------------------------------------------------
INDIVIDUAL OBJECTIVE ATTAINMENT
- ----------------------------------------------------------------------------------------------------
Working Capital 40% 10% 4.0%
- ----------------------------------------------------------------------------------------------------
Bookings 100% 10% 10.0%
- ----------------------------------------------------------------------------------------------------
PARTICIPANT AWARD 92.0%
- ----------------------------------------------------------------------------------------------------
</TABLE>
For example, if the participant's salary is $80,000, target award is 20%
($16,000) = payout of $16,000 x 92% = $14,720.
VIII. DISCRETIONARY AWARDS
There may be unusual situations where a manager feels that the reward
generated under this plan does not properly reflect the contribution of
the participant. In this situation, the participant's immediate manager
has the right to recommend an adjustment, either up or down, of up to 25%
of the participant's Target Award.
IX. INDIVIDUAL OBJECTIVES
A participant's immediate manager has the discretion to set individual
objectives as part of the employee's performance criteria under the
incentive plan. The use of individual objectives is subject to the
following requirements:
The manager must specify the weighting of the individual objectives in
the overall Target Award, not to exceed 25% of the total award
Individual objectives must be specifically identified at the beginning of
the plan year and must be quantifiable in terms of both the targeted
achievement and the time frame in which the objective is to be completed.
The portion of the award payment generated from individual objectives may
be adjusted up or down based on the manager's assessment of the
individual's results on the established objectives.
<PAGE> 4
X. ALTERNATIVE CALCULATIONS
There may be circumstances under which the financial performance of the
Company does not generate an award under this program. The nature and
scope of the Company's operations are such that at times unanticipated
economic and market conditions may render pre-established financial
objectives unattainable in any given plan year. If, in the opinion of
the Committee, such circumstances should arise, an alternative bonus
calculation may be performed. Such calculation will rank the Company's
EBITDA against a pre-established peer group of companies. If the
Company's performance is at or above 60th percentile, then a bonus
payment equal to 50% of target award may be paid.
XI. MODIFICATIONS
If, during a Plan Year, there has occurred or should occur, in the
opinion of the Company, a significant beneficial or adverse change in
economic conditions, the indicators of growth or recession in the
Company's business segments, the nature of the operations of the Company,
or applicable laws, regulations or accounting practices, or other matters
which were not anticipated by the Company when it approved Company and
Division Objectives for the Plan Year and which, in the Company's
judgment, had, have, or are expected to have a substantial positive or
negative effect on the performance of the Company as a whole, the
Compensation Committee, subject to ratification by the Board, may modify
or revise the Performance Objectives for the Plan Year in such manner as
it may deem appropriate in its sole judgment. By way of illustration,
and not limitation, such significant changes might result from sales of
assets, or mergers, acquisitions, divestitures, or spin-offs.
XII. PAYMENT
Any awards generated under the 1997 MICP must be approved by the
Compensation Committee of the Board of Directors. It is anticipated that
any MICP awards generated in 1997 will be paid during February 1998.
Employees terminating prior to the end of the fiscal year are not
eligible for payment of any award under this plan unless termination is
due to retirement or economic reduction in force. In such cases, any
bonus payments will be prorated to the date of termination and
determined on the basis of bonuses actually paid to similarly situated
employees.
<PAGE> 1
EXHIBIT 10.18
CHANGE IN CONTROL POLICY
I. PURPOSE
As part of the every day existence of publicly-held corporations, such
corporations are subject to hostile takeover attempts and friendly mergers
which create uncertainty in the employment prospects of key individuals. In
order to provide some measure of assurance as to protection in the event of a
change in managerial control of the Company, this policy is adopted to set
forth certain benefits available to certain of these key employees.
II. SCOPE
This policy applies to the designated employees of Cooper Cameron
Corporation, including its operating divisions.
III. EMPLOYEES COVERED
In the event of a Change in Control (as hereinafter defined),
designated individual executive employees will receive the benefits described
below.
Eligible employees will be selected by the Chief Executive Officer and
may include officers of the Company who are not party to an employment
contract, division presidents, division vice presidents and director level
employees at the corporate offices. Each such eligible employee shall be
notified in writing of such employee's right to receive the benefits set forth
in this policy by the Chief Executive Officer of the Company. Any employee not
receiving this policy together with an acknowledgment specifically designating
their inclusion within the terms of this policy shall not be subject to the
provisions hereof. The Company reserves the right to modify, amend or cancel
the terms hereof or such acknowledgment at any time prior to a Change in
Control. After a Change in Control, the benefits available pursuant to this
Policy as set forth in writing shall be irrevocably available to the employee.
IV. BENEFITS
Each designated employee shall receive a salary continuation benefit
as set forth by the Chief Executive Officer in writing in addition to a salary
continuation benefit set forth in the Executive Severance Program ("ESP"). Such
benefit, together with the salary continuation benefit under the ESP, shall be
paid to the employee in a lump sum payment (net of applicable income tax
withholdings and social security taxes) within 10 days of a Triggering Event.
Welfare benefits and any accrued but unpaid bonus shall remain the obligation
of the Company and be provided or paid to the employee pursuant to the terms of
the ESP. The welfare benefits shall continue for the period set forth in the
ESP plus any term provided pursuant to this policy.
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<PAGE> 2
V. EXCISE TAX
To the extent that the acceleration of vesting or any payment,
distribution or issuance made to you pursuant to this Policy following any
Triggering Event or Change of Control is subject to federal income, excise or
other tax at a rate above the rate ordinarily applicable to like payments paid
in the ordinary course of business ("Penalty Tax"), whether as a result of the
provisions of Section 280G(b)(1) and 4999(a) of the Internal Revenue code of
1985, as amended, any similar or analogous provisions of any statute adopted
subsequent to the date hereof, or otherwise, then the Company shall pay you an
additional amount of cash (the "Additional Amount") such that the net amount
received by you, after paying any applicable Penalty Tax and any federal or
state income tax on such Additional Amount, shall be equal to the amount that
you would have received if such Penalty Tax were not applicable.
VI. DEFINITIONS
The "Triggering Event" shall be the occurrence of a Change in Control
and the earlier of either (a) the involuntary termination by the Company of the
employment of the employee without cause, or (b) shall occur on the
ninety-first day of employment at the sole discretion of the employee by
notifying the Company in writing of the employee's decision to terminate the
employment.
"Change in Control" means the earliest date at which:
(i) Any Person is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing (a) 20% or more of the combined voting power of the
Company's outstanding Voting Securities, other than through the purchase of
Voting Securities directly from the Company through a private placement or
pursuant to open-market purchases approved in advance by a majority of the
incumbent members of the Board of Directors not elected for the first time at
the most recent election of board members, or (b) representing 50% or more of
the combined voting power of the Company's outstanding Voting Securities; or
(ii) individuals who constitute the Board on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the date
hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least two-thirds of the directors
comprising the Incumbent Board shall from and after such election be deemed to
be a member of the Incumbent Board; or
(iii) the Company is merged or consolidated with another corporation
or entity and as a result of such merger or consolidation less than 80% of the
outstanding Voting Securities of the surviving or resulting corporation or
entity shall then be owned by the former stockholders of the Company; or
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<PAGE> 3
(iv) a tender offer or exchange offer is made and consummated by a
Person other than the Company for the ownership of 20% or more of the Voting
Securities of the Company then outstanding; or
(v) all or substantially all of the assets of the Company are sold or
transferred to a Person as to which (A) the Incumbent Board does not have
authority (whether by law or contract) to directly control the use or further
disposition of such assets and (B) the financial results of the Company and
such Person are not consolidated for financial reporting purposes.
Anything else in this definition to the contrary notwithstanding, no
Change in Control shall be deemed to have occurred by virtue of any transaction
which results in you, or a group of Persons which includes you, acquiring more
than 20% of either the combined voting power of the Company's outstanding
Voting Securities or the Voting Securities of any other corporation or entity
which acquires all or substantially all of the assets of the Company, whether
by way of merger, consolidation, sale of such assets or otherwise.
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<PAGE> 1
EXHIBIT 10.19
EXECUTIVE SEVERANCE PROGRAM
I. PURPOSE
To establish a severance program for senior level executives of the
company that recognizes the relatively more difficult employment transition
that occurs upon the termination of employment of higher paid individuals.
II. SCOPE
This policy applies to designated employees of Cooper Cameron
Corporation, including operating groups, divisions and plants.
III. POLICY
Because senior level executive employees, to a greater extent than
other salaried employees, serve at the pleasure of the company and are
decidedly "at will" - meaning that either the company or the executive may
terminate the employment relationship at any time for any reason without
liability one to the other - a higher level of severance benefits is
appropriate. The reference to "at will" employment status does not represent a
change in company policy, but is referred to here only to avoid a
misunderstanding.
The executive severance program is applicable to designated company
executives whose active full time employment is terminated by the company for
reasons other than cause. To assist senior executives in transitioning from one
employment situation to another, the following severance compensation will be
awarded in the form of salary continuation upon the condition of signing a full
and complete severance waiver and release in a form acceptable to the company.
(An example of such a waiver and release is attached as Exhibit A.)
Position Salary Continuation
-------- -------------------
Category I 15 months
Category II 12 months
Category III 9 months
The salary continuation period includes the continuation of all
applicable benefits and benefits programs according to the respective program's
terms and conditions (including employee contributions where required). No
additional payments will be made for holidays or vacations earned or occurring
during the salary continuation period. Bonus payments will be prorated to the
date of original severance and determined on the basis of bonuses actually paid
to similarly situated employees. No further bonus entitlements will be earned
during the salary continuation period.
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Stock options granted to the executive shall be governed by the terms
of the Company's Long-Term Incentive Plan and the specific provisions of the
options with respect to vesting and exercise.
In addition to salary and benefit continuations as provided above,
outplacement services will be made available as appropriate.
If the division in which the executive is employed is sold, merged or
consolidated with another entity or business, any executive who continues
employment or is offered continued employment with a new owner of a former
Cooper Cameron operation in the same or reasonably comparable position, will
not be considered terminated within the meaning of this policy. Likewise, if
the Company is merged or consolidated with another entity or business, any
executive who continues employment or is offered continued employment in the
same or reasonably comparable position, will not be considered terminated
within the meaning of this policy except to the extent the Company's Change in
Control Policy may supersede.
IV. OTHER SEVERANCE RIGHTS
To the extent any participant under this policy is entitled to receive
benefits for severance pursuant to statutory or regulatory requirements or an
employment contract or arrangement, the benefits hereunder are not intended to
duplicate such prescribed benefits. The benefits hereunder shall be reduced
automatically to avoid such duplication, if any. The determination of the
reduction shall be in the sole determination of the Pension Administration
Committee which decision will be final and binding on both the Company and the
participant.
V. RESPONSIBILITIES
The general administration of the executive severance program is the
responsibility of the Pension Administration Committee, which has final and
binding authority to administer the plan in accordance with its stated terms.
The corporate senior vice president, general counsel and secretary has overall
responsibility for the day-to-day administration of this policy. It is his/her
responsibility to administer and effectuate the terms and conditions of this
policy. Exceptions to the policy may only be granted with the approval of the
president of the company. The senior vice president, general counsel and
secretary may delegate his/her responsibilities regarding this policy to any
person or persons that he/she chooses, including division and plant personnel
where appropriate.
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<PAGE> 1
EXHIBIT 10.21
[EXECUTION COPY]
================================================================================
$475,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
COOPER CAMERON CORPORATION
AND THE OTHER BORROWERS NAMED HEREIN
as Borrowers,
THE LENDERS NAMED HEREIN,
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
and
ABN AMRO BANK, N.V.,
BANK OF AMERICA ILLINOIS,
THE BANK OF NOVA SCOTIA,
THE CHASE MANHATTAN BANK,
CREDIT LYONNAIS, NEW YORK BRANCH,
NATIONSBANK OF TEXAS, N.A.,
PNC BANK, NATIONAL ASSOCIATION,
ROYAL BANK OF CANADA, and
SOCIETE GENERALE, SOUTHWEST AGENCY
as Co-Agents
DATED AS OF
March 20, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I
DEFINITIONS
ARTICLE II
THE CREDITS
2.1 Revolving Credit Advances . . . . . . . . . . . . . . . . . . 22
2.2 Singaporean Swing Loan. . . . . . . . . . . . . . . . . . . . 23
2.3 Canadian Swing Loan. . . . . . . . . . . . . . . . . . . . . . 25
2.4 Ratable Loans . . . . . . . . . . . . . . . . . . . . . . . . 26
2.5 Types of Revolving Credit Advances . . . . . . . . . . . . . . 26
2.6 Method of Selecting Types and Interest Periods for New
Revolving Credit Advances . . . . . . . . . . . . . . . . . . 26
2.7 Conversion and Continuation of Outstanding Advances . . . . . 27
2.8 Competitive Bid Advances . . . . . . . . . . . . . . . . . . . 28
2.9 Availability of Funds . . . . . . . . . . . . . . . . . . . . 32
2.10 Fees; Reductions in Aggregate Revolving Credit Commitment . . 32
2.11 Minimum Amount of Each Advance . . . . . . . . . . . . . . . . 33
2.12 Optional Principal Payments . . . . . . . . . . . . . . . . . 33
2.13 Mandatory Payments. . . . . . . . . . . . . . . . . . . . . . 33
2.14 Interest Rate, etc. . . . . . . . . . . . . . . . . . . . . . 34
2.15 Rates Applicable After Default . . . . . . . . . . . . . . . . 34
2.16 Method of Payment . . . . . . . . . . . . . . . . . . . . . . 34
2.17 Telephonic Notices . . . . . . . . . . . . . . . . . . . . . . 35
2.18 Interest Payment Dates; Interest and Fee Basis . . . . . . . . 35
2.19 Notification of Advances, etc . . . . . . . . . . . . . . . . 36
2.20 Lending Offices . . . . . . . . . . . . . . . . . . . . . . . 36
2.21 Non-Receipt of Funds by the Agent . . . . . . . . . . . . . . 36
2.22 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1 Yield Protection . . . . . . . . . . . . . . . . . . . . . . . 41
3.2 Changes in Capital Adequacy Regulations . . . . . . . . . . . 42
3.3 Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . 43
3.4 Availability of Types of Advances . . . . . . . . . . . . . . 43
3.5 Funding Indemnification . . . . . . . . . . . . . . . . . . . 43
3.6 Lender Statements; Survival of Indemnity . . . . . . . . . . . 43
3.7 Right to Substitute Lender . . . . . . . . . . . . . . . . . . 44
</TABLE>
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ARTICLE IV
CONDITIONS PRECEDENT
4.1 Restatement . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.2 Each Future Advance . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Corporate Existence and Standing . . . . . . . . . . . . . . . 48
5.2 Authorization and Validity . . . . . . . . . . . . . . . . . . 48
5.3 Compliance with Laws and Contracts . . . . . . . . . . . . . . 48
5.4 Governmental Consents . . . . . . . . . . . . . . . . . . . . 49
5.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . 49
5.6 Material Adverse Change . . . . . . . . . . . . . . . . . . . 49
5.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.8 Litigation and Contingent Obligations . . . . . . . . . . . . 50
5.9 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.11 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.12 Federal Reserve Regulations . . . . . . . . . . . . . . . . . 51
5.13 Investment Company . . . . . . . . . . . . . . . . . . . . . . 51
5.14 Material Agreements . . . . . . . . . . . . . . . . . . . . . 51
5.15 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . 51
5.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.17 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE VI
COVENANTS
6.1 Financial Reporting . . . . . . . . . . . . . . . . . . . . . 52
6.2 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 54
6.3 Notice of Default. . . . . . . . . . . . . . . . . . . . . . . 54
6.4 Conduct of Business . . . . . . . . . . . . . . . . . . . . . 54
6.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.7 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 55
6.8 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.9 Capital Stock and Dividends . . . . . . . . . . . . . . . . . 55
6.10 Indebtedness of Subsidiaries. . . . . . . . . . . . . . . . . 56
6.11 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.12 Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . 56
6.13 Sale of Accounts . . . . . . . . . . . . . . . . . . . . . . . 56
</TABLE>
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<TABLE>
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6.14 Investments in Foreign Subsidiaries . . . . . . . . . . . . . 56
6.15 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.16 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . 57
6.18 Restrictions on Subsidiary Payments . . . . . . . . . . . . . 58
6.19 Financial Covenants . . . . . . . . . . . . . . . . . . . . . 58
6.20 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE VII
DEFAULTS
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1 Optional Acceleration of Maturity . . . . . . . . . . . . . . 61
8.2 Automatic Acceleration of Maturity . . . . . . . . . . . . . . 61
8.3 Cash Collateral Account . . . . . . . . . . . . . . . . . . . 62
8.4 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.5 Preservation of Rights . . . . . . . . . . . . . . . . . . . . 63
ARTICLE IX
GENERAL PROVISIONS
9.1 Survival of Representations . . . . . . . . . . . . . . . . . 64
9.2 Governmental Regulation . . . . . . . . . . . . . . . . . . . 64
9.3 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 64
9.6 Several Obligations; Benefits of this Agreement . . . . . . . 64
9.7 Expenses; Indemnification . . . . . . . . . . . . . . . . . . 64
9.8 Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . 65
9.9 Severability of Provisions . . . . . . . . . . . . . . . . . . 65
9.10 Nonliability of Lenders . . . . . . . . . . . . . . . . . . . 65
9.11 CHOICE OF LAW . . . . . . . . . . . . . . . . . . . . . . . . 65
9.12 CONSENT TO JURISDICTION . . . . . . . . . . . . . . . . . . . 66
9.13 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . 66
9.14 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.15 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.16 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 67
</TABLE>
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<TABLE>
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ARTICLE X
THE AGENT
10.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.2 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.3 General Immunity . . . . . . . . . . . . . . . . . . . . . . . 67
10.4 No Responsibility for Loans, Recitals, etc. . . . . . . . . . 67
10.5 Action on Instructions of Lenders . . . . . . . . . . . . . . 68
10.6 Employment of Agents and Counsel . . . . . . . . . . . . . . . 68
10.7 Reliance on Documents; Counsel . . . . . . . . . . . . . . . . 68
10.8 Agent's Reimbursement and Indemnification . . . . . . . . . . 68
10.9 Notice of Default . . . . . . . . . . . . . . . . . . . . . . 68
10.10 Rights as a Lender . . . . . . . . . . . . . . . . . . . . . . 69
10.11 Lender Credit Decision . . . . . . . . . . . . . . . . . . . . 69
10.12 Successor Agent and Issuing Bank . . . . . . . . . . . . . . . 69
10.13 Co-Agents . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
11.2 Ratable Payments . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1 Successors and Assigns . . . . . . . . . . . . . . . . . . . . 71
12.2 Participations. . . . . . . . . . . . . . . . . . . . . . . . 71
12.3 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . 72
12.4 Dissemination of Information . . . . . . . . . . . . . . . . . 73
12.5 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE XIII
NOTICES
13.1 Giving Notice . . . . . . . . . . . . . . . . . . . . . . . . 73
13.2 Change of Address . . . . . . . . . . . . . . . . . . . . . . 73
</TABLE>
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EXHIBITS
--------
Exhibit A (Article I) Competitive Bid Note
Exhibit B (Article I) Competitive Bid Quote
Exhibit C (Article I) Competitive Bid Quote Request
Exhibit D (Article I) Invitation for Competitive Bid Quotes
Exhibit E (Article I) Revolving Credit Note
Exhibit F-1 (Article I) Singaporean Swing Loan Note
Exhibit F-2 (Article I) Canadian Swing Loan Note
Exhibit G (Section 6.1(d)) Compliance Certificate
Exhibit H (Section 12.3.1) Assignment Agreement
SCHEDULES
---------
Schedule 2.9 - Payment Offices
Schedule 5.9 - Subsidiaries
Schedule 5.10 - ERISA
Schedule 5.15 - Environmental
Schedule 6.15 - Liens
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<PAGE> 7
AMENDED AND RESTATED CREDIT AGREEMENT
This Amended and Restated Credit Agreement, dated as of March 20, 1997,
is among COOPER CAMERON CORPORATION, a Delaware corporation, COOPER CAMERON
(U.K.) LIMITED, a company formed under the laws of the United Kingdom, CAMERON
FRANCE, S.A., a societe anonyme formed under the laws of the Republic of
France, CAMERON GMBH, a Gesellschaft mit beschrankter Haftung formed under the
laws of the Federal Republic of Germany, COOPER CAMERON (SINGAPORE) PTE. LTD.,
a private limited company formed under the laws of the Republic of Singapore,
the Lenders (as defined below), ABN AMRO BANK, N.V., BANK OF AMERICA ILLINOIS,
THE BANK OF NOVA SCOTIA, THE CHASE MANHATTAN BANK, CREDIT LYONNAIS, NEW YORK
BRANCH, NATIONSBANK OF TEXAS, N.A., PNC BANK, NATIONAL ASSOCIATION, ROYAL BANK
OF CANADA, and SOCIETE GENERALE, SOUTHWEST AGENCY, individually and as Co-
Agents, and THE FIRST NATIONAL BANK OF CHICAGO, individually and as Agent.
R E C I T A L S:
A. The Borrowers (as this and other capitalized terms used in these
recitals are defined below), certain of the Lenders, certain of the Co-Agents,
and the Agent are parties to the Credit Agreement dated as of June 30, 1995, as
amended by Amendment No. 1 dated as of June 19, 1996 (the "Existing Credit
Agreement"), pursuant to which such Lenders made term loans in the aggregate
principal amount of $200,000,000 ("Existing Term Loans") and a revolving credit
facility in the aggregate committed amount of $275,000,000 ("Existing
Revolver") to the Borrowers, the proceeds of which were used (1) for the
general corporate needs of the Borrower and the Subsidiaries and (2) to repay
certain indebtedness of the Borrower and the Subsidiaries.
B. The Borrowers have requested the Lenders to amend the Existing
Credit Agreement to refinance the Existing Term Loans and the Existing Revolver
and to revise certain terms thereof and the Lenders have agreed to do so on the
terms and conditions set forth herein.
C. The Lenders have agreed to restate the Existing Credit Agreement
so that this Amended and Restated Credit Agreement constitutes for all purposes
an amendment to the Existing Credit Agreement and not a new or substitute
agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Borrowers,
the Lenders, the Co-Agents, and the Agent hereby agree as follows:
<PAGE> 8
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Absolute Rate" means, with respect to an Absolute Rate Loan made by a
given Revolving Lender for the relevant Absolute Rate Interest Period, the rate
of interest per annum (rounded to the nearest 1/100 of 1%) offered by such
Revolving Lender and accepted by the Borrower.
"Absolute Rate Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Absolute Rate Loans made by some or all of the
Revolving Lenders to the Borrower at the same time and for the same Absolute
Rate Interest Period.
"Absolute Rate Auction" means a solicitation of Competitive Bid Quotes
setting forth Absolute Rates pursuant to Section 2.8.
"Absolute Rate Interest Period" means, with respect to an Absolute Rate
Advance, a period of not less than 30 and not more than 180 days commencing on
a Business Day selected by the Borrower pursuant to this Agreement. If such
Absolute Rate Interest Period would end on a day which is not a Business Day,
such Absolute Rate Interest Period shall end on the next succeeding Business
Day.
"Absolute Rate Loan" means a Loan which bears interest at the Absolute
Rate.
"Advance" means a borrowing hereunder consisting of the aggregate amount
of the several Loans made on the same Borrowing Date by some or all of the
Lenders to the Relevant Borrower (a) of the same Type (or on the same interest
basis in the case of Competitive Bid Advances), (b) in the case of Eurocurrency
Advances, denominated in Dollars or in the same Alternative Currency, and (c)
when applicable, for the same Interest Period, and includes a Competitive Bid
Advance and a Swing Advance.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 15% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Agent" means First Chicago in its capacity as agent for the Lenders
pursuant to Article X, and not in its individual capacity as a Lender, and any
successor Agent appointed pursuant to Article X.
"Aggregate Exposure Amount" means, at any time, the sum of the Dollar
Equivalent of the
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<PAGE> 9
aggregate principal amount of all outstanding Revolving Credit Advances, the
aggregate principal amount of all outstanding Competitive Bid Advances, the
Letter of Credit Exposure, and the Dollar Equivalent of the aggregate principal
amount of all outstanding Swing Loans at such time.
"Aggregate Revolving Credit Commitment" means the aggregate of the
Revolving Credit Commitments of all the Revolving Lenders hereunder.
"Agreement" means this Amended and Restated Credit Agreement, as it may
be amended, modified, or restated and in effect from time to time.
"Agreement Accounting Principles" means U.S. generally accepted
accounting principles as in effect from time to time, applied in a manner
consistent with those used in preparing the Financial Statements; provided,
however, that for purposes of all computations required to be made with respect
to compliance by the Borrower with Section 6.19, such term shall mean generally
accepted accounting principles as in effect on the date hereof, applied in a
manner consistent with those used in preparing the Financial Statements.
"Alternate Base Rate" means, for any day, a fluctuating rate of interest
per annum equal to the higher of (a) the Corporate Base Rate for such day and
(b) the sum of the Federal Funds Effective Rate most recently determined by
First Chicago for such day plus 50 Basis Points per annum.
"Alternative Currency" shall mean, subject to availability pursuant to
Section 3.4 and to the extent freely transferable and convertible into Dollars,
(a) with respect to Revolving Credit Advances, French francs, German marks, and
British pounds sterling, (b) with respect to Canadian Advances, Canadian
dollars, and (c) with respect to Singaporean Advances, Dollars and Singapore
dollars.
"Alternative Currency Sublimit" means $100,000,000.
"Applicable Margin" means, until Senior Debt is rated by either Moody's
or S&P and the Borrower elects to use the pricing schedule below based on
Senior Debt, for any period with respect to any Eurocurrency Advance,
Singaporean Rate Advance, facility fee, or Letter of Credit, the following
applicable Basis Points in effect with respect to such period based upon the
ratio of Total Debt to Total Capitalization as follows:
-3-
<PAGE> 10
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Total Debt to Total
Capitalization Ratio Applicable Margin
- ------------------------------------------------------------------------------------------
Eurocurrency Advances,
Singaporean Rate
Greater than Advances, and Documentary
or equal to But less than Standby Letters of Credit Facility Fees Letters of Credit
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
20 Basis
50% ---- 45 Basis Points Points 12.5 Basis Points
- ------------------------------------------------------------------------------------------
15 Basis
45% 50% 30 Basis Points Points 10 Basis Points
- ------------------------------------------------------------------------------------------
12.5 Basis
40% 45% 25 Basis Points Points 6 Basis Points
- ------------------------------------------------------------------------------------------
11 Basis
---- 40% 21.5 Basis Points Points 6 Basis Points
- ------------------------------------------------------------------------------------------
</TABLE>
The ratio of Total Debt to Total Capitalization shall be calculated by the
Borrower as of the end of each of its fiscal quarters commencing March 31, 1997
based upon the most recent certificate executed by an Authorized Officer of the
Borrower and delivered in accordance with Section 6.1(d). The Applicable Margin
shall be adjusted, if necessary, quarterly as of the third day after the
delivery of the certificate provided for above. Notwithstanding the foregoing,
until adjusted as described above for the fiscal quarter ending March 31, 1997,
the ratio of Total Debt to Total Capitalization shall be deemed to be greater
than or equal to 40% but less than 45%.
After Senior Debt is rated by either Moody's or S&P and the Borrower has
elected by written notice to the Agent to use the pricing schedule below,
"Applicable Margin" means for any period with respect to any Eurocurrency
Advance, Singaporean Rate Advance, facility fee, or Letter of Credit, the
following applicable Basis Points in effect with respect to such period based
upon the ratings by S&P or Moody's applicable on such date of Senior Debt as
set forth below:
-4-
<PAGE> 11
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Senior Debt Rating Applicable Margin
- ----------------------------------------------------------------------------------
Eurocurrency Advances,
Singaporean Rate
Advances,
and Standby Documentary
S&P Moody's Letters of Credit Facility Fees Letters of Credit
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
7.5 Basis
A- or higher A3 or higher 15 Basis Points Points 7.5 Basis Points
- ----------------------------------------------------------------------------------
9 Basis
BBB+ Baa1 18 Basis Points Points 6 Basis Points
- ----------------------------------------------------------------------------------
11 Basis
BBB Baa2 21.5 Basis Points Points 6 Basis Points
- ----------------------------------------------------------------------------------
12.5 Basis
BBB- Baa3 25 Basis Points Points 6 Basis Points
- ----------------------------------------------------------------------------------
15 Basis
BB+ Ba1 35 Basis Points Points 10 Basis Points
- ----------------------------------------------------------------------------------
Lower than Lower than 20 Basis
BB+ Ba1 45 Basis Points Points 12.5 Basis Points
- ----------------------------------------------------------------------------------
</TABLE>
If a rating for Senior Debt exists from only Moody's or S&P, the Applicable
Margin shall be based on such rating. If ratings for Senior Debt exist from
both Moody's and S&P and such ratings fall within different categories, the
Applicable Margin shall be based on the higher of the two ratings unless the
lower rating is two or more levels below the higher rating, in which case the
rating which is one level above the lower rating will apply. If the ratings
established by Moody's or S&P for Senior Debt change (other than as a result of
a change in the rating system of Moody's or S&P), such change shall be
effective as of the date on which it is first announced by the applicable
rating agency. If the rating system of either Moody's or S&P shall change when
a rating for Senior Debt exists from both Moody's and S&P or if either such
rating agency shall cease to be in the business of rating corporate debt
obligations while the other remains in such business, the Applicable Margin
shall be based on the rating of the agency that has not changed its rating
system or that remains in the business of rating corporate debt obligations.
If both Moody's and S&P shall change their rating system, cease rating Senior
Debt or cease to be in the business of rating corporate debt obligations, the
Applicable Margin shall be determined by reference to the ratio of Total Debt
to Total Capitalization as provided above.
The Applicable Margin may change during an Interest Period.
-5-
<PAGE> 12
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Asset Disposition" means any sale, transfer, or other disposition of
any asset of the Borrower or any Subsidiary in a single transaction or in a
series of related transactions (other than the sale of inventory in the
ordinary course, the sale of obsolete or excess machinery, equipment, or
furniture in the ordinary course, and the sale of accounts and notes receivable
permitted by Section 6.13).
"Attributable Debt" means as at the time of determination (a) with
respect to a Synthetic Lease, the present value (discounted at the explicit or
implicit interest rate applicable to such Synthetic Lease at such time) of the
total obligations of the lessee for rental payments during the remaining term
of such Synthetic Lease at such time and (b) with respect to an accounts or
notes receivable financing or securitization program, the outstanding balance
of amounts advanced in respect of the receivables and notes under such program.
"Authorized Officer" means, with respect to any of the Borrowers, any of
the president, chief financial officer or treasurer thereof, acting singly.
"Bankruptcy Code" means Title 11, United States Code, sections 1 et
seq., as the same may be amended from time to time, and any successor thereto
or replacement therefor which may be hereafter enacted.
"Basis Point" means 1/100th of one percent.
"Borrower" means Cooper Cameron Corporation, a Delaware corporation, and
its successors and assigns.
"Borrowers" means, collectively, the Borrower and the Borrowing
Subsidiaries.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.6.
"Borrowing Subsidiary" means each of the UK Borrower, the French
Borrower, the German Borrower, the Singaporean Borrower, and when a Wholly-
Owned Subsidiary is the Canadian Borrower, the Canadian Borrower.
"Business Day" means (a) with respect to any borrowing, payment, or rate
selection of Eurocurrency Advances or Singaporean Rate Advances, a day (other
than a Saturday or Sunday) on which banks generally are open in Chicago, New
York, and London, and, for currencies other than Eurodollars, the principal
financial center of the country in whose currency the Advance is to be funded
for the conduct of substantially all of their commercial lending activities and
on which dealings in the relevant currency are carried on in the London
interbank market; provided that, if on
-6-
<PAGE> 13
a date on which a Borrowing Notice or Conversion/Continuation Notice is to be
given banks are generally open in Chicago and New York, but not in London or
the relevant principal financial center and there are at least two days after
the date of such Borrowing Notice or Conversion/Continuation Notice is to be
given and before the requested Borrowing Date during which banks are generally
open in London and the relevant principal financial center, such date shall be
a Business Day and (b) for all other purposes, a day (other than a Saturday or
Sunday) on which banks generally are open in Chicago for the conduct of
substantially all of their commercial lending activities.
"Canadian Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Canadian Swing Loans made by the Canadian
Lenders to the Canadian Borrower at the same time and for the same Interest
Period.
"Canadian Borrower" means (a) on the date of this Agreement and until a
Wholly-Owned Subsidiary is designated under the following clause (b), the
Borrower or (b) after the Borrower has designated to the Agent in writing a
Wholly-Owned Subsidiary incorporated under and operating in Canada or one of
its provinces which has executed and delivered to each Canadian Lender a
Canadian Swing Loan Note, such Wholly-Owned Subsidiary. The Borrower shall
remain the Canadian Borrower for any Canadian Advances outstanding on the date
a Wholly-Owned Subsidiary is designated to be the Canadian Borrower.
"Canadian Lenders" means the lending institutions listed on the
signature pages of this Agreement as Canadian Lenders and their respective
successors and assigns. Each Canadian Lender must be exempt from withholding
taxes imposed by Canada on interest payments made by the Canadian Borrower, but
need not be located in Canada.
"Canadian Swing Loan" means each Canadian Lender's Canadian portion of a
Canadian Advance.
"Canadian Swing Loan Note" means a promissory note in substantially the
form of Exhibit F-2, with appropriate insertions, duly executed and delivered
to Agent by the Canadian Borrower for the account of a Canadian Lender and
payable to the order of such Lender, including any amendment, modification,
renewal, or replacement of such promissory note.
"Canadian Swing Loan Share" means, for each Canadian Lender, a
percentage equal to (a) the Dollar amount set forth opposite its name on the
signature pages hereto under the heading "Canadian Swing Loan Amount" or as set
forth in any Notice of Assignment relating to any assignment which has become
effective pursuant to Section 12.3.2 divided by (b) the total Dollar amount of
the Canadian Swing Loan Amount indicated on the signature pages hereto for all
of the Canadian Lenders or as set forth in any Notices of Assignment relating
to any assignment which has become effective pursuant to Section 12.3.2.
"Capital Expenditures" means, without duplication, any expenditures for
any purchase or other acquisition for value of any asset that is classified on
a consolidated balance sheet of the
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<PAGE> 14
Borrower with the Subsidiaries prepared in accordance with Agreement Accounting
Principles as a fixed or capital asset excluding (a) the cost of assets
acquired under Capitalized Lease Obligations, (b) expenditures of insurance
proceeds to rebuild or replace any asset after a casualty loss, and (c) any
expenditures made as all or a portion of the purchase price for Specified
Acquisitions permitted hereby.
"Capitalized Lease" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"Cash Collateral Account" means a special interest bearing cash
collateral account containing cash deposited pursuant to Section 8.1(b) or
8.2(b) to be maintained at the Agent's office in accordance with Section 8.3.
"Change" is defined in Section 3.2.
"Change in Control" means (a) the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the SEC under the Securities Exchange Act of 1934) of 20% or more
of the outstanding shares of voting stock of the Borrower or (b) during any
period of 25 consecutive calendar months, commencing on the date of this
Agreement, the ceasing of those individuals (the "Continuing Directors") who
(i) were directors of the Borrower on the first day of each such period or (ii)
subsequently became directors of the Borrower and whose initial election or
initial nomination for election subsequent to that date was approved by a
majority of the Continuing Directors then on the board of directors of the
Borrower, to constitute a majority of the board of directors of the Borrower.
"Code" means the Internal Revenue Code of 1986, as amended, reformed, or
otherwise modified from time to time.
"Commercial Letter of Credit" means, collectively, letters of credit
issued to assure payment for goods or services, bid and performance bond
letters of credit, and advance payment guaranty letters of credit.
"Competitive Bid Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Competitive Bid Loans made by some or all of
the Revolving Lenders to the Borrower at the same time and for the same
Interest Period.
"Competitive Bid Borrowing Notice" is defined in Section 2.8.6.
-8-
<PAGE> 15
"Competitive Bid Loan" means a Eurodollar Bid Rate Loan or an Absolute
Rate Loan, or both, as the case may be.
"Competitive Bid Margin" means the margin above or below the applicable
Eurocurrency Base Rate offered for a Eurodollar Bid Rate Loan, expressed as a
percentage (rounded to the nearest 1/100 of 1%) to be added or subtracted from
such Eurocurrency Base Rate.
"Competitive Bid Note" means a promissory note in substantially the form
of Exhibit A, with appropriate insertions, duly executed and delivered to the
Agent by the Borrower for the account of a Revolving Lender and payable to the
order of such Lender, including any amendment, modification, renewal, or
replacement of such promissory note.
"Competitive Bid Quote" means a Competitive Bid Quote substantially in
the form of Exhibit B completed and delivered by a Revolving Lender to the
Agent in accordance with Section 2.8.4.
"Competitive Bid Quote Request" means a Competitive Bid Quote Request
substantially in the form of Exhibit C completed and delivered by the Borrower
to the Agent in accordance with Section 2.8.2.
"consolidated," when used in connection with any calculation, means a
calculation to be determined on a consolidated basis for the Borrower and the
Subsidiaries in accordance with Agreement Accounting Principles.
"Consolidated Person" means, for the taxable year of reference, each
Person which is a member of the affiliated group of the Borrower if
consolidated returns are or shall be filed for such affiliated group for
federal income tax purposes or any combined or unitary group of which the
Borrower is a member for state income tax purposes.
"Contingent Obligation" of a Person means any agreement, undertaking, or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person,
or agrees to maintain the net worth or working capital or other financial
condition of any other Person, or otherwise assures in a legally binding manner
any creditor of such other Person against loss.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any of the Subsidiaries,
are treated as a single employer under Section 414 of the Code.
"Conversion/Continuation Notice" is defined in Section 2.7.
"Corporate Base Rate" means a rate per annum equal to the corporate base
rate of interest announced by First Chicago from time to time, changing when
and as said corporate base rate
-9-
<PAGE> 16
changes. The Corporate Base Rate is a reference rate and does not necessarily
represent the lowest or best rate of interest actually charged to any customer.
First Chicago may make commercial loans or other loans at rates of interest at,
above or below the Corporate Base Rate.
"Coverage Ratio" means, for any applicable computation period, the ratio
of (a) EBITDA for such period minus Capital Expenditures for such period to (b)
Interest Expense for such period.
"Default" means an event described in Article VII.
"Documentary Letter of Credit" means a commercial letter of credit
qualifying as a trade-related contingency under 12 CFR Part 3, Appendix A,
Section 3(b)(3) or any successor U.S. Comptroller of the Currency regulation
and issued by an Issuing Bank under the terms of this Agreement.
"Dollars" or "$" shall mean lawful money of the United States of
America.
"Dollar Equivalent" shall mean on any day (a) with respect to any amount
denominated in Dollars, such amount and (b) with respect to any amount
denominated in an Alternative Currency, the amount of Dollars into which such
amount may be converted at the spot rate at which Dollars are offered to the
Agent in London for the Alternative Currency in which such amount is
denominated in an amount comparable to such amount at approximately 11:00 a.m.
(London time) on such day.
"EBITDA" means, for any applicable computation period, (a) the
Borrower's and Subsidiaries' Net Income (excluding for the period from June 30,
1995 through June 30, 1997, the effect of pre-tax Restructuring Charges of up
to $40,000,000) on a consolidated basis for such period plus (b) income and
franchise taxes accrued during such period plus (c) Interest Expense accrued
during such period plus (d) amortization and depreciation deducted in
determining Net Income for such period.
"Entitled Person" is defined in Section 2.16.
"Environmental Laws" is defined in Section 5.15.
"Environmental Permits" is defined in Section 5.15.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Advance" means an Advance in Dollars or an Alternative
Currency which bears interest at a Eurocurrency Rate, including without
limitation, Eurodollar Bid Rate Advances, Canadian Advances, and Singaporean
Eurocurrency Rate Advances.
-10-
<PAGE> 17
"Eurocurrency Base Rate" means, with respect to a Eurocurrency Advance
for any specified Eurocurrency Interest Period, a rate of interest per annum
equal to the applicable London interbank offered rate for deposits in Dollars
or in the applicable Alternative Currency as provided by the British Bankers
Association ("BBA") and appearing on Telerate Page 3740 in the case of Canadian
dollars or French francs or Telerate Page 3750 in the case of German marks,
British pounds sterling, or Dollars and, if for any reason such rate is not
available, as such BBA rates may appear on Reuters as the London interbank
offered rate for deposits in Dollars or in the applicable Alternative Currency,
as of 11:00 a.m. (London time) two Business Days prior to the first day of such
Eurocurrency Interest Period, and having a maturity approximately equal to such
Eurocurrency Interest Period. If no London interbank offered rate of such
Eurocurrency Interest Period for Dollars or for the applicable Alternative
Currency then appears on Telerate Page 3740 or 3750 or Reuters, as the case may
be, then the Eurocurrency Base Rate for Dollars or for the applicable
Alternative Currency will be equal to the London interbank offered rate for
deposits in Dollars or in the applicable Alternative Currency maturing
immediately before or immediately after such Eurocurrency Interest Period,
whichever is higher, as determined by the Agent and provided by the BBA from
Telerate Page 3740 or 3750 or Reuters, as the case may be. If Telerate Page
3740 or 3750 or Reuters, as the case may be, is not available for Dollars or
for the applicable Alternative Currency, the applicable Eurocurrency Base Rate
for the relevant Eurocurrency Interest Period for Dollars or for such
Alternative Currency will be the rate determined by the Agent to be the rate at
which First Chicago offers to place deposits in Dollars or in such Alternative
Currency with first-class banks in the London interbank market at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Eurocurrency Interest Period, in the approximate amount of First Chicago's
relevant portion of the Eurocurrency Advance and having a maturity
approximately equal to such Eurocurrency Interest Period.
"Eurocurrency Interest Period" means, with respect to a Eurocurrency
Advance or Singaporean Advance, a period of one, two, three, or six months
commencing on a Business Day selected by the Borrower pursuant to this
Agreement. Such Interest Period shall end on (but exclude) the day which
corresponds numerically to such date one, two, three, or six months thereafter;
provided, however, that if there is no such numerically corresponding day in
such next, second, third, or sixth succeeding month, such Interest Period shall
end on the last Business Day of such next, second, third, or sixth succeeding
month. If an Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall end on the next succeeding Business
Day; provided, however, that if said next succeeding Business Day falls in a
new calendar month, such Interest Period shall end on the immediately preceding
Business Day.
"Eurocurrency Loan" means a Loan denominated in Dollars or an
Alternative Currency which bears interest at the Eurocurrency Rate, including
without limitation, Canadian Swing Loans and Singaporean Eurocurrency Rate
Swing Loans.
"Eurocurrency Rate" means, with respect to a Eurocurrency Advance for
the relevant Eurocurrency Interest Period, the sum of (a) the Eurocurrency Base
Rate applicable to such Eurocurrency Advance and Eurocurrency Interest Period
plus (b) the Applicable Margin.
-11-
<PAGE> 18
"Eurodollar Auction" means a solicitation of Competitive Bid Quotes
setting forth Eurodollar Bid Rates pursuant to Section 2.8.
"Eurodollar Bid Rate" means, with respect to a Eurodollar Bid Rate Loan
made by a given Revolving Lender for the relevant Eurocurrency Interest Period,
the sum of (a) the Eurocurrency Base Rate for Dollars and (b) the Competitive
Bid Margin offered by such Revolving Lender and accepted by the Borrower.
"Eurodollar Bid Rate Advance" means a Competitive Bid Advance which
bears interest at a Eurodollar Bid Rate.
"Eurodollar Bid Rate Loan" means a Loan which bears interest at the
Eurodollar Bid Rate.
"Existing Credit Agreement," "Existing Revolver," and "Existing Term
Loans" each have the respective meaning set forth in Recital A.
"Expiration Date" means, with respect to any Letter of Credit, the date
on which such Letter of Credit will expire or terminate in accordance with its
terms.
"Facility Termination Date" means March 31, 2002.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations at approximately 10:00
a.m. (Chicago time) on such day on such transactions received by First Chicago
from three Federal funds brokers of recognized standing selected by First
Chicago in its sole discretion.
"Financial Letter of Credit" means a letter of credit which is not a
Commercial Letter of Credit and shall include, without limitation, standby
letters of credit issued to secure financial obligations.
"Financial Statements" is defined in Section 5.5.
"First Chicago" means The First National Bank of Chicago in its
individual capacity, and its successors.
"Floating Rate Advance" means an Advance in Dollars which bears interest
at the Alternate Base Rate.
"Floating Rate Loan" means a Loan in Dollars which bears interest at the
Alternate Base Rate.
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<PAGE> 19
"Foreign Subsidiary" means a Subsidiary not organized under the laws of
the United States or any state, possession, or territory thereof.
"French Borrower" means Cameron France, S.A., a societe anonyme formed
under the laws of the Republic of France, and its successors and assigns.
"GATT" means the General Agreement on Tariffs and Trade.
"GATT Actuarial Assumptions" mean the actuarial assumptions set forth in
the Retirement Protection Act of 1994 (the "RPA"), which forms a part of GATT,
or any subsequent legislation which amends such provisions of the RPA.
"German Borrower" means Cameron GmbH, a Gesellschaft mit beschrankter
Haftung formed under the laws of the Federal Republic of Germany, and its
successors and assigns.
"Governmental Authority" means any government (foreign or domestic) or
any state or other political subdivision thereof or any governmental body,
agency, authority, department, or commission (including without limitation any
taxing authority or political subdivision) or any instrumentality or officer
thereof (including without limitation any court or tribunal) exercising
executive, legislative, judicial, regulatory, or administrative functions of or
pertaining to government and any corporation, partnership, or other entity
directly or indirectly owned or controlled by or subject to the control of any
of the foregoing.
"Hazardous Materials" is defined in Section 5.15.
"Hedging Obligations" of a Person means all obligations of such Person
under forward sales arrangements, calls, options, or other similar
transactions, including any obligations to purchase or sell any commodity or
security at a future date for a specific price entered into to protect such
Person from fluctuations in prices or rates, including interest rates,
commodity prices, and securities prices.
"Indebtedness" of a Person means such Person's (a) obligations for
borrowed money, (b) obligations representing the deferred purchase price of
Property or services (other than accounts payable arising in the ordinary
course of such Person's business payable on terms customary in the trade), (c)
obligations, whether or not assumed, secured by Liens or payable out of the
proceeds or production from Property now or hereafter owned or acquired by such
Person, (d) obligations which are evidenced by notes or acceptances, (e)
Capitalized Lease Obligations, (f) Contingent Obligations, (g) reimbursement
obligations of such Person in respect of a Commercial Letter of Credit or
Financial Letter of Credit, (h) repurchase obligations or liabilities of such
Person with respect to accounts or notes receivable sold by such Person, and
(i) obligations as lessee or guarantor under Synthetic Leases.
"Interest Expense" means the aggregate of all interest paid or accrued
by the Borrower and the Subsidiaries as determined in accordance with Agreement
Accounting Principles.
-13-
<PAGE> 20
"Interest Period" means a Eurocurrency Interest Period or an Absolute
Rate Interest Period.
"Investment" of a Person means any (a) loan, advance (other than
commission, travel, and similar advances to officers and employees made in the
ordinary course of business), extension of credit (other than accounts
receivable arising in the ordinary course of business on terms customary in the
trade), (b) deposit account , (c) contribution of capital by such Person to any
other Person, or (d) investment in, or purchase or other acquisition of, the
stock, partnership interests, notes, debentures, or other securities of any
other Person made by such Person.
"Investment Grade Country" means a country with a foreign currency
rating issued by S&P of BBB- or better or by Moody's of Baa3 or better.
"Invitation for Competitive Bid Quotes" means an Invitation for
Competitive Bid Quotes substantially in the form of Exhibit D, completed and
delivered by the Agent to the Revolving Lenders in accordance with Section
2.8.3.
"Issuance Request" means a request for the issuance, increase, or
extension of a Letter of Credit given in accordance with Section 2.23.1.
"Issuing Bank" means First Chicago or any other Revolving Lender
acceptable to the Agent which has agreed to issue one or more Letters of Credit
and any successor issuing bank pursuant to Section 10.12.
"Lenders" means the Revolving Lenders, the Canadian Lenders, and the
Singaporean Lenders.
"Lending Office" means, with respect to a Lender or the Agent, any
office, branch, subsidiary, or affiliate of such Lender or the Agent.
"Letter of Credit" means any Documentary Letter of Credit or Standby
Letter of Credit.
"Letter of Credit Documents" means, with respect to any Letter of
Credit, such Letter of Credit and any agreements, documents, and instruments
entered into in connection with or relating to such Letter of Credit.
"Letter of Credit Exposure" means, at any time without duplication, the
sum of (a) the Dollar Equivalent of the aggregate undrawn maximum face amount
of each Letter of Credit at such time and (b) the Dollar Equivalent of the
aggregate unpaid amount of all Reimbursement Obligations at such time.
"Letter of Credit Obligations" means any obligations of the Borrower
under this Agreement in connection with the Letters of Credit.
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<PAGE> 21
"Lien" means any lien (statutory or other), security interest, mortgage,
pledge, hypothecation, assignment, deposit arrangement, encumbrance, or
preference, priority, or other security agreement or preferential arrangement
of any kind or nature whatsoever (including, without limitation, the interest
of a vendor or lessor under any conditional sale, Capitalized Lease, or other
title retention agreement).
"Loan" means, with respect to a Lender, such Lender's portion of any
Advance and "Loans" means, with respect to the Lenders, the aggregate of all
Advances.
"Loan Documents" means this Agreement, the Notes, the Parent Guaranty,
the Letter of Credit Documents, and the other documents and agreements
contemplated hereby and executed by any Borrower with or in favor of the Agent
or any Lender.
"Margin Stock" has the meaning assigned to that term under Regulation U.
"Material Adverse Effect" means a material adverse effect on (a) the
business, Property, financial condition, performance, or results of operations
of the Borrower and the Subsidiaries taken as a whole, (b) the ability of any
Borrower to perform its obligations under the Loan Documents, or (c) the
validity or enforceability of the Credit Agreement, the Notes, the Parent
Guaranty, or any other material Loan Document or the rights or remedies of the
Agent or the Lenders under the Credit Agreement, the Notes, the Parent
Guaranty, or any of the other material Loan Documents.
"Moody's" means Moody's Investors Service, Inc. and any successor
thereto which is a nationally recognized statistical rating organization.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of a Controlled Group is a party to which more than one employer is
obligated to make contributions.
"Net Available Proceeds" means:
(a) with respect to any Asset Disposition, the sum of cash or readily
marketable cash equivalents received therefrom, whether at the time of such
disposition or subsequent thereto or
(b) with respect to any sale or issuance of any equity securities of
the Borrower or any Subsidiary, cash or readily marketable cash equivalents
received therefrom,
in either case, whether at the time of such disposition, sale, or issuance or
subsequent thereto, net of all legal, title, and recording tax expenses,
commissions, and other fees and all costs and expenses incurred and all
federal, state, local, and other taxes required to be accrued as a liability as
a consequence of such transactions and, in the case of an Asset Disposition,
net of all payments made by the Borrower or any of the Subsidiaries on any
Indebtedness which is secured by such assets pursuant to a permitted Lien upon
or with respect to such assets or which must, by the terms of such
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<PAGE> 22
Lien, in order to obtain a necessary consent to such Asset Disposition, or by
applicable law, be repaid out of the proceeds from such Asset Disposition.
"Net Income" means, for any computation period, with respect to the
Borrower on a consolidated basis with the Subsidiaries (other than any
Subsidiary which is restricted from declaring or paying dividends or otherwise
advancing funds to its parent whether by contract or otherwise), cumulative net
income (loss) earned during such period as determined in accordance with
Agreement Accounting Principles.
"Net Worth" means at any date the Stockholders' Equity of the Borrower
and its consolidated Subsidiaries; provided, however, that any changes in
Stockholders' Equity as a result of changes in the GATT Actuarial Assumptions
and any changes in Stockholders' Equity as a result of foreign currency
translation adjustments, in either case after the date hereof, shall be
excluded when computing Net Worth.
"Notes" means, collectively, the Revolving Credit Notes, the Competitive
Bid Notes, and the Swing Notes; and "Note" means any one of the Notes.
"Notice of Assignment" is defined in Section 12.3.2.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, all Reimbursement Obligations, all accrued and unpaid
fees and all expenses, reimbursements, indemnities and other obligations of the
Borrower to the Lenders or to any Lender, any Issuing Bank, the Agent, or any
indemnified party hereunder arising under any of the Loan Documents.
"Parent Guaranty" means the Guaranty, dated as of the date hereof, duly
executed and delivered by the Borrower in favor of the Agent and the Lenders,
as the same may be amended, supplemented, or otherwise modified from time to
time.
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last day of each March, June, September, and
December.
"Payment Office" shall mean, with respect to the Agent or a Lender, the
payment office of the Agent or such Lender designated for Dollars or for the
applicable Alternative Currency on Schedule 2.9 or such other payment office
specified in writing to the Agent, the Lenders, and the Borrower.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Person" means any natural person, corporation, firm, joint venture,
partnership, association, enterprise, trust, or other entity or organization,
or any government or political subdivision or any agency, department, or
instrumentality thereof.
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"Plan" means an employee pension benefit plan, as defined in Section
3(2) of ERISA, as to which the Borrower or any member of a Controlled Group may
have any liability.
"Proceeding" is defined in Section 5.15.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets
owned, leased, or operated by such Person.
"pro-rata" means, when used (a) with respect to a provision specific to
a Revolving Lender, and any described aggregate or total amount, an amount
equal to such Revolving Lender's pro-rata share or portion based on its
percentage of the Aggregate Revolving Credit Commitment or if the Aggregate
Revolving Credit Commitment has been terminated, its percentage of the
aggregate principal amount of outstanding Advances and Letter of Credit
Exposure to the aggregate outstanding Advances and Letter of Credit Exposure of
all Revolving Lenders at such time and (b) with respect to a provision specific
to a Lender, and any described aggregate or total amount, an amount equal to
such Lender's pro-rata share or portion based on its percentage of the
aggregate principal amount of outstanding Advances to the aggregate outstanding
Advances of all Lenders at such time.
"Purchase" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrower or
any of the Subsidiaries (a) acquires any going business or all or substantially
all of the assets of any firm, corporation, or division or line of business
thereof, whether through purchase of assets, merger, or otherwise or (b)
directly or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority (in number of
votes) of the securities of a corporation which have ordinary voting power for
the election of directors (other than securities having such power only by
reason of the happening of a contingency) or a majority (by percentage or
voting power) of the outstanding partnership interests of a partnership or
equity interests of another Person.
"Purchasers" is defined in Section 12.3.1.
"Regulation D, G, T, U, and X" means Regulations D, G, T, U, and X of
the Board of Governors of the Federal Reserve System as from time to time in
effect and shall include any successor thereto or other regulation or official
interpretation of said Board of Governors relating to reserve requirements
applicable to depositary institutions.
"Reimbursement Obligations" has the meaning set forth in Section 2.23.4.
"Release" is defined in the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. 39601 et seq.
"Relevant Borrower" means, with respect to any outstanding or requested
Loan, Advance, or Letter of Credit, whichever of the Borrowers is the existing
or proposed primary obligor in respect of such Loan or Advance.
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"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
after the occurrence of such event; provided, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of
the notice requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.
"Required Lenders" means Revolving Lenders in the aggregate having at
least 66-2/3% of the Aggregate Revolving Credit Commitments or, if the
Aggregate Revolving Credit Commitments have been terminated, the Dollar
Equivalent of the aggregate unpaid principal amount of the outstanding
Revolving Credit Loans.
"Restructuring Charges" mean charges taken by the Borrower and the
Subsidiaries not later than June 30, 1997 for the purposes of rationalizing the
cost structure of the Borrower and the Subsidiaries, which charges may include,
but are not limited to, plant shut down costs, severance, outplacement and
other costs.
"Revolving Credit Advance" means an Advance made by the Revolving
Lenders to any of the Borrowers pursuant to Section 2.1.
"Revolving Credit Commitment" means, for each Revolving Lender, the
obligation of such Lender to make Revolving Credit Loans to the Borrowers
pursuant to Section 2.1 in an aggregate amount at any one time outstanding not
exceeding the amount set forth opposite its name under the heading "Revolving
Credit Commitment" on the signature page hereto or as set forth in any Notice
of Assignment relating to any assignment which has become effective pursuant to
Section 12.3.2, as such amount may be modified or reduced from time to time
pursuant to the terms of this Agreement.
"Revolving Credit Loan" means, with respect to a Revolving Lender, such
Lender's portion of all Revolving Credit Advances.
"Revolving Credit Note" means a promissory note in substantially the
form of Exhibit E, with appropriate insertions, duly executed and delivered to
the Agent by a Borrower and payable to the order of a Revolving Lender in the
amount of its Revolving Credit Commitment, including any amendment,
modification, renewal, or replacement of such promissory note.
"Revolving Lenders" means the lending institutions listed on the
signature pages of this Agreement as Revolving Lenders and their respective
successors and assigns.
"S&P" means Standard & Poor's Ratings Service, a division of the McGraw-
Hill Companies, Inc., and any successor thereto which is a nationally
recognized statistical rating organization.
"SEC" means the Securities and Exchange Commission or any successor
thereto.
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"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Senior Debt" means the Borrower's senior, unsecured, non-credit
enhanced, long-term indebtedness for borrowed money.
"Singaporean Advance" means a Singaporean Rate Advance or a Singaporean
Eurocurrency Rate Advance.
"Singaporean Borrower" means Cooper Cameron (Singapore) Pte. Ltd., a
private limited company formed under the laws of the Republic of Singapore.
"Singaporean Eurocurrency Rate Advance" means a borrowing hereunder
consisting of the aggregate amount of the several Singaporean Swing Loans made
by the Singaporean Lenders in Dollars to the Singaporean Borrower at the same
time bearing interest at the Eurocurrency Rate for Dollars and for the same
Eurocurrency Interest Period.
"Singaporean Eurocurrency Rate Swing Loan" means each Singaporean
Lender's portion of a Singaporean Eurocurrency Rate Advance.
"Singaporean Lenders" means the lending institutions listed on the
signature pages of this Agreement as Singaporean Lenders and their respective
successors and assigns. Each Singaporean Lender must be exempt from
withholding taxes imposed by the Republic of Singapore on interest payments
made by the Singaporean Borrower, but need not be located in Singapore.
"Singaporean Rate" means, with respect to a Singaporean Rate Swing Loan
for any specified Eurocurrency Interest Period, a rate of interest per annum
equal to the sum of (a) the rate offered by the Agent in the Singapore
interbank market at 11:00 a.m. (Singapore time) two Business Days prior to the
borrowing for deposits of Singapore dollars in the approximate amount of, and
for a maturity corresponding to the Singaporean Rate Swing Loan plus (b) the
Applicable Margin.
"Singaporean Rate Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Singaporean Swing Loans made by the Singaporean
Lenders in Singapore dollars to the Singaporean Borrower at the same time
bearing interest at the Singaporean Rate and for the same Eurocurrency Interest
Period.
"Singaporean Rate Swing Loan" means each Singaporean Lender's
Singaporean Swing Loan Share of a Singaporean Rate Advance.
"Singaporean Swing Loan" means a Singaporean Eurocurrency Rate Swing
Loan or a Singaporean Rate Swing Loan.
"Singaporean Swing Loan Note" means a promissory note in substantially
the form of Exhibit F-1, with appropriate insertions, duly executed and
delivered to the Agent by the
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Singaporean Borrower for the account of a Singaporean Lender and payable to the
order of such Lender, including any amendment, modification, renewal, or
replacement of such promissory note.
"Singaporean Swing Loan Share" means, for each Singaporean Lender, a
percentage equal to (a) the Dollar amount set forth opposite its name on the
signature pages hereto under the heading "Singaporean Swing Loan Amount" or as
set forth in any Notice of Assignment relating to any assignment which has
become effective pursuant to Section 12.3.2 divided by (b) the total Dollar
amount of the Singaporean Swing Loan Amount indicated on the signature pages
hereto for all of the Singaporean Lenders or as set forth in any Notices of
Assignment relating to any assignment which has become effective pursuant to
Section 12.3.2.
"Single Employer Plan" means a Plan subject to Title IV of ERISA
maintained by the Borrower or any member of a Controlled Group for employees of
the Borrower or any member of a Controlled Group, other than a Multiemployer
Plan.
"Specified Acquisition" means any Purchase of or Investment in a Person
(other than a Subsidiary), or the assets thereof, in substantially the same or
related fields of enterprise in which the Borrower or the Subsidiaries are
presently engaged; provided that Investments made in Wholly-Owned Subsidiaries
to fund a Specified Acquisition by such Wholly-Owned Subsidiary shall also be
deemed a "Specified Acquisition."
"Standby Letter of Credit" means a letter of credit that is not a
Documentary Letter of Credit that is issued by an Issuing Bank under the terms
of this Agreement.
"Stockholders' Equity" means aggregate stockholders' equity of the
Borrower and its consolidated Subsidiaries determined in accordance with
Agreement Accounting Principles.
"Subsidiary" of a Person means (a) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or
more of its Subsidiaries or by such Person and one or more of its Subsidiaries
or (b) any partnership, association, joint venture, limited liability company,
or similar business organization more than 50% of the ownership interests
having ordinary voting power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Borrower.
"Substantial Portion" means, with respect to the Property of the
Borrower and the Subsidiaries, Property which represents more than the greater
of (a) $300,000,000 and (b) 20% of the consolidated assets of the Borrower and
the Subsidiaries, as would be shown in the consolidated financial statements of
the Borrower and the Subsidiaries as at the end of the quarter next preceding
the date on which such determination is made.
"Swing Advance" means either a Canadian Advance or a Singaporean
Advance.
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"Swing Loan Lender" means a Canadian Swing Loan Lender or a Singaporean
Swing Loan Lender.
"Swing Loan Request" means a notice of request for a Swing Loan given
under Section 2.2(d) or 2.3(d).
"Swing Loans" means Canadian Swing Loans and Singaporean Swing Loans.
"Swing Notes" means the Canadian Swing Loan Notes and the Singaporean
Swing Loan Notes.
"Synthetic Lease" means (a) any lease that is treated as an operating
lease under Agreement Accounting Principles but for which the Borrower or any
of the Subsidiaries is viewed as the owner of the leased Property under the
Code and (b) guaranties by the Borrower or any of the Subsidiaries of the
obligations of the lessor of such leased Property which are secured by the
payments due under the lease of such Property.
"Termination Event" means, with respect to a Plan which is subject to
Title IV of ERISA, (a) a Reportable Event, (b) the withdrawal of the Borrower
or any other member of a Controlled Group from such Plan during a plan year in
which the Borrower or any other member of a Controlled Group was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA or was deemed such under
Section 4068(f) of ERISA, (c) the termination of such Plan, the filing of a
notice of intent to terminate such Plan or the treatment of an amendment of
such Plan as a termination under Section 4041 of ERISA, (d) the institution by
the PBGC of proceedings to terminate such Plan, or (e) any event or condition
which might constitute grounds under Section 4042 of ERISA for the termination
of, or appointment of a trustee to administer, such Plan.
"Total Capitalization" means, at any time, the sum of Total Debt and
Stockholders' Equity at such time.
"Total Debt" means, at any time and without duplication, (a) that part
of the consolidated Indebtedness of the Borrower and the Subsidiaries at such
time which would be reflected on a balance sheet prepared in accordance with
Agreement Accounting Principles plus (b) an amount (not less than zero) equal
to (i) the aggregate of (A) the Dollar Equivalent of the face amount of
Financial Letters of Credit issued for the account of the Borrower or any of
the Subsidiaries and (B) Contingent Obligations of the Borrower and the
Subsidiaries in respect of a Person other than the Borrower or a Subsidiary
minus (ii) $50,000,000 plus (c) the aggregate Attributable Debt of the Borrower
and the Subsidiaries as lessor or guarantor under Synthetic Leases plus (d) the
aggregate Attributable Debt of the Borrower and the Subsidiaries as seller,
originator, or guarantor under accounts or notes receivable financing or
securitization programs.
"Transferee" is defined in Section 12.4.
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"Type" means, with respect to any Advance, its nature as a Floating Rate
Advance, Eurocurrency Advance, Singaporean Advance bearing interest at the
Singaporean Rate, or Absolute Rate Advance.
"U.K. Borrower" means Cooper Cameron (U.K.) Limited, a company formed
under the laws of the United Kingdom, and its successors and assigns.
"Unfunded Liability" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under a Single Employer Plan
exceeds the fair market value of assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plans using the
GATT Actuarial Assumptions.
"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.
"Wholly-Owned Subsidiary" of a Person means (a) any Subsidiary all of
the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person or (b) any partnership, association, joint venture,
or similar business organization 100% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
The foregoing definitions (other than the definitions of "Borrower" and
"Borrowers") shall be equally applicable to both the singular and plural forms
of the defined terms.
ARTICLE II
THE CREDITS
2.1 Revolving Credit Advances.
(a) From and including the date hereof to but excluding the Facility
Termination Date, each Revolving Lender severally (and not jointly) agrees, on
the terms and conditions set forth in this Agreement, to make Revolving Credit
Advances in Dollars or one or more of the Alternative Currencies to the
Borrowers from time to time in amounts, not to exceed in the aggregate at any
one time outstanding (i) the amount of its Revolving Credit Commitment existing
at such time, minus (ii) (A) the Dollar Equivalent of the aggregate principal
amount of the outstanding Revolving Credit Advances of such Lender at such time
and (B) the amount of such Lender's pro-rata share of the Letter of Credit
Exposure at such time; provided, however, that in no event may the Aggregate
Exposure Amount exceed the Aggregate Revolving Credit Commitment. The initial
Revolving Credit Advances shall be in an amount sufficient to refinance in full
the outstanding principal amount of the Existing Term Loans and the Existing
Revolver. Subject to the terms of this
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Agreement, the Borrowers may borrow, repay, and reborrow Revolving Credit
Advances at any time prior to the Facility Termination Date.
(b) The Borrower hereby agrees that if at any time the Aggregate
Exposure Amount exceeds the Aggregate Revolving Credit Commitment, the Borrower
shall repay or cause to be repaid the then outstanding Revolving Credit Loans
in such amount as may be necessary to eliminate such excess.
(c) The obligation of each Borrower to pay the principal of, and
interest on, its Revolving Credit Loans shall be evidenced by a Revolving
Credit Note executed by such Borrower. Although the Revolving Credit Notes
shall be dated the date of the initial Revolving Credit Advance, interest in
respect thereof shall be payable only for the periods during which the
Revolving Credit Loans evidenced thereby are outstanding and, although the
stated amount of each Revolving Credit Note shall be equal to the applicable
Revolving Lender's Revolving Credit Commitment, each Revolving Credit Note
shall be enforceable, with respect to the Relevant Borrower's obligation to pay
the principal amount thereof, only to the extent of the unpaid principal amount
of the Revolving Credit Loan to such Relevant Borrower at the time evidenced
thereby.
(d) All Revolving Credit Advances and Revolving Credit Loans shall
mature, and the principal amount thereof and the unpaid accrued interest
thereon shall be due and payable, on the Facility Termination Date.
2.2 Singaporean Swing Loan.
(a) From and including the date hereof to but excluding the Facility
Termination Date, each Singaporean Lender may, in its sole discretion, on the
terms and conditions set forth in this Agreement, make Singaporean Advances
from time to time in amounts not to exceed such Singaporean Lender's
Singaporean Swing Loan Share of the Dollar Equivalent of $20,000,000 in the
aggregate at any one time outstanding; provided that the Aggregate Exposure
Amount shall never exceed the Aggregate Revolving Credit Commitment. Each
Singaporean Eurocurrency Rate Loan shall be in Dollars, and each Singaporean
Rate Loan shall be in Singapore dollars. Subject to the terms of this
Agreement, the Singaporean Borrower may borrow, repay, and reborrow Singaporean
Advances at any time prior to the Facility Termination Date.
(b) The obligation of the Singaporean Borrower to pay the principal
of, and interest on, the Singaporean Swing Loans shall be evidenced by the
Singaporean Swing Loan Notes. Although the Singaporean Swing Loan Notes shall
be dated the date of the initial Singaporean Advance, interest in respect
thereof shall be payable only for the periods during which the Swing Loans
evidenced thereby are outstanding and, although the stated amount of each
Singaporean Swing Loan Note shall be equal to $20,000,000, each Singaporean
Swing Loan Note shall be enforceable, with respect to the Singaporean
Borrower's obligation to pay the principal amount thereof, only to the extent
of the unpaid principal amount of the Singaporean Swing Loan to the Singaporean
Borrower at the time evidenced thereby.
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(c) All Singaporean Advances and Singaporean Swing Loans shall
mature, and the principal amount thereof and the unpaid accrued interest
thereon shall be due and payable on the Facility Termination Date and, subject
to Section 2.7(c), on the last day of each Interest Period therefor.
(d) The Singaporean Borrower shall give the Agent a Swing Loan
Request not later than 10:00 a.m. (Chicago time) at least four Business Days
before the Borrowing Date. The Swing Loan Request shall specify (i) the
Borrowing Date, which shall be a Business Day, of such Advance; (ii) the
account to which such Advance is to be funded; (iii) the aggregate principal
amount of such Advance; (iv) the Eurocurrency Interest Period applicable
thereto, and (v) the Alternative Currency for Singaporean Swing Loans in which
such Advance is to be made.
(e) Notwithstanding anything in this Agreement to the contrary, it is
expressly agreed that no Singaporean Lender shall have an obligation whatsoever
to make any Singaporean Swing Loan, the making of any Singaporean Swing Loan to
be in the sole discretion of each Singaporean Lender determined at the time of
any request for Singaporean Advances by the Singaporean Borrower. Without
limiting the foregoing sentence, each Singaporean Lender agrees to give the
Borrower and the Agent written notice of its decision to no longer make
Singaporean Swing Loans.
(f) The Borrowers and the Lenders agree that the Agent may request
each Revolving Lender to pay, and upon such a request made in accordance with
the following sentence, each Revolving Lender shall pay to the Agent for the
ratable benefit of each Singaporean Lender, such Revolving Lender's pro-rata
share of all outstanding Singaporean Swing Loans as a Revolving Credit Advance
under such Lender's Revolving Credit Commitment upon the occurrence of a
Default. In connection with any Advance to be made as contemplated by the
foregoing sentence, the Agent shall give the Revolving Lenders notice of any
such request no later than 10:00 a.m. (Chicago time) to make a Floating Rate
Advance to the Singaporean Borrower in the amount of its pro-rata share of the
Dollar Equivalent of the outstanding Singaporean Swing Loans by noon (Chicago
time) on the date the proposed Advances are to be made. All Advances made
pursuant to each request made by the Agent pursuant to the foregoing sentence
shall be considered to be a Revolving Credit Advance, and the Singaporean
Borrower hereby irrevocably instructs the Agent to apply the proceeds of such
Advances to the prepayment of the outstanding Singaporean Swing Loans. If the
Required Lenders determine that a fundamental change has occurred in the
foreign exchange or interbank markets with respect to the applicable
Alternative Currency (including, without limitation, changes in national or
international financial, political, or economic conditions or currency exchange
rates or exchange controls), then each Revolving Lender shall have been deemed
to have purchased from the Singaporean Lenders a participation in the related
Singaporean Swing Loans equal to such Revolving Lender's pro-rata share and
such sale and purchase shall otherwise be in accordance with the terms of this
Agreement. The Agent shall promptly notify each such participant Revolving
Lender of each Singaporean Swing Loan and the Dollar Equivalent of such
Lender's participation in such Singaporean Swing Loan.
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2.3 Canadian Swing Loan.
(a) From and including the date hereof to but excluding the Facility
Termination Date, each Canadian Lender may, in its sole discretion, on the
terms and conditions set forth in this Agreement, make Canadian Advances from
time to time in amounts, not to exceed such Canadian Lender's Canadian Swing
Loan Share of the Dollar Equivalent of $20,000,000 in the aggregate at any one
time outstanding; provided that the Aggregate Exposure Amount shall never
exceed the Aggregate Revolving Credit Commitment. Subject to the terms of this
Agreement, the Canadian Borrower may borrow, repay, and reborrow Canadian Swing
Advances at any time prior to the Facility Termination Date.
(b) The obligation of the Canadian Borrower to pay the principal of,
and interest on, the Canadian Swing Loans shall be evidenced by the Canadian
Swing Loan Notes. Although the Canadian Swing Loan Notes shall be dated the
date of the initial Canadian Advance, interest in respect thereof shall be
payable only for the periods during which the Swing Loans evidenced thereby are
outstanding and, although the stated amount of Canadian Swing Loan Note shall
be equal to $20,000,000, each Canadian Swing Loan Note shall be enforceable,
with respect to the Canadian Borrower's obligation to pay the principal amount
thereof, only to the extent of the unpaid principal amount of the Canadian
Swing Loans to the Canadian Borrower at the time evidenced thereby.
(c) All Canadian Advances and Canadian Swing Loans shall mature, and
the principal amount thereof and the unpaid accrued interest thereon shall be
due and payable on the Facility Termination Date and, subject to Section
2.7(c), on the last day of the Interest Period therefor.
(d) The Canadian Borrower shall give the Agent a Swing Loan Request
not later than 10:00 a.m. (Chicago time) at least four Business Days before the
Borrowing Date. The Swing Loan Request shall specify (i) the Borrowing Date,
which shall be a Business Day, of such Advance; (ii) the account to which such
Advance is to be funded; (iii) the aggregate principal amount of such Advance;
and (iv) the Eurocurrency Interest Period applicable thereto.
(e) Notwithstanding anything in this Agreement to the contrary, it is
expressly agreed that no Canadian Lender shall have an obligation whatsoever to
make any Canadian Swing Loan, the making of any Canadian Swing Loan to be in
the sole discretion of each Canadian Lender determined at the time of any
request for Canadian Advances by the Canadian Borrower. Without limiting the
foregoing sentence, each Canadian Lender agrees to give the Borrower and the
Agent written notice of its decision to no longer make Canadian Swing Loans.
(f) The Borrowers and the Lenders agree that the Agent may request
each Revolving Lender to pay, and upon such a request made in accordance with
the following sentence, each Revolving Lender shall pay to the Agent for the
ratable benefit of each Canadian Lender, such Revolving Lender's pro-rata share
of all outstanding Canadian Swing Loans as a Revolving Credit Advance under
such Lender's Revolving Credit Commitment upon the occurrence of a Default. In
connection with any Advance to be made as contemplated by the foregoing
sentence, the Agent shall give the Revolving Lenders notice of any such request
no later than 10:00 a.m. (Chicago time) to
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<PAGE> 32
make a Floating Rate Advance to the Borrower in the amount of its pro-rata
share of the Dollar Equivalent of the outstanding Canadian Swing Loans by noon
(Chicago time) on the date the proposed Advances are to be made. All Advances
made pursuant to each request made by the Agent pursuant to the foregoing
sentence shall be considered to be a Revolving Credit Advance, and the Borrower
hereby irrevocably instructs the Agent to apply the proceeds of such Advances
to the prepayment of the outstanding Canadian Swing Loans. If the Required
Lenders determine that a fundamental change has occurred in the foreign
exchange or interbank markets with respect to Canadian dollars (including,
without limitation, changes in national or international financial, political,
or economic conditions or currency exchange rates or exchange controls), then
each Revolving Lender shall have been deemed to have purchased from the
Canadian Lenders a participation in the related Canadian Swing Loans equal to
such Revolving Lender's pro-rata share and such sale and purchase shall
otherwise be in accordance with the terms of this Agreement. The Agent shall
promptly notify each such participant Revolving Lender of each Canadian Swing
Loan and the Dollar Equivalent of such Lender's participation in such Canadian
Swing Loan.
2.4 Ratable Loans. Each Revolving Credit Advance hereunder shall
consist of Revolving Credit Loans made from the several Revolving Lenders
ratably in proportion to the ratio that their respective Revolving Credit
Commitments bear to the Aggregate Revolving Credit Commitment. Each
Singaporean Swing Loan shall consist of Singaporean Swing Loans made from the
several Singaporean Lenders ratably in proportion to their respective
Singaporean Swing Loan Shares. Each Canadian Swing Loan shall consist of
Canadian Swing Loans made from the several Canadian Lenders ratably in
proportion to their respective Canadian Swing Loan Shares.
2.5 Types of Revolving Credit Advances. The Revolving Credit
Advances may be Floating Rate Advances or Eurocurrency Advances, or a
combination thereof, selected by the Borrower in accordance with Sections 2.6
and 2.7; provided, that at the time of the making or continuation of any
Eurocurrency Advance (other than a Singaporean Advance or a Canadian Advance)
or the conversion of any Floating Rate Advance to a Eurocurrency Advance, the
Dollar Equivalent of the aggregate Eurocurrency Advances (other than
Singaporean Advances and Canadian Advances) denominated in Alternative
Currencies (after giving effect to such making, conversion, or continuation)
and of the aggregate Letter of Credit Exposure denominated in Alternative
Currencies shall not exceed the Alternative Currency Sublimit. No Advance may
mature after, or have a Eurocurrency Interest Period which extends beyond, the
Facility Termination Date.
2.6 Method of Selecting Types and Interest Periods for New Revolving
Credit Advances. Subject to the terms of Section 2.5, the Borrower shall
select the Type of Advance and, in the case of each Eurocurrency Advance that
is a Revolving Credit Advance, the Interest Period and currency applicable to
each Revolving Credit Advance from time to time. The Borrower shall give the
Agent irrevocable notice (a "Borrowing Notice") not later than 10:00 a.m.
(Chicago time) on the Borrowing Date of each Floating Rate Advance and at least
three Business Days before the Borrowing Date for each Eurocurrency Advance
that is a Revolving Credit Advance. Notwithstanding the foregoing, a Borrowing
Notice for a Floating Rate Advance may be given not later than 30 minutes after
the time which the Borrower is required to reject one or more Bids offered in
connection with an Absolute Rate Auction pursuant to Section 2.8.6 and a
Borrowing Notice for
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a Eurocurrency Advance that is a Revolving Credit Advance may be given not
later than 30 minutes after the time the Borrower is required to reject one or
more Bids offered in connection with a Eurodollar Auction pursuant to Section
2.8.6. A Borrowing Notice shall specify:
(a) the Borrowing Date, which shall be a Business Day, of such
Advance;
(b) the Relevant Borrower which is to receive such Advance and the
account to which such Advance is to be funded;
(c) the aggregate principal amount of such Advance;
(d) the Type of Advance selected; and
(e) in the case of each Eurocurrency Advance that is a Revolving
Credit Advance, the Eurocurrency Interest Period applicable thereto and the
currency in which such Advance is to be made.
2.7 Conversion and Continuation of Outstanding Advances.
(a) Floating Rate Advances shall continue as Floating Rate Advances
unless and until such Floating Rate Advances are repaid or converted into
Eurocurrency Advances. Each Eurocurrency Advance in Dollars (other than a
Singaporean Eurocurrency Rate Advance) shall continue as a Eurocurrency Advance
in Dollars until the end of the then applicable Interest Period therefor, at
which time such Eurocurrency Advance shall be automatically converted into a
Floating Rate Advance unless repaid or unless the Borrower shall have given the
Agent a notice (a "Conversion/Continuation Notice"), which shall be
irrevocable, requesting that, at the end of such Interest Period, such
Eurocurrency Advance either continue as a Eurocurrency Advance for the same or
another Interest Period or be converted into a Floating Rate Advance.
(b) Each Eurocurrency Advance in an Alternative Currency shall
continue as such until the end of the then applicable Eurocurrency Interest
Period therefor, at which time such Advance shall, unless repaid, automatically
be deemed to be continued as a Eurocurrency Advance in the same amount and in
the same currency with an Interest Period of one month (commencing on the last
day of the expiring Interest Period) unless the Borrower shall have given the
Agent a Conversion/Continuation Notice requesting that, at the end of such
Interest Period, such Eurocurrency Advance continue as a Eurocurrency Advance
in the same currency for the same or another Interest Period.
(c) Each Canadian Swing Loan and each Singaporean Swing Loan shall
continue as such until the end of the then applicable Eurocurrency Interest
Period therefor, at which time such Swing Loan shall, unless repaid or the
Canadian Lender or the Singaporean Lender has given the Borrower and the Agent
written notice under Section 2.2(e) or 2.3(e), as applicable, that it will not
continue making Canadian Swing Loans or Singaporean Swing Loans, as the case
may be, automatically be deemed to be continued as a Swing Loan in the same
amount and in the same
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currency with an Interest Period of one month (commencing on the last day of
the expiring Interest Period) unless the Borrower shall have given the Agent a
Conversion/Continuation Notice requesting that, at the end of such Interest
Period, such Swing Loan continue for the same or another Interest Period and in
the same currency.
(d) The Borrower shall give the Agent a Conversion/Continuation
Notice, which shall be irrevocable, with respect to each conversion of a
Revolving Credit Advance or continuation of a Eurocurrency Advance or a
Singaporean Rate Advance (as permitted by paragraphs (a), (b), and (c) above)
not later than 10:00 a.m. (Chicago time) on the date of such conversion, in the
case of a conversion into a Floating Rate Advance, or at least three Business
Days in the case of Revolving Credit Advances and four Business Days in the
case of Swing Advances prior to the date of the requested conversion or
continuation, in the case of a conversion into or continuation of a
Eurocurrency Advance or a Singaporean Rate Advance, specifying:
(i) the requested date which shall be a Business Day, of such
conversion or continuation;
(ii) the Relevant Borrower with respect to such Advance;
(iii) the aggregate amount, currency, and Type of the Advance
which is to be converted or continued; and
(iv) the amount and Type(s) of Advance(s) into which such
Advance is to be converted or continued and, in the case of a conversion
into or continuation of a Eurocurrency Advance or a Singaporean Rate
Advance, the duration of the Interest Period applicable thereto.
Notwithstanding the provisions of paragraphs (a), (b), and (c) above, no
Eurocurrency Advance shall be continued as or converted into a Eurocurrency
Advance for a new Interest Period, no Canadian Swing Loan that is part of a
Canadian Advance shall be continued into a Canadian Swing Loan for a new
Interest Period, and no Singaporean Swing Loan that is part of a Singaporean
Rate Advance shall be continued into a Singaporean Loan for a new Interest
Period if the Aggregate Exposure Amount (determined as of the date of any
proposed conversion or continuation thereof) would exceed the Aggregate
Revolving Credit Commitment. The Relevant Borrower shall reimburse the Agent
on demand for any costs of currency exchange incurred by the Agent resulting
from the conversion pursuant to this Section 2.7 of Eurocurrency Advances
payable in an Alternative Currency to Floating Rate Advances.
2.8 Competitive Bid Advances.
2.8.1 Competitive Bid Option. In addition to Advances pursuant to
Sections 2.1, 2.2, and 2.3, but subject to the terms and conditions of this
Agreement (including, without limitation, the limitation set forth in Section
2.1(a) as to the maximum aggregate principal amount of all Advances and Letters
of Credit hereunder), at any time prior to the Facility Termination Date the
Borrower
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may, as set forth in this Section 2.8, request the Revolving Lenders to make
offers to make Competitive Bid Advances to the Borrower. Each Revolving Lender
may, but shall have no obligation to, make such offers and the Borrower may,
but shall have no obligation to, accept any such offers in the manner set forth
in this Section 2.8. The Borrower's obligation to pay the principal of, and
interest on, the Competitive Bid Advances shall be evidenced by the Competitive
Bid Notes. Although the Competitive Bid Notes shall be dated the date of the
initial Advance, interest in respect thereof shall be payable only for the
periods during which the Loans evidenced thereby are outstanding. All
outstanding Competitive Bid Loans and any unpaid accrued interest thereon shall
be due and payable in full by the Borrower on the Facility Termination Date.
2.8.2 Competitive Bid Quote Request. When the Borrower wishes to
request offers to make Competitive Bid Loans under this Section 2.8, it shall
transmit to the Agent by telecopy a Competitive Bid Quote Request so as to be
received no later than (a) 10:00 a.m. (Chicago time) at least four Business
Days prior to the Borrowing Date proposed therein, in the case of a Eurodollar
Auction or (b) 10:00 a.m. (Chicago time) at least one Business Day prior to the
Borrowing Date proposed therein, in the case of an Absolute Rate Auction
specifying:
(i) the proposed Borrowing Date, which shall be a Business
Day, for the proposed Competitive Bid Advance;
(ii) the aggregate principal amount of such Competitive Bid
Advance;
(iii) whether the Competitive Bid Quotes requested are to set
forth a Eurodollar Bid Rate, an Absolute Rate, or both; and
(iv) the Interest Period applicable thereto (which may not end
after the Facility Termination Date).
The Borrower may request offers to make Competitive Bid Loans for more than one
Interest Period in a single Competitive Bid Quote Request. No Competitive Bid
Quote Request shall be given within five Business Days (or such other number of
days as the Borrower and the Agent may agree) of any other Competitive Bid
Quote Request. A Competitive Bid Quote Request that does not conform
substantially to the format of Exhibit C shall be rejected, and the Agent shall
promptly notify the Borrower of such rejection by telecopy.
2.8.3 Invitation for Competitive Bid Quotes. Promptly and in any event
before the close of business on the same Business Day of receipt of a
Competitive Bid Quote Request that is not rejected pursuant to Section 2.8.2,
the Agent shall send to each of the Revolving Lenders by telex or telecopy an
Invitation for Competitive Bid Quotes, which shall constitute an Invitation by
the Borrower to each Revolving Lender to submit Competitive Bid Quotes offering
to make the Competitive Bid Loans to which such Competitive Bid Quote Request
relates in accordance with this Section 2.8.
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2.8.4 Submission and Contents of Competitive Bid Quotes.
(a) Each Revolving Lender may, in its sole discretion, submit a
Competitive Bid Quote containing an offer or offers to make Competitive Bid
Loans in response to any Invitation for Competitive Bid Quotes. Each
Competitive Bid Quote must comply with the requirements of this Section 2.8.4
and must be submitted to the Agent by telex or telecopy at its offices
specified in or pursuant to Article XIII not later than (i) 9:00 a.m. (Chicago
time) at least three Business Days prior to the proposed Borrowing Date, in the
case of a Eurodollar Auction or (ii) 9:00 a.m. (Chicago time) on the proposed
Borrowing Date, in the case of an Absolute Rate Auction (or, in either case
upon reasonable prior notice to the Revolving Lenders, such other time and date
as the Borrower and the Agent may agree); provided that Competitive Bid Quotes
submitted by First Chicago may only be submitted if the Agent or First Chicago
notifies the Borrower of the terms of the offer or offers contained therein not
later than 15 minutes prior to the latest time at which the relevant
Competitive Bid Quotes must be submitted by the other Revolving Lenders.
Subject to Articles IV and VIII, any Competitive Bid Quote so made shall be
irrevocable except with the written consent of the Agent given on the
instructions of the Borrower.
(b) Each Competitive Bid Quote shall specify:
(i) the proposed Borrowing Date, which shall be the same as
that set forth in the applicable Invitation for Competitive Bid Quotes;
(ii) the principal amount of the Competitive Bid Loan for which
each such offer is being made, which principal amount (A) may be greater
than, less than or equal to the Revolving Credit Commitment of the
quoting Revolving Lender, (B) must be at least $10,000,000 and an
integral multiple of $1,000,000, and (C) may not exceed the principal
amount of Competitive Bid Loans for which offers were requested;
(iii) in the case of a Eurodollar Auction, the Competitive Bid
Margin offered for each such Competitive Bid Loan;
(iv) the minimum amount, if any, of the Competitive Bid Loan
which may be accepted by the Borrower;
(v) in the case of an Absolute Rate Auction, the Absolute Rate
offered for each such Competitive Bid Loan; and
(vi) the identity of the quoting Revolving Lender.
(c) The Agent shall reject any Competitive Bid Quote that:
(i) is not substantially in the form of Exhibit B or does not
specify all of the information required by Section 2.8.4(b);
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(ii) contains qualifying, conditional, or similar language,
other than any such language contained in Exhibit B;
(iii) proposes terms other than or in addition to those set
forth in the applicable Invitation for Competitive Bid Quotes; or
(iv) arrives after the time set forth in Section 2.8.4(a).
If any Competitive Bid Quote shall be rejected pursuant to this Section
2.8.4(c), then the Agent shall promptly notify the relevant Revolving Lender of
such rejection.
2.8.5 Notice to Borrower. The Agent shall promptly notify the Borrower
of the terms (a) of any Competitive Bid Quote submitted by a Revolving Lender
that is in accordance with Section 2.8.4 and (b) of any Competitive Bid Quote
that amends, modifies, or is otherwise inconsistent with a previous Competitive
Bid Quote submitted by such Lender with respect to the same Competitive Bid
Quote Request. Any such subsequent Competitive Bid Quote shall be disregarded
by the Agent unless such subsequent Competitive Bid Quote specifically states
that it is submitted solely to correct a manifest error in such former
Competitive Bid Quote. The Agent's notice to the Borrower shall specify the
aggregate principal amount of Competitive Bid Loans for which offers have been
received for each Interest Period specified in the related Competitive Bid
Quote Request and the respective principal amounts and Eurodollar Bid Rates or
Absolute Rates, as the case may be, so offered.
2.8.6 Acceptance and Notice by Borrower. Not later than (a) 10:00 a.m.
(Chicago time) at least three Business Days prior to the proposed Borrowing
Date, in the case of a Eurodollar Auction or (b) 10:00 a.m. (Chicago time) on
the proposed Borrowing Date, in the case of an Absolute Rate Auction (or, in
either case upon reasonable prior notice to the Revolving Lenders, such other
time and date as the Borrower and the Agent may agree), the Borrower shall
notify the Agent of its acceptance or rejection of the offers so notified to it
pursuant to Section 2.8.5; provided, however, that the failure by the Borrower
to give such notice to the Agent shall be deemed to be a rejection of all such
offers. In the case of acceptance, such notice (a "Competitive Bid Borrowing
Notice") shall specify the aggregate principal amount of offers for each
Interest Period that are accepted. The Borrower may accept any Competitive Bid
Quote in whole or in part (subject to the terms of Section 2.8.4(b)(iv));
provided that:
(i) the aggregate principal amount of each Competitive Bid
Advance may not exceed the applicable amount set forth in the related
Competitive Bid Quote Request,
(ii) acceptance of offers may only be made on the basis of
ascending Eurodollar Bid Rates or Absolute Rates, as the case may be,
and
(iii) the Borrower may not accept any offer that is described in
Section 2.8.4(c) or that otherwise fails to comply with the requirements
of this Agreement.
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2.8.7 Allocation by Agent. If offers are made by two or more Revolving
Lenders with the same Eurodollar Bid Rates or Absolute Rates, as the case may
be, for a greater aggregate principal amount than the amount in respect of
which offers are accepted for the related Interest Period, the principal amount
of Competitive Bid Loans in respect of which such offers are accepted shall be
allocated by the Agent among such Lenders as nearly as possible (in such
multiples, not greater than $1,000,000, as the Agent may deem appropriate) in
proportion to the aggregate principal amount of such offers; provided, however,
that no Revolving Lender shall be allocated a portion of any Competitive Bid
Advance which is less than the minimum amount which such Lender has indicated
that it is willing to accept. Allocations by the Agent of the amounts of
Competitive Bid Loans shall be conclusive in the absence of manifest error.
The Agent shall promptly, but in any event on the same Business Day, notify
each Revolving Lender of its receipt of a Competitive Bid Borrowing Notice and
the aggregate principal amount of such Competitive Bid Advance allocated to
each participating Lender.
2.9 Availability of Funds. Not later than 11:00 a.m. (time at the
Payment Office for Dollars or the Alternative Currency, as applicable) on the
Borrowing Date thereof, each Lender shall make available its Loan, in funds
immediately available in Dollars or in the Alternative Currency, to the Agent
at its Payment Office applicable to Dollars or such Alternative Currency
specified in Schedule 2.9 or at any other Lending Office or Payment Office of
the Agent specified in writing by the Agent to the Lenders. The Agent will make
the funds so received from the Lenders available to the Relevant Borrower to
the account specified in the Borrowing Notice, Competitive Bid Borrowing
Notice, or Swing Loan Request, as the case may be, promptly following the
receipt of the related Loan from each Lender.
2.10 Fees; Reductions in Aggregate Revolving Credit Commitment.
(a) The Borrower agrees to pay to the Agent for the account of each
Revolving Lender a facility fee equal to the Applicable Margin per annum on
such Lender's Revolving Credit Commitment from the date hereof to and including
the Facility Termination Date, payable on each Payment Date hereafter and on
the Facility Termination Date. All accrued facility fees shall be payable on
the effective date of any termination of the obligations of the Revolving
Lenders to make Loans hereunder.
(b) The Borrower shall pay to the Agent the fees in the amounts and
at the times separately agreed to between the Agent and the Borrower.
(c) The Borrower agrees to pay (i) subject to the next sentence, to
the Agent for the pro-rata benefit of the Revolving Lenders, a fee for each
Letter of Credit equal to the Applicable Margin per annum of the face amount of
such Letter of Credit, (ii) to the Agent on behalf of each Issuing Bank, a fee
for each Documentary Letter of Credit issued by such Issuing Bank equal to five
Basis Points per annum of the face amount of such Documentary Letter of Credit,
and (iii) to the Agent on behalf of each Issuing Bank, a fee for each Standby
Letter of Credit issued by such Issuing Bank equal to 10 Basis Points per annum
of the face amount of such Standby Letter of Credit. If the Revolving Credit
Commitment is terminated for any reason, the letter of credit fee under the
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foregoing clause (i) for Standby Letters of Credit shall be 65 Basis Points per
annum and for Documentary Letters of Credit shall be 35 Basis Points per annum
beginning on the date of such termination. Each such fee shall be based on the
maximum amount available to be drawn under such Letter of Credit from time-to-
time from the date of issuance of the Letter of Credit until its Expiration
Date and payable quarterly in arrears on each Payment Date of each year for the
period during which such Letter of Credit or any portion thereof was
outstanding. The Borrower also agrees to pay each Issuing Bank upon the
issuance, increase, amendment, or extension of a Letter of Credit issued by
such Issuing Bank all customary and reasonable fees published by such Issuing
Bank and payable in connection with the issuance, increase, amendment, or
extension of a letter of credit.
(d) The Borrower may permanently reduce the Aggregate Revolving
Credit Commitment in whole, or in part ratably among the Revolving Lenders in a
minimum aggregate amount of $10,000,000 or any integral multiple of $1,000,000
in excess thereof, upon at least three Business Days' written notice to the
Agent, which notice shall specify the amount of any such reduction; provided,
however, that the amount of the Aggregate Revolving Credit Commitment may not
be reduced below the Aggregate Exposure Amount.
2.11 Minimum Amount of Each Advance. Each Eurocurrency Advance shall
be in the minimum amount having a Dollar Equivalent of not less than
$3,000,000, and each Floating Rate Advance shall be in the minimum amount of
$3,000,000; provided, however, that (a) any Floating Rate Advance may be in the
amount of the unused Aggregate Revolving Credit Commitment and (b) in no event
shall more than 10 Eurocurrency Advances be permitted to be outstanding at any
time.
2.12 Optional Principal Payments. The Borrowers may from time to time
pay, without penalty or premium, all outstanding Floating Rate Advances, or, in
a minimum aggregate amount of $3,000,000, any portion of the outstanding
Floating Rate Advances upon one Business Day's prior notice to the Agent.
Subject to Section 3.5 and upon two Business Days' notice, a Eurocurrency
Advance or a Singaporean Swing Loan bearing interest at the Singaporean Rate
may be paid prior to the last day of the applicable Interest Period in a
minimum amount of the Dollar Equivalent of $3,000,000. The Borrower may not
voluntarily prepay any Competitive Bid Loan.
2.13 Mandatory Payments. If at any time the Total Debt to Total
Capitalization ratio is greater than 50%, the Borrower shall make mandatory
payments of its outstanding debt for borrowed money in an amount equal to the
sum of (i) 50% of the Net Available Proceeds of the issuance of common stock,
preferred stock or other equity within five Business Days after Borrower's
receipt of such Net Available Proceeds and (ii) 100% of Net Available Proceeds
from the sale of assets outside the normal course of business in excess of
$10,000,000 during any 12 consecutive month period within five Business Days
after receipt of any such Net Available Proceeds in excess of such amount
during any such period, in either case to the extent such amount is not used to
pay other Indebtedness of the Borrowers and only to the extent necessary to
reduce the ratio of Total Debt to Total Capitalization to 50% or lower after
giving effect to such issuance or sale and payment.
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2.14 Interest Rate, etc. Each Floating Rate Advance shall bear
interest at the Alternate Base Rate from and including the date of such Advance
or the date on which such Advance was converted into a Floating Rate Advance to
(but not including) the date on which such Floating Rate Advance is paid or
converted to a Eurocurrency Advance pursuant to Section 2.7. Changes in the
rate of interest on that portion of any Advance maintained as a Floating Rate
Advance will take effect simultaneously with each change in the Alternate Base
Rate. Each Eurocurrency Advance, Absolute Rate Advance, and Advance comprised
of Singaporean Rate Swing Loans shall bear interest from and including the
first day of the Interest Period applicable thereto to, but not including, the
last day of such Interest Period at the interest rate determined as applicable
to such Eurocurrency Advance, Absolute Rate Advance, or Advance comprised of
Singaporean Rate Swing Loans. No Interest Period may end after the Facility
Termination Date.
2.15 Rates Applicable After Default. Notwithstanding anything to the
contrary contained in Section 2.6 or 2.7, no Advance may be made as, converted
into, or continued as a Eurocurrency Advance or an Advance comprised of
Singaporean Rate Swing Loans (except with the consent of the Agent and the
Required Lenders) when any Default or Unmatured Default has occurred and is
continuing. Overdue principal and (to the extent permitted by applicable law)
overdue interest in respect of each Loan shall bear interest, payable on
demand, after as well as before judgement, at a rate per annum equal to the
Alternate Base Rate plus 200 Basis Points per annum.
2.16 Method of Payment.
(a) All payments of the Obligations hereunder (including payments
made pursuant to the last sentence of this Section 2.16) shall be made, without
setoff, deduction, or counterclaim, in immediately available funds to the Agent
at the Agent's Payment Office applicable to the currency in which the payment
is to be made as specified in Schedule 2.9 or at any other Lending Office or
Payment Office of the Agent specified in writing by the Agent, to the Borrower
by noon (time at the Payment Office for applicable currency) on the date when
due and shall be applied ratably by the Agent among the Lenders, Canadian
Lenders, and Singaporean Lenders, as applicable. Each payment delivered to the
Agent for the account of any Lender shall be delivered promptly by the Agent to
such Lender in the same type of funds that the Agent received, at its Payment
Office for Dollar Advances or for the currency in which the payment is to be
made as specified in Schedule 2.9 or at any other Lending Office or Payment
Office specified in a notice received by the Agent from such Lender. The Agent
is hereby authorized to charge the account of the Borrower or any Relevant
Borrower maintained with First Chicago for each payment of principal, interest,
facility fees and annual administrative agent's fees payable in Dollars as it
becomes due hereunder. If the Agent does not intend to so charge such account
for any such amount, it will notify the Borrower of such fact at least two
Business Days prior to the due date of such amount.
(b) All payments of principal of and interest on any Advance or any
other Obligations hereunder shall be made by the Relevant Borrower in the
currency borrowed (the "Specified Currency") in the manner and at the address
(the "Specified Place") specified in Section 2.16(a). Payment of the
Obligations shall not be discharged by an amount paid in another currency or in
another place, whether pursuant to a judgment or otherwise, to the extent that
the amount so paid on
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conversion to the Specified Currency and transferred to the Specified Place
under normal banking procedures does not yield the amount of the Specified
Currency at the Specified Place due hereunder. If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum due hereunder
in the Specified Currency into another currency (the "Judgment Currency"), the
rate of exchange which shall be applied shall be that at which in accordance
with normal banking procedures the Agent could purchase the Judgment Currency
with that amount of the Specified Currency on the Business Day next preceding
that on which such judgment is rendered. The obligation of each Borrower in
respect of any such sum due from it to the Agent or any Lender hereunder (an
"Entitled Person") shall, notwithstanding the rate of exchange actually applied
in rendering such judgment, be discharged only to the extent that on the
Business Day following receipt by such Entitled Person of any sum adjudged to
be due hereunder or under the Notes in the Judgment Currency, such Entitled
Person may in accordance with normal banking procedures purchase and transfer
to the Specified Place the Specified Currency with the amount of the Judgment
Currency so adjudged to be due; and each of the Borrowers hereby, as a separate
Obligation and notwithstanding any such judgment, agrees to indemnify such
Entitled Person against, and to pay such Entitled Person on demand, in the
Specified Currency, any difference between the sum originally due to such
Entitled Person in the Specified Currency and the amount of the Specified
Currency so purchased and transferred.
2.17 Telephonic Notices. The Borrowers hereby authorize the Lenders
and the Agent to extend, convert, or continue Advances, effect selections of
Types of Advances, submit Competitive Bid Quotes and transfer funds based on
telephonic notices made by (a) any Authorized Officer of the Borrower or (b)
any person or persons for whom the Lenders and the Agent have received written
authorization from an Authorized Officer of the Borrower, which written
authorization(s) may be relied upon by the Agent, in the case of any person so
authorized, until such time as the Agent shall have received written notice
from an Authorized Officer of the Borrower revoking such person's authority to
make such telephonic notices. The Borrower agrees to deliver promptly to the
Agent a written confirmation, if such confirmation is requested by the Agent or
any Lender, of each telephonic notice signed by an Authorized Officer. If the
written confirmation differs in any material respect from the action taken by
the Agent and the Lenders, the records of the Agent and the Lenders shall
govern absent manifest error.
2.18 Interest Payment Dates; Interest and Fee Basis. Interest accrued
on each Floating Rate Advance shall be payable on each Payment Date, commencing
with the first such date to occur after the date hereof, on any date on which a
Floating Rate Advance is prepaid, whether due to acceleration or otherwise, and
at maturity. Interest accrued on that portion of the outstanding principal
amount of any Floating Rate Advance converted into a Eurocurrency Advance on a
day other than a Payment Date shall be payable on the date of conversion.
Interest accrued on each Eurocurrency Advance, Absolute Rate Advance, or
Advance comprised of Singaporean Rate Swing Loans shall be payable on the last
day of its applicable Interest Period and on any date on which the Eurocurrency
Advance, Absolute Rate Advance, or Advances comprised of Singaporean Rate Swing
Loans is prepaid, whether by acceleration or otherwise, and at maturity.
Interest accrued on each Eurocurrency Advance, Absolute Rate Advance, or
Advance comprised of Singaporean Rate Swing Loans having an Interest Period
longer than three months shall also be payable on the last day of each three-
month interval during such Interest Period. Interest shall be calculated for
actual days
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elapsed on the basis of a 360-day year, except interest accrued at the
Alternate Base Rate, at the Eurocurrency Rate on Advances denominated in
British pounds sterling, and at the Singaporean Rate shall be calculated for
actual days elapsed on the basis of a 365 or 366-day year. Interest on
Canadian Advances shall be expressed as a yearly rate for purposes of the
Interest Act (Canada) by multiplying such rate of interest by the actual number
of days in the calendar year of calculation and dividing it by 360 days.
Interest shall be payable for the day an Advance is made but not for the day of
any payment on the amount paid if payment is received prior to noon (time at
the applicable Payment Office for the Agent) at the place of payment. If any
payment of principal of or interest on an Advance shall become due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and, in the case of a principal payment, such extension of time
shall be included in computing interest in connection with such payment.
Facility and letter of credit fees shall be calculated on the basis of 365 or
366-day year.
2.19 Notification of Advances, etc. Promptly after receipt thereof,
the Agent will notify each Lender of the contents of each Aggregate Revolving
Credit Commitment reduction notice, Borrowing Notice, Conversion/Continuation
Notice, Invitation for Competitive Bid Quotes, Swing Loan Request, and
repayment notice received by it hereunder. The Agent will notify each relevant
Lender and the Borrower of the interest rate applicable to each Advance
promptly upon determination of such interest rate and will give each Lender and
the Borrower prompt notice of each change in the Alternate Base Rate.
2.20 Lending Offices. Each Lender may book its Loans at any Lending
Office selected by such Lender and may change its Lending Office from time to
time. All terms of this Agreement shall apply to any such Lending Office and
the Notes shall be deemed held by each Lender for the benefit of such Lending
Office. Each Lender may, by written or telecopy notice to the Agent and the
Borrower, designate a Lending Office through which Loans will be made by it and
for whose account Loan payments are to be made.
2.21 Non-Receipt of Funds by the Agent. Unless the Borrower or a
Lender, as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (a) in the case of a Lender, the
proceeds of a Loan or (b) in the case of the Borrower, a payment by any of the
Borrowers of principal, interest, or fees to the Agent for the account of the
Lenders, that it does not intend to make such payment, the Agent may assume
that such payment has been made. The Agent may, but shall not be obligated to,
make the amount of such payment available to the intended recipient in reliance
upon such assumption. If the Relevant Borrower has not in fact made such
payment to the Agent, the Lenders shall, on demand by the Agent, repay to the
Agent the amount so made available together with interest thereon in respect of
each day during the period commencing on the date such amount was so made
available by the Agent until the date the Agent recovers such amount at a rate
per annum equal to the (i) the Federal Funds Effective Rate for such day for
amounts denominated in or calculated with reference to Dollars, (ii) the
Eurocurrency Base Rate for amounts denominated in or calculated with reference
to Alternative Currencies or Dollars, and (iii) the Singaporean Rate for
Singaporean Rate Swing Loans. If any Lender has not in fact made such payment
to the Agent, such Lender, or the Relevant Borrower shall, on demand by the
Agent, repay to the Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date such
amount was so made available by the Agent until the date the Agent recovers
such amount at a rate per annum equal to (a) in the case of
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payment by a Lender, the Federal Funds Effective Rate for such day for amounts
denominated in or calculated with reference to Dollars and the Eurocurrency
Base Rate for such day for amounts denominated in or calculated with reference
to Alternative Currencies or (b) in the case of payment by any of the
Borrowers, the interest rate applicable to the relevant Loan.
2.22 Taxes.
(a) Any payments made by the Borrowers under this Agreement shall be
made free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp, or other taxes, levies, imposts,
duties, charges, fees, deductions, or withholdings, now or hereafter imposed,
levied, collected, withheld, or assessed by any Governmental Authority,
excluding net income taxes and franchise taxes or any other tax based upon any
income imposed on the Agent, any Lender, or any Issuing Bank by the
jurisdiction (i) of a Lending Office maintained by the Agent, such Lender, or
such Issuing Bank or (ii) in which the Agent, such Lender, or such Issuing Bank
is incorporated or has its principal place of business. If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions, or
withholdings ("Non-Excluded Taxes") are required to be withheld from any
amounts payable to the Agent, any Lender, or any Issuing Bank hereunder, the
amounts so payable to the Agent, such Lender, or such Issuing Bank shall be
increased to the extent necessary to yield to the Agent, such Lender, or such
Issuing Bank (after payment of all Non-Excluded Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in or
pursuant to this Agreement; provided, however, that the Borrowers shall not be
required to increase any such amounts payable to any Lender that is not
organized under the laws of the U.S. or a state thereof if such Lender or such
Issuing Bank fails to comply with the requirements of paragraph (b) of this
Section 2.22. Whenever any Non-Excluded Taxes are payable by one of the
Borrowers, as promptly as practicable thereafter the Relevant Borrower shall
send to the Agent for its own account or for the account of such Lender or such
Issuing Bank, as the case may be, a certified copy of an original official
receipt received by the Relevant Borrower showing payment thereof. If the
Relevant Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Agent the required
receipts or other required documentary evidence, the Relevant Borrower shall
indemnify the Agent, the Lenders, and each Issuing Bank for any incremental
taxes, interest or penalties that may become payable by any Agent, any Lender,
or any Issuing Bank as a result of any such failure. The agreements in this
Section 2.22 shall survive the termination of this Agreement and the payment of
all other amounts payable hereunder.
(b) At least five Business Days prior to the first date on which
interest or fees are payable hereunder for the account of any Lender or any
Issuing Bank, each Lender and Issuing Bank that is not incorporated under the
laws of the United States of America, or a state thereof, agrees that it will
deliver to each of the Borrower and the Agent two duly completed copies of
United States Internal Revenue Service Form 1001 or 4224, certifying in either
case that such Lender or such Issuing Bank is entitled to receive payments
under this Agreement and the Notes without deduction or withholding of any
United States federal income taxes. Each Lender and each Issuing Bank which so
delivers a Form 1001 or 4224 further undertakes to deliver to each of the
Borrower and the Agent two additional copies of such form (or a successor form)
on or before the date that such form
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expires (currently, three successive calendar years for Form 1001 and one
calendar year for Form 4224) or becomes obsolete or after the occurrence of any
event requiring a change in the most recent forms so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Agent, in each case certifying that such
Lender or such Issuing Bank is entitled to receive payments under this
Agreement and the Notes without deduction or withholding of any United States
federal income taxes, unless an event (including, without limitation, any
change in treaty, law, or regulation) has occurred prior to the date on which
any such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender or such Issuing
Bank advises the Borrower and the Agent that it is not capable of receiving
payments without any deduction or withholding of United States federal income
tax.
(c) Each Lender and each Issuing Bank shall, as soon as practicable
after the date of this Agreement, file all appropriate forms and take other
appropriate actions to obtain, if and to the extent available under applicable
law, a certificate or other appropriate document from the United Kingdom Inland
Revenue establishing that such Lender or such Issuing Bank, on the date of
delivery thereof, is entitled to receive payments of principal and interest for
the account of its Lending Office under this Agreement and the Notes without
deduction and free from withholding of any income taxes imposed by the United
Kingdom; provided that if the forms supplied by such Lender or such Issuing
Bank fails to establish a complete exemption from withholding tax of the United
Kingdom as of the date of delivery thereof, such Lender or such Issuing Bank
shall, within 15 days after a written request from the Borrower, deliver to the
Borrower the forms or other evidence reasonably satisfactory to the Borrower to
establish, if and to the extent available under applicable law, a complete
exemption from withholding tax of the United Kingdom as of such date.
2.23 Letters of Credit.
2.23.1 Issuance. On the terms and conditions of this Agreement from and
including the date hereof to but excluding the Facility Termination Date, at
the request of a Borrower, an Issuing Bank shall, within three Business Days
after receipt of a request therefor sent to it and the Agent, issue, increase,
or extend the expiration date of Letters of Credit in Dollars or in an
Alternative Currency for the account of such Borrower; provided (a) that the
Aggregate Exposure Amount shall never exceed the Aggregate Revolving Credit
Commitment; (b) the aggregate Letter of Credit Exposure shall never exceed
$100,000,000; and (c) the Dollar Equivalent of the aggregate Eurocurrency
Advances denominated in Alternative Currencies (other than Singaporean Advances
and Canadian Advances) and the Letter of Credit Exposure denominated in
Alternative Currencies shall never exceed the Alternative Currency Sublimit.
2.23.2 Certain Requirements. In addition to the terms and conditions
set forth elsewhere in this Agreement as to the issuance of Letters of Credit,
it shall be a condition to the issuance of any Letter of Credit that:
(a) such Letter of Credit has an Expiration Date not later than five
Business Days before the Facility Termination Date;
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(b) such Letter of Credit shall be in a minimum amount having a
Dollar Equivalent of not less than $3,000,000;
(c) such Letter of Credit is in form and substance reasonably
acceptable to such Issuing Bank; and
(d) the applicable Borrower has delivered to such Issuing Bank a
completed and executed letter of credit application on such form as may be
reasonably requested by such Issuing Bank.
2.23.3 Participations. Upon the date of issuance or increase of a
Letter of Credit, the Issuing Bank of such Letter of Credit shall be deemed to
have sold to each other Revolving Lender and each other Revolving Lender shall
have been deemed to have purchased from such Issuing Bank a participation in
the related Letter of Credit Obligations equal to such Lender's pro-rata share
and such sale and purchase shall otherwise be in accordance with the terms of
this Agreement. The Agent shall promptly notify each such participant
Revolving Lender of each Letter of Credit issued, increased, or extended and
the Dollar Equivalent of such Lender's participation in such Letter of Credit.
2.23.4 Reimbursement. In the event an Issuing Bank makes a payment
pursuant to a request for draw presented under a Letter of Credit and such
payment is not promptly reimbursed by the Borrower which is the account party
thereunder upon demand (the amount demanded is referred to in this Agreement as
the "Reimbursement Obligation"), such Issuing Bank shall give notice of such
payment to the Agent and the Revolving Lenders, and each Revolving Lender shall
promptly reimburse such Issuing Bank in Dollars or the applicable Alternative
Currency such Lender's pro-rata share of such payment and such Borrower's
Reimbursement Obligation in connection with such Letter of Credit shall be
deemed for all purposes of this Agreement to constitute a Floating Rate Advance
in the Dollar Equivalent of such Lender's pro rata share of such payment to
such Borrower from such Lender. Such Borrower hereby unconditionally and
irrevocably authorizes and directs the Agent and the Revolving Lenders to
record and otherwise treat such Reimbursement Obligation not immediately
reimbursed by such Borrower as a Revolving Credit Loan to such Borrower
consisting of Floating Rate Advances in the Dollar Equivalent of such
Reimbursement Obligation. If such reimbursement is not made by any Revolving
Lender to such Issuing Bank on the same day on which such Issuing Bank shall
have made payment on any such draw, such Lender shall pay interest thereon to
such Issuing Bank for each day such amount is due from such Lender at a rate
per annum equal to the Federal Funds Effective Rate on the Dollar Equivalent of
such amount for each such day through the fifth Business Day after such amount
was due and the interest rate applicable to the Borrower on each date
thereafter for Floating Rate Advances.
2.23.5 Revolving Lender Obligations Several. The failure of any
Revolving Lender to pay any amount pursuant to the foregoing Section 2.23.4
shall not relieve any other Revolving Lender of its obligation to make its
payment to such Issuing Bank. No Revolving Lender shall be
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responsible for the failure of any other Revolving Lender to make the payment
to be made by such other Revolving Lender on the date of any payment under a
Letter of Credit.
2.23.6 Obligations Unconditional. The Reimbursement Obligations and
other obligations of the Borrowers under this Agreement in respect of each
Letter of Credit shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all
circumstances, notwithstanding the following circumstances:
(a) any lack of validity or enforceability of any Letter of Credit
Document;
(b) any amendment or waiver of or any consent to departure from any
Letter of Credit Document, except to the extent otherwise provided in such
amendment, waiver, or consent;
(c) the existence of any claim, set-off, defense, or other right
which the Borrowers may have at any time against any beneficiary or transferee
of such Letter of Credit (or any Persons for whom any such beneficiary or any
such transferee may be acting), the Issuing Bank for such Letter of Credit, or
any other Person or entity, whether in connection with this Agreement, the
transactions contemplated in this Agreement, or in any Letter of Credit
Documents or any unrelated transaction;
(d) any statement or any other document presented under such Letter
of Credit proving to be forged, fraudulent, or invalid in any respect or any
statement therein being untrue or inaccurate in any respect; or
(e) payment by the Issuing Bank under such Letter of Credit against
presentation of a draft or certificate which does not comply with the terms of
such Letter of Credit unless such noncompliance is evident on the face of such
draft or certificate;
provided, however, that nothing contained in this Section 2.23.6 shall be
deemed to constitute a waiver of any remedies of the Borrowers in connection
with the Letters of Credit under Section 2.23.7.
2.23.7 Liability of Issuing Bank. The Borrowers assume all risks of the
acts or omissions of any beneficiary or transferee of any Letter of Credit with
respect to its use of such Letter of Credit. Neither any Issuing Bank nor any
of its officers or directors shall be liable for or responsible for:
(a) the use which may be made of any Letter of Credit or any acts or
omissions of any beneficiary or transferee in connection therewith;
(b) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent, or forged; or
(c) payment by such Issuing Bank against presentation of documents
which do not comply with the terms of a Letter of Credit, including failure of
any documents to bear any reference
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or adequate reference to the Letter of Credit unless such noncompliance is
evident on the face of such draft or certificate.
Notwithstanding the foregoing, the Borrowers shall have a claim against such
Issuing Bank, and such Issuing Bank shall be liable to the Borrowers, to the
extent of any direct, as opposed to consequential damages suffered by the
Borrowers which were caused by (i) such Issuing Bank's willful misconduct or
gross negligence in determining whether documents presented under a Letter of
Credit comply with the terms of such Letter of Credit or (ii) such Issuing
Bank's willful failure to make lawful payment under any Letter of Credit after
the presentation to it of a draft and certificate strictly complying with the
terms and conditions of such Letter of Credit.
In furtherance and not in limitation of the foregoing, such 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.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1 Yield Protection.
(a) If, after the date hereof, with respect to any Eurocurrency
Advance, the adoption of or any change in any law or any governmental or
quasi-governmental rule, regulation, policy, guideline, or directive (whether
or not having the force of law), or any interpretation thereof, or the
compliance of any Lender therewith,
(i) subjects any Lender or any applicable Lending Office to
any tax, duty, charge, or withholding on or from payments due from any
of the Borrowers (excluding net income taxes and franchise taxes or any
other tax based upon income imposed on the Agent or any Lender by the
jurisdiction (x) of a Lending Office maintained by the Agent or such
Lender or (y) in which the Agent or such Lender is incorporated or has
its principal place of business), or changes the basis of taxation of
principal, interest, or any other payments to any Lender or Lending
Office in respect of its Loans or other amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit, or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, any Lender or any applicable Lending Office (other than
reserves and assessments taken into account in determining the interest
rate applicable to Eurocurrency Advances), or
(iii) imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending Office of
making, funding, or maintaining Loans or reduces any amount receivable
by any Lender or any applicable Lending Office in
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connection with any Loans, or requires any Lender or any applicable
Lending Office to make any payment calculated by reference to the amount
of Loans held, or interest received by it, by an amount deemed material
by such Lender,
then, within 15 days after demand by such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or resulting in an
amount received which such Lender determines is attributable to making,
funding, and maintaining its Loans and its Commitment.
(b) In addition to any other amounts payable by the Borrowers
hereunder, each Lender may require the Relevant Borrower to pay,
contemporaneously with each payment of interest on Eurocurrency Advances of
such Relevant Borrower, additional interest on the related Eurocurrency Loan of
such Lender at the percentage calculated from time to time by such Lender to be
the percentage required to fully compensate such Lender for all reserve costs,
liabilities, expenses, and assessments which have been incurred by such Lender
(or its applicable Lending Office) regarding the making, funding, or
maintaining of such Eurocurrency Loan (including, without limitation, any and
all liquid asset maintenance requirements of the Bank of England and any
reserve requirements of Regulation D). Any Lender wishing to require payment
of such additional interest (i) shall so notify the Relevant Borrower and the
Agent pursuant to Section 3.6, in which case such additional interest on the
Eurocurrency Loans of such Lender shall be payable in the applicable currency
to such Lender at the place indicated in such notice with respect to each
Interest Period commencing at least five Business Days after the giving of such
notice and (ii) shall notify the Borrower at least five Business Days prior to
each date on which interest is payable on such Eurocurrency Loans of the amount
then due it under this Section 3.1(b); provided, however, that if a Lender
fails to give such prior notice, then such additional interest shall be payable
five Business Days after such notice is given.
3.2 Changes in Capital Adequacy Regulations. If a Lender or an
Issuing Bank determines the amount of capital required or expected to be
maintained by such Lender or such Issuing Bank, any Lending Office of such
Lender or such Issuing Bank or any corporation controlling such Lender or such
Issuing Bank is increased as a result of a Change, then, within 15 days after
demand by such Lender or such Issuing Bank, the Borrower shall pay such Lender
or such Issuing Bank the amount necessary to compensate for any shortfall in
the rate of return on the portion of such increased capital which is
attributable to this Agreement, such Lender's Loans or its obligation to make
Loans hereunder, or such Issuing Bank's Letters of Credit or its obligation to
issue the Letters of Credit (after taking into account such Lender's or such
Issuing Bank's good faith policies as to capital adequacy). "Change" means (a)
any change after the date of this Agreement in the Risk-Based Capital
Guidelines or (b) any adoption of or change in any other law, governmental, or
quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by any Lender, any Issuing Bank or any Lending Office or any
corporation controlling any Lender or any Issuing Bank. "Risk-Based Capital
Guidelines" means (a) the risk-based capital guidelines in effect in the United
States on the date of this Agreement and (b) the corresponding capital
regulations promulgated by regulatory authorities outside the United States
implementing the July 1988 report of the Basle Committee on Banking
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Regulation and Supervisory Practices entitled "International Convergence of
Capital Measurements and Capital Standards" and any amendments to such
regulations adopted prior to the date of this Agreement.
3.3 Letters of Credit. If any Change shall either (a) impose,
modify, or deem applicable any reserve, special deposit, or similar requirement
against letters of credit issued by, letters of credit participated in, or
assets held by, or deposits in or for the account of, any Revolving Lender or
any Issuing Bank or (b) impose on a Revolving Lender or an Issuing Bank any
other condition regarding the provisions of this Agreement relating to the
Letters of Credit or any Letter of Credit Obligations, and the result of any
event referred to in the preceding clause (a) or (b) shall be to increase the
cost to such Lender or such Issuing Bank of issuing or maintaining or
participating in any Letter of Credit (which increase in cost shall be
determined by such Lender's or such Issuing Bank's reasonable allocation of the
aggregate of such cost increases resulting from such event), then, within 15
days after demand by such Lender or such Issuing Bank, the Borrowers shall pay
to the Agent for the benefit of such Lender or such Issuing Bank, from time-to-
time as specified by such Lender or such Issuing Bank, additional amounts which
shall be sufficient to compensate such Lender or such Issuing Bank for such
increased cost. A certificate as to such increased cost incurred by such
Lender or such Issuing Bank, as a result of any event mentioned in clause (i)
or (ii) above, submitted by such Lender or such Issuing Bank to the Borrowers,
shall be conclusive and binding for all purposes, absent manifest error.
3.4 Availability of Types of Advances. If any Lender determines that
maintenance of its Eurocurrency Loans at a suitable Lending Office would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required Lenders determine that (a) deposits
of a type and maturity appropriate to match fund Eurocurrency Advances are not
available, (b) the interest rate applicable to a Type of Advance does not
accurately or fairly reflect the cost of making or maintaining such Advance,
(c) a fundamental change has occurred in the foreign exchange or interbank
markets with respect to any applicable Alternative Currency (including, without
limitation, changes in national or international financial, political, or
economic conditions or currency exchange rates or exchange controls), or (d) it
has become otherwise materially impractical for the Lenders to make such
Advance in any applicable Alternative Currency, then the Agent shall suspend
the availability of the affected Type of Advance until such circumstance no
longer exists and require any Eurocurrency Advances of the affected Type to be
repaid.
3.5 Funding Indemnification. If any payment of a Eurocurrency
Advance occurs on a date which is not the last day of the applicable Interest
Period, whether because of acceleration, prepayment or otherwise, or a
Eurocurrency Advance is not made on the date specified by the Relevant Borrower
for any reason other than default by the Agent or the Lenders, the Borrower
will indemnify the Agent and each Lender for any loss or cost incurred by it
resulting therefrom, including, without limitation, any loss or cost in
liquidating or employing deposits acquired to fund or maintain the Eurocurrency
Advance.
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3.6 Lender Statements; Survival of Indemnity. To the extent
reasonably possible, each Lender shall designate an alternate Lending Office
with respect to its Eurocurrency Advances to reduce any liability of the
Borrowers to such Lender under Sections 3.1 and 3.2 or to avoid the
unavailability of a Type of Advance under Section 3.4, so long as such
designation is not disadvantageous to such Lender. Each Lender and each
Issuing Bank shall use reasonable efforts to promptly deliver a written
statement of such Lender or such Issuing Bank to the Borrower (with a copy to
the Agent) as to the amount due, if any, under Sections 3.1, 3.2, 3.3, or 3.5;
provided, however, that with respect to any circumstances occurring before the
date of any such notice, such Lender or such Issuing Bank shall only be
entitled to recover compensation for such events occurring within 120 days
before the date of such notice. Such written statement shall set forth in
reasonable detail the calculations upon which such Lender or such Issuing Bank
determined such amount and shall be final, conclusive and binding on the
Borrowers in the absence of manifest error. Determination of amounts payable
under such Sections in connection with a Eurocurrency Advances shall be
calculated as though each Lender funded its Eurocurrency Advances through the
purchase of a deposit of the type and maturity corresponding to the deposit
used as a reference in determining the Eurocurrency Rate applicable to such
Loan, whether in fact that is the case or not. Unless otherwise provided
herein, the amount specified in the written statement of any Lender or any
Issuing Bank shall be payable on demand after receipt by the Borrower of the
written statement. The obligations of the Borrowers under Sections 3.1, 3.2,
3.3, and 3.5 shall survive payment of the Obligations and termination of this
Agreement.
3.7 Right to Substitute Lender. Any Lender claiming any additional
amounts payable pursuant to Section 3.1 or 3.2 or unable to make a Type of
Advance available in accordance with Section 3.4, shall, so long as no Default
or Unmatured Default has occurred and is continuing, upon the written request
of the Borrower delivered to such Lender and the Agent, assign, pursuant to and
in accordance with the provisions of Section 12.3, all of its rights and
obligations under this Agreement and under the Loan Documents to another Lender
or to a commercial bank, other financial institution, commercial finance
company, or other business lender selected by the Borrower and reasonably
acceptable to the Agent that has agreed not to claim any additional amounts
under Section 3.1 or 3.2 with respect to some or all of the taxes or regulatory
changes that gave rise to such assigning Lender's claim for such compensation,
or that has agreed to make the Type of Advance available that was not made
available from such assigning Lender, in consideration for (a) the payment by
such assignee to such assigning Lender of the principal of, and interest
accrued and unpaid to the date of such assignment on, the Notes held by such
assigning Lender, (b) the payment by the Borrower to such assigning Lender of
any and all other amounts owing to such assigning Lender under any provision of
this Agreement accrued and unpaid to the date of such assignment, and (c) the
Borrower's release of such assigning Lender from any further obligation or
liability under this Agreement and the Loan Documents. Notwithstanding
anything to the contrary contained in this Section 3.7, in no event shall the
replacement of any Lender result in a decrease or reallocation of the Aggregate
Total Commitment without the prior written consent of each of the remaining
Lenders.
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ARTICLE IV
CONDITIONS PRECEDENT
4.1 Restatement. The Existing Credit Agreement shall be amended and
restated in its entirety by this Agreement upon the satisfaction or written
waiver of each of the following conditions precedent on or before March 20,
1997:
(a) Documentation. The Borrower has furnished the following to the
Agent with sufficient copies for the Lenders:
(i) Charter Documents; Good Standing Certificates. Copies of
the certificate of incorporation of the Borrower, together with all
amendments thereto, certified by the secretary or assistant secretary of
the Borrower and a good standing certificate issued by the Secretary of
State of the jurisdiction of its incorporation and such other
jurisdictions as shall be requested by the Agent.
(ii) By-Laws and Resolutions. Copies, certified by the
secretary or assistant secretary of the Borrower of its by-laws and of
its board of directors' resolutions authorizing the execution, delivery,
and performance of the Loan Documents to which the Borrower is a party.
(iii) Incumbency Certificate. An incumbency certificate,
executed by the secretary or assistant secretary of the Borrower, which
shall identify by name and title and bear the signature of the officers
of the Borrower authorized to sign the Loan Documents and to make
borrowings hereunder, upon which certificate the Agent and the Lenders
shall be entitled to rely until informed of any change in writing by the
Borrower.
(iv) Officer's Certificate. A certificate, dated the initial
Borrowing Date, signed by an Authorized Officer of the Borrower, in form
and substance satisfactory to the Agent, to the effect that: (A) on the
initial Borrowing Date no Default or Unmatured Default has occurred and
is continuing; (B) no injunction or temporary restraining order which
would prohibit the making of the Loans, or other litigation which could
reasonably be expected to have a Material Adverse Effect is pending or,
to the best of such Person's knowledge, threatened; (C) all orders,
consents, approvals, licenses, authorizations, or validations of, or
filings, recordings, or registrations with, or exemptions by, any
governmental or public body or authority, or any subdivision thereof,
required in connection with this Agreement have been or, prior to the
time required, will have been, obtained, given, filed, or taken and are
or will be in full force and effect (or the Borrower has obtained
effective judicial relief with respect to the application thereof) and
all waiting periods applicable thereto have expired; (D) each of the
representations and warranties set forth in Article V of this Agreement
is true and correct on and as of the initial Borrowing Date; and (E)
there has occurred no material adverse change in the consolidated
financial condition of the Borrower from that reflected in the
Borrower's consolidated financial statements as of December 31, 1996.
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(v) Legal Opinions. (i) A written opinion of Franklin Myers,
general counsel of the Borrower, addressed to the Agent and the Lenders
in form and substance acceptable to the Agent and its counsel and (ii) a
written opinion of the outside counsel to the Borrower and the
Subsidiaries addressed to the Agent and the Lenders in form and
substance acceptable to the Agent and its counsel.
(vi) Revolving Credit Notes. A Revolving Credit Note payable
to the order of each of the Revolving Lenders duly executed by each
Borrower.
(vii) Competitive Bid Notes. A Competitive Bid Note payable to
the order of each of the Revolving Lenders duly executed by the
Borrower.
(viii) Swing Notes. A Singaporean Swing Loan Note payable to the
order of each of the Singaporean Lenders duly executed by the
Singaporean Borrower and a Canadian Swing Loan Note payable to the order
of each of the Canadian Lenders duly executed by the Canadian Borrower.
(ix) Loan Documents. Executed originals of this Agreement and
each of the other Loan Documents, which shall be in full force and
effect, together with all schedules, exhibits, certificates,
instruments, opinions, documents, and financial statements required to
be delivered pursuant hereto and thereto.
(x) Letters of Direction. Written money transfer instructions
with respect to the initial Advances and to future Advances in form and
substance acceptable to the Agent and its counsel addressed to the Agent
and signed by an Authorized Officer, together with such other related
money transfer authorizations as the Agent may have reasonably
requested.
(xi) Subsidiary Charter Documents; Good Standing Certificates.
Copies of the articles or certificates of incorporation or other
organizational documents of each Borrowing Subsidiary, together with all
amendments thereto, certified by the secretary or assistant secretary,
director, or other appropriate official of such Borrowing Subsidiary and
a good standing certificate (if applicable) issued by the Secretary of
State (or other appropriate official) of the jurisdiction of such
Subsidiary's incorporation or organization and such other jurisdictions
as shall be requested by the Agent.
(xii) Subsidiary By-Laws and Resolutions. Copies, certified by
the secretary or assistant secretary, director, or other appropriate
official of each Borrowing Subsidiary, of its by-laws and board of
directors' (or functional equivalent thereof's) resolutions of such
Subsidiary (and resolutions of other bodies, if any are deemed necessary
by counsel for the Agent) or such other evidence of corporate authority
reasonably acceptable to the Agent in either case authorizing the
execution, delivery, and performance of the Loan Documents to which such
Subsidiary is a party.
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(xiii) Subsidiary Incumbency Certificates. An incumbency
certificate, executed by the secretary or assistant secretary of each
Borrowing Subsidiary, which shall identify by name and title and bear
the signature of the officers of each such Subsidiary authorized to sign
the Loan Documents upon which certificate the Agent and the Lenders
shall be entitled to rely until informed of any change in writing by the
Borrower.
(xiv) Other. Such other documents as the Agent, any Lender, or
their counsel may have reasonably requested. All legal matters incident
to the making of the initial Advances shall be satisfactory to the
Lenders and their counsel.
(b) Payment of Fees and Expenses. The Borrower shall have paid
to the Agent for its account and the fees and expenses required by Section 2.10
to be paid as of the date of this Agreement.
(c) No Default. No Default or Unmatured Default shall have occurred
and be continuing.
(d) Representations and Warranties. The representations and
warranties contained in Article V shall be true and correct in all material
respects.
(e) Existing Credit Agreement. Contemporaneously with the amendment
and restatement of the Existing Credit Agreement, (i) each of the Lenders (as
defined in the Existing Credit Agreement) shall have received payment in full
of all amounts owing under the Existing Credit Agreement from the proceeds of
the initial Advances under this Agreement and (ii) the Agent shall have
received a master assignment agreement in form reasonably satisfactory to the
Agent executed by each of the Existing Lenders which are not party to this
Agreement.
4.2 Each Future Advance. The Revolving Lenders shall not be required
to make any Advance and no Issuing Bank shall be required to issue, increase,
or extend any Letter of Credit, unless on the applicable Borrowing Date or the
date of such issuance, increase, or extension:
(a) There exists no Default or Unmatured Default and none would
result from such Advance or the issuance, increase, or extension of such Letter
of Credit;
(b) The representations and warranties contained in Article V are
true and correct in all material respects as of such Borrowing Date or the date
of such issuance, increase, or extension, except to the extent any such
representation or warranty is stated to relate solely to an earlier date, in
which case such representation or warranty shall be true and correct in all
material respects on and as of such earlier date; and
(c) A Borrowing Notice, Competitive Bid Quote Request, or Issuance
Request shall have been properly submitted.
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Each Borrowing Notice, Swing Loan Request, Issuance Request, and
Competitive Bid Quote Request with respect to each such Advance shall
constitute a representation and warranty by the Borrower that the conditions
contained in Section 4.2 have been satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrowers represent and warrant to the Lenders that:
5.1 Corporate Existence and Standing. Each of the Borrowers is a
corporation duly incorporated or organized, validly existing, and in good
standing (to the extent applicable) under the laws of its respective
jurisdiction of incorporation or organization. Each of the Borrowers and each
of the Subsidiaries is duly qualified and in good standing (to the extent
applicable) as a foreign corporation or other business entity and is duly
authorized to conduct its business in each jurisdiction in which its business
is conducted or proposed to be conducted except where the failure to qualify
may not reasonably be expected to have a Material Adverse Effect.
5.2 Authorization and Validity. Each of the Borrowers has all
requisite power and authority (corporate and otherwise) and legal right to
execute and deliver each of the Loan Documents to which it is a party and to
perform its obligations thereunder. The execution and delivery by each of the
Borrowers of the Loan Documents to which it is a party and the performance of
its respective obligations thereunder have been duly authorized by proper
corporate proceedings and the Loan Documents constitute legal, valid, and
binding obligations of each of the Borrowers, as applicable, enforceable
against each of such Borrowers, as applicable, in accordance with their terms,
except as enforceability may be limited by bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors' rights generally.
5.3 Compliance with Laws and Contracts. Each of the Borrowers and
each of the Subsidiaries has complied in all material respects with all
applicable statutes, rules, regulations, orders, and restrictions of any
domestic or foreign government or any instrumentality or agency thereof, having
jurisdiction over the conduct of its respective businesses or the ownership of
its respective properties, except where the failure to so comply could not
reasonably be expected to have a Material Adverse Effect. Neither the
execution and delivery by any of the Borrowers of the Loan Documents to which
it is a party, the application of the proceeds of the Loans or any other
transaction contemplated in the Loan Documents, nor compliance with the
provisions of the Loan Documents will, or at the relevant time did, (a) violate
any law, rule, regulation (including Regulations G, T, U, and X), order, writ,
judgment, injunction, decree, or award binding on any of the Borrowers'
charter, articles or certificate of incorporation, or by-laws, (b) violate the
provisions of or require the approval or consent of any party to any indenture,
instrument, or agreement to which any of the Borrowers is a party or is
subject, or by which it, or its property, is bound (other than violations which
have been permanently and effectively waived), or conflict with or constitute a
default thereunder, or result in the creation or imposition of any Lien (other
than Liens permitted
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by the Loan Documents) in, of or on the property of the Borrowers pursuant to
the terms of any such indenture, instrument, or agreement, or (c) require any
consent of the stockholders of any Person, except for any violation of, or
failure to obtain an approval or consent required under, any such indenture,
instrument, or agreement that could not reasonably be expected to have a
Material Adverse Effect.
5.4 Governmental Consents. Except for those which have been
obtained, no order, consent, approval, qualification, license, authorization,
or validation of, or filing, recording, or registration with, or exemption by,
or other action in respect of, any court, governmental, or public body or
authority, or any subdivision thereof, any securities exchange or other Person
is or at the relevant time was required to authorize, or is or at the relevant
time was required in connection with the execution, delivery, consummation or
performance of, or the legality, validity, binding effect, or enforceability
of, any of the Loan Documents, the application of the proceeds of the Loans or
any other transaction contemplated in the Loan Documents. Neither the Borrower
nor any Subsidiary is in default under or in violation of any foreign, federal,
state, or local law, rule, regulation, order, writ, judgment, injunction,
decree, or award binding upon or applicable to the Borrower or such Subsidiary,
in each case the consequences of which default or violation could reasonably be
expected to have a Material Adverse Effect.
5.5 Financial Statements. The Borrower has heretofore furnished to
each of the Lenders the December 31, 1996 audited consolidated financial
statements of the Borrower and the Subsidiaries (the "Financial Statements").
Each of the Financial Statements was prepared in accordance with Agreement
Accounting Principles and fairly presents the consolidated financial condition
and operations of the Borrower and the Subsidiaries at such date and the
consolidated results of their operations for the fiscal year then ended.
5.6 Material Adverse Change. No material adverse change in the
business, Property, financial condition, or results of operations of the
Borrower and the Subsidiaries taken as a whole has occurred since December 31,
1996.
5.7 Taxes. The Borrower and the Subsidiaries have filed or caused to
be filed on a timely basis and in correct form all United States federal and
applicable foreign, state, and local tax returns and all other tax returns
(other than local returns pertaining to immaterial amounts) which are required
to be filed and have paid all taxes due pursuant to said returns or pursuant to
any assessment received by the Borrower or any Subsidiary, except for taxes for
which the failure to pay could not be reasonably expected to cause a Material
Adverse Effect or taxes, if any, as are being contested in good faith and as to
which adequate reserves have been provided in accordance with Agreement
Accounting Principles and as to which no Lien exists. No tax liens have been
filed and no claims are being asserted with respect to any such taxes which
could reasonably be expected to have a Material Adverse Effect. The charges,
accruals, and reserves on the books of the Borrower and the Subsidiaries in
respect of any taxes or other governmental charges are in accordance with
Agreement Accounting Principles.
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5.8 Litigation and Contingent Obligations. There is no litigation,
arbitration, proceeding, inquiry, or governmental investigation pending or, to
the knowledge of any of their officers, threatened against or affecting the
Borrower or any Subsidiary or any of their respective properties which could
reasonably be expected to have a Material Adverse Effect or to prevent, enjoin,
or unduly delay the making of the Loans under this Agreement.
5.9 Subsidiaries. Schedule 5.9 contains an accurate list of all of
the existing Subsidiaries as of the date of this Agreement, setting forth their
respective jurisdictions of incorporation or organization and the percentage of
their capital stock owned by the Borrower or other Subsidiaries. Each
Borrowing Subsidiary is a direct, Wholly-Owned Subsidiary except for the
Singaporean Borrower, all of the issued and outstanding capital stock of which
is owned by the Borrower and Cooper Energy Services International, Inc., a
direct, Wholly-Owned Subsidiary of the Borrower. All of the issued and
outstanding shares of capital stock of each Subsidiary have been duly
authorized and validly issued, and are fully paid and non-assessable, and are
free and clear of all Liens. No authorized but unissued or treasury shares of
capital stock of any Subsidiary are subject to any option, warrant, right to
call, or commitment of any kind or character. Except as set forth on Schedule
5.9, no Subsidiary has any outstanding stock or securities convertible into or
exchangeable for any shares of its capital stock, or any right issued to any
Person (either preemptive or other) to subscribe for or to purchase, or any
options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments, or claims of any
character relating to any of its capital stock or any stock or securities
convertible into or exchangeable for any of its capital stock other than as
expressly set forth in the certificate or articles of incorporation or other
charter document of the Borrower or such Subsidiary.
5.10 ERISA. Except as disclosed on Schedule 5.10, no Single Employer
Plan has any Unfunded Liability in excess of $15,000,000. Neither the Borrower
nor any other member of a Controlled Group maintains, or is obligated to
contribute to, any Multiemployer Plan or has incurred any unsatisfied
withdrawal liability to any Multiemployer Plan, or is reasonably expected to
incur, any withdrawal liability to any Multiemployer Plan. Each Plan complies
in all material respects with all applicable requirements of law and
regulations. Neither the Borrower nor any member of a Controlled Group has,
with respect to any Plan, failed to make any material contribution or pay any
material amount required under Section 412 of the Code or Section 302 of ERISA
or the terms of such Plan. There are no pending or, to the knowledge of the
Borrower, threatened claims, actions, investigations, or lawsuits against any
Plan, any fiduciary thereof, or the Borrower or any member of a Controlled
Group with respect to a Plan which could reasonably be expected to have a
Material Adverse Effect. The Borrower has not engaged in any prohibited
transaction (as defined in Section 4975 of the Code or Section 406 of ERISA) in
connection with any Plan which would subject the Borrower to any material
liability. Within the last five years, neither the Borrower nor any member of
a Controlled Group has engaged in a transaction which resulted in a Single
Employer Plan with an Unfunded Liability being transferred out of a Controlled
Group and which could reasonably be expected to have a Material Adverse Effect.
No Termination Event has occurred or is reasonably expected to occur with
respect to any Plan which is subject to Title IV of ERISA which could
reasonably be expected to have a Material Adverse Effect. Neither the Borrower
nor any other member of a Controlled Group has any material liability,
contingent or otherwise, under either Title
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IV of ERISA or Chapter 43 of the Code by reason of being or having at some
earlier date been a part of Cooper Industries, Inc. or being or having been
treated as a single employer with Cooper Industries, Inc. as a single employer
under Section 414 of the Code.
5.11 Defaults. No Default or Unmatured Default has occurred and is
continuing.
5.12 Federal Reserve Regulations. Neither the Borrower nor any
Subsidiary is engaged, directly or indirectly, principally, or as one of its
important activities, in the business of extending, or arranging for the
extension of, credit for the purpose of purchasing or carrying Margin Stock.
No part of the proceeds of any Loan will be used in a manner which would
violate, or result in a violation of, Regulation G, Regulation T, Regulation U,
or Regulation X. Neither the making of any Advance hereunder, the use of the
proceeds thereof, will violate or be inconsistent with the provisions of
Regulation G, Regulation T, Regulation U, or Regulation X. Following the
application of the proceeds of the Loans, less than 25% of the value (as
determined by any reasonable method) of the assets of the Borrower and the
Subsidiaries which are subject to any limitation on sale, pledge, or other
restriction hereunder taken as a whole have been, and will continue to be,
represented by Margin Stock.
5.13 Investment Company. Neither the Borrower nor any Subsidiary is,
or after giving effect to any Advance will be, an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
5.14 Material Agreements. Neither the Borrower nor any Subsidiary is
a party to any agreement or instrument or subject to any charter or other
corporate restriction which could reasonably be expected to have a Material
Adverse Effect. Neither the Borrower nor any Subsidiary is in default in the
performance, observance, or fulfillment of any of the obligations, covenants,
or conditions contained in any agreement to which it is a party, which default
could reasonably be expected to have a Material Adverse Effect.
5.15 Environmental Laws. There are no claims, investigations,
litigation, administrative proceedings, notices, requests for information (each
a "Proceeding"), whether pending or threatened, or judgments or orders
asserting violations of applicable federal, state, and local environmental,
health, and safety statutes, regulations, ordinances, codes, rules, orders,
decrees, directives, and standards ("Environmental Laws") or relating to any
toxic or hazardous waste, substance, or chemical or any pollutant, contaminant,
chemical, or other substance defined or regulated pursuant to any Environmental
Law, including, without limitation, asbestos, petroleum, crude oil, or any
fraction thereof ("Hazardous Materials") asserted against the Borrower or any
of the Subsidiaries which, in any case, could reasonably be expected to have a
Material Adverse Effect. Neither the Borrower nor any Subsidiary has caused or
permitted any Hazardous Materials to be released, either on or under real
property, currently (or, to the best of their knowledge, formerly), legally or
beneficially owned or operated by the Borrower or any Subsidiary or on or under
real property to which the Borrower or any of the Subsidiaries transported,
arranged for the transport or disposal of, or disposed of Hazardous Materials,
which release could reasonably be expected to have a Material Adverse Effect.
To the knowledge of each of the Borrowers, no real property currently or
formerly
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owned or operated by the Borrower or any Subsidiary has ever been used as a
dump or disposal site or as a treatment or storage site for Hazardous Materials
in a material violation of any Environmental Law, except as disclosed on
Schedule 5.15. The Borrower and each of the Subsidiaries have obtained and are
in compliance in all material respects with all material permits, certificates,
licenses, approvals, and other authorizations ("Environmental Permits")
required for the operation of their business and have filed all required
notifications or reports relating to chemical substances, air emissions, and
effluent discharges and the storage, treatment, transport, and disposal of
Hazardous Materials, except for such Environmental Permits for which the
failure to so obtain or comply could reasonably be expected to cause a Material
Adverse Effect. To the knowledge of each of the Borrowers, no asbestos
containing materials, polychlorinated biphenyls, or underground storage tanks
are or have been located in, on or under real property owned or operated by the
Borrower or any of the Subsidiaries, in a material violation of any
Environmental Law.
5.16 Insurance. The Borrower will, and will cause each Subsidiary to,
maintain with financially sound and reputable insurance companies insurance on
all or substantially all of its Property, or shall maintain self-insurance, in
such amounts and covering such risks as is consistent with sound business
practice for Persons in substantially the same industry as the Borrower or such
Subsidiary, and the Borrower will furnish to any Lender upon request full
information as to the insurance carried.
5.17 Disclosure. None of the (a) information, exhibits or reports
furnished or to be furnished by the Borrower or any Subsidiary to the Agent or
to any Lender in connection with the negotiation of the Loan Documents or (b)
representations or warranties of the Borrower or any Subsidiary contained in
this Agreement, the other Loan Documents or any other document, certificate, or
written statement furnished to the Agent or the Lenders by or on behalf of the
Borrower or any Subsidiary for use in connection with the transactions
contemplated by this Agreement contained, contains or will contain any untrue
statement of a material fact or omitted, omits or will omit to state a material
fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made. There is
no fact known to any of the Borrowers (other than matters of a general economic
nature) that has had or could reasonably be expected to have a Material Adverse
Effect and that has not been disclosed herein or in such other documents,
certificates and statements furnished to the Lenders for use in connection with
the transactions contemplated by this Agreement.
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ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1 Financial Reporting. The Borrower will maintain, for itself and
each Subsidiary, a system of accounting established and administered in
accordance with Agreement Accounting Principles, consistently applied, and
furnish to the Lenders:
(a) Within 90 days after the close of each of its fiscal years, an
audit report unqualified as to going concern or as to access to information or
in any other material respect and certified by independent certified public
accountants, acceptable to the Lenders, prepared in accordance with Agreement
Accounting Principles, as in effect from time to time, applied consistently on
a consolidated basis for itself and the Subsidiaries, including balance sheets
as of the end of such period and related statements of income, retained
earnings, and cash flows accompanied by a certificate of said accountants that,
in the course of the examination necessary for their certification of the
foregoing, they have obtained no knowledge of any Default or Unmatured Default,
or if, in the opinion of such accountants, any Default or Unmatured Default
shall exist, stating the nature and status thereof. The 90-day period
referenced above shall be extended for up to 15 days for any fiscal year as to
which the Borrower has received an extension from the SEC for the filing of its
annual report on SEC Form 10K.
(b) Within 45 days after the close of the first three quarterly
periods of each of its fiscal years, for itself and the Subsidiaries,
consolidated unaudited balance sheets as at the close of each such period and
consolidated statements of income, retained earnings, and cash flows for the
period from the beginning of such fiscal year to the end of such quarter, all
certified by its chief financial officer. The 45-day period referenced above
shall be extended for up to 15 days for any fiscal quarter as to which the
Borrower has received an extension from the SEC for the filing of its quarterly
report on SEC Form 10Q.
(c) Within 45 days after the close of each fiscal quarter, for each
of the Borrowing Subsidiaries, consolidating unaudited balance sheets as at the
close of each such period and consolidating statements of income for the period
from the beginning of such fiscal year to the end of such quarter, all
certified by the Borrower's chief financial officer. The 45-day period
referenced above shall be extended for up to 15 days for any fiscal quarter as
to which the Borrower has received an extension from the SEC for the filing of
its quarterly report on SEC Form 10Q.
(d) Together with the financial statements required by clauses (a)
and (b) above, a compliance certificate in substantially the form of Exhibit G
signed by an Authorized Officer of the Borrower showing the calculations
necessary to determine compliance with this Agreement and stating that no
Default or Unmatured Default exists, or if any Default or Unmatured Default
exists, stating the nature and status thereof.
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(e) Within 10 Business Days after the Borrower knows that any
Termination Event that could reasonably be expected to cause a Material Adverse
Effect has occurred with respect to any Plan, a statement, signed by an
Authorized Officer of the Borrower, describing such Termination Event and the
action which the Borrower proposes to take with respect thereto.
(f) Within 30 days after receipt by the Borrower, a copy of (i) any
notice, claim, complaint or order to the effect that the Borrower or any of the
Subsidiaries is or may be liable to any Person in an amount which could
reasonably be expected to exceed $5,000,000 as a result of the release by the
Borrower, any of the Subsidiaries, or any other Person of any Hazardous
Materials into the environment or requiring that action be taken to respond to
or clean up a Release of Hazardous Materials into the environment and (ii) any
notice, complaint, or citation alleging any violation of any Environmental Law
or Environmental Permit by the Borrower or any of the Subsidiaries as to which
the liability of the Borrower and the Subsidiaries may reasonably be expected
to exceed $5,000,000.
(g) Promptly upon the furnishing thereof to the stockholders of the
Borrower, copies of all financial statements, reports, and proxy statements so
furnished.
(h) Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly, or other regular reports which the
Borrower or any of the Subsidiaries files with the SEC.
(i) Such other information (including non-financial information) as
the Agent or any Lender may from time to time reasonably request.
6.2 Use of Proceeds. The Borrower will, and will cause each
Subsidiary to, use the proceeds of the Revolving Credit Advances, the
Competitive Bid Advances, the Letters of Credit, and the Swing Loans to meet
the general corporate needs of the Borrower and the Subsidiaries. The Borrower
will not, nor will it permit any Subsidiary to, use any of the proceeds of the
Advances, the Letters of Credit, or the Swing Loans to purchase or carry any
Margin Stock or to finance the Purchase of any Person which has not been
approved and recommended by the board of directors (or functional equivalent
thereof) of such Person.
6.3 Notice of Default. The Borrower will give prompt notice in
writing to the Lenders of the occurrence of (a) any Default or Unmatured
Default and (b) any other event or development, financial or otherwise,
relating specifically to the Borrower or any of the Subsidiaries (and not of a
general economic or political nature) which could reasonably be expected to
have a Material Adverse Effect.
6.4 Conduct of Business. The Borrower and the Subsidiaries, taken as
a whole, will carry on and conduct their business in substantially the same
manner and in substantially the same or related fields of enterprise as it is
presently conducted by the Borrower and the Subsidiaries taken as a whole. The
Borrower will, and will cause each Subsidiary to, do all things necessary to
remain duly incorporated, validly existing, and in good standing as a
corporation or other business entity
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in its jurisdiction of incorporation or organization and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted where the failure to so maintain its authority could reasonably be
expected to cause a Material Adverse Effect; provided, however, that
Subsidiaries may enter into mergers permitted by Section 6.11 and may (other
than in the case of Borrowing Subsidiaries) be liquidated if such liquidation
may not reasonably be expected to have a Material Adverse Effect.
6.5 Taxes. The Borrower will, and will cause each Subsidiary to,
timely file complete and correct United States federal and applicable foreign,
state, and local tax returns required by applicable law and pay when due all
material taxes, assessments, and governmental charges and levies upon it or its
income, profits, or Property, except which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
set aside.
6.6 Insurance. The Borrower will, and will cause each Subsidiary to,
maintain with financially sound and reputable insurance companies insurance on
substantially all their Property, or maintain self insurance, in such amounts
and covering such risks as is consistent with sound business practice, and the
Borrower will furnish to the Agent and any Lender upon request full information
as to the insurance carried.
6.7 Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees, or awards to which it may be subject, the
failure to comply with which could reasonably be expected to have a Material
Adverse Effect or for which the compliance is being contested in good faith by
appropriate proceedings.
6.8 Inspection. The Borrower will, and will cause each Subsidiary
to, permit the Agent and the Lenders, by their respective representatives and
agents, to inspect any of the Property, corporate books and financial records
of the Borrower and each Subsidiary, to examine and make copies of the books of
accounts and other financial records of the Borrower and each Subsidiary, and
to discuss the affairs, finances and accounts of the Borrower and each
Subsidiary with, and to be advised as to the same by, the officers of the
Borrowers at such reasonable times and intervals as the Lenders may designate
and upon reasonable notice. When no Default has occurred and is continuing,
any such inspection or examination shall be at the Lenders' cost and expense.
When a Default has occurred and is continuing, any such inspection or
examination shall be at the Borrower's cost and expense.
6.9 Capital Stock and Dividends. The Borrower will not, nor will it
permit any Subsidiary to:
(a) issue (except by a Subsidiary to the Borrower or any Wholly-Owned
Subsidiary) any preferred stock, other capital stock or any equity securities
of any kind subject to sinking fund payments or other mandatory redemptions or
payments prior to the Facility Termination Date or
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(b) declare or pay any dividends or make any distributions on its
capital stock (other than dividends payable in its own common stock) or redeem,
repurchase, or otherwise acquire or retire any of its capital stock or any
options or other rights in respect thereof at any time outstanding if a
Default or Unmatured Default exists before or after giving effect thereto.
6.10 Indebtedness of Subsidiaries. The Borrower will not permit the
Subsidiaries to create, incur, or suffer to exist (a) Indebtedness which, in
accordance with Agreement Accounting Principles is required to be shown on the
balance sheet of such Person (other than Indebtedness owed by one of the
Borrower's Wholly-Owned Subsidiaries to the Borrower or to another Wholly-Owned
Subsidiary), (b) Contingent Obligations in respect of a Person other than the
Borrower or another Subsidiary, (c) Attributable Debt as lessor or guarantor
under Synthetic Leases, and (d) Attributable Debt as seller, originator, or
guarantor under accounts or notes receivable financing or securitization
programs, in an aggregate amount outstanding at any time in excess of
$150,000,000.
6.11 Merger. The Borrower will not, nor will it permit any Subsidiary
to, merge or consolidate with or into any other Person, except that (a) a
Wholly-Owned Subsidiary may merge into the Borrower or any Wholly-Owned
Subsidiary of the Borrower and (b) the Borrower or any Subsidiary may merge or
consolidate with any other Person, so long as immediately thereafter (and after
giving effect thereto), (i) no Default or Unmatured Default exists, (ii) in the
case of a merger or a consolidation involving the Borrower, the Borrower is the
continuing or surviving corporation, and (iii) in the case of a merger or a
consolidation involving a Borrowing Subsidiary, if such Subsidiary is not the
continuing or surviving entity, then the continuing or surviving entity has
agreed in writing to assume the obligations of such Subsidiary under the Loan
Documents.
6.12 Sale of Assets. The Borrower will not, nor will it permit any
Subsidiary to enter into any Asset Disposition from on and after the date of
this Agreement, except for Asset Dispositions that in the aggregate do not
constitute a Substantial Portion of the Property of the Borrower and the
Subsidiaries.
6.13 Sale of Accounts. The Borrower will not, nor will it permit any
Subsidiary to, sell or otherwise dispose of any notes receivable or accounts
receivable arising in the ordinary course of business on terms customary in the
trade and which are due within 120 days after the invoice date, with or without
recourse, in an amount that exceeds $150,000,000 in the aggregate face amount
at any time outstanding.
6.14 Investments in Foreign Subsidiaries. The Borrower will not, nor
will it permit any Subsidiary to, make or suffer to exist any Investments in
Foreign Subsidiaries organized under the laws of or with a principal place of
business or headquarters in a non-Investment Grade Country, or commitments
therefor, or to create any Subsidiary or to become or remain a partner in any
partnership or joint venture organized under the laws of or with a principal
place of business or headquarters in a non-Investment Grade Country, except for
cash Investments which, when aggregated with (i) the outstanding amount of net
equity (i.e., cash contributed net of cash dividends and cash redemptions
received) invested by the Borrower in such Foreign Subsidiaries and
partnerships and joint ventures and (ii) all other outstanding Indebtedness
owing to the Borrower and
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the Subsidiaries by such Foreign Subsidiaries and such partnership and joint
ventures, does not exceed, at the time made, the greater of (A) 5% of the
Borrower's consolidated net assets and (B) $75,000,000.
6.15 Liens. The Borrower will not, nor will it permit any Subsidiary
to, create, incur, or suffer to exist any Lien in, of or on the Property of the
Borrower or any of the Subsidiaries, except:
(a) Liens for taxes, assessments or governmental charges or levies on
its Property if the same shall not at the time be delinquent or thereafter can
be paid without penalty, or are being contested in good faith and by
appropriate proceedings and for which adequate reserves in accordance with
generally accepted principles of accounting shall have been set aside on its
books;
(b) Liens imposed by law, such as carriers', warehousemen's, and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure the payment of obligations not more than 60 days past due
or which are being contested in good faith by appropriate proceedings and for
which adequate reserves shall have been set aside on its books;
(c) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other social
security or retirement benefits, or similar legislation;
(d) Utility easements, building restrictions, and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not in
any material way affect the marketability of the same or interfere with the use
thereof in the business of the Borrower or the Subsidiaries;
(e) Liens existing on the date hereof and described in Schedule 6.15;
and
(f) Liens other than those permitted by (a), (b), (c), (d), or (e)
immediately above securing Indebtedness not at any time exceeding in the
aggregate 10% of Net Worth.
6.16 Affiliates. The Borrower will not, and will not permit any
Subsidiary to, enter into any transaction (including, without limitation, the
purchase or sale of any Property or service) with, or make any payment or
transfer to, any Affiliate that is not a Subsidiary, except in the ordinary
course of business and pursuant to the reasonable requirements of the
Borrower's or such Subsidiary's business and upon fair and reasonable terms.
The Borrower will cause each Borrowing Subsidiary to remain a Wholly-Owned
Subsidiary.
6.17 Environmental Matters. The Borrower will, and will cause each
Subsidiary to, (a) conduct its business so as to comply with all applicable
material Environmental Laws and shall promptly take corrective action to remedy
any non-compliance with any applicable material Environmental Law, except where
failure to comply or take action could not reasonably be expected to have a
Material Adverse Effect and (b) establish and maintain a management system
designed to
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ensure compliance with applicable material Environmental Laws and minimize
financial and other risks to the Borrower and each Subsidiary arising under
applicable material Environmental Laws or as the result of environmentally
related injuries to Persons or Property. If the Agent or any Lender at any
time has a reasonable basis to believe that there may be a material violation
of any Environmental Law by the Borrower or any of the Subsidiaries, or any
material liability arising thereunder or related to a Release of Hazardous
Materials on any real property owned, leased, or operated by the Borrower or
any of the Subsidiaries or a Release on real property adjacent to such real
property, then the Borrower shall, upon the request of the Agent or such
Lender, provide the Agent and each Lender with all such reports, certificates,
engineering studies, and other written material or data relating thereto as the
Agent or any Lender may reasonably require.
6.18 Restrictions on Subsidiary Payments. The Borrower shall not, nor
shall it permit any Subsidiary to, enter into any indenture, agreement,
instrument or other arrangement which, directly or indirectly, prohibits or
restrains, or has the effect of prohibiting or restraining, or imposes
materially adverse conditions upon the ability of any Subsidiary to (a) pay
dividends or make other distributions on its capital stock, (b) make loans or
advances to the Borrower, or (c) repay loans or advances from the Borrower.
6.19 Financial Covenants. The Borrower on a consolidated basis with
the Subsidiaries:
6.19.1 Coverage Ratio. As of the end of each fiscal quarter for the
four fiscal quarters then ended shall not permit the Coverage Ratio to be less
than 2.5.
6.19.2 Total Debt to Total Capitalization Ratio. Shall not permit the
ratio of Total Debt to Total Capitalization to be greater than 50% at any time;
provided that the ratio of Total Debt to Total Capitalization may increase to
up to 60% for up to one year after the date of a Specified Acquisition approved
by the board of directors (or functional equivalent thereof) of the acquired
business; provided further that, prior to effecting any such acquisition, the
Borrower provides to the Agent and the Lenders financial projections covering
the 12 months beginning on or about the date of such acquisition and showing
that (a) the financing of such acquisition will not otherwise cause any Default
or Unmatured Default during such period and (b) the ratio of Total Debt to
Capitalization will be 50% or less within such 12-month period.
6.20 ERISA Compliance.
With respect to any Plan, neither the Borrower nor any Subsidiary shall:
(a) incur any "accumulated funding deficiency" (as such term is
defined in Section 302 of ERISA) in excess of $10,000,000, whether or not
waived;
(b) permit the occurrence of any Termination Event which could result
in a liability to the Borrower or any other member of a Controlled Group in
excess of $10,000,000;
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(c) be an "employer" (as such term is defined in Section 3(5) of
ERISA) required to contribute to any Multiemployer Plan or a "substantial
employer" (as such term in defined in Section 4001(a)(2) of ERISA) required to
contribute to any Multiemployer Plan; or
(d) permit the establishment or amendment of any Plan or fail to
comply with the applicable provisions of ERISA and the Code with respect to any
Plan which could result in liability to the Borrower or any other member of a
Controlled Group which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
Neither the Borrower nor any Subsidiary shall incur liability in excess of
$10,000,000 under Title IV of ERISA or Chapter 43 of the Code by reason of
being or having been a part of Cooper Industries, Inc.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall
constitute a Default:
7.1 Any written representation or warranty made, or deemed made
pursuant to Section 4.2, by the Borrower or any of the Subsidiaries to the
Lenders or the Agent under or in connection with this Agreement, any Loan, or
any certificate delivered in connection with this Agreement or any other Loan
Document shall be false in any material respect on the date as of which made.
7.2 Nonpayment of (a) principal of any Revolving Credit Note when
due, (b) principal of any Swing Note (i) within five Business Days of when due
if the Aggregate Revolving Credit Commitment minus the Aggregate Exposure
Amount (the "Availability") on the date such principal payment is due is
greater than or equal to the principal amount so due or (ii) when due if the
Availability is less than the principal amount so due, or (c) interest upon any
Note or any facility fee or other fee or obligations under any of the Loan
Documents within five Business Days after the same becomes due.
7.3 The breach by any of the Borrowers of any of the terms or
provisions of Section 6.2 or 6.3(a) or Sections 6.09 through 6.20.
7.4 The breach by any of the Borrowers (other than a breach which
constitutes a Default under Section 7.1, 7.2, or 7.3) of any of the terms or
provisions of this Agreement which is not remedied within 30 days after written
notice from the Agent or any Lender.
7.5 The default (after any applicable grace period) by the Borrower
or any of the Subsidiaries in the performance of any term, provision, or
condition contained in any agreement or agreements under which any Indebtedness
aggregating in excess of $20,000,000 is outstanding or
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any Hedging Obligations with an aggregate mark-to-market exposure in excess of
$20,000,000, provided such default has not been cured or waived, or the
occurrence of any other event or existence of any other condition, the effect
of any of which is to cause, or to permit the holder or holders of such
Indebtedness to cause, such Indebtedness to become due prior to its stated
maturity or such Hedging Obligations to terminate or become due before its
stated due date; or any such Indebtedness or Hedging Obligations of the
Borrower or any of the Subsidiaries shall be declared to be due and payable or
required to be prepaid (other than by a regularly scheduled payment) prior to
the stated maturity thereof.
7.6 The Borrower or any of the Subsidiaries shall (a) have an order
for relief entered with respect to it under the Federal bankruptcy laws as now
or hereafter in effect, (b) make an assignment for the benefit of creditors,
(c) apply for, seek, consent to, or acquiesce in, the appointment of a
receiver, custodian, trustee, examiner, liquidator, or similar official for it
or any Substantial Portion of its Property, (d) institute any proceeding
seeking an order for relief under the Federal bankruptcy laws as now or
hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment, or composition of it or its debts under any law relating to
bankruptcy, insolvency, or reorganization or relief of debtors or fail to file
an answer or other pleading denying the material allegations of any such
proceeding filed against it, (e) take any corporate action to authorize or
effect any of the foregoing actions set forth in this Section 7.6, (f) fail to
contest in good faith any appointment or proceeding described in Section 7.7,
or (g) become unable to pay, not pay, or admit in writing its inability to pay,
its debts generally as they become due.
7.7 Without the application, approval, or consent of the Borrower or
any of the Subsidiaries, a receiver, trustee, examiner, liquidator, or similar
official shall be appointed for the Borrower or any of the Subsidiaries or any
Substantial Portion of its Property, or a proceeding described in Section
7.6(d) shall be instituted against the Borrower or any of the Subsidiaries and
such appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of 60 consecutive days.
7.8 Any court, government, or governmental agency shall condemn,
seize, or otherwise appropriate, or take custody or control of (each a
"Condemnation"), all or any portion of the Property of the Borrower and the
Subsidiaries which, when taken together with all other Property of the Borrower
and the Subsidiaries so condemned, seized, appropriated, or taken custody or
control of, during the twelve-month period ending with the month in which any
such Condemnation occurs, constitutes a Substantial Portion.
7.9 The Borrower or any of the Subsidiaries shall fail within thirty
days to pay, bond, or otherwise discharge any judgment or order for the payment
of money in excess of $10,000,000 (or multiple judgments or orders for the
payment of an aggregate amount in excess of $20,000,000), which is not stayed
on appeal or otherwise being appropriately contested in good faith and as to
which no enforcement actions have been commenced.
7.10 Any Change in Control shall occur.
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7.11 The Parent Guaranty shall fail to remain in full force or effect
or any action shall be taken to discontinue or to assert the invalidity or
unenforceability of the Parent Guaranty, or the Borrower shall fail to comply
with any of the terms or provisions of the Parent Guaranty or shall deny that
it has any further liability under the Parent Guaranty or gives notice to such
effect.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1 Optional Acceleration of Maturity. If any Default (other than a
Default under Section 7.6, 7.7, or 7.8) shall have occurred and be continuing,
then, and in any such event,
(a) the Agent (i) shall at the request, or may with the consent, of
the Required Lenders, by notice to the Borrowers, declare the obligation of
each Lender to make Loans and the obligation of each Issuing Bank to issue,
increase, or extend Letters of Credit to be terminated, whereupon the same
shall forthwith terminate and (ii) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the Notes,
all interest thereon, the Letter of Credit Obligations, and all other amounts
payable under this Agreement to be forthwith due and payable, whereupon the
Notes, all such interest, all such Letter of Credit Obligations and all such
amounts shall become and be forthwith due and payable in full, without
presentment, demand, protest, or further notice of any kind (including, without
limitation, any notice of intent to accelerate or notice of acceleration), all
of which are hereby expressly waived by the Borrowers;
(b) the Borrower shall, on demand of the Agent at the request or with
the consent of the Required Lenders, deposit with the Agent into the Cash
Collateral Account an amount of cash equal to the Letter of Credit Exposure as
security for the Obligations to the extent the Letter of Credit Obligations are
not otherwise paid at such time; and
(c) the Agent shall at the request of, or may with the consent of,
the Required Lenders proceed to enforce its rights and remedies under the
Parent Guaranty or any other Loan Document for the ratable benefit of the
Lenders by appropriate proceedings.
8.2 Automatic Acceleration of Maturity. If any Default pursuant to
Section 7.6, 7.7, or 7.8 shall occur,
(a) the obligation of each Lender to make Loans and the obligation of
each Issuing Bank to issue, increase, or extend Letters of Credit shall
immediately and automatically be terminated and the Notes, all interest on the
Notes, all Letter of Credit Obligations, and all other amounts payable under
this Agreement shall immediately and automatically become and be due and
payable in full, without presentment, demand, protest, or any notice of any
kind (including, without limitation, any notice of intent to accelerate or
notice of acceleration), all of which are hereby expressly waived by the
Borrowers;
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(b) the Borrower shall deposit with the Agent into the Cash
Collateral Account an amount of cash equal to the outstanding Letter of Credit
Exposure as security for the Obligations to the extent the Letter of Credit
Obligations are not otherwise paid at such time; and
(c) the Agent shall at the request of, or may with the consent of,
the Required Lenders proceed to enforce its rights and remedies under the
Parent Guaranty or any other Loan Document for the ratable benefit of the
Lenders by appropriate proceedings.
8.3 Cash Collateral Account.
(a) Pledge. The Borrower hereby pledges, and grants to the Agent for
the benefit of the Lenders, a security interest in all funds held in the Cash
Collateral Account from time-to-time and all proceeds thereof, as security for
the payment of the Obligations, including all Letter of Credit Obligations
owing to the Issuing Banks or any other Lender due and to become due from the
Borrower to any Issuing Bank or any other Lender under this Agreement in
connection with the Letters of Credit. Nothing in this Section 8.3, however,
shall either obligate the Agent to require any funds to be deposited in the
Cash Collateral Account or limit the right of the Agent, which it may exercise
at any time and from time-to-time, to release to the Borrower any funds held in
the Cash Collateral Account pursuant to the other provisions of this Section
8.3.
(b) Application against Letter of Credit Obligations; Release of
Funds. The Agent may, at any time or from time-to-time apply funds then held
in the Cash Collateral Account to the payment of any Letter of Credit
Obligations owing to the Issuing Banks, in such order as the Agent may elect,
as shall have become or shall become due and payable by the Borrower to the
Issuing Banks under this Agreement in connection with the Letters of Credit.
So long as no Default referred to in Section 7.2 shall have occurred and be
continuing, the Agent will release to the Borrower at the Borrower's written
request funds held in the Cash Collateral Account in an amount up to but not
exceeding the excess, if any (immediately prior to the release of any such
funds), of (i) the total amount of funds held in the Cash Collateral Account
over (ii) the Letter of Credit Exposure.
(c) Duty of Care. The Agent shall exercise reasonable care in the
custody and preservation of any funds held in the Cash Collateral Account and
shall be deemed to have exercised such care if such funds are accorded
treatment substantially equivalent to that which the Agent accords its own
property, it being understood that the Agent shall not have any responsibility
for taking any necessary steps to preserve rights against any parties with
respect to any such funds.
8.4 Amendments. Subject to the provisions of this Article VIII, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrowers may enter into agreements supplemental hereto for
the purpose of adding or modifying any provisions to the Loan Documents or
changing in any manner the rights of the Lenders or the Borrowers hereunder or
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waiving any Default hereunder; provided, however, that no such supplemental
agreement shall, without the consent of each Lender:
(a) Extend the final maturity of any Loan or Note or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest or fees thereon;
(b) Reduce the percentage specified in the definition of Required
Lenders;
(c) Increase the amount of the Commitment of any Lender hereunder;
(d) Extend the Facility Termination Date;
(e) Amend this Section 8.4;
(f) Release the Borrower from the Parent Guaranty; or
(g) Permit any assignment by any of the Borrowers of their respective
Obligations or its rights hereunder.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive
payment of the fee required under Section 12.3.2 without obtaining the consent
of any other party to this Agreement.
8.5 Preservation of Rights. No delay or omission of the Lenders or
the Agent to exercise any right under the Loan Documents shall impair such
right or be construed to be a waiver of any Default or an acquiescence therein,
and the making of a Loan notwithstanding the existence of a Default or the
inability of any of the Borrowers to satisfy the conditions precedent to such
Loan shall not constitute any waiver or acquiescence. Any single or partial
exercise of any such right shall not preclude other or further exercise thereof
or the exercise of any other right, and no waiver, amendment, or other
variation of the terms, conditions, or provisions of the Loan Documents
whatsoever shall be valid unless in writing signed by the Lenders required
pursuant to Section 8.4, and then only to the extent in such writing
specifically set forth. All remedies contained in the Loan Documents or by law
afforded shall be cumulative and all shall be available to the Agent and the
Lenders until the Obligations have been paid in full.
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ARTICLE IX
GENERAL PROVISIONS
9.1 Survival of Representations. All representations and warranties
of the Borrowers contained in this Agreement or of the Borrower or any
Subsidiary contained in any Loan Document shall survive delivery of the Notes
and the making of the Loans herein contemplated.
9.2 Governmental Regulation. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit to
any of the Borrowers in violation of any limitation or prohibition provided by
any applicable statute or regulation.
9.3 Taxes. Any stamp, documentary, or similar taxes, assessments, or
charges payable or ruled payable by any governmental authority in respect of
the Loan Documents shall be paid by the Borrowers, together with interest and
penalties, if any, accruing after the Borrower has notice of such taxes,
assessments, or charges.
9.4 Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any
of the provisions of the Loan Documents.
9.5 Entire Agreement. The Loan Documents embody the entire agreement
and understanding among the Borrowers, the Agent, and the Lenders and supersede
all prior agreements and understandings among any of the Borrowers, the Agent,
and the Lenders relating to the subject matter thereof other than the fee
letter dated February 21, 1997 in favor of First Chicago.
9.6 Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint, and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any
of its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as to confer
any right or benefit upon any Person other than the parties to this Agreement
and their respective successors and assigns.
9.7 Expenses; Indemnification. The Borrowers shall reimburse the
Agent for any reasonable costs and out-of-pocket expenses (including attorneys'
fees and time charges of attorneys for the Agent, which attorneys may be
employees of the Agent) paid or incurred by the Agent in connection with the
preparation, negotiation, execution, delivery, review, amendment, and
modification of the Loan Documents. The Borrowers also agree to reimburse the
Agent and the Lenders for any reasonable costs and out-of-pocket expenses
(including reasonable attorneys' fees and time charges of attorneys for the
Agent and the Lenders, which attorneys may be employees of the Agent or the
Lenders) paid or incurred by the Agent or any Lender in connection with the
collection of any Obligations not paid when due or enforcement of the Loan
Documents. The Borrowers further agree to indemnify the Agent and each Lender,
its directors, officers, and employees against all losses, claims, damages,
penalties, judgments, liabilities, and expenses (including, without limitation,
all expenses of litigation or preparation therefor whether or not the
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Agent or any Lender is a party thereto) which any of them may pay or incur
arising out of or relating to this Agreement, the other Loan Documents, the
transactions contemplated hereby or thereby or the direct or indirect
application or proposed application of the proceeds of any Loan hereunder
except to the extent that they arise out of the gross negligence or willful
misconduct of the party seeking indemnification. The obligations of the
Borrowers under this Section 9.7 shall survive the termination of this
Agreement.
9.8 Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
9.9 Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
9.10 Nonliability of Lenders. The relationship between the Borrowers
and the Lenders and the Agent shall be solely that of borrower and lender.
Neither the Agent nor any Lender shall have any fiduciary responsibilities to
the Borrowers. Neither the Agent nor any Lender undertakes any responsibility
to the Borrowers to review or inform the Borrowers of any matter in connection
with any phase of the Borrowers' business or operations. Each of the Borrowers
shall rely entirely upon its own judgment with respect to its business, and any
review, inspection, or supervision of, or information supplied to the Borrowers
by the Agent or the Lenders is for the protection of the Agent and the Lenders
and neither the Borrowers nor any other Person is entitled to rely thereon.
The Borrowers (a) agree that neither the Agent nor any Lender shall have
liability to the Borrowers (whether sounding in tort, contract, or otherwise)
for losses suffered by the Borrowers in connection with, arising out of, or in
any way related to, the transactions contemplated and the relationship
established by the Loan Documents, or any act, omission, or event occurring in
connection therewith, unless it is determined by a judgment of a court that is
binding on the Agent, or such Lender, final and not subject to review on
appeal, that such losses were the result of acts or omissions on the part of
the Agent or such Lender, as the case may be, constituting gross negligence or
willful misconduct of the party from which recovery is sought. Whether or not
such damages are related to a claim that is subject to the waiver effected
above and whether or not such waiver is effective, neither the Agent nor any
Lender shall have any liability with respect to, and the Borrowers hereby
waive, release, and agree not to sue for, any special, indirect or
consequential damages suffered by the Borrowers in connection with, arising out
of, or in any way related to the Loan Documents or the transactions
contemplated thereby or the relationship established by the Loan Documents, or
any act, omission, or event occurring in connection therewith.
9.11 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS, WITHOUT REGARD
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TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
9.12 CONSENT TO JURISDICTION. EACH PARTY HEREBY IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL, NEW YORK OR
ILLINOIS STATE COURT SITTING IN NEW YORK, NEW YORK OR CHICAGO, ILLINOIS,
RESPECTIVELY, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY
LOAN DOCUMENTS AND EACH PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR
THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT
OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST ANY OF THE BORROWERS IN
THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY OF THE
BORROWERS AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY
LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A
COURT IN NEW YORK, NEW YORK OR CHICAGO, ILLINOIS; PROVIDED, THAT SUCH
PROCEEDINGS MAY BE BROUGHT IN OTHER COURTS IF JURISDICTION MAY NOT BE OBTAINED
IN A COURT IN NEW YORK, NEW YORK OR CHICAGO, ILLINOIS.
9.13 WAIVER OF JURY TRIAL. EACH OF THE BORROWERS, THE AGENT AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
9.14 Disclosure. Each of the Borrowers and each Lender hereby (a)
acknowledge and agree that First Chicago and/or its Affiliates from time to
time may hold other investments in, make other loans to or have other
relationships with any of the Borrowers, including, without limitation, in
connection with any interest rate hedging instruments or agreements or swap
transactions and (b) waive any liability of First Chicago or such Affiliate to
any of the Borrowers or any Lender, respectively, arising out of or resulting
from such investments, loans, or relationships other than liabilities arising
out of the gross negligence or willful misconduct of First Chicago or its
Affiliates to the extent that such liability would not have arisen but for
First Chicago's status as Agent hereunder.
9.15 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been
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executed by the Borrowers, the Agent, and the Lenders and each party has
notified the Agent that it has taken such action.
9.16 Confidentiality. Each Lender agrees to hold any confidential
information which it may receive from the Borrowers pursuant to this Agreement
in confidence and for use in connection with this Agreement, including, without
limitation, for use in connection with its rights and remedies hereunder,
except for disclosure (a) to its Affiliates or to other Lenders and their
respective Affiliates, (b) to legal counsel, accountants, and other
professional advisors to that Lender, (c) to regulatory officials, (d) as
requested pursuant to or as required by law, regulation, or legal process, (e)
in connection with any legal proceeding to which that Lender is a party, and
(f) permitted by Section 12.4.
ARTICLE X
THE AGENT
10.1 Appointment. First Chicago is hereby appointed Agent hereunder
and under each other Loan Document, and each of the Lenders authorizes the
Agent to act as the agent of such Lender. The Agent agrees to act as such upon
the express conditions contained in this Article X. The Agent shall not have a
fiduciary relationship in respect of any of the Borrowers or any Lender by
reason of this Agreement, any Loan Document or any transaction contemplated
hereby or thereby.
10.2 Powers. The Agent shall have and may exercise such powers under
the Loan Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder, except any action specifically provided
by the Loan Documents to be taken by the Agent.
10.3 General Immunity. Neither the Agent nor any of its directors,
officers, agents, or employees shall be liable to any of the Borrowers or any
Lender for any action taken or omitted to be taken by it or them hereunder or
under any other Loan Document or in connection herewith or therewith except for
its or their own gross negligence or willful misconduct.
10.4 No Responsibility for Loans, Recitals, etc. Neither the Agent
nor any of its directors, officers, agents, or employees shall be responsible
for or have any duty to ascertain, inquire into, or verify (a) any statement,
warranty, or representation made in connection with any Loan Document or any
borrowing hereunder, (b) the performance or observance of any of the covenants
or agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender, (c) the satisfaction of any condition specified in Article IV, except
receipt of items required to be delivered to the Agent and not waived at
closing, or (d) the validity, effectiveness, sufficiency, enforceability, or
genuineness of any Loan Document or any other instrument or writing furnished
in connection therewith. The Agent shall have no duty to disclose to the
Lenders information that is not required to be furnished by the
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Borrowers to the Agent at such time, but is voluntarily furnished by any of the
Borrowers to the Agent (either in its capacity as Agent or in its individual
capacity).
10.5 Action on Instructions of Lenders. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, hereunder and under
any other Loan Document in accordance with written instructions signed by the
Required Lenders (or, to the extent required by Section 8.4, all Lenders), and
such instructions and any action taken or failure to act pursuant thereto shall
be binding on all of the Lenders and on all holders of Notes. The Agent shall
be fully justified in failing or refusing to take any action hereunder and
under any other Loan Document unless it shall first be indemnified to its
satisfaction by the Lenders pro-rata against any and all liability, cost, and
expense that it may incur by reason of taking or continuing to take any such
action.
10.6 Employment of Agents and Counsel. The Agent may execute any of
its duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.
10.7 Reliance on Documents; Counsel. The Agent shall be entitled to
rely upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper, or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
10.8 Agent's Reimbursement and Indemnification. The Revolving Lenders
agree to reimburse and indemnify the Agent ratably in proportion to their
respective Commitments (or, if the Commitments have been terminated, in
proportion to their Commitments immediately prior to such termination) (a) for
any amounts not reimbursed by the Borrowers for which the Agent is entitled to
reimbursement by any of the Borrowers under the Loan Documents, (b) for any
other expenses incurred by the Agent on behalf of the Lenders, in connection
with the preparation, execution, delivery, administration, and enforcement of
the Loan Documents, and (c) for any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, or disbursements of any
kind and nature whatsoever which may be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of the Loan Documents
or any other document delivered in connection therewith or the transactions
contemplated thereby, or the enforcement of any of the terms thereof or of any
such other documents; provided, that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Agent. The obligations of the Revolving Lenders under this
Section 10.8 shall survive payment of the Obligations and termination of this
Agreement.
10.9 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Unmatured Default
hereunder unless the Agent has received written
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notice from a Lender or the Borrower referring to this Agreement, describing
such Default or Unmatured Default and stating that such notice is a "notice of
default". In the event that the Agent receives such a notice, the Agent shall
give prompt notice thereof to the Lenders.
10.10 Rights as a Lender. In the event the Agent is a Lender, the
Agent shall have the same rights and powers hereunder and under any other Loan
Document as any Lender and may exercise the same as though it were not the
Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is
a Lender, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity, or other transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of the Subsidiaries in which the Relevant Borrower or
such Subsidiary is not restricted hereby from engaging with any other Person.
The Agent, in its individual capacity, is not obligated to remain a Lender.
10.11 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Borrower and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each
Lender also acknowledges that it will, independently and without reliance upon
the Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement and the other Loan
Documents.
10.12 Successor Agent and Issuing Bank. The Agent or any Issuing Bank
may resign at any time by giving written notice thereof to the Lenders and the
Borrower, such resignation to be effective upon the appointment of a successor
Agent or, if no successor Agent has been appointed, forty-five days after the
retiring Agent gives notice of its intention to resign. Upon any such
resignation, the Required Lenders shall have the right to appoint, on behalf of
the Borrowers and the Lenders, a successor Agent, with the consent of the
Borrower (which shall not be unreasonably withheld). If no successor Agent
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within thirty days after the resigning Agent's giving notice
of its intention to resign, then the resigning Agent may appoint, on behalf of
the Borrowers and the Lenders, a successor Agent. If the Agent has resigned
and no successor Agent has been appointed, the Lenders may perform all the
duties of the Agent hereunder and the Borrowers shall make all payments in
respect of the Obligations to the applicable Lender and for all other purposes
shall deal directly with the Lenders. No successor Agent shall be deemed to be
appointed hereunder until such successor Agent has accepted the appointment.
Any such successor Agent shall be a commercial bank having capital and retained
earnings of at least $50,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges, and
duties of the resigning Agent. Upon the effectiveness of the resignation of
the Agent, the resigning Agent shall be discharged from its duties and
obligations hereunder and under the Loan Documents. Notwithstanding its
resignation or removal, the retiring Issuing Bank shall remain an Issuing Bank
with respect to any Letters of Credit issued by it and outstanding on the
effective date of its
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resignation or removal and the provisions affecting such Letters of Credit and
such Issuing Bank with respect to such Letters of Credit shall inure to the
benefit of, and shall continue to bind, the retiring or removed Issuing Bank
until the termination of all such Letters of Credit (giving effect to any
extensions or renewals thereof made in accordance with the provisions of this
Agreement). After the effectiveness of the resignation of an Agent or an
Issuing Bank, the provisions of this Article X shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as the Agent or an Issuing Bank hereunder and under the other Loan
Documents.
10.13 Co-Agents. There shall be no rights, obligation, or liabilities
afforded to or imposed upon any Co-Agent by virtue of its status as such under
this Agreement.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1 Setoff. In addition to, and without limitation of, any rights of
the Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default or Unmatured Default occurs, any and all deposits
(including all account balances, whether provisional or final and whether or
not collected or available) and any other Indebtedness at any time held or
owing by any Lender to or for the credit or account of the Borrower may be
offset and applied toward the payment of the Obligations owing to such Lender,
whether or not the Obligations, or any part hereof, shall then be due.
11.2 Ratable Payments. While no Default or Unmatured Default exists,
if any Revolving Lender, whether by setoff or otherwise, has payment made to it
upon its Revolving Credit Loans (other than payments received pursuant to
Section 3.1, 3.2, or 3.5) in a greater proportion than its pro-rata share of
such Revolving Credit Loans, such Revolving Lender agrees, promptly upon
demand, to purchase a portion of the Revolving Credit Loans held by the other
Revolving Lenders so that after such purchase each Revolving Lender will hold
its pro rata proportion of the Revolving Credit Loans. While no Default or
Unmatured Default exists, if any Swing Loan Lender, whether by setoff or
otherwise, has payment made to it upon its Canadian Swing Loans or Singaporean
Swing Loans (other than payments received pursuant to Section 3.1, 3.2, or 3.5)
in a greater proportion than its ratable share of such Swing Loans, such Swing
Loan Lender agrees, promptly upon demand, to purchase a portion of the Canadian
Swing Loans or Singaporean Swing Loans, as the case may be, held by the other
Swing Loan Lenders so that after such purchase each Canadian Lender or
Singaporean Lender, as the case may be, will hold its ratable proportion of the
Canadian Swing Loans or the Singaporean Swing Loans, as the case may be. While
a Default or an Unmatured Default exists, if any Lender, whether by setoff or
otherwise, has payment made to it upon its Loans (other than payments received
pursuant to Section 3.1, 3.2, or 3.5) in a greater proportion than its pro-rata
share of such Loans, such Lender agrees, promptly upon demand, to purchase a
portion of the Loans held by the other Lenders so that after such purchase each
Lender will hold its pro-rata share of Loans. If any Lender, whether in
connection with setoff or amounts
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which might be subject to setoff or otherwise, receives collateral or other
protection for its Obligations or such amounts which may be subject to setoff,
such Lender agrees, promptly upon demand, to take such action necessary such
that all Lenders share in the benefits of such collateral ratably in proportion
to their Loans. In case any such payment is disturbed by legal process, or
otherwise, appropriate further adjustments shall be made. If an amount to be
setoff is to be applied to Indebtedness of any of the Borrowers to a Lender,
other than Indebtedness evidenced by any of the Notes held by such Lender, such
amount shall be applied ratably to such other Indebtedness and to the
Indebtedness evidenced by such Notes. All calculations to determine a Lender's
share of any Loans in an Alternative Currency under this Section 11.2 shall be
based upon the Dollar Equivalent of such Alternative Currency.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrowers and
the Lenders and their respective successors and assigns, except that (a) none
of the Borrowers shall have the right to assign its rights or obligations under
the Loan Documents and (b) any assignment by any Lender must be made in
compliance with Section 12.3. Notwithstanding clause (b) of this Section, any
Lender may at any time, without the consent of the Borrowers or the Agent,
assign all or any portion of its rights under this Agreement and its Notes to a
Federal Reserve Bank; provided, however, that no such assignment to a Federal
Reserve Bank shall release the transferor Lender from its obligations
hereunder. The Agent may treat the payee of any Note as the owner thereof for
all purposes hereof unless and until such payee complies with Section 12.3 in
the case of an assignment thereof or, in the case of any other transfer, a
written notice of the transfer is filed with the Agent. Any assignee or
transferee of a Note agrees by acceptance thereof to be bound by all the terms
and provisions of the Loan Documents. Any request, authority, or consent of
any Person, who at the time of making such request or giving such authority or
consent is the holder of any Note, shall be conclusive and binding on any
subsequent holder, transferee, or assignee of such Note or of any Note or Notes
issued in exchange therefor.
12.2 Participations.
12.2.1 Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable law, at any
time sell to one or more banks or other entities excluding entities classified
by SIC code 3533 ("Participants") participating interests in any Loan owing to
such Lender, any Note held by such Lender, any Commitment of such Lender or any
other interest of such Lender under the Loan Documents. In the event of any
such sale by a Lender of participating interests to a Participant, such
Lender's obligations under the Loan Documents shall remain unchanged, such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, such Lender shall remain the holder of any
such Note for all purposes under the Loan Documents, all amounts payable by the
Borrowers under this Agreement
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shall be determined as if such Lender had not sold such participating
interests, and the Borrowers and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under the Loan Documents.
12.2.2 Voting Rights. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, modification,
or waiver of any provision of the Loan Documents other than any amendment,
modification, or waiver which effects any of the modifications referenced in
clauses (a) through (g) of Section 8.4.
12.2.3 Benefit of Setoff. The Borrowers agree that each Participant
shall be deemed to have the right of setoff provided in Section 11.1 in respect
of its participating interest in amounts owing under the Loan Documents to the
same extent as if the amount of its participating interest were owing directly
to it as a Lender under the Loan Documents; provided, that each Lender shall
retain the right of setoff provided in Section 11.1 with respect to the amount
of participating interests sold to each Participant; and provided further that
such right of setoff shall not be exercisable until five Business Days after
the date upon which the Borrower receives written notice of the fact that such
Participant is a Participant (it being understood that neither the Agent, the
Lender granting such participation nor the Participant shall be obligated to
give such notice). The Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in Section 11.1, agrees
to share with each Lender, any amount received pursuant to the exercise of its
right of setoff, such amounts to be shared in accordance with Section 11.2 as
if each Participant were a Lender.
12.3 Assignments.
12.3.1 Permitted Assignments. Any Lender may, in the ordinary course of
its business and in accordance with applicable law, at any time assign to one
or more banks or other entities ("Purchasers") all or any part of its rights
and obligations under the Loan Documents; provided, however, that in the case
of an assignment to an entity which is not a Lender or an Affiliate of a
Lender, such assignment shall be in a minimum amount of (a) $10,000,000 or (b)
all of such Lender's Revolving Credit Commitment and Loans. A Lender making an
assignment shall also assign or cause such Lender's affiliate, if any, who is a
Swing Loan Lender to assign a portion of such Swing Loan Lender's Swing Loans
to the assignee or an appropriate affiliate of the assignee equal to the same
portion of the Revolving Credit Commitments and Revolving Credit Loans sold to
such Assignee. No Swing Loan Lender may assign any portion of its Swing Loans
unless it or its affiliate which is a Revolving Lender assigns the same portion
of such Revolving Lender's Revolving Credit Commitments and Revolving Credit
Loans to the Person or an affiliate of the Person purchasing the assignment
from such Swing Loan Lender Such assignment shall be substantially in the form
of Exhibit H or in such other form as may be agreed to by the parties thereto.
The consent of the Agent and, so long as no Default is continuing, the Borrower
shall be required prior to an assignment becoming effective with respect to a
Purchaser which is not a Lender or an Affiliate thereof. Such consent shall
not be unreasonably withheld.
12.3.2 Effect; Effective Date. Upon (a) delivery to the Agent of a
notice of assignment, substantially in the form attached as Exhibit I to
Exhibit H (a "Notice of Assignment"), together with
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any consents required by Section 12.3.1 and (b) payment of a $4,000 fee to the
Agent for processing such assignment, such assignment shall become effective on
the effective date specified in such Notice of Assignment. On and after the
effective date of such assignment, (a) such Purchaser shall for all purposes be
a Lender party to this Agreement and any other Loan Document executed by the
Lenders and shall have all the rights and obligations of a Lender under the
Loan Documents, to the same extent as if it were an original party hereto, and
(b) the transferor Lender shall be released with respect to the percentage of
the Aggregate Revolving Credit Commitment and Loans assigned to such Purchaser
without any further consent or action by the Borrowers, the Lenders, or the
Agent. Upon the consummation of any assignment to a Purchaser pursuant to this
Section 12.3.2, the transferor Lender, the Agent, and the Borrowers shall make
appropriate arrangements so that replacement Notes are issued to such
transferor Lender and new Notes or, as appropriate, replacement Notes, are
issued to such Purchaser, in each case in principal amounts reflecting their
Total Commitment, as adjusted pursuant to such assignment.
12.4 Dissemination of Information. The Borrowers authorize each
Lender to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"Transferee") and any prospective Transferee (which, in each case, has agreed
to be bound by the provisions of Section 9.16) any and all information in such
Lender's possession concerning the creditworthiness of the Borrowers and the
Subsidiaries.
12.5 Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 2.22(b).
ARTICLE XIII
NOTICES
13.1 Giving Notice. Except as otherwise permitted by Section 2.17
with respect to borrowing notices, all notices and other communications
provided to any party hereto under this Agreement or any other Loan Document
shall be in writing, by facsimile, first class U.S. mail or overnight courier
and addressed or delivered to such party at its address set forth below its
signature hereto or at such other address as may be designated by such party in
a notice to the other parties. Any notice, if mailed and properly addressed
with first class postage prepaid, return receipt requested, shall be deemed
given three Business Days after deposit in the U.S. mail; any notice, if
transmitted by facsimile, shall be deemed given when transmitted; and any
notice given by overnight courier shall be deemed given when received by the
addressee.
13.2 Change of Address. The Borrowers, the Agent and any Lender may
each change the address for service of notice upon it by a notice in writing to
the other parties hereto.
[signature pages to follow]
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IN WITNESS WHEREOF, the Borrowers, the Lenders, the Agent, and the Co-
Agents have executed this Agreement as of the date first above written.
COOPER CAMERON CORPORATION
By:
------------------------------------------
Daniel P. Keenan
Vice President & Treasurer
Address: 515 Post Oak Boulevard,
Suite 1200
Houston, Texas 77027
Attn: Daniel P. Keenan
Vice President &
Treasurer
Telecopy: (713) 513-3355
Telephone: (713) 513-3336
COOPER CAMERON (U.K.) LIMITED
CAMERON FRANCE, S.A.
CAMERON GMBH
COOPER CAMERON (SINGAPORE) PTE.
LTD.
By:
------------------------------------------
Daniel P. Keenan
Attorney-in-fact
Address: 515 Post Oak Boulevard,
Suite 1200
Houston, Texas 77027
Attn: Daniel P. Keenan
Vice President and
Treasurer
Telecopy: (713) 513-3355
Telephone: (713) 513-3336
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<PAGE> 81
REVOLVING LENDERS:
Commitments
- -----------
Revolving Credit THE FIRST NATIONAL BANK OF
Commitment CHICAGO, Individually and as Agent
$46,000,000.00
By:
------------------------------------------
Dixon P. Schultz
Vice President
Address: 1100 Lousiana, Suite 3200
Houston, Texas 77002
Attn: Ms. Dixon P. Schultz
Vice President
Telecopy: (713) 654-7329
Telephone: (713) 654-7370
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Revolving Credit ABN AMRO BANK N.V.,
Commitment individually and as a Co-Agent
$39,000,000.00
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: Three Riverway, Suite 1700
Houston, Texas 77056
Attn: Ms. Cheryl I. Lipshutz
Group Vice President
Telecopy: (713) 629-7533
Telephone: (713) 964-3351
Telex: 6868916 ABN INTL HOU
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<PAGE> 83
Revolving Credit BANK OF AMERICA ILLINOIS,
Commitment individually and as a Co-Agent
$39,000,000.00
By:
------------------------------------------
J. Stephen Mernick
Senior Vice President
Address: 333 Clay Street, Suite 4550
Houston, Texas 77002-4103
Attn: Mr. J. Stephen Mernick
Senior Vice President
Telecopy: (713) 651-4808
Telephone: (713) 651-4830
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<PAGE> 84
Revolving Credit THE BANK OF NOVA SCOTIA,
Commitment individually and as a Co-Agent
$39,000,000.00
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: The Bank of Nova Scotia
Atlanta Agency
600 Peachtree Street N.E.
Suite 2700
Atlanta, Georgia 30308
Attn: Jeff Lents
Telex: 00542319
Telecopy: (404) 888-8998
Telephone: (404) 877-1559
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<PAGE> 85
Revolving Credit THE CHASE MANHATTAN BANK,
Commitment individually and as a Co-Agent
$39,000,000.00
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: 1 Chase Manhattan Plaza
3rd Floor
New York, New York 10081
Attn: Ms. Mary Jo Woodford
Telephone: (212) 552-5517
With a copy to:
707 Travis
Houston, Texas 77002
Attn: Ms. Mona Foch
Vice President
Telecopy: (713) 216-4227
Telephone: (713) 216-5911
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<PAGE> 86
Revolving Credit CREDIT LYONNAIS, NEW YORK BRANCH,
Commitment individually and as a Co-Agent
$39,000,000.00
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: c/o Credit Lyonnais Houston
Representative Office
1000 Louisiana, Suite 5360
Houston, Texas 77002
Attn: Mr. David Gurghigian
Telecopy: (713) 751-0307 or
(713) 751-0421
Telephone: (713) 753-8709
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<PAGE> 87
Revolving Credit NATIONSBANK OF TEXAS, N.A.,
Commitment individually and as a Co-Agent
$39,000,000.00
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: NationsBank of Texas, N.A.
Energy Finance Division
700 Louisiana
8th Floor
Houston, Texas 77002
Attn: Mr. James R. Allred
Telecopy: (713) 247-6568
Telephone: (713) 247-6327
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<PAGE> 88
Revolving Credit PNC BANK, NATIONAL ASSOCIATION,
Commitment individually and as a Co-Agent
$39,000,000.00
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: One PNC Plaza
249 Fifth Avenue
Pittsburgh, PA 15222-2707
Attn: Mr. John Way
Telecopy: (412) 762-2571
Telephone: (412) 762-5290
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<PAGE> 89
Revolving Credit ROYAL BANK OF CANADA,
Commitment individually and as a Co-Agent
$39,000,000.00
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: 600 Wilshire Boulevard
Suite 800
Los Angeles, California 90017
Attn: Mr. J. D. Frost
Senior Manager
Telecopy: (213) 955-5350
Telephone: (213) 955-5310
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<PAGE> 90
Revolving Credit SOCIETE GENERALE, SOUTHWEST
Commitment AGENCY, individually and as a Co-Agent
$39,000,000.00
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: 1111 Bagby, Suite 2020
Houston, Texas 77002
Attn: Mr. Thierry Namuroy
Telecopy: (713) 650-0824
Telephone: (713) 759-6316
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<PAGE> 91
Revolving Credit AUSTRALIA AND NEW ZEALAND
Commitment BANKING GROUP LIMITED
$26,000,000.00
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: 1177 Avenue of the Americas
New York, NY 10036-2798
Attn: Mr. Kyle Loughlin
Telecopy: (212) 801-9131
Telephone: (212) 801-9853
Telex: 667559-420686
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<PAGE> 92
Revolving Credit COMMERZBANK AG, ATLANTA AGENCY
Commitment
$26,000,000.00
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: 1230 Peachtree Street, NE
Suite 3500
Atlanta, Georgia 30309
Attn: Mr. David Suttles
Telecopy: (404) 888-6539
Telephone: (404) 888-6524
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<PAGE> 93
Revolving Credit NATIONAL WESTMINSTER BANK PLC
Commitment
$26,000,000.00
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: 175 Water Street
Floor 19
New York, New York 10038
Attn: Mr. Paul Carter
Vice President and
Manager
Telecopy: (212) 602-4118
Telephone: (212) 602-4249
Aggregate Revolving Credit
Commitment: $475,000,000.00
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<PAGE> 94
CANADIAN LENDERS:
Commitments
- -----------
Canadian Swing Loan FIRST CHICAGO NBD CANADA
Amount
$6,666,666.68
By:
------------------------------------------
Helen A. Carr
Attorney-in-fact
Address: 1100 Lousiana, Suite 3200
Houston, Texas 77002
Attn: Ms. Dixon P. Schultz
Vice President
Telecopy: (713) 654-7329
Telephone: (713) 654-7370
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<PAGE> 95
Canadian Swing Loan ABN AMRO BANK CANADA/BANQUE
Amount ABN AMRO DU CANADA
$3,333,333.33
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: Three Riverway, Suite 1700
Houston, Texas 77056
Attn: Ms. Cheryl I. Lipshutz
Group Vice President
Telecopy: (713) 629-7533
Telephone: (713) 964-3351
Telex: 6868916 ABN INTL HOU
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<PAGE> 96
Canadian Swing Loan BANK OF AMERICA CANADA
Amount
$3,333,333.33
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: 855 2nd Street SW, Suite 1900
Calgary, Alberta T2P 4J7
Attn: D. B. Linkletter
Vice President and
Manager
Telecopy: (403) 232-8848
Telephone: (403) 269-4909
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<PAGE> 97
Canadian Swing Loan THE BANK OF NOVA SCOTIA
Amount
$3,333,333.33
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: The Bank of Nova Scotia
Atlanta Agency
600 Peachtree Street N.E.
Suite 2700
Atlanta, Georgia 30308
Attn: Jeff Lents
Telex: 00542319
Telecopy: (404) 888-8998
Telephone: (404) 877-1559
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<PAGE> 98
[PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 99
Canadian Swing Loan ROYAL BANK OF CANADA
Amount
$3,333,333.33
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: Royal Bank Plaza
200 Bay Street, 13th Floor
South Tower
Toronto, Ontario M5J 2J5
Attn: Jan Archibald
Senior Account Manager
Telecopy: (416) 974-2249
Telephone: (416) 974-6685
Aggregate Canadian Swing
Loan Amount: $20,000,000.00
-93-
<PAGE> 100
SINGAPOREAN LENDERS:
Commitments
- -----------
Singaporean Swing Loan THE FIRST NATIONAL BANK OF
Amount CHICAGO
$5,714,285.75
By:
------------------------------------------
Dixon P. Schultz
Vice President
Address: 1100 Lousiana, Suite 3200
Houston, Texas 77002
Attn: Ms. Dixon P. Schultz
Vice President
Telecopy: (713) 654-7329
Telephone: (713) 654-7370
-94-
<PAGE> 101
Singaporean Swing Loan ABN AMRO BANK N.V.
Amount
$2,857,142.85
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: Three Riverway, Suite 1700
Houston, Texas 77056
Attn: Ms. Cheryl I. Lipshutz
Group Vice President
Telecopy: (713) 629-7533
Telephone: (713) 964-3351
Telex: 6868916 ABN INTL HOU
-95-
<PAGE> 102
Singaporean Swing Loan BANK OF AMERICA NT & SA,
Amount SINGAPORE BRANCH
$2,857,142.85
By:
------------------------------------------
J. Stephen Mernick
Senior Vice President
Address: 78 Shenton Way No. 20-00
Singapore, Republic of
Singapore
Attn: Ms. Anna Lim
Telecopy: 65 2393266
Telephone: 65 2393191
-96-
<PAGE> 103
Singaporean Swing Loan THE BANK OF NOVA SCOTIA
Amount
$2,857,142.85
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: The Bank of Nova Scotia
Atlanta Agency
600 Peachtree Street N.E.
Suite 2700
Atlanta, Georgia 30308
Attn: Jeff Lents
Telex: 00542319
Telecopy: (404) 888-8998
Telephone: (404) 877-1559
-97-
<PAGE> 104
[PAGE INTENTIONALLY LEFT BLANK]
-98-
<PAGE> 105
Singaporean Swing Loan NATIONSBANK OF TEXAS, N.A.
Amount
$2,857,142.85
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: NationsBank of Texas, N.A.
Energy Finance Division
700 Louisiana
8th Floor
Houston, Texas 77002
Attn: Mr. James R. Allred
Telecopy: (713) 247-6568
Telephone: (713) 247-6327
-99-
<PAGE> 106
Singaporean Swing Loan ROYAL BANK OF CANADA, SINGAPORE
Amount BRANCH
$2,857,142.85
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: 140 Cecil Street, #01-00
PIL Building
Republic Singapore 0106
Attn: Ms. Diana Lowe
Telecopy: 0086-065-224-7311
Telephone: 0086-065-222-2768
Aggregate Singaporean Swing
Loan Amount: $20,000,000.00
-100-
<PAGE> 107
EXHIBIT A
NOTE
(COMPETITIVE BID LOAN)
__________, ____
Cooper Cameron Corporation, a Delaware corporation (the
"Borrower"), promises to pay to the order of _____________________"Lender")
the aggregate unpaid principal amount of all Competitive Bids Loans made by the
Lender to the Borrower pursuant to Section 2.8 of the Agreement (as hereinafter
defined), in immediately available funds at the main office of The First
National Bank of Chicago in Chicago, Illinois, as Agent, together with interest
on the unpaid principal amount hereof at the rates and on the dates determined
pursuant to the Agreement. The Borrower shall pay the principal of and accrued
and unpaid interest on the Competitive Bid Loans evidenced hereby in full on
the maturity date thereof.
The Lender shall record in accordance with its usual practice,
the date, amount, applicable interest rate or margin and Interest Period of
each Competitive Bid Loan and the date and amount of each principal payment
hereunder; provided, however, that neither the failure to so record nor any
error in this recordation shall affect the Borrower's obligations under this
Note.
This Note (Competitive Bid Loan) is one of the Notes issued
pursuant to, and is entitled to the benefits of, the Amended and Restated
Credit Agreement, dated as of March 20, 1997(as the same may be amended or
modified and in effect from time to time, the "Agreement"), among the Borrower,
Cooper Cameron (U.K.) Limited, Cameron France, S.A., Cameron GmbH, Cooper
Cameron (Singapore) Pte. Ltd., the financial institutions named therein
(including the Lender), the Co-Agents named therein, and The First National
Bank of Chicago, individually and as Agent, to which Agreement reference is
hereby made for a statement of the terms and conditions governing this Note,
including the terms and conditions under which this Note may be prepaid or its
maturity date accelerated. Capitalized terms used herein and not otherwise
defined herein are used with the meanings attributed to them in the Agreement.
The Borrower hereby waives presentment, demand, protest or
notice of any kind in connection with this Note (Competitive Bid Loan).
<PAGE> 108
THIS NOTE (COMPETITIVE BID LOAN) SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF
LAWS PROVISIONS, OF THE STATE OF NEW YORK BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.
COOPER CAMERON CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
<PAGE> 109
EXHIBIT B
COMPETITIVE BID QUOTE
(Section 2.8.4)
_____________ ___, ____
To: The First National Bank of Chicago, as Agent
Attn: Lilian Arroyo
Financial Services Department
Fax No.: (312) 732-4033
Re: Competitive Bid Quote to Cooper Cameron Corporation (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_______________ ___, ____, we hereby make the following Competitive Bid Quote
pursuant to Section 2.8.4 of the Credit Agreement hereinafter referred to and
on the following terms:
1. Quoting Lender: _________________________________
2. Person to contact at Quoting Lender: _______________________
3. Borrowing Date: ____________________ ____, _________1
4. We hereby offer to make Competitive Bid Loan(s) in the
following principal amounts, for the following Interest
Periods and at the following rates:
Principal Interest [Competitive [Absolute Minimum
Amount2 Period3 Bid Margin4] Rate5] Amount6
- -------- -------- ------------ --------- --------
$
_____________________________________
1 As specified in the related Invitation.
2 Principal amount bid for each Interest Period may not exceed principal
amount requested. Bids must be made for at least $10,000,000 and an
integral multiple of $1,000,000.
3 One, two, three or six months (Eurodollar Auction) or at least 30 and up
to 180 days (Absolute Rate Auction), as specified in the related
Invitation.
4 Competitive Bid Margin over or under the Eurocurrency Base Rate
determined for the applicable Interest Period. Specify percentage
(rounded to the nearest 1/100 of 1%) and specify whether "PLUS" or
"MINUS".
5 Specify rate of interest per annum (rounded to the nearest 1/100 of 1%).
6 Specify minimum amount which the Borrower may accept (see Section
2.8.4(b)(iv)).
<PAGE> 110
We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the Amended and
Restated Credit Agreement (as the same may be amended or modified and in effect
from time to time, the "Credit Agreement") dated as of March 20, 1997 among the
Borrower, Cooper Cameron (U.K.) Limited, Cameron France, S.A., Cameron GmbH,
Cooper Cameron (Singapore) Pte. Ltd., the financial institutions named therein,
the Co-Agents named therein, and yourself, individually and as Agent,
irrevocably obligates us to make the Competitive Bid Loan(s) for which any
offer(s) are accepted, in whole or in part.
Capitalized terms used herein and not otherwise defined herein are
used with the meanings attributed to them in the Credit Agreement.
Very truly yours,
[NAME OF LENDER]
Dated: , By:
------------- --- ------ ---------------------------
Authorized Officer
2
<PAGE> 111
EXHIBIT C
COMPETITIVE BID QUOTE REQUEST
(Section 2.8.2)
_____________ ___, ____
To: The First National Bank of Chicago,
as agent (the "Agent")
From: Cooper Cameron Corporation ("Borrower")
Re: Amended and Restated Credit Agreement dated as of March 20,
1997 among the Borrower, Cooper Cameron (U.K.) Limited, Cameron
France, S.A., Cameron GmbH, Cooper Cameron (Singapore) Pte.
Ltd., the financial institutions named therein, the Co-Agents
named therein and The First National Bank of Chicago,
individually and as Agent (as from time to time amended, the
"Agreement")
We hereby give notice pursuant to Section 2.8.2 of the Agreement that
we request Competitive Bid Quotes for the following proposed Competitive Bid
Advance(s):
Borrowing Date: ________________ ___,________
Principal Amount: $ [1]
---------
Interest Period: [2]
---------
Such Competitive Bid Quotes should offer a [Competitive Bid Margin]
[Absolute Rate].
Upon acceptance by the undersigned of any or all of the Competitive
Bid Advances offered by Lenders in response to this request, the undersigned
shall be deemed to affirm as of such date the representations and warranties
made in the Agreement to the extent specified in Section 4.2 thereof.
Capitalized terms used herein have the meanings assigned to them in the
Agreement.
COOPER CAMERON CORPORATION
By:
--------------------------------
Title:
-----------------------------
1 Amount must be at least $10,000,000 and an integral multiple of
$1,000,000.
2 One, two, three or six months (Eurodollar Auction) or at least 30
and up to 180 days (Absolute Rate Auction), subject to the provisions
of the definitions of Eurocurrency Interest Period and Absolute Rate
Interest Period.
<PAGE> 112
EXHIBIT D
INVITATION FOR COMPETITIVE BID QUOTES
(Section 2.8.3)
________________ ___, _____
To: [Name of Lender]
Re: Invitation for Competitive Bid Quotes to
Cooper Cameron Corporation (the "Borrower")
Pursuant to Section 2.8.3 of the Amended and Restated Credit Agreement
dated as of March 20, 1997 (as from time to time amended, the "Agreement")
among the Borrower, Cooper Cameron (U.K.) Limited, Cameron France, S.A.,
Cameron GmbH, Cooper Cameron (Singapore) Pte. Ltd., the financial institutions
named therein, the Co-Agents named therein and the undersigned, individually
and as Agent, we are pleased on behalf of the Borrower to invite you to submit
Competitive Bid Quotes to the Borrower for the following proposed Competitive
Bid Advance(s):
Borrowing Date: ___________________ ___, ______
Principal Amount: $___________
Interest Period: ___________
Such Competitive Bid Quotes should offer a [Competitive Bid Margin]
[Absolute Rate]. Your Competitive Bid Quote must comply with Section 2.8.4 of
the Agreement and the foregoing terms in which the Competitive Bid Quote
Request was made. Capitalized terms used herein have the meanings assigned to
them in the Agreement.
Please respond to this invitation by no later than 9:00 a.m. Chicago
time on ________________, ____.
THE FIRST NATIONAL BANK OF CHICAGO, as Agent
By:
--------------------------------------
Authorized Officer
<PAGE> 113
EXHIBIT E
REVOLVING CREDIT NOTE
$_______________________ Dated: ___________, ____
FOR VALUE RECEIVED, _______________________ (the "Borrower") HEREBY PROMISES TO
PAY to the order of ______________________ (the "Lender") the principal sum of
________________________ United States Dollars ($__________) or, if less, the
aggregate unpaid principal amount of the Revolving Credit Loans made by the
Lender to the Borrower pursuant to Section 2.1 of the Credit Agreement (as
hereinafter defined), on or before the Facility Termination Date; together, in
each case, with interest on any and all principal amounts remaining unpaid
hereunder from time to time. Interest upon the unpaid principal amount hereof
shall accrue at the rates, shall be calculated in the manner and shall be
payable on the dates set forth in the Credit Agreement. After maturity, whether
by acceleration or otherwise, accrued interest shall be payable upon demand.
Both principal and interest shall be payable in Dollars or the applicable
Alternative Currency determined in accordance with the Credit Agreement to The
First National Bank of Chicago, as Agent (the "Agent") on behalf of the Lender,
at the appropriate office specified in the Credit Agreement, in immediately
available funds. The Revolving Credit Loans made by the Lender to the Borrower
pursuant to the Credit Agreement and all payments on account of principal hereof
shall be recorded by the Lender in accordance with its usual practices;
provided, however, that the failure to so record shall not affect the Borrower's
obligations under this Revolving Credit Note.
This Revolving Credit Note is a Revolving Credit Note referred
to in, and is entitled to the benefits of, the Amended and Restated Credit
Agreement dated as of March 20, 1997 among Cooper Cameron Corporation, Cooper
Cameron (U.K.) Limited, Cameron France, S.A., Cameron GmbH, Cooper Cameron
(Singapore) Pte. Ltd., the financial institutions named therein (including the
Lender), the Co-Agents named therein, and The First National Bank of Chicago,
individually and as Agent (as amended, modified or supplemented from time to
time, the "Credit Agreement") and the other Loan Documents. Capitalized terms
used but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Credit Agreement. The Credit Agreement, among other
things, contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
The Borrower hereby waives presentment, demand, protest or
notice of any kind in connection with this Revolving Credit Note.
<PAGE> 114
THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS
PROVISIONS, OF THE STATE OF NEW YORK BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.
[BORROWER]
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
2
<PAGE> 115
EXHIBIT F-1
SINGAPOREAN SWING LOAN NOTE
$___________________________ Dated: ____________, ____
FOR VALUE RECEIVED, Cooper Cameron (Singapore) Pte. Ltd. (the
"Borrower") HEREBY PROMISES TO PAY to the order of ____________________ (the
"Lender") the principal sum of _____________________ United States Dollars
($__________) or, if less, the aggregate unpaid principal amount of the
Singaporean Swing Loans made by the Lender to the Borrower pursuant to Section
2.2 of the Credit Agreement (as hereinafter defined), on or before the Facility
Termination Date; together, in each case, with interest on any and all principal
amounts remaining unpaid hereunder from time to time. Interest upon the unpaid
principal amount hereof shall accrue at the rates, shall be calculated in the
manner and shall be payable on the dates set forth in the Credit Agreement.
After maturity, whether by acceleration or otherwise, accrued interest shall be
payable upon demand. Both principal and interest shall be payable in Dollars or
the applicable Alternative Currency determined in accordance with the Credit
Agreement to The First National Bank of Chicago, as Agent (the "Agent") on
behalf of the Lender, at its main office in Chicago, Illinois in immediately
available funds. The Singapore Swing Loans made by the Lender to the Borrower
pursuant to the Credit Agreement and all payments on account of principal hereof
shall be recorded by the Lender in accordance with its usual practices;
provided, however, that the failure to so record shall not affect the Borrower's
obligations under this Singapore Swing Loan Note.
This Singapore Swing Loan Note is a Singapore Swing Loan Note
referred to in, and is entitled to the benefits of, the Amended and Restated
Credit Agreement dated as of March 20, 1997 among Cooper Cameron Corporation,
Cooper Cameron (U.K.) Limited, Cameron France, S.A., Cameron GmbH, the
Borrower, the financial institutions named therein (including the Lender), the
Co-Agents named therein, and The First National Bank of Chicago, individually
and as Agent (as amended, modified or supplemented from time to time, the
"Credit Agreement") and the other Loan Documents. Capitalized terms used but
not otherwise defined herein shall have the respective meanings ascribed
thereto in the Credit Agreement. The Credit Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal
hereof prior to the maturity hereof upon the terms and conditions therein
specified.
The Borrower hereby waives presentment, demand, protest or
notice of any kind in connection with this Singapore Swing Loan Note.
<PAGE> 116
THIS SINGAPORE SWING LOAN NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF
LAWS PROVISIONS, OF THE STATE OF NEW YORK BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.
COOPER CAMERON (SINGAPORE) PTE. LTD.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
2
<PAGE> 117
EXHIBIT F-2
CANADIAN SWING LOAN NOTE
$___________________________ Dated: ____________, ____
FOR VALUE RECEIVED, ________________________________ (the
"Borrower") HEREBY PROMISES TO PAY to the order of __________________ (the
"Lender") the principal sum of _____________________ United States Dollars
($__________) or, if less, the aggregate unpaid principal amount of the Canadian
Swing Loans made by the Lender to the Borrower pursuant to Section 2.3 of the
Credit Agreement (as hereinafter defined), on or before the Facility Termination
Date; together, in each case, with interest on any and all principal amounts
remaining unpaid hereunder from time to time. Interest upon the unpaid principal
amount hereof shall accrue at the rates, shall be calculated in the manner and
shall be payable on the dates set forth in the Credit Agreement. After
maturity, whether by acceleration or otherwise, accrued interest shall be
payable upon demand. Both principal and interest shall be payable in the
Alternative Currency determined in accordance with the Credit Agreement to The
First National Bank of Chicago, as Agent (the "Agent") on behalf of the Lender,
at its main office in Chicago, Illinois in immediately available funds. The
Canadian Swing Loans made by the Lender to the Borrower pursuant to the Credit
Agreement and all payments on account of principal hereof shall be recorded by
the Lender in accordance with its usual practices; provided, however, that the
failure to so record shall not affect the Borrower's obligations under this
Canadian Swing Loan Note.
This Canadian Swing Loan Note is a Canadian Swing Loan Note
referred to in, and is entitled to the benefits of, the Amended and Restated
Credit Agreement dated as of March 20, 1997 among the Borrower, Cooper Cameron
(U.K.) Limited, Cameron France, S.A., Cameron GmbH, Cooper Cameron (Canadian)
Pte. Ltd., the financial institutions named therein (including the Lender), the
Co-Agents named therein, and The First National Bank of Chicago, individually
and as Agent (as amended, modified or supplemented from time to time, the
"Credit Agreement") and the other Loan Documents. Capitalized terms used but
not otherwise defined herein shall have the respective meanings ascribed
thereto in the Credit Agreement. The Credit Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal
hereof prior to the maturity hereof upon the terms and conditions therein
specified.
The Borrower hereby waives presentment, demand, protest or
notice of any kind in connection with this Canadian Swing Loan Note.
<PAGE> 118
THIS CANADIAN SWING LOAN NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF
LAWS PROVISIONS, OF THE STATE OF NEW YORK BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.
------------------------------------
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
2
<PAGE> 119
EXHIBIT G
COMPLIANCE CERTIFICATE
I, _________________ certify that I am the _____________ of
Cooper Cameron Corporation (the "Borrower"), and that as such I am authorized
to execute this Compliance Certificate on behalf of the Borrower, and DO HEREBY
FURTHER CERTIFY on behalf of the Borrower that:
1. I have reviewed the terms of that certain Amended and Restated
Credit Agreement, dated as of March 20, 1997, among the Borrower, Cooper
Cameron (U.K.) Limited, Cameron France, S.A., Cameron GmbH, Cooper Cameron
(Singapore) Pte. Ltd., the financial institutions named therein (the
"Lenders"), the Co-Agents named therein, and The First National Bank of
Chicago, individually and as Agent (the "Agent") (as amended, supplemented or
modified from time to time, the "Credit Agreement") and I have made, or have
caused to be made by employees or agents under my supervision, a detailed
review of the transactions and conditions of the Borrower and the Borrowing
Subsidiaries (as this and other capitalized terms not defined herein are
defined in the Credit Agreement) during the accounting period covered by the
attached financial statements;
2. The examinations described in paragraph 1 did not disclose, and
I have no knowledge of, the existence of any condition or event which
constitutes a Default or Unmatured Default during or at the end of the
accounting period covered by the attached financial statements or as of the
date of this Compliance Certificate[, except as set forth below]; and
3. Schedule I attached hereto sets forth financial data and
computations evidencing compliance with the covenants set forth in Sections
6.10, 6.12, 6.14, 6.15, and 6.19 of the Credit Agreement, all of which data and
computations are true, complete and correct.
[Described below are the exceptions, if any, to paragraph 2,
listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which the Borrower has taken, is taking, or
proposes to take with respect to each such condition or event:
------------------------------------------------
------------------------------------------------
------------------------------------------------
-----------------------------------------------]
<PAGE> 120
The foregoing certifications, together with the computations set forth
in Schedule I hereto and the financial statements delivered with this
Compliance Certificate in support hereof, are made and delivered this ______
day of ______________, ____.
COOPER CAMERON CORPORATION
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
2
<PAGE> 121
SCHEDULE I
SECTION 6.10 -- INDEBTEDNESS OF SUBSIDIARIES ($MILLIONS)
- ------------ ---------------------------- -----------
(a) Indebtedness of Subsidiaries (other than
Indebtedness owed by one of the Borrower's Wholly-
owned Subsidiaries to the Borrower or to another
Wholly-owned Subsidiary or Rate Hedging Obligation),
(b) Contingent Obligations in respect of a Person other
than the Borrower or another Subsidiary, (c) Attributable
Debt as lessor or guarantor under Synthetic Leases,
and (d) Attributable Debt as seller, originator, or
guarantor under accounts or notes receivable financing
or securitization programs
PERMITTED MAXIMUM $150,000,000
ACTUAL ------------
SECTION 6.12 -- SALE OF ASSETS
- ------------ --------------
Asset dispositions of the Borrower and its
Subsidiaries to any Person other than the
Borrower or a Subsidiary Guarantor for period
from March 20, 1997 to date of determination:
PERMITTED MAXIMUM ------------
greater of (a) $300,000,000 and (b) 20% of
consolidated assets of the Borrower and its
Subsidiaries as of the end of the quarter next
preceding the date of determination
ACTUAL ------------
<PAGE> 122
SECTION 6.14 -- INVESTMENTS IN FOREIGN SUBSIDIARIES
PERMITTED MAXIMUM
5% of Borrower's consolidated net assets or $75,000,000
$
ACTUAL ------------
Amount of net equity (i.e., cash contributed net of
cash dividends and cash redemptions received) invested
by the Borrower and the Subsidiaries in Foreign
Subsidiaries organized or headquartered in a non-
Investment Grade Country
Plus, all outstanding Indebtedness owing to the Borrower
and the Subsidiaries by the Foreign Subsidiaries
organized or headquartered in a non-Investment
Grade Country ------------
Equals, total actual
------------
2
<PAGE> 123
SECTION 6.15(f) -- LIENS
Indebtedness secured by Liens (other than as permitted by Section
6.15(a)-(e))
PERMITTED MAXIMUM
Net Worth of the Borrower and the Subsidiaries -----------
Times, 10% x 10%
-----------
Equals, total permitted maximum
-----------
ACTUAL -----------
3
<PAGE> 124
SECTION 6.19.1 -- COVERAGE RATIO
REQUIRED MINIMUM 2.5x
ACTUAL
Net Income (excluding for the period from June 30, 1995
through June 30, 1997, the effect of pre-tax Restructuring
Charges of up to $40,000,000)*
--------------
Plus, income and franchise taxes accrued and
deducted in the determination of Net Income*
--------------
Plus, Interest Expense*
--------------
Plus, amortization and depreciation deducted in the
determination of Net Income*
--------------
Equals, EBITDA
--------------
Minus, Capital Expenditures*
--------------
Equals, ratio numerator
--------------
Divided by, Interest Expense*
--------------
Equals, actual coverage ratio x
--------------
* for the Borrower and its Subsidiaries on a consolidated basis for
the four fiscal quarters ending on the date of determination
4
<PAGE> 125
SECTION 6.19.2 -- TOTAL DEBT TO TOTAL CAPITALIZATION RATIO ($ MILLIONS)
- -------------- ---------------------------------------- ------------
PERMITTED MAXIMUM 50%*
ACTUAL
Total Debt ------------
Plus, Stockholders' Equity ------------
Equals, Total Capitalization ------------
Actual ratio of Total Debt to Total Capitalization -----------%
*May increase to up to 60% for up to one year after the date of a Specified
Acquisition approved by the board of directors (or functional equivalent
thereof) of the acquired business; provided that, prior to effecting any such
acquisition, the Borrower provides the Agent and the Lenders financial
projections covering the 12 months beginning on or about the date of such
acquisition and showing that (a) the financing of such acquisition will not
otherwise cause any Default or Unmatured Default during such period and (b)
the ratio of Total Debt to Capitalization will be 50% or less with such
12-month period.
5
<PAGE> 126
EXHIBIT H
FORM OF
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
________________________ (the "Assignor") and _______________________ (the
"Assignee") is dated as of ____________________, ____. The parties hereto
agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit
Agreement (which, as it may be amended, supplemented, modified, renewed
or extended from time to time is herein called the "Credit Agreement")
described in Item 1 of Schedule 1 attached hereto. Capitalized terms used but
not otherwise defined herein shall have the meanings ascribed thereto in the
Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and
assigns to the Assignee, and the Assignee hereby purchases and assumes from the
Assignor, an interest in and to the Assignor's rights and obligations under the
Credit Agreement such that after giving effect to such assignment the Assignee
shall have purchased pursuant to this Assignment Agreement the percentage
interest specified in Item 3 of Schedule 1 of all outstanding rights and
obligations under the Credit Agreement relating to the Loans and the other Loan
Documents. [The aggregate Revolving Credit Commitment (or Revolving Credit
Loans and Letter of Credit Exposure, if the applicable Revolving Credit
Commitment has been terminated) purchased by the Assignee hereunder is set
forth in Item 4 of Schedule 1.] [The aggregate Swing Loans purchased by the
Assignee hereunder is set forth in Item 4 of Schedule I.]
3. EFFECTIVE DATE. The effective date of this Assignment
Agreement (the "Effective Date") shall be the later of the date specified in
Item 5 of Schedule 1 or two Business Days (or such shorter period agreed to by
the Agent) after a Notice of Assignment substantially in the form of Exhibit I
attached hereto has been delivered to the Agent. Such Notice of Assignment
must include any consents required to be delivered to the Agent pursuant to
Section 12.3.1 of the Credit Agreement. In no event will the Effective Date
occur if the payments required to be made by the Assignee to the Assignor on
the Effective Date under Section 4 hereof are not made on the proposed
Effective Date. The Assignor will notify the Assignee of the proposed
Effective Date no later than the Business Day prior to the proposed Effective
Date. As of the Effective Date, (a) the Assignee shall have the rights and
obligations of a Lender under the Loan Documents with respect to the rights and
obligations assigned to the Assignee hereunder, and (b) the Assignor shall
relinquish its rights and be released from its corresponding obligations under
the Loan Documents with respect to the rights and obligations assigned to the
Assignee hereunder.
<PAGE> 127
4. PAYMENT OBLIGATIONS. On and after the Effective Date, the
Assignee shall be entitled to receive from the Agent all payments of principal,
interest and fees with respect to the interest assigned hereby. The Assignee
shall advance funds directly to the Agent with respect to all Loans and
reimbursement payments made on or after the Effective Date with respect to the
interest assigned hereby. In consideration for the sale and assignment of
Loans hereunder, (a) the Assignee shall pay the Assignor, on the Effective
Date, an amount equal to the principal amount of the portion of all Floating
Rate Advances assigned to the Assignee hereunder, and (b) with respect to each
Eurocurrency Loan [and Singaporean Rate Loan] made by the Assignor and assigned
to the Assignee hereunder which is outstanding on the Effective Date, (i) on
the last day of the Interest Period therefor, (ii) on such earlier date agreed
to by the Assignor and the Assignee, or (iii) on the date on which any such
Eurocurrency Loan [and Singaporean Rate Loan] either becomes due (by
acceleration or otherwise) or is prepaid (the date as described in the
foregoing clauses (i), (ii) or (iii) being hereinafter referred to as the
"Payment Date"), the Assignee shall pay the Assignor an amount equal to the
principal amount of the portion of such Eurocurrency Loan [and Singaporean Rate
Loan] assigned to the Assignee which is outstanding on the Payment Date. If
the Assignor and the Assignee agree that the Payment Date for such Eurocurrency
Loan [and Singaporean Rate Loan] shall be the Effective Date, they shall agree
to the interest rate applicable to the portion of such Eurocurrency Loan [and
Singaporean Rate Loan] assigned hereunder for the period from the Effective
Date to the end of the existing Interest Period applicable to such Eurocurrency
Loan [and Singaporean Rate Loan] (the "Agreed Interest Rate") and any interest
received by the Assignee in excess of the Agreed Interest Rate shall be
remitted to the Assignor. In the event interest for the period from the
Effective Date to but not including the Payment Date is not paid by the
Borrower with respect to any Eurocurrency Loan [or Singaporean Rate Loan] sold
by the Assignor to the Assignee hereunder, the Assignee shall pay to the
Assignor interest for such period on the portion of such Eurocurrency Loan [or
Singaporean Rate Loan] sold by the Assignor to the Assignee hereunder at the
applicable rate provided by the Credit Agreement. In the event a prepayment of
any Eurocurrency Loan [or Singaporean Rate Loan] which is existing on the
Payment Date and assigned by the Assignor to the Assignee hereunder occurs
after the Payment Date but before the end of the Interest Period applicable to
such Eurocurrency Loan [or Singaporean Rate Loan], the Assignee shall remit to
the Assignor the excess of the amount paid under Section 3.5 of the Credit
Agreement with respect to the portion of such Eurocurrency Loan [or Singaporean
Rate Loan] assigned to the Assignee hereunder over the amount which would have
been paid if such amount paid under Section 3.5 of the Credit Agreement was
calculated based on the Agreed Interest Rate. The Assignee will also promptly
remit to the Assignor (x) any principal payments received from the Agent with
respect to Eurocurrency Loans [and Singaporean Rate Loans] prior to the Payment
Date, and (y) any amounts of interest on Loans and fees received from the Agent
which relate to the portion of the Loans assigned to the Assignee hereunder for
periods prior to the Effective Date, in the case of Floating Rate Loans, or the
Payment Date, in the case of Eurocurrency Loans and Singaporean Rate Loans, and
not previously paid by the Assignee to the Assignor. In the event that either
party hereto receives any payment to which the other party hereto is entitled
under this Assignment Agreement, then the party receiving such amount shall
promptly remit it to the other party hereto.
2
<PAGE> 128
5. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim created by the Assignor. It is
understood and agreed that the assignment and assumption hereunder are made
without recourse to the Assignor and that the Assignor makes no other
representation or warranty of any kind to the Assignee. Neither the Assignor
nor any of its officers, directors, employees, agents or attorneys shall be
responsible for (a) the due execution, legality, validity, enforceability,
genuineness, sufficiency or collectibility of any Loan Document, (b) any
representation, warranty or statement made in or in connection with any of the
Loan Documents, (c) the financial condition or creditworthiness of any Borrower
or any guarantor, (d) the performance of or compliance with any of the terms or
provisions of any of the Loan Documents, (e) inspecting any of the Property,
books or records of any Borrower, (f) the validity, enforceability, perfection,
priority, condition, value or sufficiency of any collateral securing or
purporting to secure the Loans, or (g) any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans or the Loan
Documents.
6. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (a) confirms
that it has received a copy of the Credit Agreement, together with copies of
the financial statements requested by the Assignee and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement, (b) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Loan Documents, (c) appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under the Loan
Documents as are delegated to the Agent by the terms thereof, together with
such powers as are reasonably incidental thereto, (d) agrees that it will
perform in accordance with their terms all of the obligations which by the
terms of the Loan Documents are required to be performed by it as a Lender, (e)
agrees that its payment instructions and notice instructions are as set forth
in the attachment to Schedule 1, (f) confirms that none of the funds, monies,
assets or other consideration being used to make the purchase and assumption
hereunder are "plan assets" as defined under ERISA and that its rights,
benefits and interests in and under the Loan Documents will not be "plan
assets" under ERISA, [and (g) attaches the forms prescribed by the Internal
Revenue Service of the United States certifying that the Assignee is entitled
to receive payments under the Loan Documents without deduction or withholding
of any United States federal income taxes].*
* to be inserted if the Assignee is not incorporated under the laws of
the United States, or a state thereof.
7. INDEMNITY. The Assignee agrees to indemnify and hold the
Assignor harmless against any and all losses, costs and expenses (including,
without limitation, reasonable attorneys' fees) and liabilities incurred by the
Assignor in connection with or arising in any manner from the Assignee's
non-performance of the obligations assumed under this Assignment Agreement.
The
3
<PAGE> 129
obligations of the Assignee under this Section 7 shall survive the payment of
all amounts hereunder and the termination of this Agreement.
8. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee
shall have the right pursuant to and in accordance with Section 12.3 of the
Credit Agreement to assign the rights which are assigned to the Assignee
hereunder to any entity or person; provided, that (a) any such subsequent
assignment does not violate any of the terms and conditions of the Loan
Documents or any law, rule, regulation, order, writ, judgment, injunction or
decree and that any consent required under the terms of the Loan Documents has
been obtained, and (b) unless the prior written consent of the Assignor is
obtained, the Assignee is not thereby released from its obligations to the
Assignor hereunder, if any remain unsatisfied, including, without limitation,
its obligations under Sections 4, 6 and 7 hereof.
9. REDUCTIONS OF COMMITMENT. If any reduction in the Aggregate
Revolving Credit Commitment occurs between the date of this Assignment
Agreement and the Effective Date, the percentage interest specified in Item 3
of Schedule 1 shall remain the same, but the dollar amount purchased shall be
recalculated based on the reduced Aggregate Revolving Credit Commitment.
10. ENTIRE AGREEMENT. This Assignment Agreement and the attached
Notice of Assignment embody the entire agreement and understanding between the
parties hereto and supersede all prior agreements and understandings between
the parties hereto relating to the subject matter hereof.
11. GOVERNING LAW. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
12. NOTICES. Notices shall be given under this Assignment
Agreement in the manner set forth in the Credit Agreement. For the purpose
hereof, the addresses of the parties hereto (until notice of a change is
delivered) shall be the address set forth in the attachment to Schedule 1.
4
<PAGE> 130
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
[NAME OF ASSIGNOR]
By:
---------------------------------
Title:
------------------------------
-----------------------------------
-----------------------------------
[NAME OF ASSIGNEE]
By:
---------------------------------
Title:
------------------------------
------------------------------
------------------------------
5
<PAGE> 131
SCHEDULE 1
TO ASSIGNMENT AGREEMENT
1. Description and Date of Credit Agreement:
That certain Amended and Restated Credit Agreement dated as of
March 20, 1997, as from time to time amended, modified or
otherwise supplemented, among Cooper Cameron Corporation,
Cooper Cameron (U.K.) Limited, Cameron France, S.A., Cameron
GmbH, Cooper Cameron (Singapore) Pte. Ltd., the financial
institutions named therein, the Co-Agents named therein and The
First National Bank of Chicago, individually and as Agent.
2. Date of Assignment Agreement: _____________ ___, ______
3. Amounts (As of Date of Item 2 above):
a. Total of Revolving Commitments (Loans)*
under Credit Agreement $__________
b. Assignee's percentage of the Revolving
Credit (Loans)* Commitments and Letter
of Credit Exposure purchased under
the Assignment Agreement** __________%
c. Total of [Canadian] [Singaporean] Swing
Loans under the Credit Agreement $__________
d. Assignee's percentage of [Canadian]
[Singaporean] Swing Loans purchased
under the Assignment Agreement __________%
4. a. Assignee's aggregate (Loan amount)*
Revolving Credit Commitment amount
purchased hereunder $__________
b. Assignee's aggregate Letter of Credit
Exposure purchased hereunder $__________
c. Assignee's aggregate [Canadian]
[Singaporean] Swing Loans purchased
hereunder $__________
5. Proposed Effective Date: __________
<PAGE> 132
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
---------------------------- --------------------------------
Name: Name:
-------------------------- ------------------------------
Title: Title:
------------------------- ----------------------------
* If a Commitment has been terminated, insert outstanding Loans in place
of Commitment
** Percentage taken to 10 decimal places
2
<PAGE> 133
ATTACHMENT TO SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must
include notice address for the Assignor and the Assignee
<PAGE> 134
EXHIBIT I
TO ASSIGNMENT AGREEMENT
NOTICE OF ASSIGNMENT
______________ __, ____
To: Cooper Cameron Corporation
515 Post Oak Boulevard, Suite 1200
Houston, Texas 77027
Attn: Thomas R. Hix, Chief Financial Officer
The First National Bank of Chicago
One First National Plaza
Chicago, IL 60670
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to the Credit Agreement (the "Credit
Agreement") described in Item 1 of Schedule 1 attached hereto. Capitalized
terms used herein and not otherwise defined herein or in such consent shall
have the meanings attributed to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and
delivered to the Borrower and the Agent pursuant to Section 12.3.2 of the
Credit Agreement.
3. The Assignor and the Assignee have entered into an
Assignment Agreement, dated as of _________ _ , ____ (the "Assignment"),
pursuant to which, among other things, the Assignor has sold, assigned,
delegated and transferred to the Assignee, and the Assignee has purchased,
accepted and assumed from the Assignor the percentage interest specified in
Item 3 of Schedule 1 of all outstandings, rights and obligations under the
Credit Agreement relating to the facilities listed in Item 3 of Schedule 1,
including, without limitation, such interest in the Assignor's Revolving Credit
Commitment (if applicable), Letter of Credit Exposure, and the Revolving Credit
Loans owing to the Assignor relating to such facilities [and Swing Loans]. The
effective date of the Assignment (the "Effective Date") shall be the later of
the date specified in Item 5 of Schedule 1 or two Business Days (or such
shorter period as agreed to by the Agent) after this Notice of Assignment and
any consents and fees required by Sections 12.3.1 and 12.3.2 of the Credit
Agreement have been delivered to the Agent; provided, that the Effective Date
shall not occur if any condition precedent agreed to by the Assignor and the
Assignee has not been satisfied.
<PAGE> 135
4. The Assignor and the Assignee hereby give to the
Borrower and the Agent notice of the assignment and delegation referred to
herein. The Assignor will confer with the Agent before the date specified in
Item 5 of Schedule 1 to determine if the Assignment Agreement will become
effective on such date pursuant to Section 3 hereof and will confer with the
Agent to determine the Effective Date pursuant to Section 3 hereof if it occurs
thereafter. The Assignor shall notify the Agent if the Assignment does not
become effective on any proposed Effective Date as a result of the failure to
satisfy the conditions precedent agreed to by the Assignor and the Assignee.
At the request of the Agent, the Assignor will give the Agent written
confirmation of the satisfaction of the conditions precedent.
5. The Assignor or the Assignee shall pay to the Agent on
or before the Effective Date the processing fee of $4,000 required by Section
12.3.2 of the Credit Agreement.
6. If Notes are outstanding on the Effective Date, the
Assignor and the Assignee request and direct that the Agent prepare and cause
the Borrower to execute and deliver new Notes or, as appropriate, replacement
Notes, to the Assignor and the Assignee. The Assignor and, if applicable, the
Assignee each agree to deliver to the Agent the original Notes received by it
from the Borrower upon its receipt of new Notes in the appropriate amount.
7. The Assignee advises the Agent that notice and payment
instructions are set forth in the attachment to Schedule 1.
8. Each party consenting to the Assignment in the space
indicated below hereby releases the Assignor from any obligations to it which
have been assigned to the Assignee. The Assignee hereby represents and
warrants that none of the funds, monies, assets or other consideration being
used to make the purchase pursuant to the Assignment are "plan assets" as
defined under ERISA and that its rights, benefits and interests in and under
the Loan Documents will not be "plan assets" under ERISA.
9. The Assignee authorizes the Agent to act as its agent
under the Loan Documents in accordance with the terms thereof. The Assignee
acknowledges that the Agent has no duty to supply information with respect to
the Borrower or the Loan Documents to the Assignee until the Assignee becomes a
party to the Credit Agreement.
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
------------------------ --------------------------
Name: Name:
----------------------- -------------------------
Title: Title:
---------------------- ------------------------
2
<PAGE> 136
ACKNOWLEDGED AND CONSENTED TO ACKNOWLEDGED AND CONSENTED TO
BY THE FIRST NATIONAL BANK OF BY COOPER CAMERON CORPORATION
CHICAGO, as Agent
By: By:
--------------------------- -----------------------------
Name: Name:
------------------------- ---------------------------
Title: Title:
------------------------ --------------------------
[Attach photocopy of Schedule 1 to Assignment]
3
<PAGE> 137
SCHEDULE 2.9
PAYMENT OFFICES
THE FIRST NATIONAL BANK OF CHICAGO
1. US Dollars
The First National Bank of Chicago
Attn: DCS Incoming Clearing Account
One First National Plaza
Chicago, Illinois 60670
Acct. No.: 7521-7653
ABA No.: 071000013
2. British Sterling
Midland Bank PLC - London
International Division
London, ENGLAND
Acct. No.: 35202851
SWIFT Address: MIDLGB22
3. French Francs
Credit Commerciale de France
103 Avenue des Champes-Elysees
Paris, FRANCE
Acct. No.: 00203501611
SWIFT Address: CCFRFRPP
4. Deutsche Marks
Swiss Bank Corporation/
Schweizerscher Bankverein Deutschland
Ulmentrasse 30 (D-6000)
Frankfurt, GERMANY
Acct. No.: 111550-5005
SWIFT Address: SBCODEFF
5. Singapore Dollars
Overseas Union Bank, Limited
60 Robinson Road
Singapore 0106, Singapore
Acct. No.: 1410046515150
SWIFT Address: OUBKSGSG
<PAGE> 138
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
1. US Dollars
Bank of America Illinois
Chicago, Illinois 60697
Acct. No.: 4703421
ABA No.: 071000039
Attn: Loan Department
Ref: Cooper Cameron Corporation
Telephone: (312) 828-4575
Fax: (312) 974-9626
2. British Sterling
Midland Bank PLC
For the Account of Bank of America Illinois
Nassau Account No. 35189445
Ref: Cooper Cameron Corporation
3. French Francs
Banque Paribas, Paris, France
For the Account of Bank of America Illinois
Nassau Account No. 44311B
Ref: Cooper Cameron Corporation
4. Deutsche Marks
Bank of America Frankfurt
For the Account of Bank of America Illinois
Nassau Account No. 15129-008
Ref: Cooper Cameron Corporation
5. Singapore Dollars
Bank of America Singapore
For the Account of Bank of America Illinois
USD A/C 43628-027, SGD A/C 43628-035
SWIFT Address: BOFASG2X
Ref: Cooper Cameron Corporation
2
<PAGE> 139
THE BANK OF NOVA SCOTIA
1. US Dollars
The Bank of Nova Scotia, New York Agency
ABA No.: 026002532
For further credit to Atlanta Agency
Acct. No.: 0606634
Re: Cooper Cameron Corporation
Attn: Cleve Bushey
2. British Sterling
The Bank of Nova Scotia
Scotia House, 33 Finsbury Square
London
Acct. No.: 0992301442
For credit to BNS Toronto - Int'l Banking Division
Ref: Atlanta Agency/Cooper Cameron
SWIFT Address: NOSCGB22
3. French Francs
Credit Commercial de France
Paris
Acct. No.: 002034477221
For credit to BNS Toronto - Int'l Banking Division
Ref: Atlanta Agency/Cooper Cameron
SWIFT Address: CCFRFPPP
4. Deutsche Marks
Deutsche Bank AG Frankfurt
Acct. No.: 100 9510579 0000
For credit to BNS Toronto - Int'l Banking Division
Ref: Atlanta Agency/Cooper Cameron
SWIFT Address: DEUTDEFF
3
<PAGE> 140
5. Singapore Dollars
The Bank of Nova Scotia
Acct. No.: 082/32/80008
Favour Bank of Nova Scotia Toronto
Ref: Atlanta Agency/Cooper Cameron
SWIFT Address: NOSCSGSG
4
<PAGE> 141
THE CHASE MANHATTAN BANK
1. US Dollars
The Chase Manhattan Bank
New York, NY
ABA No.: 021000021
Acct. No.: 900-9-000036
Telephone: (212) 552-7414
Telecopy: (212) 552-5777
2. British Sterling
The Chase Manhattan Bank
London, ENGLAND
Acct. No.: 1200-4677
for Chase Nassau Account
Ref: Cooper-Cameron
Attn: Ruth Tortorici
3. French Francs
Caisse Nationale Credit Agricole
Paris, FRANCE
Acct. No.: 00995-3045-2000-0
for Chase Nassau Account
Ref: Cooper-Cameron
Attn: Ruth Tortorici
4. Deutsche Marks
Chase Bank AG
Frankfurt, GERMANY
Acct. No.: 623-12-00178
for Chase Nassau Account
Ref: Cooper-Cameron
Attn: Ruth Tortorici
5
<PAGE> 142
5. Singapore Dollars
The Chase Manhattan Bank
Singapore
for Chase Nassau Acct. No. 0121 869320
Ref: Cooper Cameron
Attn: Ruth Tortorici
6. Canadian Dollars
Bank of Montreal
Toronto, CANADA
for Chase Nassau Acct. No. 3144-1001-537
Ref: Cooper-Cameron
Attn: Ruth Tortorici
6
<PAGE> 143
COMMERZBANK AKTIENGESELLSCHAFT
ATLANTA AGENCY
1. US Dollars
Commerzbank Aktiengesellschaft, New York Branch
2 World Financial Center
New York, New York 10281
F/C Atlanta Agency
Ref: Cooper Cameron Corporation
ABA No.: 026008044
Telephone: (212) 266-7200
Fax: (212) 266-7235
2. British Sterling
Commerzbank Aktiengesellschaft, London Branch
Commerzbank House
23 Austin Friars
PO Box 286
GB-London, EC2P 2 JD
F/C Atlanta Agency
Ref: Cooper Cameron Corporation
Acct. No.: 160-940150600
SWIFT Address: OELBATWW
3. French Francs
Commerzbank Aktiengesellschaft, Paris Branch
3, Place de l'Opera, F-75002
Paris, France
F/C Atlanta Agency
Ref: Cooper Cameron Corporation
Acct. No.: 140-940150600
SWIFT Address: COBAFRPX
7
<PAGE> 144
4. Deutsche Marks
Commerzbank Aktiengesellschaft, Frankfurt Branch Neue Mainzer Str.
32-36 60311 Frankfurt a. M. F/C Atlanta Agency Ref: Cooper Cameron
Corporation Acct. No.: 400-940150600 SWIFT Address: COBADEFF
5. Singapore Dollars
Commerzbank AG
F/C Atlanta Agency
Ref.: Cooper Cameron Corporation
Acct, no.: 167-940150600
SWIFT Address: COBASGSX
8
<PAGE> 145
CREDIT LYONNAIS NEW YORK BRANCH
1. US Dollars
Credit Lyonnais New York
Attn: Loan Servicing Department
Ref: Cooper Cameron Corporation
1301 Avenue of the Americas
New York, New York 10019
ABA No.: 026008073
Holdover Credit 01 881792140
Ref: Cooper Cameron Corporation
Contact: Richard Pilonski
Telephone: (212) 261-7640
2. British Sterling
Credit Lyonnais London
London, England
Acct. No.: 00916113400100
Ref: Cooper Cameron Corporation
CHAPS Sort Code: 165209
SWIFT Address: CRLYGB2L
3. French Francs
Credit Lyonnais Paris
Paris, France
Acct. No.: 09100081730
Ref: Cooper Cameron Corporation
Code Banque: 30002
SWIFT Address: CRLYFRPP
4. Deutsche Marks
Bankers Trust International, Plc
Frankfurt, Germany
Acct. No.: 832230028
Ref: Cooper Cameron Corporation
SWIFT Address: BKTDDEFF
9
<PAGE> 146
5. Singapore Dollars
Credit Lyonnais Singapore
Singapore 0104, Singapore
Acct. no.: 11 215137 320 40 090
Ref: Cooper Cameron Corporation
Telephone: 65 535 94 77
Telecopy: 65 532 28 34
10
<PAGE> 147
NATIONAL WESTMINSTER BANK PLC
1. US Dollars
National Westminster Bank Plc
New York Branch
175 Water Street
New York, New York 10038
Attn: Donna Weiss
ABA No.: 026002749
Acct. No.: 89016815
2. British Sterling
National Westminster Bank
NatWest Tower
25 Old Broad Street
London EC2N IHQ England
Nostro Acct. No.: 3100203020258
Nostro Branch 50
SWIFT Address: NWBKGB2L
3. French Francs
Societe Generale Paris
29 Boulevard Haussmann
75009 Paris France
Nostro Acct. No.: 00101764471
Nostro Branch 50
SWIFT Address: SOGEFRPP
4. Deutsche Marks
NatWest AG Frankfurt
Feldbergstrasse 35
P.O. Box 111061
6000 Frankfurt am Main I
Germany
Nostro Acct. No.: 1187175003
Nostro Branch 50
SWIFT Address: NWBKDEFF
11
<PAGE> 148
5. Singapore Dollars
Overseas-Chinese Banking Corp. Ltd.
Singapore
Nostro Account no.: 501-352603-001
Nostro Branch 50
SWIFT Address: OCBCSGSG
12
<PAGE> 149
NATIONSBANK OF TEXAS, N.A.
1. US Dollars
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75202
ABA No.: 111000025
Acct. No.: 1292000883
Acct. Name: Corporate Loans Funds Transfer
Ref: Cooper Cameron Corporation
2. British Sterling
Midland Bank PLC, London
Acct. No.: 00478549
By order of NationsBank Texas Nassau Further Credit to Cooper Cameron
Corp.
SWIFT Address: MIDLGB22 Use SWIFT payment MT202
3. French Francs
Societe Generale, Paris
Acct. No.: 001014429200
By order of NationsBank Texas Nassau Further Credit to Cooper Cameron
Corp.
SWIFT Address: SOGEFRPP Use SWIFT payment MT202
4. Deutsche Marks
Commerzbank, Frankfurt
Acct. No.: 400887531200
By order of NationsBank Texas Nassau Further Credit to Cooper Cameron
Corp.
SWIFT Address: COBADEFF Use SWIFT payment MT202
5. Singapore Dollars
Overseas Chinese Banking Group
Acct. no.: 501097620001
By order of NationsBank Texas Nassau Further Credit to Cooper Cameron
Corp.
SWIFT Address: OCBCSGSG Use SWIFT payment MT202
13
<PAGE> 150
ABN AMRO BANK N.V.
1. US Dollars
ABN AMRO New York
ABA No.: 026009580
For credit to ABN AMRO Houston Agency
Acct. No.: 651001071541
Attn: Patricia Baker
Ref: Cooper Cameron
2. British Sterling
Lloyds Bank PLC - London
CHAPS No. 30-96-34
ABN AMRO Chicago Treasury
Acct. No.: 01001036
Favor: Grand Cayman
3. French Francs
Banque de Neuflize Schlumberger Mallet - Paris
ABN AMRO Chicago Treasury
Acct. No.: 00.12040.12862.00
Favor: Grand Cayman
4. Deutsche Marks
Dresdner Bank - Frankfurt
ABN AMRO Chicago Treasury
Acct. No.: 8.182.930.00
Favor: Grand Cayman
5. Singapore Dollars
ABN AMRO Singapore
ABN AMRO Chicago Treasury
Acct. no.: 28 00 349
Favor: Grand Cayman
SWIFT Address: ABNASGSG
14
<PAGE> 151
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
1. US Dollars
Morgan Guaranty Trust Co., New York
ABA No.: 021-000-238
For account of: Australia and New Zealand Banking Group Limited
Acct. No.: 631-00-888
Ref: Cooper Cameron Corporation
Attn: Loan Administration
2. British Sterling
ANZ London
Minerva House
P.O. Box 7
Montague Close
London, England
SWIFT Address: ANZBGB2L
For account of: ANZ New York
3. French Francs
ANZ Paris
6 Rue de Berri
75008 Paris
France
SWIFT Address: ANZBFRPP
For account of: ANZ New York
4. Deutsche Marks
ANZ Frankfurt
Mainzer Landstrasse 46
60325 Frankfurt am Main
Germany
SWIFT Address: ANZBDEFF
For account of: ANZ New York
15
<PAGE> 152
5. Singapore Dollars
ANZ Bank Singapore
10 Collyer Quay, #17-01/07
Ocean Building
Singapore 0104
SWIFT Address: ANZBSGSX
For account of: ANZ New York
16
<PAGE> 153
PNC BANK, NATIONAL ASSOCIATION
1. US Dollars
PNC Bank, National Association
ABA No.: 043-000096
Acct.: Cooper Cameron Attn: Loan and Collateral
Acct. No.: 196060890
2. British Sterling
Coutts & Company
International Banking Office
27 Bush Loan
Cannon Street
London EC4ROAA England
SWIFT Address: COUTGB22
Beneficiary Acct.: PNC Bank, N.A., Pittsburgh
Acct. No.: 8384533
3. French Francs
Societe Generale
29 Boulevard Haussman
75009 Paris, France
SWIFT Address: SOGEFRPP
Beneficiary Acct.: PNC Bank, N.A., Pittsburgh
Acct. No.: 001014438780
4. Deutsche Marks
Deutsche Bank AG
TZE/Bankenbateilung Postfach 5223
6236 Eachborn 1
Frankfurt, Germany
SWIFT Address: DEUTDEFF
Beneficiary Acct.: PNC Bank, N.A., Pittsburgh
Acct. No.: 100-9586876-0000
17
<PAGE> 154
5. Singapore Dollars
Development Bank of Singapore Ltd.
DBS Building
6 Shenton Way
SWIFT Address: DBSSSGSG
Beneficiary Acct.: PNC Bank, N.A., Pittsburgh
Acct. no.: 37-0056-6
Ref.: Attn: Forex Corporate Operations
18
<PAGE> 155
ROYAL BANK OF CANADA
1. US Dollars
Chase Manhattan Bank, N.A.
New York, New York
ABA No.: 021000021
Acct. No.: 920-1-033363 c/o Royal Bank of Canada, NY
For further credit to account no. 2185999
Ref: Cooper Cameron Corporation
2. British Sterling
Barclays Bank PLC, London
For Account of: RBC IMM Toronto
Acct. No.: 50251887
Ref: Cooper Cameron Corporation
3. French Francs
Banque Nationale de Paris, Paris
For Account of: RBC IMM Toronto
Acct. No.: 040407642
Ref: Cooper Cameron Corporation
4. Deutsche Marks
Deutsche Bank AG, Frankfurt
For Account of: RBC IMM Toronto
Acct. No.: 10095111970000
Ref: Cooper Cameron Corporation
5. Singapore Dollars
Royal Bank of Canada (Singapore)
For Account of: RBC IMM Toronto
Acct. no.: 5902911
Ref: Cooper Cameron Corporation
19
<PAGE> 156
SOCIETE GENERALE, SOUTHWEST AGENCY
1. US Dollars
Societe Generale, New York
1221 Avenue of the Americas
New York, New York 10020
ABA No.: 026 004 226
FFC Cooper Cameron Corporation
Acct. No.: 9031685
2. British Sterling
Societe Generale
London, England
Acct. No.: 03100235
SWIFT Address: SOGEGB2LLON
3. French Francs
Societe Generale
Paris, France
Acct. No.: 001014445870
SWIFT Address: SOGEFRPP
4. Deutsche Marks
Societe Generale, S.A.
Frankfurt, Germany
Acct. No.: 891410-801119
SWIFT Address: SOGEDEFF
5. Singapore Dollars
Societe Generale
Singapore
F/C/T SG - New York
Acct. no.: 100800081012
Ref.: Cooper Cameron
SWIFT Address: SOGESGSG
20
<PAGE> 1
EXHIBIT 13.1
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION OF COOPER CAMERON CORPORATION
The following discussion of the Company's historical results of
operations and financial condition should be read in conjunction with the
Company's consolidated financial statements and notes thereto included
elsewhere in this Annual Report.
OVERVIEW
The Company's operations are organized into two separate and distinct
business segments -- Petroleum Production Equipment and Compression and Power
Equipment. Petroleum Production Equipment, which includes the Cameron division
and Wheeling Machine (through November 1995), manufactures and markets a wide
variety of equipment for use in oil and natural gas production, transmission
and drilling including valves, wellhead equipment, blowout preventers ("BOPs")
and control systems for land, platform and subsea applications. Compression and
Power Equipment, which includes Cooper Energy Services and Cooper
Turbocompressor, manufactures and markets engines, gas turbines and centrifugal
gas and air compressors for use in oil and natural gas production and
transmission as well as a wide variety of other industrial applications.
The following table sets forth the percentage relationship to revenues
of certain income statement items for the periods presented.
<TABLE>
<CAPTION>
Years Ended December 31,
- ------------------------------------------------------------------------------------------------------
1996 1995 1994
- ------------------------------------------------------------------------------------------------------
Revenues 100.0% 100.0% 100.0%
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Costs and expenses:
Cost of sales, exclusive of depreciation and amortization 72.8 77.1 75.6
Depreciation and amortization 4.5 6.3 6.3
Selling and administrative expenses 14.1 15.8 16.0
Interest expense 1.5 2.0 1.8
Provision for impairment of goodwill -- 38.6 --
Nonrecurring/unusual charges 0.5 3.6 --
- ------------------------------------------------------------------------------------------------------
Total costs and expenses 93.4 143.4 99.7
- ------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 6.6 (43.4) 0.3
Income taxes (2.0) (0.3) (0.6)
- ------------------------------------------------------------------------------------------------------
Net income (loss) 4.6% (43.7)% (0.3)%
======================================================================================================
</TABLE>
1996 COMPARED TO 1995
Cooper Cameron Corporation had net income of $64.2 million, or $2.41 per
share, for the twelve months ended December 31, 1996, compared to a net loss of
$500.1 million, or $19.87 per share on a pro forma basis, for the same period in
1995. The full year 1996 income includes nonrecurring or unusual charges
totaling $7.3 million ($5.1 million after tax), or $.19 per share (see Note 3 of
the Notes to Consolidated Financial Statements). Included in the 1995 net loss
were nonrecurring or unusual charges totaling $482.5 million pre-tax (also see
Note 3), and several unusual items affecting the tax provision as explained in
Note 13. Excluding these items, the net income for 1996 would have been $69.3
million, or $2.60 per share, compared to a 1995 net loss of $13.5 million, or
$.54 per share. The remainder of this discussion will be based on the Company's
results exclusive of these nonrecurring or unusual items.
REVENUES
Revenues for 1996 totaled $1,388.2 million, an increase of 21% from the
$1,144.0 million in 1995. This increase was due to generally improved market
fundamentals, driven largely by increasing worldwide demand for oil and natural
gas, and the June 1996 acquisition of Ingram Cactus Company. Although some
fluctuations were experienced, oil and natural gas prices improved during the
period, providing the impetus for increased exploration and production spending
by major and independent producers. Approximately 61% of the improvement in
revenues was in the Petroleum Production Equipment segment and 39% in the
Compression and Power Equipment segment. The favorable market conditions
continued throughout the year and the Company's backlog, defined as firm
customer orders for which a purchase order has been received, satisfactory
credit or financing arrangements exist and delivery is scheduled, ended 1996 at
$728.3 million, an increase of 24% from the $588.1 million at year-end 1995.
The Petroleum Production Equipment segment's revenues of $798.6 million
increased 23% over 1995 revenues of $648.1 million. (Full year 1995 revenues
included $14.0 million related to the Wheeling Machine Products Division, which
was sold during the fourth quarter of 1995.) Because the acquired Ingram Cactus
operations have been substantially integrated into the Cameron
17
<PAGE> 2
business, separate data on the revenues and earnings attributable to the
acquisition are not available. Management estimates, however, that the revenues
would have been approximately $65 million for the six-month period following the
acquisition date with a resulting impact on earnings essentially proportionate
to the remainder of the Cameron business. The effect of the fourth quarter
Tundra Valve & Wellhead acquisition on revenues was minimal. The remainder of
the revenue increase was due to the generally improved market conditions
discussed previously and shipments associated with large subsea projects in the
North Sea. Order activity for the segment increased by 42% from the 1995 level,
with the second half of 1996 up by 48% over the first half of 1996. This
improvement was across all lines of the business and not the result of large
subsea projects that can cause significant fluctuations from period to period.
Year-end 1996 backlog was $440.4 million, an increase of 67% from year-end 1995.
Revenues for the Compression and Power Equipment segment of $588.5
million improved by 19% from $493.6 million in 1995. This improvement resulted
from increased international gas turbine and compressor project revenues and
strong centrifugal air compressor activity. The increased international gas
turbine and compressor project revenues were the result of several large orders
received in the second half of 1995, which, due to the lead time for this
equipment, did not generate revenues until the second half of 1996. Revenues
from reciprocating natural gas compression equipment were virtually unchanged
from 1995, as the Company's new high-speed products were slow to be accepted by
the market. This began to improve in the third quarter of 1996 and orders for
this product line increased sharply during the second half of the year. The
majority of this equipment will not be shipped until 1997 due to the lead time
for these products. Gas compression equipment parts and service revenues
declined somewhat in 1996 as customers experiencing record demand levels delayed
preventive maintenance, outsourced inventory management, and purchased non-OEM
or refurbished parts. These changes placed additional pressure on price and
lead times. In response, several programs were initiated during 1996, including
the cost rationalization reflected in the nonrecurring/unusual charges. On a
favorable note, centrifugal air compressor revenues increased by 24% from 1995.
Continued strong demand in both industrial and air separation applications was
driven by economic growth, particularly in Southeast Asia and the Pacific Rim.
Order activity for the Compression and Power Equipment segment declined by 7%
from 1995 primarily due to the effect of large gas turbine and compressor
projects discussed previously. Due to the size and complex nature of these
projects, the specific timing of an order is very difficult to predict and can
cause significant fluctuations in the year-to-year order level for this
segment. Year-end backlog was $287.9 million, down 11% from year-end 1995.
COSTS AND EXPENSES
Cost of sales (exclusive of depreciation and amortization) of $1,010.6
million in 1996 increased by $128.8 million, or 15%, compared with $881.8
million in 1995. This increase was primarily the result of the previously
discussed revenue growth, partially offset by several factors. As discussed
above, revenues increased by 23% in the Petroleum Production Equipment segment
and 19% in the Compression and Power Equipment segment, while cost of sales
increased 11% and 20%, respectively. This resulted in a gross margin percentage
(defined as revenues less cost of sales as a percentage of revenues) of 28.6%
for the Petroleum Production Equipment segment, compared to 20.6% in 1995. This
increase resulted from improved pricing, several very low margin projects
shipped during the first half of 1995 that did not recur in 1996, the leveraging
of various manufacturing support costs that are relatively fixed in the
short-term, and cost reduction programs. For the Compression and Power
Equipment segment, the gross margin percentage remained essentially flat at
25.2% in 1996 versus 25.6% in 1995. This was the result of several offsetting
factors. Pricing pressure in the very competitive gas turbine and compressor
project business and in the aftermarket for gas compression equipment
replacement parts was only partially offset by modest price increases in the
centrifugal air compressor business. Also contributing to the decline was the
year-to-year decrease in higher margin gas compression equipment aftermarket
parts and service revenues. Providing an offset were increased production
levels during 1996 which allowed the leveraging of various manufacturing support
costs and the fourth quarter effect of the cost rationalization program that
will fully benefit 1997.
Depreciation and amortization decreased by $9.3 million, from $71.7
million in 1995 to $62.4 million in 1996, primarily in the Petroleum Production
Equipment segment. This decline was largely due to the effect on amortization
of the $441.0 million goodwill write-off recorded in 1995, as discussed in Note
3 of the Notes to Consolidated Financial Statements, and relatively low capital
expenditures during the second half of 1995 and the first three quarters of
1996. Providing a partial offset is the additional depreciation and
amortization related to the Ingram Cactus acquisition.
Selling and administrative expenses increased by $13.9 million, or 8%,
from $181.1 million in 1995 to $195.0 million in 1996. This increase was in the
Petroleum Production Equipment segment and related to the higher revenue levels,
the Ingram Cactus acquisition and the Company's conscious effort to improve its
market presence. Providing a partial offset were ongoing cost control programs,
including lower employment levels, in the Compression and Power Equipment
segment. General corporate expenses declined slightly from 1995 to 1996. As a
percentage of revenues, selling and administrative costs for the Company
decreased from 15.8% in 1995 to 14.1% in 1996. The Petroleum Production
Equipment segment decreased from 15.3% to 14.9%, while the Compression and Power
Equipment segment declined from 14.4% to 11.3%.
Reflecting the various factors discussed above, operating income
(defined as earnings before nonrecurring/unusual items, corporate expenses,
interest and taxes) totaled $129.2 million for the Company, an increase of
$111.8 million from 1995. The Petroleum Production Equipment segment improved
from a loss of $12.6 million in 1995 to income of $71.6 million in 1996, while
the Compression and Power Equipment segment improved from $30.0 million in 1995
to $57.6 million in 1996.
18
<PAGE> 3
Interest expense decreased from $23.3 million in 1995 to $20.9 million
in 1996 due to a reduction in the average debt level and lower interest rates.
During 1995 debt declined from a fixed $375.0 million allocation from Cooper
for the first half of the year to $264.5 million at year-end. Debt increased
to $394.6 million at year-end 1996 due to acquisitions totaling $113.9 million
for various assets of Ingram Cactus Company, Tundra Valve & Wellhead, and ENOX
Technologies, Inc., and additional working capital requirements in support of
the revenue growth. Average interest rates in 1996 were 6.4% compared to 6.7%
in 1995.
Income taxes, excluding the effect on taxes of the nonrecurring/unusual
pre-tax charges, was an expense of $30.0 million in 1996. This compares to a
credit of $0.4 million in 1995, which excludes both the effect on taxes of the
nonrecurring or unusual charges as well as the unusual provision adjustments
which are discussed in Note 13 of the Notes to Consolidated Financial
Statements. The Company's effective tax rate for 1996 was 30.2% compared with
overall U.S., including state and local, and foreign statutory rates of
approximately 38%. The Company's favorable rate primarily reflects the absence
of tax expense on the 1996 earnings of several international operations. In
years prior to 1996 these same operations had taxable losses which were not
tax-benefited. The recognition of these benefits in 1996 then eliminated the
tax expense that would otherwise have occurred.
1995 COMPARED TO 1994
Cooper Cameron Corporation had a net loss of $500.1 million, or $19.87
per share, for the twelve months ended December 31, 1995 compared to a net loss
of $3.7 million, or $.15 per share on a pro forma basis, for the same period in
1994. The full year 1995 loss includes $482.5 million pre-tax of nonrecurring
or unusual charges explained in Note 3 of the Notes to Consolidated Financial
Statements. The largest item included in the $482.5 million charge was a
$441.0 million reduction in goodwill recorded with respect to the Cameron
portion of the Company's Petroleum Production Equipment segment. Although this
reduction occurred as a direct result of a change in the Company's method of
testing for goodwill impairment, the change was made because management
believed that the amount of goodwill reflected with respect to Cameron was in
excess of the fair market value of this business' actual going-concern
goodwill. The Cameron business had a large operating loss in 1994 and a
smaller loss in 1995. While the projections indicated that Cameron would
return to profitability in 1996 and improve further in future years, the
cyclical nature of the business suggested that future downturns could also be
expected. As a result, cash flow projections based on an assumed 4% annual
growth rate applied to average actual and projected earnings or losses for 1994
through 1999 were developed which indicated that, while the goodwill was not
impaired on an undiscounted basis, utilizing a more conservative discounted
cash flow evaluation resulted in a reduced goodwill amount that was more nearly
in line with management's assessment of current actual going-concern values.
The various items comprising the $41.5 million residual charge are described in
detail in Note 3 of the Notes to Consolidated Financial Statements. While
certain of the items such as the receivable reserve related to customers in
Iran and the Venezuelan translation loss are not expected to have any direct
future earnings benefit, the goodwill write-down and the reduction in the
carrying value of certain fixed assets is expected to reduce future years
depreciation and amortization expense by approximately $13.8 million, while the
$4.8 million of severance and the $1.3 million of other costs are expected to
generate annual earnings and cash flow savings of approximately $12.9 million
per year in addition to approximately $2.8 million of annual operating and
interest savings which will result from the sales of the Richmond foundry and
Wheeling Machine Products. While the majority of the actions to which the
reorganization and restructuring charges relate were completed during 1995, all
of the actions were completed by the end of 1996. Additionally, the Company's
tax provision reflects several unusual items as described in Note 13 of the
Notes to Consolidated Financial Statements. Excluding these
nonrecurring/unusual items and the tax provision adjustment, the net loss for
1995 would have been $13.5 million, or $.54 per share. The remainder of this
discussion will be based on the Company's results exclusive of these
nonrecurring/unusual items.
Operating income (defined as earnings before nonrecurring/unusual items,
corporate expenses, interest and taxes) totaled $17.4 million for the year,
reflecting a loss of $12.6 million in the Petroleum Production Equipment
segment and income of $30.0 million in the Compression and Power Equipment
segment. Due to the lead time of many of the Company's products, the
improvement in market conditions which began in the second half of 1994 and
continued through 1995 was largely not reflected in Cooper Cameron's 1995
financial performance until the second half of the year. Operating results for
the first half of 1995 was a loss of $19.8 million, comprised of a loss of
$21.6 million in the Petroleum Production Equipment segment and income of $1.8
million in the Compression and Power Equipment segment. For the second half of
the year, operating income improved to $37.2 million, with $9.0 million of
income in Petroleum Production Equipment and $28.2 million in Compression and
Power Equipment. The discussion of full year 1995 results compared to full
year 1994 follows.
REVENUES
Revenues for 1995 totaled $1,144.0 million, an increase of 3% from the
$1,110.1 million in 1994. This increase was due primarily to the effect of oil
prices, which improved during the second half of 1994 and then remained
relatively stable during most of 1995. This trend in oil prices resulted in
stronger international markets in the Petroleum Production Equipment segment.
Providing a partial offset was a steep decline in natural gas prices during the
second half of 1994 followed by stable although relatively low prices during
the first three quarters of 1995. This trend resulted in weaker North American
markets in the Compression and Power Equipment segment. Market conditions
improved with increased natural gas prices in the fourth quarter of 1995 and
strong international gas turbine and compressor project business which began
late in the third quarter, but there was little effect on 1995's revenues due
to the manufacturing lead time of the Company's products. The Company's
backlog, defined as firm customer orders for which a purchase order has been
received, satisfactory credit or financing arrangements exist and delivery is
scheduled, ended the year at $588.1 million, an increase of 27% from the $464.6
million at year-end 1994.
19
<PAGE> 4
The Petroleum Production Equipment segment's revenues of $648.1 million
increased 15% over 1994 revenues of $562.7 million. In addition to the oil
price-related improvement in international markets, this segment is also
participating in several large development and production projects in the Gulf
of Mexico. The North American markets, excluding major Gulf of Mexico
projects, was slower to improve, however, due to relatively low natural gas
prices during most of 1995. Major project order activity was strongest in the
first quarter of 1995, particularly in the North Sea, but delivery of these
orders did not begin until late in the year, with most of the equipment to be
delivered in 1996. Although major project orders slowed after the first
quarter, order activity for the year was still 13% above the 1994 level. Year-
end 1995 backlog for this segment was $264.5 million, an increase of 8% from
year-end 1994.
Revenues for the Compression and Power Equipment segment of $493.6
million declined by 10% from $546.0 million in 1994. This decline was the
result of the weak natural gas prices discussed above and customer delays in
placing international gas turbine and compressor project orders. The U.S. and
Canadian markets for natural gas compression equipment, which tend to be
largely driven by the price of natural gas, were very weak through the first
three quarters of 1995. Additionally, many of the domestic projects in 1995
were in lower horsepower ranges where certain of the Company's newer product
offerings did not gain full market acceptance until the second half of the
year. Also, major international gas turbine and compressor project orders were
very slow to close until late in the third quarter of 1995. Providing a
partial offset to this decline was continuing strong demand for centrifugal air
compressors in both the air separation and industrial air compressor
applications. As a result, sales of these products increased by approximately
$20 million year-to-year. Segment backlog ended the year at $323.6 million, an
improvement of 47% from 1994 year-end.
COSTS AND EXPENSES
Cost of sales (exclusive of depreciation and amortization) of $881.8
million in 1995 increased by $43.2 million, or 5%, compared with $838.6 million
in 1994. This increase was primarily the result of higher revenues and a
product mix shift between segments. As discussed above, revenues increased by
15% in the relatively lower-margin Petroleum Production Equipment segment while
there was a 10% revenue decline in the higher-margin Compression and Power
Equipment segment. For the Petroleum Production Equipment segment, the gross
margin percent (defined as revenues less cost of sales as a percentage of
revenues) increased from 19.3% in 1994 to 20.6% in 1995. This improvement was
largely the result of cost reduction programs and some firming in pricing
during 1995 after the very weak market conditions experienced in 1994. For the
Compression and Power Equipment segment, the gross margin percent decreased
from 29.6% in 1994 to 25.6% in 1995. This decline reflects lower production
levels caused by reduced orders in the second half of 1994 and the first half
of 1995, resulting in less absorption of manufacturing costs that are
relatively fixed in the short-term. Also contributing to the decline was lower
replacement parts margins caused by a reduction in higher-margin international
parts shipments and very competitive pricing in the North American market.
Depreciation and amortization increased by $1.5 million from $70.2
million in 1994 to $71.7 million in 1995 with both segments reflecting
increases. This increase results not only from the effect of normal capital
additions but also from the classification, for all of 1995 and future periods,
of rental equipment amortization as depreciation rather than cost of sales and
an acceleration of depreciation charges related to certain fixed asset fair
market value adjustments recorded at the time of the acquisition of Cameron
Iron Works, Inc. by Cooper. Providing a partial offset is the reduction in
third and fourth quarter 1995 amortization resulting from the goodwill write-
off in the second quarter of 1995. (See Note 3 of the Notes to Consolidated
Financial Statements for further information.)
Selling and administrative expenses increased by $3.2 million, or 2%,
from $177.9 million in 1994 to $181.1 million in 1995. The increase results
primarily from the effects of inflation and some additional costs associated
with the higher revenues, including commissions, which vary with revenue
levels. Providing a partial offset were ongoing cost control programs,
including lower employment levels. As a percentage of sales, selling and
administrative costs for the Company declined from 16.0% in 1994 to 15.8% in
1995. The Petroleum Production Equipment segment decreased from 17.4% of
revenues to 15.3%, while the Compression and Power Equipment segment increased
from 13.1% of revenues to 14.4% as cost reductions were unable to match the
revenue decline.
Reflecting the various factors discussed above, operating income for the
Petroleum Production Equipment segment improved from a loss of $35.6 million in
1994 to a loss of $12.6 million in 1995, while the Compression and Power
Equipment segment declined from $66.1 million of income in 1994 to $30.0
million in 1995.
Interest expense increased from $20.0 million in 1994 to $23.3 million
in 1995. This increase was the result of higher interest rates on the
Company's debt, partially offset by a reduction in the average debt level
during the second half of 1995. For all of 1994 and the first half of 1995,
interest expense was based on a fixed $375 million debt allocation from Cooper,
while debt was reduced from the initial $375 million level at the beginning of
the third quarter of 1995 to $264.5 million at year-end. Average interest
rates in 1995 were 6.7% compared to 5.2% in 1994.
Income taxes, excluding both the effect on taxes of the
nonrecurring/unusual pre-tax charges as well as the unusual provision
adjustments which are discussed in Note 13 of the Notes to Consolidated
Financial Statements, was a credit of $0.4 million in 1995. This compares with
$7.1 million of expense in 1994. Because the Company had a pre-tax loss of
$13.9 million in 1995 (excluding the nonrecurring/unusual pre-tax charges)
compared with a profit of $3.3 million in 1994, the effect of items, such as
goodwill, which are not deductible in computing tax expense is less significant
in 1995 than 1994. Also affecting the change in taxes was a lower amount of
goodwill amortization in 1995 than in 1994 as a result of the goodwill write-
off recorded in June of 1995.
20
<PAGE> 5
While Cooper Cameron did not become a separate, publicly-traded company
until June 30, 1995, the earnings per share amounts for 1994 have been
determined based on a pro forma assumption that 25 million shares would have
been outstanding at each date. Similarly, earnings per share amounts for the
year ended December 31, 1995 are based on actual common and common equivalent
shares outstanding during the third and fourth quarters combined with a
constant 25 million shares up through June 30, 1995.
PRICING AND VOLUME
The Company believes that during 1996 unit volumes increased in both the
Petroleum Production Equipment and Compression and Power Equipment segments.
During 1995, unit volumes are estimated to have increased in the Petroleum
Production Equipment segment and decreased in the Compression and Power
Equipment segment.
In the Petroleum Production Equipment segment, price increases slightly
in excess of cost increases were implemented during 1996, while small price
increases that generally recovered cost increases were realized in 1995. In
the Compression and Power Equipment segment, prices declined slightly during
1996 and 1995 due to the competitive condition of the natural gas compression
equipment markets in 1996 and the generally weak natural gas compression
equipment markets throughout most of 1995.
LIQUIDITY AND CAPITAL RESOURCES
Prior to June 30, 1995, the Company's operations participated in
Cooper's consolidated worldwide debt and cash management system. As a result,
the Company's financial statements reflected up through June 30, 1995 the
transfer to Cooper of all funds not otherwise utilized in the business and a
constant $375 million of allocated indebtedness. At the time of the Exchange
Offer, the Company entered into a third party Credit Agreement which is
described in Note 11 of the Notes to Consolidated Financial Statements.
Subsequent to June 30, 1995, the Company's liquidity and capital resources
reflect its stand-alone operations. During its first six months of stand-alone
operations, the Company was able to substantially improve its overall liquidity
by reducing total indebtedness from $375 million to $264.5 million. Aided by
improving earnings, and prior to the mid-June 1996 acquisition of Ingram
Cactus, the Company continued to generate excess cash flows and reduced debt by
a further $15 million. In the balance of 1996, in addition to the $100 million
cost of the Ingram Cactus acquisition and in spite of continued earnings
growth, the company's total debt increased by approximately $45 million. This
increase is primarily attributable to working capital requirements associated
with long lead time equipment orders within the Compression and Power Equipment
segment. At December 31, 1996 this segment had over $65 million of receivables
recognized under the percentage of completion method, of which $37 million had
not yet been billed to customers. As a result, the Company currently
anticipates little or no reduction in total debt during the first quarter,
followed by more substantial declines during the second quarter and throughout
the balance of 1997. Because of the cyclical nature of the industry in which
the Company competes and the long time period from when the Company first
receives a large equipment order until the product can be manufactured,
delivered and the receivable collected, the Company's liquidity is susceptible
to fairly large swings in relatively short periods of time. As a result, while
the Company believes that its operating results will improve again during 1997
and that this should allow year-over-year debt reductions, the Company has
substantially increased its planned 1997 capital spending and continues to
actively seek opportunities to grow the business through acquisitions. As a
consequence, unanticipated growth in large orders with long lead times as well
as further overall market expansion could change the timing and magnitude of
the reductions that are currently expected.
WORKING CAPITAL
Operating working capital is defined as receivables and inventories less
accounts payable and accrued liabilities, excluding the effect of foreign
currency translation, acquisitions and divestitures, and the effect of the
nonrecurring/unusual charges discussed above.
During 1996, operating working capital increased $121.8 million.
Receivables increased as a result of higher revenues, including $65.4 million
recognized under the percentage of completion method of accounting at year-end
1996. This relates to large gas turbine and compressor projects in the
Compression and Power Equipment segment. At year-end 1995, there was no
revenue recognized under percentage of completion accounting. Inventories
increased largely in the Petroleum Production Equipment segment as a result of
the Ingram Cactus acquisition and in support of the significantly higher year-
end backlog level. The increase in accounts payable and accrued liabilities
reflected the higher business levels, as well as continuing focus on managing
the Company's payments to vendors.
During 1995, operating working capital decreased $99.4 million. Because
of various reclassifications during the year, including the large increase in
excess, obsolete and slow-moving inventory reserves discussed in Note 3 of the
Notes to Consolidated Financial Statements, only a portion of the year-to-year
decrease reflects actual cash flows. A $21.2 million receivable decline,
exclusive of a reclassification of $10.3 million of receivables from customers
in Iran as long-term, resulted from lower revenues in December of 1995 than in
1994 and improved collections during the year. The decrease in inventories
largely resulted from the reclassifications noted above, while the increase in
accounts payable and accrued liabilities reflected increased cash advances and
progress payments received from customers against orders in backlog as well as
increases in certain normal trade payables and operating accruals.
21
<PAGE> 6
During 1994, operating working capital decreased $5.7 million. The
decline in receivables was the result of lower revenues and an unusually high
receivable balance in 1993 due to the completion in the latter part of that
year of shipments of compression equipment for government-sponsored oil and gas
production projects in India. This decline more than offset increases in
inventories and decreases in accounts payable and accrued liabilities. The
increases in inventories and decreases in accounts payable and accrued
liabilities were due to the timing and stage of completion of various customer
orders.
CASH FLOWS
During 1996, cash flows from operating activities totaled $13.2 million,
proceeds from the sales of plant and equipment totaled $2.6 million, and funds
received from the exercise of stock options and other employee benefit plans
totaled $6.0 million. The Company expended $113.9 million on the acquisition
of certain assets of Ingram Cactus Company, Tundra Valve & Wellhead and ENOX
Technologies, Inc., $37.1 million on capital projects, and $1.2 million on the
purchase of treasury stock. This resulted in an increase in outstanding debt
of $130.1 million, leaving a cash residual of approximately $9.1 million.
During 1995, cash flows from operating activities totaled $142.3
million, proceeds from sales of plant and equipment totaled $5.5 million, and
proceeds from the sale of Wheeling were $14.2 million. The Company expended
$39.5 million on capital projects and reduced outstanding debt by $110.5
million, leaving a cash residual of approximately $12.1 million.
During 1994, cash flows from operating activities totaled $99.0 million
and proceeds from sales of plant and equipment totaled $5.8 million. The
Company expended $63.5 million on capital projects and transferred $42.6
million to Cooper.
22
<PAGE> 7
In connection with accounting for the acquisition of Cameron Iron Works
in 1989, which included the Cameron Oil Tool operations, the Company recorded,
to the extent appropriate, accruals for the costs of closing duplicate
facilities, severing redundant personnel and integrating the acquired business
into existing operations. Cash flow from operating activities for each of the
two years in the period ended December 31, 1995 is reduced by the amounts
actually expended and charged against the various accruals established in
connection with these activities. The following table reflects the remaining
accruals at the end of each period and the activity in the two-year period
ended December 31, 1995:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
- ---------------------------------------------------------------------
(DOLLARS IN MILLIONS) 1995 1994
- ---------------------------------------------------------------------
<S> <C> <C>
Systems Integration:
Beginning of period $ 1.3 $ 1.3
Spending (0.8) (1.6)
Reclassifications (0.5) 1.5
Translation -- 0.1
- ---------------------------------------------------------------------
End of Period $ -- $ 1.3
=====================================================================
Plant Shut-down and Realignment:
Beginning of period $ 10.4 $ 22.3
Spending (3.7) (14.7)
Reclassifications (7.2) 0.3
Translation 0.5 2.5
- ---------------------------------------------------------------------
End of Period $ -- $ 10.4
=====================================================================
Other Facility Relocations and Severance:
Beginning of period $ 0.4 $ 1.2
Spending (0.2) (0.9)
Reclassifications (0.2) 0.1
Translation -- --
- ---------------------------------------------------------------------
End of Period $ -- $ 0.4
=====================================================================
Other Realignment and Integration:
Beginning of period $ 0.1 $ 0.4
Spending -- (0.6)
Reclassifications (0.1) 0.3
Translation -- --
- ---------------------------------------------------------------------
End of Period $ -- $ 0.1
=====================================================================
</TABLE>
Systems Integration accruals represent costs for consolidation and
integration of the Cameron Division's computer hardware and software systems
into existing systems. Spending since acquisition has been for contract
programming, education and training, consulting and other implementation-
related projects. Capitalized costs, including purchased and internally
developed software, are amortized or depreciated over their useful lives. Such
costs are not included in the above table.
Plant Shut-down and Realignment accruals represent the costs for
consolidating facilities in order to eliminate excess manufacturing capacity in
both North America and Europe. The North American consolidation included
facilities in Mexico; Tyler, Texas; and Houston, Texas. In Europe, two
facilities were closed in the United Kingdom and consolidated into a third
facility as well as into operations in France. Spending since acquisition has
primarily been for employee severance or relocation, equipment and inventory
relocation and costs associated with plant closure and preparation for sale of
the associated redundant property.
Other Facility Relocations and Severance accruals primarily represent
the cost of employee severance or relocation relating to sales and marketing
staff and other headquarters personnel of the Cameron division, including
expatriates and sales agents. Other realignment and integration costs during
the two-year period were not material. Amounts with respect to other
acquisitions during the two-year period were not material to the Company.
During the two-year period ended December 31, 1995, none of these
accruals were reversed to income. Reclassifications during 1994 represent
revisions to the initial accruals based on updated estimates of the actual
costs to be incurred in each project. The reclassifications include $2.2
million in 1994 reclassified from other accrued liability accounts. At the end
of 1995, as discussed in Note 3 of the Notes to Consolidated Financial
Statements, the remaining accruals were reclassified to a reserve for excess,
obsolete and slow-moving inventory.
The above expenditures, as well as amounts spent in prior years, have
significantly reduced excess capacity and positioned the business to be able to
profitably participate in the growth of its primary markets.
23
<PAGE> 8
CAPITAL EXPENDITURES AND COMMITMENTS
Capital projects to reduce product costs, improve product quality,
increase manufacturing efficiency and operating flexibility, or expand
production capacity resulted in expenditures of $37.1 million in 1996 compared
with $39.5 million in 1995 and $63.5 million in 1994.
At December 31, 1996, internal commitments for capital expenditures
amounted to $58.2 million compared to $21 million at year-end 1995. The
commitments for 1997 include approximately $12.6 million for capacity
expansion, $37.6 million for machinery and equipment modernization and
enhancement, $3.2 million for various computer hardware and software projects,
$2.7 million for environmental projects, and $2.1 million for other items.
EFFECT OF INFLATION
During each year, inflation has had a relatively minor effect on the
Company's reported results of operations. This is true primarily for three
reasons. First, in recent years, the rate of inflation in the Company's
primary markets has been fairly low. Second, the Company makes extensive use
of the LIFO method of accounting for inventories. The LIFO method results in
current inventory costs being matched against current sales dollars, such that
inflation affects earnings on a current basis. Finally, many of the assets and
liabilities included in the Company's Consolidated Balance Sheets were recorded
in business combinations that were accounted for as purchases. At the time of
such acquisitions, the assets and liabilities were adjusted to a fair market
value and, therefore, the cumulative long-term effect of inflation is reduced.
ENVIRONMENTAL REMEDIATION
The cost of environmental remediation and compliance has not been an
item of material expense for the Company during any of the periods presented,
other than with respect to the Osborne Landfill in Grove City, Pennsylvania.
The Company's facility in Grove City disposed of wastes at the Osborne Landfill
from the early 1950s until 1978. Cooper, on behalf of the Company, developed a
remediation plan, which was accepted by the U. S. Environmental Protection
Agency as the preferred remedy for the site. Substantial amounts were expended
for this cleanup during 1996 with completion anticipated during 1997 in
compliance with the remediation plan and the order issued by the EPA in 1991.
The Company's balance sheet at December 31, 1996, includes accruals totaling
$5.6 million for environmental matters ($11.4 million at December 31, 1995).
Cooper Cameron has been identified as a potentially responsible party with
respect to ten sites designed for cleanup under the Comprehensive Environmental
Response Compensation and Liability Act ("CERCLA") or similar state laws.
Although estimated cleanup costs have not yet been made for certain of these
sites, the Company believes, based on its review and other factors, that the
costs relating to these sites will not have a material adverse effect on the
Company's results of operations, financial condition or liquidity. However, no
assurance can be given that the actual cost will not exceed the estimates of
the cleanup costs once determined.
OTHER
In various places in this Annual Report, including the information set
forth above in the Company's Management's Discussion and Analysis, there may be
indications of management's current expectations regarding the future results
of operations or financial condition of the Company. Such information, if any,
is based on current expectations regarding the markets affecting the Company
and other matters which can affect the Company's results of operations,
liquidity or financial condition. Because such information is based solely on
data currently available, it is subject to change as a result of changes in
conditions and should not therefore be viewed as assurance regarding the
Company's future performance. Additionally, the reader of this information
should be aware that the Company is not obliged to inform the reader of such
changes as they occur or make public indication of changes unless obliged under
applicable disclosure rules and regulations.
24
<PAGE> 9
REPORT OF INDEPENDENT AUDITORS
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
COOPER CAMERON CORPORATION
We have audited the accompanying consolidated balance sheets of Cooper
Cameron Corporation as of December 31, 1996 and 1995, the related statements of
consolidated results of operations, and consolidated cash flows for each of the
three years in the period ended December 31, 1996 and the statement of
consolidated changes in stockholders' equity for the period from June 30, 1995
to December 31, 1995 and the year ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Cooper Cameron Corporation at December 31, 1996 and 1995, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
As discussed in Note 3 of the Notes to Consolidated Financial
Statements, upon separating from its former parent in 1995, the Company adopted
a new method of evaluating goodwill for impairment.
/s/ ERNST & YOUNG LLP
Houston, Texas
January 29, 1997
25
<PAGE> 10
CONSOLIDATED RESULTS OF OPERATIONS
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
- -------------------------------------------------------------------------------------
1996 1995 1994
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 1,388,187 $ 1,144,035 $ 1,110,076
- -------------------------------------------------------------------------------------
Costs and expenses:
Cost of sales (exclusive of depreciation
and amortization) 1,010,558 881,798 838,575
Depreciation and amortization 62,480 71,754 70,233
Selling and administrative expenses 194,983 181,097 177,902
Interest expense 20,878 23,273 20,023
Provision for impairment of
goodwill -- 441,000 --
Nonrecurring/unusual charges 7,274 41,509 --
- -------------------------------------------------------------------------------------
1,296,173 1,640,431 1,106,733
- -------------------------------------------------------------------------------------
Income (loss) before income taxes 92,014 (496,396) 3,343
Income tax provision (27,830) (3,657) (7,089)
- -------------------------------------------------------------------------------------
Net income (loss) $ 64,184 $ (500,053) $ (3,746)
======================================================================================
Earnings (loss) per share (pro forma
prior to June 30, 1995) $ 2.41 $ (19.87) $ (0.15)
======================================================================================
</TABLE>
The Notes to Consolidated Financial Statements are an integral part of these
statements.
26
<PAGE> 11
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except shares and per share data)
<TABLE>
<CAPTION>
December 31,
- ------------------------------------------------------------------------------------
1996 1995
- ------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 9,057 $ 12,074
Receivables, net 360,814 192,170
Inventories, net 404,268 308,456
Other 24,092 16,056
- ------------------------------------------------------------------------------------
Total current assets 798,231 528,756
- ------------------------------------------------------------------------------------
Plant and equipment, at cost less accumulated
depreciation 369,528 346,583
Intangibles, less accumulated amortization 259,317 233,257
Other assets 41,846 26,809
- ------------------------------------------------------------------------------------
Total assets $ 1,468,922 $ 1,135,405
- ------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current maturities of long-term debt $ 47,100 $ 29,700
Accounts payable and accrued liabilities 391,294 283,973
Accrued income taxes 6,447 3,036
- ------------------------------------------------------------------------------------
Total current liabilities 444,841 316,709
- ------------------------------------------------------------------------------------
Long-term debt 347,548 234,841
Postretirement benefits other than pensions 97,232 103,382
Deferred income taxes 31,268 22,066
Other long-term liabilities 31,905 34,819
- ------------------------------------------------------------------------------------
Total liabilities 952,794 711,817
- ------------------------------------------------------------------------------------
Stockholders' equity:
Common stock, par value $.01 per share, 75,000,000
shares authorized, 25,617,727 shares issued
(25,146,232 at December 31, 1995) 256 251
Preferred stock, par value $.01 per share, 10,000,000
shares authorized, no shares issued or outstanding -- --
Capital in excess of par value 873,933 859,671
Minimum pension liability (2,642) (5,600)
Translation component 43,274 31,517
Retained deficit (including $441,000 charge on
June 30, 1995 related to goodwill impairment) (398,067) (462,251)
Less: Treasury stock - 11,349 shares at cost (626) --
- ------------------------------------------------------------------------------------
Total stockholders' equity 516,128 423,588
- ------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 1,468,922 $ 1,135,405
====================================================================================
</TABLE>
The Notes to Consolidated Financial Statements are an integral part of these
statements.
27
<PAGE> 12
CONSOLIDATED CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
- --------------------------------------------------------------------------------------------------------
1996 1995(1) 1994(1)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 64,184 $(500,053) $ (3,746)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation 48,129 51,120 43,505
Amortization 14,351 20,634 26,728
Provision for impairment of goodwill -- 441,000 --
Nonrecurring/unusual charges 7,274 38,634 --
Allocation of interest and general and adminis-
trative expenses from Cooper Industries, Inc.
through June 30, 1995 (net of tax) -- 9,539 17,130
Deferred income taxes 17,449 2,338 24,828
Changes in assets and liabilities, net of translation and
effects of acquisitions:
Receivables (131,423) 31,473 76,110
Inventories (45,458) 36,994 (26,514)
Accounts payable and accrued liabilities 55,073 29,617 (46,522)
Other assets and liabilities, net (16,365) (18,949) (12,480)
- --------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 13,214 142,347 99,039
- --------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures and proceeds from sales of plant and
equipment, net (34,459) (33,996) (57,756)
Acquisitions (113,942) -- --
Net proceeds from the sale of Wheeling Machine Products -- 14,191 --
- --------------------------------------------------------------------------------------------------------
Net cash used for investing activities (148,401) (19,805) (57,756)
- --------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Long-term borrowings 100,000 334,062 --
Loan repaid to Cooper Industries, Inc. -- (334,062) --
Loan borrowings (repayments), net 30,107 (110,459) --
Activity under stock option and other benefit plans 5,989 -- --
Purchase of treasury stock (1,240) -- --
Transferred (to) from Cooper Industries, Inc. -- 971 (42,627)
- --------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing activities 134,856 (109,488) (42,627)
- --------------------------------------------------------------------------------------------------------
Effect of translation on cash (2,686) (980) 1,344
- --------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents (3,017) 12,074 --
- --------------------------------------------------------------------------------------------------------
Cash and cash equivalents, beginning of year 12,074 -- --
- --------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 9,057 $ 12,074 $ --
========================================================================================================
</TABLE>
(1) Revised for comparability with the 1996 presentation.
The Notes to Consolidated Financial Statements are an integral part of these
statements.
28
<PAGE> 13
CONSOLIDATED CHANGES IN STOCKHOLDERS' EQUITY
For the period from June 30, 1995 to December 31, 1995 and the year ended
December 31, 1996
(dollars in thousands)
<TABLE>
<CAPTION>
CAPITAL IN MINIMUM
COMMON EXCESS OF PENSION TRANSLATION RETAINED TREASURY
STOCK PAR VALUE LIABILITY COMPONENT DEFICIT STOCK
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Opening equity balances following
split-off on June 30, 1995(1) $ 250 $ 856,713 $ (3,683) $ 37,901 $ -- $ --
Charge to operations on June 30, 1995
related to goodwill impairment (441,000)
Operating loss from July 1, 1995 through
December 31, 1995 (21,251)
Common stock issued for
employee retirement savings plan 1 2,958
Adjustment for minimum pension liability (1,917)
Translation loss (6,384)
- -------------------------------------------------------------------------------------------------------------------
Balance - December 31, 1995 251 859,671 (5,600) 31,517 (462,251) --
Net income 64,184
Purchase of treasury stock (1,240)
Common stock issued under stock option
and other employee benefit plans 5 12,397 614
Tax benefit of employee stock benefit
plan transactions 1,865
Adjustment for minimum pension liability 2,958
Translation gain 11,757
- -------------------------------------------------------------------------------------------------------------------
BALANCE - DECEMBER 31, 1996 $ 256 $ 873,933 $ (2,642) $ 43,274 $(398,067) $ (626)
===================================================================================================================
</TABLE>
(1) Reflects the effect of the final settlement reached with Cooper during the
fourth quarter of 1995. See Note 15 of the Notes to Consolidated Financial
Statements for additional information related to periods prior to July 1,
1995.
The Notes to Consolidated Financial Statements are an integral part of these
statements.
29
<PAGE> 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: COOPER CAMERON CORPORATION
Cooper Cameron Corporation, hereinafter referred to as "the Company",
became a separate public company effective June 30, 1995 when Cooper
Industries, Inc. ("Cooper") completed an exchange offer, pursuant to which
21,375,000 shares of the Company's Common stock were issued to those holders of
Cooper Common stock who had elected to participate in the exchange offer.
Cooper retained 3,625,000 shares of the Company's Common stock and was one of
the Company's principal stockholders until the third quarter of 1996 when
Cooper sold essentially all shares it retained. The Company's operations are
comprised of two segments -- the Petroleum Production Equipment segment and the
Compression and Power Equipment segment (see Note 16 of the Notes to
Consolidated Financial Statements for further segment information).
Although the Company was not a separate public company prior to June 30,
1995, the financial statements for periods prior to this date are presented as
if the Company had existed as an entity separate from its parent, Cooper, and
include the assets, liabilities, revenues and expenses that were directly
related to the Company's operations.
Because the majority of the Company's domestic results and, in certain
cases, foreign results were included in the consolidated financial statements
of Cooper on a divisional basis, there are no separate meaningful historical
equity accounts for the Company prior to June 30, 1995. Additionally, for
periods prior to June 30, 1995, amounts of Cooper's general corporate,
accounting, tax, legal and other administrative costs that were not directly
attributable to the operations of the Company were allocated to the Company.
Management believes the allocation method used provided the Company with a
reasonable amount of such expenses.
For periods prior to June 30, 1995, in addition to a small amount of
domestic debt related to industrial revenue bonds, approximately $370,685,000
of Cooper's long-term debt and related interest were allocated to the Company
in its historical financial statements. Because the Company was fully
integrated into Cooper's worldwide cash management system, all of its cash
requirements were provided by Cooper and any excess cash generated by the
Company was transferred to Cooper. As a result, $375,000,000 of total
indebtedness was held constant from year-to-year in the Company's consolidated
financial statements. The financial information included herein for periods
prior to June 30, 1995 may not necessarily be indicative of the results of
operations or cash flows of the Company in the future or what the results of
operations or cash flows of the Company would have been if it had been a
separate, stand-alone company during all periods presented.
NOTE 2: SUMMARY OF MAJOR ACCOUNTING POLICIES
Estimates in Financial Statements -- The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
Principles of Consolidation -- The consolidated financial statements
include the accounts of the Company and all majority-owned subsidiaries.
Investments of 50% or less in affiliated companies are accounted for on the
equity method.
Revenue Recognition -- Revenue is recognized at the time of shipment or
the performance of services except in the case of certain larger, long lead
time orders in the Compression and Power Equipment segment which are accounted
for using the percentage of completion method. Under this method, revenue is
recognized as work progresses in the ratio that costs incurred bear to
estimated total costs. Expected losses on contracts in progress are charged to
operations currently. The aggregate of costs incurred reduces net inventories
while the revenue recognized is shown as a receivable.
Inventories -- Inventories are carried at cost or, if lower, net
realizable value. On the basis of current costs, 65% of inventories in 1996
and 64% in 1995 are carried on the last-in, first-out (LIFO) method. The
remaining inventories are carried on the first-in, first-out (FIFO) method.
Plant and Equipment -- Depreciation is provided over the estimated
useful lives of the related assets using primarily the straight-line method.
This method is applied to group asset accounts which in general have the
following lives: buildings - 10 to 40 years; machinery and equipment - 3 to 18
years; and tooling, dies, patterns, etc. - 5 to 10 years.
30
<PAGE> 15
Intangibles -- Intangibles consist primarily of goodwill related to
purchase acquisitions. With minor exceptions, the goodwill is being amortized
over 40 years from respective acquisition dates. The carrying value of the
Company's goodwill is reviewed by division at least annually or whenever there
are indications that the goodwill may be impaired. See Note 3 for information
regarding a change during 1995 in the Company's method of calculating goodwill
for impairment. Effective January 1, 1996, the Company adopted the provisions
of Statement of Financial Accounting Standards (SFAS) No. 121 (Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of). Since the Company's previous policy for the evaluation of long-lived
assets was more conservative than the approach required under SFAS No. 121,
there was no effect on the Company at the time of adopting the new standard.
Income Taxes -- Income taxes are provided as if the Company was a stand-
alone business filing a separate tax return during each period presented prior
to June 30, 1995. Income tax expense includes U.S. and foreign income taxes,
including U.S. federal taxes on undistributed earnings of foreign subsidiaries
to the extent such earnings are planned to be remitted.
Environmental Remediation and Compliance -- Environmental remediation
costs are accrued, except to the extent costs can be capitalized, based on
estimates of known environmental remediation exposures. Environmental
compliance costs include maintenance and operating costs with respect to
pollution control facilities, costs of ongoing monitoring programs and similar
costs. Such costs are expensed as incurred. Capitalized environmental costs
are depreciated generally utilizing a 15-year life.
Product Warranty -- Estimated warranty expense is accrued either at the
time of sale or in certain cases where specific warranty problems are
encountered. Adjustments to the accruals are made periodically to reflect
actual experience.
Stock Options -- Options to purchase Common stock are granted to certain
executive officers and key management personnel at not less than 100% of the
market value of the Company's stock at the date of grant. As permitted, no
compensation expense is recognized by the Company upon grant of options.
Cash Equivalents -- For purposes of the Consolidated Cash Flows
statement, the Company considers all investments purchased with original
maturities of three months or less to be cash equivalents.
NOTE 3: NONRECURRING/UNUSUAL CHARGES
During the year ended December 31, 1996, the Cooper Energy Services
division of the Compression and Power Equipment segment recorded restructuring
charges covering severance, relocation and other costs associated with changes
both at the division's manufacturing facility in Grove City, Pennsylvania and
the division's headquarters in Mt. Vernon, Ohio. Additionally, the Petroleum
Production Equipment segment incurred during 1996 certain one-time costs of
integrating newly acquired operations with the operations of the Cameron
division. No significant additional charges relating to these projects are
expected to be incurred during 1997.
During 1995, the Company recorded approximately $482,509,000 of unusual
charges including a $441,000,000 write-down of goodwill and $41,509,000 of
other items. The goodwill write-down, which was recorded concurrent with the
Company becoming a separate stand-alone entity on June 30, 1995, resulted from
a change in the Company's accounting method of evaluating long-lived assets,
including goodwill, for impairment. Prior to that date, long-lived assets were
evaluated utilizing undiscounted cash flows in accordance with the practice
followed by the Company's former parent. Upon becoming a separate entity, the
Company began evaluating its long-lived assets for impairment based on
discounted cash flows. This write-down was related entirely to the Cameron
division of the Petroleum Production Equipment segment. Recorded goodwill with
respect to the other divisions and the remaining goodwill with respect to the
Cameron division is not impaired.
Nonrecurring/unusual charges other than the goodwill write-down consist
of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
- ---------------------------------------------------------------------------------------
(dollars in thousands) 1996 1995
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Reorganization and restructuring of various operations $ 4,169 $10,109
Acquisition integration costs 3,105 --
Receivable reserve related to customers in Iran -- 16,890
Loss on sale of Richmond foundry -- 7,310
Translation loss from currency devaluation in Venezuela -- 5,709
Loss on sale of Wheeling Machine Products -- 1,491
- ---------------------------------------------------------------------------------------
Total $ 7,274 $41,509
=======================================================================================
</TABLE>
31
<PAGE> 16
The 1995 reorganization and restructuring charge includes $4,823,000 of
severance, $4,026,000 of reduction in the carrying value of various fixed
assets which will no longer be utilized in the Company's operations and
$1,260,000 of various other costs.
The receivable reserve, which was established in May 1995, reflected the
Company's desire to conservatively value these receivables in light of the
Clinton Administration's May 8, 1995 implementation of an economic embargo
against Iran. Although the Company has received payments from customers in
Iran, the political and economic environment continues to be unstable and, as a
result, substantially all of the uninsured receivables outstanding at December
31, 1996 continue to be fully reserved.
In late December 1995, the Company entered into a definitive agreement
regarding the sale of the Cameron division's Richmond, Texas, foundry. In
contemplation of this sale, which was consummated during the first quarter of
1996, the Company wrote-down the assets covered by the sale agreement and
recorded other costs associated with the sale. During 1995, the foundry had an
operating loss of approximately $2,700,000.
The 1995 currency devaluation loss resulted from the December 1995
government-announced devaluation of the Bolivar. Further declines in the value
of the Bolivar during 1996 were not material and were charged against
operations.
In November 1995, the Company consummated the sale of its Wheeling
Machine Products division. This business, which was included in the Company's
Petroleum Production Equipment segment, had 1995 sales of approximately
$14,000,000 and a small operating profit. The $14,191,000 of net cash sales
proceeds were utilized to reduce outstanding indebtedness.
Of the $41,509,000 charge described above for 1995, only approximately
$7,796,000 required the utilization of cash, of which approximately $2,875,000
was expended during 1995 and the balance in 1996. In addition to the above
items, the Company also reviewed all reserves and accruals that were recorded
as of June 30, 1995 in accordance with Cooper's various policies, procedures
and practices. This review identified a number of accruals related to plant or
other facility shutdowns, reorganizations or restructurings which the Company
will not be undertaking, a severance accrual recorded in connection with the
Company's adoption of SFAS No. 112 which was no longer appropriate, an excess
pension accrual and various other items which were no longer appropriate. The
Company also reviewed all of its inventories on a worldwide basis and
determined that, while the inventories net of LIFO reserves were appropriately
stated at the lower of cost or market, a significant amount of inventories
existed which were in excess of levels which current management believed to be
appropriate. As a result, the various excess reserves and accruals described
above, plus an additional charge of approximately $4,000,000 against the
Company's fourth quarter 1995 results, were utilized to establish approximately
$34,500,000 of additional obsolete, excess and slow-moving inventory reserves
at December 31, 1995. During 1996, the Company disposed of a large portion of
this inventory either by sale at reduced prices or, in certain instances,
physical scrapping.
NOTE 4: ACQUISITIONS
On June 14, 1996, the Company purchased the assets of Ingram Cactus
Company for approximately $100,511,000 in cash, including acquisition costs,
(subject to a pending adjustment for a change in working capital) and the
assumption of certain operating liabilities. The acquired operations, which
have been integrated into Cameron, manufacture and sell wellheads, surface
systems, valves and actuators used primarily in onshore oil and gas production
operations. The acquisition, funded primarily by long-term borrowings, has
been accounted for under the purchase method and, therefore, the results of the
acquired business are combined with the Company's results only from the
acquisition date forward. Additional goodwill of approximately $27,218,000 was
recorded during 1996 but is subject to revision during 1997 when the purchase
price and its allocation are finalized. During 1995, Ingram Cactus had
revenues and earnings before taxes of approximately $105,000,000 and
$7,500,000, respectively.
During October 1996, the Company made two acquisitions for a combined
cost of approximately $13,431,000. In the first, the Company acquired various
assets of ENOX Technologies, Inc., a Boston-based manufacturer of ignition
systems, which has been combined into the existing operations of the
Compression and Power Equipment segment. The second acquisition, which is part
of the Petroleum Production Equipment segment, involved certain assets and
liabilities of Tundra Valve & Wellhead Corp., a Canadian manufacturer of
wellheads, trees and valves. Both acquisitions were accounted for under the
purchase method and resulted in a preliminary amount of additional goodwill of
$8,763,000.
32
<PAGE> 17
NOTE 5: RECEIVABLES
Current and long-term receivables consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
- -------------------------------------------------------------------------------
(dollars in thousands) 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
Trade receivables $ 294,519 $ 194,893
Receivables under the percentage of completion method
($28,770 billed at December 31, 1996) 65,370 --
Other receivables 12,666 10,163(1)
Allowance for doubtful accounts (11,741) (12,886)
- -------------------------------------------------------------------------------
$ 360,814 $ 192,170
===============================================================================
Noncurrent Assets:
Long-term receivables $ 6,608 $ 10,809
Allowance for doubtful accounts (5,512) (10,336)
- -------------------------------------------------------------------------------
$ 1,096 $ 473
===============================================================================
</TABLE>
(1) Revised for comparability with 1996.
Additions to the allowance for doubtful accounts of $373,000, $18,511,000
and $525,000 have been charged to expense for the years ended December 31,
1996, 1995 and 1994, respectively. A total of $16,890,000 of the expense
charged during 1995 is reflected on the Consolidated Results of Operations
statement as a nonrecurring/unusual charge (see Note 3 of the Notes to
Consolidated Financial Statements).
NOTE 6: INVENTORIES
<TABLE>
<CAPTION>
DECEMBER 31,
- -------------------------------------------------------------------------------
(dollars in thousands) 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
Raw materials $ 64,384 $ 56,381
Work-in-process 192,889 147,827
Finished goods, including parts and subassemblies 261,315 242,251
Other 2,739 3,808
- -------------------------------------------------------------------------------
521,327 450,267
Excess of current standard costs over LIFO costs (92,114) (101,482)
Allowance for obsolete and slow-moving inventory (24,945) (40,329)
- -------------------------------------------------------------------------------
Net inventories $ 404,268 $ 308,456
===============================================================================
</TABLE>
33
<PAGE> 18
NOTE 7: PLANT AND EQUIPMENT AND INTANGIBLES
<TABLE>
<CAPTION>
DECEMBER 31,
- -------------------------------------------------------------------------------
(dollars in thousands) 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
Plant and equipment:
Land and land improvements $ 30,408 $ 28,534
Buildings 163,118 150,570
Machinery and equipment 387,339 355,250
Tooling, dies, patterns, etc. 41,547 35,186
All other 99,095 91,740
Construction in progress 21,478 14,102
- -------------------------------------------------------------------------------
742,985 675,382
Accumulated depreciation (373,457) (328,799)
- -------------------------------------------------------------------------------
$ 369,528 $ 346,583
===============================================================================
Intangibles:
Goodwill $ 402,013 $ 361,811
Assets related to pension plans 585 1,408
Other 52,262 48,897
- -------------------------------------------------------------------------------
454,860 412,116
Accumulated amortization (195,543) (178,859)
- -------------------------------------------------------------------------------
$ 259,317 $ 233,257
===============================================================================
</TABLE>
NOTE 8: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31,
- -------------------------------------------------------------------------------
(dollars in thousands) 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
Trade accounts and accruals $265,640 $174,517
Salaries, wages and related fringe benefits 29,358 28,405(1)
Payroll and other taxes 14,553 16,521
Product and environmental liability accruals 8,560 15,571
Accrued warranty 18,728 19,879
Deferred taxes 25,137 16,059
Other (individual items less than 5% of total
current liabilities) 29,318 13,021(1)
- -------------------------------------------------------------------------------
$391,294 $283,973
===============================================================================
</TABLE>
(1) Revised for comparability with 1996.
At December 31, 1996, the Company had accruals totaling $4,415,000
($6,287,000 at December 31, 1995) with respect to potential product liability
claims and accruals of $5,617,000 ($11,380,000 at December 31, 1995) with
respect to potential environmental liabilities based on the current estimate of
the most likely amount of liabilities that it believes will be incurred.
Of the $4,415,000 of total product liability accruals, $2,943,000 relates
to known claims with respect to ongoing operations and are reflected as a
current liability at December 31, 1996, while $1,472,000 relates to an estimate
of claims that have been incurred but not yet reported and are reflected as a
long-term liability. While the Company is generally self-insured with respect
to product liability claims, insurance coverage has been in place since July 1,
1995 for individual claims received in excess of $1,000,000. Prior to July 1,
1995, insurance coverage was in place for individual claims in excess of
$1,000,000 for products utilized in oilfield applications and in excess of
$3,000,000 for all other products. At December 31, 1996 and 1995, there were no
claims where any insurance recovery has been assumed.
Of the $5,617,000 of environmental liability accruals, $2,314,000 relates
to sites owned by the Company and $3,303,000 relates to third party sites where
the Company was a contributor. Third party sites usually involve multiple
contributors where the Company's liability will be determined based on an
estimate of the proportionate responsibility for the total cleanup. The amount
actually accrued for such sites is based on these estimates as well as an
assessment of the financial capacity of the other potentially responsible
parties. Environmental liabilities are not generally subject to insurance
recovery and no amounts of insurance recovery have been deducted in arriving at
the Company's accruals. In addition, the Company has capitalized a total of
$2,059,000 with respect to environmental remediation (net book value of
$1,786,000) at December 31, 1996.
34
<PAGE> 19
NOTE 9: EMPLOYEE BENEFIT PLANS
<TABLE>
<CAPTION>
COMPONENTS OF DEFINED BENEFIT
PLAN PENSION EXPENSE
- --------------------------------------------------------------------------------
(dollars in thousands) 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the year $ 8,462 $ 7,728 $ 9,042
Interest cost on projected benefit obligation 16,613 15,587 15,068
Actual return on assets (34,597) (45,321) 204
Net amortization and deferral 11,770 26,745 (19,055)
- --------------------------------------------------------------------------------
Net pension cost $ 2,248 $ 4,739 $ 5,259
================================================================================
</TABLE>
<TABLE>
<CAPTION>
FUNDED STATUS OF DEFINED BENEFIT PLANS
PLANS WITH
PLANS WITH ASSETS IN EXCESS ACCUMULATED BENEFITS
OF ACCUMULATED BENEFITS IN EXCESS OF ASSETS
- --------------------------------------------------------------------------------------------
(dollars in thousands) 1996 1995 1996 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation $(189,742) $(170,048) $ (26,973) $ (39,181)
============================================================================================
Accumulated benefit obligation $(201,767) $(179,501) $ (27,236) $ (41,670)
============================================================================================
Projected benefit obligation $(210,645) $(187,777) $ (28,465) $ (42,715)
Plan assets at fair value 262,656 218,701 21,980 30,340
- --------------------------------------------------------------------------------------------
Plan assets in excess of (less than)
projected benefit obligation 52,011 30,924 (6,485) (12,375)
Unrecognized net (gain) loss (24,113) (4,440) 5,455 9,557
Unrecognized net (asset) obligation from
adoption date (951) (2,713) 138 1,312
Unrecognized prior service cost (1,216) (1,187) 270 74
Other (194) -- (41) (290)
Adjustment required to recognize
minimum liability -- -- (4,864) (10,477)
- --------------------------------------------------------------------------------------------
Pension asset (liability) at end of year $ 25,537 $ 22,584 $ (5,527) $ (12,199)
============================================================================================
</TABLE>
<TABLE>
<CAPTION>
COMPUTATIONAL ASSUMPTIONS
PROJECTED BENEFIT
NET PENSION COST OBLIGATION
- ---------------------------------------------------------------------------------------------------------------
1996 1995 1994 1996 1995
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Discount rate:
Domestic 7.25% 8% 7% 7.75% 7.25%
International 6.5 - 8.25 7.5 - 9 6 - 7.75 6.5 - 8.25 6.5 - 9
Rate of increase in compensation levels:
Domestic 4.5 - 5 5 5 4.5 5
International 4 - 6 4 - 6 4 - 5.5 4 - 6 4 - 6
Expected long-term rate of return on assets:
Domestic 8.5 8.5 8.5 -- --
International 6.5 - 10 6.5 - 10 6 - 9.5 -- --
Benefit basis:
Salaried plans - earnings during career
Hourly plans - dollar units, multiplied
by years of service
Funding policy: 5-30 years
</TABLE>
35
<PAGE> 20
In connection with the split-off from Cooper, a separate Cooper Cameron
Salaried Employees' Pension Plan was established as well as a separate plan in
the U.K. These new plans assumed the liabilities with respect to all active,
inactive and retired employees of the Company and were transferred a pro-rata
share of the assets contained in the respective Cooper plans. The expense shown
in the preceding table for 1994 reflects an allocation to the Company
calculated by Cooper's actuaries while the amounts shown for 1996 and 1995 have
been determined by separate actuarial valuations of the newly established
plans. Aggregate pension expense amounted to $12,167,000 in 1996, $13,572,000
in 1995 and $13,737,000 in 1994. The Company's expense with respect to defined
benefit pension plans is set forth in the table above. Expense with respect to
the domestic defined contribution plans for the years ended December 31, 1996,
1995 and 1994 amounted to $9,919,000, $8,833,000 and $8,383,000, respectively.
Gains and losses on curtailments and settlements were not material in any of
the last three years. The assets of the domestic and foreign plans are
maintained in various trusts and consist primarily of equity and fixed income
securities.
The Company's minimum liability for pension plans with accumulated
benefits in excess of assets totaled $4,864,000 in 1996 ($10,477,000 in 1995)
and has been recorded in the Company's Consolidated Balance Sheets as a
long-term liability with a $585,000 offsetting intangible asset ($1,408,000 in
1995) and a $2,642,000 reduction in stockholders' equity, net of taxes
($5,600,000 in 1995).
The Company's full-time domestic employees who are not covered by a
bargaining unit are also eligible to participate in the Cooper Cameron
Corporation Retirement Savings Plan. Under this plan, which is essentially the
same as the Cooper plan in which employees participated prior to April 1, 1995,
employees' savings deferrals are partially matched with shares of the Company's
Common stock. Through March 1995, contributions were partially matched with
Cooper Common stock. The Company's expense under this plan since April 1995
equals the matching contribution under the Plan's formula, while the expense
prior to April 1995 and in 1994 equalled such matching expense adjusted to
reflect the Company's proportionate participation during those years in
Cooper's Employee Stock Ownership Plan (ESOP). No assets or liabilities with
respect to Cooper's ESOP were included in the Company's financial statements
for 1995 or 1994. Expense for the years ended December 31, 1996, 1995 and 1994
amounted to $6,393,000, $5,753,000 and $6,983,000, respectively. For 1996, the
Company issued or sold 144,137 shares of Common stock to the Trustee of the
Retirement Savings Plan to meet matching and other obligations under the plan.
NOTE 10: STOCK OPTIONS AND EMPLOYEE STOCK PURCHASE PLAN
<TABLE>
<CAPTION>
NUMBER OF SHARES
------------------------
LONG-TERM NON-EMPLOYEE WEIGHTED
INCENTIVE DIRECTOR AVERAGE
PLAN PLAN EXERCISE PRICES
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stock options outstanding at January 1, 1995 -- -- --
Options granted 1,589,185 52,421 $16.94
Options cancelled (42,022) $16.657
- ----------------------------------------------------------------------------------------
Stock options outstanding at December 31, 1995 1,547,163 52,421 $16.94
Options granted 1,052,646 73,000 $51.27
Options cancelled (35,020) -- $16.657
Options exercised (104,574) (2,000) $16.84
- ----------------------------------------------------------------------------------------
STOCK OPTIONS OUTSTANDING AT DECEMBER 31, 1996 2,460,215 123,421 $31.91(1)
========================================================================================
STOCK OPTIONS EXERCISABLE AT DECEMBER 31, 1996 469,551 50,421 $16.77(2)
========================================================================================
</TABLE>
(1) Exercise prices range from $16.657 to $70.50 per share.
(2) Exercise prices range from $16.657 to $26.25 per share.
The options issued to key employees under the Long-term Incentive Plan
during 1996 and 1995 expire ten years from the date of grant. The options
granted under this plan during 1995 generally become one-sixth exercisable one
year after the date of grant, one-third on each of the second and third
anniversary dates following the date of grant and one-sixth at the end of four
years. The options granted during 1996 generally become one-third exercisable
each year beginning on the first anniversary date following the date of grant.
Certain key executives also elected to receive options in lieu of salary for
periods that now extend through December 31, 1997. The options granted under
the Options in Lieu of Salary Program generally become exercisable at the end
of a six-month or one-year salary period and expire five years after the
beginning of the respective salary period.
Under an amendment to the Company's Non-employee Director Stock Option
Plan approved by the Board of Directors on May 2, 1996, and subject to
stockholder approval at the 1997 Stockholders' Meeting, non-employee directors
receive a grant of 3,000 stock options annually. In addition, in 1996,
directors were permitted to either take their annual retainer in cash ($30,000)
36
<PAGE> 21
or receive additional stock options for 9,000 shares of stock at market value
on the date of grant. All directors elected to receive the additional stock
options. The exercise price of each option is based on the fair market value of
the Company's stock at the date of grant. The options expire five years and one
day after the date of grant and become exercisable one year following the date
of grant. As of December 31, 1996, shares reserved for future grants under the
Long-term Incentive and Non-employee Director Stock Option Plans were zero and
124,579, respectively. The weighted average remaining contractual life of all
options at December 31, 1996 is approximately 6.5 years.
Pro forma information is required by SFAS No. 123 to reflect the estimated
effect on net income and earnings per share as if the Company had accounted for
the stock options and other awards granted using the fair value method
described in that Statement. The fair value was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted average
assumptions for 1996 and 1995, respectively: risk-free interest rates of 5.9%
and 5.3%; dividend yields of 1% and 0.7%; volatility factors of the expected
market price of the Company's common stock of .302 and .221; and a
weighted-average expected life of the options of 2.2 and 3.5 years. These
assumptions resulted in a weighted average grant date fair value for options
and other awards of $11.03 and $10.93, respectively for 1996 and $3.77 and
$4.68, respectively for 1995. For purposes of the pro forma disclosures, the
estimated fair value is amortized to expense over the awards' vesting period.
Reflecting the amortization of this hypothetical expense for 1996 and 1995
results in pro forma net income and earnings per share of $59,147,000 and
$2.22, respectively, for 1996 and pro forma net loss and loss per share of
$501,212,000 and $20.11, respectively, for 1995.
EMPLOYEE STOCK PURCHASE PLAN
Under the Cooper Cameron Employee Stock Purchase Plan, the Company is
authorized to sell up to 1,000,000 shares of Common stock to its full-time
domestic and Canadian employees, nearly all of whom are eligible to
participate. Under the terms of the Plan, employees may elect each year to have
up to 10% of their annual compensation withheld to purchase the Company's
Common stock. The purchase price of the stock is 85% of the lower of the
beginning-of-plan year or end-of-plan year market price of the Company's Common
stock. Under the 1996/1997 plan, nearly 1,500 employees have elected to
purchase approximately 120,000 shares of the Company's Common stock at $40 per
share, or 85% of the market price of the Company's Common stock on July 31,
1997, if lower. A total of 231,935 shares were purchased at $18.965 per share
on August 1, 1996 under the 1995/1996 plan.
NOTE 11: LONG-TERM DEBT
<TABLE>
<CAPTION>
DECEMBER 31,
- ---------------------------------------------------------------------------
(dollars in thousands) 1996 1995
- ---------------------------------------------------------------------------
<S> <C> <C>
Floating-rate term loans $ 168,700 $ 198,400
Floating-rate revolving credit advances 190,068 31,553
Other long-term debt 35,880 34,588
- ---------------------------------------------------------------------------
394,648 264,541
Current maturities (47,100) (29,700)
- ---------------------------------------------------------------------------
Long-term portion $ 347,548 $ 234,841
===========================================================================
</TABLE>
On June 30, 1995, the Company entered into a $475,000,000 Credit Agreement
with various lenders to repay the $375,000,000 of outstanding bank indebtedness
guaranteed by Cooper and to provide for the Company's general borrowing
requirements. The Credit Agreement provides the Company with an aggregate
unsecured borrowing capacity consisting of $200,000,000 of floating-rate term
loans with scheduled quarterly principal payments through March 31, 2000 and
$275,000,000 of floating-rate revolving credit advances ultimately maturing on
June 30, 2000.
The weighted average interest rates on the term loans and revolving credit
advances were 6.125% and 6.08%, respectively, at December 31, 1996 (6.51% and
5.93%, respectively, at December 31, 1995). As described further in Note 18,
the Company has entered into interest rate swaps with a notional value of
$100,000,000 at December 31, 1996, resulting in an effective fixed rate of
5.67% plus a variable margin of 0.375% to 0.75% on that portion of the
Company's outstanding debt. The terms of the swap agreements result in
$100,000,000 of floating rate debt being at an effective fixed interest rate
plus the variable margin through December 31, 1998 and $75,000,000 at a similar
rate thereafter until the expiration of all outstanding agreements on June 30,
2000. The Company is also required to pay a commitment fee, which at December
31, 1996 equalled 0.2% annually, on the unused portion of the credit facility.
In addition to the Credit Agreement, the Company has $35,880,000 of
unsecured debt outstanding at the end of 1996 under other credit facilities
which are available both domestically and to its foreign subsidiaries. The
average interest rate on the majority
37
<PAGE> 22
of this debt at December 31, 1996 was 5.55% (6.59% at December 31, 1995). At
December 31, 1996, the Company has classified $47,100,000 of its outstanding
indebtedness as current based on the scheduled maturities of its Credit
Facility term loans during the next twelve months. Amounts borrowed under other
credit facilities, which by their terms represent current liabilities, have
been reclassified to long-term debt reflecting the Company's intention and
ability to refinance such amounts under its long-term Credit Agreement. At
December 31, 1996, the Company had $84,932,000 of committed borrowing capacity
available under its long-term Credit Agreement plus additional uncommitted
amounts available under various other borrowing arrangements.
Under the terms of the Credit Agreement, which was amended on June 19,
1996, the Company is required to maintain certain financial ratios including a
55% maximum debt to total capitalization ratio, which steps down to 40% over
the period from June 30, 1997 to June 30, 1999, and an interest coverage ratio.
The Company has been, throughout all periods reported, and was, at December 31,
1996, in compliance with all loan covenants.
Prior to June 30, 1995, the Company's cash and debt were managed on a
worldwide basis through Cooper's consolidated cash and debt management system.
As a result, the actual amounts of cash or debt historically related to the
businesses now making up the Company were not previously determinable.
Accordingly, the Asset Transfer Agreement between Cooper and the Company
specified a fixed amount of $375,000,000 of debt be allocated to the Company
for periods through June 30, 1995 with all positive or negative cash flows
being treated as transferred to or from Cooper.
For the years 1996, 1995 and 1994, total interest expense was $20,878,000,
$23,273,000 and $20,023,000, respectively, including $11,858,000 of interest
allocated to the Company by Cooper for the six-month period ended June 30,
1995. Interest expense for periods prior to June 30, 1995 is based on a Cooper
interest rate that includes both domestic and foreign interest costs believed
to be reflective of where the Company carried out its primary business
functions. For the six months ended June 30, 1995 and the year 1994, aggregate
interest rates amounted to 6.3% and 5.2%, respectively. Interest paid by the
Company and paid on the Company's behalf by Cooper is not materially different
from the amounts expensed.
Maturities of long-term debt, which are based primarily on the scheduled
payments of the term loans for the four years subsequent to December 31, 1996,
are $47,100,000, $49,600,000, $57,100,000 and $240,848,000, respectively.
At December 31, 1996, the Company had two long-term leases extending out
15 and 20 years and involving annual rental payments of approximately
$3,725,000. The Company also has numerous other operating leases pertaining to
sales offices, office equipment, data processing equipment and other items. The
obligations with respect to these leases are generally for less than three
years and are not considered to be material individually or in the aggregate.
NOTE 12: POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Following the split-off from Cooper, the Company's salaried employees have
participated in various domestic employee welfare benefit plans, including
medical, dental and prescriptions among other benefits for active employees.
These plans are essentially the same as the plans which employees participated
in as part of Cooper. Salaried employees who retired prior to 1989, as well as
certain other employees who were near retirement and elected to receive certain
benefits, have retiree medical, prescription and life insurance benefits, while
active salaried employees will not have postretirement health care benefits.
The hourly employees had under Cooper, and continue to have under the
Company, separate plans with varying benefit formulas. In all cases, however,
currently active employees, except for certain employees who are near
retirement and previously elected to receive certain benefits, will not receive
health care benefits after retirement. All of these plans were and continue to
be unfunded.
The amounts reflected in the table that follows represent the Company's
expense and liability as actuarially determined under SFAS No. 106 for the plan
years beginning January 1, 1996 and 1995, and in the case of 1994, the
Company's proportionate amounts in various plan groupings actuarially evaluated
in arriving at Cooper's overall expense for these plans. The 1995 separate
actuarial valuation did not result in any significant changes in the 1995
amounts by comparison with prior years. The decrease in postretirement benefit
expense from 1994 to 1996 is primarily attributable to the amortization of
accumulated actuarial gains. These accumulated actuarial gains have resulted
primarily from the Company's actual medical claims experience being less than
expected at the time of the Company's adoption of SFAS No. 106.
38
<PAGE> 23
<TABLE>
<CAPTION>
AMOUNTS PER CONSOLIDATED
ACCUMULATED ITEMS NOT YET RECORDED FINANCIAL STATEMENTS
POST- IN CONSOLIDATED LIABILITY FOR NET
RETIREMENT BENEFIT FINANCIAL STATEMENTS POSTRETIREMENT ANNUAL
OBLIGATION PRIOR ACTUARIAL BENEFITS OTHER EXPENSE
(dollars in thousands) (APBO) SERVICE COST NET GAIN THAN PENSIONS (INCOME)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance - December 31, 1993 $(87,207) $ (900) $(20,500) $(108,607)
Plan amendments 2,600 (2,600)
Benefit payments 3,908 3,908
Actuarial net gains 21,800 (21,800)
Plan expense:
Service cost (300) $ 300
Interest cost (5,000) 5,000
Amortization of prior
service cost 600 (600)
Amortization of
actuarial net gain 1,682 (1,682)
--------
Net annual expense (3,018) $ 3,018
- -----------------------------------------------------------------------------------------------------
Balance - December 31, 1994 (64,199) (2,900) (40,618) (107,717)
Benefit payments 4,035 4,035
Actuarial net gains 6,500 (6,500)
Plan expense:
Service cost (200) $ 200
Interest cost (5,200) 5,200
Amortization of
prior service cost 600 (600)
Amortization of
actuarial net gain 5,100 (5,100)
--------
Net annual income 300 $ (300)
- -----------------------------------------------------------------------------------------------------
Balance - December 31, 1995 (59,064) (2,300) (42,018) (103,382)
Plan amendments 800 (800)
Benefit payments 3,850 3,850
Actuarial net gains 9,300 (9,300)
Plan expense:
Service cost (200) $ 200
Interest cost (4,000) 4,000
Amortization of
prior service cost 600 (600)
Amortization of
actuarial net gain 5,900 (5,900)
--------
Net annual income 2,300 $(2,300)
- -----------------------------------------------------------------------------------------------------
BALANCE - DECEMBER 31, 1996 $(49,314) $(2,500) $(45,418) $ (97,232)
=====================================================================================================
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
- ------------------------------------------------------------------------------------------
(dollars in thousands) 1996 1995
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Amount of APBO related to:
Retired employees $(43,714) $(50,364)
Employees eligible to retire (2,900) (5,600)
Other employees (2,700) (3,100)
Actuarial assumptions:
Discount rate 7.59% 7.18%
Ensuing year to 2002- healthcare cost trend rate 8.5% 10.0%
RATABLE TO ratable to
5.0% 5.0%
Effect of 1% change in healthcare cost trend rate:
Increase/decrease year-end APBO $ 3,600 $ 3,800
Increase/decrease expense $ 300 $ 400
</TABLE>
39
<PAGE> 24
NOTE 13: INCOME TAXES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
- ----------------------------------------------------------------------------------------------------------
(dollars in thousands) 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income (loss) before income taxes:
U.S. operations $ 53,267 $(181,285) $ 348
Foreign operations 38,747 (315,111) 2,995
- ----------------------------------------------------------------------------------------------------------
Income (loss) before income taxes $ 92,014 $(496,396) $ 3,343
==========================================================================================================
Income taxes:
Currently payable (receivable):
U.S. federal $ 2,084 $ (2,111) $ (15,740)
U.S. state and local and franchise 2,054 1,170 (2,168)
Foreign 6,243 2,260 169
- ----------------------------------------------------------------------------------------------------------
10,381 1,319 (17,739)
- ----------------------------------------------------------------------------------------------------------
Deferred:
U.S. federal 13,697 (6,168) 17,221
U.S. state and local 1,519 (927) 4,026
Foreign 2,233 1,051 3,581
- ----------------------------------------------------------------------------------------------------------
17,449 (6,044) 24,828
- ----------------------------------------------------------------------------------------------------------
Other:
Reserve for prior year deferred tax assets -- 8,382 --
- ----------------------------------------------------------------------------------------------------------
-- 8,382 --
- ----------------------------------------------------------------------------------------------------------
Income tax provision $ 27,830 $ 3,657 $ 7,089
==========================================================================================================
Items giving rise to deferred income taxes:
Reserves and accruals $ 7,813 $ (2,309) $ 17,775
Inventory allowances, full absorption and LIFO 1,913 (8,111) 8,509
Percentage of completion income (recognized) not
recognized for tax 5,703 -- (3,436)(2)
Prepaid medical and dental expenses 3,158 1,529(2) --
U.S. tax deductions in excess of amounts currently deductible (8,123) -- --
Other 6,985 2,847(2) 1,980(2)
- ----------------------------------------------------------------------------------------------------------
Deferred income taxes $ 17,449 $ (6,044) $ 24,828
==========================================================================================================
The differences between the provision for income
taxes and income taxes using the U.S. federal
income tax rate were as follows:
U.S. federal statutory rate 35.00% 35.00% 35.00%
Nondeductible goodwill 2.85 (0.97) 241.24
Provision for impairment of goodwill -- (31.09) --
State and local income taxes 0.76 (0.23) 13.25
Tax exempt income (1.90) 0.34 (58.35)
Foreign statutory rate differential (0.82) 0.02 (17.67)
Change in valuation of prior year tax assets (8.90) (1.69) --
Losses not receiving a tax benefit 2.36 (2.18) --
All other 0.90 0.06 (1.41)
- ----------------------------------------------------------------------------------------------------------
Total 30.25% (0.74)% 212.06%
==========================================================================================================
Total income taxes paid(1) $ 9,366 $ 4,248 $ 7,201
==========================================================================================================
</TABLE>
(1) For periods prior to June 30, 1995, the Company paid taxes to Cooper, who
in turn paid the taxes to the various taxing authorities. The amount shown
for 1995 represents tax actually paid by the Company since June 30, 1995
and foreign taxes paid by Cooper on the Company's behalf through June 30,
1995. Information regarding U.S. taxes paid or refunds received by Cooper
on the Company's behalf during the first half of 1995 is not available.
(2) Revised for comparability with 1996.
40
<PAGE> 25
<TABLE>
<CAPTION>
DECEMBER 31,
- ----------------------------------------------------------------------------------
(dollars in thousands) 1996 1995
- ----------------------------------------------------------------------------------
<S> <C> <C>
Components of deferred tax balances:
Deferred tax liabilities:
Plant and equipment $ (41,912) $ (45,669)
Inventory (33,105) (34,203)
Pensions (8,817) (7,648)
Percentage of completion (5,703) --
Other (12,854) (6,553)
- ----------------------------------------------------------------------------------
Total deferred tax liabilities (102,391) (94,073)
- ----------------------------------------------------------------------------------
Deferred tax assets:
Postretirement benefits other than pensions 37,191 39,222
Reserves and accruals 24,290 32,495
Net operating losses and related deferred tax assets 30,430 28,324
Other 3,959 4,126
- ----------------------------------------------------------------------------------
Total deferred tax assets 95,870 104,167
- ----------------------------------------------------------------------------------
Valuation allowance (37,307) (43,324)
- ----------------------------------------------------------------------------------
Net deferred tax liabilities $ (43,828) $ (33,230)
==================================================================================
</TABLE>
41
<PAGE> 26
During 1996, certain of the Company's international operations, which had
incurred losses for several years, generated earnings which exceeded the 1996
losses related to several other operations. As a result, the valuation
allowance established during 1995 was reduced by $6,017,000 with a
corresponding reduction in the Company's income tax expense. In addition, while
the Company was profitable on a book basis domestically during 1996, it had tax
deductions which exceeded the book tax on this income by approximately
$8,123,000 resulting in the recognition of a current deferred tax asset.
Although the Company presently anticipates that this asset will be utilized
during 1997, under present U.S. tax rules the Company has until the year
2010-2011 to utilize these excess deductions.
The Company's tax provision includes U.S. tax expected to be payable on
the foreign portion of the Company's income before income taxes when such
earnings are remitted. The Company's accruals are sufficient to cover the
additional U.S. taxes estimated to be payable on the earnings that the Company
anticipates will be remitted. Through December 31, 1996, this amounted to
essentially all unremitted earnings of the Company's foreign subsidiaries
except certain unremitted earnings in the U.K. and Ireland which are considered
to be permanently reinvested.
Although prior to June 30, 1995 the Company's operations were included in
the consolidated U.S. federal and certain combined state income tax returns of
Cooper, the tax provisions and tax liabilities through that date were
determined as if the Company was a stand-alone business filing a separate tax
return. Under the agreement between Cooper and the Company pursuant to which
the Company's assets and liabilities were legally transferred, the U.S. federal
and state and local income and franchise tax liability for periods prior to
June 30, 1995 was retained by Cooper and accordingly, the Company does not have
any non-deferred tax accruals with respect to these liabilities. Except for the
Company's foreign subsidiaries in Germany, Norway and Canada, where the
Company's assets and liabilities were transferred pursuant to agreements with
Cooper comparable to the domestic agreement referred to above, prior year
foreign tax liabilities are the responsibility of the Company. For periods
after June 30, 1995, the Company has responsibility and has provided for its
tax liabilities on a worldwide basis.
As described in Note 3, the Company had a $441,000,000 non-deductible
goodwill write-off as well as $41,509,000 of nonrecurring/unusual charges
during 1995. Of the $41,509,000, approximately $18,600,000 was treated as a
non-deductible expense because it related to the Company's international
operations in countries where the operations have experienced losses over the
last several years. In addition to the nonrecurring/unusual charges, these same
international operations also had operating losses during 1995 which aggregated
$12,300,000 that were treated as non-deductible. Lastly, in 1994 and prior
years, deferred tax assets totaling $17,518,000 had been recorded with respect
to these operations and the Company established a valuation allowance against
these deferred tax assets during 1995. Of this last amount, approximately
$9,136,000 was recorded through a reclassification of long-term tax accruals
covering pre-1987 unremitted earnings with respect to the Company's operations
in the U.K. The Company has determined that these earnings are permanently
invested and that, therefore, these long-term accruals are no longer required.
The remainder, or $8,382,000, was charged against 1995's tax expense. In total,
these items resulted in a $28,324,000 increase in the Company's valuation
allowance with respect to deferred tax assets during 1995.
42
<PAGE> 27
NOTE 14: COMMON STOCK, PREFERRED STOCK AND RETAINED DEFICIT
COMMON STOCK
At December 31, 1996, 75,000,000 shares of Common stock, par value $.01
per share, were authorized of which 25,617,727 were issued (25,146,232 at
December 31, 1995). At year end, a total of 3,648,936 shares of Common stock
was reserved for issuance under various employee benefit plans.
PREFERRED STOCK
The Company is authorized to issue up to 10,000,000 shares of preferred
stock, par value of $.01 per share. At December 31, 1996, no preferred shares
were issued or outstanding. Shares of preferred stock may be issued in one or
more series of classes, each of which series or class shall have such
distinctive designation or title as shall be fixed by the Board of Directors of
the Company prior to issuance of any shares. Each such series or class shall
have such voting powers, full or limited, or no voting powers, and such
preferences and relative, participating, optional or other special rights and
such qualifications, limitations or restrictions thereof, as shall be stated in
such resolution or resolutions providing for the issuance of such series or
class of preferred stock as may be adopted by the Board of Directors prior to
the issuance of any shares thereof. A total of 750,000 shares of Series A
Junior Participating Preferred Stock has been reserved for issuance upon
exercise of the Stockholder Rights described below.
STOCKHOLDER RIGHTS PLAN
On May 23, 1995, the Company's Board of Directors declared a dividend
distribution of one Right for each outstanding share of Common stock. Each
Right entitles the registered holder to purchase one one-hundredth of a share
of Series A Junior Participating Preferred Stock of the Company, par value $.01
per share, for a purchase price of $75, subject to adjustment. The Rights were
attached to all outstanding shares of the Company's Common stock immediately
following completion of the exchange offer with Cooper (see Note 1). Unless
earlier redeemed by the Company at a price of $.01 each, the Rights become
exercisable only in certain circumstances constituting a potential change in
control of the Company and will expire on April 30, 2005, or such later date as
determined by the Board of Directors.
Each share of Series A Junior Participating Preferred Stock purchased upon
exercise of the Rights will be entitled to certain minimum preferential
quarterly dividend payments as well as a specified minimum preferential
liquidation payment in the event of a merger, consolidation or other similar
transaction. Each share will also be entitled to 100 votes to be voted together
with the Common stockholders and will be junior to any other series of
Preferred Stock authorized or issued by the Company, unless the terms of such
other series provides otherwise.
Under certain circumstances, the Rights may be subject to exercise for
additional shares of Common stock or other consideration at a predefined ratio
rather than for shares of Series A Junior Participating Preferred Stock.
RETAINED DEFICIT
The Company's retained deficit as of December 31, 1996 and 1995 includes a
$441,000,000 charge related to the goodwill write-down described in Note 3 of
the Notes to Consolidated Financial Statements. Delaware law, under which the
Company is incorporated, provides that dividends may be declared by the
Company's Board of Directors from a current year's earnings as well as from the
net of capital in excess of par value less the retained deficit. Accordingly,
at December 31, 1996, the Company had approximately $475,866,000 from which
dividends could be paid.
43
<PAGE> 28
NOTE 15: NET ASSETS
Prior to June 30, 1995, the Company was not a separate stand-alone entity
and, therefore, it did not have any meaningful amounts of Common stock, capital
in excess of par value or retained earnings. Accordingly, the equity was
reflected as a single amount titled "Net Assets." The table below shows the
items which have resulted in increases or decreases to this Net Asset total for
the period from December 31, 1993 through June 30, 1995. The Company's
stockholders' equity activity for the period from July 1, 1995 through December
31, 1996 is shown in the Consolidated Changes in Stockholders' Equity
statement.
<TABLE>
<CAPTION>
(dollars in thousands) NET ASSETS
- -----------------------------------------------------------------------
<S> <C>
Balance at December 31, 1993 $ 841,955
Adjustment required to recognize minimum pension liability (179)
Translation adjustment 28,989
Receivable from Cooper 36,607
Free cash flow transferred to Cooper (42,627)
Allocation of interest and general and administrative
expenses, net of tax, from Cooper 17,130
Net loss (3,746)
- -----------------------------------------------------------------------
Balance at December 31, 1994 878,129
Translation adjustment 27,106
Allocation of interest and general and administrative
expenses, net of tax, from Cooper 9,539
Net loss from January 1, 1995 through June 30, 1995 (37,802)
Adjustment of equity balances to reflect split-off
from Cooper at June 30, 1995(1) 14,209
- -----------------------------------------------------------------------
BALANCE ON JUNE 30, 1995 AT TIME OF SPLIT-OFF $ 891,181
=======================================================================
</TABLE>
(1) Includes the effect of the final settlement with Cooper reached during
the fourth quarter of 1995.
Intercompany transactions are principally cash transfers between the Company
and Cooper.
44
<PAGE> 29
NOTE 16: INDUSTRY SEGMENTS
<TABLE>
<CAPTION>
REVENUES OPERATING EARNINGS IDENTIFIABLE ASSETS
YEARS ENDED DECEMBER 31, YEARS ENDED DECEMBER 31, DECEMBER 31,
- ----------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands) 1996 1995 1994 1996 1995 1994 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Petroleum Production
Equipment $ 798,607 $ 648,141 $ 562,680 $ 71,590 $ (12,557) $ (35,553) $ 991,726 $ 775,353 $1,286,749
Compression and
Power Equipment 588,536 493,602 546,028 57,629 30,010 66,060 450,408 348,295 379,933
- ----------------------------------------------------------------------------------------------------------------------------------
1,387,143 1,141,743 1,108,708 129,219 17,453 30,507 1,442,134 1,123,648 1,666,682
Other income 1,044 2,292 1,368 1,044 2,292 1,368
- ----------------------------------------------------------------------------------------------------------------------------------
Total revenues $1,388,187 $ 1,144,035 $1,110,076
==================================================================================================================================
Goodwill write-down -- (441,000) --
Nonrecurring/
unusual charges (7,274) (41,509) --
Interest expense (20,878) (23,273) (20,023)
General corporate (10,097) (10,359) (8,509) 21,159 10,027 36,607
- ----------------------------------------------------------------------------------------------------------------------------------
Consolidated income
(loss) before income
taxes $ 92,014 $(496,396) $ 3,343
==================================================================================================================================
Investment in uncon-
solidated subsidiaries 5,629 1,730 7,091
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets $1,468,922 $1,135,405 $1,710,380
==================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
REVENUES OPERATING EARNINGS IDENTIFIABLE ASSETS
YEARS ENDED DECEMBER 31, YEARS ENDED DECEMBER 31, DECEMBER 31,
- ----------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands) 1996 1995 1994 1996 1995 1994 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Domestic $ 897,533 $ 736,079 $ 769,676 $ 92,440 $ 8,566 $ 24,448 $ 823,461 $ 638,245 $ 902,895
- ----------------------------------------------------------------------------------------------------------------------------------
International:
Europe 443,957 336,133 302,933 42,719 4,988 (3,140) 562,425 449,508 692,880
Canada 64,326 60,250 108,106 2,203 94 154 43,995 26,585 46,096
Other 100,246 108,423 87,035 538 2,207 4,612 102,431 83,284 118,983
- ----------------------------------------------------------------------------------------------------------------------------------
Sub-total
International 608,529 504,806 498,074 45,460 7,289 1,626 708,851 559,377 857,959
- ----------------------------------------------------------------------------------------------------------------------------------
Eliminations:
Transfers to
International (93,364) (82,061) (148,639) (23,816) (16,265) (49,681)
Transfers to Domestic (25,555) (17,081) (10,403) (49,540) (49,569) (32,095)
Other (8,681) 1,598 4,433 (16,822) (8,140) (12,396)
- ----------------------------------------------------------------------------------------------------------------------------------
1,387,143 1,141,743 1,108,708 129,219 17,453 30,507 1,442,134 1,123,648 1,666,682
Other income 1,044 2,292 1,368 1,044 2,292 1,368
- ----------------------------------------------------------------------------------------------------------------------------------
Total revenues $1,388,187 $1,144,035 $1,110,076
==================================================================================================================================
Goodwill write-down -- (441,000) --
Nonrecurring/
unusual charges (7,274) (41,509) --
Interest expense (20,878) (23,273) (20,023)
General corporate (10,097) (10,359) (8,509) 21,159 10,027 36,607
- ----------------------------------------------------------------------------------------------------------------------------------
Consolidated income
(loss) before income
taxes $ 92,014 $(496,396) $ 3,343
==================================================================================================================================
Investment in uncon-
solidated subsidiaries 5,629 1,730 7,091
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets $1,468,922 $1,135,405 $1,710,380
==================================================================================================================================
</TABLE>
45
<PAGE> 30
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
- ----------------------------------------------------------------------------
(dollars in thousands) 1996 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Research and development expense:
Petroleum Production Equipment $ 1,944 $ 1,347 $ 1,266
Compression and Power Equipment 5,192 7,201 7,280
- ----------------------------------------------------------------------------
Total $ 7,136 $ 8,548 $ 8,546
============================================================================
Depreciation and amortization:
Petroleum Production Equipment $ 37,467 $ 46,615 $ 46,118
Compression and Power Equipment 24,518 25,071 24,115
Corporate 495 68 --
- ----------------------------------------------------------------------------
Total $ 62,480 $ 71,754 $ 70,233
============================================================================
Capital expenditures:
Petroleum Production Equipment $ 16,373 $ 23,132 $ 43,156
Compression and Power Equipment 18,939 14,603 20,354
Corporate 1,833 1,791 --
- ----------------------------------------------------------------------------
Total $ 37,145 $ 39,526 $ 63,510
============================================================================
Goodwill write-down:
Domestic $ -- $144,719 $ --
Europe -- 259,879 --
Canada -- 7,330 --
Other -- 29,072 --
- ----------------------------------------------------------------------------
Total $ -- $441,000(1) $ --
============================================================================
Nonrecurring/unusual charges:
Domestic $ 4,724 $ 15,584 $ --
Europe 1,926 19,494 --
Canada 359 720 --
Other 265 5,711 --
- ----------------------------------------------------------------------------
Total $ 7,274(2) $ 41,509(3) $ --
============================================================================
</TABLE>
(1) All related to Petroleum Production Equipment.
(2) $4,169 related to Compression and Power Equipment and the balance to
Petroleum Production Equipment.
(3) $2,242 related to Compression and Power Equipment and the balance to
Petroleum Production Equipment.
The Company's operations are organized into two segments, Petroleum
Production Equipment and Compression and Power Equipment.
The Petroleum Production Equipment segment manufactures, markets and
services valves, wellhead equipment, blowout preventers, chokes and control
systems, and other components for oil and gas drilling, production and
transmission activities.
The Compression and Power Equipment segment manufactures, markets and
services engines and centrifugal gas and air compressors used in the
production, transmission, storage and processing of natural gas and oil as well
as a variety of other industrial applications.
Intersegment sales and related receivables for each of the years shown
were immaterial and have been eliminated.
Export sales to unaffiliated companies were $277,426,000 in 1996,
$184,390,000 in 1995, and $172,436,000 in 1994. Of total export sales,
approximately 60% in 1996, 60% in 1995, and 60% in 1994 were to Asia, Africa,
Australia and the Middle East; 17% in 1996, 13% in 1995, and 11% in 1994 were
to Canada and Europe; and 23% in 1996, 27% in 1995, and 29% in 1994 were to
Latin America. Foreign currency transaction gains and losses were insignificant
for all of the years shown. See Note 3 of the Notes to Consolidated Financial
Statements for information regarding 1995 translation losses related to the
Company's operations in Venezuela.
46
<PAGE> 31
NOTE 17: RELATED PARTY TRANSACTIONS
The Company received services provided by Cooper including employee
benefits administration, cash management, risk management, certain legal
services, public relations, domestic tax reporting and internal and domestic
external audit through June 30, 1995. The costs associated with these services
allocated to the Company amounted to $4,042,000 and $8,509,000 in 1995 and
1994, respectively.
For purposes of the Company's consolidated financial statements, the
intercompany account between the Company and Cooper was included as an element
of the Company's net assets for periods prior to June 30, 1995. All free cash
flows and cash requirements of the Company through June 30, 1995 were
considered to be transferred to or provided by Cooper and have been included in
this intercompany account.
The Company reflected a receivable of $36,607,000 at December 31, 1994 due
from Cooper representing the excess of free cash flows of the Company, which
were transferred to Cooper, over the Company's net loss for the period October
1, 1994 to December 31, 1994. The Company settled the outstanding receivable
from Cooper during the fourth quarter of 1995 which resulted in a decrease of
$8,817,000 to the Company's equity balance transferred from Cooper at June 30,
1995.
The Company sells, on third-party terms, small amounts of its products to
Cooper. The amounts involved in these transactions, as well as transactions
with other related parties, are not material to the Company.
NOTE 18: OFF-BALANCE SHEET RISK, CONCENTRATIONS OF CREDIT RISK AND
FAIR VALUE OF FINANCIAL INSTRUMENTS
OFF-BALANCE SHEET RISK
As a result of having sales and purchases denominated in currencies other
than the functional currencies used by the Company's divisions and foreign
subsidiaries, the Company is exposed to the effect of foreign exchange rate
fluctuations on the U.S. dollar value of its cash flows. To the extent
possible, the Company utilizes natural hedges to minimize the effect on cash
flows of fluctuating foreign currencies. When natural hedges are not
sufficient, generally it is the Company's policy to enter into forward foreign
exchange contracts to hedge significant transactions for periods consistent
with the terms of the underlying transactions. The Company does not engage in
speculation or hedge nontransaction-related balance sheet exposure. While
forward contracts affect the Company's results of operations, they do so only
in connection with the underlying transactions. As a result, they do not
subject the Company to uncertainty from exchange rate movements, because gains
and losses on these contracts offset losses and gains on the transactions being
hedged. The volume of forward activity engaged in by the Company from
year-to-year fluctuates in proportion to the level of worldwide cross-border
transactions, and contracts generally have maturities that do not exceed one to
two years.
The table below summarizes the contractual amounts of the Company's
forward exchange contracts to sell the following currencies at December 31,
1996 and 1995.
<TABLE>
<CAPTION>
DECEMBER 31,
- --------------------------------------------------------------------------
(dollars in thousands) 1996 1995
- --------------------------------------------------------------------------
<S> <C> <C>
Canadian Dollar $ 44,695 $ --
Italian Lira 5,526 --
Pound Sterling -- 1,020
French Franc -- 8,861
Other 487 1,751
- --------------------------------------------------------------------------
$ 50,708 $ 11,632
==========================================================================
</TABLE>
Contracts to buy foreign currencies were not material at December 31, 1996
and 1995. Counterparties to the forward foreign currency exchange contracts are
typically large, stable financial institutions. Accordingly, the Company's
exposure to credit loss in the event of nonperformance by these counterparties
is considered to be minimal. Deferred gains and losses on forward foreign
exchange contracts based upon anticipated transactions were not material at
December 31, 1996 and 1995.
At December 31, 1996, the Company was contingently liable with respect to
approximately $74,079,000, ($83,536,000 at December 31, 1995) of standby
letters of credit ("letters") issued in connection with the delivery,
installation and performance of the Company's products under contracts with
customers throughout the world. Of the outstanding total, approximately 49%
relates to the Petroleum Production Equipment segment and the balance, or 51%,
to the Compression and Power Equipment segment. The Company was also liable for
approximately $8,770,000 of bank guarantees and letters of credit used to
secure certain financial obligations of the Company ($2,579,000 at December 31,
1995). While certain of the letters do not have a fixed expiration date, the
majority expire within the next one to two years and the Company would expect
to issue new or extend existing letters in the normal course of business.
The Company's other off-balance sheet risks are not material.
47
<PAGE> 32
CONCENTRATIONS OF CREDIT RISK
See Note 3 for a discussion of the Company's receivables and related
reserves with respect to customers in the country of Iran. The Company's other
concentrations of credit risk are not significant.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist primarily of cash and cash
equivalents, trade receivables, trade payables, debt instruments, interest rate
swap contracts and foreign currency forward contracts. The book values of cash
and cash equivalents, trade receivables and trade payables and floating-rate
debt instruments are considered to be representative of their respective fair
values. Based on the spread between the contract forward rate and the quoted
forward rate as of year-end on contracts with similar terms to existing
contracts, the fair value of the Company's foreign currency forward contracts
was not material at December 31, 1996 and 1995.
As described in Note 11 of the Notes to Consolidated Financial Statements,
the Company has entered into various interest rate swap agreements. The
interest rate differential to be received or paid on the swaps is recognized
over the lives of the swaps as an adjustment to interest expense. If
marked-to-market at December 31, 1996 the interest rate swaps would result in a
small pre-tax gain at December 31, 1996 compared to a small loss at December
31, 1995. Because the Company currently intends to maintain these swaps through
their maturity as long-term hedges of floating-rate bank debt, gains or losses
implied by the mark-to-market calculation have not been recognized.
NOTE 19: SUMMARY OF NONCASH INVESTING AND FINANCING ACTIVITIES
Increase (decrease) in net assets:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
- ---------------------------------------------------------------------------------------
(dollars in thousands) 1996 1995
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Common stock issued for employee stock ownership and
retirement savings plans $ 7,027 $ 2,959
Adjustment of minimum pension liability 2,958 (1,917)
Tax benefit of certain employee stock benefit plan transactions 1,865 --
Adjustment of equity balances to reflect split-off
from Cooper at June 30, 1995 -- (14,209)
</TABLE>
48
<PAGE> 33
NOTE 20: EARNINGS (LOSS) PER SHARE
The weighted average number of common shares and common stock equivalents
outstanding for each period presented was as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
- -------------------------------------------------------------------------------------------
(amounts in thousands) 1996 1995 1994
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Average shares outstanding 25,345 25,049 25,000
Common stock equivalents 1,269 117 --
- -------------------------------------------------------------------------------------------
Shares utilized in earnings per share calculation 26,614 25,166 25,000
===========================================================================================
</TABLE>
For periods prior to June 30, 1995, earnings (loss) per share amounts have been
computed on a pro forma basis based on the assumption that 25,000,000 shares of
Common stock were outstanding during each period presented.
NOTE 21: UNAUDITED QUARTERLY OPERATING RESULTS
<TABLE>
<CAPTION>
1996 (BY QUARTER)
- ----------------------------------------------------------------------------------------------
(dollars in thousands, except per share data) 1 2(2) 3(2) 4(2)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 280,648 $ 312,444 $ 378,793 $ 416,302
Gross margin(1) 74,782 85,399 101,094 116,354
Net income 7,664 12,869 19,253 24,398
Earnings per share 0.29 0.49 0.72 0.90
</TABLE>
<TABLE>
<CAPTION>
1995 (BY QUARTER)
- ----------------------------------------------------------------------------------------------
(dollars in thousands, except per share data) 1 2(2) 3(2) 4(2)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 254,576 $ 268,539 $ 335,225 $ 285,695
Gross margin(1) 53,079 52,481 77,648 79,029
Net income (loss) (4,252) (474,550) 6,546 (27,797)
Earnings (loss) per share(3) (0.17) (18.98) 0.26 (1.11)
</TABLE>
(1) Gross margin equals revenues less cost of sales before depreciation and
amortization.
(2) See Note 3 of the Notes to Consolidated Financial Statements for further
information relating to nonrecurring/unusual charges incurred during 1996
and 1995.
(3) Earnings (loss) per share amounts for periods prior to June 30, 1995 have
been computed on a pro forma basis based on the assumption that 25,000,000
shares of Common stock were outstanding during each period presented.
49
<PAGE> 34
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF COOPER CAMERON CORPORATION
The following table sets forth selected historical financial data for the
Company for each of the five years in the period ended December 31, 1996. The
financial information included herein may not necessarily be indicative of the
financial position or results of operations of the Company in the future or of
the financial position or results of operations of the Company that would have
been obtained if the Company had been a separate, stand-alone entity during the
periods presented. This information should be read in conjunction with the
consolidated financial statements of the Company and notes thereto included
elsewhere in this Annual Report.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
- ---------------------------------------------------------------------------------------------------------------------
(dollars in thousands, except per share) 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income Statement Data(1):
Revenues $ 1,388,187 $ 1,144,035 $ 1,110,076 $ 1,340,778 $ 1,438,189
- ---------------------------------------------------------------------------------------------------------------------
Costs and expenses:
Cost of sales (exclusive of
depreciation and amortization) 1,010,558 881,798 838,575 970,944 1,007,748
Depreciation and amortization 62,480 71,754 70,233 70,413 61,776
Selling and administrative
expenses 194,983 181,097 177,902 194,242 191,958
Interest expense 20,878 23,273 20,023 15,852 20,361
Provision for impairment of
goodwill -- 441,000 -- -- --
Nonrecurring/unusual charges(2) 7,274 41,509 -- -- --
Nonrecurring income, net -- -- -- -- (12,200)
- ---------------------------------------------------------------------------------------------------------------------
1,296,173 1,640,431 1,106,733 1,251,451 1,269,643
- ---------------------------------------------------------------------------------------------------------------------
Income (loss) before income
taxes and cumulative effect
of changes in accounting
principles 92,014 (496,396) 3,343 89,327 168,546
Income taxes (27,830) (3,657) (7,089) (38,138) (57,575)
- ---------------------------------------------------------------------------------------------------------------------
Income (loss) before cum-
ulative effect of changes in
accounting principles 64,184 (500,053) (3,746) 51,189 110,971
Cumulative effect on prior
years of changes in account-
ing principles(3) -- -- -- -- (108,048)
- ---------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 64,184 $ (500,053) $ (3,746) $ 51,189 $ 2,923
=====================================================================================================================
Earnings (loss) per share (pro
forma prior to June 30, 1995)(4) $ 2.41 $ (19.87) $ (0.15) $ 2.05 $ 0.12
=====================================================================================================================
Balance Sheet Data (at the end of period)(1):
Total assets $ 1,468,922 $ 1,135,405 $ 1,710,380(5) $ 1,713,668 $ 1,725,385
Stockholders' equity/net assets 516,128 423,588 878,129(5) 841,955 807,167
Long-term debt 347,548 234,841 374,800 374,815 375,000
Other long-term obligations 160,405 160,267 181,043 193,666 234,226
</TABLE>
50
<PAGE> 35
(1) For the historical periods presented prior to June 30, 1995, all of the
excess cash generated by the Company's operations was regularly remitted
to Cooper pursuant to Cooper's centralized cash management program. As a
result, total indebtedness has been held constant from year-to-year for
such periods. See Note 11 of the Notes to Consolidated Financial
Statements of the Company for further information regarding long-term
debt.
(2) See Note 3 of the Notes to Consolidated Financial Statements for further
information relating to the nonrecurring/unusual charges incurred during
1996 and 1995.
(3) In the first quarter of 1992, the Company adopted the following accounting
standards: SFAS No. 106 (Employers' Accounting for Postretirement Benefits
Other Than Pensions); SFAS No. 109 (Accounting for Income Taxes); and SFAS
No. 112 (Employers' Accounting for Postemployment Benefits).
(4) See Note 20 of the Notes to the Consolidated Financial Statements for
further information relating to the calculation of earnings (loss) per
share amounts for periods prior to June 30, 1995.
(5) Includes a $36,607,000 receivable from Cooper at December 31, 1994.
51
<PAGE> 1
EXHIBIT 21
COOPER CAMERON CORPORATION -- SUBSIDIARIES
(AS OF MARCH 18, 1997)
<TABLE>
<CAPTION>
COOPER CAMERON CORPORATION (DELAWARE) -- PARENT % OWNED % OWNED
BY SUBSIDIARY BY CCC
------------- -------
<S> <C> <C>
Cameron Argentina S.A.I.C. (Argentina)(1) 100%
Cameron Australasia Pty. Ltd. (Australia) 100%
Cooper Cameron Pensions Australia. Pty. Ltd. (Australia) 100%
Cameron France, S.A. (France) (except 6 shares by directors) 100%
Cameron Gabon, S.A. (Gabon) (except 7 shares by directors) 100%
Cameron GmbH (Germany) 100%
Cameronvolgomash (Russia) 50%
Cameron Ireland Limited (Ireland) (except 1 share)(1) 100%
Cameron Norge AS (Norway) 100%
Cameron Venezolana, S.A. (Venezuela) 49%
Servicios Cameron, C.A. (Venezuela) 100%
Camercay, Ltd. (Grand Cayman) 100%
Compression Services Company (Ohio) 100%
Cooper Cameron de Mexico S.A. de C.V. (Mexico)(except 1 share) 100%
Cooper Cameron do Brasil Ltda. (Brazil) (except 1 share)(1) 100%
Cooper Cameron Foreign Sales Company Ltd. (Barbados) 100%
Cooper Cameron (U.K.) Limited (United Kingdom) 100%
CoopCam (U.K.) Limited (United Kingdom) 100%
Cameron Offshore Engineering Limited (United Kingdom) 100%
Cooper Cameron Pensions Limited (United Kingdom) 100%
Cameron Integrated Services Limited (United Kingdom) 100%
Cooper Cameron Holding B.V. (Netherlands) 100%
Cooper Energy Services B.V. (Netherlands) 100%
Cameron B.V. (Netherlands) 100%
Cooper Cameron Limited (Canada) 100%
Cooper, Rolls Corporation (Canada)(3) 50%
Cooper Cameron Corporation Nigeria (Nigeria) 60%
Cooper Energy Services de Venezuela, S.A. (Venezuela) 100%
Cooper Energy Services International, Inc. (Ohio) 100%
Canada Tiefbohrgerate und Maschinenfabrik GmbH (Austria) 100%
Cooper Cameron (Singapore) Pte. Ltd. (Singapore) 39%
Cooper Flow Control Australia Pty. Ltd. (Australia)(1) 50%
Cooper Cameron (Singapore) Pte. Ltd. (Singapore)(4) 61%
Cameron-Excel Sdn Bhd (Malaysia -- Joint Venture) 49%
Cameron (Brunei) Sdn Bhd (except 1 share owned by Lai Yue Kee) (Brunei) 100%
Cooper Petroleum Equipment Group, Inc. (Delaware) 100%
Cooper Flow Control Australia Pty. Ltd. (Australia) 50%
Cooper Rolls Incorporated (Ohio)(2) 50%
Cooper Rolls Limited (United Kingdom) (except 1 share) 100%
Cooper Turbocompressor, Inc. (Delaware) 100%
Cooper Turbocompressor (Deutschland) GmbH (Germany) 100%
Ingram Cactus (Malaysia) Sdn Bhd (Malaysia Joint Venture) 49%
Ingram Cactus de Venezuela (Malaysia Joint Venture) 49%
</TABLE>
(1) Partially owned by Cooper Petroleum Equipment Group, Inc.
(2) Joint venture with Rolls-Royce PLC
(3) Joint venture with Rolls-Royce Industries Canada Inc.
(4) Partially owned by Cooper Energy Services, Inc.
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Cooper Cameron Corporation of our report dated January 29 1997, included in
the 1996 Annual Report to Stockholders of Cooper Cameron Corporation.
We also consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-94948) pertaining to the Cooper Cameron Corporation Employee
Stock Purchase Plan, the Registration Statement (Form S-8 No. 33-95000)
pertaining to the Cooper Cameron Corporation 1995 Stock Option Plan for
Non-Employee Directors, the Registration Statement (Form S-8 No. 33-95002)
pertaining to the Cooper Cameron Corporation Retirement Savings Plan and the
Registration Statement (Form S-8 No. 33-95004) pertaining to the Cooper Cameron
Corporation Long-Term Incentive Plan of Cooper Cameron Corporation of our
report dated January 29, 1997, with respect to the consolidated financial
statements of Cooper Cameron Corporation incorporated by reference in the
Annual Report (Form 10-K) for the year ended December 31, 1996.
ERNST & YOUNG LLP
Houston, TX
March 21, 1997
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<FISCAL-YEAR-END> DEC-31-1996
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0
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