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THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT IS SUBORDINATED TO THE PRIOR
PAYMENT IN FULL OF THE SENIOR DEBT (AS DEFINED IN THE SUBORDINATION AND
INTERCREDITOR AGREEMENT DEFINED BELOW) PURSUANT TO, AND TO THE EXTENT PROVIDED
IN, THE SUBORDINATION INTERCREDITOR AGREEMENT DATED AS OF MARCH 31, 1999 AS
AMENDED, MODIFIED, SUPPLEMENTED AND/OR RESTATED, AMONG BORROWER AND THE
SUBORDINATED LENDERS PARTIES THERETO (AND THEIR AGENT) AND THE SENIOR LENDERS
(OR THEIR AGENT) PARTY THERETO.
================================================================================
AMENDED AND RESTATED
SUBORDINATED LOAN AGREEMENT
AMONG
BASIC ENERGY SERVICES, INC.
AS BORROWER
THE SUBORDINATED LENDERS NAMED IN THIS AGREEMENT,
AS SUBORDINATED LENDERS
AND
ENRON NORTH AMERICA CORP.
AS SUBORDINATED AGENT
DATED AS OF JUNE ___, 2000
$10,000,000 SUBORDINATED LOAN FACILITY
================================================================================
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TABLE OF CONTENTS
ARTICLE 1DEFINITIONS..............................................................................................1
Section 1.1 Certain Definitions....................................................................1
Section 1.2 Accounting Principles.................................................................12
ARTICLE 2AMOUNT AND TERM OF THE SUBORDINATED LOAN................................................................13
Section 2.1 Subordinated Loan.....................................................................13
Section 2.2 Repayment Obligations; Prepayments....................................................13
Section 2.3 Payments and Computations.............................................................14
Section 2.4 Interest..............................................................................15
Section 2.5 Subordinated Notes....................................................................15
Section 2.6 Taxes.................................................................................16
Section 2.7 [Intentionally Omitted.]..............................................................16
Section 2.8 [Intentionally Omitted.]..............................................................16
ARTICLE 3CONDITIONS OF CLOSING...................................................................................16
ARTICLE 4REPRESENTATIONS AND WARRANTIES..........................................................................20
Section 4.1 Corporate Existence...................................................................20
Section 4.2 Corporate Power and Authorization.....................................................20
Section 4.3 Binding Obligations...................................................................20
Section 4.4 No Legal Bar Or Resultant Lien........................................................20
Section 4.5 No Consent............................................................................20
Section 4.6 Financial Condition...................................................................20
Section 4.7 Liabilities...........................................................................21
Section 4.8 Litigation............................................................................21
Section 4.9 Taxes; Governmental Charges...........................................................21
Section 4.10 Ownership of Property; Liens; Leases of Equipment.....................................21
Section 4.11 Intellectual Property.................................................................21
Section 4.12 Defaults..............................................................................22
Section 4.13 Casualties; Taking of Properties......................................................22
Section 4.14 Margin Stock..........................................................................22
Section 4.15 Location of Business and Offices......................................................22
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Section 4.16 Compliance with the Law...............................................................22
Section 4.17 No Material Misstatements.............................................................23
Section 4.18 ERISA.................................................................................23
Section 4.19 Environmental Matters.................................................................23
Section 4.20 Subsidiaries; Partnerships............................................................25
Section 4.21 Certain Fees..........................................................................25
Section 4.22 Purpose of Loans......................................................................25
Section 4.23 Support and Security Documents........................................................25
Section 4.24 Employment............................................................................25
Section 4.25 [Intentionally Omitted]...............................................................26
Section 4.26 Insurance.............................................................................26
Section 4.27 Hedging Agreements....................................................................26
ARTICLE 5AFFIRMATIVE COVENANTS...................................................................................26
Section 5.1 Financial Statements and Reports......................................................26
Section 5.2 Certificates of Compliance............................................................27
Section 5.3 Accountants' Certificate..............................................................28
Section 5.4 Taxes Other Liens.....................................................................28
Section 5.5 Compliance with Laws..................................................................28
Section 5.6 Further Assurances....................................................................28
Section 5.7 Insurance.............................................................................28
Section 5.8 Accounts and Records..................................................................29
Section 5.9 Right of Inspection...................................................................29
Section 5.10 Notice of Certain Events..............................................................29
Section 5.11 ERISA Information and Compliance......................................................29
Section 5.12 Environmental Reports and Notices.....................................................29
Section 5.13 Maintenance...........................................................................30
Section 5.14 New Subsidiary........................................................................30
Section 5.15 [Intentionally Omitted]...............................................................30
Section 5.16 Change of Principal Place of Business.................................................30
Section 5.17 [Intentionally Omitted]...............................................................31
ARTICLE 6NEGATIVE COVENANTS......................................................................................31
Section 6.1 Liens.................................................................................31
Section 6.2 Mergers...............................................................................31
Section 6.3 Indebtedness and Other Obligations....................................................31
Section 6.4 Dividends; Compensation...............................................................32
Section 6.5 Investments...........................................................................32
Section 6.6 [Intentionally Omitted]...............................................................32
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Section 6.7 Nature of Business....................................................................32
Section 6.8 Amendment of Articles of Incorporation or Bylaws......................................32
Section 6.9 Asset Sales...........................................................................32
Section 6.10 Transactions with Affiliates..........................................................33
Section 6.11 Partnerships..........................................................................33
Section 6.12 Subsidiaries..........................................................................33
Section 6.13 Equity Proceeds.......................................................................33
Section 6.14 Public Disclosures....................................................................33
Section 6.15 Limitation on Payment Restrictions Affecting Subsidiaries.............................34
Section 6.16 Financial Covenants...................................................................34
Section 6.17 Leases/Capital Leases.................................................................35
ARTICLE 7
EVENTS OF DEFAULT.......................................................................................36
Section 7.1 Events of Default.....................................................................36
Section 7.2 Acceleration..........................................................................38
Section 7.3 Default Interest......................................................................38
Section 7.4 Other Subordinated Loan Documents.....................................................38
Section 7.5 Right of Setoff.......................................................................39
Section 7.6 [Intentionally Omitted]...............................................................39
Section 7.7 Application of Payments...............................................................39
ARTICLE 8
THE SUBORDINATED AGENT..................................................................................40
Section 8.1 Authorization and Action..............................................................40
Section 8.2 Subordinated Agent's Reliance, Etc....................................................40
Section 8.3 The Subordinated Agent and Its Affiliates.............................................41
Section 8.4 Subordinated Lender Loan Decision.....................................................41
Section 8.5 Indemnification.......................................................................41
Section 8.6 Successor Subordinated Agent..........................................................42
ARTICLE 9
MISCELLANEOUS...........................................................................................42
Section 9.1 Interpretation and Survival of Provisions.............................................42
Section 9.2 Costs, Expenses and Taxes.............................................................43
Section 9.3 No Waiver; Modifications in Writing...................................................45
Section 9.4 Binding Effect; Assignment............................................................46
Section 9.8 Communications........................................................................48
Section 9.9 Interest..............................................................................48
Section 9.10 Governing Law.........................................................................49
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Section 9.11 WAIVER OF JURY TRIAL..................................................................49
Section 9.12 LIMITATION ON DAMAGES.................................................................50
Section 9.13 Execution in Counterparts.............................................................50
EXHIBITS:
Exhibit A - Form of Subordinated Note
Exhibit B - Form of Guaranty
Exhibit C - Form of Pledge Agreements
Exhibit D - Form of Security Agreements
Exhibit 5.2 - Form of Compliance Certificate
SCHEDULES:
Schedule 4.19 - Environmental
Schedule 4.20(a) - Subsidiaries
Schedule 4.20(b) - Partnerships; Joint Ventures
Schedule 4.27 - Hedging Arrangements
Schedule 6.3 - Certain Indebtedness
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AMENDED AND RESTATED
SUBORDINATED LOAN AGREEMENT
This Amended and Restated Subordinated Loan Agreement (the
"Subordinated Loan Agreement") is made and entered into as of June ___, 2000,
among BASIC ENERGY SERVICES, INC., a Delaware corporation, f/k/a Sierra Well
Service, Inc. ("Borrower") the SUBORDINATED LENDERS, as defined below, and ENRON
NORTH AMERICA CORP., a Delaware corporation, as agent for the Subordinated
Lenders ("Subordinated Agent").
The Subordinated Loan Agreement dated March 31, 1999 (the "Original
Loan Agreement") was entered into among the Borrower, the Subordinated Lenders
and Joint Energy Development Investments II Limited Partnership, a Delaware
limited partnership ("JEDI II"). The Original Loan Agreement was amended
pursuant to the First Amendment of Loan Agreement dated March 21, 2000 (the
"First Amendment"). In conjunction with the initial public offering of the
Borrower's common stock and the purchase by CITBC, as hereafter defined, of all
indebtedness owed by the Borrower under the Senior Loan Agreement dated as of
March 31, 1999 among the Borrower, the Senior Lenders identified therein, and
the Senior Agent, as such terms are defined therein (as modified from time to
time the "Senior Loan Agreement"), the Borrower, the Subordinated Lenders and
the Subordinated Agent have agreed to amend and restate the Original Loan
Agreement pursuant to the terms hereof.
In consideration of the mutual covenants and agreements herein
contained and of the loans hereinafter referred to, the parties agree as
follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Certain Definitions.
As used in this Agreement the following terms shall have the following
meanings:
"Acquisitions" shall mean, collectively, the Asset Acquisition and the
Stock Acquisition.
"Acquisition Subsidiaries" mean, collectively, the following: (i) Turn
Around Trucking, Inc.; (ii) Sundown Operating, Inc. d/b/a Sundown Well Service;
(iii) Xxxxxx Well Servicing Co., Inc.; (iv) Gold Star Service Company, Inc.; (v)
Xxxxxxxx Well Service, Inc., and (vi) Xxxxx Xxxxxxxx Inc. d/b/a Xxxxx Well
Service.
"Advance" shall mean the outstanding principal from a Subordinated
Lender which represents such Subordinated Lender's Pro Rata Share of the
Subordinated Loan.
"Affiliate" of any specified Person shall mean any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control", when used with respect to any Person, means the power
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to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing; provided that no Person which would otherwise be an Affiliate of
Enron Capital & Trade Resources Corp. if not for this proviso shall be
considered as an Affiliate of the Borrower or its Subsidiaries.
"Asset Acquisition" shall mean the acquisition of (i) the assets used
in the business operated under the name Trinity Services pursuant to the Asset
Purchase Agreement dated as of February 10, 2000, between Xxxxxxx X. Xxxxxx
d/b/a Trinity Services and the Borrower; and (ii) the assets of Gold Star SWD,
Ltd., Co., a New Mexico limited liability company, pursuant to the Acquisition
Agreement dated as of March 14, 2000, between the Borrower and the sellers named
therein relating to the acquisition of the capital stock of Gold Star Service
Company, Inc., a New Mexico corporation, and the assets of Gold Star SWD, Ltd.
Co., a New Mexico limited liability company.
"Bailment Agreement" shall mean a Bailment Agreement among the
Borrower, the Senior Agent and the Subordinated Agent as the same may be
mutually agreed upon by the parties.
"Borrower" shall mean Basic Energy Services, Inc., a Delaware
corporation.
"Business Day" shall mean any day other than Saturday, Sunday, or a day
on which banking institutions in Houston, Texas are not required to open for
business.
"Capital Expenditures" for any period shall mean the aggregate of all
expenditures of the Borrower and its Subsidiaries during such period that in
conformity with GAAP are required to be included in or reflected by the
property, plant or equipment or similar fixed assets account reflected in the
Consolidated Balance Sheet.
"Capital Lease" shall mean any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"Capitalized Lease Obligation" shall mean the amount of the liability
under any Capital Lease that, in accordance with GAAP, is required to be
capitalized and reflected as a liability on the balance sheet.
"Capital Stock" of any Person shall mean all shares, general or limited
partnership interests, membership interests, or other ownership interests
(regardless of how designated) of or in a corporation, partnership, limited
liability company, trust, or other entity, whether voting or non-voting,
including common stock, preferred stock or any other "equity security" (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended).
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"CITBC" shall mean THE CIT GROUP/BUSINESS CREDIT, INC., a New York
corporation.
"CITBC Financing Agreement" shall mean that certain Amended and
Restated Financing Agreement dated of even date herewith between the CITBC and
the Borrower as the same may be amended, supplemented or otherwise modified from
time to time.
"CITBC Loan Documents" shall mean the "Loan Documents" as such term is
defined in the CITBC Financing Agreement.
"Closing Date" shall mean the date upon which each of the conditions
precedent contained in Article 3 have been either (a) satisfied in full to the
Subordinated Agent's satisfaction or (b) waived by the Subordinated Agent in its
sole discretion; provided that in no event shall the Closing Date be a date
occurring after June 30, 2000.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, any successor statute, and the rules and regulation thereunder.
"Collateral" shall mean any real or personal property which may now or
hereafter be subject to a Lien securing the Subordinated Loan Obligations,
including the Liens granted by the Borrower concurrently with the execution of
this Subordinated Loan Agreement for the benefit of the Subordinated Lenders.
"Commitment" shall mean, for any Subordinated Lender, such Subordinated
Lender's commitment to make its Pro Rata Share of the Subordinated Loan pursuant
to the terms of this Subordinated Loan Agreement in an aggregate outstanding
amount not to exceed the Subordinated Lender's Maximum Commitment.
"Common Stock" shall mean the common stock, no par value per share, of
the Borrower or such other Capital Stock or other securities as shall constitute
the common equity of the Borrower.
"Consolidated Balance Sheet" shall mean a consolidated balance sheet
for the Borrower (and its Subsidiaries) eliminating all inter-company
transactions and prepared in accordance with GAAP, subject to year end
adjustments.
"Consolidating Balance Sheet" shall mean an individual balance sheet
for each of the Subordinated Loan Parties, showing all eliminations of
inter-company transactions and prepared in accordance with GAAP, subject to
year-end adjustments.
"Default" shall mean any event which is, or after notice or passage of
time, or both, would be, an Event of Default.
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"Default Rate" shall mean, for the applicable period, a per annum
interest rate equal to the applicable interest rate on the outstanding principal
balance of the respective Subordinated Notes as set forth in Section 2.4(a) for
such period plus 3.00% per annum.
"EBITDA" shall mean, in any period, calculated on a consolidated basis
in accordance with GAAP for the Borrower and its Subsidiaries, all net income of
the Borrower and its Subsidiaries before all (i) interest and tax obligations,
(ii) depreciation and (iii) amortization for said period, all determined in
accordance with GAAP on a basis consistent with the latest audited financial
statements of the Borrower but excluding the effect of extraordinary and/or
non-reoccurring gains or losses for such period.
"Effective Date" shall mean the date of this Subordinated Loan
Agreement.
"Environmental Laws" shall mean any and all laws, statutes, ordinances,
rules, regulations, orders, or determinations of any Governmental Authority
pertaining to health or the environment in effect in any and all jurisdictions
in which the Borrower or its Subsidiaries are conducting or at any time have
conducted business, or where any property of the Borrower or its Subsidiaries is
located, or where any hazardous substances generated by or disposed of by the
Borrower or its Subsidiaries are located, including but not limited to the Oil
Pollution Act of 1990 ("OPA"), as amended, the Clean Air Act, as amended, the
Comprehensive Environmental, Response, Compensation, and Liability Act of 1980
("CERCLA"), as amended, the Federal Water Pollution Control Act, as amended, the
Occupational Safety and Health Act of 1970, as amended, the Resource
Conservation and Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking
Water Act, as amended, the Toxic Substances Control Act, as amended, the
Superfund Amendments and Reauthorization Act of 1986, as amended, and other
environmental conservation or protection laws. The term "oil" has the meaning
specified in OPA; the terms "hazardous substance," "release" and "threatened
release" have the meanings specified in CERCLA, and the terms "solid waste,"
"disposal" and "disposed" have the meanings specified in RCRA; provided,
however, if either CERCLA, RCRA or OPA is amended so as to broaden the meaning
of any term defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment, and provided, further, that, to the extent the
laws of the state in which any property of the Borrower or its Subsidiaries is
located establish a meaning for "oil," "hazardous substance," "release," "solid
waste" or "disposal" which is broader than that specified in either OPA, CERCLA
or RCRA, such broader meaning shall apply with respect to such property.
"Equipment" shall mean all of Borrower's and its Subsidiaries' present
and future owned fixtures, equipment, mobile equipment, vehicles, interstate
commercial vehicles, workover rigs and inventory comprised of such items,
wherever located, including Vehicles, tongs, hooks, tubing elevators, pumps,
pipes, engines, containers, tires, parts inventory, and other oil-field service
equipment, and all parts thereof and all accessions and additions thereto.
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"Equity Documents" shall mean the Subscription Agreement and all
documents, agreements, instruments and certificates to be issued or entered into
thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, any successor statute, and the rules and
regulations thereunder.
"Event of Default" shall have the meaning specified in Section 7.1.
"Final Maturity Date" shall mean June 30, 2004.
"Financial Statements" shall mean consolidated balance sheets,
statements of operation and statements of cash flow, the consolidating schedules
used to prepare the same and, on an annual basis, appropriate footnotes prepared
in accordance with GAAP.
"Financing Statement" shall mean any document executed by either the
Borrower or any of its Subsidiaries required to perfect the pledge or security
interest granted by the Subordinated Loan Parties in any of the Collateral.
"Fiscal Quarter" shall mean each three (3) month period ending on March
31, June 30, September 30 and December 31 of each year.
"Fiscal Year" shall mean each twelve (12) month period commencing on
January 1 of each year and ending on the following December 31.
"Fixed Charge Coverage Ratio" shall mean, for the relevant period, the
ratio determined by dividing (i) the amount equal to the difference of: (a)
EBITDA, minus (b) non-financed Capital Expenditures, by (ii) the sum of: (v)
Interest Expense, plus (w) the principal component of obligations in respect of
Capital Leases repaid or, if not repaid, scheduled to be repaid, plus (x) the
amount of principal repaid, or if not repaid, scheduled to be repaid on the Term
Loan (as defined in the CITBC Financing Agreement), the Subordinated Loan,
Indebtedness secured by Permitted Liens, and Indebtedness permitted pursuant to
clause (c) of Section 6.3, plus, (y) all federal, state, and local income tax
expenses due and payable by the Borrower and its Subsidiaries, plus (z) all cash
dividends paid or, if not paid, scheduled to be paid, on account of the Standby
Preferred Stock.
"GAAP" shall mean generally accepted accounting principles, applied on
a consistent basis, as set forth in Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants or in statements of
the Financial Accounting Standards Board or their respective successors and
which are applicable in the circumstances as of the date in question. Accounting
principles are applied on a "consistent basis" when the accounting principles
observed in a current period are comparable in all material respects to those
accounting principles applied in preceding periods.
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"Governmental Authority" shall mean any (domestic or foreign) federal,
native American Indian, state, province, county, city, municipal, or other
political subdivision or government, department, commission, board, bureau,
court, agency, or any other instrumentality of any of them, which exercises
jurisdiction over the Borrower, any of its Subsidiaries, or any of their
respective property.
"Guaranteed Debt" of any Person shall mean, without duplication, all
Indebtedness of any other Person guaranteed directly or indirectly in any manner
by such Person, or in effect guaranteed directly or indirectly by such Person
through an agreement (i) to pay or purchase such Indebtedness or to advance or
supply funds for the payment or purchase of such Indebtedness, (ii) to purchase,
sell or lease (as lessee or lessor) property, or to purchase or sell services,
primarily for the purpose of enabling the debtor to make payment of such
Indebtedness or to assure the holder of such Indebtedness against loss, (iii) to
supply funds to, or in any other manner invest in, the debtor (including any
agreement to pay for property or services to be acquired by such debtor
irrespective of whether such property is received or such services are
rendered), (iv) to maintain working capital or equity capital of the debtor, or
otherwise to maintain the net worth, solvency or other financial condition of
the debtor, or (v) otherwise to assure a creditor against loss; provided that
the term "guarantee" shall not include endorsements for collection or deposit,
in either case in the ordinary course of business, or any obligation or
liability of such Person in respect of leasehold interests assigned by such
Person to any other Person.
"Guaranty" shall mean (i) the Guaranty dated as of the Effective Date
made by the Borrower's Subsidiaries in favor of the Subordinated Agent
substantially in the form of Exhibit B, (ii) any present or future guaranty in
favor of the Subordinated Agent for the benefit of the Subordinated Lenders
guaranteeing the payment and performance of the Subordinated Loan Obligations as
each of the foregoing may be amended, supplemented, or otherwise modified from
time to time.
"Indebtedness" shall mean, with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services, excluding any trade accounts
payable and other accrued current liabilities incurred in the ordinary course of
business, (ii) all obligations of such Person evidenced by bonds, notes,
debentures, or other similar instruments, (iii) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade accounts payable
arising in the ordinary course of business, (iv) all Capitalized Lease
Obligations of such Person, (v) all indebtedness referred to in (but not
excluded from) clause (i), (ii), (iii), or (iv) above of other Persons, the
payment of which is secured by (or for which the holder of such indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien upon or
in property (including, without limitation, accounts and contract rights) owned
by such Person, even though such Person has not assumed or become liable for the
payment of such indebtedness, (vi) all Guaranteed Debt
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of such Person, (vii) all Redeemable Capital Stock that has any redemptions,
dividend payments, or other obligations that are or could become due before the
Final Maturity Date issued by such Person.
"Interest Expense" shall mean, WITHOUT DUPLICATION, total consolidated
interest obligations (paid or accrued) of the Borrower and its Subsidiaries,
determined in accordance with GAAP on a basis consistent with the latest audited
statements of the Borrower.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), or preference,
priority, or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any conditional sale or other
title retention agreement, any Capital Lease having substantially the same
economic effect as any of the foregoing, and the filing of any financing
statement under any applicable version of the Uniform Commercial Code in effect
from time to time or any comparable law of any jurisdiction in respect of any of
the foregoing). In no event shall a negative pledge constitute a Lien.
"Majority Subordinated Lenders" shall mean, at any time, Subordinated
Lenders holding more than 50% of the then aggregate unpaid principal amount of
the Subordinated Loan at such time.
"Material Adverse Effect" shall mean any circumstances or events which
could (i) have a material adverse effect on the assets or properties,
liabilities, financial condition, business, operations, affairs, or
circumstances of the Borrower and its Subsidiaries (taken as a whole) from the
facts represented or warranted in any Subordinated Loan Document or Equity
Document (other than any representation or warranty related solely to a
different point in time), or (ii) materially impair the ability of the Borrower
or any of its Subsidiaries to carry out its business as it exists on the date of
this Subordinated Loan Agreement or proposed at the date of this Subordinated
Loan Agreement to be conducted or to meet its obligations under the Subordinated
Loan Documents or Equity Documents on a timely basis.
"Maximum Rate" shall mean, at any particular time in question, the
maximum rate of interest which under applicable law may then be charged on the
Subordinated Notes. If such maximum rate changes after the date hereof, the
Maximum Rate shall be automatically increased or decreased, as the case may be,
without notice to the Borrower from time to time as of the effective date of
each change in such maximum rate.
"Mortgages" shall mean (a) such Security Documents requested by the
Subordinated Agent in form and substance satisfactory to the Subordinated Agent
which shall replace and/or amend and restate the existing Deeds of Trust,
Security Agreements, and Fixture Filings, and Mortgages, Security Agreements,
and Fixture Filings executed in connection with the Original Loan Agreement, and
(b) any present or future deeds of trust, mortgages, or similar agreements made
by the Borrower or any Subsidiary, granting a lien and security interest,
subject only to Permitted Liens, in all real property, fixtures and improvements
owned by the respective Subordinated Loan Parties, including
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any leasehold estate in real property, fixtures and improvements, in favor of
the Subordinated Agent for the benefit of the Subordinated Lenders securing the
Subordinated Loan Obligations.
"Net Worth" shall mean the consolidated assets in excess of
liabilities, and shall be determined in accordance with GAAP, on a consistent
basis with the latest audited statements of the Borrower and its Subsidiaries.
"Operating Leases" shall mean all leases of property by the Borrower or
any of its Subsidiaries (whether real, personal or mixed) other than Capital
Leases.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Payment Date" shall mean the last Business Day of each March, June,
September, and December following the Effective Date until the Final Maturity
Date.
"Permitted Lien" shall mean (i) Liens disclosed in Schedule 4.10, (ii)
ad valorem taxes not yet due and payable, laborers', vendors', repairmen's,
mechanics', worker's, or materialmen's liens arising by operation of law or
incident to the construction or improvement of property if the obligations
secured thereby are not yet due or are being contested in good faith by
appropriate legal proceedings, (iii) minor irregularities in title to real
property which do not materially interfere with the occupation, use and
enjoyment by the Borrower or any Subsidiary of any of their respective
properties in the normal course of business as presently conducted or materially
impair the value thereof for such business, (iv) Liens securing the Obligations
(as defined in the CITBC Financing Agreement) in a principal amount not to
exceed $35,000,000, (v) deposits made (and the Liens thereon) in the ordinary
course of business (including, without limitation, security deposits for leases,
surety bonds and appeal bonds) in connection with workers' compensation,
unemployment insurance and other types of social security benefits or to secure
the performance of tenders, bids, contracts (other than for the repayment or
guarantee of borrowed money or purchase money obligations), statutory
obligations and other similar obligations arising as a result of progress
payments under government contracts, (vi) deposits made to secure liabilities to
insurance carriers under insurance or self-insurance arrangements, (vii) Liens
securing reimbursement obligations under letters of credit, provided in each
case that such liens cover only the title documents and related goods and any
proceeds thereof covered by the related letter of credit, (viii) Purchase Money
Liens, (ix) bankers' liens and rights of set-off, charge back and recoupment
with respect to deposit accounting, (x) liens of judgment creditors provided
such liens do not exceed $50,000 (other than liens bonded or insured) and (xi)
Liens securing the Subordinated Loan Obligations.
"Person" shall mean any individual, corporation, limited liability
company, limited or general partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, or Government Authority.
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"Plan" shall mean any plan subject to Title IV of ERISA and maintained
by the Borrower or any Subsidiary, or any such plan to which the Borrower or any
Subsidiary is required to contribute on behalf of their employees.
"Pledge Agreements" shall mean (a) the Pledge Agreements dated as of
the Effective Date, respectively made by the Borrower and Gold Star Service
Company, Inc. in favor of the Subordinated Agent substantially in the form of
Exhibit D and (b) such other pledge agreements securing the Subordinated Loan
Obligations, as the same may be amended, supplemented, or otherwise modified
from time to time.
"Pro Rata Share" shall mean, with respect to any Subordinated Lender,
(i) while no Advances are outstanding, the ratio (expressed as a percentage) of
such Subordinated Lender's Maximum Commitment, at any given time, to the total
of the Maximum Commitments at such time and (ii) while Advances are outstanding,
the the ratio (expressed as a percentage) outstanding principal amount of
Advances of such Subordinated Lender at such time to the aggregate outstanding
amount of Advances at such time.
"Public Offering" shall mean an initial public offering of the common
stock of the Borrower pursuant to a registration statement on Form S-1 (Reg. No.
33-33108) filed with the U. S. Securities and Exchange Commission.
"Purchase Money Liens" shall mean Liens on any item of Equipment
acquired after the date of this Subordinated Agreement by any Subordinated Loan
Party provided that (i) each such Lien shall attach only to the property to be
acquired, (ii) a description of the property so acquired is furnished to
Subordinated Agent, and (iii) the Indebtedness incurred in connection with such
acquisitions of Equipment by the Subordinated Loan Parties shall not exceed in
the aggregate $6,000,000 in any Fiscal Year.
"Redeemable Capital Stock" of any Person means any Capital Stock of
such Person or any Subsidiary of such Person that, either by its terms, by the
terms of any security into which it is convertible or exchangeable or otherwise,
(i), is, or upon the happening of an event or passage of time would be, required
to be redeemed on or prior to the Final Maturity Date, or (ii) is redeemable at
the option of the holder thereof at any time prior to the Final Maturity Date,
or (iii) is convertible into or exchangeable for debt securities at any time
prior to the Final Maturity Date.
"Refinancing Fee Agreement" means the letter agreement dated as of even
date herewith between the Borrower and ENA CLO I Holding Company I, L.P.
"Requirement of Law" shall mean as to any Person, the Articles or
Certificate of Incorporation and By-laws or other organizational or governing
documents of such Person, and any law, treaty, rule, or regulation or
determination of an arbitrator or a court or other Governmental
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Authority, domestic or foreign, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.
"Responsible Officer" shall mean the chief executive officer,
president, executive vice president, general counsel, treasurer, or corporate
secretary of the Borrower or any of its Subsidiaries, as the case may be.
"Security Agreements" shall mean (a) the Amended and Restated Security
Agreement dated as of the Effective Date, made by the Borrower and its
Subsidiaries, in favor of the Subordinated Agent substantially in the form of
Exhibit D and (b) any future security agreements made by the Borrower or any of
the Subsidiaries, granting a security interest in all of the assets and
properties of the Subordinated Loan Parties, in favor of the Subordinated Agent
for the benefit of the Subordinated Lenders as security for the payment or
performance of the Subordinated Loan Obligations as each of the foregoing may be
amended, supplemented, or otherwise modified from time to time.
"Security Documents" shall mean this Subordinated Loan Agreement, the
Mortgages, the Financing Statements, the Pledge Agreement, the Security
Agreements, the Guaranties, and any and all other agreements or instruments now
or hereafter executed and delivered by the Borrower, the Subsidiaries, or any
other Person as security or support for the payment or performance of the
Subordinated Loan Obligations as each of the foregoing may be amended,
supplemented, or otherwise modified from time to time.
"Senior Agent" means CITBC, as agent for itself and any other lender
under the CITBC Financing Agreement.
"Standby Preferred Stock" shall mean any shares of the Borrower's
Series D Preferred Stock that may be issued pursuant to the Subscription
Agreement.
"Stock Acquisition Agreements" shall mean (i) the Stock Purchase
Agreement dated as of December 29, 1999, between the Borrower and the sellers
named therein relating to the acquisition of the capital stock of Xxxxxxxx Well
Service, Inc., a Texas corporation; (ii) the Stock Purchase Agreement dated as
of February 8, 2000, between the Borrower and Xxxxx X. Xxxxxx, relating to the
acquisition of Sundown Operating, Inc., d/b/a Sundown Well Service, a Texas
corporation; (iii) the Stock Purchase Agreement dated as of February 20, 2000
between the Borrower and Xxx Xxxxx and Xxxxx Xxxxxx, as the sellers, relating to
the acquisition of the capital stock of Xxxxxx Well Servicing Co., Inc., a New
Mexico corporation; (iv) the Stock Purchase Agreement dated as of March 1, 2000
between the Borrower and Xxxxxx X. Best and Xxx Xxxxxx, Trustee of the Best
Children's Trust, as the sellers, relating to the acquisition of the capital
stock of Turn Around Trucking, Inc., a Texas corporation; and (v) the
Acquisition Agreement dated as of March 14, 2000, between the Borrower and the
stock sellers named therein relating to the acquisition of the capital stock of
Gold Star Service Company, Inc., a New Mexico corporation, and all of the assets
of Gold Star SWD, Ltd. Co., a New Mexico limited liability company.
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"Stock Acquisition" shall mean the Borrower's acquisition on the
Closing Date of all of the issued and outstanding Stock of each of the
Acquisition Subsidiaries pursuant to the Stock Acquisition Agreements.
"Subordinated Agent's Account" shall mean the account specified by the
Subordinated Agent as the Subordinated Agent's Account shall by written notice
to the Borrower.
"Subordinated Lenders" shall mean the Subordinated Lenders listed on
the signature pages of this Subordinated Loan Agreement and each assignee that
shall become a party to this Subordinated Loan Agreement pursuant to Section
9.4.
"Subordinated Lender's Account" shall mean, for any Subordinated
Lender, the account specified by such Subordinated Lender as its Subordinated
Lender's Account by notice in writing to the Subordinated Agent.
"Subordinated Lender's Maximum Commitment" shall mean $10,000,000.
"Subordinated Loan" shall mean the loan evidenced by this Subordinated
Loan Agreement consisting of the Advances made by the Subordinate Lenders under
the Original Loan Agreement.
"Subordinated Loan Documents" shall mean, collectively, the
Subordinated Loan Agreement, the Subordinated Notes, the Refinancing Fee
Agreement, the Guaranty, the Security Documents, the Subordination Agreement,
and all other documents, agreements, and other instruments executed in
connection with the Subordinated Loan Agreement as each of the foregoing may be
amended, supplemented, or otherwise modified from time to time.
"Subordinated Loan Obligations" shall mean all principal, interest,
fees, reimbursements, indemnifications, and other amounts or obligations now or
hereafter owed or performable by the Subordinated Loan Parties under the
Subordinated Loan Documents.
"Subordinated Loan Parties" shall mean the Borrower and the
Subsidiaries.
"Subordinated Note" shall mean a promissory note in substantially the
form of Exhibit A made by the Borrower and payable to the order of any
Subordinated Lender evidencing indebtedness of the Borrower to such Subordinated
Lender resulting from the Subordinated Loan as the same may be amended,
supplemented, or otherwise modified from time to time.
"Subordination Agreement" shall mean the Amended and Restated
Subordination and Intercreditor Agreement dated as of even date herewith among
the Subordinated Loan Parties, the Subordinated Agent, and the Senior Agent as
the same may be amended, supplemented, or otherwise modified from time to time.
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"Subscription Agreement" shall mean the Subscription Agreement dated
June 15, 2000 between Subordinated Agent and Borrower relating to purchase of
Standby Preferred Stock of Borrower as the same may be amended, supplemented, or
otherwise modified from time to time .
"Subsidiary" shall mean any entity of which more than 50% of the Voting
Stock is owned of record or beneficially, directly or indirectly, by another
entity. Unless otherwise specified or the context otherwise requires,
"Subsidiary" refers to a Subsidiary of the Borrower and a Subsidiary of any
other Subsidiary of the Borrower.
"Tangible Net Worth" shall mean the following on a consolidated basis
for the Borrower and its Subsidiaries, and shall be determined in accordance
with GAAP, on a consistent basis with the latest audited statements of the
Borrower and its Subsidiaries: consolidated shareholders' equity less the
consolidated net book value of all assets that would be deemed "intangible"
under GAAP.
"Vehicles" means all of Borrower's present and future owned or leased
crew cabs, pick-ups, vans, trucks, automobiles, tractors, trailers, and other
mobile equipment.
"Voting Stock" means Capital Stock of any class or classes, the holders
of which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or persons performing similar functions).
Section 1.2 Accounting Principles.
(a) The Borrower shall not, and shall not permit any
of its Subsidiaries to, materially change any method of accounting employed in
the preparation of their Financial Statements from the methods employed in the
preparation of the audited consolidated Financial Statements dated as of
December 31, 1999, unless required to conform to GAAP or approved in writing by
the Subordinated Agent.
(b) Except as expressly provided for in this
Subordinated Loan Agreement, all accounting terms, definitions, ratios, and
other tests described herein shall be construed in accordance with GAAP in
effect from time to time.
(c) When the Financial Statements or financial
results of any group of Persons are described as "combined," that reference is
to the financial statements or financial results of such Persons, but not their
Subsidiaries, taken together on a combined basis after eliminating significant
inter-entity balances and transactions.
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ARTICLE 2
AMOUNT AND TERM OF THE SUBORDINATED LOAN
Section 2.1 Subordinated Loan. Subject to the terms, conditions and
notice requirements and relying on the representations and warranties contained
in this Subordinated Loan Agreement and the other Subordinated Loan Documents,
on the Closing Date but effective as of the Effective Date Ten Million and
No/100 Dollars ($10,000,000) of the outstanding principal amount owed by the
Borrower under the Original Loan Agreement shall be converted into the
Subordinated Loan which shall consist of Advances owed to each Subordinated
Lender in an amount equal to such Subordinated Lender's Pro Rata Share of
$10,000,000.
Section 2.2 Repayment Obligations; Prepayments.
(a) Principal. The Borrower shall pay to the
Subordinated Agent for the ratable benefit of the Subordinated Lenders the
aggregate outstanding principal amount of the Subordinated Loan on the Final
Maturity Date.
(b) Voluntary Prepayments. The Subordinated Loan may
be prepaid in whole or in part, from time to time, without penalty or premium,
following ten (10) days prior written notice to the Subordinated Agent. Any
voluntary partial prepayments of principal must be in whole multiples of
$100,000 and voluntary prepayments may only be made on a Payment Date and shall
include all interest accrued on the Subordinated Loan and unpaid to the date of
payment. Voluntary prepayments of principal may not be reborrowed. Any
prepayments shall be made to the Subordinated Agent for the ratable benefit of
the Subordinated Lenders.
(c) Mandatory Prepayments. After the Obligations (as
defined in the CITBC Financing Agreement) have been repaid in full, in the event
of any disposition or transfer, including, without limitation, any transfer by
merger or operation of law, by the Borrower or any Subsidiary of any of their
respective assets, Capital Stock or debt securities, or should the Borrower or
any Subsidiary secure any loans other than the Subordinated Loan or the loan
under the CITBC Financing Agreement, and whether such sales or loans are
undertaken with or without the consent of the Majority Subordinated Lenders, the
net proceeds thereof (after deducting all reasonable costs and expenses incurred
by the Borrower or Subsidiary in connection therewith) shall be delivered to the
Subordinated Agent for the ratable benefit of the Subordinated Lenders as a
mandatory prepayment of the Subordinated Loan provided that with regard to any
disposition or transfer of any assets of the Borrower or its Subsidiaries, such
prepayment shall only be required to the extent that such disposition or
transfer requires the Subordinated Majority Lenders consent pursuant to Section
6.9. All mandatory prepayments shall be applied to the Subordinated Loan
Obligations in accordance with Section 7.7. Mandatory prepayments of principal
may not be reborrowed.
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Section 2.3 Payments and Computations.
(a) All payment hereunder shall be made in U.S.
Dollars. The Borrower shall make each payment under the Subordinated Loan
Agreement and under the Subordinated Notes not later than 12:00 noon (New York,
New York time) on the day when due to the Subordinated Agent's Account in
immediately available funds. All payments by the Borrower hereunder shall be
made without any offset, abatement, withholding, deduction, counterclaim, or
reduction. Upon receipt of payment from the Borrower of any principal, interest,
or fees due to the Subordinated Lenders, the Subordinated Agent shall promptly
after receipt thereof distribute to the Subordinated Lenders their ratable share
of such payments for the account of their respective Subordinated Lender's
Account. If and to the extent that the Subordinated Agent shall not have so
distributed to any Subordinated Lender its ratable share of such payments, the
Subordinated Agent agrees that it shall pay interest on such amount for each day
after the day when such amount is made available to the Subordinated Agent by
the Borrower until the date such amount is paid to such Subordinated Lender by
the Subordinated Agent at the Federal Funds Rate in effect from time to time.
Interest on such amount shall be due and payable by the Subordinated Agent upon
demand by such Subordinated Lender. Upon receipt of other amounts due solely to
the Subordinated Agent or a specific Subordinated Lender, the Subordinated Agent
shall distribute such amounts to the appropriate party to be applied in
accordance with the terms of the Subordinated Loan Agreement. Whenever any
payment shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of payment of interest.
If the time for payment for an amount payable is not specified in the
Subordinated Loan Documents, or in any other document, the payment shall be due
and payable ten (10) days after the date on which the Subordinated Agent or
applicable Subordinated Lender demands payment therefor.
(b) Unless the Subordinated Agent shall have received
written notice from the Borrower prior to any date on which any payment is due
to the Subordinated Lender that the Borrower shall not make such payment in
full, the Subordinated Agent may assume that the Borrower has made such payment
in full to the Subordinated Agent on such date and the Subordinated Agent may,
in reliance upon such assumption, cause to be distributed to each Subordinated
Lender on such date an amount equal to the amount then due such Subordinated
Lender. If and to the extent the Borrower shall not have so made such payment in
full to the Subordinated Agent, each Subordinated Lender shall repay to the
Subordinated Agent forthwith on demand such amount distributed to such
Subordinated Lender, together with interest thereon from the date such amount is
distributed to such Subordinated Lender until the date such Subordinated Lender
repays such amount to the Subordinated Agent, at an interest rate equal to, the
Federal Funds Rate in effect from time to time.
(c) Each Subordinated Lender agrees that if it
should receive any payment (whether by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, by the enforcement of any right under the
Subordinated Loan Documents, or otherwise) in respect of any obligation of the
Borrower to pay
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principal, interest, fees, or any other obligation incurred under the
Subordinated Loan Documents in a proportion greater than the total amount of
such principal, interest, fees, or other obligation then owed and due by the
Borrower to such Subordinated Lender bears to the total amount of principal,
interest, fees, or other obligation then owed and due by the Borrower to the
Subordinated Lenders immediately prior to such receipt, then such Subordinated
Lender receiving such excess payment shall purchase for cash without recourse
from the other Subordinated Lenders an interest in the obligations of the
Borrower to such Subordinated Lenders in such amount as shall result in a
participation by all of the Subordinated Lenders, in proportion with the
Subordinated Lenders' respective pro rata shares, in the aggregate unpaid amount
of principal, interest, fees, or any such other obligation, as the case may be,
owed by the Borrower to all of the Subordinated Lenders; provided that if all or
any portion of such excess payment is thereafter recovered from such
Subordinated Lender, such purchase shall be rescinded and the purchase price
restored to the extent of such recovery, in proportion with the Subordinated
Lenders' respective Pro Rata Shares.
Section 2.4 Interest.
(a) The outstanding principal balance of the
Subordinated Loan shall bear interest at a rate per annum equal to twelve
percent (12%). The Borrower shall pay to the Subordinated Lenders all accrued
but unpaid interest on the Subordinated Loan (i) except as permitted by Section
2.4(b), on each Payment Date and (ii) on the Final Maturity Date.
(b) Past due interest, principal and other amounts
hereunder shall bear interest at an interest rate per annum that is equal to the
lesser of (i) the Default Rate or (ii) the Maximum Rate from the date due until
paid.
(c) All computations of interest shall be made on the
basis of a 365/366 day year, as the case may be. All such computations shall be
made for the actual number of days (including the first day but excluding the
last day) occurring in the period for which such computation is being performed.
Interest provided for under this Subordinated Loan Agreement and the
Subordinated Notes shall be calculated on the unpaid sums actually loaned and
outstanding pursuant to the terms of this Subordinated Loan Agreement and the
Subordinated Notes and only for the period from the date or dates advanced until
repaid. Each determination by the Subordinated Agent of an interest rate shall
be conclusive and binding for all purposes, absent manifest error.
Section 2.5 Subordinated Notes. To evidence the Advance made by each of
the Subordinated Lenders pursuant to this Subordinated Loan Agreement, the
Borrower will issue, execute and deliver a Subordinated Note to each
Subordinated Lender in the principal amount of each Subordinated Lender's
Maximum Commitment dated as of the Effective Date. The records of the
Subordinated Agent shall be deemed rebuttably presumptive evidence of the
principal amount owing on the Subordinated Notes. The liability for payment of
principal and interest evidenced by Subordinated Notes shall be limited to the
principal amounts actually loaned and outstanding under the Subordinated Notes
and this Subordinated Loan Agreement and interest on such amounts calculated in
accordance with the Subordinated Notes and this Subordinated Loan Agreement.
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Section 2.6 Taxes.
(a) Any and all payments by the Subordinated Loan
Parties shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges, or withholdings,
and all liabilities with respect thereto, excluding, in the case of the
Subordinated Lenders, taxes imposed on its income and franchise taxes imposed on
it by any jurisdiction of which any the Subordinated Lenders is a citizen or
resident or any political subdivision of such jurisdiction (all such nonexcluded
taxes, levies, imposts, deductions, charges, withholdings, and liabilities being
hereinafter referred to as "Taxes"). If any Subordinated Loan Party shall be
required by law to deduct any Taxes from or in respect of any sum payable to any
Subordinated Lender, (i) the sum payable shall be increased as may be necessary
so that, after making all required deductions (including deductions applicable
to additional sums payable under this Section 2.6), such Subordinated Lender
receive an amount equal to the sum it would have received had no such deductions
been made; (ii) such Subordinated Loan Party shall make such deductions; and
(iii) such Subordinated Loan Party shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(b) The Borrower agrees to pay and hold each
Subordinated Lender harmless from and against any and all present and future
stamp and other similar taxes with respect to this Subordinated Loan Agreement
and any other Subordinated Loan Documents and save each Subordinated Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission to pay such taxes, and indemnify each Subordinated
Lender for the full amount of taxes paid by the Subordinated Lenders in respect
of payments made or to be made under this Subordinated Loan Agreement or any
other Subordinated Loan Document and any liability (including penalties,
interest, and expenses) arising therefrom or with respect thereto, whether or
not such taxes were correctly or legally asserted (excluding taxes imposed on
its income and franchise taxes imposed on it by any jurisdiction of which such
Subordinated Lender is a citizen or resident or any political subdivision of
such jurisdiction).
Section 2.7 [Intentionally Omitted.]
Section 2.8 [Intentionally Omitted.]
ARTICLE 3
CONDITIONS OF CLOSING
The amendment and restatement of the Original Loan Agreement pursuant
to this Subordinated Loan Agreement is subject to the following conditions
precedent:
(a) The Subordinated Agent shall have received
copies of each of the following documents in form and content satisfactory to
the Subordinated Agent and its counsel, duly executed by the parties thereto
and, where applicable, acknowledged:
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(i) The Subordinated Loan Documents.
(ii) Opinions of counsel to the Borrower
delivered on the Closing Date as the Subordinated Agent may request and that are
acceptable to the Subordinated Agent addressing the existence and good standing
of the Borrower and each Subsidiary, the authorization of the Subordinated Loan
Documents, the enforceability of the Subordinated Loan Documents and the
perfection of the liens under the Subordinated Loan Documents, the absence of
conflicts with law, other material agreements, and court orders, the absence of
litigation, and such other matters as the Subordinated Agent may request.
(iii) Certificates, dated as of the
Effective Date, of the Secretary or an Assistant Secretary of each of the
Borrower, the Subsidiaries and the Acquisition Subsidiaries (A) certifying as
true, complete and correct the charter and by-laws of the Borrower, each
Subsidiary and the Acquisition Subsidiaries, and resolutions of the Board of
Directors of the Borrower, each respective Subsidiary and the Acquisition
Subsidiaries attached thereto, (B) as to the absence of proceedings or other
action for dissolution, liquidation or reorganization of the Borrower, each
Subsidiary and the Acquisition Subsidiaries, (C) as to the incumbency of the
officers of the Borrower, the Subsidiaries and the Acquisition Subsidiaries who
shall have executed instruments, agreements, and other documents in connection
with the transactions contemplated hereby or by the Subordinated Loan Documents,
and (D) covering such other matters, and with such other attachments thereto, as
the Subordinated Agent may request, and such certificate and the attachments
thereto shall be satisfactory in form and substance to the Subordinated Agent.
(iv) Original Certificates of Title to each
of the certificated vehicles owned by the Borrower, and the Acquisition
Subsidiaries, each endorsed by the applicable Subordinated Loan Party to
evidence that such vehicle is subject to a security interest in favor of the
Subordinated Agent for the benefit of the Subordinated Lenders.
(v) The Bailment Agreement.
(vi) All other documents reasonably
requested by the Subordinated Agent in connection with the transaction
contemplated by this Subordinated Loan Agreement.
(b) Each of the Mortgages, Financing Statements, and
Certificates of Title referenced in subparagraph (a) above, and any other
document reasonably required by the Subordinated Agent to be filed of record,
shall have been filed of record with the appropriate party in order to put third
parties on notice of the liens, security interests or other rights granted by
the Subordinated Loan Parties in the Collateral.
(c) Stock certificates of Capital Stock of the
Acquisition Subsidiaries pledged pursuant to the Pledge Agreements, along with
stock powers endorsed in blank and financing statements executed by each of the
Pledgors in connection with the perfection of the Liens
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created by the Pledge Agreements shall have been delivered to CITBC pursuant to
the terms of the Bailment Agreement.
(d) The Subordinated Agent shall have completed its
due diligence review of such matters as it shall deem appropriate, and all other
documents relating thereto, the Borrower's, each Subsidiaries' and each
Acquisition Subsidiaries' properties and operations thereof, compliance with
Environmental Laws, and any available reports related thereto, and the results
of such due diligence review shall be satisfactory to the Subordinated Agent.
(e) The Subordinated Agent shall have received
insurance certificates for the Borrower, its Subsidiaries and the Acquisition
Subsidiaries reflecting the insurance coverage required under this Subordinated
Loan Agreement.
(f) The Borrower shall have provided the Subordinated
Agent with a copy of a twelve (12) month projected income statement and capital
budget, commencing with the Effective Date, which has been approved by board of
director's of Borrower and which is satisfactory to the Subordinated Agent in
its sole discretion.
(g) The Borrower shall have delivered to the
Subordinated Agent copies of audited Financial Statements of the Borrower as of
December 31, 1999, unaudited Financial Statements of the Borrower as of March
31, 2000, and there shall not have occurred any Material Adverse Effect in the
business, assets or financial condition of any of the Borrower or any of its
Subsidiaries since March 31, 2000.
(h) As of the Effective Date and the Closing Date, no
Default exists or would reasonably be expected to occur by virtue of making the
Subordinated Loan or the loans under the CITBC Financing Agreement or after
giving effect to the transactions contemplated by the Subordinated Loan
Documents.
(i) Except to the extent any of them relate to any
earlier date, all of the representations and warranties of the Borrower and each
other Subordinated Loan Party contained in the Subordinated Loan Documents shall
be true and correct as of the Effective Date and as of the Closing Date of the
Subordinated Loan. The Subordinated Loan Documents shall have been executed and
delivered by the Subordinated Loan Parties as appropriate and such documents
shall be in full force and effect.
(j) As of the Effective Date and the Closing Date,
the Borrower shall have performed and complied with all agreements and
conditions set forth in or contemplated hereunder or in any other Subordinated
Loan Document or in the Equity Documents required to be performed or complied
with by it at or prior to each of such dates.
(k) The Borrower shall have paid to Subordinated
Agent for the benefit of the Subordinated Lenders all amounts payable pursuant
to Section 9.2 of this Subordinated Loan
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Agreement and shall have paid to the Subordinated Lender all payments required
under the terms of the Refinancing Fee Agreement.
(l) The Borrower shall have provided schedules to the
Subordinated Loan Documents in form and substance satisfactory to the
Subordinated Agent.
(m) (i) The CITBC Financing Agreement shall have been
executed and delivered by all parties thereto and the conditions precedent set
forth in Section 2 of the CITBC Financing Agreement shall have been satisfied
and (ii) the conditions precedent, covenants and agreements set forth in the
Subscription Agreement shall have been satisfied.
(n) The Public Offering shall have been completed and
the Borrower shall have received in one or more wire transfers not less than
$49,500,000 as cash proceeds thereof and/or pursuant to the issuance and sale of
Standby Preferred Stock pursuant to the Subscription Agreement.
(o) The Borrower shall have fully consummated the
Acquisitions, and the Borrower shall have delivered or made available to the
Subordinated Agent or its counsel, and the Subordinated Agent shall be satisfied
with the documents governing the Acquisitions, including without limitation, the
purchase agreements, all other purchase and sale documentation, covenants not to
compete, indemnities provided to the Borrower by the sellers, and opinions of
counsel. The Acquisitions shall have been lawfully consummated without a waiver
of any material terms and conditions with respect thereto and the Borrower shall
have acquired indefeasible title, free and clear or all Liens to the stock or
assets covered thereby.
(p) CITBC shall have purchased the Indebtedness owed
pursuant to the Senior Loan Agreement on terms satisfactory to the Subordinated
Agent.
(q) The Borrower shall have paid to Subordinated
Agent, for the ratable benefit of the Subordinated Lenders, principal, interest,
and such other amounts so that on the Closing Date the outstanding principal
amount of the Subordinated Loan is $10,000,000 and no accrued but unpaid
interest is outstanding as of the Closing Date.
(r) No Default, Event of Default, or Material Adverse
Effect shall have occurred or be continuing.
(s) The Borrower shall have provided to the
Subordinated Agent such other information, documents, and agreements as it may
reasonably have requested.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES
In order to induce the Subordinated Lenders to enter into this
Subordinated Loan Agreement and to make the Subordinated Loan hereunder, the
Borrower represents and warrants to the Subordinated Agent and each of the
Subordinated Lenders that as of the Effective Date and as of the Closing Date:
Section 4.1 Corporate Existence. The Borrower and each of its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it was incorporated and is
duly qualified as a foreign corporation in all jurisdictions in which
qualification is required.
Section 4.2 Corporate Power and Authorization. The Borrower is duly
authorized and empowered to create and issue the Subordinated Notes and is duly
authorized and empowered to execute, deliver, and perform its obligation
pursuant to, each of the Subordinated Loan Documents to which it is a party.
Each Subsidiary is duly authorized and empowered to execute, deliver, and
perform its obligations pursuant to, each of the Subordinated Loan Documents to
which it is a party. All corporate and other action on the Borrower's and each
Subsidiaries' part, requisite for the due execution, delivery, and performance
of the Subordinated Loan Documents to which each is a party has been duly and
effectively taken.
Section 4.3 Binding Obligations. The Subordinated Loan Documents
constitute valid and binding obligations of the Borrower and each Subsidiary,
respectively, enforceable in accordance with their respective terms (except that
enforcement may be subject to any applicable bankruptcy, insolvency, or similar
debtor relief laws now or hereafter in effect and relating to or affecting the
enforcement of creditors rights generally) and general principles of equity.
Section 4.4 No Legal Bar Or Resultant Lien. The Subordinated Loan
Documents do not and will not violate any provisions of any contract, agreement,
law, regulation, order, injunction, judgment, decree, or writ to which the
Borrower or any of its Subsidiaries is subject, or result in the creation or
imposition of any lien or other encumbrance upon any assets or properties of the
Borrower or any of its Subsidiaries other than those contemplated by this
Subordinated Loan Agreement.
Section 4.5 No Consent. The execution, delivery, and performance by the
Borrower and each Subsidiary of the Subordinated Loan Documents to which each is
a party does not require the consent or approval of any other person or entity,
including without limitation any Governmental Authority.
Section 4.6 Financial Condition. The audited consolidated Financial
Statements of the Borrower dated December 31, 1999, which have been delivered to
the Subordinated Agent are
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complete and correct in all material respects, and fully and accurately reflect
in all material respects the financial condition and results of the operations
of the Borrower as of the date or dates and for the period or periods stated,
and such Financial Statements have been prepared in accordance with GAAP. The
unaudited consolidated Financial Statements of the Borrower dated March 31,
2000, which have been delivered to the Subordinated Agent are complete and
correct in all material respects, and fully and accurately reflect in all
material respects the financial condition and results of the operations of the
Borrower as of the date or dates and for the period or periods stated, and such
Financial Statements have been prepared in accordance with GAAP. Since March 31,
2000, no change has occurred in the condition, financial or otherwise, of the
Borrower which could have a Material Adverse Effect.
Section 4.7 Liabilities. Neither the Borrower nor any of its
Subsidiaries have any material (individually or in the aggregate) liability,
direct or contingent, except as disclosed in the Financial Statements described
in Section 4.6. No unusual or unduly burdensome restrictions, restraint, or
hazard exists by contract, law or governmental regulation, or otherwise relative
to the business, assets, or properties of the Borrower or any of its
Subsidiaries.
Section 4.8 Litigation. Except as described in the consolidated
Financial Statements of the Borrower described in Section 4.6, there is no
litigation, legal or administrative proceeding, investigation, or other action
of any nature pending or, to the knowledge of the officers of the Borrower,
threatened against or affecting the Borrower or any of its Subsidiaries which
could have a Material Adverse Effect which involves the possibility of any
judgment or liability not fully covered by insurance.
Section 4.9 Taxes; Governmental Charges. The Borrower and each of its
Subsidiaries have filed all tax returns and reports required to be filed and has
paid all taxes, assessments, fees, and other governmental charges levied upon it
or its assets, properties, or income which are due and payable, including
interest and penalties or has provided adequate reserves, if required, in
accordance with GAAP for the payment thereof, except such as are being contested
in good faith by appropriate proceedings and for which adequate reserves for the
payment thereof as required by GAAP has been provided and levy and execution
thereon have been stayed and continue to be stayed.
Section 4.10 Ownership of Property; Liens; Leases of Equipment. Each of
the Borrower and its Subsidiaries has good and marketable title in fee simple
(except for exceptions to title as will not in the aggregate materially
interfere with the present or contemplated use of the property affected thereby)
to, or a valid leasehold interest in, all its real property, and good and
marketable title to all its other property, and in all cases enjoys peaceful and
undisturbed possession thereof, and none of such property is subject to any Lien
except Permitted Liens. None of the equipment or inventory owned by Borrower or
any of its Subsidiaries has been leased by such Person as lessor.
Section 4.11 Intellectual Property. Borrower and each Subsidiary owns,
or is licensed to use, all trademarks, trade names, trade secrets, copyrights,
technology, know-how, and processes necessary for the conduct of its business as
currently conducted (the "Intellectual Property"). No
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claim has been asserted and is pending by any Person challenging or questioning
the use of any such Intellectual Property or the validity or effectiveness of
any such Intellectual Property, nor does the Borrower know of any valid basis
for any such claim. The use of such Intellectual Property by the Subordinated
Loan Parties does not infringe on the rights of any Person.
Section 4.12 Defaults. Neither the Borrower nor any of its Subsidiaries
are in default and no event or circumstance has occurred which, but for the
passage of time or the giving of notice, or both, would constitute a default
under any loan or credit agreement, indenture, mortgage, deed of trust, security
agreement, or other agreement or instrument to which the Borrower or any of its
Subsidiaries is a party. No Event of Default hereunder has occurred and is
continuing.
Section 4.13 Casualties; Taking of Properties. Since March 31, 2000
neither the business nor the assets or properties of the Borrower or any of its
Subsidiaries have been affected, as a result of any fire, explosion, earthquake,
flood, drought, windstorm, accident, strike, or other labor disturbance,
embargo, requisition, or taking of property or cancellation of contracts,
permits, or concessions by any domestic or foreign Governmental Agency thereof,
riot, activities of armed forces, or acts of God or of any public enemy.
Section 4.14 Margin Stock. The Borrower is not engaged principally or
as one of its important activities in the business of extending credit for the
purpose of purchasing or carrying any "margin stock" as defined in Regulation U
of the Board of Governors of the Federal Reserve System (12 C.F.R. part 221), or
for the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry a margin stock or for any other purpose which
might constitute this transaction a "purpose credit" within the meaning of said
Regulation U. Neither the Borrower nor any Person acting on behalf of the
Borrower have taken or will take any action which might cause the loans
hereunder or any of the Subordinated Loan Documents to violate Regulation U or
any other regulation of the Board of Governors of the Federal Reserve System or
to violate the Securities Exchange Act of 1934 or any rule or regulation
thereunder, in each case as now in effect or as the same may hereafter be in
effect.
Section 4.15 Location of Business and Offices. The place of business
or, if it has more than one place of business, the chief executive office of the
Borrower and its Subsidiaries is located at 000 X. Xxx Xxxxxx, Xxxxxxx, Xxxxx
00000-0000.
Section 4.16 Compliance with the Law. Neither the Borrower nor any of
its Subsidiaries:
(a) is in violation of any law, judgment, decree, order,
ordinance, or governmental rule or regulation to which the Borrower or
any of its Subsidiaries, or any of their assets or properties are
subject;
(b) have failed to obtain any license, permit, franchise or
other governmental authorization necessary to the ownership of any of
its assets or properties or the conduct of their business;
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which violation or failure is individually, or in the aggregate, reasonably
expected to have a Material Adverse Effect.
Section 4.17 No Material Misstatements.
(a) There are no facts or conditions relating to the
Subordinated Loan Documents or the financial condition, assets, or business
prospects of the Borrower or any of its Subsidiaries that could, collectively or
individually, have a Material Adverse Effect. No certificate or representation
or warranty of Borrower or its Subsidiaries in the Basic Documents contains an
untrue statement of a material fact or omits to state a material fact necessary
to make the statements in such Basic Documents not misleading.
(b) The Financial Statements and other related financial data
(excluding all projections and pro forma financial data) furnished to the
Subordinated Agent by or at the direction of the Borrower or any of its
Subsidiaries in connection with the negotiation of this Subordinated Loan
Agreement do not contain any material misstatement of fact and, when considered
with all other written statements furnished to the Subordinated Agent in that
connection, such Financial Statements, related financial data (excluding all
projections and pro forma financial data) do not omit to state a material fact
or any fact necessary to make the statement contained therein not misleading.
Section 4.18 ERISA. The Borrower and of its Subsidiaries are in
compliance in all respects with the applicable provisions of ERISA, and no
"reportable event", as such term is defined in Section 4043 of ERISA, has
occurred with respect to any Plan of the Borrower or any of its Subsidiaries.
Section 4.19 Environmental Matters. Except as disclosed on
Schedule 4.19:
(a) Environmental Laws, etc. None of the property of
the Borrower or any of its Subsidiaries nor the operations conducted thereon
violate any applicable order of any court or Governmental Authority or
Environmental Laws which could reasonably be expected to result in remedial
obligations assuming disclosure to the applicable Governmental Authority of all
relevant facts, conditions, and circumstances, if any, pertaining to the
relevant property.
(b) No Litigation. Without limitation of paragraph
(a) above, no property of the Borrower or any of its Subsidiaries, nor the
operations currently conducted thereon or by any prior owner or operator of such
property or operation, are in violation of or subject to any existing, pending,
or threatened action, suit, investigation, inquiry, or proceeding by or before
any Governmental Authority or to any remedial obligations under Environmental
Laws which could reasonably be expected to result in remedial obligations
assuming disclosure to the applicable Governmental Authority of all relevant
facts, conditions, and circumstances, if any, pertaining to the relevant
property.
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(c) Notices, Permits, etc. All notices, permits,
licenses, or similar authorizations, if any, required to be obtained or filed by
the Borrower or any of its Subsidiaries in connection with the operation or use
of any and all property of the Borrower or any of its Subsidiaries, including
but not limited to past or present treatment, storage, disposal, or release of a
hazardous substance or solid waste into the environment, have been duly obtained
or filed which could reasonably be expected to result in remedial obligations
assuming disclosure to the applicable Governmental Authority of all relevant
facts, conditions, and circumstances, if any, pertaining to the relevant
property.
(d) Hazardous Substances Carriers. All hazardous
substances or solid waste generated at any and all property of the Borrower or
any of its Subsidiaries have in the past been transported, treated, and disposed
of only by carriers maintaining valid permits under any Environmental Law and
only at treatment, storage, and disposal facilities maintaining valid permits
under any Environmental Law, which carriers and facilities have been and are
operating in compliance with such permits which could reasonably be expected to
result in remedial obligations assuming disclosure to the applicable
Governmental Authority of all relevant facts, conditions, and circumstances, if
any, pertaining to the relevant property.
(e) Hazardous Substances Disposal. The Borrower and
Subsidiaries have taken all reasonable steps necessary to determine and have
determined that no hazardous substances or solid waste have been disposed of or
otherwise released and there has been no threatened release of any hazardous
substances on or to any property of the Borrower or any of its Subsidiaries,
except in compliance with Environmental Laws which could reasonably be expected
to result in remedial obligations assuming disclosure to the applicable
Governmental Authority of all relevant facts, conditions, and circumstances, if
any, pertaining to the relevant property.
(f) OPA Requirements. To the extent applicable, the
Borrower and each of its Subsidiaries have complied with all design, operation,
and equipment requirements imposed by OPA or scheduled to be imposed by OPA, and
the Borrower does not have reason to believe that either it or its Subsidiaries
will not be able to maintain such compliance with OPA requirements through the
Final Maturity Date.
(g) No Contingent Liability. Neither the Borrower nor
any of its Subsidiaries have any contingent liabilities in connection with any
release or threatened release of any hazardous substance or solid waste into the
environment other than such contingent liabilities at any one time and from time
to time which could reasonably be expected to exceed an aggregate of $500,000 in
excess of applicable insurance coverage and for which adequate reserves for the
payment thereof as required by GAAP have not been provided, or which could
reasonably be expected to result in remedial obligations assuming disclosure to
the applicable Governmental Authority of all relevant facts, conditions, and
circumstances, if any, pertaining to such release or threatened release.
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Section 4.20 Subsidiaries; Partnerships. There are no Subsidiaries of
the Borrower other than (i) as set forth on Schedule 4.20(a) or (ii)
Subsidiaries that have complied with the provisions of Section 6.12. All of the
issued and outstanding shares of Capital Stock of the Subsidiaries of the
Borrower have been duly and validly authorized and issued and are fully paid and
non-assessable and free of preemptive rights, and, such shares are owned by the
Borrower or one of its Subsidiaries free and clear of any Lien other than
Permitted Liens. Except as set forth on Schedule 4.20(a), there are no
outstanding warrants, options, or other rights to purchase or acquire any of the
shares of Capital Stock of any Subsidiary, nor any outstanding securities
convertible into such shares or outstanding warrants, options, or other rights
to acquire any such convertible securities.
Section 4.21 Certain Fees. Except for the refinancing fee payable
pursuant to the Refinancing Fee Agreement and the drawdown fee payable to ECT
Securities Limited Partnership in connection with the Subscription Agreement, no
fees or commissions will be payable by the Borrower to brokers, finders,
investment bankers, the Subordinated Agent or Subordinated Lenders with respect
the consummation of the transactions with the Subordinated Agent and the
Subordinated Lenders contemplated by this Subordinated Loan Agreement. The
Borrower agrees that it will indemnify and hold harmless the Subordinated Agent
and the Subordinated Lenders from and against any and all claims, demands, or
liabilities for broker's, finders, placement or other similar fees or
commissions incurred by the Borrower or alleged to have been incurred by the
Borrower in connection with the consummation of the transactions contemplated by
this Subordinated Loan Agreement.
Section 4.22 Purpose of Loans. As more fully set forth in Section 2.2,
the proceeds of the Subordinated Loan and the loans under the CITBC Financing
Agreement shall be used only for restructuring the Indebtedness owed to the
Subordinated Lenders under the terms of the Original Loan Agreement, for the
reasonable fees, expenses, and financing costs incurred by the Borrower in
connection with the foregoing and for the general corporate purposes of the
Borrower and its Subsidiaries. The proceeds of the Subordinated Loan shall not
be used for any purpose which violates applicable Requirements of Law, including
laws regulating investments in foreign jurisdictions.
Section 4.23 Support and Security Documents. The Security Documents are
effective to create in favor of the Subordinated Agent for the benefit of the
Subordinated Lenders, a legal, valid, and enforceable mortgage lien, security
interest, or other interest in the Collateral pledged thereunder and the
proceeds thereof in accordance with the terms of the Security Documents.
Section 4.24 Employment. All inventory of Borrower and each Subsidiary
has been and will hereafter be produced, and all services of Borrower and each
Subsidiary has been and will hereafter be rendered, in compliance with all
applicable material laws, rules, regulations, and governmental standards,
including, without limitation, the minimum wage and overtime provisions of the
Fair Labor Standards Act, as amended (29 U.S.C. xx.xx. 201-219), and the
regulations promulgated thereunder.
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Section 4.25 [Intentionally Omitted].
Section 4.26 Insurance. All material policies of fire, liability,
workmen's compensation and other forms of insurance owned or held by the
Borrower and each of its Subsidiaries are in full force and effect, all premiums
with respect thereto covering all periods up to and including the Effective Date
and the Closing Date have been or will be paid, and no notice of cancellation or
termination has been received with respect to any such policy. Such policies are
sufficient for compliance with all requirements of law and of all agreements to
which the Borrower and each of its Subsidiaries is a party; are valid,
outstanding and enforceable policies; provide adequate insurance coverage in at
least such amounts and against at least such risks (but including in any event
public liability) as are usually insured against in the same general area by
companies engaged in the same or a similar business for the assets and
operations of the Borrower and each of its Subsidiaries; will remain in full
force and effect through their respective dates without the payment of
additional premiums; and will not in any way be affected by, or terminate or
lapse by reason of, the transactions contemplated by this Subordinated Loan
Agreement. None of the Borrower nor any of its Subsidiaries has been refused any
insurance with respect to its Property or operations, nor has its coverage been
limited below usual and customary policy limits, by an insurance carrier to
which it has applied for any such insurance or with which it has carried
insurance during the last three years.
Section 4.27 Hedging Agreements. Schedule 4.27 sets forth, as of the
date hereof, a true and complete list of all hedging agreements, financing
transactions and swap transactions (including commodity price swap agreements,
forward agreements or contracts of sale which provide for prepayment for
deferred shipment or delivery of oil, gas or other commodities) of the Borrower
and each of its Subsidiaries, the material terms thereof (including the type,
term, effective date, termination date and notional amounts or volumes), the net
xxxx to market value thereof, all credit support agreements relating thereto
(including any margin required or supplied), and the counter party to each such
agreement.
ARTICLE 5
AFFIRMATIVE COVENANTS
From the Effective Date and for so long as any part of the Commitments
or the Subordinated Loan Obligations is outstanding, the Borrower shall and
shall cause each of its Subsidiaries to (and where applicable shall cause other
Persons to):
Section 5.1 Financial Statements and Reports. The Borrower shall
promptly furnish to the Subordinated Agent from time to time upon request such
information regarding the business and affairs and financial condition of the
Borrower and its Subsidiaries as the Subordinated Agent may request, and will
furnish to the Subordinated Agent:
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(a) Within ninety (90) days after the end of each Fiscal Year
of the Borrower, a copy of the form 10-K (including all financial statements
contained therein) filed by the Borrower as of the end of and for such Fiscal
Year then ended, together with a Consolidated Balance Sheet, audited by
independent public accountants selected by the Borrower and satisfactory to the
Subordinated Agent together with statements of profit and loss, cash flow and
reconciliation of surplus of the Borrower and its Subsidiaries for such year and
an unaudited Consolidating Balance Sheet as at the close of such Fiscal Year;
(b) Within forty-five (45) days after the end of each Fiscal
Quarter of the Borrower, a copy of the form 10-Q (including all financial
statements contained therein) filed by the Borrower as of the end of and for
such Fiscal Quarter then ended, together with a Consolidated Balance Sheet and
Consolidating Balance Sheet as at the end of such period and statements of
profit and loss, cash flow and surplus of the Borrower and its Subsidiaries,
certified by an authorized financial or accounting officer of the Borrower;
(c) Within thirty (30) days after the end of each month, a
Consolidated Balance Sheet as at the end of such period and statements of profit
and loss, cash flow and surplus of the Borrower and its Subsidiaries for such
period, certified by an authorized financial or accounting officer of the
Borrower;
(d) As soon as available, one copy of each (if any) financial
statement, report, notice or proxy statement sent by the Borrower to its
stockholders or other security holders generally, one copy of each (if any)
regular, periodic or special report (including, without limitation, reports on
forms 10-K, 10-Q and 8-K), registration statement or prospectus filed by the
Borrower with any securities exchange or the Securities and Exchange Commission
or any successor agency and one copy of each press release or other statement
made by the Borrower to the public containing material developments relating to
its business, operations or prospects; and
(e) from time to time, such further information regarding the
business affairs and financial condition of the Borrower and/or any subsidiary
thereof as the Subordinated Agent may reasonably request, including without
limitation (i) the accountant's management practice letter and (ii) annual cash
flow projections in form satisfactory to the Subordinated Agent.
All such information, reports, and Financial Statements referred to in this
Section 5.1 shall be in such detail as the Subordinated Agent may reasonably
request and shall be prepared in a manner consistent with the requirements set
forth above and in Section 1.2.
Section 5.2 Certificates of Compliance. Concurrently with the
furnishing of the annual audited Financial Statements pursuant to Section 5.1(a)
hereof, the quarterly unaudited Financial Statements pursuant to Section 5.1(b),
and each of the monthly unaudited Financial Statements pursuant to Section
5.1(c) hereof, the Borrower will furnish or cause to be furnished to the
Subordinated Agent a certificate in the form of Exhibit 5.2. Borrower will
furnish to Subordinated
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Agent at Borrower's expense all certifications which the Subordinated Agent from
time to time reasonably requests, as to the accuracy and validity of or
compliance with all representations, warranties and covenants made by Borrower
in any of the Subordinated Loan Documents, the satisfaction of all conditions
contained therein, the absence of any Default and all other matters pertaining
thereto.
Section 5.3 Accountants' Certificate. Concurrently with the furnishing
of the annual audited Financial Statements pursuant to Section 5.1(a) hereof,
the Borrower will furnish a statement from the firm of independent public
accountants which prepared such statements to the effect that nothing has come
to their attention to cause them to believe that there existed on the date of
such statements any Event of Default.
Section 5.4 Taxes Other Liens. The Borrower shall, and shall cause each
Subsidiary to, pay and discharge promptly all taxes, assessments, and
governmental charges or levies imposed upon the income or any assets or property
of any of such entities as well as all claims of any kind (including claims for
labor, materials, supplies, and rent) which, if unpaid, might become a Lien or
other encumbrance upon any or all of the assets or property of any of such
entities; provided, however, that the Borrower and each Subsidiary shall not be
required to pay any such tax, assessment, charge, levy, or claim if the amount,
applicability or validity thereof shall currently be contested in good faith by
appropriate proceedings diligently conducted, levy and execution thereon have
been stayed and continue to be stayed, and the Borrower and each Subsidiary, or
any of them, as the case may be, shall have set up adequate reserves therefor,
if required, under GAAP.
Section 5.5 Compliance with Laws. The Borrower shall, and shall cause
each Subsidiary to, observe and comply, in all material respects, with all
applicable laws, statutes, codes, acts, ordinances, orders, judgments, decrees,
injunctions, rules, regulations, orders, and restrictions of applicable
Governmental Authorities, including those relating to Environmental Laws.
Section 5.6 Further Assurances. The Borrower shall, and shall cause
each Subsidiary to, cure promptly any defects in the creation and issuance of
the Subordinated Loan Documents. The Borrower shall, and shall cause each
Subsidiary at their sole expense to, promptly execute and deliver to the
Subordinated Agent upon its reasonable request all such other and further
documents, agreements, and instruments in compliance with or accomplishment of
the covenants and agreements in the Subordinated Loan Documents including all
documents, agreements and instruments necessary to grant the Subordinated Agent
for the benefit of the Subordinated Lenders a Lien on all assets of the
Subordinated Loan Parties subject only to the Permitted Liens.
Section 5.7 Insurance. The Borrower will at all times keep all of its
and each Subsidiaries' properties which are of an insurable nature insured with
insurers reasonably believed by the Borrower to be financially sound, reputable
and responsible, against loss or damage to the extent that property of similar
character is usually so insured by corporations similarly situated and owning
like properties, as determined by the Subordinated Agent.
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Section 5.8 Accounts and Records. The Borrower shall, and shall cause
each of its Subsidiaries to, keep books, records, and accounts in which full,
true, and correct entries will be made of all dealings or transactions in
relation to its business and activities, prepared in a manner consistent with
the requirements of Section 1.2. Upon request of the Subordinated Agent, the
Borrower shall furnish profit and loss statements for each field office of the
Borrower and its Subsidiaries.
Section 5.9 Right of Inspection. The Borrower shall, and shall cause
each of its Subsidiaries to, permit any officer, employee, or agent of the
Subordinated Agent to examine their books, records, and accounts, and take
copies and extracts therefrom, all at such reasonable times and as often as the
Subordinated Agent may reasonably request. The Subordinated Agent will keep all
such information confidential and will not without prior written consent
disclose or reveal the information or any part thereof to any person other than
the Subordinated Lenders and each of the Subordinated Agent's and Subordinated
Lenders' officers, employees, legal counsel, regulatory authorities, or advisors
to whom it is necessary to reveal such information for the purpose of
effectuating the agreements and undertakings specified herein or as otherwise
required by law or in connection with the enforcement of the Subordinated
Agent's and the Subordinated Lenders' rights and remedies under the Subordinated
Loan Documents.
Section 5.10 Notice of Certain Events. The Borrower shall promptly and
in any event within five (5) days notify the Subordinated Agent if the Borrower
or any of its Subsidiaries learns of the occurrence of (i) an Event of Default
together with a detailed statement by the Borrower of the steps being taken to
cure the Event of Default; (ii) any legal, judicial, or regulatory proceedings
affecting the Borrower or any of its Subsidiaries or any of the assets or
properties of the Borrower or any of its Subsidiaries; (iii) any dispute between
the Borrower or any of its Subsidiaries and any Governmental Authority or any
other person or entity which, if adversely determined, could cause a Material
Adverse Effect; (iv) any judgment, liability, casualty or other loss that is not
insured by the Borrower or its Subsidiaries; (v) any notice delivered by
Borrower to CITBC under the CITBC Financing Agreement; or (vi) any other matter
that could reasonably be expected to have a Material Adverse Effect.
Section 5.11 ERISA Information and Compliance. The Borrower shall
promptly furnish to the Subordinated Agent immediately upon becoming aware of
the occurrence of any "reportable event", as such term is defined in Section
4043 of ERISA, or of any "prohibited transaction", as such term is defined in
Section 4975 of the Internal Revenue Code of 1986, as amended, in connection
with any Plan or any trust created thereunder, a written notice signed by the
president or the chief financial officer of the Borrower, specifying the nature
thereof, what action the Borrower is taking or proposes to take with respect
thereto, and, when known, any action taken by the Internal Revenue Service with
respect thereto.
Section 5.12 Environmental Reports and Notices. The Borrower will
deliver to the Subordinated Agent (i) promptly upon its becoming available, one
copy of each report sent by the Borrower or any of its Subsidiaries to any
court, Governmental Agency, or instrumentality pursuant
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to any Environmental Law, (ii) notice, in writing, promptly upon the Borrower's
or any of its Subsidiaries' learning that they have received notice or otherwise
learned of any claim, demand, action, event, condition, report, or investigation
indicating any potential or actual liability arising in connection with (x) the
non-compliance with or violation of the requirements of any Environmental Law;
(y) the release or threatened release of any toxic or hazardous waste into the
environment or which release the Borrower or any of its Subsidiaries would have
a duty to report to any court or Government Agency or instrumentality, or (iii)
prompt notice of the existence of any Lien related to violation of Environmental
Laws or any liabilities for cleanup thereunder on any properties or assets of
the Borrower or any of its Subsidiaries.
Section 5.13 Maintenance. The Borrower shall, and shall cause each
Subsidiary to (i) observe and comply in all material respects with all
Environmental Laws; (ii) (A) maintain all of the assets and properties of such
Person in good and workable condition at all times and (B) make all repairs,
replacements, additions, betterments, and improvements to such assets and
properties as are needed and proper so that with respect to clauses (A) and (B)
the business carried on by the Borrower and its Subsidiaries may be conducted
properly and efficiently at all times in accordance with the good faith
reasonable business judgment of the Borrower and its Subsidiaries provided,
however, that nothing in this Section shall prevent the Borrower and its
Subsidiaries from discontinuing the maintenance of any of their properties if
such discontinuance is, in the good faith reasonable business judgment of the
Borrower and its Subsidiaries, desirable in the conduct of the business of the
Borrower or any such Subsidiary and not disadvantageous in any material respect
to the Subordinated Lenders;(iii) take or cause to be taken whatever actions are
necessary or desirable to prevent an event or condition of default by the
Borrower or any Subsidiary under the provisions of any contract, agreement, or
lease comprising a part of the Collateral hereunder; and (iv) furnish to the
Subordinated Agent upon request evidence satisfactory to the Subordinated Agent
that there are no Liens, claims, or encumbrances superior to the Liens of the
Subordinated Lenders on such assets and properties, except Permitted Liens.
Section 5.14 New Subsidiary. Upon the formation or acquisition of any
new Subsidiary, the Borrower shall cause such Subsidiary to promptly execute and
deliver to the Subordinated Agent any joinder agreements requested by the
Subordinated Agent to cause such new Subsidiary to become a party to a Guaranty
and any security agreements, pledge agreements, mortgages, and other agreements
requested by the Subordinated Agent to cause such new Subsidiary to pledge its
assets to the Subordinated Agent for the benefit of the Subordinated Lenders. In
connection therewith, the Borrower shall provide corporate documentation and
opinion letters reasonably satisfactory to the Subordinated Agent reflecting the
corporate status of such new Subsidiary of the Borrower and the enforceability
of such agreements.
Section 5.15 [Intentionally Omitted].
Section 5.16 Change of Principal Place of Business. The Borrower shall,
and shall cause the Subsidiaries to, give Subordinated Agent at least thirty
(30) days prior written notice of its intention to move its principal place of
business from the address set forth in Section 4.15 hereof.
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Section 5.17 [Intentionally Omitted].
ARTICLE 6
NEGATIVE COVENANTS
From the Effective Date and for so long as any part of the Commitments
or the Subordinated Loan Obligations is outstanding, the Borrower shall not and
shall cause each of its Subsidiaries not to (and where applicable shall cause
other Persons not to):
Section 6.1 Liens. The Borrower shall not, and shall not permit any
Subsidiary to, create, incur, assume, or permit to exist any Lien on any of its
assets or properties except for Permitted Liens.
Section 6.2 Mergers. The Borrower shall not, and shall not permit any
of its Subsidiaries to, consolidate or merge with or into any other Person, to
liquidate, dissolve or incur a name change, including a change of trade name.
Section 6.3 Indebtedness and Other Obligations. The Borrower shall not,
and shall not permit any of the Subsidiaries to incur, create, assume, or in any
manner become or be liable in respect of any Indebtedness, except that the
foregoing restriction shall not apply to:
(a) Indebtedness under the Subordinated Loan
Documents;
(b) Indebtedness under the CITBC Loan Documents, the
outstanding principal amount of which shall not exceed $35,000,000;
(c) Indebtedness disclosed in Schedule 6.3;
(d) taxes, assessments, or other government charges
which are not yet due or are being contested in good faith by appropriate action
promptly initiated and diligently conducted, if such reserve as shall be
required by GAAP shall have been made therefor and levy and execution thereon
have been stayed and continue to be stayed;
(e) obligations for trade payables and ordinary
operating liabilities payable within one hundred twenty (120) days from the date
incurred, incurred in the ordinary course of business as conducted on the
Effective Date;
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(f) any renewals, extensions, substitutions,
refinancings or replacements (each, for purposes of this clause, a
"refinancing") by the Borrower of any Indebtedness of the Borrower described in
clause (a) and (b) above, including any successive refinancings by the Borrower,
so long as in each case the refinanced Indebtedness meets the requirements of
the Indebtedness being refinanced as set forth above and, without limiting the
foregoing, (i) any such new Indebtedness shall be in a principal amount that
does not exceed the principal amount so refinanced, (ii) in the case of any
refinancing of nonrecourse indebtedness such new Indebtedness is also
nonrecourse indebtedness, and (iii) such new Indebtedness has a stated maturity
that is no shorter than the stated maturity of the Indebtedness being
refinanced; and
(g) Indebtedness secured by the Purchase Money Liens.
Section 6.4 Dividends; Compensation. Except for any dividends payable
pursuant to any Standby Preferred Stock issued under the Subscription Agreement
or the redemption thereof by the Borrower, the Borrower shall not declare or pay
any cash dividend, purchase, redeem or otherwise acquire for value any of its
Capital Stock now or hereafter outstanding, return any capital to stockholders,
or make any distribution of its assets to its stockholders as such.
Section 6.5 Investments. The Borrower shall not and shall not permit
any of its Subsidiaries to make any advance or loan to, or any investment in,
any Person or corporation, except investments by the Borrower in its
Subsidiaries, and other advances, loans, or any investment in other Persons not
exceeding $500,000 in the aggregate.
Section 6.6 [Intentionally Omitted].
Section 6.7 Nature of Business. The Borrower shall not, and shall not
permit any Subsidiary to, allow any material change to be made in the character
of their business as carried on at the date hereof.
Section 6.8 Amendment of Articles of Incorporation or Bylaws. The
Borrower shall not, and shall not permit any Subsidiary to, allow any amendment
to, or other alteration of, its or their Certificate or Articles of
Incorporation, Bylaws or any contract, agreement or instrument that could have a
detrimental affect on the Collateral.
Section 6.9 Asset Sales. The Borrower shall not and shall not permit
any Subsidiary to, sell, transfer or otherwise convey any interest of the
Borrower or any Subsidiary in any of their respective assets without the prior
written consent of the Majority Subordinated Lenders if the aggregate amount of
the consideration received from all such sales, transfers, and conveyances
during any Fiscal Year of the Borrower would exceed $100,000; provided that the
Borrower and its
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Subsidiaries may sell inventory in the ordinary course of business. No sale,
transfer or conveyance shall be for less than the fair market value of the
asset.
Section 6.10 Transactions with Affiliates. Without the prior written
consent of the Majority Subordinated Lenders, the Borrower shall not, and shall
not permit any of its Subsidiaries to, enter into any transaction with any of
its Affiliates, except transactions upon terms no less favorable to it than
would be obtained in a transaction negotiated at arm's length with an unrelated
third party.
Section 6.11 Partnerships. Neither the Borrower nor any of its
Subsidiaries will, without the prior written consent of the Majority
Subordinated Lenders, form any partnership, joint venture, or similar
partnership arrangement after the Effective Date that have the ability to incur
Indebtedness with recourse to the Borrower or any of its Subsidiaries, whether
contractual or through liability as a partner.
Section 6.12 Subsidiaries.
(a) The Borrower will not, without the prior written
consent of the Majority Subordinated Lenders, sell or otherwise dispose of any
of the equity securities of its Subsidiaries.
(b) The Borrower shall not, and shall not permit any
of the Borrower's Subsidiaries to, create or acquire any additional Subsidiaries
unless the Subordinated Agent shall have received, in form and substance
satisfactory to the Subordinated Agent, such documents and instruments as it
shall require to evidence the following: (i) a valid exclusive, fully perfected
pledge of all the Capital Stock of such entity; (ii) an absolute and
unconditional guaranty of the payment and performance of all the Subordinated
Loan Obligations by the Subsidiary so formed or created; and (iii) a valid,
exclusive, fully perfected security interest and lien in favor of the
Subordinated Agent for the benefit of the Subordinated Lenders in such
Subsidiary's assets.
Section 6.13 Equity Proceeds. The Borrower shall not permit any
Subsidiary to, issue any additional Capital Stock or debt securities following
the Effective Date except to the Borrower, without the prior written consent of
the Majority Subordinated Lenders.
Section 6.14 Public Disclosures. The Borrower will not, and will not
permit any Subsidiary to, disclose the identity of the Subordinated Agent or any
Subordinated Lender in any public announcement, governmental filing or otherwise
without the Subordinated Agent's and such Subordinated Lender's, as applicable,
prior written consent unless such disclosure is compelled or required by law,
stock exchange rule or by order of a court of competent jurisdiction.
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Section 6.15 Limitation on Payment Restrictions Affecting Subsidiaries.
Except as may be contained in the CITBC Loan Documents, the Borrower will not,
and will not permit any of its Subsidiaries to, create or otherwise cause to
exist or become effective any consensual encumbrance or consensual restriction
of any kind, on the ability of any Subsidiary of the Borrower to (a) pay
dividends or make any other distribution on its Capital Stock to the Borrower or
any Subsidiary, (b) pay any Indebtedness owed to the Borrower or any Subsidiary,
(c) make investments in the Borrower or any Subsidiary, or (d) transfer any of
its property or assets to the Borrower or any Subsidiary, except, in each case
(i) any encumbrances or restrictions binding upon a Person at the time such
Person becomes a Subsidiary (unless the agreement creating such encumbrance or
restrictions was entered into in connection with, or in contemplation of, such
entity becoming Subsidiary), provided that such encumbrances or restrictions
shall not encumber or restrict any assets of the Borrower or its other
Subsidiaries other than such Subsidiary, (ii) any encumbrance or restriction
pursuant to any customary non-assignment provisions in leases, (iii) any
encumbrances or restrictions due to applicable law, (iv) any such encumbrance or
restriction with respect to a Subsidiary imposed pursuant to an agreement
entered into for the sale or disposition of all or substantially all of the
Capital Stock or assets of such Subsidiary or any such encumbrance or
restriction referred to in clause (d) above with respect to the assets of a
Subsidiary and imposed pursuant to an agreement entered into for the sale of
such assets (in either case, so long as such encumbrance or restriction, by its
terms, terminates on the earlier of the termination of such agreement or the
consummation of such agreement), and (v) any such encumbrance or restriction
pursuant to any agreement that amends, extends, refinances, renews or replaces
any agreement described in the foregoing clauses (i), (ii), and (iii), provided
that the terms and conditions of any such encumbrances or restrictions are not
materially less favorable to the Borrower than those under or pursuant to the
agreement amended, extended, refinanced, renewed or replaced.
Section 6.16 Financial Covenants. The Borrower shall:
(a) maintain at all times during the periods set forth below
Tangible Net Worth of not less than the amount set forth below for the
applicable period:
PERIOD TANGIBLE NET WORTH
------ ------------------
For the Fiscal Quarters ending
September 30, 2000 and December 31, 2000 $18,400,000
For the Fiscal Quarter ending
March 31, 2001 $19,300,000
For the Fiscal Quarter ending
June 30, 2001 $20,300,000
For the Fiscal Quarter ending
September 30, 2001 $21,700,000
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For the Fiscal Quarter ending
December 31, 2001 $22,900,000
For the Fiscal Quarter ending
March 31, 2002 $24,000,000
For the Fiscal Quarter ending
June 30, 2002 $25,200,000
For the Fiscal Quarter ending
September 30, 2002 $26,400,000
For the Fiscal Quarter ending
December 31, 2002 $27,600,000
For the Fiscal Quarter ending
March 31, 2003 $28,800,000
For the Fiscal Quarter ending
June 30, 2003 $29,900,000
For the Fiscal Quarter ending
September 30, 2003 $30,400,000
For the Fiscal Quarter ending
December 31, 2003 $30,900,000
For the Fiscal Quarter ending
March 31, 2004 $31,400,000
and thereafter;
(b) maintain at the end of each fiscal quarter during the
periods set forth below a Fixed Charge Coverage Ratio of not less than the ratio
set forth below for the applicable period:
PERIOD RATIO
------ -----
For the Fiscal Quarter ending
September 30, 2000 1.1 to 1.0
For the six-month period ending
December 31, 2000 1.1 to 1.0
For the nine-month period ending
March 31, 2001 1.1 to 1.0
For the four Fiscal Quarters ending
June 30, 2001 and each four 1.1 to 1.0
Fiscal Quarters thereafter.
Section 6.17 Leases/Capital Leases. The Borrower and its Subsidiaries
will not: (a) enter into any Operating Lease if after giving effect thereto the
aggregate obligations with respect to Operating Leases of the Borrower and its
Subsidiaries during any Fiscal Year would exceed
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$250,000 or (b) contract for, purchase, make expenditures for, lease pursuant to
a Capital Lease or otherwise incur obligations with respect to Capital
Expenditures (whether subject to a security interest or otherwise) during any
period below in the aggregate amount in excess of the amount set forth for such
period:
(a) $5,100,000 for the two (2) Fiscal Quarters ending December
31, 2000;
(b) $11,800,000 for the Fiscal Year ending December 31, 2001;
(c) $10,000,000 for the Fiscal Year ending December 31, 2002;
(d) $10,000,000 for the Fiscal Year ending December 31, 2003,
(e) $2,500,000 for the Fiscal Quarter ending March 31, 2004,
and for each Fiscal Quarter thereafter.
ARTICLE 7
EVENTS OF DEFAULT
Section 7.1 Events of Default. The occurrence of any of the following
shall be an "Event of Default" for the purposes of this Subordinated Loan
Agreement and the other Subordinated Loan Documents:
(a) (i) Any Subordinated Loan Party shall fail to pay
when due or declared due any principal of the Subordinated Loan; or (ii) with
respect to any interest, fee or any other amounts due under this Subordinated
Loan Agreement or any other Subordinated Loan Document; any Subordinated Loan
Party shall fail to pay such amounts within five Business Days of the date due;
or
(b) Any representation or warranty made by any
Subordinated Loan Party under this Subordinated Loan Agreement, any other
Subordinated Loan Document, or in any certificate or statement furnished or made
to the Subordinated Agent or any Subordinated Lender pursuant thereto, or in
connection therewith, or in connection with any document furnished hereunder,
shall prove to be untrue in any material respect as of the date on which such
representation or warranty is made (or deemed made), or any representation,
statement (including Financial Statements), certificate, report, or other data
furnished or to be furnished or made by any Subordinated Loan Party under any
Subordinated Loan Document proves to have been untrue in any material respect as
of the date as of which the facts therein set forth were stated or certified and
in each case such untruth is not cured to the Majority Subordinated Lenders'
satisfaction within ten Business Days of the Subordinated Agent's notice thereof
to Borrower; or
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(c) Any breach shall be made in the due observance or
performance of any of the affirmative covenants, negative covenants or the
agreements of any Subordinated Loan Party contained in the Subordinated Loan
Documents or the Equity Documents and such breach is not cured to the
satisfaction of the Majority Subordinated Lenders within ten Business Days of
the Subordinated Agent's notice thereof to Borrower; or
(d) Any default or event of default (after giving
effect to any applicable grace or cure periods) under any instrument or
agreement evidencing any Indebtedness of any Subordinated Loan Party having a
principal amount in excess of $250,000; or
(e) Any Subordinated Loan Party shall commence a
voluntary case or other proceedings, and such proceeding is not dismissed or
discharged within thirty days after commencement, seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency, or other similar law now or hereafter in effect or
seeking an appointment of a trustee, receiver, liquidator, custodian, or other
similar official of it or any substantial part of its property, or shall consent
to any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action or authorizing the foregoing; or
(f) An involuntary case or other proceeding, and such
proceeding is not dismissed or discharged within thirty days after commencement,
shall be commenced against any Subordinated Loan Party seeking liquidation,
reorganization, or other relief with respect to it or its debts under any
bankruptcy, insolvency, or similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian, or other similar
official of it or any substantial part of its property, and such involuntary
case or other proceeding shall remain undismissed and unstayed for a period of
60 days; or an order for relief shall be entered against either of any
Subordinated Loan Party under the federal bankruptcy laws as now or hereinafter
in effect; or
(g) A final judgment or order for the payment of
money in excess of $500,000 (or judgments or orders aggregating in excess of
$500,000) that is not fully insured shall be rendered against any Subordinated
Loan Party and such judgements or orders shall continue unsatisfied and unstayed
for a period of thirty 30 days; or
(h) The individuals who, as of the Effective Date,
constitute the members of the Borrower's board of directors (for purposes of
this subparagraph, the "incumbent board") do not constitute or cease for any
reason to constitute at least 66 2/3% of the Borrower's board of directors. For
purposes of this subparagraph, any individual who becomes a member of the board
of directors or comparable body or who obtains a voting interest after the date
of this Subordinated
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Loan Agreement and whose appointment to the board, or nomination for election,
was (i) approved or ratified by a vote of the individuals comprising at least
50% of the then incumbent board, or (ii) who was appointed by the chairman of
the board, shall thereafter be deemed to be a member of the incumbent board.
(i) Any Guaranty shall at any time and for any reason
cease to be in full force and effect or shall be contested by the guarantor
thereunder, or any guarantor under a Guaranty shall deny it has any further
liability or obligation thereunder; or
(j) Any Security Document shall at any time and for
any reason cease to create the Lien on the property purported to be subject to
such agreement in accordance with the terms of such agreement, cease to be in
full force and effect, or shall be contested by any party thereto; or
(k) Any "Event of Default" shall occur under the
CITBC Financing Agreement.
Section 7.2 Acceleration. Upon the occurrence of any Event of Default
under Sections 7.1(e) or (f) ("Bankruptcy Event of Default"), the outstanding
principal amount of the Notes, all accrued but unpaid interest thereon, and all
other Subordinated Loan Obligations shall immediately and automatically become
due and payable. During the existence of any Event of Default, the Subordinated
Agent shall at the request of the Majority Subordinated Lenders declare by
written notice to the Borrower the outstanding principal amount of the Notes,
all accrued but unpaid interest thereon, and all other Subordinated Loan
Obligations to be immediately due and payable. In connection with any of the
foregoing, except for the notice provided for above, to the extent permitted by
law, the Borrower waives notice of intent to demand, demand, presentment for
payment, notice of nonpayment, protest, notice of protest, grace, notice of
dishonor, notice of intent to accelerate, notice of acceleration, and all other
notices.
Section 7.3 Default Interest. During the existence of an Event of
Default, the Majority Subordinated Lenders may declare by written notice to the
Borrower that all Subordinated Loan Obligations (including the outstanding
principal amount of the Advances and, to the fullest extent permitted by law,
all accrued but unpaid interest thereon and all other Indebtedness) shall bear
interest beginning on the date of occurrence of such Event of Default, until
paid in full, at the applicable Default Rate, payable upon demand by the
Subordinated Agent.
Section 7.4 Other Subordinated Loan Documents. During the existence of
an Event of Default, the Subordinated Agent shall at the request of the Majority
Subordinated Lenders take any and all actions permitted under the other
Subordinated Loan Documents, including the Security Documents.
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Section 7.5 Right of Setoff. During the existence of an Event of
Default, the Subordinated Agent and each Subordinated Lender is hereby
authorized at any time, to the fullest extent permitted by law, to set off and
apply any indebtedness owed by the Subordinated Agent or such Subordinated
Lender to the Borrower against any and all of the obligations of the Borrower
under the Subordinated Loan Documents, irrespective of whether or not the
Subordinated Agent or such Subordinated Lender shall have made any demand under
the Subordinated Loan Documents and although such obligations may be contingent
and unmatured. The Subordinated Agent and each Subordinated Lender, as the case
may be, agree promptly to notify the Borrower after any such setoff and
application made by the Subordinated Agent or such Subordinated Lender provided
that the failure to give such notice shall not affect the validity of such
setoff and application.
Section 7.6 [Intentionally Omitted].
Section 7.7 Application of Payments. Prior to any payment default upon
any maturity date or any acceleration of the Subordinated Loan Obligations, all
payments made on the Subordinated Loan Obligations hereunder shall be applied to
the Subordinated Loan Obligations as directed by the Borrower, subject to the
rules regarding the application of payments to certain Indebtedness provided for
hereunder and in the Subordinated Loan Documents. Following any payment default
upon any maturity date or any acceleration of the Subordinated Loan Obligations,
all payments and collections shall be applied to the Subordinated Loan
Obligations in the following order:
First, to the payment of the costs, expenses, reimbursements,
and indemnifications of the Subordinated Agent that are due
and payable under the Subordinated Loan Documents;
Then, ratably to the payment of the costs, expenses,
reimbursements, and indemnifications of the Subordinated
Lenders that are due and payable under the Subordinated Loan
Documents;
Then, ratably to the payment of all outstanding principal due
and payable under the Subordinated Loan Documents;
Then, ratably to the payment of any other amounts due and
owing with respect to the Indebtedness; and
Finally, any surplus held by the Subordinated Agent and
remaining after payment in full of all the Subordinated Loan
Obligations and reserve for Indebtedness not yet due and
payable shall be promptly paid over to the Borrower or to
whomever may be lawfully entitled to receive such surplus.
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ARTICLE 8
THE SUBORDINATED AGENT
Section 8.1 Authorization and Action. Each Subordinated Lender hereby
appoints and authorizes the Subordinated Agent to take such action as agent on
behalf of such Subordinated Lender and to exercise such powers under this
Subordinated Loan Agreement as are delegated to the Subordinated Agent by the
terms hereof and of the other Subordinated Loan Documents, together with such
powers as are reasonably incidental thereto. As to any matters not expressly
provided for by this Subordinated Loan Agreement or any other Subordinated Loan
Document (including, without limitation, enforcement or collection of the
Notes), the Subordinated Agent shall not be required to exercise any discretion
or take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Majority Subordinated Lenders, and such instructions shall
be binding upon all Subordinated Lenders and all holders of the Notes; provided,
however, that the Subordinated Agent shall not be required to take any action
which exposes the Subordinated Agent to personal liability or which is contrary
to this Subordinated Loan Agreement, any other Subordinated Loan Document, or
applicable law.
Section 8.2 Subordinated Agent's Reliance, Etc. Neither the
Subordinated Agent nor any of the Subordinated Agent's directors, officers,
agents or employees shall be liable for any action taken or omitted to be taken
(including the Subordinated Agent's own negligence) by it or them under or in
connection with this Subordinated Loan Agreement or the other Subordinated Loan
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Subordinated Agent:
(a) may treat the payee of any Subordinated Note as the holder thereof until the
Subordinated Agent receives written notice of the assignment or transfer thereof
signed by such payee and in form satisfactory to the Subordinated Agent; (b) may
consult with legal counsel (including counsel for the Borrower), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Subordinated Lender and shall not be responsible to any
Subordinated Lender for any statements, warranties or representations made in or
in connection with this Subordinated Loan Agreement or the other Subordinated
Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Subordinated Loan Agreement or any other Subordinated Loan Document on the part
of the Borrower, or its Subsidiaries or to inspect the property (including the
books and records) of such Persons; (e) shall not be responsible to any
Subordinated Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Subordinated Loan Agreement or any
other Subordinated Loan
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Document; and (f) shall incur no liability under or in respect of this
Subordinated Loan Agreement or any other Subordinated Loan Document by acting
upon any notice, consent, certificate or other instrument or writing (which may
be by telecopy, telegram, cable or telex) reasonably believed by it to be
genuine and signed or sent by the proper party or parties.
Section 8.3 The Subordinated Agent and Its Affiliates. With respect to
its Commitment, the Loans made by it and the Subordinated Note issued to it, the
Subordinated Agent shall have the same rights and powers under this Subordinated
Loan Agreement as any other Subordinated Lender and may exercise the same as
though it were not an Subordinated Agent hereunder. The term "Subordinated
Lender" or "Subordinated Lenders" shall, unless otherwise expressly indicated,
include the Subordinated Agent in its individual capacity. The Subordinated
Agent and its Affiliates may accept deposits from, lend money to, act as trustee
under indentures of, and generally engage in any kind of business with the
Borrower or any of its Subsidiaries, and any Person who may do business with or
own securities of the Borrower, or any such Subsidiary, all as if the
Subordinated Agent were not an agent hereunder and without any duty to account
therefor to the Subordinated Lenders.
Section 8.4 Subordinated Lender Loan Decision. Each Subordinated Lender
acknowledges that it has, independently and without reliance upon the
Subordinated Agent or any other Subordinated Lender and based on the financial
statements referred to in Section 4.6 and such other documents and information
as it has deemed appropriate, made its own credit analysis and decision to enter
into this Subordinated Loan Agreement. Each Subordinated Lender also
acknowledges that it will, independently and without reliance upon the
Subordinated Agent or any other Subordinated 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 Subordinated Loan
Agreement.
Section 8.5 Indemnification. The Subordinated Lenders severally agree
to indemnify the Subordinated Agent and each Affiliate thereof and their
respective directors, officers, employees and agents (to the extent not
reimbursed by the borrower), according to their respective pro rata shares from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against the
Subordinated Agent in any way relating to or arising out of this Subordinated
Loan Agreement or any action taken or omitted by the Subordinated Agent under
this Subordinated Loan Agreement or any other Subordinated Loan Document
(INCLUDING THE AGENT'S OWN NEGLIGENCE), provided that no Subordinated Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Subordinated Agent's gross negligence or willful misconduct.
Without limitation of the foregoing, each Subordinated Lender agrees to
reimburse the Subordinated Agent promptly upon demand for its ratable share of
any out-of-pocket expenses (including counsel fees) incurred by the agent in
connection with the preparation, execution,
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delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Subordinated Loan Agreement or
any other Subordinated Loan Document, to the extent that the Subordinated Agent
is not reimbursed for such expenses by the Borrower.
Section 8.6 Successor Subordinated Agent. The Subordinated Agent may
resign at any time by giving written notice thereof to the Majority Subordinated
Lenders and the Borrower and may be removed at any time with cause by the
Majority Subordinated Lenders upon receipt of written notice from the Majority
Subordinated Lenders to such effect. Upon receipt of notice of any such
resignation or removal, the Majority Subordinated Lenders shall have the right
to appoint a successor Subordinated Agent with, if no Default exists, the
consent of the Borrower, which consent shall not be unreasonably withheld. If no
successor Subordinated Agent shall have been so appointed by the Majority
Subordinated Lenders with the consent of the Borrower, if required, and shall
have accepted such appointment, within 30 days after the retiring Subordinated
Agent's giving of notice of resignation or the Majority Subordinated Lenders'
removal of the retiring Subordinated Agent, then the retiring Subordinated Agent
may, on behalf of the Subordinated Lenders and the Borrower, appoint a successor
Subordinated Agent. Upon the acceptance of any appointment as Subordinated Agent
by a successor Subordinated Agent, such successor Subordinated Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Subordinated Agent, and the retiring Subordinated
Agent shall be discharged from its duties and obligations under this
Subordinated Loan Agreement and the other Subordinated Loan Documents. After any
retiring Subordinated Agent's resignation or removal hereunder as Subordinated
Agent, the provisions of this Article 8 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Subordinated Agent this
Subordinated Loan Agreement and the other Subordinated Loan Documents.
ARTICLE 9
MISCELLANEOUS
Section 9.1 Interpretation and Survival of Provisions. Article,
Section, Schedule, and Exhibit references are to this Subordinated Loan
Agreement, unless otherwise specified. All references to instruments, documents,
contracts, and agreements are references to such instruments, documents,
contracts, and agreements as the same may be amended, supplemented, and
otherwise modified from time to time, unless otherwise specified. The word
"including" shall mean "including but not limited to." Whenever the Borrower has
an obligation under the Subordinated Loan Documents, the expense of complying
with that obligation shall be an expense of the Borrower unless otherwise
specified. Whenever any determination, consent, or approval is to be made or
given by the Subordinated Agent or the Subordinated Lenders, such action shall
be in the Subordinated Agent's or Subordinated Lenders', as applicable, sole
discretion unless otherwise specified in this
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Subordinated Loan Agreement. If any provision in the Subordinated Loan Documents
is held to be illegal, invalid, not binding, or unenforceable, such provision
shall be fully severable and the Subordinated Loan Documents shall be construed
and enforced as if such illegal, invalid, not binding, or unenforceable
provision had never comprised a part of the Subordinated Loan Documents, and the
remaining provisions shall remain in full force and effect. The Subordinated
Loan Documents have been reviewed and negotiated by sophisticated parties with
access to legal counsel and shall not be construed against the drafter. The
representations, warranties, and covenants made in this Subordinated Loan
Agreement and the Subordinated Notes shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of the Borrower,
the Subordinated Agent, or any Subordinated Lender. All indemnification
obligations of the Borrower hereunder and the provisions of Section 9.2 shall
remain operative and in full force and effect unless such obligations are
expressly terminated in a writing referencing such obligations, regardless of
any purported general termination of this Subordinated Loan Agreement.
Section 9.2 Costs, Expenses and Taxes. The Borrower agrees to:
(a) pay all costs and expenses reasonably incurred by the
Subordinated Agent in connection with negotiation, preparation, printing,
execution and delivery of the Subordinated Loan Documents and the transactions
contemplated hereby and thereby. The Borrower shall also pay any expenses of the
Subordinated Agent reasonably incurred after the date hereof in connection with
any amendment or supplement to or modification of any of the foregoing and any
and all other documents furnished pursuant hereto or thereto or in connection
herewith or therewith. In addition, the Borrower, to the extent permitted by
applicable law, shall pay any and all stamp, transfer, and other similar taxes
payable or determined to be payable in connection with the execution and
delivery of this Subordinated Loan Agreement and shall save and hold the
Subordinated Agent and the Subordinated Lenders harmless from and against any
and all liabilities with respect to or resulting from any delay in paying, or
omission to pay, such taxes;
(b) indemnify the Subordinated Agent, each Subordinated
Lender, and its respective officers, directors, employees, representatives,
agents, attorneys, and Affiliates (collectively, "Related Parties") from, hold
each of them harmless against and promptly upon demand pay or reimburse each of
them for, any and all actions, suits, proceedings (including any investigations,
litigation, or inquiries), claims, demands, and causes of action, and, in
connection therewith, all reasonable costs, losses, liabilities, damages, or
expenses of any kind or nature whatsoever (collectively the "Indemnity Matters")
which may be incurred by or asserted against or involve any of them (whether or
not any of them is designated a party thereto) as a result of, arising out of,
or in any way related to (i) any actual or proposed use by Borrower of the
proceeds of the Subordinated Loan or the loans under the CITBC Financing
Agreement, (ii) the operations of the business of Borrower or any Subsidiary,
(iii) any bodily injury or death or property damage occurring in or upon or in
the vicinity of any Collateral, (iv) any claim by any third Person against any
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Collateral assigned to, or paid to, the Subordinated Agent, for the benefit of
the Subordinated Lenders pursuant to any Security Agreement, (v) the failure of
a Borrower or any Subsidiary to comply with any Governmental Requirement, or
(vi) any other aspect of this Subordinated Loan Agreement and the other
Subordinated Loan Documents, including, without limitation, the reasonable fees
and disbursements of counsel and all other expenses incurred in connection with
investigating, defending or preparing to defend any such action, suit,
proceeding (including any investigations, litigation, or inquiries), or claim
and INCLUDING ALL INDEMNITY MATTERS ARISING BY REASON OF THE NEGLIGENCE OF ANY
INDEMNITEE (but not Indemnity Matters related to the gross negligence, unlawful
acts or willful misconduct of any Indemnitee);
(c) pay and hold the Subordinated Agent and each Subordinated
Lender harmless from and against any and all present and future stamp and other
similar taxes with respect to this Subordinated Loan Agreement and Subordinated
Loan Documents and save the Subordinated Agent and each Subordinated Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission to pay such taxes, and will indemnify the
Subordinated Agent and each Subordinated Lender for the full amount of taxes
paid by the Subordinated Agent and each Subordinated Lender in respect of
payments made or to be made under this Subordinated Loan Agreement, any of the
Subordinated Notes, or any other Subordinated Loan Document and any liability
(including penalties, interest, and expenses) arising therefrom or with respect
thereto, whether or not such taxes were correctly or legally asserted;
(d) indemnify and hold harmless from time to time the
Subordinated Agent, each Subordinated Lender, and its respective Related Parties
from and against any and all losses, claims, cost recovery actions,
administrative orders or proceedings, damages, and liabilities to which any such
Person may become subject (i) under any Environmental Law applicable to
Borrower, any Subsidiary or any of their respective properties, (ii) as a result
of the breach or non-compliance by Borrower or any Subsidiary with any
Environmental Law applicable to Borrower or any Subsidiary, (iii) due to past
ownership by Borrower or any Subsidiary of their respective properties or past
activity on any of their respective properties, or past activity on any of their
respective properties which, though lawful and fully permissible at the time,
could result in present liability, (iv) the presence, use, release, storage,
treatment, or disposal of hazardous substances on or at any of the properties
owned or operated by Borrower or any Subsidiary, or (v) any other environmental,
health, or safety condition in connection with this Subordinated Loan Agreement
or any other Subordinated Loan Document, provided, however, no indemnity shall
be afforded under this Section 9.2(d) in respect of any property for any
occurrence arising solely and directly from the acts or omissions of the
Subordinated Lenders during the period after which such Person, its successors
or assigns shall have acquired such property through foreclosure or deed in lieu
of foreclosure;
(e) in the case of any indemnification hereunder, the
Subordinated Agent or other Person indemnified hereunder shall give notice to
the Borrower within a reasonable period of time
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of any such claim or demand being made against the Subordinated Agent, the
Subordinated Lenders or other indemnified Person and the Borrower shall have the
non-exclusive right to join in the defense against any such claim or demand;
(f) no indemnitee may settle any claim to be indemnified
without the consent of the indemnitor, such consent not to be unreasonably
withheld; provided, that the indemnitor may not reasonably withhold consent to
any settlement that an indemnitee proposes, if the indemnitor does not have the
financial ability to pay all its obligations outstanding and asserted against
the indemnitee at that time, including the maximum potential claims against the
indemnitee to be indemnified pursuant to this Section 9.2;
(g) this Section 9.2 shall not apply to actions, suits,
proceedings, investigations, demands, losses, liabilities, claims, damages,
deficiencies, interest, judgments, costs, or expenses arising solely and
directly from the acts or omissions of the Subordinated Agent or any
Subordinated Lender during the period after which such Person, its successors or
assigns shall have acquired such property through foreclosure or deed in lieu of
foreclosure; and
(h) the Borrower's obligations under this Section 9.2 shall
survive any termination of this Subordinated Loan Agreement and the payment of
the Indebtedness.
Section 9.3 No Waiver; Modifications in Writing.
(a) [Intentionally Omitted].
(b) No modification or waiver of any provision of the
Subordinated Loan Agreement or the Subordinated Notes, nor any consent required
under the Subordinated Loan Agreement or the Subordinated Notes, shall be
effective unless the same shall be in writing and signed by the Subordinated
Agent and Majority Subordinated Lenders and the Borrower, and then such
modification, waiver, or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
no modification, waiver, or consent shall, unless in writing and signed by the
Subordinated Agent, all the Subordinated Lenders, and the Borrower do any of the
following: (a) increase any Commitment of any Subordinated Lender, (b) forgive
or reduce any amount or rate of any principal, interest, or fees payable under
the Subordinated Loan Documents, or postpone or extend any time for payment
thereof, (c) release any guaranty or all or substantially all of the Collateral
securing the Indebtedness (except as otherwise permitted or required herein), or
(d) change the percentage of Subordinated Lenders required to take any action
under the Subordinated Loan Agreement, the Subordinated Notes, or the Security
Documents, including any amendment of the definition of "Majority Subordinated
Lenders" or this Section 9.3. No modification, waiver, or consent shall, unless
in writing and signed by the Subordinated Agent affect the rights or obligations
of the Subordinated Agent under the
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Subordinated Loan Documents. The Subordinated Agent shall not modify or waive or
grant any consent under any other Subordinated Loan Document if such action
would be prohibited under this Section 9.3 with respect to this Subordinated
Loan Documents.
Section 9.4 Binding Effect; Assignment. This Subordinated Agreement and
the Subordinated Loan Documents shall bind and inure to the benefit of the
Borrower and its successors and assigns and the Subordinated Agent and the
Subordinated Lenders and their respective successors and assigns. The Borrower
may not assign its rights or delegate its duties under the Subordinated Loan
Agreement or any Subordinated Loan Document.
(a) Assignments. Any Subordinated Lender may assign
to one or more banks or other entities all or any portion of its rights and
obligations with respect to the Subordinated Loan Agreement (including the
Advances owing to it, the Subordinated Note held by it, and its Commitment);
provided, however, that (i) the parties to each such assignment shall execute
and deliver to the Subordinated Agent, for its acceptance and recording in the
Register, an assignment and acceptance in form and substance reasonably
satisfactory to the Subordinated Agent ("Assignment and Acceptance"), together
with the Subordinated Notes subject to such assignment and (ii) each assignee
shall pay to the Subordinated Agent a $3,500 administrative fee. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be at
least three Business Days after the execution thereof, (A) the assignee
thereunder shall be a party hereto for all purposes and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Subordinated
Lender hereunder and (B) the assignor thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Subordinated Loan Agreement (and, in the case of an
Assignment and Acceptance covering all of such Subordinated Lender's rights and
obligations under the Subordinated Loan Agreement, such Subordinated Lender
shall cease to be a party hereto).
(b) Term of Assignments. By executing and delivering
an Assignment and Acceptance, the assignor thereunder and the assignee
thereunder confirm to and agree with each other and the other parties hereto as
follows: (i) other than as provided in such Assignment and Acceptance, the
assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with the Subordinated Loan Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency of value of the Subordinated
Loan Agreement or any other instrument or document furnished pursuant hereto;
(ii) the assignor makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Subordinated Loan
Party or the performance or observance by any Subordinated Loan Party of any of
its obligations under the Subordinated Loan Agreement or any other instrument or
document furnished pursuant hereto;
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(iii) the assignee confirms that it has received a copy of the Subordinated Loan
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) the assignee shall, independently and without
reliance upon the Subordinated Agent, the assignor or any other Subordinated
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 Subordinated Loan Agreement; (v) the assignee appoints and
authorizes the Subordinated Agent to take such action as agent on its behalf and
to exercise such powers under the Subordinated Loan Agreement as are delegated
to the Subordinated Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vi) the assignee agrees that it shall
perform in accordance with their terms all of the obligations which by the terms
of the Subordinated Loan Agreement are required to be performed by it as a
Subordinated Lender.
9.5 The Register. The Subordinated Agent shall maintain at its
address referred to in Section 9.8 a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Subordinated Lenders and the Commitments and Subordinated
Notes of each Subordinated Lender from time to time (the "Register"). The
entries in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Subordinated Agent, and the Subordinated
Lenders may treat each Person whose name is recorded in the Register as a
Subordinated Lender hereunder for all purposes of the Subordinated Loan
Agreement. The Register shall be available for inspection by the Borrower or any
Subordinated Lender at any reasonable time and from time to time upon reasonable
prior notice.
9.6 Procedures. Upon its receipt of an Assignment and
Acceptance executed by the assignor thereunder and the assignee thereunder,
together with the Subordinated Notes subject to such assignment, the
Subordinated Agent shall, if such Assignment and Acceptance has been completed
in the appropriate form, (i) accept such Assignment and Acceptance, (ii) record
the information contained therein in the Register, and (iii) give prompt notice
thereof to the Borrower. Within five Business Days after its receipt of such
notice, the Borrower shall execute and deliver to the Subordinated Agent in
exchange for the surrendered Subordinated Note new Subordinated Notes in the
appropriate amounts to the order of the assignee and, if the assignor has
retained any rights and obligations hereunder, new Subordinated Notes in the
appropriate amounts to the order of the assignor. Such new Subordinated Notes
shall be dated the effective date of such Assignment and Acceptance and shall be
in the appropriate form.
9.7 Participation. Each Subordinated Lender may sell
participation to one or more banks or other entities in or to all or a portion
of its rights and obligations under the Subordinated Loan Agreement (including
the Advances owing to it, the Subordinated Notes held by it, and its
Commitments); provided, however, that (i) such Subordinated Lender's obligations
under the
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Subordinated Loan Agreement (including its Commitments to the Borrower
hereunder) shall remain unchanged, (ii) such Subordinated Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Subordinated Lender shall remain the holder of any
Commitments and Subordinated Notes for all purposes of the Subordinated Loan
Agreement, (iv) the Borrower, the Subordinated Agent, and the other Subordinated
Lenders shall continue to deal solely and directly with such Subordinated Lender
in connection with such Subordinated Lender's rights and obligations under the
Subordinated Loan Agreement, and (v) such Subordinated Lender shall not require
the participant's consent to any matter under the Subordinated Loan Agreement
except for those that require approval of all of the Subordinated Lenders under
Section 8.3. The Borrower hereby agrees that participants shall have the same
rights under Sections 2.6 and 9.2 as a Subordinated Lender to the extent of
their respective participation.
Section 9.8 Communications. All notices and demands provided for
hereunder shall be in writing, shall be given by registered or certified mail,
return receipt requested, telecopy, air courier guaranteeing overnight delivery
or personal delivery, to the addresses specified under such Person's signature
block or to such other address as such Persons may designate in writing. All
other communications may be by regular mail. All such notices and communications
and all notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; four days after being sent
by certified mail, return receipt requested, if mailed; when answered back, if
telexed; when receipt acknowledged, if telecopied; and on the next Business Day
if timely delivered to an air courier guaranteeing overnight delivery.
Section 9.9 Interest. Notwithstanding anything herein or in the other
Subordinated Loan Documents or Equity Document to the contrary, it is the
intention of the parties hereto to conform strictly to usury laws applicable to
this transaction. Accordingly, if the transactions contemplated hereby would be
usurious under applicable law, then, in that event, notwithstanding anything to
the contrary in the Subordinated Notes, this Subordinated Loan Agreement, any
other Subordinated Loan Document, or any Equity Document or agreement entered
into in connection with or as security for the Subordinated Notes, it is agreed
as follows: (a) the aggregate of all consideration which constitutes interest
under law applicable to the Subordinated Lenders that is contracted for, taken,
reserved, charged or received under the Subordinated Notes, this Subordinated
Loan Agreement, any of the other Subordinated Loan Documents, the Equity
Documents or otherwise in connection with this transaction shall under no
circumstances exceed the maximum amount allowed by such applicable law, and any
excess shall be canceled automatically and, if already paid, shall be credited
by the Subordinated Lenders on the principal amount of the Subordinated Notes
(or, to the extent that the principal amount of the Subordinated Notes shall
have been or would thereby be paid in full, refunded to the Borrower); and (b)
in the event that the maturity of the Subordinated Notes is accelerated for any
reason, or in the event of any required or permitted prepayment, then such
consideration that constitutes interest under law applicable to this transaction
may never include more than the maximum amount allowed by such applicable law,
and (c) excess interest, if any,
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provided for in this Subordinated Loan Agreement or otherwise in connection with
the Subordinated Loans shall be canceled automatically and, if already paid,
shall be credited by the Subordinated Lenders on the principal amount of the
Subordinated Notes (or, to the extent that the principal amount of the
Subordinated Notes shall have been or would thereby be paid in full, refunded by
the Subordinated Lenders to the Borrower). The right to accelerate the maturity
of the Subordinated Notes does not include the right to accelerate any interest
which has not otherwise accrued on the date of such acceleration, and the
Subordinated Lenders do not intend to collect any unearned interest in the event
of acceleration. All sums paid or agreed to be paid to the Subordinated Lenders
for the use, forbearance or detention of sums included in the Indebtedness
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of the Subordinated Notes until
payment in full so that the rate or amount of interest on account of the
Subordinated Notes does not exceed the applicable usury ceiling, if any. As used
in this Section 9.9, the term "applicable law" shall mean the laws which govern
this Subordinated Loan Agreement as described in Section 9.10 (or the law of any
other jurisdiction whose laws may be mandatorily applicable notwithstanding
other provisions of this Subordinated Loan Agreement), or law of the United
States of America applicable to the Subordinated Lenders and the Subordinated
Loan which would permit the Subordinated Lenders to contract for, charge, take,
reserve or receive a greater amount of interest than under any other applicable
law. If the stated rate of interest under this Subordinated Loan Agreement ever
exceeds the Maximum Rate, then the outstanding principal amount of the
Subordinated Loan made hereunder shall bear interest at the Maximum Rate until
the difference between the interest which would have been due at the stated
rates of interest and the amount due at the Maximum Rate (the "Lost Interest")
has been recaptured by the Subordinated Lenders. If the Subordinated Loan made
hereunder is repaid in full and the Lost Interest has not been fully recaptured
by the Subordinated Lenders pursuant to the preceding sentence, then the
Subordinated Loans made hereunder shall be deemed to have accrued interest at
the Maximum Rate since the date the Subordinated Loan was made to the extent
necessary to recapture the Lost Interest not recaptured pursuant to the
preceding sentence and, to the extent allowed by law, the Borrower shall pay to
the Subordinated Lenders the amount of the Lost Interest remaining to be
recaptured by the Subordinated Lenders.
Section 9.10 Governing Law. The laws of the State of Texas will govern
this Subordinated Loan Agreement without regard to principles of conflicts of
laws.
SECTION 9.11 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
SUBORDINATED AGENT, AND THE SUBORDINATED LENDERS HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO ANY SUBORDINATED LOAN DOCUMENT AND FOR
ANY COUNTERCLAIM THEREIN.
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SECTION 9.12 LIMITATION ON DAMAGES. IN NO EVENT SHALL ANY PARTY HERETO
BE LIABLE TO ANY OTHER PARTY HERETO FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL,
INCIDENTAL, PUNITIVE, OR EXEMPLARY DAMAGES, INCLUDING WITHOUT LIMITATION, LOST
PROFITS OR SAVINGS, REGARDLESS OF THE FORM OF ACTION GIVING RISE TO SUCH A CLAIM
FOR SUCH DAMAGES, WHETHER IN CONTRACT OR TORT, INCLUDING NEGLIGENCE, EVEN IF A
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Section 9.13 Execution in Counterparts. This Subordinated Loan
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which counterparts, when so executed
and delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Subordinated Loan
Agreement.
THIS WRITTEN AGREEMENT AND THE SUBORDINATED LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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[SIGNATURE PAGE - SUBORDINATED LOAN AGREEMENT]
IN WITNESS WHEREOF, the parties hereto execute this
Subordinated Loan Agreement, effective as of the date first above written.
Borrower: BASIC ENERGY SERVICES, INC.,
A Delaware corporation
By:
---------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Address for notification:
Basic Energy Services, Inc.
000 Xxxxx Xxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention:
-------------------------
Telecopier: (000) 000-0000
Subordinated Agent: ENRON NORTH AMERICA CORP.,
AS SUBORDINATED AGENT
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Address for notification:
x/x Xxxxx Xxxxx Xxxxxxx Corp.
Legal Department
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxx
Telecopier: (000) 000-0000
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57
[SIGNATURE PAGE-SUBORDINATED LOAN AGREEMENT]
x/x Xxxxx Xxxxx Xxxxxxx Corp.
Compliance Department
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxx
Telecopier:(000) 000-0000 or
(000) 000-0000
Subordinated Lender: ENA CLO I HOLDING COMPANY I L.P.
By: ENA CLO I Holding Company GP L.L.C.,
its general partner
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Address for notification:
x/x Xxxxx Xxxxx Xxxxxxx Corp.
Legal Department
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxx
Telecopier: (000) 000-0000
c/o Enron North America Corp.
Compliance Department
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxx
Telecopier:(000) 000-0000 or
(000) 000-0000
S-2
