ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
1.6 NOTE PURCHASE AGREEMENT DATED MARCH 27, 1997 BETWEEN
THE COMPANY AND RIMCO.
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UNIVERSAL SEISMIC ASSOCIATES, INC.
$2,000,000
12% Senior Secured General Obligation Notes
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NOTE PURCHASE AGREEMENT
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Dated as of March 27, 1997
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NOTE PURCHASE AGREEMENT
NOTE PURCHASE AGREEMENT dated as of March 27, 1997 among UNIVERSAL SEISMIC
ASSOCIATES, INC., a Delaware corporation (the "COMPANY"), and RIMCO PARTNERS,
L.P., a Delaware limited partnership, RIMCO PARTNERS, ▇.▇. ▇▇, a Delaware
limited partnership, RIMCO PARTNERS, L.P. III, a Delaware limited partnership,
and RIMCO PARTNERS, ▇.▇. ▇▇, a Delaware limited partnership (collectively, the
"NOTEHOLDERS").
In consideration of the mutual covenants herein contained, the Company and
the Noteholders agree as follows:
ARTICLE I
DEFINITIONS, ETC.
SECTION 1.01. CERTAIN DEFINED TERMS. Capitalized terms used in this
Agreement and not otherwise defined herein shall have the respective meanings
set forth in ANNEX A attached hereto (such meanings to be equally applicable to
both singular and plural forms of the terms defined).
SECTION 1.02. COVENANT CONSTRUCTION. Each covenant contained herein shall
be construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be take by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
SECTION 1.03. OTHER RULES OF CONSTRUCTION. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All references herein to articles, sections, annexes, exhibits and
schedules shall, unless the context requires a different construction, be deemed
to be references to the articles and sections of this Agreement and the annexes,
exhibits and schedules attached hereto and made a part hereof. In this
Agreement, unless a clear contrary intention appears, the word "including" (and
with correlative meaning "include") means including, without limiting the
generality of any description preceding such terms. The headings of the various
articles and sections of this Agreement are for convenience only and shall not
affect the meaning of the terms and conditions of this Agreement. No provision
of this Agreement shall be interpreted or construed against any party solely
because that party or its legal representative drafted such provision.
ARTICLE II
SALE OF NOTES
SECTION 2.01. NOTES. The Company will authorize the issue and sale of
$2,000,000 aggregate principal amount of its 12% Senior Secured General
Obligation Notes (the "NOTES"). Subject to the terms and conditions of this
Agreement, at the Closing provided for in ARTICLE III, the Company will issue
and sell to the Noteholders, and the Noteholders will purchase from the Company,
Notes in the principal amount specified opposite such Noteholder's name in
SCHEDULE A at the purchase price of 100% of the principal amount thereof. The
Notes shall be substantially in the form set out in EXHIBIT 2.01, with such
changes therefrom, if any, as may be approved by the Noteholders and the
Company.
ARTICLE III
CLOSING
The sale and purchase of the Notes to be purchased by the Noteholders shall
occur at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, at 10:00 a.m., Houston time, at a closing (the "CLOSING") on March 27,
1997. At the Closing the Company will deliver to each Noteholder the Note to be
purchased by such Noteholder, registered in such Noteholder's name, against
delivery by such Noteholder to or for the account of the Company of immediately
available funds in the amount of the purchase price therefor by wire transfer to
the Company. If at the Closing the Company shall fail to tender such Notes to
the Noteholders as provided above in this ARTICLE III, or any of the conditions
specified in ARTICLE IV shall not have been fulfilled to the Noteholders'
satisfaction, the Noteholders shall, at the Noteholders' election, be relieved
of all further obligations under this Agreement, without thereby waiving any
rights the Noteholders may have by reason of such failure or such
nonfulfillment.
ARTICLE IV
CONDITIONS TO CLOSING
The Noteholders' obligation to purchase and pay for the Notes to be sold to
the Noteholders at the Closing is subject to the fulfillment to the Noteholders'
satisfaction, prior to or at the Closing, of the following conditions:
SECTION 4.01. EXECUTION OF DOCUMENTS. The Noteholders shall have received
the following agreements (together with this Agreement, collectively, the
"TRANSACTION DOCUMENTS"), in such number of counterparts as the Noteholders may
reasonably request, each dated the date of the Closing and duly executed by the
Persons indicated below:
(a) the Notes duly executed by the Company;
(b) the Security Documents duly executed by the Company and Universal
Seismic Acquisition, Inc. as appropriate; and
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(c) amendments to such of the Prior Transaction Documents as the
Noteholders shall deem appropriate to permit the purchase and sale of the
Notes, such amendments to be in a form reasonably satisfactory to the
Noteholders.
SECTION 4.02. PERFECTION OF LIENS. The Noteholders shall have received
evidence, in form and substance satisfactory to the Noteholders, that the Liens
contemplated by the Security Documents have been duly perfected in accordance
with applicable law and constitute a first priority Lien on the Collateral,
including (a) acknowledgment copies of UCC financing statements filed with the
Secretaries of State of Texas, Alabama, California, Florida, Louisiana,
Mississippi, New Mexico and Ohio and the Oklahoma County Clerk, (b) a search of
the lien records of the Secretaries of State of Texas, Alabama, California,
Florida, Louisiana, Mississippi, New Mexico and Ohio and the Oklahoma County
Clerk and (c) notation of the Noteholders' Lien on each certificate of title
pertaining to the Collateral.
SECTION 4.03. CERTIFICATES. The Company shall have delivered to the
Noteholders:
(a) an Officer's Certificate, dated the date of the Closing,
certifying that the conditions specified in SECTION 4.05 and SECTION 4.06
have been fulfilled; and
(b) a certificate certifying as to the resolutions attached thereto
and other corporate proceedings relating to the authorization, execution and
delivery of the Notes and the other Transaction Documents.
SECTION 4.04 OPINION OF COUNSEL. The Noteholders shall have received
opinions in form and substance satisfactory to the Noteholders, dated the date
of the Closing from ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, Incorporated, counsel for the
Company, covering the matters set forth in EXHIBIT 4.04 and covering such other
matters incident to the transactions contemplated hereby as the Noteholders or
the Noteholders' counsel may reasonably request (and the Company hereby
instructs its counsel to deliver such opinion to the Noteholders).
SECTION 4.05 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company in this Agreement and the other Transaction Documents
shall be correct when made and at the time of the Closing.
SECTION 4.06 PERFORMANCE; NO DEFAULT. The Company shall have performed and
complied with all agreements and conditions contained in this Agreement or the
other Transaction Documents required to be performed or complied with by it
prior to or at the Closing and after giving effect to the issue and sale of the
Notes (and the application of the proceeds thereof as contemplated by SECTION
5.14) no Default or Event of Default shall have occurred and be continuing.
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SECTION 4.07 PAYMENT OF SPECIAL COUNSEL FEES. Without limiting the
provisions of SECTION 13.01, the Company shall have paid on or before the
Closing the reasonable fees, charges and disbursements of the Noteholders'
special counsel to the extent reflected in a statement of such counsel rendered
to the Company at least one Business Day prior to the Closing.
SECTION 4.08 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
in connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory to the Noteholders and the Noteholders' special counsel, and the
Noteholders and the Noteholders' special counsel shall have received all such
counterpart originals or certified or other copies of such documents as the
Noteholders or they may reasonably request.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Noteholders that:
SECTION 5.01. ORGANIZATION; POWER AND AUTHORITY. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and is duly qualified as a foreign corporation and is
in good standing in each jurisdiction in which such qualification is required by
law, other than those jurisdictions as to which the failure to be so qualified
or in good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Company has the corporate power
and authority to own or hold under lease the properties it purports to own or
hold under lease, to transact the business it transacts and proposes to
transact, to execute and deliver this Agreement and the other Transaction
Documents and to perform the provisions hereof and thereof.
SECTION 5.02. AUTHORIZATION, ETC. This Agreement and the other Transaction
Documents have been duly authorized by all necessary corporate action on the
part of the Company, and this Agreement constitutes, and upon execution and
delivery thereof each other Transaction Document will constitute, a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by (a)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and (b) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
SECTION 5.03. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. The execution,
delivery and performance by the Company of this Agreement and the other
Transaction Documents will not (a) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of the Company or any Subsidiary under, any indenture, mortgage,
deed of trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other agreement or instrument to which the Company or any
Subsidiary is bound or by which the Company or any Subsidiary or any of their
respective properties may be bound or affected, (b)
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conflict with or result in a breach of any of the terms, conditions or
provisions of any order, judgment, decree, or ruling of any court, arbitrator or
Governmental Authority applicable to the Company or any Subsidiary or (c)
violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Company or any Subsidiary.
SECTION 5.04. GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by the Company of this Agreement or the other Transaction Documents.
SECTION 5.05. SUBSIDIARIES. SCHEDULE 5.05 contains complete and correct
lists of the Company's Subsidiaries, showing, as to each Subsidiary, the correct
name thereof, the jurisdiction of its organization, and the percentage of shares
of each class of its capital stock or similar equity interests outstanding owned
by the Company and each other Subsidiary. No Subsidiary is a party to, or
otherwise subject to any legal restriction or any agreement (other than this
Agreement and customary limitations imposed by corporate law statutes)
restricting the ability of such Subsidiary to pay dividends out of profits or
make any other similar distributions of profits to the Company or any of its
Subsidiaries that owns outstanding shares of capital stock or similar equity
interests of such Subsidiary.
SECTION 5.06. FINANCIAL STATEMENTS. The consolidated balance sheet of the
Company and its Subsidiaries as at June 30, 1996, and the related consolidated
statements of income, retained earnings and cash flows for the 12-month period
then ended, copies of which the Company has delivered to each Noteholder, fairly
present in all material respects the consolidated financial position of the
Company and its Subsidiaries as of such date and the consolidated results of
their operations and cash flows for such period and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto.
SECTION 5.07. DISCLOSURE. This Agreement, the documents, certificates or
other writings delivered to the Noteholders by or on behalf of the Company in
connection with the transactions contemplated hereby, the financial statements
referred to in SECTION 5.06 and the Form 10-Qs filed by the Company with the
Securities Exchange Commission since June 30, 1996, taken as a whole, do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading. Since June 30,
1996, there has been no change in the financial condition, operations, business,
properties or prospects of the Company or any Subsidiary except changes that
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect. There is no fact known to the Company that could
reasonably be expected to have a Material Adverse Effect that has not been set
forth herein or in the other documents, certificates and other writings
(including the financial statements referred to in SECTION 5.06) delivered to
the Noteholders by or on behalf of the Company specifically for use in
connection with the transactions contemplated hereby.
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SECTION 5.08. LITIGATION. Except as disclosed in SCHEDULE 5.08, there are
no actions, suits or proceedings pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary or any property of
the Company or any Subsidiary in any court or before any arbitrator of any kind
or before or by any Governmental Authority that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
SECTION 5.09. OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS. Neither the
Company nor any Subsidiary is in default under any term of any agreement or
instrument to which it is a party or by which it is bound, or any order,
judgment, decree or ruling of any court, arbitrator or Governmental Authority or
is in violation of any applicable law, ordinance, rule or regulation (including
without limitation Environmental Laws) of any Governmental Authority, which
default or violation, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
SECTION 5.10. TAXES. The Company and its Subsidiaries have filed all tax
returns that are required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (i) the amount
of which is not individually or in the aggregate Material or (ii) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company or a Subsidiary,
as the case may be, has established adequate reserves in accordance with
GAAP. The Company knows of no basis for any other tax or assessment that, if
imposed, could reasonably be expected to have a Material Adverse Effect. The
charges, accruals and reserves on the books of the Company and its Subsidiaries
in respect of Federal, state or other taxes for all fiscal periods are adequate
in all material respects. The Federal income tax liabilities of the Company and
its Subsidiaries have been determined by the Internal Revenue Service and paid
for all fiscal years up to and including the fiscal year ended June 30, 1996.
SECTION 5.11. TITLE TO PROPERTY. The Company and its Subsidiaries have good
and sufficient title to their respective properties that individually or in the
aggregate are Material, including all such properties reflected in the most
recent audited balance sheet referred to in SECTION 5.06 or purported to have
been acquired by the Company or any Subsidiary after said date, in each case
free and clear of Liens other than those permitted by this Agreement. All leases
that individually or in the aggregate are Material are valid and subsisting and
are in full force and effect in all material respects.
SECTION 5.12. LICENSES, PERMITS, ETC. The Company and its Subsidiaries own
or possess all licenses, permits, franchises, authorizations, patents,
copyrights, service marks, trademarks and trade names, or rights thereto, that
individually or in the aggregate are Material, without known conflict with the
rights of others. To the best knowledge of the Company, (a) no product of the
Company infringes in any material respect any license, permit, franchise,
authorization, patent, copyright, service ▇▇▇▇, trademark, trade name or other
right owned by any
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other Person; and (b) there is no Material violation by any Person of any right
of the Company or any of its Subsidiaries with respect to any patent, copyright,
service ▇▇▇▇, trademark, trade name or other right owned or used by the Company
or any of its Subsidiaries.
SECTION 5.13. COMPLIANCE WITH ERISA.
(a) The Company and each ERISA Affiliate have operated and administered each
Plan, if any, in compliance with all applicable laws except for such instances
of noncompliance as have not resulted in and could not reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate
has incurred any liability pursuant to Title I or IV or ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans (as defined
in Section 3 of ERISA), and no event, transaction or condition has occurred or
exists that could reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA Affiliate, or in the imposition of any
Lien on any of the rights, properties or assets of the Company or any ERISA
Affiliate, in either case pursuant to Title I or IV or ERISA or to such penalty
or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other than
such liabilities or Liens as would not be individually or in the aggregate
Material.
(b) The present value of the aggregate benefit liabilities under each of the
Plans (other than Multiemployer Plans), determined as of the end of such Plan's
most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities. The term "BENEFIT LIABILITIES" has the
meaning specified in section 4001 of ERISA and the terms "CURRENT VALUE" and
"PRESENT VALUE" have the meaning specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
(d) The expected post-retirement benefit obligation (determined as of the
last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is not Material.
SECTION 5.14. USE OF PROCEEDS; MARGIN REGULATIONS. The Company will apply
the proceeds of the sale of the Notes for working capital. No part of the
proceeds from the sale of the Notes hereunder will be used, directly or
indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation G of the Board of Governors of the Federal Reserve System
(12 CFR 207), or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve the Company in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220).
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SECTION 5.15. STATUS UNDER CERTAIN STATUTES. Neither the Company nor any
Subsidiary is subject to regulation under the Investment Company Act of 1940, as
amended, the Public Utility Holding Company Act of 1935, as amended, the
Interstate Commerce Act, as amended, or the Federal Power Act, as amended.
SECTION 5.16. CAPITALIZATION. The authorized capital stock of the Company
consists solely of 20,000,000 shares of $.0001 par common stock, of which
5,234,109 shares are issued and outstanding.
SECTION 5.17. SECURITIES MATTERS. Other than offers to Accredited Investors,
neither the Company nor anyone acting on its behalf has directly or indirectly
offered the Notes or any part thereof or any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise approached or
negotiated in respect thereof with, anyone other than the Noteholders named in
SCHEDULE A. Neither the Company nor anyone acting on its behalf has taken or
will take any action which would subject the issuance and sale of the Notes to
the registration and prospectus delivery provisions of the Securities Act.
SECTION 5.18. ENVIRONMENTAL MATTERS. Neither the Company nor any Subsidiary
has knowledge of any claim or has received any notice of any claim, and no
proceeding has been instituted raising any claim against the Company or any of
its Subsidiaries or any of their respective real properties now or formerly
owned, leased or operated by any of them or other assets, alleging any damage
to the environment or violation of any Environmental Laws, except, in each case,
such as could not reasonably be expected to result in a Material Adverse Effect.
Except as otherwise disclosed to the Noteholders in writing, (a) neither the
Company nor any Subsidiary has knowledge of any facts which would give rise to
any claim, public or private, of violation of Environmental Laws or damage to
the environment emanating from, occurring on or in any way related to real
properties now or formerly owned, leased or operated by any of them or to other
assets or their use, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect; (b) neither the Company nor any
of its Subsidiaries has stored any Hazardous Materials on real properties now or
formerly owned, leased or operated by any of them and has not disposed of any
Hazardous Materials in a manner contrary to any Environmental Laws in each case
in any manner that could reasonably be expected to result in a Material Adverse
Effect; and (c) all buildings on all real properties now owned, leased or
operated by the Company or any of its Subsidiaries are in compliance with
applicable Environmental Laws, except where failure to comply could not
reasonably be expected to result in a Material Adverse Effect.
ARTICLE VI
REPRESENTATIONS OF THE PURCHASER
SECTION 6.01. PURCHASE OF INVESTMENT. Each Noteholder represents that it is
acquiring its Notes for its own account or for one of its separate accounts (or
for the account of trusts for which it is trustee) for investment with no
intention of presently distributing or reselling the same, subject,
nevertheless, to its right to dispose of, in compliance with applicable
securities laws,
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its respective Notes, or any part of any thereof held by it, if at some future
time in its sole discretion it deems it advisable so to do. Each Noteholder
hereby agrees that it will not sell, transfer or otherwise dispose of its Notes
in violation of the Securities Act.
SECTION 6.02. STATUS; NO REGISTRATION. Each Noteholder represents that it
is an Accredited Investor. Each Noteholder acknowledges that the Notes have not
been registered under the Securities Act, and that such Notes must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available.
ARTICLE VII
PAYMENT OF THE NOTES
SECTION 7.01. PLACE OF PAYMENT. The Company will pay all sums becoming
due to any Noteholder under any Transaction Document by the method and at the
address specified for such purpose below such Noteholder's name in SCHEDULE A,
or by such other method or at such other address as such Noteholder shall have
from time to time specified to the Company in writing for such purpose, without
the presentation or surrender of such Note or the making of any notation
thereon, except that upon written request of the Company made concurrently with
or reasonably promptly after payment or prepayment in full of any Note, the
Noteholders shall surrender such Note for cancellation, reasonably promptly
after any such request, to the Company at its principal executive office.
SECTION 7.02. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of principal
of or interest on any note that is due on a date other than a Business Day shall
be made on the next succeeding Business Day without including the additional
days elapsed in the computation of the interest payable on such next succeeding
Business Day.
SECTION 7.03. OPTIONAL PREPAYMENTS OF NOTES. (a) The Company may, at its
option, without notice, penalty, premium or fee, prepay at any time all, or from
time to time any part of, the Notes, in an amount not less than $75,000 in the
case of a partial prepayment, at 100% of the principal amount so prepaid, plus
accrued interest on such principal amount.
(b) In the case of each partial prepayment of the Notes, the principal
amount of the Notes to be prepaid shall be allocated among all of the Notes at
the time outstanding in proportion, as nearly as practicable, to the respective
unpaid principal amounts thereof not theretofore called for prepayment.
(c) Any Note paid or prepaid in full shall be surrendered to the Company
and canceled and shall not be reissued, and no Note shall be issued in lieu of
any prepaid principal amount of any Note.
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SECTION 7.04. PURCHASE OF NOTES. The Company will not, and will not permit
any Affiliate to, purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except upon the payment or prepayment
of the Notes in accordance with the terms of this Agreement and the Notes. The
Company will promptly cancel all Notes acquired by it or any Affiliate pursuant
to any payment, prepayment or purchase of Notes pursuant to any provision of
this Agreement and no Notes may be issued in substitution or exchange for any
such Notes.
ARTICLE VIII
INFORMATION AS TO COMPANY
SECTION 8.01. FINANCIAL AND BUSINESS INFORMATION. The Company shall deliver
to each of the Noteholders:
(a) Within 45 days after the end of each quarterly fiscal period in each
fiscal year of the Company, copies of (i) a consolidated balance sheet of the
Company and its Subsidiaries as at the end of such quarter, and (ii)
consolidated statements of income, changes in shareholders' equity and cash
flows of the Company and its Subsidiaries, for such quarter and for the portion
of the fiscal year ending with such quarter, setting forth in each case in
comparative form the figures for the corresponding periods in the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP
applicable to quarterly financial statements generally, and certified by a
Senior Financial Officer as fairly presenting, in all material respects, the
financial position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments.
(b) Within 90 days after the end of each fiscal year of the Company, copies
of (i) a consolidated balance sheet of the Company and its Subsidiaries, as at
the end of such year, and (ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its Subsidiaries, for
such year, setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance with
GAAP, and accompanied (A) by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall state that such
financial statements present fairly, in all material respects, the financial
position of the companies being reported upon and their results of operations
and cash flows and have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards, and that
such audit provides a reasonable basis for such opinion in the circumstances,
and (B) a certificate of such accountants stating that they have reviewed this
Agreement and stating further whether, in making their audit, they have become
aware of any condition or event that then constitutes a Default or an Event of
Default, and, if they are aware that any such condition or event then exists,
specifying the nature and period of the existence thereof.
(c) Within 25 days after the end of each calendar month, copies of (i) a
consolidated balance sheet of the Company and its Subsidiaries as at the end of
such month, and
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(ii) consolidated statements of income, changes in shareholders' equity and cash
flows of the Company and its Subsidiaries, for such month and for the portion of
the fiscal year ending with such month, setting forth in each case in
comparative form the figures for the corresponding periods in the previous
fiscal year, all in reasonable detail, prepared in accordance with
GAAP applicable to monthly financial statements generally, and certified by a
Senior Financial Officer as fairly presenting, in all material respects, the
financial position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments.
(d) Within 60 days after the end of each calendar year, an appraisal
report, prepared by an independent appraisal firm reasonably acceptable to the
Noteholders, covering the Collateral and calculating the Collateral Liquidation
Value as of the end of such calendar year, all in form and substance
satisfactory to the Noteholders.
(e) Promptly upon their becoming available, one copy of (i) each financial
statement, report, notice or proxy statement sent by the Company or any
Subsidiary to public securities holders generally, and (ii) each regular or
periodic report, each registration statement (without exhibits except as
expressly requested by such holder), and each prospectus and all amendments
thereto filed by the Company or any Subsidiary with the Securities and Exchange
Commission and of all press releases and other statements made available
generally by the Company or any Subsidiary to the public concerning developments
that are Material.
(f) Promptly, and in any event within five days after a Responsible Officer
becoming aware of the existence of any Default or Event of Default or that any
Person has given any notice or taken any action with respect to a claimed
default hereunder or that any Person has given any notice or taken any action
with respect to a claimed default of the type referred to in SECTION 11.01, a
written notice specifying the nature and period of existence thereof and what
action the Company is taking or proposes to take with respect thereto;
(g) Promptly, and in any event within five days after a Responsible Officer
becoming aware of any of the following, a written notice setting forth the
nature thereof and the action, if any, that the Company or an ERISA Affiliate
proposes to take with respect thereto: (i) with respect to any Plan, any
reportable event, as defined in section 4043(b) of ERISA and the regulations
thereunder, for which notice thereof has not been waived pursuant to such
regulations as in effect on the date hereof; or (ii) the taking by the PBGC of
steps to institute, or the threatening by the PBGC of the institution of,
proceedings under section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the receipt by the Company
or any ERISA Affiliate of a notice from a Multiemployer Plan that such action
has been taken by the PBGC with respect to such Multiemployer Plan; or (iii) any
event, transaction or condition that could result in the incurrence of any
liability by the Company or any ERISA Affiliate pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating to employee
benefit plans, or in the imposition of any Lien on any of the rights, properties
or assets of the Company or any ERISA Affiliate pursuant to Title I or IV of
ERISA or such penalty or excise tax provisions, if such liability
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or Lien, taken together with any other such liabilities or Liens then existing,
could reasonably be expected to be Material.
(h) Promptly, and in any event within 30 days of receipt thereof, copies of
any notice to the Company or any Subsidiary from any Federal or state
Governmental Authority relating to any order, ruling, statute or other law or
regulation that could reasonably be expected to have a Material Adverse Effect;
and
(i) With reasonable promptness, such other data and information relating to
the business, operations, affairs, financial condition, assets or properties of
the Company or any of its Subsidiaries or relating to the ability of the Company
to perform its obligations hereunder and under the Notes as from time to time
may be reasonably requested by any of Noteholder.
SECTION 8.02. OFFICER'S CERTIFICATE. Each set of financial statements
delivered to a holder of Notes pursuant to SECTION 8.01(A), SECTION 8.01(B) OR
SECTION 8.01(C) shall be accompanied by a certificate of a Senior Financial
Officer setting forth: (a) the information (including detailed calculations)
required in order to establish whether the Company was in compliance with the
requirements of SECTION 10.03 hereof during the monthly, quarterly or annual
period covered by the statements then being furnished (including with respect to
each such Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the terms of
such Sections, and the calculation of the amount, ratio or percentage then in
existence); and (b) a statement that such officer has reviewed the relevant
terms hereof and has made, or caused to be made, under his or her supervision, a
review of the transactions and conditions of the Company and its Subsidiaries
from the beginning of the monthly, quarterly or annual period covered by the
statements then being furnished to the date of the certificate and that such
review shall not have disclosed the existence during such period of any
condition or event that constitutes a Default or an Event of Default or, if any
such condition or event existed or exists (including, without limitation, any
such event or condition resulting from the failure of the Company or any
Subsidiary to comply with any Environmental Law), specifying the nature and
period of existence thereof and what action the Company shall have taken or
proposes to take with respect thereto.
SECTION 8.03. INSPECTION. The Company shall permit the representatives of
each Noteholder, at the expense of the Company and upon reasonable prior notice
to the Company, to visit and inspect any of the offices or properties of the
Company or any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such times and as often as may be
requested.
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ARTICLE IX
AFFIRMATIVE COVENANTS
The Company covenants that so long as any of the Notes are outstanding:
SECTION 9.01. COMPLIANCE WITH LAW; CONTRACTS. The Company will, and will
cause each of its Subsidiaries to, comply with all laws, ordinances or
governmental rules or regulations to which each of them is subject, including,
without limitation, Environmental Laws, and will obtain and maintain in effect
all licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent necessary
to ensure that noncompliance with such laws, ordinances or governmental rules or
regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company will, and will cause each of its Subsidiaries to,
comply with, and perform their respective obligations under, each contract or
agreement to which each is a party, unless, in the good faith judgment of the
Company, the failure to so comply or perform could not reasonably be expected to
have a Material Adverse Effect.
SECTION 9.02. INSURANCE. The Company will, and will cause each of its
Subsidiaries to, maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated, including the insurance described in SCHEDULE 9.02.
SECTION 9.03. MAINTENANCE OF PROPERTIES. The Company will, and will cause
each of its Subsidiaries to, maintain and keep, or cause to be maintained and
kept, their respective properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried on in
connection therewith may be properly conducted at all times, provided that this
Section shall not prevent the Company or any Subsidiary from discontinuing the
operation and the maintenance of any of its properties if such discontinuance is
desirable in the conduct of its business and the Company has concluded that such
discontinuance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
SECTION 9.04. PAYMENT OF TAXES AND CLAIMS. The Company will, and will cause
each of its Subsidiaries to, file all tax returns required to be filed in any
jurisdiction and to pay and discharge all taxes shown to be due and payable on
such returns and all other taxes, assessments, governmental charges, or levies
imposed on them or any of their properties, assets, income or franchises, to the
extent such taxes and assessments have become due and payable and before they
have become delinquent and all claims for which sums have become due and payable
that have or might become a Lien on properties or assets of the Company or any
Subsidiary, provided that neither
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the Company nor any Subsidiary need pay any such tax or assessment or claims if
(i) the amount, applicability or validity thereof is contested by the Company or
such Subsidiary on a timely basis in good faith and in appropriate proceedings,
and the Company or a Subsidiary has established adequate reserves therefor in
accordance with GAAP on the books of the Company or such Subsidiary or (ii) the
nonpayment of all such taxes and assessments in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
SECTION 9.05. CORPORATE EXISTENCE, ETC. The Company will at all times
preserve and keep in full force and effect its corporate existence. The Company
will at all times preserve and keep in full force and effect the corporate
existence of each of its Subsidiaries and all rights and franchises of the
Company and its Subsidiaries unless, in the good faith judgment of the Company,
the termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
ARTICLE X
NEGATIVE COVENANTS
The Company covenants that so long as any of the Notes are outstanding:
SECTION 10.01. RESTRICTIONS ON INDEBTEDNESS. The Company will not, and will
not permit any Subsidiary to, create, incur, assume, Guaranty or permit to exist
any Indebtedness, except:
(a) the Notes;
(b) the Existing Senior Notes;
(c) the Subsidiary Notes; and
(d) Indebtedness outstanding under the Fidelity Funding Agreement.
SECTION 10.02. RESTRICTIONS ON LIENS. The Company will not, and will not
permit any Subsidiary to, create, incur, assume, or permit to exist any Lien
with respect to any asset now owned or hereafter acquired, except:
(a) Liens in favor of the Noteholders;
(b) Liens existing on the date hereof and permitted under the Existing
Transaction Documents;
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(c) encumbrances consisting of easements of ingress or egress over real
property, where the same do not materially detract from the use or enjoyment of
such property by, or the value of such property to, the Company;
(d) Liens for taxes or assessments or governmental charges or levies, if
payment shall not at the time be required to be made in accordance with the
provisions of SECTION 9.04;
(e) any judgment lien, unless the judgment it secures shall not, within 30
days after the entry thereof, have been discharged or execution thereof stayed
pending appeal, or shall not have been discharged within 30 days after the
expiration of any such stay;
(f) statutory liens of landlords and liens of carriers, warehousemen,
mechanics, laborers and materialmen incurred in the ordinary course of business
for sums not yet due or being contested in good faith; and
(g) Liens (other than liens created by section 4068 of ERISA) incurred on
pledges or deposits made in the ordinary course of business in connection with
workmen's compensation, unemployment insurance, social security laws or similar
legislation.
SECTION 10.03. FINANCIAL COVENANTS. The Company will not permit:
(a) its Current Assets at any time to be less than the sum of (i) its
Current Liabilities as at such date, minus (ii) any portion of such Current
Liabilities consisting of amounts under the Fidelity Funding Agreement that are
not due within one year of such date;
(b) its Tangible Net Worth at any time to be less than $7,000,000;
(c) the sum, determined as of the last day of each calendar month
beginning March 1997, or (i) its Net Income for the twelve month period then
ended, plus (i) any interest expense deducted in the calculation of Net Income
for such twelve month period, plus (iii) any depreciation and amortization
expense deducted in the calculation of Net Income for such twelve month period,
plus (v) any Federal income taxes deducted in the calculation of Net Income for
such twelve month period, to be less than $2,500,000; and
(d) the ratio of (i) the Collateral Liquidation Value to (ii) the
aggregate outstanding principal balance of the Notes and the Existing Senior
Notes, to be less than 1.5 to 1.0 at any time.
SECTION 10.04. REESTRICTED PAYMENTS. Except as contemplated by the
Transaction Documents and the Existing Transaction Documents, the Company will
not, and will not permit any Subsidiary, directly or indirectly, to make or pay
(a) any dividend or other distribution on any shares of the Company's capital
stock (including any dividends payable in shares of capital stock), (b) any
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payment on account of the purchase, redemption, retirement or acquisition of any
shares of the Company's capital stock or any option, warrant or other right to
acquire such shares, or (c) any payments or other distributions to Sierra
Management, Inc.
SECTION 10.05. MERGER, CONSOLIDATED, ETC. The Company shall not
consolidate with or merge with any other Person or convey, transfer or lease all
or substantially all of its assets in a single transaction or series of
transactions to any Person.
SECTION 10.06. RESTRICTIONS ON ASSET SALES. Without the Noteholders'
prior written consent, the Company will not, and will not permit any Subsidiary
to, sell, transfer, assign, convey or otherwise dispose of an interest in any
asset now owned or hereafter acquired, except sales of assets during each
calendar year that have an aggregate Collateral Liquidation Value of $150,000 or
less.
SECTION 10.07. TRANSACTIONS WITH AFFILIATES. The Company will not, and
will not permit any Subsidiary to, enter into directly or indirectly any
Material transaction or Material group of related transactions (including
without limitation the purchase, lease, sale or exchange of properties of any
kind or the rendering of any service) with any Affiliate (other than the Company
or another Subsidiary), except in the ordinary course and pursuant to the
reasonable requirements of the Company's or such Subsidiary's business and upon
fair and reasonable terms no less favorable to the Company or such Subsidiary
than would be obtainable in a comparable arm's-length transaction with a Person
not an Affiliate.
SECTION 10.08. CHANGE IN BUSINESS. Except for oil and gas exploration and
production operations to be conducted by UNEXCO, the Company will not, and will
not permit any of its Subsidiaries to, directly or indirectly engage to a
material extent in any business other than those in which it is presently
engaged or that are directly related thereto, or discontinue any of its existing
lines of business or substantially alter its method of doing business. Without
limiting the generality of the foregoing, the Company and its Subsidiaries
(other than UNEXCO) shall not engage in any oil and gas exploration and
production operations or business.
SECTION 10.09. FIDELITY FUNDING AGREEMENT. Without the prior written
consent of the Noteholders, the Company will not, and will not permit any of its
Subsidiaries to amend, modify or extend the Fidelity Funding Agreement.
SECTION 10.10. RESTRICTION ON INVESTMENT. Other than (a) the common stock
of UNEXCO owned by the Company on the date thereof, (b) Oil and Gas Properties
transferred to UNEXCO prior to the date hereof and (c) capital contributions to
UNEXCO that are applied directly to pay the Indebtedness owing on the Subsidiary
Notes, the Company will not, and will not permit any of its Subsidiaries to,
make any Investment in UNEXCO without the Noteholders' prior written consent.
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ARTICLE XI
DEFAULT AND REMEDIES
SECTION 11.01. EVENTS OF DEFAULT. An "EVENT OF DEFAULT" shall exist
if any of the following conditions or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or interest
on any Note when the same becomes due and payable, whether at maturity, by
declaration or otherwise; or
(b) the Company defaults in the performance of or compliance with any
term contained in ARTICLE X; or
(c) the Company defaults in the performance of or compliance with any
term contained herein (other than those referred to in paragraphs (a) and
(b) of this SECTION 11.01) and such default is not remedied within 30 days
after the earlier of (i) a Responsible Officer obtains actual knowledge of
such default or (ii) the Company receives written notice of such default
from any holder of a Note; or
(d) any representation or warranty made in writing by or on behalf of
the Company or by any officer of the Company in this Agreement or in any
writing furnished in connection with the transactions contemplated hereby
proves to have been false or incorrect in any Material respect on the date
as of which made; or
(e) (i) the Company or any Subsidiary is in default (as principal or
as guarantor or other surety) in the payment of any principal of or premium
or interest on any Indebtedness that is outstanding in an aggregate
principal amount of at least $100,000 beyond any period of grace provided
with respect thereto, or (ii) the Company or any Subsidiary is in default
in the performance of or compliance with any term of any evidence of any
Indebtedness in an aggregate outstanding principal amount of at least
$100,000 or of any mortgage, indenture or other agreement relating thereto
or any other condition exists, and as a consequence of such default or
condition such Indebtedness has become, or has been declared (or one or
more Persons are entitled to declare such Indebtedness to be), due and
payable before its stated maturity or before its regularly scheduled dates
of payment, or (iii) as a consequence of the occurrence or continuation of
any event or condition (other than the passage of time or the right of the
holder of Indebtedness to convert such Indebtedness into equity interests),
(x) the Company or any Subsidiary has become obligated to purchase or repay
Indebtedness before its regular maturity or before its regularly scheduled
dates of payment in an aggregate outstanding principal amount of at least
$100,000, or (y) one or more Persons have the right to require the Company
or any Subsidiary to purchase or repay such Indebtedness; or
-17-
(f) the Company or any Subsidiary (i) is generally not paying, or admits in
writing its inability to pay, its debts as they become due, (ii) files, or
consents by answer or otherwise to the filing against it of, a petition for
relief or reorganization or arrangement or any other petition in bankruptcy,
for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii)
makes an assignment for the benefit of its creditors, (iv) consents to the
appointment of a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes
corporate action for the purpose of any of the foregoing; or
(g) a court or governmental authority of competent jurisdiction enters an
order appointing, without consent by the Company or any of its Subsidiaries,
a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, or
constituting an order for relief or approving a petition for relief or
reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the Company or any of
its Subsidiaries, or any such petition shall be filed against the Company or
any of its Subsidiaries and such petition shall not be dismissed within 60
days; or
(h) a final judgment or judgments for the payment of money aggregating in
excess of $250,000 are rendered against one or more of the Company and its
Subsidiaries and such judgments are not, within 60 days after entry thereof,
bonded, discharged or stayed pending appeal, or are not discharged within 60
days after the expiration of such stay; or
(i) an "EVENT OF DEFAULT" exists under the Existing Company Note
Agreements or the Subsidiary Note Agreement; or
(j) the Company fails to own (both beneficially and of record) 100% of the
common stock and other equity securities of UNEXCO; or
(k) if (i) any Plan shall fail to satisfy the minimum funding standards of
ERISA or the Code for any plan year or part thereof or a waiver of such
standards or extension of any amortization period is sought or granted under
section 412 of the Code, (ii) a notice of intent to terminate any Plan shall
have been or is reasonably expected to be filed with the PBGC or the PBGC
shall have instituted proceedings under ERISA section 4042 to terminate or
appoint a trustee to administer any Plan or the PBGC shall have notified the
Company or any ERISA Affiliate that a Plan may become a subject to any such
proceedings (iii) the aggregate "amount of unfunded benefit liabilities"
(within the meaning of section 4001(a)(18) of ERISA) under all Plans,
determined in accordance with Title IV of ERISA, shall exceed $25,000, (iv)
the Company or any ERISA Affiliate shall have incurred or is reasonably
expected to incur any liability pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to employee benefit
plans, (v) the Company or
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any ERISA Affiliate withdraws from any Multiemployer Plan, (vi) the Company or
any ERISA Affiliate fails to make any contribution due, or payment to, any
employee benefit plan, or (vii) the Company or any Subsidiary establishes or
amends any employee welfare benefit plan that provides post-employment welfare
benefits in a manner that would increase the liability of the Company or any
Subsidiary thereunder, and any such event or events described in clauses (i)
through (vii) above, either individually or together with any other such event
or events, could reasonably be expected to have a Material Adverse Effect.
As used in this Section 11.01(j), the terms "EMPLOYEE BENEFIT PLAN" AND
"EMPLOYEE WELFARE BENEFIT PLAN" shall have the respective meanings assigned to
such terms in Section 3 of ERISA.
SECTION 11.02. ACCELERATION.
(a) If an Event of Default with respect to the Company described in
paragraph (f) or (g) of SECTION 11.01 (other than an Event of Default described
in clause (i) of paragraph (f) or described in clause (vi) of paragraph (f) by
virtue of the fact that such clause encompasses clause (i) of paragraph (f)) has
occurred, all the Notes then outstanding shall automatically become immediately
due and payable.
(b) If any other Event of Default has occurred and is continuing, the
Required Holders at any time at its or their option, by notice or notices to the
Company, declare all the Notes then outstanding to be immediately due and
payable.
(c) If any Event of Default described in paragraph (a) of SECTION 11.01 has
occurred and is continuing, any holder or holders of Notes at the time
outstanding affected by such Event of Default may at any time, at its or their
option, by notice or notices to the Company, declare all the Notes held by it or
them to be immediately due and payable.
Upon any Notes becoming due and payable under this SECTION 11.02, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, plus all accrued and unpaid interest
thereon, shall all be immediately due and payable, in each and every case
without presentment, demand, notice of default, notice of intent to accelerate,
notice of acceleration, protest or further notice, all of which are hereby
waived.
SECTION 11.03. OTHER REMEDIES. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under SECTION 11.02, the holder
of any Note at the time outstanding may proceed to protect and enforce the
rights of such holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.
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SECTION 11.04. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC. No course
of dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice
such holder's rights, powers or remedies. No right, power or remedy conferred by
this Agreement or by any Note upon any holder thereof shall be exclusive of any
other right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise. Without limiting the
obligations of the Company under SECTION 13.01, the Company will pay to the
holder of each Note on demand such further amount as shall be sufficient to
cover all reasonable costs and expenses of such holder incurred in any
enforcement or collection under this ARTICLE XI, including, without limitation,
reasonable attorneys' fees, expenses and disbursements, together with interest
on such amounts at the Default Rate accruing from the date of demand.
ARTICLE XII
REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
SECTION 12.01. REGISTRATION OF NOTES. The Company shall keep at its
principal executive office a register for the registration and registration of
transfers of Notes. The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.
SECTION 12.02. TRANSFER AND EXCHANGE OF NOTES. Subject to compliance with
all applicable securities laws, upon surrender of any Note at the principal
executive office of the Company for registration of transfer or exchange (and in
the case of a surrender for registration of transfer, duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder of such Note or his attorney duly authorized in writing and accompanied
by the address for notices of each transferee of such Note or part thereof), the
Company shall execute and deliver, at the Company's expense, one or more new
Notes (as requested by the holder thereof) in exchange therefor, in an aggregate
principal amount equal to the unpaid principal amount of the surrendered Note.
Each such new Note shall be payable to such Person as such holder may request
and shall be substantially in the form specified herein. Each such new Note
shall be dated and bear interest from the date to which interest shall have been
paid on the surrendered Note or dated the date of the surrendered Note if no
interest shall have been paid thereon.
SECTION 12.03. REPLACEMENT OF NOTES. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note, and (a) in the case of loss, theft or
destruction, of indemnity reasonably satisfactory to it (provided that if the
holder of such Note is, or is a nominee for, an original Noteholder, such
Person's own unsecured agreement of indemnity shall be deemed to be
satisfactory), or (b) in the
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case of mutilation, upon surrender and cancellation thereof, the Company at its
own expense shall execute and deliver, in lieu thereof, a new Note, dated and
bearing interest from the date to which interest shall have been paid on such
lost, stolen, destroyed or mutilated Note or dated the date of such lost,
stolen, destroyed or mutilated Note if no interest shall have been paid thereon.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. TRANSACTION EXPENSES. Whether or not the transactions
contemplated hereby are consummated, the Company will pay all reasonable costs
and expenses (including reasonable attorneys' fees of a special counsel and any
local or other counsel) incurred by the Noteholders or holder of a Note in
connection with such transactions and in connection with any amendments, waivers
or consents under or in respect of this Agreement or the other Transaction
Documents (whether or not such amendment, waiver or consent becomes effective),
including, without limitation: (a) the reasonable costs and expenses incurred in
enforcing or defending (or determining whether or how to enforce or defend) any
rights under this Agreement or the other Transaction Documents or in responding
to any subpoena or other legal process or informal investigative demand issued
in connection with this Agreement or the other Transaction Documents, or by
reason of being a holder of any Note, (b) the reasonable costs and expenses of
negotiation, preparation and execution of this Agreement and the other
Transaction Documents, and (c) the reasonable costs and expenses, including
reasonable financial advisors' fees, incurred in connection with the insolvency
or bankruptcy of the Company or any Subsidiary or in connection with any work-
out or restructuring of the transactions contemplated hereby and by the Notes.
The Company will pay, and will save the Noteholders and each other holder of a
Note harmless from, all claims in respect of any fees, costs or expenses if any,
of brokers and finders (other than those retained by the Noteholders). The
obligations of the Company under this SECTION 13.01 will survive the payment or
transfer of any Note, the enforcement, amendment or waiver of any provision of
this Agreement or the other Transaction Documents, and the termination of this
Agreement.
SECTION 13.02. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the Notes, the purchase or transfer by the
Noteholders of any Note or portion thereof or interest therein and the payment
of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of the
Noteholders or any other holder of a Note. All statements contained in any
certificate or other instrument delivered by or on behalf of the Company
pursuant to this Agreement shall be deemed representations and warranties of the
Company under this Agreement.
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SECTION 13.03. AMENDMENT AND WAIVER. This Agreement and the Notes may be
amended, and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Company and the Required Holders, except that (a) no amendment or
waiver of any of the provisions of ARTICLES II, III, IV or V, or any defined
term (as it is used therein), will be effective as to the Noteholders unless
consented to by all of the Noteholders in writing, and (b) no such amendment or
waiver may, without the written consent of the holder of each Note at the time
outstanding affected thereby, (i) subject to the provisions of ARTICLE XI
relating to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or reduce the rate or change the time of
payment or method of computation of interest on, the Notes, or (ii) change the
percentage of the principal amount of the Notes the holders of which are
required to consent to any such amendment or waiver. Any amendment or waiver
consented to as provided in this SECTION 13.03 applies equally to all holders of
Notes and is binding upon them and upon each future holder of any Note and upon
the Company without regard to whether such Note has been marked to indicate such
amendment or waiver. No such amendment or waiver will extend to or affect any
obligation, covenant, agreement, Default or Event of Default not expressly
amended or waived or impair any right consequent thereon. No course of dealing
between the Company and the holder of any Note nor any delay in exercising any
rights hereunder or under any Note shall operate as a waiver of any rights of
any holder of such Note.
SECTION 13.04. NOTICES. All notices and communications provide for
hereunder shall be in writing and sent (a) by telecopy if the sender on the same
day sends a confirming copy of such notice by a recognized overnight delivery
service (charges prepaid), or (b) by registered or certified mail with return
receipt requested (postage prepaid), or (c) by a recognized overnight delivery
service (with charges prepaid). Any such notice must be sent: (i) if to a
Noteholder, to its address specified for such communications in SCHEDULE A, or
at such other address as it shall have specified to the Company in writing, (ii)
if to the Company, to the Company at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇, or at such other address as the Company
shall have specified to the holder of each Note in writing. Notices under this
SECTION 13.04 will be deemed given only when actually received.
SECTION 13.05. LIMITATION ON INTEREST. Each provision in this Agreement and
each other Transaction Document is expressly limited so that in no event
whatsoever shall the amount paid, or otherwise agreed to be paid, by the Company
for the use, forbearance or detention of the money to be loaned under this
Agreement or any other Transaction Document or otherwise (including any sums
paid as required by any covenant or obligation contained herein or in any other
Transaction Document which is for the use, forbearance or detention of such
money), exceed that amount of money which would cause the effective rate of
interest thereon to exceed the Highest Lawful Rate, and all amounts owed under
this Agreement and each other Transaction Document shall be held to be subject
to reduction to the effect that such amounts so paid or agreed to be paid which
are for the use, forbearance or detention of money under this Agreement or such
Transaction Document shall in no event exceed that amount of money which would
cause the effective rate of interest thereon to exceed the Highest Lawful Rate.
Notwithstanding the provisions of SECTION 13.14, to the extent that the Highest
Lawful Rate applicable to a Noteholder is at any time
-22-
determined by Texas law, such rate shall be the "indicated rate ceiling"
described in Section (a)(1) of Article 1.04 of Charter 1, Title 79, of the
Revised Civil Statutes of Texas, 1925, as amended; provided, however, to the
extent permitted by such Article, the Noteholders from time to time by notice to
Company may revise the aforesaid election of such interest rate ceiling as such
ceiling affects the then-current or future balances of the loans outstanding
under the Notes. Notwithstanding any provision in this Agreement or any other
Transaction Document to the contrary, if the maturity of the Notes or the
obligations in respect of the other Transaction Documents are accelerated for
any reason, or in the event of prepayment of all or any portion of the Notes or
the obligations in respect of the other Transaction Documents by the Company or
in any other event, earned interest on the Notes and such other obligations of
the Company may never exceed the maximum amount permitted by applicable law,
and any unearned interest otherwise payable under the Notes or the obligations
in respect of the other Transaction Documents that is in excess of the maximum
amount permitted by applicable law shall be canceled automatically as of the
date of such acceleration or prepayment or other such event and, if theretofore
paid, shall be credited on the principal of the Notes or, if the principal of
the Notes has been paid in full, refunded to the Company. In determining
whether or not the interest paid or payable, under any specific contingency,
exceeds the Highest Lawful Rate, the Company and the Noteholders shall, to the
maximum extent permitted by applicable law, amortize, prorate, allocate and
spread, in equal parts during the period of the actual term of this Agreement,
all interest at any time contracted for, charged, received or reserved in
connection with the Transaction Documents.
SECTION 13.06. INDEMNIFICATION. The Company agrees to indemnify, defend and
hold each Noteholder, their partners and their respective officers, employees,
agents, directors, partners, affiliates and shareholders (collectively,
"INDEMNIFIED PERSONS") harmless from and against any and all loss, liability,
damage, judgment, claim, deficiency or reasonable expense (including interest,
penalties, reasonable attorneys' fees and amounts paid in settlement) incurred
by or asserted against any Indemnified Person arising out of, in any way
connected with, or as a result of (a) the execution and delivery of this
Agreement and the other documents contemplated hereby, the performance by the
parties hereto and thereto of their respective obligations hereunder and
thereunder and consummation of the transactions contemplated hereby and thereby,
(b) the actual or proposed use of the proceeds of the loans contemplated hereby,
(c) any violation by the Company or any of its Subsidiaries of any requirement
of law, including but not limited to Environmental Laws, (d) any Noteholder
being deemed an operator of any real or personal property of the Company in
circumstances in which no Noteholder is generally operating or generally
exercising control over such property, to the extent such losses, liabilities,
damages, judgments, claims, deficiencies or expenses arise out of or result from
any Hazardous Materials located in, on or under such property or (e) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnified Person is a party thereto; provided that such
indemnity shall not apply to any such losses, claims, damages, liabilities or
related expenses that result from the gross negligence or willful misconduct of,
or willful violation of the Transaction Documents by, such Indemnified Person.
WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION
DOCUMENTS, IT IS THE EXPRESS INTENTION OF THE PARTIES THAT EACH INDEMNIFIED
PERSON SHALL BE
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INDEMNIFIED AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS,
DEFICIENCIES, JUDGMENTS AND REASONABLE EXPENSES ARISING OUT OF OR RESULTING FROM
THE ORDINARY NEGLIGENCE (WHETHER SOLE OR CONTRIBUTORY) OF SUCH INDEMNIFIED
PERSON. Each Indemnified Person will attempt to consult with the Company prior
to entering into any settlement of any lawsuit or proceeding that could give
rise to a claim for indemnity under this SECTION 13.06, although nothing herein
shall give the Company the right to direct, or control any such settlement
negotiations or any related lawsuit or proceeding on behalf of such Indemnified
Party. The obligations of the Company under this SECTION 13.06 shall survive the
termination of this Agreement and repayment of the Notes.
SECTION 13.07. SUCCESSORS AND ASSIGNS. All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent holder of a Note) whether so expressed or
not.
SECTION 13.08. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 13.09. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one instrument. Each counterpart may consist of a number of
copies hereof, each signed by less than all, but together signed by all, of the
parties hereto.
SECTION 13.10. CONFIDENTIALITY. In connection with the negotiation and
administration of this Agreement and the other Transaction Documents, the
Company has furnished and will from time to time furnish the Noteholders certain
written information (such information, other than any such information which (i)
was publicly available, or otherwise known to the Noteholders, at the time of
disclosure, (ii) subsequently becomes publicly available other than through any
act or omission by the Noteholders or (iii) otherwise subsequently becomes known
to the Noteholders, being hereinafter referred to as "CONFIDENTIAL
INFORMATION"). The Noteholders will maintain the confidentiality of any
Confidential Information in accordance with such procedures as the Noteholders
apply generally to information of that nature. Subject to the prohibitions and
restrictions imposed on the Noteholders with respect to the Confidential
Information under applicable securities laws, it is understood that the
foregoing will not restrict the Noteholders' ability to exchange such
Confidential Information with their current or prospective investors, assignees
of the Notes and advisors. It is further understood that the foregoing will not
prohibit the disclosure of any or all Confidential Information if and to the
extent that such disclosure may be required or requested (w) by a Governmental
Authority, (x) pursuant to court order, subpoena or other legal process or in
connection with any pending or threatened litigation hereunder, (y) otherwise as
-24-
required by law, or (z) in order to protect its interests or its rights or
remedies hereunder or under the other Transaction Documents; in the event of any
required disclosure under clause (w), (x), or (y) above, the Noteholders agree
to use reasonable efforts to inform the Company as promptly as practicable.
SECTION 13.11. FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT AND THE
OTHER TRANSACTION DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
SECTION 13.12. JURY WAIVER. THE COMPANY AND THE NOTEHOLDERS HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 13.13. CHOICE OF FORUM. THE COMPANY AND THE NOTEHOLDERS AGREE
THAT ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY SHALL BE BROUGHT IN THE FEDERAL OR STATE COURTS
OF ▇▇▇▇▇▇ COUNTY, TEXAS, OTHER THAN LEGAL PROCEEDINGS INSTITUTED BY THE
NOTEHOLDERS WITH RESPECT TO THEIR RIGHTS AND REMEDIES UNDER THE SECURITY
DOCUMENTS, WHICH PROCEEDINGS MAY BE BROUGHT IN THE FEDERAL OR STATE COURTS OF
▇▇▇▇▇▇ COUNTY, TEXAS OR THE COURTS OF ANY OTHER JURISDICTION DEEMED APPROPRIATE
BY THE NOTEHOLDERS TO ENFORCE THEIR RIGHTS AND REMEDIES UNDER THE SECURITY
DOCUMENTS.
SECTION 13.14. GOVERNING LAW. This Agreement and the Notes shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the law of the State of New York excluding choice-of-law
principles of the law of such State that would require the application of the
laws of a jurisdiction other than such State.
-25-
IN WITNESS WHEREOF, the Company and the Noteholders have caused this
Agreement to be executed by their respective representatives thereunto duly
authorized effective as of the date first above written.
UNIVERSAL SEISMIC ASSOCIATES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
RIMCO PARTNERS, L.P.,
RIMCO PARTNERS, ▇.▇. ▇▇,
RIMCO PARTNERS, L.P.III, and
RIMCO PARTNERS, ▇.▇. ▇▇
By: RESOURCE INVESTORS MANAGEMENT COMPANY
LIMITED PARTNERSHIP, THEIR GENERAL PARTNER
By: RIMCO ASSOCIATES, INC.,
ITS GENERAL PARTNER
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
-26-
SCHEDULE A
INFORMATION RELATING TO NOTEHOLDERS
Principal Amount of
Name and Address of Noteholder Notes to be Purchased
------------------------------ ---------------------
RIMCO PARTNERS, L.P. $ 712,000
RIMCO PARTNERS, ▇.▇. ▇▇ $ 576,000
RIMCO PARTNERS, L.P. III $ 112,000
RIMCO PARTNERS, ▇.▇. ▇▇ $ 600.000
----------
$2,000,000
----------
(1) All payments by wire transfer
of immediately available
funds to:
Fleet Bank, N.Y.
ABA No. ▇▇▇▇▇▇▇▇▇
Account Name: Universal Seismic Associates, Inc.
Automatic Clearing Account
Account No. 9390641743
with sufficient information to identify the source and application
of such funds.
(2) All notices of payments and
written confirmations of such
wire transfers:
Resource Investors Management Company
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Schedule A Page 1
(3) All other communications:
Resource Investors Management Company
Suite 6875
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to
Resource Investors Management Company
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Schedule A Page 2
SCHEDULE 5.05
Company Subsidiaries
--------------------
Schedule 5.05
SCHEDULE 5.08
Litigation
----------
Schedule 5.08
SCHEDULE 9.02
Insurance
---------
Schedule 9.02
ANNEX A
DEFINED TERMS
"ACCREDITED INVESTOR" means an "accredited investor" as such term is
defined in Regulation D, Rule 501, promulgated by the Securities and Exchange
Commission.
"AFFILIATE" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "CONTROL" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Company.
"AGREEMENT" means this Note Purchase Agreement, as amended or modified from
time to time.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on
which commercial banks in Houston, Texas or New York, New York are required or
authorized to be closed.
"CAPITAL LEASE" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"CHANGE OF CONTROL" means any of (a) the acquisition by any Person or two
or more Persons (excluding underwriters in the course of their distribution of
voting stock in an underwritten public offering) acting in concert, of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Security Exchange Act of 1934, as amended) of 35% or more of the outstanding
shares of voting stock of the Company, (b) 50% or more of the members of the
Board of Directors of the Company on any date shall not have been (i) members of
the Board of Directors of the Company on the date 12 months prior to such date
or (ii) approved (by recommendation, nomination, election or otherwise) by
Persons who constitute at least a majority of the members of the Board of
Directors of the Company as constituted on the date 12 months prior to such
date, (c) all or substantially all of the assets of the Company are sold in a
single transaction or series or related transactions to any Person, or (d) the
Company merges with or consolidates with any other Person.
"CLOSING" is defined in ARTICLE III.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"COLLATERAL" means the equipment and other property described as
collateral under the Security Documents.
"COLLATERAL LIQUIDATION VALUE" means, at any time, while the Existing
Senior Notes or the Notes are outstanding, the value that would be received for
the Collateral in a sale of the Collateral by a seller who is compelled to sell
the Collateral on an "as is," "where is" basis with only a limited time to find
a purchaser, such value to be determined in a manner consistent with the most
recent appraisal report delivered to the Noteholders under SECTION 8.01(D), as
adjusted from time to time by the Noteholders, in their sole discretion, for
any Collateral that is lost, damaged, destroyed or disposed of by the Company.
"COMPANY" is defined in the introduction to this Agreement.
"CURRENT ASSETS" means, as of any date, all assets of the Company and its
Subsidiaries that would be reflected as current assets on a consolidated
balance sheet of the Company and its Subsidiaries prepared on such date in
accordance with GAAP consistently applied.
"CURRENT LIABILITIES" means, as of any date, all liabilities of the Company
and its Subsidiaries that would be reflected as current liabilities on a
consolidated balance sheet of the Company and its Subsidiaries prepared on such
date in accordance with GAAP consistently applied.
"DEFAULT" means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
"DEFAULT RATE" means (i) as to any amount owing with respect to a Note, the
rate of interest stated in clause (b) of the first paragraph of such Note and
(ii) as to any other amount fifteen percent (15%) per annum, but in no event to
exceed the Highest Lawful Rate.
"ENVIRONMENTAL LAWS" means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
-2-
"ERISA AFFILIATE" means any trade or business (whether or not incorporated)
that is treated as a single employer together with the Company under section 414
of the Code.
"EVENT OF DEFAULT" is defined in SECTION 11.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXISTING NOTE AGREEMENTS" means that certain Note Purchase Agreement,
dated January 19, 1996, among the Company, the Noteholders and RIMCO Partners,
L.P. III, as amended or modified from time to time and that certain Note
Purchase Agreement, dated May 28, 1996, among the Company and the Noteholders,
as amended or modified from time to time.
"EXISTING SENIOR NOTES" means the 10% Senior Secured General Obligation
Notes, in the maximum aggregate principal amount of $10,000,000 issued by the
Company under the Existing Note Agreements.
"EXISTING TRANSACTION DOCUMENTS" means, collectively, (i) the Existing
Company Note Agreements and the other agreements and promissory notes described
or referred to therein, and (ii) the Subsidiary Note Agreement and the other
agreements and promissory notes described or referred to therein.
"FIDELITY FUNDING AGREEMENT" means, collectively, that certain Loan and
Security Agreement, dated as of August 31, 1995, between Universal Seismic
Acquisition, Inc. and Fidelity Funding, Inc. and that certain Loan and Security
Agreement, dated August 31, 1995, between Universal Seismic Technologies, Inc.
and Fidelity Funding, Inc.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"GOVERNMENTAL AUTHORITY" means (a) the government of (i) the United States
of America or any State or other political subdivision thereof, or (ii) any
jurisdiction in which the Company or any Subsidiary conducts all or any part of
its business, or which asserts jurisdiction over any properties of the Company
or any Subsidiary, or (b) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or pertaining to, any such
government.
"GUARANTY" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person: (a) to
purchase such indebtedness or obligation or any property constituting security
therefor; (b) to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or other
balance sheet condition or any income statement condition of any other
-3-
Person or otherwise to advance or make available funds for the purchase or
payment of such indebtedness or obligation; (c) to lease properties or to
purchase properties or services primarily for the purpose of assuring the owner
of such indebtedness or obligation of the ability of any other Person to make
payment of the indebtedness or obligation; or (d) otherwise to assure the owner
of such indebtedness or obligation against loss in respect thereof. In any
computation of the indebtedness or other liabilities of the obliger under any
Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obliger.
"HAZARDOUS MATERIAL" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).
"HIGHEST LAWFUL RATE" means with respect to any indebtedness owed to any
Noteholder under any Transaction Document, the maximum nonusurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged or received by such Noteholder with respect to such
indebtedness under law applicable to such Noteholder.
"HOLDER" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to SECTION
12.01.
"INDEBTEDNESS" with respect to any Person means, at any time, without
duplication, (a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock; (b) its
liabilities for the deferred purchase price of property acquired by such Person
(excluding accounts payable arising in the ordinary course of business but
including all liabilities created or arising under any conditional sale or other
title retention agreement with respect to any such property); (c) all
liabilities appearing on its balance sheet in accordance with GAAP in respect of
Capital Leases; (d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has assumed or
otherwise become liable for such liabilities); (e) all its liabilities in
respect of letters of credit or instruments serving a similar function issued or
accepted for its account by banks and other financial institutions (whether or
not representing obligations for borrowed money); (f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a type described
in any of clauses (a) through (f) hereof. Indebtedness of any Person shall
include all obligations of such Person of the character described in clauses (a)
through (g) to the extent such Person remains legally liable in respect thereof
notwithstanding that any such obligation is deemed to be extinguished under
GAAP.
"INDEMNIFIED PERSON" is defined in SECTION 13.06.
-4-
"INVESTMENT" means, with respect to any Person, any direct or indirect
purchase or other acquisition by such Person of stock or other securities of
any other Person, or any direct or indirect loan, advance or capital
contribution by such Person to any other Person, and any other item which would
be classified as an "investment" on a balance sheet of such Person prepared in
accordance with GAAP.
"LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance of any kind (whether voluntary
or involuntary), or any interest or title of any vendor, lessor, lender or
other secured party to or of such Person under any conditional sale or other
title retention agreement or Capital Lease, upon or with respect to any
property or asset of such Person (including in the case of stock, stockholder
agreements, voting trust agreements and all similar arrangements).
"MATERIAL" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Company
and its Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the
Company to perform its obligations under this Agreement and the other
Transaction Documents, or (c) the validity or enforceability of this Agreement
or the other Transaction Documents.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan" (as such
term is defined in section 4001(a)(3) of ERISA).
"NET INCOME" means, for any period, the consolidated net earnings of the
Company and its Subsidiaries for such period, determined in accordance with
GAAP.
"NOTEHOLDERS" is defined in the introduction to this Agreement.
"NOTES" is defined in Section 2.01.
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial Officer
or of any other officer of the Company whose responsibilities extend to the
subject matter of such certificate.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"PERSON" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
-5-
"PLAN" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"PREFERRED STOCK" means any class of capital stock of a corporation that is
preferred over any other class of capital stock of such corporation as to the
payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"REQUIRED HOLDERS" means, at any time, the holder or holders of at least
51% in principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by the Company or any of its Affiliates).
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time.
"SECURITY AGREEMENT" means that certain Second Amended and Restated
Security Agreement of even date herewith granting a first Lien on the collateral
described therein executed by the Company in favor of the Noteholders, as the
same may be supplemented or amended from time to time.
"SECURITY DOCUMENTS" means the Security Agreement, the Subsidiary Security
Agreement and such other security agreements, guaranties, pledges, instruments,
financing statements or other documents which may be executed to secure the
obligations of the Company with respect to the Notes and this Agreement.
"SENIOR FINANCIAL OFFICER" means any of the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.
"SUBSIDIARY" means, as to any Person, any corporation, association or other
business entity in which such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
-6-
"SUBSIDIARY NOTE AGREEMENT" means that certain Amended and Restated Note
Purchase Agreement, dated of even date herewith, among UNEXCO and the
Noteholders, as amended or modified from time to time.
"SUBSIDIARY NOTES" means the Amended and Restated 12% Senior Secured
Exchangeable General Obligation Notes, in the maximum aggregate principal amount
of $5,500,000, issued by UNEXCO under the Subsidiary Note Agreement.
"SUBSIDIARY SECURITY AGREEMENT" means that certain Second Amended and
Restated Security Agreement of even date herewith granting a first Lien on the
Collateral described therein executed by Universal Seismic Acquisition, Inc. in
favor of the Noteholders, as same may be supplemented or amended from time to
time.
"SWAPS" means, with respect to any Person, payment obligations with respect
to interest rate swaps, currency swaps and similar obligations obligating such
Person to make payments, whether periodically or upon the happening of a
contingency. For the purposes of this Agreement, the amount of the obligation
under any Swap shall be the amount determined in respect thereof as of the end
of the then most recently ended fiscal quarter of such Person, based on the
assumption that such Swap had terminated at the end of such fiscal quarter, and
in making such determination, if any agreement relating to such Swap provides
for the netting of amounts payable by and to such Person thereunder or if any
such agreement provides for the simultaneous payment of amounts by and to such
Person, then in each such case, the amount of such obligation shall be the net
amount so determined.
"TANGIBLE NET WORTH" means, as of any date, the total shareholder's equity
(including capital stock, additional paid-in capital and retained earnings after
deducting treasury stock) which would appear on a consolidated balance sheet of
the Company and its Subsidiaries prepared as of such date in accordance with
GAAP, minus (i) the amount of any assets resulting from capitalization of
goodwill, organizational expenses, research and development expenses,
trademarks, trade names, copyrights patents, patent applications, licenses and
rights in any thereof, and other similar intangibles, (ii) cash held in a
sinking or other analogous fund established for the purpose of redemption,
retirement or prepayment of capital stock or Indebtedness, and (iii) the amount
of any other items which are treated as intangible assets in accordance with
GAAP.
"TRANSACTION DOCUMENTS" is defined in SECTION 4.01.
"UNEXCO" means UNEXCO, Inc., a Delaware corporation and wholly owned
Subsidiary of the Company.
-7-
EXHIBIT 2.01
[FORM OF NOTE]
UNIVERSAL SEISMIC ASSOCIATES, INC.
12% SENIOR SECURED GENERAL OBLIGATION NOTE
No. [ ] March 27, 1997
$ [ ]
FOR VALUE RECEIVED, the undersigned, UNIVERSAL SEISMIC ASSOCIATES, INC.
a Delaware corporation (the "COMPANY"), hereby promises to pay to
, or registered assigns, the principal sum of
and /100 DOLLARS ($ ),
together with interest (computed on the basis of a 360-day year of twelve 30-day
months) (a) on the unpaid principal balance hereof at the rate of twelve percent
(12%) per annum from the date hereof, until the principal hereof shall have
become due and payable, and (b) on any overdue payment of principal or interest,
at a rate per annum from time to time equal to fifteen percent (15%); provided,
however, in no event shall such rate of interest ever exceed the Highest Lawful
Rate (as defined in the Note Purchase Agreement referred to below).
This Note shall be due and payable as follows:
(a) commencing on May 1, 1997, on the first day of each month through and
including November 1, 1999, a payment equal to all accrued but unpaid interest
thereon;
(b) on December 1, 1999, the entire unpaid principal balance hereof,
together with all accrued, but unpaid interest hereon, shall be fully and
finally due and payable; and
(c) if a Change of Control (as defined in the Note Purchase Agreement
referred to below) shall occur, the entire unpaid principal balance hereof,
together with all accrued, but unpaid interest hereon, shall be fully and
finally due and payable on the date one day after such Change of Control occurs.
This Note is one of a series of 12% Senior Secured General Obligation
Notes issued pursuant to the Note Purchase Agreement dated of even date herewith
(as from time to time amended, the "NOTE PURCHASE AGREEMENT") between the
Company and the Noteholders named therein and is entitled to the benefits, and
otherwise subject to the provisions, thereof, including, without limitation, the
limitations on interest set forth in Section 13.05 thereof. This Note is secured
by the Security Documents referred to in the Note Purchase Agreement.
All payments made by the Company on this Note shall be applied first, to
the accrued, but unpaid interest hereon, and the remainder, if any, shall be
applied to the principal balance hereof. This Note is subject to optional
prepayment, in whole or from time to time in part, without notice, premium, fee
or penalty, at the times and on the terms specified in the Note Purchase
Agreement, but not otherwise.
Payments of principal of and interest on this Note are to be made in lawful
money of the United States of America at places designated in the Note Purchase
Agreement.
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
If an Event of Default, as defined in the Note Purchase Agreement, occurs
and is continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner, at the price and with the effect provided
in the Note Purchase Agreement.
This Note shall be governed by and construed in accordance with the laws
of the State of New York, excluding the choice of law rules thereof.
UNIVERSAL SEISMIC ASSOCIATES, INC.
By:
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
Page 2
SCHEDULE 5.05
TO THE UNIVERSAL SEISMIC ASSOCIATION, INC.
NOTE PURCHASE AGREEMENT
SUBSIDIARIES
JURISDICTION PERCENTAGE
SUBSIDIARY OF INCORPORATION OWNERSHIP
------------------------------------- --------------- ----------
UNIVERSAL SEISMIC ACQUISITION, INC. TEXAS 100%
UNIVERSAL SEISMIC TECHNOLOGIES, INC. TEXAS 100%
MANNE AUTOMATED SURVEYS, INC. TEXAS 100%
UNEXCO, INC. DELAWARE 100%
SCHEDULE 5.08
TO THE UNIVERSAL SEISMIC ASSOCIATES NOTE PURCHASE AGREEMENT
1. No. 95-09~62; The Shamrock Pipe Line Corporation vs. ▇▇▇▇▇▇▇▇ Energy
Corporation, Universal Seismic Acquisition, Inc., ▇▇▇▇▇▇ Drilling, Inc. and
Marine Automated Surveys, Inc.; In the 271st Judicial District Court of Wise
County, Texas ("Shamrock Pipe").
Universal Seismic Associates, Inc. ("USA") and Marine Automated Surveys,
Inc. ("MAS") are defendants in the above action in which the plaintiffs have
alleged that one or more of the defendants caused the plaintiffs' pipe to
rupture as a result of negligent conduct of seismic testing, resulting in down
time and lost gasoline. Presently USA's insurance company has assumed the
defense and has hired counsel to represent it in the case. MAS is a wholly-owned
subsidiary of USA which was formed for the purpose of acquiring the assets,
including the tradename, of a now dissolved corporation. The asset acquisition
occurred after the alleged incident giving rise to this suit. Accordingly,
plaintiff's counsel believes that the former owner of the corporate name Marine
Automated Surveys, now known as JBX Corporation, will be joined and that all
claims with respect to MAS will be dismissed.
2. No. ▇▇-▇▇-▇▇▇; ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, et al. ▇. ▇▇▇▇▇▇▇▇ Energy Corp., et al.; In
the 271st Judicial District Court of Wise County, Texas.
This action, which arose out of the same set of facts as Shamrock Pipe, was
brought by the owners of the real property upon which the pipeline in Shamrock
Pipe lies for recovery of damages to such property.
3. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and the Universal Seismic
Associates, Inc. Shareholders' Protective Committee v. Universal Seismic
Associates, Inc., et al.; Civil Action No. 97-22 in United States District
Court for the District of Delaware.
This is a case brought by dissident shareholders which originally sought
revocation of proxies submitted in favor of existing management-sponsored
members of the Board of Directors of the Company. The Directors sponsored by
management were elected by a substantial majority of the voting shares and the
District Court declined to overturn the result. The suit was then amended to
add claims against the Company and all of its Board members sounding in
fraudulent misrepresentation and non-disclosure of financial information
relevant to the Company.
4. Universal Seismic Associates v. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇;
Cause No. 97-12684 in the ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇.
This is a case brought against the defendants jointly for breaches of
fiduciary duty, disclosure of confidential information and tortious interference
resulting from the defendants' disclosure of various confidential information of
the Company to the public. The defendants have not answered the suit at this
time.
To the Universal Seismic
Associates, Inc. Note Purchase
Agreement
SCHEDULE OF INSURANCE
APRIL 19, 1996 TO APRIL 27, 1997
---------------------------------------------------------------------------------------------------------------
POLICY EFFECTIVE
COVERAGE COMPANY NO. DATES CURRENT PROGRAM PREMIUM
---------------------------------------------------------------------------------------------------------------
General Liability Ranger Lloyds GL0705044 4/19/96 2,000,000 Bodily injury and Property $91,214
Ins Co to Damage Combined Single Limit
4/27/97 General Aggregate - Per Project
2,000,000 Bodily Injury and Property
Damage Combined Single Limit
Products/Completed
Operations Aggregate
1,000,000 Bodily Injury and Property
Damage Combined Single Limit
- Per Occurrence
1,000,000 Personal and Advertising Injury
- Any One Person or Organization
50,000 Fire Damage Liability - Any One
Occurrence
1,000,000 Employee Benefits Liability -
Each Employee
1,000,000 Employee Benefits Liability -
Annual Aggregate
DEDUCTIBLE
1,000 Employee Benefits Liability -
Each Claim
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
POLICY EFFECTIVE
COVERAGE COMPANY NO. DATES CURRENT PROGRAM PREMIUM
------------------------------------------------------------------------------------------------------------------------------------
Business Automobile Ranger County TBA 3263 4/19/96 1,000,000 Bodily Injury and Property $113,730
Mutual Ins Co to Damage Combined Single Limit
4/27/97 - Each Accident Owned Autos,
Hired and Non-Owned Autos
100,000 Bodily Injury and Property
Damage Combined Single Limit
Uninsured/Underinsured
Motorist
2,500 Person Injury Protection - Per
Person
DEDUCTIBLE
1,000 Comprehensive - Specified
Vehicles
25 Specified Causes of Loss -
Specified Vehicle
1,000 Collision - Specified
Vehicles
------------------------------------------------------------------------------------------------------------------------------------
Workers American Home WC8883401RA 4/27/96 1,000,000 Bodily Injury by Accident - Each $221,290
Compensation & Assurance WC8883402RA to Accident
Employers' Liability Company 4/27/97 1,000,000 Bodily Injury by Disease - Policy
Limit
1,000,000 Bodily Injury by Disease - Each
Employee
1,000,000 Maritime Coverage
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
POLICY EFFECTIVE
COVERAGE COMPANY NO. DATES CURRENT PROGRAM PREMIUM
------------------------------------------------------------------------------------------------------------------------------------
Umbrella Liability National Union BE9322214 4/19/96 5,000,000 Bodily Injury and Property $46,803
Fire Insurance to Combined Single Limit - Per
Company 4/27/97 Occurrence
5,000,000 Bodily Injury and Property
Damage Combined Single Limit
Products/Completed Operations
Aggregate
5,000,000 Bodily Injury, Property Damage
Combined Single Limit Policy
Aggregate (Except Products/
Completed Operations and
Automobile which is not subject
to an aggregate)
SELF INSURED RETENTION
10,000 Each Occurrence, Applicable to
Losses covered in the Excess
but not covered in the Primary &
when underlying aggregates are
exhausted
------------------------------------------------------------------------------------------------------------------------------------
Contractors Hartford 4/19/96 22,000,000 Contractors Equipment Blanket $60,716
Equipment Casualty Ins. to Limit
Co. 4/27/97 3,500,000 Contractors Equipment Any
One Item
250,000 Waterborne Equipment
350,000 Leased/Rented Equipment Any
One Loss/Any One Item
DEDUCTIBLE
25,000 Per Occurrence - Theft
10,000 Per Occurrence - All other perils
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
POLICY EFFECTIVE
COVERAGE COMPANY NO. DATES CURRENT PROGRAM PREMIUM
------------------------------------------------------------------------------------------------------------------------------------
Commercial Property Hartford 04/19/96 COMMERCIAL PROPERTY $ 1,281
Insurance to 225,000 Office Contents - Park Ten
04/27/97 Place
75,000 Extra Expense Office
10,000 Contents - ▇▇▇▇ ▇▇▇▇▇▇
50,000 Contents - Off Premises
DEDUCTIBLE
1,000 Per Occurrence - Commercial
Property
------------------------------------------------------------------------------------------------------------------------------------
Electronic Equipment Hartford 04/19/96 ELECTRONIC EQUIPMENT $ 5,000
Casualty Ins. to 290,000 Equipment - Park Ten Place
Co. 04/27/97 25,000 Extra Expense
DEDUCTIBLE
250 Electronic Equipment
------------------------------------------------------------------------------------------------------------------------------------
Directors & Officers Executive Re 75L004659- 9/19/96 2,000,000 Each Claim and Aggregate $60,000
Liability Indemnity Inc. 95 to RETENTION
9/19/97 0 D&O Section
50,000 Corporate Reimbursement
Section
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
POLICY EFFECTIVE
COVERAGE COMPANY NO. DATES CURRENT PROGRAM PREMIUM
------------------------------------------------------------------------------------------------------------------------------------
Foreign Package CIGNA Ins. Co. PFF047474 02/22/96 FOREIGN COMMERCIAL GENERAL LIABILITY $2,883
to 2,000,000 Each Occurrence
04/19/97 2,000,000 Products/Completed Ops
Aggregate
1,000,000 Personal & Adveritising Injury
Aggregate
1,000,000 Premises Damage Limit - each
occurrence
10,000 Medical Expense Limit
EMPLOYEE BENEFITS LLABILLTY
1,000,000 Each Claim (Claims Made)
1,000,000 Annual Aggregate (Claims
Made)
CONTINGENT AUTO LLABILLTY
1,000,000 Each Accident
EMPLOYERS LLABILLTY
1,000,000 Bodily Injury by Accident
1,000,000 Bodily Injury by Disease (Policy
Limits)
1,000,000 Bodily Injury by Disease (each
employee)
250,000 Repatriation Policy Limit
------------------------------------------------------------------------------------------------------------------------------------
