Exhibit 10.1
CREDIT AGREEMENT
BY AND BETWEEN
BANK ONE, TEXAS, NATIONAL ASSOCIATION
AND
DRIL-QUIP, INC.
GOVERNING
$15,000,000.00 REVOLVING CREDIT FACILITY
$1,500,000.00 ADVANCING CREDIT FACILITY
$12,175,000.00 TERM LOAN
MARCH 30, 1994
TABLE OF CONTENTS
TAB
ARTICLE I Definitions.......................................................... v
Section 1.01. Definitions.................................................. v
Section 1.02. Other Definitional Provisions................................12
ARTICLE II Revolving Credit Loan................................................12
Section 2.01. Commitment for Revolving Credit Loan...................... 12
Section 2.02. Revolving Credit Note..................................... 12
Section 2.03. Expiration of Commitment to Lend under Revolving Credit... 13
Section 2.04. Procedure for Borrowing Under the Revolving Credit Loan... 13
Section 2.05. Use of Proceeds of Revolving Credit Loan.................. 14
Section 2.06. Reduction or Termination of Revolving Committed Sum....... 14
Section 2.07. Agreement to Remain in Effect; Revolving Credit........... 14
Section 2.08. Letters of Credit......................................... 14
Section 2.09. Aggregate Amounts Available under Letters of Credit....... 15
Section 2.10. Advances in Respect of Letters of Credit; Reimbursement... 15
Section 2.11. Purpose of Letters of Credit.............................. 16
Section 2.12. Conflicts in Terms........................................ 16
Section 2.13. Letter of Credit Fee...................................... 16
Section 2.14. Borrowing Base............................................ 16
Section 2.15. Required Date and Amount of Mandatory Prepayments......... 17
ARTICLE III Advancing Credit Loan............................................... 17
Section 3.01. Commitment for Advancing Credit Loan...................... 17
Section 3.02. Advancing Credit Note..................................... 18
Section 3.03. Expiration of Commitment to Lend under Advancing Credit... 18
Section 3.04. Procedure for Borrowing Under the Advancing Credit Loan... 18
Section 3.05. Use of Proceeds of Advancing Credit Loan.................. 19
Section 3.06. Reduction or Termination of Advancing Committed Sum....... 19
Section 3.07. Advancing Credit Commitment Fee........................... 19
ARTICLE IV Term Loan........................................................... 20
Section 4.01. Commitment for Term Loan.................................. 20
Section 4.02. Term Note................................................. 20
ARTICLE V Payments............................................................ 21
Section 5.01. Method of Payment......................................... 21
Section 5.02. Prepayment................................................ 21
i
ARTICLE VI Collateral.......................................................... 21
Section 6.01. Collateral................................................ 21
Section 6.02. Setoff.................................................... 22
ARTICLE VII Conditions Precedent................................................ 23
Section 7.01. Initial Advance........................................... 23
Section 7.02. Additional Revolving Credit Advances...................... 24
Section 7.03. Additional Conditions to Each Advancing Credit Advance.... 25
ARTICLE VIII Representations and Warranties...................................... 25
Section 8.01. Corporate Existence....................................... 25
Section 8.02. Financial Statements...................................... 26
Section 8.03. Default................................................... 26
Section 8.04. Authorization and Compliance with Laws and Material
Agreements................................................ 26
Section 8.05. Litigation and Judgments.................................. 26
Section 8.06. Rights in Properties; Liens............................... 27
Section 8.07. Enforceability............................................ 27
Section 8.08. Approvals................................................. 27
Section 8.09. Debt...................................................... 27
Section 8.10. Taxes..................................................... 27
Section 8.11. Use of Proceeds; Margin Securities........................ 27
Section 8.12. ERISA..................................................... 27
Section 8.13. Disclosure................................................ 28
Section 8.14. Subsidiaries.............................................. 28
Section 8.15. Principal Place of Business............................... 28
Section 8.16. Investment Company Act.................................... 28
Section 8.17. Public Utility Holding Company Act........................ 28
Section 8.18. Contracts................................................. 28
Section 8.19. Compliance with Law....................................... 29
Section 8.20. Consent................................................... 29
Section 8.21. Securities Laws........................................... 29
Section 8.22. Existing Loans to Affiliates.............................. 29
Section 8.23. Patents and Trademarks.................................... 29
ARTICLE IX Affirmative Covenants............................................... 29
Section 9.01. Financial Statements...................................... 29
Section 9.02. Periodic Miscellaneous Reports............................ 31
Section 9.03. Warehousing Agreements.................................... 32
Section 9.04. Performance of Obligations................................ 32
Section 9.05. Preservation of Existence and Conduct of Business......... 32
Section 9.06. Maintenance of Properties................................. 32
Section 9.07. Payment of Taxes and Claims............................... 32
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Section 9.08. Audit..................................................... 32
Section 9.09. Keeping Books and Records................................. 32
Section 9.10. Compliance with Laws...................................... 33
Section 9.11. Compliance with Agreements................................ 33
Section 9.12. Further Assurances........................................ 33
Section 9.13. Compliance with ERISA..................................... 33
Section 9.14. Use of Proceeds........................................... 33
Section 9.15. Insurance Summary......................................... 33
Section 9.16. Licenses.................................................. 33
Section 9.17. Insurance; Payment of Premiums............................ 34
Section 9.18. Casualty or Damage to Insured Property.................... 34
Section 9.19. Guaranty Obligation....................................... 35
ARTICLE X Negative Covenants.................................................. 35
Section 10.01. Limitation on Liens; Debt................................. 35
Section 10.02. Mergers, Acquisitions and Dissolutions.................... 36
Section 10.03. Capital Expenditures...................................... 36
Section 10.04. Lease Obligations......................................... 36
Section 10.05. Consolidated Tangible Net Worth Test...................... 36
Section 10.06. Current Ratio Test........................................ 36
Section 10.07. Cash Flow Coverage Test................................... 36
Section 10.08. Restricted Payments....................................... 37
Section 10.09. Loans and Investments..................................... 37
Section 10.10. Transactions With Affiliates.............................. 37
Section 10.11. Disposition of Assets..................................... 37
Section 10.12. Sale and Leaseback........................................ 37
Section 10.13. Prepayment of Debt........................................ 37
Section 10.14. Nature of Business........................................ 38
Section 10.15. Prohibited Transactions................................... 38
Section 10.16. Contingent Liabilities.................................... 38
Section 10.17. Removal of Collateral..................................... 38
Section 10.18. Negative Pledge........................................... 38
Section 10.19. Sale of Stock............................................. 38
Section 10.20. Compliance with Regulations G, T, U, and X................ 39
ARTICLE XI Default............................................................. 39
Section 11.01. Events of Default......................................... 39
Section 11.02. Occurrence of a Default or an Event of Default............ 41
Section 11.03. Performance by Lender..................................... 43
Section 11.04. Waivers................................................... 43
Section 11.05. Application of Proceeds................................... 43
Section 11.06. Cumulative Rights......................................... 43
Section 11.07. Expenditures by Lender or Any Lender...................... 43
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ARTICLE XII Miscellaneous....................................................... 44
Section 12.01. Expenses of Lender........................................ 44
Section 12.02. Restatement............................................... 44
Section 12.03. No Waiver; Cumulative Remedies............................ 44
Section 12.04. Successors and Assigns.................................... 44
Section 12.05. Survival of Representations and Warranties................ 44
Section 12.06. Entire Agreement; Amendment............................... 45
Section 12.07. Maximum Interest Rate..................................... 45
Section 12.08. Notices................................................... 45
Section 12.09. APPLICABLE LAW............................................ 46
Section 12.10. Counterparts.............................................. 46
Section 12.11. Severability.............................................. 46
Section 12.12. Headings.................................................. 46
Section 12.13. Non-Application of Chapter 15 of Texas Credit Code........ 46
Section 12.14. Controlling Provision Upon Conflict....................... 46
iv
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (the "Agreement"), dated as of March 30, 1994,
is by and between DRIL-QUIP, INC., a Texas corporation ("Borrower"), and BANK
ONE, TEXAS, NATIONAL ASSOCIATION, a national banking association ("Lender").
In consideration of the mutual covenants and agreements herein
contained, Borrower and Lender agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. As used in this Agreement, the following
terms shall have the respective meanings indicated below:
"Accounts" means accounts (as such term is defined in the UCC) and
"Account" means any of the Accounts.
"Advance" means an advance of funds by Lender to Borrower pursuant to
Article II, Article III or Article IV.
"Advancing Credit Commitment Fee" shall have the meaning set forth in
Section 3.07 hereof.
"Advancing Credit Commitment Period" means the period commencing on
the date of this Agreement and ending on the Advancing Credit Termination Date.
"Advancing Credit Committed Sum" means ONE MILLION FIVE HUNDRED
THOUSAND AND NO/100 DOLLARS ($1,500,000.00) , as such amount may be reduced
pursuant to Section 3.06 or otherwise.
"Advancing Credit Loan" means the Loan made by Lender to Borrower, in
one or more Advances, during the Advancing Credit Commitment Period, pursuant to
Section 3.01.
"Advancing Credit Note" means the promissory note in favor of Lender
in substantially the form of Exhibit B hereto, and all extensions, renewals and
modifications thereof.
"Advancing Credit Termination Date" means 11:00 a.m. Houston, Texas,
time on September 30, 1994, or such earlier date as the Commitment to make
Advances pursuant to Section 3.01 terminates as provided in this Agreement.
"Affiliate" means any Person directly or indirectly controlling,
controlled by, or under common control with, Borrower.
"Agreement" means this Credit Agreement (including all Exhibits and
Schedules attached hereto), as the same may be amended or supplemented from time
to time.
"Application" means the document between Borrower and Lender relating
to a Letter of Credit and evidencing, inter alia, the agreement of Lender to
issue such Letter of Credit and Borrower's reimbursement obligation with respect
thereto, which Application shall be in form and substance satisfactory to
Lender.
"Authorized Financial Officer" means the Chairman of the Board of
Directors, President, Vice President, Chief Financial Officer, Treasurer or
Controller of Borrower.
"Available Sum" means, as of the date of any determination thereof,
the Borrowing Base less the sum of (w) the aggregate unpaid balance of the
Revolving Credit Loan plus (x) the aggregate amount of any pending Notice of
Revolving Credit Borrowing plus (y) the aggregate contingent liability of Lender
under all open Letters of Credit plus (z) the aggregate amount of any pending
Notice of Letter of Credit Issuance.
"Bank One Texas Base Rate" means at any time the lesser of (i) the
rate of interest per annum then most recently established by Lender as its Bank
One Texas Base Rate in effect from day to day, with each change in the rate of
interest charged as the Bank One Texas Base Rate to become effective, without
notice to Borrower, on the effective date of each change in the Bank One Texas
Base Rate, such Bank One Texas Base Rate to be computed on the basis of a year
composed of 365 days for the actual number of days elapsed (including the first
day but excluding the last day) or (ii) the Maximum Rate (as herein defined).
"Borrowing" means a borrowing hereunder consisting of Loans made to
Borrower by Lender in Advances under this Agreement and the Notes.
"Borrowing Base" means, at any particular time, an amount equal to the
sum of (a) eighty percent (80%) of Eligible Accounts, plus (b) fifty percent
(50%) of Eligible Inventory; provided, however, that fifty percent (50%) of
Eligible Inventory shall never exceed sixty percent (60%) of the Borrowing Base.
"Borrowing Base Deficiency" shall have the meaning set forth in
Section 2.14 hereof.
"Borrowing Base Report" shall have the meaning set forth in Section
2.14 hereof.
"Borrowing Date" means a date upon which an Advance is to be made
hereunder.
"Business Day" means a day when Lender is open for business.
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"Closing" means the exchange of the various documents and instruments
by the parties hereto on the Closing Date (as defined in Section 7.01 hereof)
which are required to be exchanged on the Closing Date to consummate the initial
Advances (regardless of whether such initial Advances are then made) and related
transactions in accordance with Article VII hereof.
"Closing Date" shall have the meaning set forth in Section 7.01
hereof.
"Collateral" shall have the meaning set forth in Section 6.01.
"Commitment" means (i) the commitment of Lender to make available the
Revolving Credit Loan hereunder, (ii) the commitment of Lender to make available
the Advancing Credit Loan hereunder, (iii) the commitment of Lender to make
available the Term Loan hereunder and (iv) the commitment of Lender to issue the
Letters of Credit hereunder.
"Consolidated" means, with reference to any item, such item of
Borrower or any Material Company or, if Borrower or any Material Company shall
have any Subsidiary or Subsidiaries which are consolidated for financial
reporting purposes for the date or for the period as of or with respect to which
a determination is made, of Borrower, the Material Companies and such Subsidiary
or Subsidiaries, consolidated in accordance with GAAP.
"Consolidated Tangible Net Worth" means, on any date as of which the
amount thereto is to be determined, all amounts which, as determined in
accordance with GAAP, would be included as stockholders' equity (including
capital stock, capital in excess of par value and retained earnings [or deficit]
but excluding treasury stock) on a Consolidated balance sheet of Borrower and
the Subsidiaries; provided, however, there shall be excluded therefrom (i) any
amount at which shares of capital stock of Borrower or any Material Company
appear as an asset on such Person's balance sheet, (ii) goodwill, including any
amounts, however designated, which represent the excess of the purchase price
paid for assets or stock over the value assigned thereto, (iii) patents,
trademarks, trade names, franchises, experimental expense and copyrights, (iv)
deferred expenses, (v) loans and advances to any stockholder, director, officer,
or employee of Borrower or any Subsidiary or any Affiliate (vi) all other assets
which are properly classified as intangible assets and (vii) any surplus
resulting from any write-up of assets subsequent to the date of this Agreement.
Notwithstanding anything to the contrary herein, foreign currency translation
adjustments shall be excluded in the calculation of Consolidated Tangible Net
Worth.
"Debt" means for any Person (i) all indebtedness whether or not
represented by bonds, debentures, notes or other securities, for the repayment
of money borrowed, (ii) all indebtedness representing deferred payment of the
purchase price of property or assets, (iii) all indebtedness under any lease
which, in conformity with GAAP, is required to be capitalized for balance sheet
purposes, (iv) all indebtedness under guaranties, endorsements, assumptions or
other contingent obligations, in respect of, or to purchase or otherwise
acquire, indebtedness of others, and (v) all indebtedness secured by a Lien
existing on property owned, subject to such Lien, whether or not the
indebtedness secured thereby shall have been assumed by the owner thereof.
3
"Default" means the occurrence of any event which with the giving of
notice or lapse of time, or both, would become an Event of Default.
"DQAP" means Dril-Quip Asia Pacific Pte Ltd, a company incorporated in
the Republic of Singapore.
"DQE" mean Dril-Quip (Europe) Limited, a private limited company
formed under the Companies Act of the United Kingdom 1948, as amended.
"Eligible Accounts" means at any date of determination thereof, all
Accounts of Borrower that are acceptable to Lender in its sole reasonable
discretion and satisfy the following eligibility requirements:
(i) If the Account arises because of the sale of goods, such
goods have been shipped or delivered on an open account basis (or
Lender has been provided with a letter from the customer accepting
title for the goods prior to shipment and accepting risk of loss with
respect thereto and confirming its obligation to pay for such goods on
Borrower's regular terms to such customer) and on an absolute sales
basis and not on consignment, on approval or on a sale-or-return basis
or subject to any other repurchase or return agreement and no material
part of such goods has been returned, rejected, lost or damaged;
(ii) The Account is not evidenced by chattel paper or an
instrument of any kind unless such chattel paper or instrument is
assigned and delivered to and is acceptable to Lender;
(iii) The account debtor obligated on such account is not
insolvent or the subject of any bankruptcy, reorganization,
receivership or insolvency proceedings of any kind and Lender is
reasonably satisfied with the credit worthiness of such account
debtor;
(iv) The Account is a valid, legally enforceable obligation of
the relevant account debtor not subject to any offset, defense or
claim denying or limiting liability thereunder, other than normal
discounts and allowances granted in the ordinary course of Borrower's
business on prior notice to Lender, and other than any amount in
dispute or subject to debit memorandum which shall have been deducted
from the total Account to determine what may otherwise be the balance
of the Eligible Account;
4
(v) The Account is subject to Lender's prior perfected security
interest and is not subject to any Lien other than any Permitted Lien;
(vi) The Account has arisen with respect to:
(1) sales invoiced for net payment on terms of thirty (30)
days or less after the date of the invoice and which remain
unpaid for no longer than ninety (90) days after the date of
invoice or the due date on the invoice; or
(2) sales invoiced for net payments beyond thirty (30) days,
and which remain unpaid for no longer than thirty (30) days after
due date, on the condition that no invoice will be eligible for
more than ninety (90) days before due date;
(vii) If the Account debtor is located in a jurisdiction which
requires the filing of any tax report or tax return with respect to
any Account, such tax reports and tax returns have been filed by
Borrower;
(viii) The Account is not owing from any employee, officer,
agent, director, or a stockholder of Borrower or any Subsidiary, or
from an Affiliate;
(ix) The Account does not arise from a contract containing a
prohibition against granting a security interest therein;
(x) The Account is not an account from the United States of
America or any agency thereof, unless the provisions of The Federal
Assignment of Claims Act have been complied with in regard to the
Account;
(xi) If ten percent (10%) or more of Accounts owing from an
account debtor become ineligible for reason of being past-due and
Borrower fails to notify Lender in writing of such fact before such
fact is reflected on the Borrowing Base Report next delivered to
Lender pursuant to Section 2.14, then, unless expressly approved by
Lender in writing, all Accounts owed by such account debtor shall be
ineligible;
5
(xii) If ten percent (10%) or more of Accounts owing from an
account debtor become ineligible for reason of being past-due and
Borrower notifies Lender in writing of such fact before such fact is
reflected on the Borrowing Base Report next delivered to Lender
pursuant to Section 2.14, then, unless Lender notifies Borrower in
writing that all Accounts owed by such account debtor are ineligible
(which decision Lender shall make in its sole good faith discretion),
all the Accounts owed by such account debtor which satisfy all of the
other eligibility requirements of this definition, except for clause
(vi), shall be Eligible Accounts; and
(xiii) If the Lender has determined, in its sole reasonable
discretion, that the effect of any rebate or other sales program with
respect to any Accounts would be to reduce collections of the face
amounts of such Accounts, then the Lender may reduce the eligibility
of the face amount of such Accounts to the extent of any such rebate
or the amount covered by such sales program.
"Eligible Inventory" means at any date of determination thereof, all
Inventory of Borrower that is acceptable to Lender in its sole reasonable
discretion, but not exceeding the lesser of the actual cost or fair market value
of Borrower's Inventory. With respect to Inventory, "actual costs" shall mean
the sum of (i) the purchase price of the materials included in the raw
materials, work in process, and finished goods and (ii) all direct labor costs
attributable to the work in process or finished goods, less any progress
payments or partial xxxxxxxx included in such Inventory as reflected in
Borrower's work orders, if any, for such Inventory. Inventory is "eligible"
only if, on the date as of which the determination is being made, it satisfies
the following eligibility requirements:
(i) The Inventory consists of raw materials, work in process and
finished goods;
(ii) The Inventory does not consist of consigned Inventory;
(iii) The Inventory is in good condition, meets all standards
imposed by any governmental agency, or department or division thereof,
having regulatory authority over such goods, their use and/or sale and
is either currently usable or currently saleable in the normal course
of business of Borrower and is not otherwise unacceptable to the
Lender due to age, type, category and/or quantity;
(iv) Inventory not located at one of the Permitted Locations that
otherwise would be Eligible Inventory hereunder and
6
which exceeds ten percent (10%) of the value of all Eligible Inventory
shall not be Eligible Inventory;
(v) The Inventory is subject to Lender's prior perfected security
interest and is not subject to any other Lien other than Permitted
Liens;
(vi) If the lesser of the actual cost or fair market value of
Tubular Goods exceeds thirty percent (30%) of Eligible Inventory, then
the amount of such excess shall be ineligible; and
(vii) Inventory which has been determined by Lender, in its sole
reasonable discretion, to be ineligible because such Inventory is
damaged, not currently usable or currently saleable in the normal
course of business of Borrower, shall not be Eligible Inventory for
purposes hereof.
"ERISA" shall have the meaning set forth in Section 8.12 hereof.
"Event of Default" shall have the meaning specified in Section 11.01.
"Excess Amount" shall have the meaning set forth in Section 2.14
hereof.
"Existing Letters of Credit" means those certain letters of credit
issued by Lender for the account of Borrower as more particularly described on
Schedule 12 hereto.
"Existing Liens" means any Lien on any assets or properties of
Borrower, including all such Liens that secure Debt of Borrower in an amount
(including any amounts which Borrower has the right to borrow under the
documents, agreements and instruments evidencing such Debt and Liens, whether or
not then advanced by such lender), as of the date of this Agreement, at least
equal to $50,000.00, as fully described in Schedule 1 hereto.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board and/or their successors which are
applicable in the circumstances as of the date in question. Accounting
principles are applied on a "consistent basis" when the accounting principles
observed in a current period are comparable in all material respects to those
accounting principles applied in a preceding period.
"Inventory" means as at the date of determination, all Inventory (as
such term is defined in the UCC) of Borrower.
7
"Investments" means all loans, advances, capital contributions and
transfers of assets (other than for cash in an amount equal to the fair market
value of the assets transferred) and all purchase and other acquisitions for
consideration or evidences of indebtedness, capital stock or other securities of
any partnership, corporation, firm or other Person.
"Letter of Credit" means either a standby letter of credit or a
commercial letter of credit issued by Lender for the account of Borrower in
accordance with the terms of Article II hereof.
"Letter of Credit Fee" shall have the meaning set forth in Section
2.13 hereof.
"Lien" means any lien, mortgage, security interest, tax lien, pledge,
encumbrance, or conditional sale or title retention agreement, or any other
interest in property designed to secure the repayment of Debt or any other
obligation, whether arising by agreement, or under any statute or law of any
applicable jurisdiction, or otherwise.
"Loans" means, collectively, the Revolving Credit Loan, the Advancing
Credit Loan and the Term Loan, and "Loan" means singly, the Revolving Credit
Loan, the Advancing Credit Loan or the Term Loan.
"Loan Papers" means this Agreement and all promissory notes, deeds of
trust, security agreements, or their equivalent under applicable laws, financing
statements, collateral assignments, guaranties, letters of credit, and other
instruments, documents, and agreements executed and delivered pursuant to, in
connection with or as contemplated by this Agreement and any future amendments,
supplements or other modifications hereto or thereto.
"Material Companies" means, collectively, both DQAP and DQE, and
"Material Company" means, singly, DQAP or DQE.
"Maximum Rate" has the meaning set forth in Section 2.02 hereof.
"Notes" shall mean the Revolving Credit Note, the Advancing Credit
Note and the Term Note and all extensions, renewals and modifications thereof.
"Notice of Advancing Credit Borrowing" shall have the meaning set
forth in Section 3.04 hereof.
"Notice of Credit Issuance" shall have the meaning set forth in
Section 2.08 hereof.
"Notice of Revolving Credit Borrowing" shall have the meaning set
forth in Section 2.04 hereof.
"Obligations" means all present and future obligations, liabilities
and indebtedness, and all renewals and extensions thereof, or any part thereof,
of Borrower to Lender arising pursuant
8
to the Loan Papers and all interest accruing thereon and reasonable attorneys'
fees incurred in the enforcement or collection thereof, regardless of whether
such obligations, liabilities and indebtedness are direct or indirect, primary
or secondary, fixed, contingent, liquidated, unliquidated, joint, several, or
joint and several, including, but not limited to, the indebtedness and
obligations evidenced by the Notes, all reimbursement obligations with respect
to the Letters of Credit and all obligations referred to in any and all other
Loan Papers. The Letter of Credit Fee called for by Section 2.13 hereof and the
Advancing Credit Commitment Fee called for by Section 3.07 hereof shall be
included within the Obligations.
"Payment Notice" shall have the meaning set forth in Section 2.14
hereof.
"Permitted Investments" means any one or more of the following:
(a) readily marketable securities issued or fully guaranteed by
the United States of America;
(b) certificates of deposit, eurodollar or repurchase obligations
with maturities of one year or less from the date of acquisition
thereof of any commercial bank operating in the United States having
capital and surplus in excess of $100,000,000.00;
(c) certificates of deposit or time deposits of any commercial
bank operating in the United States with maturities of one (1) year or
less from the date of such deposit where any and all such deposits are
at all times fully insured at such institution by the Federal Deposit
and Insurance Corporation;
(d) commercial paper of a domestic issuer if at the time of
purchase such paper is rated "AA" by Xxxxx'x Investors Service with
maturities of not more than one hundred eighty (180) days; and
(e) capital contributions by Borrower to any Material Company.
"Permitted Liens" means any one or more of following:
(i) Liens for taxes, assessments or governmental charges either
not yet delinquent or the validity of which are being contested in
good faith by appropriate proceedings diligently prosecuted and as to
which adequate reserves shall have been set aside in conformity with
GAAP;
9
(ii) Deposits, pledges or other liens to secure the payment of
workers' compensation, unemployment insurance or other social security
benefits or obligations, or to secure the performance of bids, trade
contracts, leases, public or statutory obligations, surety or appeal
bonds and other obligations of a like nature incurred in the ordinary
course of business and in each case to secure such obligations not yet
delinquent, or if delinquent which are being diligently contested in
good faith and as to which adequate reserves shall have been set aside
in conformity with GAAP;
(iii) Materialmen's, mechanics', worker's, repairmen's,
employees', warehousemen's, carrier's or other like statutory or
common law liens, in each case arising in the ordinary course of
business to secure obligations not yet delinquent, or if delinquent
which are being diligently contested in good faith and as to which
adequate reserves shall have been set aside in conformity with GAAP or
as to which adequate bonds shall have been obtained;
(iv) Purchase money liens, purchase money security interests, or
title retention arrangements upon or in any property acquired or held
by any Person in the ordinary course of business to secure purchase
money indebtedness which is otherwise permitted by Section 10.01
hereof and is incurred solely for the purpose of financing the
acquisition of such property, or renewals or extensions thereof;
(v) Existing Liens, or continuations, renewals and extensions
thereof; provided, however, that such Existing Lien shall not secure
any additional Debt (except any amounts which a Person has the right
to borrow under the documents, agreements and instruments evidencing
Debt existing as of the Closing Date) created pursuant to any such
continuation, renewal or extension; or
(vi) Lender's Liens.
"Permitted Locations" means the locations listed on Schedule 2
attached hereto, all of which are and shall at all times be locations in the
continental United States or locations where the Lender, in its sole discretion,
has made all filing necessary to perfect a security interest in any Inventory at
such location, and which are and shall at all times be either (i) locations,
where Collateral is located, owned by Borrower; (ii) locations, where Collateral
is located, leased by, in each case for which Borrower shall have obtained
landlords' waivers acceptable in form and substance to Lender; or (iii) public
warehouses for which Borrower shall use its best efforts to have: (1) filed
financing statements against such warehouseman covering the Inventory, which
financing
10
statements shall have been assigned to Lender, and (2) obtained warehouseman's
waivers acceptable in form and substance to Lender, except that Lender shall
have the option to exclude from Eligible Inventory, Inventory at warehouse
locations having in the aggregate a value less than $30,000.00, but the
exclusion of such Inventory from Eligible Inventory shall be in the sole
discretion of Lender.
"Person" means and includes any natural person, corporation, business
trust, association, company, partnership, joint venture, or other entity.
"Revolving Credit Available Loan Amount" means, as of the date of any
determination thereof, the lesser of (i) the Revolving Credit Committed Sum less
the sum of (w) the aggregate unpaid balance of the Revolving Credit Loan plus
(x) the aggregate amount of any pending Notice of Revolving Credit Borrowings
plus (y) the aggregate contingent liability of Lender under all open Letters of
Credit plus (z) the aggregate amount of any pending Notice of Credit Issuance or
(ii) the Available Sum.
"Revolving Credit Commitment Period" means the period commencing on
the Closing Date and ending on the Revolving Credit Termination Date.
"Revolving Credit Committed Sum" means FIFTEEN MILLION AND NO/100
DOLLARS ($15,000,000.00), as such amount may be reduced pursuant to Section
2.06.
"Revolving Credit Loan" means the Loan made by Lender to Borrower, in
one or more Advances, during the Revolving Credit Commitment Period, pursuant to
Section 2.01.
"Revolving Credit Note" means the promissory note in favor of Lender
in substantially the form of Exhibit A hereto, and all extensions, renewals and
modifications thereof.
"Revolving Credit Termination Date" means October 1, 1995, or such
earlier date as the Revolving Credit Commitment terminates as provided in this
Agreement.
"Rights" means with respect to any Person, the rights, remedies
(equitable or legal), claims, causes of action, powers, and privileges granted
to such Person pursuant to any or all of the Loan Papers or any other document,
instrument or other agreement heretofore, now, or hereafter executed in
connection therewith, whether granted or arising pursuant to the express
provisions of any of the foregoing, or at law, or in equity, by constitution,
statute, case or otherwise.
"Security Documents" means the documents described in Section 6.01
hereof and all other documents now or hereafter existing which provide Lender
with Collateral to secure the Obligations, as the same may be amended or
restated from time to time.
"Subsidiary" means any corporation of which more than fifty percent
(50%) of the issued and outstanding securities having ordinary voting power for
the election of directors is owned
11
or controlled, directly or indirectly, by Borrower, DQE, DQAP and/or any other
Subsidiary, individually or jointly.
"Term Loan" means the loans made by Lender pursuant to Section 4.01
and evidenced by the Term Note.
"Term Note" means the promissory note described in Section 4.01 hereof
in favor of Lender in substantially the form of Exhibit C hereto, and all
extensions, renewals and modifications thereof.
"Tubular Goods" means all tubular goods of Borrower.
"UCC" means the Uniform Commercial Code as adopted and amended by the
State of Texas.
Section 1.02. Other Definitional Provisions. All definitions
contained in this Agreement are equally applicable to the singular and plural
form of the term defined. Unless otherwise specified herein, all accounting
terms used herein shall be interpreted, all accounting determinations hereunder
shall be made, and all financial statements required to be delivered hereunder
shall be prepared in accordance with GAAP as in effect from time to time,
applied on a basis consistent (except for changes disclosed to Lender,
consistent with GAAP and approved by Borrower's independent public accountants)
with the most recent respective financial statements of Borrower delivered to
Lender. The words "herein," "hereof," "hereunder" and other words of similar
import refer to this Agreement as a whole and not to a particular section,
paragraph or other subdivision. The terms defined in Section 1.01 hereof,
unless the context requires otherwise, will have the meaning assigned to them in
Section 1.01 hereof, and will include the plural as well as the singular. All
other terms used herein shall have the meanings as otherwise stated herein or as
otherwise defined in the UCC.
ARTICLE II
Revolving Credit Loan
Section 2.01. Commitment for Revolving Credit Loan. Subject to the
terms and conditions of this Agreement, and provided that no Default or Event of
Default has occurred or is continuing or no Default or Event of Default will
have occurred upon the making of such Advance, Lender agrees to lend to
Borrower, pursuant to this Agreement, such amounts as the Borrower may request
in one or more Advances, from time to time during the Revolving Credit
Commitment Period to and including the Revolving Credit Termination Date;
provided that the aggregate principal amounts available at any time under the
Revolving Credit Loan shall not at any time exceed the Revolving Credit
Available Loan Amount.
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Section 2.02. Revolving Credit Note. The obligation of Borrower to
repay the Revolving Credit Loan shall be evidenced by the Revolving Credit Note
executed by Borrower, payable to the order of Lender, in the principal amount of
the Revolving Credit Committed Sum and dated the date of the making of the
Revolving Credit Loan. The principal of the Revolving Credit Loan shall be due
and payable on the Revolving Credit Termination Date. The Revolving Credit Loan
shall bear interest prior to maturity at a varying rate per annum equal from day
to day to the lesser of (a) the maximum rate permitted from day to day by
applicable law ("Maximum Rate"), including as to Article 5069-1.04 Vernon's
Texas Civil Statutes (and as the same may be incorporated by reference in other
Texas statutes), but otherwise without limitation, that rate based upon the
"indicated rate ceiling," or (b) the sum of the Bank One Texas Base Rate in
effect from day to day plus one-half of one percent (1/2%), each such change in
the rate of interest charged hereunder to become effective, without notice to
Borrower, on the effective date of each change in the Bank One Texas Base Rate;
provided, however, if at any time the rate of interest specified in clause (b)
preceding shall exceed the Maximum Rate, thereby causing the interest on the
Revolving Credit Loan to be limited to the Maximum Rate, then any subsequent
reduction in the Bank One Texas Base Rate shall not reduce the rate of interest
on the Revolving Credit Loan below the Maximum Rate until the aggregate amount
of interest accrued on the Revolving Credit Loan equals the aggregate amount of
interest which would have accrued on the Revolving Credit Loan if the interest
rate specified in clause (b) preceding had at all times been in effect. Accrued
and unpaid interest on the Revolving Credit Loan shall be due and payable (a)
quarterly in arrears, on the 1st day of each successive July, October, January
and April commencing on July 1, 1994, until payment in full of the outstanding
principal under the Revolving Credit Note and (b) on the Revolving Credit
Termination Date. All past due principal and interest shall bear interest at
the Maximum Rate.
Section 2.03. Expiration of Commitment to Lend under Revolving
Credit. The maximum obligation of Lender to make Advances under Section 2.01
hereof or to issue Letters of Credit under Section 2.08 hereof shall not at any
time exceed in the aggregate the Revolving Credit Committed Sum, and Lender's
obligation to make additional Advances under Section 2.01 hereof or to issue
Letters of Credit under Section 2.08 hereof shall terminate and expire at 11:00
A.M., Houston, Texas time on the Revolving Credit Termination Date; provided
that Borrower's Obligations and the Rights of Lender under the Loan Papers shall
continue in full force and effect until the Obligations have been paid and
performed in full.
Section 2.04. Procedure for Borrowing Under the Revolving Credit
Loan. During the Revolving Credit Commitment Period, Borrower shall give Lender
a written notice executed on behalf of Borrower by any Authorized Financial
Officer of Borrower (the "Notice of Revolving Credit Borrowing") of any proposed
Borrowing under the Revolving Credit Loan which shall be irrevocable. Each
Notice of Revolving Credit Borrowing shall be received by Lender not later than
11:00 A.M., Houston, Texas time, at least two (2) Business Days prior to any
proposed Borrowing requested by Borrower. Each such Notice of Revolving Credit
Borrowing shall be in substantially the form of Exhibit D attached hereto.
Lender, at its option, may from time to time accept telephonic requests for
Advances; provided that Borrower shall promptly thereafter provide Lender with a
completed Notice of Revolving Credit Borrowing. Lender is hereby authorized to
act in reliance
13
upon a certificate of incumbency from Borrower's Secretary or Assistant
Secretary as to the identity of the foregoing officers and their due appointment
and authorization to issue Borrowing requests and receive proceeds of Advances
hereunder on behalf of Borrower unless and until Lender is in actual receipt of
written notice by Borrower of revocation of said appointment and authorization.
If prior to the Borrowing Date, Lender shall request that Borrower provide
additional information on or confirmation of the Borrowing Base, Borrower agrees
to provide same and Lender shall not have any obligation to make any Advance
with respect to a proposed Borrowing until Lender is satisfied with the
Borrower's determination of the Borrowing Base. Prior to 11:00 A.M. (Houston,
Texas time) on each Borrowing Date and subject to the provisions of Section
2.01, Lender shall make available to Borrower in immediately available funds
such requested Advance by deposit to Borrower's deposit account maintained with
Lender or such other reasonable disposition of such funds as Borrower shall
request in writing. Lender may, and is hereby authorized by Borrower to, endorse
on the schedule attached to the Revolving Credit Note or on a continuation of
such schedule attached to and made a part of such Revolving Credit Note an
appropriate notation evidencing the date and amount of each Advance and payment
and prepayment by Borrower of the principal of and interest on the Revolving
Credit Loan evidenced by such Revolving Credit Note, but the failure of Lender
to make any such endorsement or any incorrect endorsement shall not subject
Lender to any liability hereunder and shall not limit or otherwise affect the
obligations of Borrower under such Revolving Credit Note.
Section 2.05. Use of Proceeds of Revolving Credit Loan. The initial
Advance under the Revolving Credit Loan shall be made the date of this Agreement
and shall be in an amount of $5,000,000.00. The proceeds of all Advances
comprising the Revolving Credit Loan shall be used for any legitimate corporate
purpose.
Section 2.06. Reduction or Termination of Revolving Committed Sum.
Borrower may at any time by giving at least three (3) Business Days' notice in
writing to Lender terminate or reduce the Revolving Credit Committed Sum;
provided, however, that (i) no such reduction of the Revolving Credit Committed
Sum shall be effective unless the amount by which the Revolving Credit Committed
Sum is reduced shall be ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00) or
an integral multiple thereof, (ii) no such termination or reduction of the
Revolving Credit Committed Sum shall be effective unless, simultaneously
therewith, all principal outstanding under the Revolving Credit Loan in excess
of the new Revolving Credit Committed Sum, after giving effect to the proposed
reduction, together with all interest accrued thereon, shall be pre-paid in full
by Borrower, and (iii) simultaneously with such termination or reduction, DQE
shall have terminated or reduced by the same amount the maximum amount Lender is
obligated to loan to DQE pursuant to the revolving credit facility DQE has with
Lender. Once reduced or terminated, the Revolving Credit Committed Sum may not
be increased or reinstated without the prior written consent of Lender.
Section 2.07. Agreement to Remain in Effect; Revolving Credit. This
Agreement shall remain in effect regardless of the aggregate amount of Advances
from time to time outstanding evidenced by the Revolving Credit Note. Subject
to the limitations set forth in this Article II and
14
to the other terms and provisions of this Agreement, Borrower may borrow, repay,
and reborrow under the Revolving Credit Note.
Section 2.08. Letters of Credit. Subject to the terms and conditions
of this Agreement, and provided that no Default or Event of Default has occurred
and is continuing, Lender will, upon Borrower's request, issue one or more
Letters of Credit during the Revolving Credit Commitment Period for the account
of Borrower; provided that the aggregate face amount of such Letters of Credit
to be issued shall not exceed the Revolving Credit Available Loan Amount; and
further provided that the aggregate face amount of all Letters of Credit issued
pursuant to this Section 2.08 shall not exceed $1,500,000.00 at any one time.
During the Revolving Credit Commitment Period, Borrower shall give Lender
written notice executed on behalf of Borrower by any Authorized Financial
Officer of Borrower (the "Notice of Credit Issuance") of any proposed issuance
of a Letter of Credit. Such Notice of Credit Issuance shall be in substantially
the form of Exhibit E attached hereto. Such Notice of Credit Issuance shall be
revocable prior to the issuance of the Letter of Credit; provided, however, if
such notice is revoked, Borrower shall pay to Lender a fee of $300.00. Each
Notice of Credit Issuance, except with respect to Letters of Credit to be opened
on the Closing Date, shall be delivered to Lender not less than two (2) Business
Days before the requested date of issuance thereof. Additionally, each Notice
of Letter of Credit Issuance shall be accompanied by an Application executed by
the Company relating to the subject Letter of Credit. If prior to the issuance
of any Letter of Credit, Lender shall request that Borrower provide additional
information on or confirmation of the Borrowing Base, Borrower agrees to provide
same and Lender shall not issue any Letter of Credit covered by the Notice of
Letter of Credit Issuance until Lender is satisfied with Borrower's
determination of the Borrowing Base. Each Letter of Credit shall be on
substantially such terms as Borrower may specify in the relevant Application and
must be in form and substance satisfactory to Lender and shall have a fixed
expiration date no later than 1:00 P.M. (Houston, Texas time) one (1) year from
the issuance thereof. The Existing Letters of Credit shall for all purposes be
deemed to have been issued pursuant to this Section 2.08.
Section 2.09. Aggregate Amounts Available under Letters of Credit.
The reimbursement obligation of Borrower to Lender with respect to the Letters
of Credit shall be evidenced by the Revolving Credit Note and the Application
relating to the subject Letter of Credit. Any amounts paid by Lender with
respect to such Letter of Credit shall be deemed to be an Advance by Lender
under the Revolving Credit Note as set forth in Section 2.10 hereof.
Section 2.10. Advances in Respect of Letters of Credit;
Reimbursement. (a) Prior to the expiration or termination of the Revolving
Credit Commitment Period, if Borrower does not provide Lender with funds, in the
amount and on the date necessary to settle such Lender's obligations under any
draft drawn or demand made under a Letter of Credit issued by Lender (whether at
or prior to the expiration of such Letter of Credit), Lender shall make and
Borrower shall accept, an Advance under the Revolving Credit Note in the amount
disbursed or to be disbursed by Lender pursuant to such draft on demand, such
Advance to be made as of the date of such settlement of the Letters of Credit.
The obligations and indebtedness of Borrower to the Lender pursuant to such
Advances shall be evidenced by the Revolving Credit Note and the Application
relating to the
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subject Letter of Credit. Anything herein to the contrary notwithstanding, in no
event shall any Advance be made under the Revolving Credit Note which, together
with the outstanding balance thereunder, would exceed the Revolving Credit
Available Loan Amount, and any such excess shall be payable to Lender on demand.
(b) After the expiration or termination of the Revolving Credit
Commitment Period, if any Letter of Credit is outstanding, Borrower agrees (i)
to deposit in an interest-bearing cash collateral account opened by Lender an
amount equal to the aggregate undrawn amount of such Letters of Credit and (ii)
to reimburse Lender in immediately available funds (which may be drawn by Lender
from such cash collateral account, including interest accrued thereon) upon
demand of Lender at any time, the amount necessary to settle Lender's
obligations under any draft drawn or demand made under a Letter of Credit issued
by Lender (whether at or prior to the expiration of such Letter of Credit) which
has not been paid by the proceeds of Revolving Credit Loans made pursuant to
Section 2.10(a) hereof. After the respective expiry dates of the Letters of
Credit and after the Obligations are paid in full, Lender shall return the
unused portion of such cash collateral described above, together with all
interest earned thereon, to the Borrower.
(c) In order to induce Lender to issue a Letter of Credit, Borrower
agrees that (i) Lender shall not be responsible or liable for, and the
obligation of Borrower to reimburse Lender for any payment made by Lender under
such Letter of Credit shall not be affected by, (A) the validity, enforceability
or genuineness of any note or other document (or any endorsement thereof)
presented to Lender under such Letter of Credit, even if such note or other
document (or such endorsement) is proven to be invalid, unenforceable,
fraudulent or forged, or (B) any dispute between Borrower and the beneficiary
under such Letter of Credit, and (ii) any action taken or omitted to be taken by
Lender in connection with such Letter of Credit, if taken in good faith and with
reasonable care, shall be binding upon Borrower and shall not create any
liability for Lender to Borrower.
Section 2.11. Purpose of Letters of Credit. Subject to the other
terms and conditions of this Agreement, Lender shall issue Letters of Credit for
any corporate purpose of Borrower or of any Material Company.
Section 2.12. Conflicts in Terms. In case of any conflict between
the terms of any Application with respect to a Letter of Credit and the terms
hereof, the terms of this Agreement shall control, except to the extent the
Application states that certain specified provisions thereof control, in which
case those specified provisions of the Application in question shall control.
Section 2.13. Letter of Credit Fee. Upon issuance of any Letter of
Credit, Borrower agrees to pay to Lender a fee (the "Letter of Credit Fee")
equal to the greater of $300.00 or one and one-half of one percent (1-1/2%) per
annum of the amount of the Letter of Credit for the period of time from the date
of issuance thereof to the stated expiry date.
Section 2.14. Borrowing Base. The restriction on the aggregate
outstanding principal amount of Advances up to the Revolving Credit Available
Loan Amount contained in
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Section 2.01 hereof shall be cumulative of other limitations and conditions
contained in this Agreement or any other Loan Papers. If at any time during the
term of this Agreement for whatever reason the Borrowing Base then in effect is
less than an amount equal to the sum of (i) the unpaid balance under the
Revolving Credit Loan plus (ii) the aggregate contingent liability of Lender
under all Letters of Credit (the amount by which the sum of (i) and (ii) exceeds
the Borrowing Base being called the "Excess Amount"), Borrower shall, within
three (3) days after the determination of such fact, give notice thereof to
Lender (a "Payment Notice") and, unless waived by Lender in writing upon the
written request of Borrower, Borrower shall, within thirty (30) days after
giving of notice to Lender, make mandatory prepayments in accordance with the
terms of Section 2.15. Borrower shall compute the Borrowing Base at the Closing
as of the last day of the preceding month. Thereafter Borrower shall compute the
Borrowing Base, at least monthly (and more often should Lender require), using
the Borrowing Base Report in substantially the form attached hereto as Exhibit F
(the "Borrowing Base Report"), for the immediately preceding calendar month,
which Borrower is obligated to furnish to Lender within twenty (20) days after
the end of each calendar month through the term of this Agreement, and more
frequent reports if and as Lender may require. The Borrowing Base Report shall
be certified by an Authorized Financial Officer of Borrower and shall contain
statements to the effect that, as of the date of such Borrowing Base Report, the
representations and warranties contained in Article VIII hereof, are true except
as disclosed in such report, and there exists no Default under the Loan Papers.
Notwithstanding anything to the contrary herein contained, if the Borrowing Base
Report shows a Borrowing Base less than an amount equal to the sum of (i) the
unpaid balance under the Revolving Credit Loan plus (ii) the aggregate
contingent liability of Lender under all Letters of Credit (a "Borrowing Base
Deficiency"), and Borrower fails to timely deliver the Payment Notice required
by this Section 2.14, Lender may demand that Borrower make, within thirty (30)
days, mandatory prepayments in accordance with the terms of Section 2.15.
Section 2.15. Required Date and Amount of Mandatory Prepayments.
Within thirty (30) Business Days after Lender has received a Payment Notice or
the Borrowing Base Report which reflects a Borrowing Base Deficiency, unless
waived by Lender in writing upon the written request of Borrower, Borrower shall
make a prepayment on the Revolving Credit Loan equal to the lesser of (i) the
Excess Amount or (ii) the unpaid balance under the Revolving Credit Loan.
ARTICLE III
Advancing Credit Loan
Section 3.01. Commitment for Advancing Credit Loan. Subject to the
terms and conditions of this Agreement, and provided that no Default or Event of
Default has occurred or is continuing, Lender agrees to lend to Borrower,
pursuant to this Agreement, such amounts as the Borrower may request in one or
more Advances, from time to time during the Advancing Credit Commitment Period
to and including the Advancing Credit Termination Date; provided that such
Advances shall not exceed either singularly or cumulatively the Advancing Credit
Committed Sum; and further provided that Lender shall not be obligated to make
such Loans pursuant to this Section
17
3.01 in excess of eighty-five percent (85%) of the cost of improvements, eighty
percent (80%) of the cost of new equipment, eighty percent (80%) of the cost of
used, refurbished equipment and sixty percent (60%) of the cost of used,
unrefurbished equipment; provided, however, that with respect to any used,
unrefurbished equipment, if Borrower should subsequently refurbish such
equipment, then the limit shall be increased to eighty percent (80%) and
Borrower may increase the amount borrowed hereunder on account of such equipment
to bring the total to eighty percent (80%) of the cost of such equipment and the
cost of refurbishing such equipment.
Section 3.02. Advancing Credit Note. The obligation of Borrower to
repay the Advancing Credit Loan shall be evidenced by the Advancing Credit Note
executed by Borrower, payable to the order of Lender, in the principal amount of
the Advancing Credit Committed Sum and dated of even date herewith. The
principal of the Advancing Credit Loan outstanding on the Advancing Credit
Termination Date, plus accrued and unpaid interest thereon, shall be due and
payable in: (a) two (2) installments of accrued and unpaid interest only due and
payable on July 1, 1994 and October 1, 1994; (b) in fifteen (15) consecutive
installments each equal to one-thirtieth (1/30th) of the outstanding principal
of the Advancing Credit Loan on the Advancing Credit Termination Date, together
with all accrued and unpaid interest, the first of such installments being due
and payable on or before January 1, 1995 and like installments being due and
payable on the first day of each succeeding third calendar month thereafter
through and including July 1, 1998; and (c) a final installment shall be due on
or before October 1, 1998 in an amount equal to the remaining unpaid principal
outstanding on the Advancing Credit Loan together with all accrued and unpaid
interest. The Advancing Credit Loan shall bear interest prior to maturity at a
varying rate per annum equal from day to day to the lesser of (a) the Maximum
Rate or (b) the sum of the Bank One Base Rate in effect from day to day plus
three-quarters of one percent (3/4%), each such change in the rate of interest
charged hereunder to become effective, without notice to Borrower, on the
effective date of each change in the Bank One Base Rate; provided, however, if
at any time the rate of interest specified in clause (b) preceding shall exceed
the Maximum Rate, thereby causing the interest on the Advancing Credit Loan to
be limited to the Maximum Rate, then any subsequent reduction in the Bank One
Base Rate shall not reduce the rate of interest on the Advancing Credit Loan
below the Maximum Rate until the aggregate amount of interest accrued on the
Advancing Credit Loan equals the aggregate amount of interest which would have
accrued on the Advancing Credit Loan if the interest rate specified in clause
(b) preceding had at all times been in effect. All past due principal and
interest shall bear interest at the Maximum Rate.
Section 3.03. Expiration of Commitment to Lend under Advancing Credit.
The maximum obligation of Lender to make Advances under Section 3.01 hereof
shall not at any time exceed, either singularly or cumulatively, the Advancing
Credit Committed Sum, and Lender shall have no obligation to make additional
Advances under Section 3.01 hereof and Lender's Commitment to lend to Borrower
pursuant to Section 3.01 hereof shall terminate and expire at 11:00 a.m.,
Houston, Texas time on the Advancing Credit Termination Date; provided that
Borrower's Obligations and the Rights of Lender under the Loan Papers shall
continue in full force and effect until the Obligations have been paid and
performed in full.
18
Section 3.04. Procedure for Borrowing Under the Advancing Credit
Loan. During the Advancing Credit Commitment Period, Borrower shall give Lender
a written notice executed on behalf of the Borrower by any Authorized Financial
Officer of the Borrower (the "Notice of Advancing Credit Borrowing") of any
proposed Borrowing under the Advancing Credit Loan which shall be irrevocable.
Each Notice of Advancing Credit Borrowing shall be received by Lender not later
than 11:00 a.m., Houston, Texas time, at least one (1) Business Day prior to any
proposed Borrowing requested by Borrower together with copies of invoices for
the equipment purchased or improvements undertaken. Each such Notice of
Advancing Credit Borrowing shall be substantially in the form of Exhibit G
attached hereto. Lender, at its option, may from time to time accept telephonic
requests for Advances; provided that Borrower shall promptly thereafter provide
Lender with a completed Notice of Advancing Credit Borrowing together with
copies of invoices for the equipment purchased or improvements undertaken.
Lender is hereby authorized to act in reliance upon a certificate of incumbency
from Borrower's Secretary or Assistant Secretary as to the identity of the
foregoing officers and their due appointment and authorization to issue
Borrowing requests and receive proceeds of Advances hereunder on behalf of
Borrower unless and until Lender is in actual receipt of written notice by
Borrower of revocation of said appointment and authorization. Prior to 11:00
A.M. (Houston, Texas time) on each Borrowing Date and subject to the provisions
of Section 3.01, Lender shall make available to Borrower in immediately
available funds such requested Advance by deposit to Borrower's deposit account
maintained with Lender or other reasonable disposition of such funds as Borrower
shall request in writing. Lender may, and is hereby authorized by Borrower to,
endorse on the schedule attached to the Advancing Credit Note or on a
continuation of such schedule attached to and made a part of such Advancing
Credit Note an appropriate notation evidencing the date and amount of each
Advance and payment and prepayment by Borrower of the principal of and interest
on the Advancing Credit Loan evidenced by such Advancing Credit Note, but the
failure of Lender to make any such endorsement or any incorrect endorsement
shall not subject Lender to any liability hereunder and shall not limit or
otherwise affect the obligations of Borrower under such Advancing Credit Note.
Section 3.05. Use of Proceeds of Advancing Credit Loan.
Notwithstanding anything to the contrary herein, the initial Advance under the
Advancing Credit Loan shall be made the date of this Agreement, and shall be in
an amount of $1,000,000.00. The proceeds of all additional Advances comprising
the Advancing Credit Loan shall be used to pay for up to eighty-five percent
(85%) of the costs of Borrower for improvements on the realty described on
Schedule 3 attached hereto, up to eighty-five percent (85%) of the cost of
improvements, eighty percent (80%) of the cost of new equipment, eighty percent
(80%) of the cost of used, refurbished equipment and sixty percent (60%) of the
cost of used, unrefurbished equipment; provided, however, that with respect to
any used, unrefurbished equipment, if Borrower should subsequently refurbish
such equipment, then the limit shall be increased to eighty percent (80%) and
Borrower may increase the amount borrowed hereunder on account of such equipment
to bring the total to eighty percent (80%) of the cost of such equipment and the
cost of refurbishing such equipment.
Section 3.06. Reduction or Termination of Advancing Committed Sum.
Borrower may at any time by giving at least three (3) Business Days' notice in
writing to Lender terminate or
19
reduce the Advancing Credit Committed Sum; provided, however, that no such
reduction of the Advancing Credit Committed Sum shall be effective unless the
amount by which the Advancing Credit Committed Sum is reduced shall be ONE
HUNDRED THOUSAND AND NO/100 ($100,000.00) or an integral multiple thereof. Once
reduced or terminated, the Advancing Credit Committed Sum may not be increased
or reinstated without the prior written consent of Lender.
Section 3.07. Advancing Credit Commitment Fee. Borrower agrees to
pay to Lender a fee (the "Advancing Credit Commitment Fee") on the average daily
unused portion of the Advancing Credit Commitment, from the date of this
Agreement to and including the Advancing Credit Termination Date, at the rate of
one-half of one percent (1/2%) per annum based on a 365 day year and the actual
number of days elapsed, payable in arrears, on July 1, 1994 and on the Advancing
Credit Termination Date.
ARTICLE IV
Term Loan
Section 4.01. Commitment for Term Loan. Subject to the terms and
conditions of this Agreement, and provided that no Default or Event of Default
has occurred and is continuing on the Closing Date, Lender agrees to make the
Term Loan to Borrower under the Term Note, in the amount of TWELVE MILLION ONE
HUNDRED SEVENTY-FIVE THOUSAND AND NO/100 DOLLARS ($12,175,000.00).
Section 4.02. Term Note. The obligation of Borrower to repay the
Term Loan shall be evidenced by the Term Note executed by Borrower, payable to
the order of Lender, in the principal amount of the Term Loan and dated of even
date herewith. The principal of the Term Loan, plus accrued and unpaid interest
thereon, shall be due and payable in: (a) fourteen (14) consecutive installments
each equal to FOUR HUNDRED SEVENTY-NINE THOUSAND AND NO/100 DOLLARS
($479,000.00) of principal, together with all accrued and unpaid interest, the
first of such installments being due and payable on or before April 1, 1994 and
like installments being due and payable on the first day of each succeeding
third calendar month thereafter through and including July 1, 1997; and (b) a
final installment due and payable on October 1, 1997 in an amount equal to the
remaining unpaid principal amount outstanding on the Term Loan, together with
all accrued and unpaid interest. The Term Loan shall bear interest prior to
maturity at a varying rate per annum equal from day to day to the lesser of (a)
the Maximum Rate or (b) the sum of the Bank One Texas Base Rate in effect from
day to day plus three-quarters of one percent (3/4%), each such change in the
rate of interest charged hereunder to become effective, without notice to
Borrower, on the effective date of each change in the Bank One Texas Base Rate;
provided, however, if at any time the rate of interest specified in clause (b)
preceding shall exceed the Maximum Rate, thereby causing the interest on the
Term Loan to be limited to the Maximum Rate, then any subsequent reduction in
the Bank One Texas Base Rate shall not reduce the rate of interest on the Term
Loan below the Maximum Rate until the aggregate amount of interest accrued on
the Term Loan equals the aggregate amount of interest which would have accrued
on the Term Loan if the interest rate
20
specified in clause (b) preceding had at all times been in effect. All past due
principal and interest shall bear interest at the Maximum Rate.
ARTICLE V
Payments
Section 5.01. Method of Payment. All payments of principal,
interest, and other amounts to be made by Borrower hereunder and under the Notes
shall be made to Lender at its office at 000 Xxxxxx, Xxxxxxx, Xxxxx 00000, in
lawful currency of the United States of America and in immediately available
funds. Whenever any Payment hereunder or under the Notes shall be stated to be
due on a day that is not a Business Day, such payment may be made on the next
succeeding Business Day and interest or commitment fee, as the case may be,
shall continue to accrue during such extension.
Section 5.02. Prepayment. Borrower may, on at least three (3)
Business Days' notice to Lender, prepay all or any portion of any of the Notes
at any time or from time to time without premium or penalty but with accrued
interest to the date of prepayment on the amount so prepaid, provided that each
partial prepayment shall be in the principal amount of FIFTY THOUSAND AND NO/100
DOLLARS ($50,000.00) or an integral multiple thereof and in the case of the
Advancing Credit Note and the Term Note, such prepayment shall be applied to
installments of principal thereof in the inverse order of maturity. All
prepayments made pursuant to Sections 2.06 or 2.14 shall be similarly applied.
Notwithstanding anything to the contrary in this Agreement, however, Borrower
shall not prepay the Term Note without DQE simultaneously making a prepayment of
the term Debt DQE owes Lender in an amount so that the percentage that DQE's
prepayment is to the total amount of principal term Debt DQE then owes Lender is
equal to or greater than the percentage Borrower's prepayment is to the total
amount of principal then outstanding under the Term Note.
ARTICLE VI
Collateral
Section 6.01. Collateral. To secure full and complete payment and
performance of the Obligations, Borrower shall execute and deliver or cause to
be executed and delivered the documents described below covering the property
and collateral described in this Section 6.01 (which, together with any other
property and collateral which may now or hereafter secure the Obligations or any
portion thereof are sometimes herein called the "Collateral").
(a) Borrower shall grant to Lender a first priority lien on the
real property located in Xxxxxx County, Texas, as more fully described
in Schedule 3 attached hereto, and all improvements thereon and all
appurtenances thereto and shall assign to Lender all rents, leases,
and profits relating to such
21
property pursuant to reasonable documentation acceptable to Lender in
its sole good faith discretion.
(b) Borrower shall grant to Lender a first priority security
interest in all of its accounts, accounts receivable, equipment,
machinery, fixtures, raw materials, work-in process, inventory,
chattel paper, documents, instruments, and general intangibles,
whether now owned or hereafter acquired, and all products and proceeds
thereof, pursuant to reasonable documentation acceptable to Lender in
its sole good faith discretion.
(c) Borrower shall grant to Lender a first priority security
interest in all of its patents, tradenames and trademarks, whether now
owned or hereafter acquired, and all substitutions and replacements
therefor, pursuant to reasonable documentation acceptable to Lender in
its sole good faith discretion.
(d) Borrower shall collaterally assign the proceeds of the life
insurance policies required to be maintained pursuant to Section 9.17
to Lender pursuant to reasonable documentation acceptable to the
issuer of such life insurance policies and the Lender.
(e) Borrower shall execute and deliver and cause to be executed
and delivered such further documents and instruments, including
without limitation, Uniform Commercial Code financing statements, as
Lender, in its sole discretion, deems necessary or desirable to
evidence and perfect its liens and security interests in the
Collateral.
Section 6.02. Setoff. After the occurrence of any Default and so
long as such Default is continuing, Lender shall have the right to setoff and
apply against the Obligations, without notice to Borrower, any and all deposits
(general or special, time or demand, provisional or final) or other sums at any
time credited by or owing from Lender to Borrower for application against any of
the Obligations whether or not any portion of the Obligations are then due and
payable. As further security for the Obligations, Borrower hereby grants to
Lender a security interest in all money, instruments, and other property of
Borrower now or hereafter held by Lender, including, without limitation,
property held in safekeeping. In addition to Lender's right of setoff and as
further security for the Obligations, Borrower hereby grants to Lender a
security interest in all deposits (general or special, time or demand,
provisional or final) and other accounts of Borrower now or hereafter on deposit
with or held by Lender and all of the sums at any time credited by or owing from
Lender to Borrower. The rights and remedies of Lender hereunder are in addition
to other rights and remedies (including, without limitation, other rights of
setoff) which Lender may have.
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ARTICLE VII
Conditions Precedent
Section 7.01. Initial Advance. The obligation of Lender to make the
initial Advances is subject to the condition precedent that Lender shall have
received from Borrower, as applicable, on or before the day (the "Closing Date")
of such Advances all of the following, each dated (unless otherwise indicated)
the day of the Advance, in form and substance satisfactory to Lender:
(a) Resolutions. Resolutions of the Board of Directors of
Borrower certified by its Secretary or Assistant Secretary, which
authorize the execution, delivery and performance by Borrower of this
Agreement and the other Loan Papers to which Borrower is or is to be a
party;
(b) Incumbency Certificate. A certificate of incumbency
certified by the Secretary or an Assistant Secretary of Borrower
certifying the names of the officers of Borrower authorized to sign
this Agreement and each of the other Loan Papers to which Borrower is
or is to be a party (including the certificates contemplated herein)
together with specimen signatures of such officers;
(c) Articles of Incorporation. The articles of incorporation of
Borrower certified by the Secretary of State of the State of
incorporation, and dated within ten (10) days prior to the date of the
initial Advance;
(d) Bylaws. The bylaws of Borrower certified by the Secretary or
an Assistant Secretary;
(e) Governmental Certificates. Certificates of the appropriate
government officials of the jurisdiction of incorporation of Borrower
as to its existence and good standing, each dated within ten (10) days
prior to the date of the initial Advance;
(f) Foreign Qualification. Certificates of the appropriate
governmental officials of each jurisdiction in which Borrower is
qualified to do business to the effect that Borrower is so qualified
and is in good standing under the laws of such jurisdiction, each
dated within ten (10) days prior to the date of the initial Advance;
(g) Notes. The Notes executed by Borrower;
23
(h) Security Documents. The Security Documents executed by
Borrower;
(i) Financing Statements. Uniform Commercial Code financing
statements executed by Borrower covering such Collateral as Lender may
request;
(j) Insurance Policies. Copies of all casualty insurance
policies required by Section 9.17, showing Lender as loss payee;
(k) UCC Search. The results of a Uniform Commercial Code search
showing all financing statements and other documents or instruments on
file against Borrower in the office of the Secretaries of State of
State of Texas, such search to be as of a date no more than ten (10)
days prior to the date of the initial Advance;
(l) Opinion of Counsel. A favorable opinion or opinions of legal
counsel to Borrower as of the Closing Date;
(m) Other Documents. Such other documents, opinions,
certificates, and evidence as Lender or Lender's counsel may
reasonably request;
(n) Proceedings. All proceedings to be taken in connection with
the transactions contemplated by this Agreement and all documents
incident thereto shall be satisfactory in form and substance to Lender
and Lender's counsel, and Lender shall have received copies of all
documents which it may reasonably request in connection with such
transactions and all corporate proceedings with respect thereto in
form and substance satisfactory to Lender and Lender's counsel; and
Section 7.02. Additional Revolving Credit Advances. The obligation
of Lender to make any additional Advance pursuant to Article II hereof is
subject to the following additional conditions precedent:
(a) Advance Request Form. Lender shall have received, not later
than 11:00 A.M., Houston, Texas time, at least two (2) Business Days
prior to the date of such Advance, an appropriate form of Notice of
Revolving Credit Borrowing or Notice of Credit Issuance as applicable,
dated the date of such Advance, executed by an authorized officer of
Borrower, all of the statements in which shall be true and correct on
and as of such date;
24
(b) Additional Information. Lender shall have received such
additional documents, instruments, and information as Lender or its
legal counsel may request; and
(c) Other Matters. All corporate proceedings taken in connection
with the transactions contemplated by this Agreement and all
documents, instruments, and other legal matters incident thereto shall
be satisfactory to Lender and its legal counsel.
Section 7.03. Additional Conditions to Each Advancing Credit Advance.
The obligation of Lender to make any Advance, including, without limitation, the
initial Advance, pursuant to Article III hereof is subject to the following
additional conditions precedent:
(a) Advance Request Form. Lender shall have received, not later
than 11:00 A.M., Houston, Texas time, at least one (1) Business Days
prior to the date of such Advance, an appropriate form of Notice of
Advancing Credit Borrowing as applicable, dated the date of such
Advance, executed by an authorized officer of Borrower, all of the
statements in which shall be true and correct on and as of such date;
(b) Invoices. Lender shall have received not later than 11:00
A.M., Houston, Texas time, at least one (1) Business Day prior to the
date of such Advance copies of the invoices for equipment purchased or
improvements undertaken that are to be financed with such Advance.
(c) Additional Information. Lender shall have received such
additional documents, instruments, and information as Lender or its
legal counsel may request; and
(d) Other Matters. All corporate proceedings taken in connection
with the transactions contemplated by this Agreement and all
documents, instruments, and other legal matters incident thereto shall
be satisfactory to Lender and its legal counsel.
ARTICLE VIII
Representations and Warranties
To induce Lender to enter into this Agreement, Borrower represents and
warrants to Lender that:
Section 8.01. Corporate Existence. Borrower and each Subsidiary (a)
is a corporation duly organized, validly existing, and in good standing under
the laws of the jurisdiction
25
of its incorporation; (b) has all requisite corporate power to own assets and
carry on its business as now being or as proposed to be conducted; and (c) is
qualified to do business in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where failure to
so qualify would have a material adverse effect on its business, financial
condition, or operations. Borrower has the corporate power and authority to
execute, deliver, and perform its obligations under the Loan Papers to which it
is or may become a party.
Section 8.02. Financial Statements. Borrower has delivered to Lender
the audited Consolidated financial statements of Borrower and the Subsidiaries
as at and for the fiscal year ended December 31, 1992, and unaudited
Consolidated financial statements of Borrower and the Subsidiaries for the nine
(9) month period ended September 30, 1993. Such financial statements are true
and correct in all material respects, have been prepared in accordance with
GAAP, and fairly and accurately present, on a consolidated basis, the financial
condition of Borrower and the Subsidiaries as of the respective dates indicated
therein and the results of operations for the respective periods indicated
therein. Neither Borrower nor any Subsidiary has any material contingent
liabilities, liabilities for taxes, material forward or long-term commitments,
or unrealized or anticipated losses from any unfavorable commitments not
reflected in such financial statements. There has been no material adverse
change in the condition, financial or otherwise, or operations of Borrower or
the Subsidiaries, on a consolidated basis, since the date of the most recent
financial statements referred to in this Section 8.02.
Section 8.03. Default. Neither Borrower nor any Material Company is
in default in any material respect under the provisions of any instrument
evidencing any material obligation, indebtedness, or liability of such Person or
of any agreement relating thereto, or under any order, writ, injunction, or
decree of any tribunal, or in default in any material respect under or in
violation of any order, regulation, or demand of any tribunal, which default or
violation could have a material adverse effect on Borrower or such Material
Company.
Section 8.04. Authorization and Compliance with Laws and Material
Agreements. The execution, delivery, and performance by Borrower of this
Agreement, the Borrowings, and the execution, delivery and performance of the
Notes and the other Loan Papers to which Borrower is or may become a party have
been duly authorized by all requisite action on the part of Borrower and do not
and will not violate the articles of incorporation or bylaws of Borrower or any
law or any order of any court, governmental authority or arbitrator and do not
and will not conflict with, result in a breach of, or constitute a default
under, or result in the imposition of any Lien (except as provided in Article
VI) upon any assets of Borrower or any Subsidiary pursuant to the provisions of
any indenture, mortgage, deed of trust, security agreement, franchise, permit,
license, or other instrument or agreement to which Borrower or any Subsidiary or
their respective properties is bound.
Section 8.05. Litigation and Judgments. Except as disclosed on
Schedule 4 hereto, there is no action, suit, or proceeding before any court,
governmental authority or arbitrator pending, or to the knowledge of Borrower,
threatened against or affecting Borrower or any Subsidiary that would, if
adversely determined, have a material adverse effect on the financial condition
or
26
operations of Borrower or any Subsidiary or the ability of Borrower to pay
and perform the Obligations under this Agreement or would invalidate any patent
or trademark currently owned or held, directly or indirectly, by Borrower. There
are no outstanding judgments against Borrower or any Subsidiary.
Section 8.06. Rights in Properties; Liens. Borrower has good and
indefeasible title or valid leasehold interests in its properties and assets,
real and personal reflected in the financial statements described in Section
8.02, and none of the properties, assets, or leasehold interests of Borrower or
any Subsidiary is subject to any Lien, except as permitted by Section 10.01.
Borrower represents and warrants that substantially all of its tangible
properties and assets reflected in said financial statements are located in the
continental United States.
Section 8.07. Enforceability. This Agreement constitutes and the other
Loan Papers to which Borrower is a party, when delivered, shall constitute,
legal, valid, and binding obligations of Borrower, enforceable against Borrower
in accordance with their respective terms, except as limited by bankruptcy,
insolvency, or other laws of general application relating to the enforcement of
creditor's rights.
Section 8.08. Approvals. No authorization, approval, or consent of,
and no filing or registration with, any court, governmental authority, or third
party is necessary for the execution, delivery, or performance by Borrower of
this Agreement or the other Loan Papers to which Borrower is or may become a
party or the validity or enforceability thereof.
Section 8.09. Debt. Neither Borrower nor any Subsidiary has any Debt
other than (i) the Debt disclosed on Schedule 5 attached hereto, (ii) Debt owed
to Lender or (iii) Debt reflected in the financial statements most recently
delivered to Lender.
Section 8.10. Taxes. Borrower and each Subsidiary has filed all tax
returns (federal, state, local and foreign) required to be filed, including all
income, franchise, employment, property and sales taxes, and have paid all of
their respective tax liabilities, and except as disclosed on Schedule 11
attached hereto, Borrower does not know of any pending investigation of Borrower
or any Subsidiary by any taxing authority or of any pending but unassessed tax
liability of Borrower or any Subsidiary.
Section 8.11. Use of Proceeds; Margin Securities. Neither Borrower nor
any Subsidiary is engaged principally, or as one of its important activities, in
the business of extending credit for the purposes of purchasing or carrying
margin stock (within the meaning of Regulations G, T, U, or X of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of any
extension of credit under this Agreement will be used to purchase or carry any
such margin stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock. Neither Borrower nor any Person acting on its
behalf has taken any action that might cause the transactions contemplated by
this Agreement or the Notes to violate Regulations G, T, U, or X or to violate
the Securities Exchange Act of 1934, as amended.
27
Section 8.12. ERISA. With respect to each employee pension benefit
plan as defined in Section 3(2) of the Employee Retirement Income Security Act
of 1984, as amended ("ERISA"), Borrower and each Subsidiary has complied with
all applicable minimum funding requirements and all other applicable and
material requirements of ERISA, and there are no existing conditions which would
give rise to any liability thereunder (other than routine claims for benefits
payable thereunder). No Reportable Event (as defined in Section 4043 of ERISA)
has occurred in connection with any such plan which might constitute grounds for
the termination thereof by the Pension Benefit Guaranty Corporation or for the
appointment by the appropriate United States District Court of a trustee to
administer such plan.
Section 8.13. Disclosure. No representation or warranty made by
Borrower in this Agreement or in any other Loan Papers contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements herein or therein not misleading. There is no fact known to
Borrower which has a material adverse effect, or which might in the future have
a material adverse effect, on the business, assets, financial condition or
operations of Borrower or any Subsidiary.
Section 8.14. Subsidiaries. There are no Subsidiaries of Borrower or
any Subsidiary other than those listed on Schedule 6 attached hereto, and
Schedule 6 sets forth the jurisdiction of incorporation of each Subsidiary and
the percentage of Borrower's or each Subsidiary's ownership of the outstanding
voting stock of each Subsidiary. Except as disclosed on Schedule 7, there are no
outstanding contracts, instruments, documents, or agreements binding upon
Borrower or any Subsidiary granting to any Person or groups of Persons any right
to purchase or acquire shares of the capital stock of any of such Subsidiary
which would in the event that the rights granted thereby were acted upon, result
in Borrower or any Subsidiary retaining ownership of less than the majority of
the issued and outstanding voting stock of such Subsidiary, and the stockholders
(other than Borrower or any Subsidiary) of any such Subsidiary are not entitled
to any preemptive rights with respect to the issuance of any capital stock of
any such Subsidiary which would in the event that the rights granted thereby
were acted upon result in Borrower or any Subsidiary, retaining ownership of
less than the majority of the issued and outstanding voting stock of such
Person.
Section 8.15. Principal Place of Business. The principal place of
business and chief executive office of Borrower and the place where Borrower
keeps its books and records is located at the address set forth in Article XII.
Section 8.16. Investment Company Act. Neither Borrower nor any
Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 8.17. Public Utility Holding Company Act. Neither Borrower nor
any Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company" or a "public utility" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
28
Section 8.18. Contracts. To the best of Borrower's knowledge, neither
Borrower nor any Subsidiary is a party to, or bound by, any agreement,
condition, contract, or arrangement which might in the future have a material
adverse effect on the business, operations, or financial condition of Borrower
or any Subsidiary.
Section 8.19. Compliance with Law. Borrower and each Subsidiary have
all necessary operating licenses and are in compliance with all laws, rules,
regulations, orders and decrees which are applicable to Borrower or any
Subsidiary or any of their respective properties necessary to enable each to
carry on their respective businesses in all material respects. No event which
with either the passage of time or the giving of notice or both, will cause
either of the foregoing representations to become untrue.
Section 8.20. Consent. Except as set forth on Schedule 8 attached
hereto and except for the filing with public officials in order to perfect
Lender's Liens, no consent of any Person and no consent, license, permit,
approval or authorization of, or registration or declaration with, any tribunal
is required in connection with the execution, delivery and performance of this
Agreement, the Notes, and the other Loan Papers to which Borrower is a party, or
to the extent that any such consent or other action may be required, it has been
validly procured.
Section 8.21. Securities Laws. Except with respect to Lender, Borrower
has not directly or indirectly offered the Notes for sale to, or solicited any
offer to buy the Notes, or otherwise negotiated in respect thereof with, any
Person (except Lender) and has not done (or omitted to do) any other act, so as
to bring the issuance or sale thereof within the registration requirements of
the Securities Act of 1933, as amended, and the Borrower has complied with or is
exempt from the registration provisions of all state securities or "blue sky"
laws applicable to the issuance or sale of the Notes.
Section 8.22. Existing Loans to Affiliates. Except for the loans
listed on Schedule 9 attached hereto, Borrower does not have any loans to an
Affiliate.
Section 8.23. Patents and Trademarks. Borrower is the owner and holder
of the patents and trademarks described on Schedule 10 attached hereto and the
patents and trademarks described on Schedule 10 are all of the United States and
United Kingdom patents and trademarks owned, directly or indirectly, by
Borrower. Lender hereby agrees to hold the information set forth on Schedule 10
confidential.
ARTICLE IX
Affirmative Covenants
Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or Lender has any commitment hereunder, Borrower
will perform and observe the following positive covenants, unless the Lender
shall otherwise consent in writing:
29
Section 9.01. Financial Statements. Borrower will furnish to
Lender:
(a) As soon as available, and in any event within one hundred
twenty (120) days after the end of each fiscal year of Borrower,
beginning with the fiscal year ending December 31, 1993, a copy of the
annual audit report of Borrower and the Subsidiaries for such fiscal
year containing, on a Consolidated basis, balance sheets, statements
of income, statements of stockholders' equity, and statements of
changes in cash flows as at the end of such fiscal year and for the
12-month period then ended, in each case setting forth in comparative
form the figures for the preceding fiscal year, all in reasonable
detail and audited and certified by independent certified public
accountants of nationally recognized standing acceptable to Lender, to
the effect that such report has been prepared in accordance with GAAP;
(b) As soon as available, and in any event within one hundred
twenty (120) days after the end of each fiscal year of Borrower,
beginning with the fiscal year ending December 31, 1993, a copy of an
unaudited financial report of Borrower and the Subsidiaries for such
fiscal year, containing, on a consolidating basis, balance sheets,
statements of income, and statements of changes in cash flows, in each
case setting forth in comparative form the figures for the
corresponding period of the preceding fiscal year, all in reasonable
detail and, certified by an Authorized Financial Officer of Borrower
as having been prepared in accordance with GAAP and to fairly and
accurately present (subject to year-end audit adjustments) the
financial condition and results of operations of Borrower and the
Subsidiaries, on a consolidating basis, at the date and for the period
indicated therein;
(c) As soon as available, and in any event within forty-five (45)
days after the end of each of the quarters of each fiscal year of
Borrower, a copy of an unaudited financial report of Borrower and the
Subsidiaries as of the end of such fiscal quarter and for the portion
of the fiscal year then ended, containing, on a Consolidated basis,
balance sheets, statements of income, and statements of changes in
cash flows, in each case setting forth in comparative form the figures
for the corresponding period of the preceding fiscal year, all in
reasonable detail and, certified by an Authorized Financial Officer of
Borrower as having been prepared in accordance with GAAP and to fairly
and accurately present (subject to year-end audit adjustments) the
financial condition and results of operations of Borrower and the
Subsidiaries, on a Consolidated basis, at the date and for the period
indicated therein;
30
(d) Concurrently with the delivery of the financial statements
described in subsections (b) and (c) above, a certificate by an
Authorized Financial Officer of Borrower certifying to Lender that,
based upon his examination of the affairs of Borrower and each
Subsidiary performed in connection with the preparation of said
financial statements, he is not aware of any Default or Event of
Default or, if he is aware of such Default or Event of Default, the
nature thereof and specifying the steps taken or proposed to remedy
such condition or event;
(e) As soon as available, but not later than twenty (20) calendar
days after the end of each calendar month, a Borrowing Base Report,
accompanied by a certificate by an Authorized Financial Officer of
Borrower certifying to Lender that, based upon his examination of the
affairs of Borrower performed in connection with the preparation of
said Borrowing Base Report, he is not aware of any Default or Event of
Default or, if he is aware of such Default or Event of Default, the
nature thereof;
(f) All management and other reports to Borrower's and each
Material Company's financial condition or the Collateral or any part
thereof, including drafts if no final report is issued, submitted to
Borrower by the independent public accounting firm employed by
Borrower; and
(g) Such other data and information (financial and otherwise) ,
as Lender, from time to time, may reasonably request, bearing upon or
related to the Collateral, Borrower's or any Material Company's
financial condition and/or results of operations.
Section 9.02. Periodic Miscellaneous Reports. Promptly, but in no
event later than five (5) Business Days after Borrower's learning thereof,
Borrower shall inform Lender, in writing, of (i) as to any Accounts where the
aggregate amount in question is in excess of $100,000.00; (x) any material delay
in Borrower's performance of any of its obligations to any account debtor and of
any assertion of any disputes, claims, credits, offsets or counterclaims by any
account debtor and of any allowances, credits or other monies granted by
Borrower to any account debtor; (y) any material adverse information relating to
the financial condition of any account debtor; and (z) any material adverse
facts relating to any Account; (ii) any litigation affecting Borrower or any
Subsidiary if any claims are made for amounts in excess of $250,000.00 or if
such litigation involves an account debtor if any claims are made for amounts in
excess of $100,000.00, whether or not the claim is to be covered by insurance,
and of the institution of any litigation which might have a material adverse
effect on Borrower, any Subsidiary or Lender's Lien on the Collateral; (iii) any
default under, or delinquency in the payment of any rent pursuant to the terms
of, any lease of warehouse or storage facilities leased by Borrower for the
storage of any Collateral; (iv) any Default or an Event of Default hereunder;
(v) any default under any material agreement which could have a material adverse
effect on Borrower or any Material Company; (vi) any other matter that might
have a
31
material adverse effect on the business, financial condition, or operations of
Borrower or any Subsidiary; and (vii) the change in the title or identification
of any office, officer or Person who has authority to sign certificates or
requests for advances, accompanied by a certificate of such officer's incumbency
certified by the secretary or assistant secretary, or its equivalent, of
Borrower which certificate shall contain a signature exemplar certified by such
secretary or assistant secretary, or its equivalent, as being true and correct.
Section 9.03. Warehousing Agreements. Borrower shall, upon request of
Lender, provide Lender with copies of all agreements between Borrower and any
other Person covering any Permitted Location at which Collateral may from time
to time be kept and all lease or similar agreements with respect to any
Permitted Location between Borrower and any other Person, whether Borrower is
lessor or lessee thereunder.
Section 9.04. Performance of Obligations. Borrower will duly and
punctually pay and perform the Obligations, including, without limitation,
Borrower's obligations under this Agreement and the other Loan Papers.
Section 9.05. Preservation of Existence and Conduct of Business.
Borrower will (i) preserve and maintain, and will cause each Subsidiary to
preserve and maintain, its corporate existence and all of its leases,
privileges, franchises, and rights that are necessary or desirable in the
ordinary conduct of its business, and (ii) conduct, and cause each Subsidiary to
conduct, its business as presently conducted in an orderly and efficient manner
in accordance with good business practices.
Section 9.06. Maintenance of Properties. Borrower will maintain, and
will cause each Subsidiary to maintain, its assets and properties in good
condition and repair.
Section 9.07. Payment of Taxes and Claims. Borrower will pay or
discharge, and will cause each Subsidiary to pay or discharge, at or before
maturity or before they become delinquent (i) all taxes, levies, assessments,
and governmental charges imposed on it or any of its property, and (ii) all
lawful claims for labor, material, and supplies, which, if unpaid, might become
a Lien upon any of its property; provided, however, that neither Borrower nor
any Subsidiary shall be required to pay or discharge any tax, levy, assessment,
or governmental charge which is being contested in good faith by appropriate
proceedings diligently pursued and if Borrower or such Subsidiary, as
appropriate, shall have set aside on its books and in cash adequate reserves in
respect thereof, which deferment of payment is permissible so long as the title
to and any right to use the Collateral is not materially adversely affected
thereby and Lender's Lien and the priority of Lender's Lien on the Collateral
are not affected, altered or impaired thereby.
Section 9.08. Audit. Lender shall have the right to require at any
time, but not more frequently than once every one hundred eighty (180) days, an
audit of all Inventory of Borrower. Such audit shall be conducted by a Person
mutually acceptable to Borrower and Lender. All such
32
audits shall be paid for by Borrower, provided, however, Borrower shall not be
obligated to pay in excess of $2,000.00 for any such audit.
Section 9.09. Keeping Books and Records. Borrower will maintain, and
will cause each Subsidiary to maintain, proper books of record and account in
which full, timely and complete entries in conformity with GAAP shall be made of
all dealings and transactions in relation to its business and activities.
Section 9.10. Compliance with Laws. Borrower will comply, and will
cause each Subsidiary to comply, with all material applicable laws, rules,
regulations, and orders of any court or governmental authority or arbitration.
Section 9.11. Compliance with Agreements. Borrower will comply, and
will cause each Subsidiary to comply, in all material respects with all
agreements, indentures, mortgages, deeds of trust, and other documents binding
on it or affecting its properties or business.
Section 9.12. Further Assurances. Borrower will execute, and will
cause each Subsidiary to execute and deliver, such further instruments as may be
deemed necessary or desirable by Lender to carry out the provisions and purposes
of this Agreement and the other Loan Papers and to preserve and perfect the
Liens of Lender in the Collateral.
Section 9.13. Compliance with ERISA. Borrower will comply, and will
cause each Subsidiary to comply, with all minimum funding requirements, and all
other material requirements, of ERISA, if applicable, so as not to give rise to
any liability thereunder. Promptly after the filing thereof, Borrower shall
furnish to Lender with regard to each employee benefit plan of Borrower and its
Subsidiaries, copies of each annual report required to be filed pursuant to
Section 103 of ERISA in connection with each such plan for each plan year.
Borrower will notify Lender immediately of any fact, including, but not limited
to, any "Reportable Event", as that term is defined in Section 4043 of ERISA,
arising in connection with any such plan which might constitute grounds for the
termination thereof by the Pension Benefit Guaranty Corporation or for the
appointment by the appropriate United States district court of a trustee to
administer such plan and furnish to Lender, promptly upon its request therefor,
such additional information concerning any such plan as may be reasonably
requested.
Section 9.14. Use of Proceeds. Borrower shall at all times during the
term hereof comply with the terms and conditions of Sections 2.05, 2.11 and 3.05
hereof.
Section 9.15. Insurance Summary. Borrower shall, not later than once
every twelve months, deliver to Lender a summary of the insurance coverage
maintained by Borrower and each Material Company accompanied by a certificate
from an authorized officer of Borrower to the effect that the summary is a true,
correct and complete summary of all insurance coverage maintained by Borrower
and each Material Company, all premiums have been paid on the policies described
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thereon, the policies described thereon conform to the requirements set forth in
Section 9.17 hereof and that all such policies are in full force and effect.
Section 9.16. Licenses. Borrower shall, and cause each Material
Company to, maintain all material licenses to do business or conduct operations
in all countries, states and provinces in which the laws thereof require
Borrower or any Material Company, as applicable, to be so licensed, and Borrower
shall, and cause each Material Company to obtain and keep in force all material
licenses to do business or conduct operations in any additional countries,
states and provinces in which the laws thereof require such Person to be so
licensed in the future.
Section 9.17. Insurance; Payment of Premiums. Borrower shall maintain
life insurance in the amount of $2,500,000.00 on each of the lives of J. Xxxx
Xxxxxx, Xxxxx X. Xxxxxxx and Xxxx X. Xxxxx. Borrower shall keep adequately
insured by reputable insurers, which, if requested by Lender, shall be
acceptable to Lender, all the Collateral and such other assets which it owns or
possesses for its full insurable value, subject to customary deductibles,
against loss or damage by fire, theft, tornado, flood (if such asset is located
in an identified "flood hazard area" in which flood insurance has been made
available pursuant to the National Flood Insurance Act of 1968), explosion,
sprinklers and all other hazards and risks ordinarily insured against by other
owners or users of such properties in similar businesses, and notify Lender
promptly of any event of occurrence causing a material loss or decline in value
of the Collateral and such other assets and the estimated (or actual, if
available) amount of such loss or decline. All policies of insurance on the
Collateral and such other assets shall be in form and with insurers recognized
as adequate by prudent business persons and all such policies shall be in such
amounts as may be satisfactory to Lender. Borrower shall deliver or cause to be
delivered to Lender the original (or certified copy) of each policy of insurance
covering any Collateral and evidence of payment of all premiums for all policies
of insurance. If requested by Lender, Borrower shall deliver or cause to be
delivered to Lender the original (or certified copy) of each other policy of
insurance. The policies of insurance shall contain an endorsement, in form and
substance acceptable to Lender, providing for the payment of all losses to
Lender. Such endorsement or any independent instrument furnished to Lender,
shall provide that the insurance companies will give Lender at least thirty (30)
days prior written notice before any such policy or policies of insurance shall
be altered or cancelled, and that no act or default of the insured or any other
Person shall affect the right of Lender to recover under such policy or policies
of insurance in case of loss or damage. Borrower hereby directs, to the full
extent permitted by law, all insurers under policies of insurance covering
Collateral with a value in excess of $300,000.00 to pay all proceeds payable
thereunder directly to Lender. In the event Borrower, at any time hereafter
shall fail to obtain or maintain any of the policies of insurance required above
or to pay any premium in whole or in part relating thereto, then Lender, without
waiving or releasing any obligations or Default by Borrower hereunder, may at
any time thereafter (but Lender shall be under no obligation to) obtain and
maintain such policies of insurance and pay such premium and take any other
action with respect thereto which Lender deems advisable. All sums so disbursed
by Lender, including any related expenses and other charges relating thereto,
shall be payable on demand to Lender and shall be additional Obligations
hereunder secured by the Collateral.
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Section 9.18. Casualty or Damage to Insured Property. Notwithstanding
the provisions of the foregoing Section 9.17, if a casualty or any damage occurs
at the property of Borrower, insurance for such casualty or damage shall be used
to restore the property in question in the former condition unless:
(a) There shall be existing a Default or an Event of Default; or
(b) Lender shall otherwise consent in writing.
If the insurance proceeds are utilized to repair a casualty or damage,
Borrower will cause the insurance proceeds paid for any such casualty or damage
to be disbursed by the insurance company in question periodically as the work
progresses on a time and materials basis upon receipt of invoices for work
performed and materials provided, if the insurance proceeds to be paid shall be
less than $250,000.00, such proceeds may be paid as Borrower may direct to
restore the property in question subject to the conditions in this Section
9.18(a) and (b) hereof. All work paid for with insurance proceeds shall be
performed by reputable contractors, which shall, if Lender request, be
reasonably acceptable to Lender, and pursuant to plans and specifications which,
if Lender request, shall be reasonably acceptable to Lender. All work done to
restore property damaged to its former condition shall be done in accordance
with the plans and specifications in good and workmanlike fashion with first
quality materials and, if Lender requests, Borrower shall provide Lender with
evidence satisfactory to Lender of the same. If the cost of the work to restore
the property in question shall exceed the available insurance proceeds, Borrower
shall expend the necessary funds to complete the restoration. If the insurance
proceeds should exceed the final cost to complete the restoration, and there
shall be existing a Default or an Event of Default, any excess shall at the
election of Lender be used to repay any amounts owing hereunder or shall be held
as security for the Obligations. If the insurance proceeds are not utilized to
restore the property in question because of the operation of Section 9.18.(a) or
(b) hereof, Lender shall have the right, at its option, to hold the insurance
proceeds as security for the Obligations, apply such proceeds to any Obligations
then due and owing or to the Notes in such order and manner as Lender may
determine in its sole discretion or apply such proceeds to the restoration of
the Collateral.
Section 9.19. Guaranty Obligation. Upon execution hereof, Borrower
shall (i) execute a Guaranty Agreement in form and substance acceptable to
Lender, in its sole discretion, evidencing Borrower's agreement to
unconditionally and irrevocably guarantee the full and final payment of all Debt
of DQE owed to Lender, (ii) execute such documents and instruments in form and
substance acceptable to Lender, in its sole discretion, evidencing Borrower's
agreement that all of Lender's Liens on the Collateral shall secure, in addition
to the Obligations, all of Borrower's liabilities and obligations under such
Guaranty Agreement and all Debt of DQE owed to Lender, (iii) deliver certified
corporate resolutions which authorize the execution, delivery and performance by
Borrower of such Guaranty Agreement and lien documentation and (iv) have its
counsel deliver a favorable opinion of counsel relating to such matters.
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ARTICLE X
Negative Covenants
Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or Lender has any commitment hereunder, Borrower
will not, unless the Lender shall otherwise consent in writing:
Section 10.01. Limitation on Liens; Debt. Incur, create, assume
or permit to exist, nor permit any Subsidiary to incur, create, assume or permit
to exist, any Lien upon any of its property, assets, or revenues, whether now
owned or hereafter acquired, except Permitted Liens, or incur, or permit any
Subsidiary to incur, any additional Debt in excess of $300,000.00 in the
aggregate, except (i) Debt associated with a Permitted Lien (provided that such
Permitted Lien shall not secure any Debt in excess of the amount initially
incurred with respect to such Permitted Lien described in subparts (v)-(vi) in
the definition of "Permitted Liens" contained herein [except any amounts which a
Person has the right to borrow under the documents, agreements and instruments
evidencing Debt existing as of the Closing Date]), (ii) any amounts which such
Person has the right to borrow under the documents, agreements and instruments
evidencing Debt existing as of the Closing Date, (iii) trade accounts payable in
the ordinary course of business, (iv) accrued expenses incurred in the ordinary
course of business, (v) taxes, (vi) guaranties required or permitted to be
extended by law, (vii) Debt incurred in connection with capitalized expenditures
including capitalized leases and (viii) additional Debt owed Lender.
Section 10.02. Mergers, Acquisitions and Dissolutions. Become,
nor permit any Subsidiary to become, a party to a merger or consolidation, or
purchase or otherwise acquire all or a substantial part of the assets of any
Person or any shares or other evidence of beneficial ownership of any Person, or
dissolve or liquidate.
Section 10.03. Capital Expenditures. Permit the aggregate
capital expenditures of Borrower and Subsidiaries to exceed SEVEN MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($7,500,000.00) in the aggregate during any
fiscal year.
Section 10.04. Lease Obligations. Permit aggregate payments of
Borrower and Subsidiaries under leases of real or personal property to exceed
ONE MILLION FOUR HUNDRED THOUSAND AND NO/100 DOLLARS ($1,400,000.00) in the
aggregate during any fiscal year.
Section 10.05. Consolidated Tangible Net Worth Test. Permit the
Consolidated Tangible Net Worth of Borrower and the Material Companies, on a
Consolidated basis, at any time to be less than the sum of (a) $26,300,000.00
plus (b) an amount equal to seventy-five percent (75%) of all earnings (if
positive) of Borrower and the Material Companies for the immediately preceding
fiscal quarter of Borrower ending prior to the date of such determination.
Section 10.06. Current Ratio Test. Permit the ratio of current
assets of Borrower and the Material Companies (on a Consolidated basis) to
current liabilities of Borrower and the Material Companies (on a Consolidated
basis, but exclusive of (i) the Debt evidenced by the
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Revolving Credit Note and (ii) the revolving credit Debt of DQE owed Lender), to
be less than 1.5 to 1.0.
Section 10.07. Cash Flow Coverage Test. Permit the ratio of (a)
the cash flow of Borrower and the Material Companies (on a Consolidated basis)
for each four consecutive fiscal quarter period, being the sum of (i) net
income, after provision for federal and state income taxes, plus (ii) depletion,
depreciation and amortization (other than payments made to amortize Debt), minus
(iii) the amount of unfinanced capital expenditures during such period, to (b)
the sum of all scheduled repayments of principal of any Debt of the Borrower or
the Material Companies presently owed Lender or Bank of Scotland and all
renewals and extensions thereof (except the last scheduled repayment under the
Advancing Credit Loan due October 1, 1998, under the Term Loan due October 1,
1997, under the Revolving Credit Loan due October 1, 1995, under the revolving
Debt of DQE owed Lender due October 1, 1995 and under the term Debt of DQE owed
Lender due October 1, 1997) for the next succeeding four fiscal quarter period,
to be less than 1.25 to 1.0.
Section 10.08. Restricted Payments. Borrower will not declare or
pay any dividends or make any other payment on account of its capital stock, or
redeem, purchase, or retire any of its capital stock, or grant or issue any
capital stock or any warrant, right, or option pertaining to its capital stock,
or issue any security convertible into capital stock, except to existing
shareholders for fair market value consideration.
Section 10.09. Loans and Investments. Make, and will not permit
any Subsidiary to make, any material advance, loan, extension of credit, or
capital contribution to any Person, except for inter-company loans between
Borrower and the Material Companies, or invest in or purchase, or permit any
Subsidiary to invest in or purchase, any stock, bonds, notes, debentures, or
other securities of any Person, except Permitted Investments.
Section 10.10. Transactions With Affiliates. Enter into, and
will not permit any Subsidiary to enter into, any transaction with any director,
officer, employee or shareholder of Borrower, any Subsidiary or any Affiliate,
except under fair and reasonable terms no less favorable than could be obtained
in an arm's length transaction with a Person not an Affiliate.
Section 10.11. Disposition of Assets. Sell, lease, assign,
transfer or otherwise dispose of any of its assets, or permit any Subsidiary to
do so with any of its assets, except (i) dispositions of inventory in the
ordinary course of business, (ii) assets with a value of less than $75,000.00,
provided, however, such assets permitted to be sold pursuant to this clause (ii)
shall not exceed $300,000.00 in the aggregate during any fiscal year, or (iii)
sales, leases, assignments, transfers or other dispositions of assets from
Borrower or a Material Company to Borrower or a Material Company.
Section 10.12. Sale and Leaseback. Enter into, and will not
permit any Subsidiary to enter into, any arrangement with any Person pursuant to
which it leases from such Person real or
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personal property that has been or is to be sold or transferred, directly or
indirectly, by it to such Person.
Section 10.13. Prepayment of Debt. Prepay, and will not permit
any Subsidiary to prepay, any Debt, except (i) the Obligations, (ii) Debt of DQE
owed Lender, (iii) prepayments of less than $50,000.00, provided, however, such
prepayments permitted to be made pursuant to this clause (iii) shall not exceed
$100,000.00 in the aggregate during any fiscal year or (iv) Debt owed by a
Subsidiary to Borrower.
Section 10.14. Nature of Business. Engage in, and will not
permit any Subsidiary to engage in, any business other than the business in
which they are engaged as of the date hereof, unless such business is of the
same or similar nature.
Section 10.15. Prohibited Transactions. Enter into, or permit
any Subsidiary to enter into, any transaction which has a material adverse
effect on the Collateral, Borrower or any Material Company's business, or
Borrower's ability to repay the Obligations, or permit or agree to any
extension, compromise or settlement in excess of $250,000.00 or make any change
or modification of any kind or nature with respect to any Accounts in the
aggregate in excess of $250,000.00 owing by any account debtor, including any of
the terms relating thereto.
Section 10.16. Contingent Liabilities. Guarantee or otherwise,
in any way, become liable with respect to the obligations or liabilities of any
Person (other than any Material Company), or permit any Subsidiary to become so
liable, except (i) its Affiliates' obligations to Lender, (ii) by endorsement of
instruments or items of payment for deposit to the general account of any
Material Company or for delivery to Lender on account of the Obligations, (iii)
for the indemnif ication provisions contained in the certif icate or articles of
incorporation or by-laws, or its equivalent, of Borrower or any Material Company
for the directors, officers, employees and others acting in a capacity
benefiting the general corporate purposes or business of Borrower or each
relevant Material Company or indemnif ication contracts entered into for the
benefit of such persons and in conformity with applicable Law, and (iv) other
Debt permitted by Section 10.01 hereof.
Section 10.17. Removal of Collateral. Remove its books and
records and/or the Collateral (the value of which shall exceed, in the aggregate
$100,000.00) from the locations set forth on Schedule 2 hereto, except for
removal of Inventory upon its sale or consignment, or keep any of such books and
records and/or the Collateral at any other office(s) or locations) unless
Borrower gives Lender written notice thereof and of the new location of said
books and records and/or the Collateral (accompanied by financing statements
satisfactory to Lender covering such Collateral and which comply with the Laws
of the jurisdictions) where such Collateral is to be relocated) at least thirty
(30) calendar days prior thereto.
Section 10.18. Negative Pledge. Grant any security interest in,
pledge, assign or otherwise encumber the stock of any Subsidiary owned by
Borrower or any Subsidiary, or allow a
38
security interest to be granted in the stock of any Subsidiary owned by Borrower
or any Subsidiary or allow the stock to be pledged or otherwise encumbered.
Section 10.19. Sale of Stock. Other than (a) pursuant to the
obligation disclosed in Schedule 7 relating to P.T. Dril-Quip Indonesia and (b)
the stock of Borrower pursuant to a buy-sell agreement by and among J. Xxxx
Xxxxxx, Xxxxx X. Xxxxxxx, Xxxx X. Xxxxx and Xxxx X. Xxxxxxxx, sell, convey,
assign or otherwise alienate, or allow to be sold, conveyed, assigned or
otherwise alienated, any of the stock of Borrower or any Subsidiary.
Section 10.20. Compliance with Regulations G, T, U, and X. Take
any action which might cause this Agreement or any of the Loan Papers to
violate, and will take all actions necessary to comply with, Regulations G, T,
U, and X of the Board of Governors of the Federal Reserve System and the
Securities Exchange Act of 1934, in each case as now in effect or as the same
may hereafter be in effect.
ARTICLE XI
Default
Section 11.01. Events of Default. The term "Event of Default,"
as used herein, means the occurrence of any one or more of the following events
(including the giving of notice and/or passage of time, if any specified
therefor) and the term "Default", as used herein, means the occurrence of any
one or more of the following events which, with notice or lapse of time or both,
would become an Event of Default (provided that, if any such event occurs, and
(i) prior to the exercise of any Rights or remedies under this Agreement
triggered by such event, such event has been remedied or cured, or both, or (ii)
Lender subsequently agrees in writing that they will not exercise any remedies
hereunder as a result thereof, the specific occurrence of such event shall no
longer be deemed a "Default" or "Event of Default", as applicable, hereunder
insofar as the state of facts giving rise to such event is concerned):
(a) Borrower shall fail to pay when due the Obligations or any
part thereof and such failure shall continue for three (3) Business
Days after notice has been given by Lender to Borrower.
(b) Any representation or warranty made or deemed made by
Borrower (or its officers) in any Loan Papers or in any certificate,
report, notice, or financial statement furnished at any time in
connection with this Agreement shall be false, misleading, or
erroneous in any material respect when made or deemed to have been
made.
(c) Borrower shall fail to perform, observe, or comply with (i)
any covenant set forth in Sections 10.03, 10.04, 10.05, 10.06
39
or 10.07 hereof and such failure shall continue for ten (10) Business
Days after notice has been given by Lender to Borrower or (ii) any
other covenant, agreement, or term contained in this Agreement or any
other Loan Paper and such failure shall continue for thirty (30)
Business Days after notice has been given by Lender to Borrower.
(d) Borrower or any Subsidiary (if the Subsidiary, in the
Lender's sole reasonable discretion, is material to the financial
condition, business or operations of Borrower and the Material
Companies, on a Consolidated basis) shall commence a voluntary
proceeding seeking liquidation, reorganization, or other relief with
respect to itself or its debts under any bankruptcy, insolvency, or
other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian, or other
similar official of it or a substantial part of its property or shall
consent to any such relief or to the appointment of or taking
possession by any such official in such a proceeding commenced against
it or shall make a general assignment for the benefit of creditors or
shall generally fail to pay its debts as they become due or shall take
any corporate action to authorize any of the foregoing.
(e) An involuntary proceeding or shall be commenced against
Borrower or any Subsidiary (if the Subsidiary, in the Lender's sole
reasonable discretion, is material to the financial condition,
business or operations of Borrower and the Material Companies, on a
Consolidated basis) seeking liquidation, reorganization, or other
relief with respect to it or its debts under any bankruptcy,
insolvency, or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or a substantial part of its property, and such
proceeding shall remain undismissed and unstayed for a period of
ninety (90) days.
(f) Borrower or any Material Company shall fail to discharge
within a period of thirty (30) days after the commencement thereof any
attachment, sequestration, or similar proceeding involving an amount
in excess of FIFTY THOUSAND AND NO/100 DOLLARS ($50,000.00) against
any of the assets or properties.
(g) Borrower or any Material Company shall fail to satisfy and
discharge promptly any final, non-appealable judgment against it for
the payment of money in an aggregate amount in excess of FIFTY
THOUSAND AND NO/100 DOLLARS ($50,000.00).
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(h) Borrower or any Material Company shall default in the payment
of any Debt in excess of FIFTY THOUSAND AND NO/100 DOLLARS
($50,000.00) beyond any applicable grace period, or shall default in
the performance of any other material agreement binding upon it or its
property.
(i) This Agreement or any other Loan Paper shall cease to be in
full force and effect or shall be declared null and void or the
validity or enforceability thereof shall be contested or challenged by
Borrower or any Subsidiary or any of their respective shareholders, or
Borrower shall deny that it has any further liability or obligation
under any of the Loan Papers.
(j) Any two of J. Xxxx Xxxxxx, Xxxxx X. Xxxxxxx or Xxxx X. Xxxxx
shall have died or have been declared incompetent by a court of proper
jurisdiction.
(k) Any two of J. Xxxx Xxxxxx, Xxxxx X. Xxxxxxx or Xxxx X. Xxxxx
shall cease to be active in the management of Borrower.
(1) The occurrence of any event which is material and adverse to
the financial condition, business or operations of Borrower and the
Material Companies on a Consolidated basis or which materially and
adversely impairs the ability of Borrower to perform its obligations
under the Loan Papers.
(m) An "Event of Default", as defined in any of the Loan Papers.
(n) An "Event of Default", as defined in that certain Credit
Agreement dated of even date herewith by and between Lender, DQE (as
borrower) and Borrower (as may be amended from time to time).
(o) Any representation or warranty made or deemed made by
Borrower (or its officers) in the Guaranty Agreement referred to in
Section 9.19 shall be false, misleading or erroneous in any material
respect when made or deemed to have been made.
(p) Borrower shall fail to perform, observe, or comply with any
covenant, agreement, or term contained in the Guaranty Agreement
referred to in Section 9.19 and such failure shall continue
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for thirty (30) Business Days after notice has been given by Lender to
Borrower.
Section 11.02. Occurrence of a Default or an Event of Default.
If a Default shall occur and be continuing, the obligation of the Lender to make
Advances or issue Letters of Credit shall immediately cease until such Default
shall have been cured or corrected. If an Event of Default shall occur and be
continuing (provided, however, that there shall be no right of cure after
acceleration of the Obligations), Lender may do any one or more of the
following:
(a) Acceleration. Declare the entire unpaid balance of the
Obligations, or any part thereof, immediately due and payable,
whereupon it shall be due and payable without demand, presentment,
notice of dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, or protest, all of which are
hereby expressly waived.
(b) Termination of Commitments. Terminate the Commitment of
Lender hereunder.
(c) Judgment. Reduce any claim to judgment.
(d) Foreclosure. Take such steps as Lender may deem appropriate
to foreclose or otherwise enforce any Liens which may at any time
hereafter be granted to Lender, for the benefit of Lender to secure
payment and performance of the Obligations; provided, however, Lender
agrees to foreclose on all Accounts, Inventory, equipment and real
property pledged to secure the Obligations prior to foreclosing on the
patents and trademarks pledged to secure the Obligations; further
provided, however, that if Lender is unable to foreclose on the real
estate pledged to secure the Obligations for reasons of
impracticability, legal impossibility or concerns regarding liability
for the Lender which would result from such foreclosure, Lender shall
be entitled to foreclose on the patents and trademarks without first
foreclosing on the real estate.
(e) Rights. Exercise any and all Rights afforded by the Laws of
the State of Texas or any other jurisdiction, as Lender shall deem
appropriate, including, but not limited to, the UCC or of such other
jurisdiction or by any of the Loan Papers, or by law or equity, or
otherwise.
Provided, however, that upon occurrence of an Event of Default under Section
11.01(d) and (e) hereof, the Commitment shall automatically terminate, and the
Obligations shall become
42
immediately due and payable without notice of any kind whatsoever including,
without limitation, notice of intent to accelerate or notice of acceleration,
demand, presentment, notice of dishonor, or protest, which are hereby expressly
waived. Borrower acknowledges and understands that under the laws of the State
of Texas, unless waived, Borrower has the right to notice of Lender's intent to
accelerate the Obligations evidenced by the Notes, the right to notice of the
actual acceleration of the Obligations evidenced by the Notes, and the right to
presentment of the Notes by Lender's demand for payment. Borrower acknowledges
that it understands that it can waive these rights and by Borrower's execution
of this Agreement it agrees to waive its right to notice of intent to
accelerate, its rights to notice of acceleration and its right to presentment or
other demand for payment. Upon the occurrence of any such Event of Default as
described in the immediately preceding sentence, Lender may exercise all Rights
available to it in law or in equity, under the Loan Papers or otherwise. With
respect to all Letters of Credit that shall not have matured or with respect to
which presentment for honor shall not have occurred, Borrower shall deposit in a
cash collateral account with Lender an amount equal to the aggregate undrawn
amount of Letters of Credit, and the unused portion thereof, if any, shall be
returned to Borrower after the respective expiry dates of the Letters of Credit
and after all Obligations are paid in full.
Section 11.03. Performance by Lender. If any covenant, duty, or
agreement of Borrower should fail to be performed in accordance with the terms
of the Loan Papers, Lender shall perform, or attempt to perform, such covenants,
duty, or agreement on behalf of Borrower. In such event, Borrower shall, at the
request of Lender, promptly pay any reasonable amounts expended by Lender on
behalf of Borrower in such performance or attempted performance to Lender at its
principal office in Houston, Xxxxxx County, Texas, together with interest
thereon at the Maximum Rate from the date of such expenditure by Lender (as
appropriate) until paid and which amounts until paid shall be Obligations
hereunder secured by the Collateral. Notwithstanding the foregoing, it is
expressly understood that Lender shall not assume or have, except by its express
written consent, any liability or responsibility for the performance of any
duties of Borrower or any other Person hereunder.
Section 11.04. Waivers. The acceptance by Lender at any time and
from time to time of part payment on the Obligations shall not be deemed to be a
waiver of any Default or Event of Default then existing. No waiver by Lender of
any Default or Event of Default shall be deemed to be a waiver of any other then
existing or subsequent Default or Event of Default. No delay or omission by
Lender in exercising any Rights under the Loan Papers shall impair such Rights
or be construed as a waiver thereof or any acquiescence therein, nor shall any
single or partial exercise of any such Rights preclude other or further exercise
thereof, or the exercise of any other Rights under the Loan Papers or otherwise.
Section 11.05. Application of Proceeds. Any and all proceeds
ever received by Lender from the exercise of any Rights pursuant to this Article
XI, shall be applied promptly when received by Lender to the Obligations in such
order and manner as Lender, in its sole discretion, may deem appropriate.
Borrower shall remain liable to Lender for any deficiency.
43
Section 11.06. Cumulative Rights. All Rights available to Lender
under the Loan Papers shall be cumulative of and in addition to all other rights
granted to Lender at law or in equity, whether or not the Obligation be due and
payable and whether or not Lender shall have instituted any suit for collection
or other action in connection with the Loan Papers.
Section 11.07. Expenditures by Lender or Any Lender. Any
reasonable sums spent by Lender pursuant to the exercise of any Right provided
herein shall become part of the Obligations, except as otherwise provided by
Law.
ARTICLE XII
Miscellaneous
Section 12.01. Expenses of Lender. Borrower agrees to pay on
demand all reasonable costs and expenses incurred by Lender in connection with
the preparation, negotiation, and execution of this Agreement and the other Loan
Papers and any and all amendments, modifications, and supplements thereto,
including, without limitation, all reasonable costs and fees of Lender's legal
counsel, and all reasonable costs and expenses incurred by Lender in connection
with the enforcement or preservation of any rights under this Agreement or any
other Loan Papers, including, without limitation, all reasonable costs and fees
of Lender's legal counsel.
Section 12.02. Restatement. The delivery of each statement,
report, and certificate to Lender pursuant to this Agreement and each request by
Borrower for an Advance hereunder (whether by Advance Request Form, Notice of
Revolving Credit Borrowing, Notice of Credit Issuance or otherwise) shall by
virtue of such delivery or request alone constitute a restatement of the
representations and warranties contained in Article VIII hereof on and as of the
date of delivery or the date requested for the Advance, except that the
representations and warranties contained in Section 8.02 shall in each instance
be deemed to be made with respect to the financial statements most recently
furnished to Lender pursuant to Section 8.02 or 9.01, as the case may be. Each
such delivery or request shall also constitute a representation and warranty at
the time of said delivery or on the date requested for the Advance that no Event
of Default has occurred and is continuing and that no event has occurred that,
with notice or lapse of time or both would be an Event of Default, has occurred
and is continuing.
Section 12.03. No Waiver; Cumulative Remedies. No failure on the
part of Lender to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power, or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power, or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement and the other Loan Papers are
cumulative and not exclusive of any rights and remedies provided by law.
44
Section 12.04. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of Lender and Borrower and their
respective successors and assigns, except that Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of Lender.
Section 12.05. Survival of Representations and Warranties. All
representations and warranties made in this Agreement or any other Loan Document
or in any document, statement, or certificate furnished in connection with this
Agreement shall survive the execution and delivery of this Agreement and the
other Loan Papers, and no investigation by Lender or any closing shall affect
the representations and warranties or the right of Lender to rely upon them.
Section 12.06. Entire Agreement; Amendment. This Agreement
embodies the entire agreement among the parties hereto and supersedes all prior
agreements and understandings, if any, relating to the subject matter hereof.
THIS WRITTEN AGREEMENT AND THE OTHER LOAN 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. The provisions of this Agreement
and the other Loan Papers to which Borrower or any other Person is a party may
be amended or waived only by an instrument in writing signed by the parties
hereto.
Section 12.07. Maximum Interest Rate. No provision of this
Agreement or of any Note shall require the payment or the collection of interest
in excess of the maximum permitted by applicable law. If any excess of interest
in such respect is hereby provided for, or shall be adjudicated to be so
provided, in any Note or otherwise in connection with this loan transaction, the
provisions of this Section 12.07 shall govern and prevail and neither Borrower
nor the sureties, guarantors, successors, or assigns of Borrower shall be
obligated to pay the excess amount of such interest or any other excess sum paid
for use, forbearance, or detention of sums loaned pursuant hereto. In the event
Lender ever receives, collects, or applies as interest any such sum, such amount
which would be in excess of the maximum amount permitted by applicable law shall
be applied as a payment and reduction of the principal of the indebtedness
evidenced by the Notes; and, if the principal of the Notes has been paid in
full, any remaining excess shall forthwith be paid to Borrower.
Section 12.08. Notices. Any notice, consent, or other
communication required or permitted to be given under any of the Loan Papers to
Lender or Borrower must be in writing and delivered in person or mailed by
registered or certified mail, return receipt requested, postage prepaid, as
follows:
To Lender: BANK ONE, TEXAS, NATIONAL ASSOCIATION
000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx
45
To Borrower: Dril-Quip, Inc.
00000 Xxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: J. Xxxx Xxxxxx
with a copy to:
Dril-Quip, Inc.
00000 Xxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxx
and if the notice is pursuant to Section
11.01 or 11.02 hereof with a copy to:
Xxxxxx & Xxxxx
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
or such other address as shall be set forth in a notice from the appropriate
party given in compliance with this Section 12.08. Any such notice, consent, or
other communications shall be deemed given when delivered in person or, if
mailed, when duly deposited in the mails.
SECTION 12.09. APPLICABLE LAW. THIS AGREEMENT, THE NOTES, AND
THE OTHER LOAN PAPERS SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN
HOUSTON, XXXXXX COUNTY, TEXAS, AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
Section 12.10. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 12.11. Severability. Any provision of this Agreement
held by a court of competent jurisdiction to be invalid or unenforceable shall
not impair or invalidate the remainder of this Agreement and the effect thereof
shall be confined to the provision held to be invalid or illegal.
Section 12.12. Headings. The headings, captions, and
arrangements used in this Agreement are for convenience only and shall not
affect the interpretation of this Agreement.
Section 12.13. Non-Application of Chapter 15 of Texas Credit
Code. The provisions of Chapter 15 of the Texas Credit Code (Vernon's Texas
Civil Statutes, Article 5069-15)
46
are specifically declared by the parties hereto not to be applicable to this
Agreement or any of the Loan Papers or to the transactions contemplated hereby.
Section 12.14. Controlling Provision Upon Conflict. In the event
of a conflict between the provisions of this Agreement and those of the Notes,
the Security Documents or any other Loan Paper, the provisions of this Agreement
shall control.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BORROWER:
DRIL-QUIP, INC.
/s/ X. X. XXXXXX
By:___________________________________
X. X. Xxxxxx
Vice President
LENDER:
BANK ONE, TEXAS, NATIONAL
ASSOCIATION
/s/ XXXX X. XXXXX
By:____________________________________
Xxxx X. Xxxxx
Vice President
47
EXHIBIT A
PROMISSORY NOTE
$15,000,000.00 Houston, Texas March , 1994
FOR VALUE RECEIVED, the undersigned, DRIL-QUIP, INC., a Texas
corporation ("Maker"), hereby promises to pay to the order of BANK ONE, TEXAS,
NATIONAL ASSOCIATION, a national banking association ("Payee"), at its offices
at 910 Travis, Houston, Xxxxxx County, Texas, on October 1, 1995, in lawful
money of the United States of America, the principal sum of FIFTEEN MILLION AND
NO/100 DOLLARS ($15,000,000.00), or so much thereof as may be advanced and
outstanding hereunder, together with interest on the outstanding principal
balance hereof, at a varying rate per annum which shall from day to day be equal
to the lesser of (a) the maximum rate permitted by applicable law as the same
exists from day to day during the term hereof ("Maximum Rate"), including, as to
Article 5069-1.04, Vernon's Texas Civil Statutes (and as the same may be
incorporated by reference in other Texas statutes), but otherwise without
limitation, that rate based upon the "indicated rate ceiling" or (b) the sum of
the Bank One Base Rate (hereinafter defined) of Payee in effect from day to day
plus one-half of one percent (1/2%), each such change in the rate of interest
charged hereunder to become effective, without notice to Maker, on the effective
date of each change in the Bank One Base Rate; provided however, if at any time
the rate of interest specified in clause (b) preceding shall exceed the Maximum
Rate, thereby causing the interest rate hereon to be limited to the Maximum
Rate, then any subsequent reduction in the Bank One Base Rate will not reduce
the rate of interest hereon below the Maximum Rate until the total amount of
interest accrued hereon equals the amount of interest which would have accrued
hereon if the rate specified in clause (b) preceding had at all times been in
effect.
Accrued and unpaid interest shall be due and payable quarterly in
arrears during the term hereof, on the 1st day of each successive July, October,
January and April commencing on July 1, 1994, until payment in full of the
outstanding principal hereunder. All principal hereof, together with all
accrued and unpaid interest thereon, shall be due and payable on maturity. All
past due principal and interest shall bear interest at the Maximum Rate.
As used herein, the term "Bank One Base Rate" means, at any time the
lesser of (i) the rate of interest per annum then most recently established by
Payee as its Bank One Base Rate in effect from day to day, with each change in
the rate of interest charged as the Bank One Base Rate to become effective,
without notice to Maker, on the effective date of each change in the Bank One
Base Rate, such Bank One Base Rate to be computed on the basis of a year
composed of 365 days for the actual number of days elapsed (including the first
day but excluding the last day) or (ii) the Maximum Rate (as herein defined).
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This note is the Revolving Credit Note provided for and as defined in
that certain Credit Agreement dated of even date herewith by and among Maker and
Payee (such instrument as the same may be amended or modified from time to time,
is hereinafter referred to as the "Agreement").
Maker may prepay the principal of this note upon the terms and
conditions specified in the Agreement. Maker may borrow, repay and reborrow
hereunder upon the terms and conditions specified in the Agreement.
Notwithstanding anything to the contrary contained herein, no
provisions of this note shall require the payment or permit the collection of
interest in excess of the Maximum Rate. If any excess of interest in such
respect is herein provided for, or shall be adjudicated to be so provided, in
this note or otherwise in connection with this loan transaction the provisions
of this paragraph shall govern and prevail, and neither Maker nor the sureties,
guarantors, successors or assigns of Maker shall be obligated to pay the excess
amount of such interest, or any other excess sum paid for the use, forbearance
or detention of sums loaned pursuant hereto. If for any reason interest in
excess of the Maximum Rate shall be deemed charged, required or permitted by any
court of competent jurisdiction, any such excess shall be applied as a payment
and reduction of the principal of indebtedness evidenced by this note; and, if
the principal amount hereof has been paid in full, any remaining excess shall
forthwith be paid to Maker.
If default be made in the payment of principal or interest under this
note and such default shall continue for three (3) Business Days after notice
thereof to Maker pursuant to the Agreement, as defined in the Agreement, or upon
the occurrence of any other Event of Default, as such term is defined in the
Agreement, the holder hereof may, at its option, declare the entire unpaid
principal of and accrued interest on this note immediately due and payable
without additional notice, demand or presentment, all of which are hereby
waived, and upon such declaration, the same shall become and shall be
immediately due and payable, and the holder hereof shall have the right to
foreclose or otherwise enforce all liens or security interests securing any sum
or sums owed by the holder hereof to Maker. Failure of the holder hereof to
exercise this option shall not constitute a waiver of the right to exercise the
same upon the occurrence of a subsequent Event of Default.
If the holder hereof expends any effort in any attempt to enforce
payment of all or any part or installment of any sum due the holder hereunder,
or if this note is placed in the hands of an attorney for collection, or if it
is collected through any legal proceedings, Maker agrees to pay all collection
costs and fees incurred by the holder, including reasonable attorneys' fees.
This note is performable in Houston, Xxxxxx County, Texas, and Maker
and each surety, guarantor, endorser and other party ever liable for payment of
any sums of money payable on this note, jointly and severally waive the right to
be sued hereon elsewhere. This note shall be
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governed by and construed in accordance with the laws of the state of Texas and
the applicable laws of the United States of America.
Maker and each surety, guarantor, endorser and other party ever liable
for payment of any sums of money payable on this note jointly and severally
waive presentment and demand for payment, protest, notice of protest and non-
payment of dishonor, notice of acceleration, notice of intent to accelerate,
notice of intent to demand, diligence in collecting, and grace, and consent to
all extensions without notice for any period or periods of time and partial
payments, before or after maturity, without prejudice to the holder. Maker
acknowledges and understands that under the laws of the State of Texas, unless
waived, Maker has the right to notice of Payee's intent to accelerate the
indebtedness evidenced by this note, the right to notice of the actual
acceleration of the indebtedness evidenced by this note, and the right to
presentment of this note by Payee's demand for payment. Maker acknowledges that
it understands that it can waive these rights and by Maker's execution of this
note it agrees to waive its right to notice of intent to accelerate, its right
to notice of acceleration, and its right to presentment or other demand for
payment. The holder shall similarly have the right to deal in any way, at any
time, without one or more of the foregoing parties without notice to any other
party, and to grant any such party and extensions of time for payment of any of
said indebtedness, or to release part or all of the collateral securing this
note, or to grant any other indulgences or forbearances whatsoever, without
notice to any other party and without in any way affecting the personal
liability of any party hereunder.
Maker hereby authorizes the holder hereof to endorse on the Schedule
attached to this note or any continuation thereof, all advances made to Maker
hereunder and all payments made on account of the principal thereof, which
endorsements shall be prima facie evidence as to the outstanding principal
amount of this note; provided, however, any failure by the holder hereof to make
endorsement shall not limit or otherwise affect the obligations of Maker under
the Agreement or this note.
DRIL-QUIP, INC.
By:__________________________________
J. Xxxx Xxxxxx, Vice President
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EXHIBIT B
PROMISSORY NOTE
$1,500,000.00 Houston, Texas March , 1994
FOR VALUE RECEIVED, the undersigned, DRIL-QUIP, INC., a Texas
corporation ("Maker"), hereby promises to pay to the order of BANK ONE, TEXAS,
NATIONAL ASSOCIATION, a national banking association ("Payee"), at its offices
at 910 Travis, Houston, Xxxxxx County, Texas, on October 1, 1998, in lawful
money of the United States of America, the principal sum of ONE MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($1,500,000.00), or so much thereof as may
be advanced and outstanding hereunder, plus accrued and unpaid interest thereon
as hereinafter calculated, as follows:
(a) in two (2) installments of accrued and unpaid interest due and
payable on July 1, 1994 and October 1, 1994;
(b) fifteen (15) quarterly installments each in the principal amount
equal to one-thirtieth (1/30th) of the principal balance outstanding
hereunder as of 11:00 a.m., October 1, 1994, together with all accrued and
unpaid interest, with the first of such installments due and payable on
January 1, 1995, and like successive installments of principal plus accrued
and unpaid interest due and payable on the 1st day of each succeeding
April, July, October and January thereafter, through and including July 1,
1998; and
(c) a final installment in the amount of all outstanding principal,
plus accrued and unpaid interest, due and payable on the maturity of this
note, October 1, 1998.
The outstanding principal balance hereof shall bear interest prior to
maturity at a varying rate per annum which shall from day to day be equal to the
lesser of (a) the maximum rate permitted by applicable law as the same exists
from day to day during the term hereof ("Maximum Rate"), including, as to
Article 5069-1.04, Vernon's Texas Civil Statutes (and as the same may be
incorporated by reference in other Texas statutes), but otherwise without
limitation, that rate based upon the "indicated rate ceiling" or (b) the sum of
the Bank One Base Rate (hereinafter defined) of Payee in effect from day to day
plus three-quarters of one percent (3/4%), each such change in the rate of
interest charged hereunder to become effective, without notice to Maker, on the
effective date of each change in the Bank One Base Rate; provided however, if at
any time the rate of interest specified in clause (b) preceding shall exceed the
Maximum Rate, thereby causing the interest rate
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hereon to be limited to the Maximum Rate, then any subsequent reduction in the
Bank One Base Rate will not reduce the rate of interest hereon below the Maximum
Rate until the total amount of interest accrued hereon equals the amount of
interest which would have accrued hereon if the rate specified in clause (b)
preceding had at all times been in effect. All past due principal and interest
shall bear interest at the Maximum Rate.
As used herein, the term "Bank One Base Rate" means, at any time the
lesser of (i) the rate of interest per annum then most recently established by
Payee as its Bank One Base Rate in effect from day to day, with each change in
the rate of interest charged as the Bank One Base Rate to become effective,
without notice to Maker, on the effective date of each change in the Bank One
Base Rate, such Bank One Base Rate to be computed on the basis of a year
composed of 365 days for the actual number of days elapsed (including the first
day but excluding the last day) or (ii) the Maximum Rate (as herein defined).
This note is the Advancing Credit Note provided for and as defined in
that certain Credit Agreement dated of even date herewith by and among Maker and
Payee (such instrument as the same may be amended or modified from time to time,
is hereinafter referred to as the "Agreement").
Maker may prepay the principal of this note upon the terms and
conditions specified in the Agreement.
Notwithstanding anything to the contrary contained herein, no
provisions of this note shall require the payment or permit the collection of
interest in excess of the Maximum Rate. If any excess of interest in such
respect is herein provided for, or shall be adjudicated to be so provided, in
this note or otherwise in connection with this loan transaction the provisions
of this paragraph shall govern and prevail, and neither Maker nor the sureties,
guarantors, successors or assigns of Maker shall be obligated to pay the excess
amount of such interest, or any other excess sum paid for the use, forbearance
or detention of sums loaned pursuant hereto. If for any reason interest in
excess of the Maximum Rate shall be deemed charged, required or permitted by any
court of competent jurisdiction, any such excess shall be applied as a payment
and reduction of the principal of indebtedness evidenced by this note; and, if
the principal amount hereof has been paid in full, any remaining excess shall
forthwith be paid to Maker.
If default be made in the payment of principal or interest under this
note and such default shall continue for three (3) Business Days after notice
thereof to Maker pursuant to the Agreement, as defined in the Agreement, or upon
the occurrence of any other Event of Default, as such term is defined in the
Agreement, the holder hereof may, at its option, declare the entire unpaid
principal of and accrued interest on this note immediately due and payable
without additional notice, demand or presentment, all of which are hereby
waived, and upon such declaration, the same shall become and shall be
immediately due and payable, and the holder hereof shall have the right to
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foreclose or otherwise enforce all liens or security interests securing any sum
or sums owed by the holder hereof to Maker. Failure of the holder hereof to
exercise this option shall not constitute a waiver of the right to exercise the
same upon the occurrence of a subsequent Event of Default.
If the holder hereof expends any effort in any attempt to enforce
payment of all or any part or installment of any sum due the holder hereunder,
or if this note is placed in the hands of an attorney for collection, or if it
is collected through any legal proceedings, Maker agrees to pay all collection
costs and fees incurred by the holder, including reasonable attorneys' fees.
This note is performable in Houston, Xxxxxx County, Texas, and Maker
and each surety, guarantor, endorser and other party ever liable for payment of
any sums of money payable on this note, jointly and severally waive the right to
be sued hereon elsewhere. This note shall be governed by and construed in
accordance with the laws of the state of Texas and the applicable laws of the
United States of America.
Maker and each surety, guarantor, endorser and other party ever liable
for payment of any sums of money payable on this note jointly and severally
waive presentment and demand for payment, protest, notice of protest and non-
payment of dishonor, notice of acceleration, notice of intent to accelerate,
notice of intent to demand, diligence in collecting, and grace, and consent to
all extensions without notice for any period or periods of time and partial
payments, before or after maturity, without prejudice to the holder. Maker
acknowledges and understands that under the laws of the State of Texas, unless
waived, Maker has the right to notice of Payee's intent to accelerate the
indebtedness evidenced by this note, the right to notice of the actual
acceleration of the indebtedness evidenced by this note, and the right to
presentment of this note by Payee's demand for payment. Maker acknowledges that
it understands that it can waive these rights and by Maker's execution of this
note it agrees to waive its right to notice of intent to accelerate, its right
to notice of acceleration, and its right to presentment or other demand for
payment. The holder shall similarly have the right to deal in any way, at any
time, without one or more of the foregoing parties without notice to any other
party, and to grant any such party and extensions of time for payment of any of
said indebtedness, or to release part or all of the collateral securing this
note, or to grant any other indulgences or forbearances whatsoever, without
notice to any other party and without in any way affecting the personal
liability of any party hereunder.
Maker hereby authorizes the holder hereof to endorse on the Schedule
attached to this note or any continuation thereof, all advances made to Maker
hereunder and all payments made on account of the principal thereof, which
endorsements shall be prima facie evidence as to the outstanding principal
amount of this note; provided, however, any failure by the holder hereof to make
endorsement shall not limit or otherwise affect the obligations of Maker under
the Agreement or this note.
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DRIL-QUIP, INC.
By:___________________________
J. Xxxx Xxxxxx, Vice President
EXHIBIT C
PROMISSORY NOTE
$12,175,000.00 Houston, Texas March , 1994
FOR VALUE RECEIVED, the undersigned, DRIL-QUIP, INC., a Texas
corporation ("Maker"), hereby promises to pay to the order of BANK ONE, TEXAS,
NATIONAL ASSOCIATION, a national banking association ("Payee"), at its offices
at 910 Travis, Houston, Xxxxxx County, Texas, on October 1, 1997, in lawful
money of the United States of America, the principal sum of TWELVE MILLION ONE
HUNDRED SEVENTY-FIVE THOUSAND AND NO/100 DOLLARS ($12,175,000.00), plus accrued
and unpaid interest thereon as hereinafter calculated, as follows:
(a) fourteen (14) quarterly installments each in the principal amount
of FOUR HUNDRED SEVENTY-NINE THOUSAND AND NO/100 DOLLARS ($479,000.00),
together with all accrued and unpaid interest, with the first of such
installments due and payable on April 1, 1994, and like successive
installments of principal plus accrued and unpaid interest due and payable
on the 1st day of each succeeding April, July, October and January
thereafter, through and including July 1, 1997; and
(b) a fifteenth (15th) and final installment in the amount of all
outstanding principal, plus accrued and unpaid interest, due and payable on
the maturity of this note, October 1, 1997.
The outstanding principal balance hereof shall bear interest prior to
maturity at a varying rate per annum which shall from day to day be equal to the
lesser of (a) the maximum rate permitted by applicable law as the same exists
from day to day during the term hereof ("Maximum Rate"), including, as to
Article 5069-1.04, Vernon's Texas Civil Statutes (and as the same may be
incorporated by reference in other Texas statutes), but otherwise without
limitation, that rate based upon the "indicated rate ceiling" or (b) the sum of
the Bank One Base Rate (hereinafter defined) of Payee in effect from day to day
plus three-quarters of one percent (3/4%), each such change in the rate of
interest charged hereunder to become effective, without notice to Maker, on the
effective date of each change in the Bank One Base Rate; provided however, if at
any time the rate of interest specified in clause (b) preceding shall exceed the
Maximum Rate, thereby causing the interest rate hereon to be limited to the
Maximum Rate, then any subsequent reduction in the Bank One Base Rate will not
reduce the rate of interest hereon below the Maximum Rate until the total amount
of interest accrued hereon equals the amount of interest which would have
accrued hereon if the rate
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specified in clause (b) preceding had at all times been in effect. All past due
principal and interest shall bear interest at the Maximum Rate.
As used herein, the term "Bank One Base Rate" means, at any time the
lesser of (i) the rate of interest per annum then most recently established by
Payee as its Bank One Base Rate in effect from day to day, with each change in
the rate of interest charged as the Bank One Base Rate to become effective,
without notice to Maker, on the effective date of each change in the Bank One
Base Rate, such Bank One Base Rate to be computed on the basis of a year
composed of 365 days for the actual number of days elapsed (including the first
day but excluding the last day) or (ii) the Maximum Rate (as herein defined).
This note is the Term Note provided for and as defined in that certain
Amended and Restated Credit Agreement dated of even date herewith by and among
Maker and Payee (such instrument as the same may be amended or modified from
time to time, is hereinafter referred to as the "Agreement").
Maker may prepay the principal of this note upon the terms and
conditions specified in the Agreement.
Notwithstanding anything to the contrary contained herein, no
provisions of this note shall require the payment or permit the collection of
interest in excess of the Maximum Rate. If any excess of interest in such
respect is herein provided for, or shall be adjudicated to be so provided, in
this note or otherwise in connection with this loan transaction the provisions
of this paragraph shall govern and prevail, and neither Maker nor the sureties,
guarantors, successors or assigns of Maker shall be obligated to pay the excess
amount of such interest, or any other excess sum paid for the use, forbearance
or detention of sums loaned pursuant hereto. If for any reason interest in
excess of the Maximum Rate shall be deemed charged, required or permitted by any
court of competent jurisdiction, any such excess shall be applied as a payment
and reduction of the principal of indebtedness evidenced by this note; and, if
the principal amount hereof has been paid in full, any remaining excess shall
forthwith be paid to Maker.
If default be made in the payment of principal or interest under this
note and such default shall continue for three (3) Business Days after notice
thereof to Maker pursuant to the Agreement, as defined in the Agreement, or upon
the occurrence of any other Event of Default, as such term is defined in the
Agreement, the holder hereof may, at its option, declare the entire unpaid
principal of and accrued interest on this note immediately due and payable
without additional notice, demand or presentment, all of which are hereby
waived, and upon such declaration, the same shall become and shall be
immediately due and payable, and the holder hereof shall have the right to
foreclose or otherwise enforce all liens or security interests securing any sum
or sums owed by the holder hereof to Maker. Failure of the holder hereof to
exercise this option shall not constitute a waiver of the right to exercise the
same upon the occurrence of a subsequent Event of Default.
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If the holder hereof expends any effort in any attempt to enforce
payment of all or any part or installment of any sum due the holder hereunder,
or if this note is placed in the hands of an attorney for collection, or if it
is collected through any legal proceedings, Maker agrees to pay all collection
costs and fees incurred by the holder, including reasonable attorneys' fees.
This note is performable in Houston, Xxxxxx County, Texas, and Maker
and each surety, guarantor, endorser and other party ever liable for payment of
any sums of money payable on this note, jointly and severally waive the right to
be sued hereon elsewhere. This note shall be governed by and construed in
accordance with the laws of the state of Texas and the applicable laws of the
United States of America.
Maker and each surety, guarantor, endorser and other party ever liable
for payment of any sums of money payable on this note jointly and severally
waive presentment and demand for payment, protest, notice of protest and non-
payment of dishonor, notice of acceleration, notice of intent to accelerate,
notice of intent to demand, diligence in collecting, and grace, and consent to
all extensions without notice for any period or periods of time and partial
payments, before or after maturity, without prejudice to the holder. Maker
acknowledges and understands that under the laws of the State of Texas, unless
waived, Maker has the right to notice of Payee's intent to accelerate the
indebtedness evidenced by this note, the right to notice of the actual
acceleration of the indebtedness evidenced by this note, and the right to
presentment of this note by Payee's demand for payment. Maker acknowledges that
it understands that it can waive these rights and by Maker's execution of this
note it agrees to waive its right to notice of intent to accelerate, its right
to notice of acceleration, and its right to presentment or other demand for
payment. The holder shall similarly have the right to deal in any way, at any
time, without one or more of the foregoing parties without notice to any other
party, and to grant any such party and extensions of time for payment of any of
said indebtedness, or to release part or all of the collateral securing this
note, or to grant any other indulgences or forbearances whatsoever, without
notice to any other party and without in any way affecting the personal
liability of any party hereunder.
Maker hereby authorizes the holder hereof to endorse on the Schedule
attached to this note or any continuation thereof, all advances made to Maker
hereunder and all payments made on account of the principal thereof, which
endorsements shall be prima facie evidence as to the outstanding principal
amount of this note; provided, however, any failure by the holder hereof to make
endorsement shall not limit or otherwise affect the obligations of Maker under
the Agreement or this note.
DRIL-QUIP, INC.
By: ______________________________
J. Xxxx Xxxxxx, Vice President
----------------
Initialled for
Identification
Page 3 of a 4 Page Note
EXHIBIT D
FORM OF NOTICE OF REVOLVING
CREDIT BORROWING
____________, 00__
XXXX XXX, XXXXX, NATIONAL ASSOCIATION
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: ____________________
Gentlemen:
The undersigned is an Authorized Financial Officer of Dril-Quip, Inc.,
a Texas corporation ("Borrower"), and as such is authorized to make and deliver
this Notice of Revolving Credit Borrowing pursuant to Section 2.04 of that
certain Credit Agreement dated March __, 1994 (as may be amended, the "Credit
Agreement"), by and among Bank One, Texas, National Association ("Lender") and
Borrower. All terms defined in the Credit Agreement shall have the same meaning
herein. Borrower hereby requests a Borrowing under the Revolving Credit Loan
from Lender in accordance with Section 2.04 of the Credit Agreement.
In connection with the foregoing and pursuant to the terms and
provisions of the Credit Agreement, the undersigned hereby certifies that:
(i) Except as disclosed in Schedule I attached hereto, the
representations and warranties contained in Article VIII of the Credit
Agreement are true and correct in all material respects at and as of
the date hereof as though made as of the date hereof.
(ii) No Default or Event of Default has occurred and is
continuing.
(iii) The amount of the Revolving Credit Loan to be made
pursuant to this request does not exceed the Revolving Credit
Available Loan Amount.
(iv) All information supplied herein is true and accurate as of
the date hereof.
BANK ONE, TEXAS, NATIONAL ASSOCIATION
_________________________
Page 2
The Borrowing Date shall be ___________________, 19__.
DRIL-QUIP, INC.
By: _______________________________
Name: _____________________________
Title: ____________________________
EXHIBIT E
---------
FORM OF NOTICE OF CREDIT ISSUANCE
---------------------------------
_____________, 00__
XXXX XXX, XXXXX, NATIONAL ASSOCIATION
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention:_______________
Gentlemen:
The undersigned is an Authorized Financial Officer of Dril-Quip, Inc.,
a Texas corporation ("Borrower"), and as such is authorized to make and deliver
this Notice of Credit Issuance pursuant to Section 2.08 of that certain Credit
Agreement dated March __, 1994 (as may be amended, the "Credit Agreement"), by
and among Bank One, Texas, National Association ("Lender") and Borrower. All
terms defined in the Credit Agreement shall have the same meaning herein.
Borrower hereby notifies Lender of the proposed issuance of a Letter of Credit,
the terms of which are fully described on Schedule I attached hereto, and the
purpose of which is fully described on Schedule II attached hereto, in
accordance with Section 2.08 of the Credit Agreement.
In connection with the foregoing and pursuant to the terms and
provisions of the Credit Agreement, the undersigned hereby certifies that:
(i) Except as disclosed in Schedule III attached hereto, the
representations and warranties contained in Article VIII of the Credit
Agreement are true and correct in all material respects at and as of
the date hereof as though made as of the date hereof.
(ii) No Default or Event of Default has occurred and is
continuing.
(iii) The amount of the Letter of Credit to be issued pursuant
to this request does not exceed the Revolving Credit Available Loan
Amount.
(iv) The amount of the Letter of Credit to be issued pursuant to
this request, together with all other outstanding Letters of Credit
does not exceed $3,000,000.00.
BANK ONE, TEXAS, NATIONAL ASSOCIATION
----------------
Page 2
(v) All information supplied herein is true and accurate as of
the date hereof.
The issuance date of the Letter of Credit shall be ___________, 19__.
DRIL-QUIP, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
EXHIBIT F
---------
FORM OF BORROWING BASE REPORT
-----------------------------
TO: BANK ONE, TEXAS, N.A.
000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention:_______________________
Gentlemen:
This Borrowing Base Report (this "Report") for the month ending
_______________, 19__, is executed and delivered by DRIL-QUIP, INC. (the
"Borrower") to BANK ONE, TEXAS, NATIONAL ASSOCIATION (the "Lender") pursuant to
that certain Credit Agreement (the "Credit Agreement") dated as of March __,
1994, among the Borrower and the Lender. All terms used herein shall have the
meanings assigned to them in the Credit Agreement.
The Borrower represents and warranties to the Lender that all
information contained herein is true, correct and complete, and that below
represent the Eligible Accounts and Eligible Inventory that qualify for purposes
of determining the Borrowing Base under the Credit Agreement. The Borrower
further represents and warrants to the Lender that attached hereto as Schedule I
is a list of the Eligible Accounts for the month ending _________________, 19__,
showing all Eligible Accounts aged in thirty-day intervals and as Schedule II is
the amount of Eligible Accounts, Eligible Inventory and calculation of the
Borrowing Base.
ACCOUNTS RECEIVABLE:
1. Total Accounts Receivable per Financial Statement $__________
2. Eligible Accounts $__________
INVENTORY:
3. Total Inventory per Financial Statements $__________
4. Eligible Inventory $__________
BORROWING BASE:
5. 80% of line 2 $__________
6. 50% of line 4 (not to exceed 60% of the
total Borrowing Base) $__________
7. Borrowing Base (line 5 plus line 6) $__________
OUTSTANDING SUM:
8. Outstanding Principal of Revolving Credit Loan
plus Amount of Open Letters of Credit Outstanding $__________
9. Amount of Any Pending Notice of Revolving Credit
Borrowing $__________
10. Amount of Any Pending Notice of Credit Issuance $__________
11. Aggregate Amount of Pending Notices (sums of lines
9 and 10) $__________
12. Outstanding Sum (line 8 plus line 11) $__________
13. Available Sum (the lesser of (i)$15,000,000.00
minus line 12, or (ii) line 7 minus line 12) $__________
The Borrower further represents and warrants to the Lender that the
representation and warranties contained in Article VIII of the Credit Agreement
(as modified, if appropriate, in accordance with Section 12.02 of the Agreement)
are true and correct in all material respects on and as of the date of this
Report as if made on and as of the date hereof, and that no Default or Event of
Default has occurred and is continuing.
Date:
---------------------
BORROWER:
DRIL-QUIP, INC.
By:
-----------------------------------
Printed Name:
-------------------------
Title:
--------------------------------
EXHIBIT G
---------
FORM OF NOTICE OF ADVANCING
---------------------------
CREDIT BORROWING
----------------
_____________, 00__
XXXX XXX, XXXXX, NATIONAL ASSOCIATION
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention:_______________
Gentlemen:
The undersigned is an Authorized Financial Officer of Dril-Quip, Inc.,
a Texas corporation ("Borrower"), and as such is authorized to make and deliver
this Notice of Advancing Credit Borrowing pursuant to Section 3.04 of that
certain Credit Agreement dated March ___, 1994 (as may be amended, the "Credit
Agreement"), by and among BANK ONE, TEXAS, NATIONAL ASSOCIATION ("Lender") and
Borrower. All terms defined in the Credit Agreement shall have the same meaning
herein. Borrower hereby requests a Borrowing under the Advancing Credit Loan
from Lender in accordance with Section 3.04 of the Credit Agreement.
In connection with the foregoing and pursuant to the terms and
provisions of the Credit Agreement, the undersigned hereby certifies that:
(i) Except as disclosed in Schedule I attached hereto, the
representations and warranties contained in Article VIII of the Credit
Agreement are true and correct in all material respects at and as of the
date hereof as though made as of the date hereof.
(ii) No Default or Event of Default has occurred and is continuing.
(iii) The amount of the Advancing Credit Loan to be made pursuant to
this request, either singularly or together with other Borrowings
previously made under Section 3.01 of the Credit Agreement does not exceed
the Advancing Credit Committed Sum.
(iv) [Proceeds from this Borrowing will be used to pay for up to
eighty-five percent (85%) of the costs of improvements to the realty
described on Schedule 3 to the Credit Agreement].
BANK ONE, TEXAS, NATIONAL ASSOCIATION
----------------
Page 2
[Proceeds from this Borrowing will be used to pay for up to sixty
percent (60%) of the cost of certain used, unrefurbished equipment].
[Proceeds from this Borrowing will be used to pay for up to eighty
percent (80%) of the cost of certain new equipment].
[Proceeds from this Borrowing will be used to pay for up to eighty
percent (80%) of the costs of certain used, refurbished equipment].
(v) [Attached hereto are copies of invoices for such materials and
work performed].
[Attached hereto are copies of invoices for such equipment purchased].
(vi) All information supplied herein is true and accurate as of the
date hereof.
The Borrowing Date shall be ___________, 19__.
DRIL-QUIP, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SCHEDULE 1
TO CREDIT AGREEMENT
BY AND BETWEEN DRIL-QUIP, INC. AND
BANK ONE, TEXAS, NATIONAL ASSOCIATION
EXISTING LIENS
--------------
Description of Property Covered Lienholder
------------------------------- ----------
1. Copier & Postage equipment Pitney Xxxxx Credit Corp.
2. Forklift trucks Citicorp Dealer Financial
3. Telephone System AT & T Credit Corp.
4. Computer equipment & software Hewlett Packard
5. Copier equipment Xxxxx Financial Corp.
SCHEDULE 2
TO CREDIT AGREEMENT
BY AND BETWEEN DRIL-QUIP, INC. AND
BANK ONE, TEXAS, NATIONAL ASSOCIATION
PERMITTED LOCATIONS
-------------------
Address Landlord
------- --------
1. 00000 Xxxxxxxxx Xxx. Not applicable
Xxxxxxx, Xxxxx 00000 Owned by Dril-Quip, Inc.
2. 0000 Xxxxx Xxxxxxxx Xxxxxxx Not applicable
Xxxxxxx, Xxxxx 00000 Owned by Dril-Quip, Inc.
3. 13501 Xxxxxx Not applicable
Xxxxxxx, Xxxxx 00000 Owned by Dril-Quip, Inc.
SCHEDULE 3
CREDIT AGREEMENT
BY AND BETWEEN DRIL-QUIP, INC.
AND
BANK ONE, TEXAS, N.A.
LEGAL DESCRIPTION OF
PROPERTY COVERED BY DEED OF TRUST
TRACT I:
All that certain 116,850 square feet of land being Lot 14 and the adjoining 90
feet of Lot 13, Replat of Faircourt Farms according to the plat thereof filed at
Volume 12, Page 72, Xxxxxx County Map Records and being more particularly
described by metes and bounds as follows:
BEGINNING at a 1/2 inch iron pipe marking the southeast corner of said Lot 13;
THENCE N 50 deg. 08 min. W - 190 feet, along the north right-of-way line of
Hempstead Road (100' wide), to a 5/8 inch iron rod for corner;
THENCE N 39 deg. 52 min. E - 615 feet to a 5/8 inch iron rod for corner;
THENCE S 50 deg. 08 min. E - 190 feet, along the south right-of-way line of
Hillmont Street (60' wide) to a 5/8 inch iron rod for corner;
THENCE S 39 deg. 52 min. W - 615 feet, along the west right-of-way line of
Raywood Boulevard (60' wide), to the POINT OF BEGINNING and containing 116,850
square feet of land, more or 1ess.
TRACT II:
Parcel I:
Tract containing all of Lots 10, 11, 30, 31 and southeast one-half of Xxx 00,
Xxxxxxxxx Xxxxx Subdivision in X. Xxxxxx Survey, Abstract 670, Xxxxxx County
Texas, said tract being more particularly described as follows:
COMMENCING at a 3/4 inch iron rod found set at the West Corner of Lot 6, same
being in the Northeast line or Hempstead Highway (U.S. 290) 100 feet wide;
THENCE North 50 deg. 08 min. West 610 feet with the Northeast right of way line
of aforesaid Hempstead Highway and Southwest line of Xxxx 0, 0, 0, 00, 00 xxx
Xxxxxxxxx one-half of Lot 12 to a 5/8 inch iron rod found set at West Corner of
Southeast one-half of Lot 12, same being on the Southeast line of Raywood
Street, 60 feet wide, to the PLACE OF BEGINNING of Tract herein described (5/8
inch iron rod being 1.0' Southwest and 4.5' Southeast of 7' fence corner);
THENCE North 39 deg. 46 min. East 615 feet with Northwest line of East one-half
of Xxx 00 xxx Xxxxxxxxx xxxx xx Xxxxxxx Xxxxxx to a 1 inch galvanized iron pipe
set for North Corner of Lot 12 and Tract herein described (1 inch iron pipe
being 9.2 feet Northeast and 1.8 feet Northwest of 7 foot fence corner);
Page 1 of 3
SCHEDULE 3 Cont.
THENCE South 50 deg. 08 min. East 150 feet with the Southwest line of Lots 28
and 29 to a 1 inch galvanized iron pipe set for corner of Tract herein
described, same being the common corner of Lots 10, 11, 29 and 30 (1 inch iron
pipe being 9.2' Northeast of 7' fence corner;
THENCE North 39 deg. 46 min. East 395 feet with the Southeast line of Lot 29,
same being the Northwest line of Lot 30, to a point for the North Corner of Lot
30 and Tract herein described, said point being 0.4 feet Northwest and 0.1 foot
Northeast of 2 inch iron corner post of new 7 foot chain link fence;
THENCE South 50 deg. 08 min. East 200 feet with the Southwest line of Leghorn
Ave. (60 feet wide), same being the Northeast lines of Lots 30 and 31, to a 1
inch galvanized iron pipe set for East Corner of Lot 31 and Tract herein
described (1 inch iron pipe being 0.5' Southwest and 0.2' Southeast of 7' fence
corner);
THENCE South 39 deg. 46 min. West 395 feet with the Southeast line of Lot 31
(passing a 5/8 inch iron rod at 394.5') to a 1 inch galvanized iron pipe set for
the South corner of Lot 31 and common corner of Lots 32, 9, and 8 (1 inch iron
pipe being 1.1' Southeast of 7' fence corner);
THENCE North 50 deg. 08 min. West 100 feet with the Northeast line of Lot 9 to a
1 inch galvanized iron pipe set for the West corner of Lot 31 (found 1 inch
galvanized iron pipe 0.2' Northeast of corner in new 7' chain link fence) (1
inch iron pipe being 5.3' Southeast and 0.3' Southwest of 7' fence corner);
THENCE South 39 deg. 46 min. West 615 feet with the Northwest line of Lot 9 to a
5/8 inch iron rod set July 3, 1984, for South corner of Lot 10, on Northeast
right of way line of Hempstead Highway, 100 feet wide, (found 5/8 inch iron rod
0.3' Southeast of corner) (5/8 inch iron rod corner being 3.7' Southeast and
4.4' Southwest of 7' fence corner);
THENCE North 50 deg. 08 min. West 250 feet (passing 3/4 inch galvanized iron
pipe at 100 feet) with the Northeast right of way line of Hempstead Highway to
the PLACE OF BEGINNING and containing 5.3432 acres.
Parcel II:
All of Lot Four (4), in Block Nine (9), in YAUPON GROVE, a subdivision in Xxxxxx
County, Texas, according to the map thereof recorded in Volume 49, Page 49 of
the Map Records of Xxxxxx County, Texas.
TRACT III:
Lot Eight (8), of FAIRCOURT FARMS SUBDIVISION, a subdivision in Xxxxxx County,
Texas, according to the map or plat thereof recorded in Volume 12, Page 72 of
the Map Records of Xxxxxx County, Texas.
TRACT IV:
Lots Thirty-Two (32) and Thirty-Three (33) of FAIRCOURT FARMS, a subdivision in
Xxxxxx County, Texas, according to the map or plat thereof recorded in Volume
12, Page 72 of the Map Records of Xxxxxx County, Texas, being more particularly
described by metes and bounds as follows:
BEGINNING at a 1/2 inch iron rod found for the Southwest corner of said Lot 33
and being in the Northwesterly right-of-way line of Wyandott Boulevard, based
on a width of 60 feet;
Page 2 of 3
SCHEDULE 3 Cont.
THENCE North 50 degrees 08 minutes West, passing at 100.00 feet the common
rear corner of said Lots 32 and 33 continuing for a total distance of 200.00
feet to a 1 inch galvanized iron pipe found for the Northwest corner of said
Lot 32;
THENCE North 39 degrees 46 minutes East, a distance of 395 feet to a 1 inch
galvanized iron pipe found for the Northeast corner of said Lot 32 and being
in the Southwesterly right-of-way line of Leghorn Avenue, based on a width of
60 feet;
THENCE South 50 degrees 08 minutes East, along the right-of-way line of
Leghorn Avenue, passing at 100.00 feet the common front corner of said Lots 32
and 33, continuing for a total distance of 105.00 feet to a 1/2 inch iron rod
set for a point of curvature to the right whose radius is 95 feet;
THENCE following said curve to the right whose radius is 95 feet, having a
central angle of 90 degrees 05 minutes 57 seconds, a distance of 149.39 feet
to a 1/2 inch iron rod set for a point of tangency and being in the
Northwesterly right-of-way line of Wyandott Boulevard;
THENCE South 39 degrees 46 minutes West, along the Northwesterly right-of-way
line of Wyandott Boulevard, a distance of 300.00 feet to the POINT OF
BEGINNING and containing 77,071 square feet of 1.7693 acres of land.
TRACT V:
That tract or parcel of land located in Xxxxxx County, Texas conveyed to Dril-
Quip, Inc. from Inex X. Xxxxxx by Special Warranty Deed recorded in the Official
Public Records of Real Property of Xxxxxx County, Texas under County Clerk's
File No. M870602.
Page 3 of 3
SCHEDULE 4
TO CREDIT AGREEMENT
BY AND BETWEEN DRIL-QUIP, INC.,
BANK ONE, TEXAS, N.A.
EXISTING LITIGATION
-------------------
None.
SCHEDULE 5
TO CREDIT AGREEMENT
BY AND BETWEEN DRIL-QUIP, INC. AND
BANK ONE, TEXAS, N.A.
DEBT
----
None, except as identified in or otherwise reflected by the most recently
prepared financial statements of Borrower which have been delivered to Lender.
SCHEDULE 6
TO CREDIT AGREEMENT
BY AND BETWEEN DRIL-QUIP, INC. AND
BANK ONE, TEXAS, N.A.
SUBSIDIARIES
------------
Subsidiaries of Dril-Quip, Inc.
-------------------------------
Name Jurisdiction % Owned
---- -------------- --------
DQE United Kingdom 100%
DQAP Singapore 100%
Dril-Quip Trade Corp. Virgin Islands 100%
PT Dril-Quip Indonesia Indonesia 80%
Subsidiaries of other Material Companies
None
SCHEDULE 7
TO CREDIT AGREEMENT
BY AND BETWEEN DRIL-QUIP, INC. AND
BANK ONE, TEXAS, N.A.
CONTRACTS
---------
With respect to P.T. Dril-Quip Indonesia ("PTDQI"), Borrower is obligated to
sell, transfer and assign a sufficient portion of its equity interest in PTDQI
to Ir. Iman Taufik, Borrower's current minority co-equity owner in PTDQI, to
bring his ownership interest in PTDQI to 51% in the 15th year following
commencement of commercial production in Indonesia. Such sale will be made at a
mutually agreed upon price or as may be determined as the then fair value by an
internationally recognized and independent firm of public accountants.
SCHEDULE 8
TO CREDIT AGREEMENT
BY AND BETWEEN DRIL-QUIP, INC. AND
BANK ONE, TEXAS, N.A.
CONSENTS
--------
None.
SCHEDULE 9
TO CREDIT AGREEMENT
BY AND BETWEEN DRIL-QUIP, INC. AND
BANK ONE, TEXAS, N.A.
LOANS TO AFFILIATES
-------------------
None, except as may be reflected in the most recently prepared financial
statements of Borrower which have been provided to Lender.
SCHEDULE 10
TO CREDIT AGREEMENT
BY AND BETWEEN DRIL-QUIP, INC. AND
BANK ONE, TEXAS, NATIONAL ASSOCIATION
PATENTS
-------
U.S. Patents
------------
Number Title Inventor
------ ----- --------
4,410,204 Connector Xxxxx X. Xxxxxxx
4,429,904 Self-Aligning Connector Xxxxx X. Xxxxxxx
4,610,467 Connector Xxxxx X. Xxxxxxx
4,648,627 Stabbing Connector Xxxxx X. Xxxxxxx
4,407,527 Self-Aligning Connector Assembly Xxxxx X. Xxxxxxx
4,522,431 Self-Aligning Connector Assembly Xxxxx X. Xxxxxxx
4,659,119 Latching Connector Xxxxx X. Xxxxxxx
4,422,507 Wellhead Apparatus Xxxxx X. Xxxxxxx
4,491,346 Apparatus for Releasably Connecting Xxxxx X. Xxxxxx
Tubular Members in End-to-End Relation
4,496,172 Subsea Wellhead Apparatus Xxxxx X. Xxxxxx
4,468,055 Wellhead Apparatus Xxxxx X. Xxxxxxx
4,509,777 Weld-On Casing Connector Xxxxx X. Xxxxxx
4,830,408 Connector Assembly Xxxxx X. Xxxxxxx
4,757,860 Wellhead Equipment Xxxxx X. Xxxxxxx
4,941,691 Tieback Connector Xxxxx X. Xxxxxxx
5,026,097 Mudline Hanger System Xxxxx X. Xxxxxxx
5,076,356 Tubing Hanger Seal Assembly Xxxxx X. Xxxxxxx
4,902,044 Wellhead Connector Xxxxx X. Xxxxxxx
4,995,464 Adjustable Sub Xxxxx Xxxxxxx
5,143,158 Tubing/Casing Annulus Valve Xxxxx Xxxxxxx
5,094,270 Double Gated Valve Xxxxx X. Xxxxxxx
5,244,038 Hydraulically Actuated Tubing Hanger Xxxxx Xxxxxxx
Running Tool
5,226,493 Clutch Type Running Tool Xxxxx Xxxxxxx
5,211,228 Diverter System Xxxxx Xxxxxxx
5,236,037 Unitized Wellhead System Xxxxx Xxxxxxx
5,287,925 Wellhead Apparatus Xxxxx Xxxxxxx
5,273,117 Subsea Wellhead Equipment Xxxxx X. Xxxxxxx
5,244,038 Hanger Running Tool Xxxxx Xxxxxxx
Schedule 10 (Continued)
PATENTS
-------
U.K. Patents
Number Title Inventor
----- ----- --------
2099945B Connector Assembly Xxxxx X. Xxxxxxx
2101700B Connector Xxxxx X. Xxxxxxx
2119466 Self-Aligning Connector Xxxxx X. Xxxxxxx
2104606B Self-Aligning Connector Assembly Xxxxx X. Xxxxxxx
2147676B Self-Aligning Connector Assembly Xxxxx X. Xxxxxxx
2152168B Latching Connector Xxxxx X. Xxxxxxx
2129894B Apparatus for Releasably Connecting Xxxxx X. Xxxxxx
Tubular Members in End-to-End Relation
2129895B Subsea Wellhead Connector Xxxxx X. Xxxxxx
8302449 Wellhead Apparatus Xxxxx X. Xxxxxxx
2161569 Connector Xxxxx X. Xxxxxxx
2153027 Stabbing Connector Xxxxx X. Xxxxxxx
2176518 Wellhead Equipment Xxxxx X. Xxxxxxx
2203775 Wellhead Equipment Xxxxx X. Xxxxxxx
2210444 Wellhead Equipment Xxxxx X. Xxxxxxx
2234794A Wellhead Connector Xxxxx X. Xxxxxxx
2262789B Subsea Wellhead Connector Xxxxx X. Xxxxxxx
2235229B Adjustable Sub Xxxxx Xxxxxxx
2233364 Tubing Hanger Seal Assembly Xxxxx X. Xxxxxxx
Schedule 10 (Continued)
TRADEMARKS
----------
Registration No.
----------------
U.S. TRADEMARKS:
----------------
"DRIL-QUIP" 1677362
"WING" LOGO 1420650
"NO-CROSS" 1387231
"QUIK-STAB" 1500169
"QUIK-THREAD" 1524168
"QUIK-LATCH" 1489018
U.K. TRADEMARKS:
----------------
"DRIL-QUIP" B1242234
"NO-CROSS" B1279493
"QUIK-STAB" B1279495
"QUIK-THREAD" B1279496
"QUIK-LATCH" B1279494
SCHEDULE 11
TO CREDIT AGREEMENT
BY AND BETWEEN DRIL-QUIP, INC. AND
BANK ONE, TEXAS, N.A.
TAXES
-----
None.
SCHEDULE 12
TO CREDIT AGREEMENT
BY AND BETWEEN DRIL-QUIP, INC. AND
BANK ONE, TEXAS, N.A.
OUTSTANDING LETTERS OF CREDIT
-----------------------------
30-Mar-94
DESCRIPTION BANK ONE ISSUE EXPIRATION NET
LOC# DATE DATE EXPOSURE
TOTAL $358,625.13
ONGC 13327 07/21/93 04/22/94 13,500.00
Hong Kong and Shanghai Banking Corp.
BRBC\SP\IMP\DBG\DS\1\(06)\93\B-4042 Sales Order 20-S-0333
XX XXXXXXX 13335 07/30/93 09/14/94 14,850.00
National Bank of Fujairah
ADCO P.O.#42974.1.01 - DQI SALES ORDER #20-10743
CONOCO NORWAY INC. 13348 08/12/93 08/31/96 271,739.13
Fokus Bank
HEIDRUN CONTRACT HEI - 6013 KOK $2,000,000
XX XXXXXXX 13345 08/16/93 09/25/94 14,355.00
National Bank of Fujairah
ADCO P.O.#43795.1.01 - DQI SALES ORDER #20-10674
XX XXXXXXX 13344 08/16/93 04/27/94 39,105.00
National Bank of Fujairah
ADCO P.O.#43795.1.01 - DQI SALES ORDER #20-10674
ONGC (Bid Bond) 13468 01/06/94 11/08/94 5,076.00
Hong Kong and Shanghai Banking Corp.
BRBC\DBG\MM\IMP\DS\A\17(85)\93\OT-269 Quote 10-H-7108
