CREDIT AND SECURITY AGREEMENT BY AND AMONG BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC., IWC SERVICES, LLC, AND WELLS FARGO BANK, NATIONAL ASSOCIATION Acting through its WELLS FARGO BUSINESS CREDIT operating division March 3, 2006
Exhibit
10.1
Execution
Copy
BY
AND AMONG
BOOTS
& XXXXX INTERNATIONAL WELL CONTROL, INC.,
IWC
SERVICES, LLC,
AND
XXXXX
FARGO BANK, NATIONAL ASSOCIATION
Acting
through its XXXXX FARGO BUSINESS CREDIT operating division
March
3, 2006
TABLE
OF CONTENTS
ARTICLE
I DEFINITIONS
|
1
|
|
Section
1.1
|
Definitions
|
1
|
Section
1.2
|
Other
Definitional Terms; Rules of Interpretation
|
21
|
ARTICLE
II AMOUNT AND TERMS OF THE CREDIT FACILITY
|
22
|
|
Section
2.1
|
Revolving
Advances
|
22
|
Section
2.2
|
Procedures
for Requesting Advances
|
22
|
Section
2.3
|
LIBOR
Rate Advances.
|
23
|
Section
2.4
|
Letters
of Credit.
|
24
|
Section
2.5
|
Special
Account
|
25
|
Section
2.6
|
Equipment
Term Advance.
|
25
|
Section
2.7
|
Payment
of Equipment Term Note
|
25
|
Section
2.8
|
Interest;
Default Interest Rate; Application of Payments; Participations;
Usury.
|
26
|
Section
2.9
|
Fees.
|
27
|
Section
2.10
|
Time
for Interest Payments; Payment on Non-Business Days; Computation
of
Interest and Fees.
|
29
|
Section
2.11
|
Lockbox
and Collateral Account; Sweep of Funds.
|
30
|
Section
2.12
|
Term
|
30
|
Section
2.13
|
Voluntary
Prepayment; Reduction of the Maximum Facility Amount; Termination
of a
Credit Facility by Borrower
|
31
|
Section
2.14
|
Mandatory
Prepayment
|
31
|
Section
2.15
|
Revolving
Advances to Pay Obligations
|
31
|
Section
2.16
|
Use
of Proceeds
|
31
|
Section
2.17
|
Liability
Records
|
32
|
ARTICLE
III SECURITY INTEREST; OCCUPANCY; SETOFF
|
32
|
|
Section
3.1
|
Grant
of Security Interest
|
32
|
Section
3.2
|
Notification
of Account Debtors and Other Obligors
|
32
|
Section
3.3
|
Assignment
of Insurance
|
32
|
Section
3.4
|
Occupancy.
|
33
|
Section
3.5
|
License
|
33
|
Section
3.6
|
Financing
Statement
|
33
|
Section
3.7
|
Setoff
|
34
|
Section
3.8
|
Collateral
|
34
|
ARTICLE
IV CONDITIONS OF LENDING
|
35
|
|
Section
4.1
|
Conditions
Precedent to the Initial Advances and Letter of Credit
|
35
|
Section
4.2
|
Conditions
Precedent to All Advances and All Issuances of a Letter of
Credit
|
38
|
ARTICLE
V REPRESENTATIONS AND WARRANTIES
|
39
|
|
Section
5.1
|
Existence
and Power; Name; Chief Executive Office; Inventory and Equipment
Locations; Federal Employer Identification Number and Organizational
Identification Number
|
39
|
-i-
Section
5.2
|
Capitalization
|
39
|
Section
5.3
|
Authorization
of Borrowing under the Loan Documents and Senior Subordinated Loan
Documents and consummation of the HWC Transactions; No Conflict as
to Law
or Agreements
|
39
|
Section
5.4
|
Legal
Agreements
|
40
|
Section
5.5
|
Subsidiaries
|
40
|
Section
5.6
|
Financial
Condition; No Adverse Change
|
40
|
Section
5.7
|
Litigation
|
40
|
Section
5.8
|
Regulation
U
|
40
|
Section
5.9
|
Taxes
|
41
|
Section
5.10
|
Titles
and Liens
|
41
|
Section
5.11
|
Intellectual
Property Rights.
|
41
|
Section
5.12
|
Plans
|
42
|
Section
5.13
|
Default
|
42
|
Section
5.14
|
Environmental
Matters.
|
42
|
Section
5.15
|
Submissions
to Lender
|
43
|
Section
5.16
|
Financing
Statements
|
43
|
Section
5.17
|
Rights
to Payment
|
43
|
Section
5.18
|
Deposit
Accounts, Tort Claims and Investment Property
|
44
|
Section
5.19
|
No
Labor Disputes
|
44
|
Section
5.20
|
Compliance
with Laws
|
44
|
Section
5.21
|
Brokers
|
44
|
Section
5.22
|
Insurance
|
44
|
Section
5.23
|
Existing
Indebtedness and Guaranties
|
44
|
Section
5.24
|
Affiliate
Agreements
|
44
|
Section
5.25
|
Investment
Company Act
|
45
|
Section
5.26
|
Public
Utility Holding Company Act
|
45
|
Section
5.27
|
Interests
in Real Property
|
45
|
Section
5.28
|
Senior
Subordinated Loan Documents and the HWC Transaction
Documents
|
45
|
Section
5.29
|
Snubbing
Units
|
45
|
Section
5.30
|
Financial
Solvency
|
46
|
Section
5.31
|
Personal
Property Evidenced by a Certificate of Title
|
46
|
ARTICLE
VI COVENANTS
|
46
|
|
Section
6.1
|
Reporting
Requirements
|
47
|
Section
6.2
|
Financial
Covenants.
|
50
|
Section
6.3
|
Permitted
Liens; Financing Statements.
|
51
|
Section
6.4
|
Indebtedness
|
52
|
Section
6.5
|
Guaranties
|
52
|
Section
6.6
|
Investments
and Subsidiaries
|
52
|
Section
6.7
|
Dividends;
Distributions and Equity
|
53
|
Section
6.8
|
Salaries
|
53
|
Section
6.9
|
Books
and Records; Collateral Examination, Inspection and
Appraisals
|
53
|
Section
6.10
|
Account
Verification
|
54
|
Section
6.11
|
Compliance
with Laws.
|
54
|
Section
6.12
|
Payment
of Taxes and Other Claims
|
55
|
Section
6.13
|
Maintenance
of Properties.
|
55
|
-ii-
Section
6.14
|
Insurance
|
55
|
Section
6.15
|
Preservation
of Existence
|
56
|
Section
6.16
|
Delivery
of Instruments; New Deposit Accounts
|
56
|
Section
6.17
|
Sale
or Transfer of Assets; Suspension of Business Operations
|
56
|
Section
6.18
|
Consolidation
and Merger; Asset Acquisitions
|
57
|
Section
6.19
|
Sale
and Leaseback
|
57
|
Section
6.20
|
Restrictions
on Nature of Business
|
57
|
Section
6.21
|
Accounting
|
58
|
Section
6.22
|
Discounts
|
58
|
Section
6.23
|
Plans
|
58
|
Section
6.24
|
Place
of Business; Name
|
58
|
Section
6.25
|
Constituent
Documents
|
58
|
Section
6.26
|
Senior
Subordinated Loan Documents, Securities Repurchase Agreement and
HWC
Transaction Documents
|
58
|
Section
6.27
|
Transactions
with Affiliates
|
59
|
Section
6.28
|
Snubbing
Units
|
59
|
Section
6.29
|
Performance
by Lender
|
59
|
ARTICLE
VII EVENTS OF DEFAULT, RIGHTS AND REMEDIES
|
60
|
|
Section
7.1
|
Events
of Default
|
60
|
Section
7.2
|
Rights
and Remedies
|
62
|
Section
7.3
|
Certain
Notices
|
63
|
ARTICLE
VIII MISCELLANEOUS
|
63
|
|
Section
8.1
|
No
Waiver; Cumulative Remedies; Compliance with Laws; No
Marshaling
|
63
|
Section
8.2
|
Amendments,
Etc
|
64
|
Section
8.3
|
Notices;
Communication of Confidential Information; Requests for
Accounting
|
64
|
Section
8.4
|
Further
Documents
|
64
|
Section
8.5
|
Costs
and Expenses
|
65
|
Section
8.6
|
Indemnity
|
65
|
Section
8.7
|
Participants
|
66
|
Section
8.8
|
Execution
in Counterparts; Telefacsimile Execution
|
66
|
Section
8.9
|
Retention
of Borrower’s Records
|
66
|
Section
8.10
|
Binding
Effect; Assignment; Complete Agreement; Sharing
Information
|
66
|
Section
8.11
|
Severability
of Provisions
|
67
|
Section
8.12
|
Headings
|
67
|
Section
8.13
|
Governing
Law; Jurisdiction, Venue; Waiver of Jury Trial
|
67
|
Section
8.14
|
Non-applicability
of Chapter 346
|
67
|
Section
8.15
|
BNC’s
and Borrower’s Waiver of Rights Under Texas Deceptive Trade Practices
Act
|
67
|
-iii-
Dated
as
of March 3, 2006
BOOTS
& XXXXX INTERNATIONAL WELL CONTROL, INC.,
a
Delaware corporation (“BNC”),
IWC
SERVICES, LLC,
a Texas
limited liability company, d/b/a Boots & Xxxxx Services and successor by
conversion from IWC Services, Inc., a Texas corporation (“IWC
Services”)
and
XXXXX
FARGO BANK,
National Association (“Lender”),
acting through its XXXXX
FARGO BUSINESS CREDIT
operating division, hereby agree as follows:
ARTICLE
I
DEFINITIONS
Section
1.1 Definitions.
Except as otherwise expressly provided in this Agreement, the following terms
shall have the meanings given them in this Section:
“Accounts”
means
all of Borrower’s accounts, as such term is defined in the UCC, including each
and every right of Borrower to the payment of money, whether such right to
payment now exists or hereafter arises, whether such right to payment arises
out
of a sale, lease or other disposition of goods or other property, out of a
rendering of services, out of a loan, out of the overpayment of taxes or other
liabilities, or otherwise arises under any contract or agreement, whether such
right to payment is created, generated or earned by Borrower or by some other
Person who subsequently transfers such Person’s interest to Borrower, whether
such right to payment is or is not already earned by performance, and howsoever
such right to payment may be evidenced, together with all other rights and
interests (including all Liens) which Borrower may at any time have by law
or
agreement against any account debtor or other obligor obligated to make any
such
payment or against any property of such account debtor or other obligor; all
including but not limited to all present and future accounts, contract rights,
loans and obligations receivable, chattel papers, bonds, notes and other debt
instruments, tax refunds and rights to payment in the nature of general
intangibles.
“Accounts
Advance Rate”
means
up to eighty-five percent (85%), or such lesser rate as Lender in its sole
discretion may deem appropriate from time to time, provided
that, as
of any date of determination, the Accounts Advance Rate shall be reduced by
one
(1) percentage point for each percentage by which Dilution is in excess of
4%.
“Advance”
means
a
Revolving Advance or the Equipment Term Advance.
“Affiliate”
or
“Affiliates”
means
any Person controlled by, controlling or under common control with Borrower
or
BNC, including any Subsidiary of Borrower or BNC. For purposes of this
definition, “control,” when used with respect to any specified Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or
otherwise.
“Agreement”
means
this Credit and Security Agreement.
“Approved
Foreign Account Debtor”
means
each of Sonatrach Division Production - Algeria, C. petrobas, ONGC, E.N.S.P.
-
Algeria, and Total E & P - Congo.
“Approved
Credit Limit”
means
the amount corresponding to the applicable Approved Foreign Account Debtor
set
forth in the table below:
Approved
Foreign Account Debtor
|
Approved
Credit Limit
|
Sonatrach
Division Production - Algeria
|
$3,000,000
|
C.
petrobas
|
$500,000
|
ONGC
|
$300,000
|
E.N.S.P.
- Algeria
|
$1,250,000
|
Total
E & P - Congo
|
$1,000,000
|
“Assumed
Maturity Date”
means,
with respect to the Equipment Term Note, the fifth anniversary of the date
of
this Agreement.
“Availability”
means
the amount, if any, by which the Borrowing Base exceeds the sum of (i) the
outstanding principal balance of the Revolving Note, and (ii) the L/C Amount.
“Bank
Guarantee”
has
the
meaning set forth in Section
6.3.
“Bankruptcy
Code”
means
Title 11 of the United States Code (11 U.S.C. § 101 et seq.), as
amended.
“BNC”
has
the
meaning ascribed to that term in the first paragraph.
“BNC
Merger”
means
the consummation of the merger of HWC Acquisition into Borrower, with Borrower
being the surviving entity.
“Book
Net Worth”
means
the aggregate of the common and preferred shareholders’ equity in BNC and its
Subsidiaries, on a consolidated basis, determined in accordance with
GAAP.
“Borrower” means
IWC
Services.
“Borrowing
Base”
means
at any time the least of:
(a) The
Maximum Line Amount;
(b) The
maximum principal amount of “Superior Debt” in effect from time to time under
the Senior Subordinated Promissory Note; or
(c) Subject
to change from time to time in Lender’s sole discretion, the sum
of:
(i) The
product of the Accounts Advance Rate times Eligible Accounts, plus
Page
2
(ii) The
lesser of (A) the product of the Unbilled Accounts Advance Rate times Eligible
Unbilled Accounts or (B) $2,500,000, less
(iii) The
Borrowing Base Reserve, less
(iv) The
VAT
Tax Reserve, less
(v) Obligations
that Borrower owes to Lender that have not yet been advanced on the Revolving
Note, and the dollar amount that Lender in its Permitted Discretion then
determines to be a reasonable determination of Borrower’s credit exposure with
respect to Xxxxx Fargo Bank Affiliate Obligations.
“Borrowing
Base Reserve”
means,
as of any date of determination, such amounts (expressed as either a specified
amount or as a percentage of a specified category or item) as Lender may from
time to time establish and adjust in reducing Availability (a) to reflect
events, conditions, contingencies or risks which, as determined by Lender in
its
sole discretion, do or may affect (i) the Collateral or its value,
(ii) the assets, business or prospects of Borrower, or (iii) the
security interests and other rights of Lender in the Collateral (including
the
enforceability, perfection and priority thereof), (b) to reflect Lender’s
judgment in its sole discretion that any collateral report or financial
information furnished by or on behalf of Borrower to Lender is or may have
been
incomplete, inaccurate or misleading in any material respect, (c) in
respect of any state of facts that Lender determines constitutes a Default
or an
Event of Default, or (d) in respect of any judgment liens appearing on current
lien and judgment search results for a Credit Party that have not been paid
in
full and released of record.
“Business
Day”
means
a
day on which the Federal Reserve Bank of New York is open for business and,
if
such day relates to a LIBOR Advance, a day on which dealings are carried on
in
the London interbank eurodollar market.
“Capital
Expenditures”
means
for a period, any expenditure of money during such period for the lease,
purchase or other acquisition of any capital asset.
“Change
of Control”
means
the
occurrence of any of the following events:
(a) Any
Person or “group” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that
a
Person will be deemed to have “beneficial ownership” of all securities that such
Person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of more than fifteen
percent (15%) of the voting power of all classes of capital stock of BNC
(however, if Oil States continues to beneficially own any of the capital stock
issued in BNC pursuant to the HWC Transactions, then Oil States shall not be
deemed a “beneficial owner” for purposes of this clause(a));
(b) IWC
Services or any other Domestic Subsidiary of BNC (other than an Inactive
Subsidiary that has merged into another Domestic Subsidiary in accordance with
this Agreement) ceases to be a wholly-owned Subsidiary of BNC;
Page
3
(c) During
any consecutive two-year period, individuals who at the beginning of such period
constituted the board of Directors of BNC (together with any new Directors
who
were appointed by Oil States pursuant to the HWC Transaction Documents or whose
election to such board of Directors, or whose nomination for election by the
Owners of BNC, was approved by a vote of two thirds of the Directors then still
in office who were either Directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the board of Directors of BNC then in office;
or
(d) Xxxxx
Xxxxxxxxxx shall cease to actively manage BNC’s and its Subsidiaries day-to-day
business activities and shall not be replaced within ninety (90) days by a
Person having senior management level experience in Borrower’s industry
acceptable to Lender.
“Collateral”
means
all of Borrower’s Accounts, Intellectual Property Rights, chattel paper and
electronic chattel paper, deposit accounts, documents, Equipment, General
Intangibles, goods, instruments, Inventory, Investment Property,
letter-of-credit rights, letters of credit, all sums on deposit in any
Collateral Account, and any items in any Lockbox or in any deposit account
associated therewith; together with (i) all substitutions and replacements
for and products of any of the foregoing; (ii) in the case of all goods,
all accessions; (iii) all accessories, attachments, parts, equipment and
repairs now or hereafter attached or affixed to or used in connection with
any
goods; (iv) all warehouse receipts, bills of lading and other documents of
title now or hereafter covering such goods; (v) all collateral subject to
the Lien of any Security Document; (vi) all proceeds of claims of Borrower
for recovery or avoidance, as the case may be, of obligations, transfers of
property, or interests in property, offsets, lawful currency or its equivalents,
and other types or kinds of property (or the value thereof) recoverable or
avoidable under Chapter 5 of the Bankruptcy Code or under other applicable
law; (vii) any money, or other assets of Borrower that now or hereafter come
into the possession, custody, or control of Lender; (viii) the Special Account
and all sums on deposit in the Special Account; (viii) proceeds of any and
all of the foregoing items; (ix) books and records of Borrower, including
all mail or electronic mail addressed to Borrower; and (x) all of the
foregoing, whether now owned or existing or hereafter acquired or arising or
in
which Borrower now has or hereafter acquires any rights.
“Collateral
Account”
means
the “Lender Account” as defined in the Wholesale Lockbox and Collection Account
Agreement.
“Collateral
Assignment of Transaction Agreement”
means
that certain Collateral Assignment of Transaction Agreement executed as of
the
date hereof by BNC, HWC Acquisition and HWC Merger Corporation in favor of
Lender and consented to by Seller.
“Collateral
Assignment of Securities Repurchase Agreement”
means
that certain Collateral Assignment of Securities Repurchase Agreement executed
as of the date hereof by BNC in favor of Lender and consented to by Halliburton
Energy Services, Inc.
“Commitment”
means
Lender’s commitment to make Advances to, and to issue Letters of Credit for the
account of, Borrower pursuant to this Agreement.
“Constituent
Documents”
means,
with respect to any Person, as applicable, such Person’s certificate of
incorporation, articles of incorporation, by-laws, certificate of formation,
articles of organization, limited liability company agreement, management
agreement, operating agreement, shareholder agreement, partnership agreement
or
similar document or agreement governing such Person’s existence, organization or
management or concerning disposition of ownership interests of such Person
or
voting rights among such Person’s owners.
Page
4
“Credit
Facility”
means
the credit facility under which Revolving Advances, the Equipment Advance and
Letters of Credit may be made available to Borrower by Lender under Article
II.
“Credit
Party”
means
BNC, Borrower or any BNC’s or Borrower’s Subsidiaries, and “Credit
Parties”
means,
collectively, BNC, Borrower and those Subsidiaries.
“Current
Maturities of Long Term Debt”
means
the amount of BNC’s and its Subsidiaries’ current maturities of long-term debt
on a consolidated basis determined in accordance with GAAP.
“Cut-off
Time”
means
11:00 a.m. San Antonio, Texas time.
“Debt”
means
of a Person as of a given date, all items of indebtedness or liability which
in
accordance with GAAP would be included in determining total liabilities as
shown
on the liabilities side of a balance sheet for such Person and shall also
include the aggregate payments required to be made by such Person at any time
under any lease that is considered a capitalized lease under GAAP.
“Debt
Service Coverage Ratio”
means,
at any time of determination, the ratio of (i) the sum of (A) EBITDA
of BNC and its Subsidiaries on a consolidated basis for the twelve (12) calendar
months preceding the determination date (including the calendar month in which
the determination date occurs) minus (B) Unfinanced Capital Expenditures of
BNC and its Subsidiaries on a consolidated basis for the twelve (12) calendar
months preceding the determination date (including the calendar month in which
the determination date occurs) to (ii) (a) the Interest Expense for the
twelve (12) calendar months preceding the determination date (including the
calendar month in which the determination date occurs) plus (b) the Current
Maturities of Long Term Debt of BNC and its Subsidiaries as of the determination
date (provided
the
foregoing clause (ii)(b) shall not include for purposes of this definition
the
final principal payment due to Lender on Maturity Date for the repayment of
outstanding principal amount of the Equipment Advance).
“Default”
means
an event that, with giving of notice or passage of time or both, would
constitute an Event of Default.
“Default
Period”
means
any period of time beginning on the day a Default or Event of Default occurs
and
ending on the date identified by Lender in writing as the date that such Default
or Event of Default has been cured or waived.
“Default
Rate”
means,
with respect to a Note, an annual interest rate in effect during a Default
Period or following the Termination Date, which interest rate shall be equal
to
the lesser of (a) three percent (3%) over the applicable Floating Rate, or
LIBOR Rate, as the case may be, and (b) the maximum lawful rate of interest,
as
each rate may change from time to time.
Page
5
“Dilution”
means,
as of any date of determination, a percentage, based upon the experience of
the
trailing twelve (12) month period ending on the date of determination, which
is
the result of dividing (a) actual bad debt write-downs, Receivables
Discounts, advertising allowances, credits, or other dilutive items with respect
to the Accounts as determined by Lender in its sole discretion during such
period, by (b) Borrower’s net sales during such period (excluding
extraordinary items) plus the amount of clause (a).
“Director”
means
a
board member of a Person.
“Distribution”
means,
with respect to any Indebtedness, debt, liability or obligation, (a) any payment
or distribution by any Person of cash, securities or other property, by set-off,
off set or otherwise, on account of such Indebtedness, debt, liability or
obligation, (b) any redemption, purchase or other acquisition of such
Indebtedness or obligation by any Person or (c) the granting of any Lien or
security interest to or for the benefit of the holders of such Indebtedness
or
obligation in or upon any property of any Person.
“Domestic
Subsidiary”
means
any Subsidiary of BNC or Borrower organized under the laws of the United States
or any political subdivision thereof.
“EBITDA”
shall
mean Net Income for the applicable period plus, to the extent deducted in
calculating Net Income, Interest Expense, taxes paid, option expenses as a
result of Financial Accounting Standards 123R, depreciation and amortization,
all as allocable to such period and as determined in accordance with GAAP and
without duplication.
“ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended from time to
time.
“ERISA
Affiliate”
means
any trade or business (whether or not incorporated) that is a member of a group
which includes a Credit Party and which is treated as a single employer under
Section 414 of the IRC.
“Eligible
Accounts”
means
all unpaid Accounts arising from the sale or lease of goods or the performance
of services, net of any credits, but excluding any such Accounts having any
of
the following characteristics:
(i)
That
portion of Accounts unpaid 90 days or more after the invoice date;
(ii) That
portion of Accounts related to goods or services with respect to which a Credit
Party has received notice of a claim or dispute, which a Lien has been filed
against the account debtor’s property on behalf of a subcontractor who provided
goods or performed services for Borrower, which are subject to a claim of offset
or a contra account, or which reflect a reasonable reserve for warranty claims
or returns;
(iii) That
portion of Accounts not yet earned by the final delivery of goods or rendition
of services, as applicable, by Borrower to the customer, including progress
xxxxxxxx, and that portion of Accounts for which an invoice has not been sent
to
the applicable account debtor;
Page
6
(iv) Accounts
constituting (i) proceeds of copyrightable material unless such
copyrightable material shall have been registered with the United States
Copyright Office, or (ii) proceeds of patentable inventions unless such
patentable inventions have been registered with the United States Patent and
Trademark Office;
(v) Accounts
not covered by clause (vii) below owed by any unit of government, whether
foreign or domestic (provided,
however,
that
there shall be included in Eligible Accounts that portion of Accounts owed
by
such units of government for which Borrower has provided evidence satisfactory
to Lender that (A) Lender has a first priority perfected security interest
and (B) such Accounts may be enforced by Lender directly against such unit
of government under all applicable laws);
(vi) Accounts
denominated in any currency other than United States dollars;
(vii) Accounts
owed by an account debtor located outside the United States (including, without
limitation, an Approved Foreign Account Debtor) which (i) are not (A) backed
by
a transferable bank letter of credit naming Lender as beneficiary or assigned
to
Lender, in Lender’s possession or control, and with respect to which a control
agreement concerning the letter-of-credit rights is in effect, and acceptable
to
Lender in all respects, in its sole discretion, or (B) covered by a foreign
receivables insurance policy acceptable to Lender in its sole discretion, and
(ii) do not exceed the credit limit for such account debtor established by
Lender in its sole discretion (or with respect to an Approved Foreign Account
Debtor, the applicable Approved Credit Limit);
(viii) Accounts
owed by an account debtor that is insolvent, the subject of bankruptcy
proceedings or has gone out of business, or if Lender believes, in its sole
discretion, that collection of such Account is insecure or that such Account
may
not be paid by reason of the customer’s financial inability to pay;
(ix) Accounts
owed by an Owner of BNC (having “beneficial ownership” of more than five percent
(5%) of the voting power of all classes of capital stock of BNC on a
fully-diluted basis), Subsidiary, Affiliate, Officer or employee of
Borrower;
(x) Accounts
not subject to a duly perfected security interest in Lender’s favor or which are
subject to any Lien in favor of any Person other than Lender;
(xi) That
portion of Accounts that has been restructured, extended, amended or
modified;
(xii) That
portion of Accounts that constitutes advertising charges, shipping or freight
charges, contract retainage amounts, bonded receivables, finance charges,
service charges or sales or excise taxes;
(xiii) Accounts
with respect to which Borrower has not instructed the account debtor to pay
the
Account to the Collateral Account;
(xiv) Accounts
owed by debtors located in countries not acceptable to Lender in its sole
discretion;
Page
7
(xv) Accounts
owed by an account debtor (other than by an Approved Foreign Account Debtor),
regardless of whether otherwise eligible, to the extent that the aggregate
balance of such Accounts exceeds 15% of the aggregate amount of all Accounts;
(xvi) Accounts
owed by an Approved Foreign Account Debtor to the extent the aggregate balance
of such Accounts exceeds its applicable Approved Credit Limit;
(xvii) Accounts
owed by an account debtor, regardless of whether otherwise eligible, if 35%
or
more of the total amount of Accounts due from such account debtor is ineligible
under clauses (i), (ii), or (x) above;
(xviii) That
portion of Accounts attributable to work performed at Borrower’s request by or
on behalf of a sub-contractor or another Person who is not an employee of
Borrower to the extent the sub-contractor or other Person has not received
payment in full for that work; and
(xix) Accounts,
or portions thereof, otherwise deemed ineligible by Lender in its sole
discretion.
“Eligible
Equipment”
means
the Equipment that Lender, in its sole discretion, shall not deem ineligible,
based on such considerations as Lender may deem appropriate, including whether
the Equipment is subject to a perfected, first priority security interest in
favor of Lender and no other Lien (other than a Permitted Lien). In addition,
the Equipment shall not constitute Eligible Equipment if the Equipment
(i) is a vehicle or other rolling stock, (ii) does not conform in all
material respects to all standards imposed by any governmental body which has
regulatory authority over such goods or the use or sale thereof, (iii) is
located in a jurisdiction not acceptable to Lender, (iv) is subject to any
agreement that limits, conditions or restricts Borrower’s or Lender’s right to
sell or otherwise dispose of such Equipment, unless Lender is a party to such
agreement; (v) is situated at a location not owned by Borrower, unless the
owner or occupier of such location has executed in favor of Lender a lien waiver
and access agreement or is a customer and has entered into a contract with
Borrower that has been collaterally assigned to Lender, in each case acceptable
to Lender in its sole discretion, (vi) is covered by a negotiable document
of title, (vii) is not covered by insurance to the extent required under
this Agreement, or (viii) is not operable, has not been refurbished or is
not otherwise in good working condition.
“Eligible
Unbilled Accounts”
means
all Accounts that would otherwise constitute Eligible Accounts but for Borrower
not yet having received approval from the applicable governmental authority
as
to the work and services performed that gives rise to the Account. However,
if
(i) Borrower has received the approval, (ii) the governmental authority denies
the approval or (iii) Borrower does not unconditionally receive the approval
within ninety (90) days of the creation of the Account, then the Account shall
not constitute an Eligible Unbilled Account.
“Environmental
Law”
means
any federal, state, local or other governmental statute, regulation, law or
ordinance dealing with the protection of human health and the
environment.
“Equipment”
means
all of Borrower’s equipment, as such term is defined in the UCC, whether now
owned or hereafter acquired, including all present and future machinery,
vehicles, furniture, fixtures, manufacturing equipment, shop equipment, office
and record-keeping equipment, parts, tools, supplies, and including specifically
the goods described in any equipment schedule or list herewith or hereafter
furnished to Lender by Borrower. Without limiting the foregoing, each Snubbing
Unit shall constitute Equipment.
Page
8
“Equipment
Term Advance” has
the
meaning set forth in Section 2.6(a).
“Equipment
Term Note”
means
Borrower’s promissory note, payable to the order of Lender in substantially the
form of Exhibit
B
hereto,
as the same may be renewed and amended from time to time, and all replacements
thereto.
“Equity
Interests”
shall
mean, with respect to any Person, its equity ownership interests, its common
stock and any other capital stock or other equity ownership units of such Person
authorized from time to time, and any other shares, options, interests,
participations or other equivalents (however designated) of or in such Person,
whether voting or nonvoting, including, without limitation, common stock,
options, warrants, preferred stock, phantom stock, membership units (common
or
preferred), stock appreciation rights, membership unit appreciation rights,
convertible notes or debentures, stock purchase rights, membership unit purchase
rights and all securities convertible, exercisable or exchangeable, in whole
or
in part, into any one or more of the foregoing.
“Event
of Default”
has
the
meaning set forth in Section
7.1.
“Financial
Covenants”
means,
collectively, the covenants set forth in Section
6.2.
“Floating
Rate”
means
(i) with respect to Floating Rate Advances evidenced by the Revolving Note,
an annual interest rate equal the lesser of (x) to the sum of the Prime
Rate plus the applicable Revolving Loan Margin, and (y) the maximum lawful
rate of interest, and (ii) with respect to the Floating Rate Advances
evidenced by the Equipment Term Note, an annual interest rate equal to the
lesser of (x) the sum of the Prime Rate plus the applicable Term Loan
Margin, and (y) the maximum lawful rate of interest, which interest
rates shall, in each case, change when and as the Prime Rate, or the maximum
lawful rate, as applicable, changes.
“Floating
Rate Advance”
means
each Advance for which Borrower has requested that it bear interest by reference
to the Prime Rate in accordance with Article
II.
“Foreign
Subsidiary”
means
any Subsidiary that is not organized under the laws of the United States or
any
political subdivision thereof.
“Funding
Date”
has
the
meaning set forth in Section
2.1.
“GAAP”
means
generally accepted accounting principles, applied on a basis consistent with
the
accounting practices applied in the financial statements described in
Section
5.6.
“General
Intangibles”
means
all of Borrower’s general intangibles, as such term is defined in the UCC,
whether now owned or hereafter acquired, including all present and future
Intellectual Property Rights, customer or supplier lists and contracts, manuals,
operating instructions, permits, franchises, the right to use Borrower’s name,
and the goodwill of Borrower’s business.
Page
9
“Guaranty”
means
each unconditional continuing guaranty or unconditional continuing guaranty
by
BNC and each Domestic Subsidiary (other than Borrower) (each being a
“Guarantor”)
in
favor of the Lender (collectively, the “Guaranties”).
“Hazardous
Substances”
means
pollutants, contaminants, hazardous substances, hazardous wastes, petroleum
and
fractions thereof, and all other chemicals, wastes, substances and materials
listed in, regulated by or identified in any Environmental Law.
“HWC”
means
Hydraulic Well Control, LLC, a Delaware limited liability company.
“HWC
Acquisition”
means
HWC Acquisition, LLC, a Delaware limited liability company.
“HWC
Limited”
means
HWC Limited, a Louisiana corporation.
“HWC
Merger Corporation”
means
HWC Merger Corporation, a Delaware corporation.
“HWC
Transactions”
means,
collectively, the transactions contemplated by the Transaction Agreement,
including (i) the transfer of all issued and outstanding capital stock in HWCES
and HWC Limited to HWC Acquisition, (ii) the merger of HWC Merger Corporation
into HWC, with HWC being the surviving entity and thereafter, the merger of
HWC
into HWC Acquisition, HWC Acquisition being the surviving entity, and (iii)
the
making of the Senior Subordinated Loans.
“HWC
Transaction Documents”
means
all documents executed or delivered in connection with the HWC
Transactions.
“HWCES”
means
HWCES International, a Cayman Island corporation.
“Inactive
Subsidiary”
means
each of Boots & Xxxxx Special Services, Inc., a Texas corporation, Elmagco,
Inc., a Delaware corporation, Hell Fighters, Inc., a Texas corporation and
IWC
Engineering, Inc., a Texas corporation, each of which has no current business
operations but if any such Person commences business activity in the future,
it
shall cease to be an “Inactive Subsidiary”.
“Indebtedness”
has
the
meaning set forth in Section
6.4.
“Indemnified
Liabilities”
has
the
meaning set forth in Section
8.6.
“Indemnitees”
has
the
meaning set forth in Section
8.6.
“IRC”
means
the Internal Revenue Code of 1986, as amended from time to time.
“Infringement”
or
“Infringing”
when
used with respect to Intellectual Property Rights means any infringement or
other violation of Intellectual Property Rights.
“Intellectual
Property Rights”
means
all actual or prospective rights arising in connection with any intellectual
property or other proprietary rights, including all rights arising in connection
with copyrights, patents, service marks, trade dress, trade secrets, trademarks,
trade names or mask works.
Page
10
“Interest
Expense”
means
BNC’s and its Subsidiaries’ total gross interest expense on a consolidated basis
during the applicable period (excluding interest income), and shall in any
event
include (i) interest expensed (whether or not paid) on all Debt,
(ii) the amortization of debt discounts, (iii) the amortization of all
fees payable in connection with the incurrence of Debt to the extent included
in
interest expense, and (iv) the portion of any capitalized lease obligation
allocable to interest expense.
“Interest
Period”
means
the period that commences on (and includes) the Business Day on which either
a
LIBOR Rate Advance is made or continued pursuant to Sections 2.2(a)
or
2.3(b),
or on
which a Floating Rate Advance is converted to a LIBOR Rate Advance pursuant
to
Section
2.3(a),
and
ending on (but excluding) the Business Day numerically corresponding to such
date that is one, two, three, six, or twelve months thereafter as designated
by
Borrower, during which period all or a portion of the outstanding principal
balance of the LIBOR Rate Advance shall bear interest determined in relation
to
LIBOR; provided,
however,
that:
(a) No
Interest Period may be selected for an Advance for a principal amount less
than
One Million Dollars ($1,000,000), and no more than six (6) different
Interest Periods may be outstanding at any one time;
(b) If
an
Interest Period would otherwise end on a day which is not a Business Day, then
the Interest Period shall end on the next Business Day thereafter, unless that
Business Day is the first Business Day of a month, in which case the Interest
Period shall end on the last Business Day of the preceding month;
(c) No
Interest Period applicable to a Revolving Advance may end later than the
Maturity Date; and
(d) In
no
event shall Borrower select Interest Periods with respect to Advances that,
in
the aggregate, would require payment of a contracted funds breakage fee under
Section
2.9(g)
in order
to make required principal payments.
“Interest
Payment Date”
has
the
meaning set forth in Section
2.10(a).
“Inventory”
means
all of Borrower’s inventory, as such term is defined in the UCC, whether now
owned or hereafter acquired, whether consisting of whole goods, spare or
maintenance parts or components, supplies or materials, whether acquired, held
or furnished for sale, for lease or under service contracts or for manufacture
or processing, and wherever located.
“Investment
Property”
means
all of Borrower’s investment property, as such term is defined in the UCC,
whether now owned or hereafter acquired, including but not limited to all
securities, security entitlements, securities accounts, commodity contracts,
commodity accounts, stocks, bonds, mutual fund shares, money market shares
and
U.S. Government securities.
“IWC
Services”
has
the
meaning ascribed to that term in the first paragraph.
Page
11
“L/C
Amount”
means
the sum of (i) the aggregate face amount of any issued and outstanding Letters
of Credit and (ii) the unpaid amount of the Obligation of
Reimbursement.
“L/C
Application”
means
an application for the issuance of standby letters of credit pursuant to the
terms of a Standby Letter of Credit Agreement, in form acceptable to Lender.
“Letter
of Credit”
is
defined in Section
2.4(a).
“LIBOR”
means
the rate per annum (rounded upward, if necessary, to the nearest whole 1/8
of
1%) determined pursuant to the following formula:
LIBOR
=
|
Base
LIBOR
|
||
100%
- LIBOR Reserve Percentage
|
(i) “Base
LIBOR”
means
the rate per annum for United States dollar deposits quoted by Lender as the
Inter-Bank Market Offered Rate, with the understanding that such rate is quoted
by Lender for the purpose of calculating effective rates of interest for loans
making reference thereto, on the first day of a Interest Period for delivery
of
funds on said date for a period of time approximately equal to the number of
days in such Interest Period and in an amount approximately equal to the
principal amount to which such Interest Period applies. Borrower understands
and
agrees that Lender may base its quotation of the Inter-Bank Market Offered
Rate
upon such offers or other market indicators of the Inter-Bank Market as Lender
in its discretion deems appropriate including, but not limited to, the rate
offered for U.S. dollar deposits on the London Inter-Bank Market.
(ii) “LIBOR
Reserve Percentage”
means
the reserve percentage prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for “Eurocurrency Liabilities” (as defined in
Regulation D of the Federal Reserve Board, as amended), adjusted by Lender
by a
commensurate amount for expected changes in such reserve percentage during
the
applicable Interest Period.
“LIBOR
Rate”
means
(i) with respect to LIBOR Rate Advances evidenced by the Revolving Note, an
annual interest rate equal the lesser of (x) to the sum of the LIBOR plus
the applicable Revolving Loan Margin, and (y) the maximum lawful rate of
interest, and (ii) with respect to the LIBOR Rate Advances evidenced by the
Equipment Term Note, an annual interest rate equal to the lesser of (x) the
sum of the LIBOR plus the applicable Term Loan Margin, and (y) the maximum
lawful rate of interest.
“LIBOR
Rate Advance”
means
an Advance for which Borrower has requested that it bear interest by reference
to LIBOR in accordance with Article
II.
“Licensed
Intellectual Property”
has
the
meaning as set forth in Section
5.11(c).
“Lien”
means
any security interest, mortgage, deed of trust, pledge, lien, charge,
encumbrance, title retention agreement or analogous instrument or device,
including the interest of each lessor under any capitalized lease and the
interest of any bondsman under any payment or performance bond, in, of or on
any
assets or properties of a Person, whether now owned or subsequently acquired
and
whether arising by agreement or operation of law.
Page
12
“Loan
Documents”
means
this Agreement, the Notes, any L/C Applications, the Guaranties, the
Subordination Agreement, the Security Documents, and the Post-Closing Agreement,
together with every other agreement, note, document, contract or instrument
to
which Borrower now or in the future may be a party and which is required by
Lender, as all of those documents may be amended, restated or extended from
time
to time.
“Lockbox”
means
“Lockbox” as defined in the Wholesale Lockbox and Collection Account
Agreement.
“Material
Adverse Effect”
means
any
of the following:
(i) A
material adverse effect on the business, operations, results of operations,
prospects, assets, liabilities or financial condition of a Credit Party other
than a Inactive Subsidiary;
(ii) A
material adverse effect on the ability of a Credit Party to perform its
obligations under the Loan Documents;
(iii) A
material adverse effect on the ability of Lender to enforce the Obligations
or
to realize the intended benefits of the Security Documents, including a material
adverse effect on the validity or enforceability of any Loan Document, or on
the
status, existence, perfection, priority (subject to Permitted Liens) or
enforceability of any Lien securing payment or performance of the Obligations;
or
(iv) Any
claim
against a Credit Party or threat of litigation which if determined adversely
to
a Credit Party would be likely to cause such Credit Party to be liable to pay
an
amount exceeding $250,000 in excess of any applicable insurance coverage and
the
applicable deductible for that coverage or would result in the occurrence of
an
event described in clauses (i), (ii) and (iii) above.
“Maturity
Date”
means
the Renewal Date, or any anniversary thereof as provided in Section
2.12
hereof.
“Maximum
Facility Amount”
means
$20,000,000.
“Maximum
Line Amount”
means
$10,300,000 unless this amount is reduced pursuant to Sections
2.9(f)
and
(g)
and
2.13,
in
which event it means such lower amount.
“Mobile
Snubbing Units”
shall
mean Snubbing Units and Snubbing Unit Accessories that are attached or affixed
to, or comprise an integral part of a vehicle, trailer or carrier.
“Multiemployer
Plan”
means
a
multiemployer plan (as defined in Section 4001(a)(3) of ERISA) to which a Credit
Party or any ERISA Affiliate contributes or is obligated to
contribute.
Page
13
“Net
Cash Proceeds”
means
in connection with any asset sale, the cash proceeds (including any cash
payments received by way of deferred payment whether pursuant to a note,
installment receivable or otherwise, but only as and when actually received)
from such asset sale, net of (i) attorneys’ fees, accountants’ fees,
investment banking fees, brokerage commissions and amounts required to be
applied to the repayment of any portion of the Debt secured by a Lien not
prohibited hereunder on the asset which is the subject of such sale, and
(ii) taxes paid or reasonably estimated to be payable as a result of such
asset sale.
“Net
Forced Liquidation Value”
means
a
professional opinion of the estimated most probable Net Cash Proceeds which
could typically be realized at a properly advertised and conducted public
auction sale without reserve, held under forced sale conditions and under
economic trends current within 60 days of the appraisal. The opinion may
consider physical location, difficulty of removal, adaptability, specialization,
marketability, physical condition, overall appearance and psychological
appeal.
“Net
Income”
means
for the applicable period after-tax net income from continuing operations,
including extraordinary losses but excluding extraordinary gains, all as
determined in accordance with GAAP.
“Net
Orderly Liquidation Value”
means
a
professional opinion of the estimated most probable Net Cash Proceeds which
could typically be realized at a properly advertised and professionally managed
liquidation sale, conducted under orderly sale conditions for an extended period
of time (usually six to nine months), under the economic trends existing at
the
time of the appraisal.
“Note”
means
the Revolving Note or the Equipment Term Note, and “Notes”
means
the Revolving Note and the Equipment Term Note.
“Notice
of Non-Renewal”
has
the
meaning set forth in Section
2.12.
“Obligation
of Reimbursement”
means
the obligation of Borrower to reimburse Lender pursuant to the terms of the
Standby Letter of Credit Agreement and
any
applicable L/C Application.
“Obligations”
means
each Note, the Obligation of Reimbursement and each and every other debt,
liability and obligation of every type and description which a Credit Party
may
now or at any time hereafter owe to Lender, whether such debt, liability or
obligation now exists or is hereafter created or incurred, whether it arises
in
a transaction involving Lender alone or in a transaction involving other
creditors of a Credit Party, and whether it is direct or indirect, due or to
become due, absolute or contingent, primary or secondary, liquidated or
unliquidated, or sole, joint, several or joint and several, and including all
indebtedness of a Credit Party arising under any Loan Document or guaranty
between a Credit Party and Lender, whether now in effect or subsequently entered
into, and all Xxxxx Fargo Bank Affiliate Obligations.
“Officer”
means
an officer of Borrower.
“Offshore”
means
located on or over lands that constitute the Outer Continental Shelf of the
United States of America.
Page
14
“OFAC”
has
the
meaning set forth in Section
6.11(c).
“Oil
States”
means
Oil States International, Inc., a Delaware corporation.
“Overadvance”
means
the amount, if any, by which the sum of (i) outstanding principal balance of
the
Revolving Note and (ii) the L/C Amount, is in excess of the then-existing
Borrowing Base.
“Owned
Intellectual Property”
has
the
meaning set forth in Section
5.11(a).
“Owner”
means
with respect to a Person, each Person having legal or beneficial title to an
ownership interest in the subject Person or a right to acquire such an
interest.
“Patent
and Trademark Security Agreement”
means
each and every Patent and Trademark Security Agreement now or hereafter executed
by a Credit Party in favor of Lender dated the same date as this
Agreement.
“Pension
Plan”
means
a
pension plan (as defined in Section 3(2) of ERISA) maintained for employees
of a
Credit Party or any ERISA Affiliate and covered by Title IV of
ERISA.
“Permitted
Discretion”
means
a
determination or judgment made in good faith in the exercise of reasonable
(from
the perspective of a secured lender) credit or business judgment.
“Permitted
Lien”
and
“Permitted
Liens”
have
the meanings set forth in Section
6.3(a).
“Permitted
Subordinated Debt Payments”
has
the
meaning set forth in the Senior Subordinated Promissory Notes.
“Person”
means
any individual, corporation, partnership, joint venture, limited liability
company, association, joint-stock company, trust, unincorporated organization
or
government or any agency or political subdivision thereof.
“Plan”
means
an employee benefit plan (as defined in Section 3(3) of ERISA) maintained for
employees of a Credit Party or any ERISA Affiliate.
“Pledge
Agreement”
means,
collectively, each pledge agreement executed by BNC, Borrower and each of BNC’s
other Domestic Subsidiaries in favor of Lender with respect to the pledge of
their respective Equity Interests in each Subsidiary (other than Boots &
Xxxxx/IWC de Venezuela, S.A., a Venezuelan corporation).
“Post-Closing
Agreement”
means
that certain Agreement Regarding Post-Closing Matters, dated as of the date
hereof, entered into between Borrower and Lender.
“Premises”
means
all locations where Borrower conducts its business or has any rights of
possession, including the locations legally described in Exhibit
D
attached
hereto.
“Prime
Rate”
means
at any time the rate of interest most recently announced by Lender at its
principal office as its Prime Rate, with the understanding that the Prime Rate
is one of Lender’s base rates (but not necessarily its best rate), and serves as
the basis upon which effective rates of interest are calculated for those loans
making reference thereto, and is evidenced by the recording thereof in such
internal publication or publications as Lender may designate. Each change in
the
rate of interest shall become effective on the date each Prime Rate change
is
announced by Lender.
Page
15
“Rate
Management Transaction”
means
any transaction (including an agreement with respect thereto) now existing
or
hereafter entered by a Credit Party which is a rate swap, basis swap, forward
rate transaction, commodity swap, commodity option, equity or equity index
swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
forward transaction, currency swap transaction, cross-currency rate swap
transaction, currency option or any other similar transaction (including any
option with respect to any of these transactions) or any combination thereof,
whether linked to one or more interest rates, foreign currencies, commodity
prices, equity prices or other financial measures.
“Receivables
Discount”
means
any credit issued as a result of equipment downtime or delays attributable
to
workmanship or in settlement of disputed invoice amounts, but shall not include
any trade discounts issued in association with bid proposals or issued as
incentives for payment terms or other inducements.
“Registration
Rights Agreement”
means
that certain Registration Rights Agreement dated as of the date hereof between
BNC and Seller.
“Reportable
Event”
means
a
reportable event (as defined in Section 4043 of ERISA), other than an event
for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the Pension Benefit Guaranty Corporation.
“Renewal
Date”
has
the
meaning set forth in Section
2.12.
“Revolving
Advance”
has
the
meaning set forth in Section
2.1.
“Revolving
Loan Margin”
means,
from the date hereof until the date of the first adjustment described below,
the
rate per annum applicable to Level 1 as reflected on the grid below, and
thereafter, a rate per annum determined by reference to the following
grid:
Level
|
Senior
Debt to EBITDA Ratio
|
Revolving
Loan
Margin
for
LIBOR
Rate Advances
|
Revolving
Loan
Margin
for Floating Rate
Advances
|
1
|
Less
than or equal to 1.50 to 1.00
|
2.50%
|
0.00%
|
2
|
Greater
than or equal to 1.51 to 1.00 but less than or equal to 2.00 to
1.00
|
2.75%
|
0.50%
|
3
|
Greater
than or equal to 2.01 to 1.00
|
3.00%
|
1.00%
|
Page
16
Adjustments,
if any, in the applicable Revolving Loan Margin shall be implemented quarterly,
on a prospective basis, as of the first day of the fiscal quarter following
the
date of delivery to Lender of the unaudited or annual audited (as applicable)
financial statements covering the fiscal quarter then ended evidencing the
need
for an adjustment, commencing with the financial statements for the period
ending March 31, 2006. Failure to timely deliver such financial statements
shall, in addition to any other remedy provided for in this Agreement
(including, without limitation, imposing the Default Rate), result in an
increase in the applicable Revolving Loan Margin to the highest level set forth
in the foregoing grid, until the first day of the first fiscal quarter following
the delivery of those financial statements demonstrating that such an increase
is not required.
If
amended or restated financial statements change the previously calculated
Revolving Loan Margin, Lender may reduce or increase the Revolving Loan Margin
from the date of receipt of such amended or restated financial statements,
to
the beginning of the appropriate fiscal quarter to which the restated statements
relate or to the beginning of the fiscal quarter in which any Event of Default
has occurred, as Lender in its sole discretion deems appropriate.
“Revolving
Note”
means
Borrower’s revolving promissory note, payable to the order of Lender in
substantially the form of Exhibit
A
hereto,
as same may be renewed and amended from time to time, and all replacements
thereto.
“Securities
Repurchase Agreement”
means
the Amended and Restated Securities Repurchase and Waiver Agreement, dated
as of
February 28, 2006, entered into between BNC and Halliburton Energy Services,
Inc.
“Security
Agreement”
means,
collectively, each security agreement executed by BNC and each Domestic
Subsidiary (other than Borrower) in favor of Lender.
“Security
Documents”
means
this Agreement, the Pledge Agreement, the Wholesale Lockbox and Collection
Account Agreement, the Security Agreement, the Patent and Trademark Security
Agreement, and
any
other document delivered to Lender from time to time to secure the
Obligations.
“Security
Interest”
has
the
meaning set forth in Section
3.1.
“Seller”
means
HWC Energy Services, Inc., a Delaware corporation.
“Senior
Debt to EBITDA Ratio”
means,
as of any date of determination, the ratio of (i) the then outstanding
principal balance of the Notes, to (ii) EBITDA for BNC and its Subsidiaries
on a consolidated basis for twelve (12) calendar months then ended on the
determination date; provided,
however,
that
for purposes of calculating the Senior Debt to EBITDA Ratio through and
including the fiscal quarter ending September 30, 2006, (a) EBITDA arising
for
the fiscal quarter ending March 31, 2006 shall be an amount equal to the amount
of EBITDA for the first fiscal quarter for the quarter then ended multiplied
by
four, (b) EBITDA arising for the fiscal quarter ending June 30, 2006 shall
be an
amount equal to EBITDA for the six months then ended multiplied by two, and
(c)
EBITDA arising for the fiscal quarter ending September 30, 2006 shall be an
amount equal to EBITDA for the nine months then ended divided by three and
multiplied by four.
Page
17
“Senior
Subordinated Guarantees”
means,
collectively, all guarantees made by a Domestic Subsidiary of BNC of the Senior
Subordinated Loans, as presently in effect and without giving effect to any
amendment thereto.
“Senior
Subordinated Loans”
means,
collectively, (i) the $10,000,000 unsecured, subordinate purchase money loan
made by Seller to BNC pursuant to the Transaction Agreement, and (ii) the
$5,000,000 unsecured, subordinate purchase money loan made by Seller to BNC
pursuant to the Transaction Agreement, as the principal balance of either note
may be increased on account of a Working Capital Adjustment.
“Senior
Subordinated Loan Documents”
means,
collectively, all documents or instruments executed or delivered in connection
with the Senior Subordinated Loans, including the Senior Subordinated Notes
and
the Senior Subordinated Guarantees, as those documents or instruments are
presently in effect and without giving effect to any amendment thereto.
“Senior
Subordinated Promissory Note”
means
each of the Senior Subordinated Promissory Notes.
“Senior
Subordinated Promissory Notes”
means,
collectively, (i) the Senior Subordinated Promissory Note made by BNC in favor
of Seller, dated as of the date hereof, in the original principal amount of
$10,000,000, and (ii) the Senior Subordinated Promissory Note made by BNC in
favor of Seller, dated as of the date hereof, in the original principal amount
of $5,000,000, as those notes are presently in effect and without giving effect
to any amendment thereto other than any increase in the principal balance of
either note on account of a Working Capital Adjustment.
“Special
Account”
means
a
specified cash collateral account maintained with Lender or another financial
institution acceptable to Lender in connection with Letters of Credit, as
contemplated by Section
2.5.
“Snubbing
Unit Accessories”
means
all pumps, fuel tanks, drilling equipment, piperacks, porta lathe cutters,
machinery, other equipment and parts necessary or useful for the operation
of
any hydraulic well control unit.
“Snubbing
Unit Agreement”
means
a
written agreement between Borrower and its customer pursuant to which Borrower
agrees to provide well-control services requested from time to time by the
customer, including the use by the customer of one or more Snubbing Units.
“Snubbing
Units”
means
all hydraulic well control units and hydraulic workover units owned by Borrower,
together with all Snubbing Unit Accessories that are installed on or affixed
to
such equipment, and a “Snubbing
Unit”
means
one of the Snubbing Units.
“Standby
Letter of Credit Agreement”
means
an agreement governing the issuance of standby letters of credit by Lender
entered into between Borrower, as applicant and Lender, as issuer.
“Subordinated
Creditor”
means
Seller or any other Person now or in the future who agrees to subordinate
Indebtedness of Borrower held by that Person to the payment of the
Obligations.
Page
18
“Subordination
Agreement”
means
the subordination provisions set forth in each Senior Subordinated Promissory
Note in favor of Lender.
“Subsidiary”
means
any Person of which more than 50% of the outstanding ownership interests having
general voting power under ordinary circumstances to elect a majority of the
board of directors or the equivalent of such Person, regardless of whether
or
not at the time ownership interests of any other class or classes shall have
or
might have voting power by reason of the happening of any contingency, is at
the
time directly or indirectly owned by BNC, by Borrower and one or more other
Subsidiaries, or by one or more other Subsidiaries (or would be directly or
indirectly owned by BNC after giving effect to the transactions contemplated
by
the HWC Transactions and the BNC Merger).
“Termination
Date”
means
the earliest of (i) the Maturity Date, (ii) the date Borrower
terminates a Credit Facility, or (iii) the date Lender demands payment of
the Obligations, following an Event of Default, pursuant to its remedies under
Section
7.2.
“Term
Loan Margin”
means,
from the date hereof until the date of the first adjustment described below,
the
rate per annum applicable to Level 1 as reflected on the grid below, and
thereafter, a rate per annum determined by reference to the following
grid:
Level
|
Senior
Debt to EBITDA Ratio
|
Term
Loan Margin
for
LIBOR Rate
Advances
|
Term
Loan Margin
for
Floating Rate
Advances
|
1
|
Less
than or equal to 1.50 to 1.00
|
3.00%
|
0.50%
|
2
|
Greater
than or equal to 1.51 to 1.00 but less than or equal to 2.00 to
1.00
|
3.25%
|
1.00%
|
3
|
Greater
than or equal to 2.01 to 1.00
|
3.50%
|
1.50%
|
Adjustments,
if any, in the applicable Term Loan Margin shall be implemented quarterly,
on a
prospective basis, as of the first day of the fiscal quarter following the
date
of delivery to Lender of the unaudited or annual audited (as applicable)
financial statements covering the fiscal quarter then ended evidencing the
need
for an adjustment, commencing with the financial statements for the period
ending March 31, 2006. Failure to timely deliver such financial statements
shall, in addition to any other remedy provided for in this Agreement
(including, without limitation, imposing the Default Rate), result in an
increase in the applicable Term Loan Margin to the highest level set forth
in
the foregoing grid, until the first day of the first fiscal quarter following
the delivery of those financial statements demonstrating that such an increase
is not required.
If
amended or restated financial statements change the previously calculated Term
Loan Margin, Lender may reduce or increase the applicable Term Loan Margin
from
the date of receipt of such amended or restated financial statements, to the
beginning of the appropriate fiscal quarter to which the restated statements
relate or to the beginning of the fiscal quarter in which any Event of Default
has occurred, as Lender in its sole discretion deems appropriate.
Page
19
“Texas
Finance Code”
has
the
meaning set forth in Section
2.8.
“Transaction
Agreement”
means
that certain Transaction Agreement entered on November 21, 2005 among Seller,
HWC Acquisition, HWC Merger Corporation, HWC and BNC, together with that certain
letter agreement among the same parties dated March 3, 2006.
“UCC”
means
the Uniform Commercial Code as in effect in the state designated in this
Agreement as the state whose laws shall govern this Agreement, or in any other
state whose laws are held to govern this Agreement or any portion of this
Agreement.
“Unbilled
Accounts Advance Rate”
means
up to sixty percent (60%), or such lesser rate as Lender in its sole discretion
may deem appropriate from time to time, provided
that, as
of any date of determination, the Unbilled Accounts Advance Rate shall be
reduced by one (1) percentage point for each percentage by which Dilution is
in
excess of 4%.
“Unfinanced
Capital Expenditures”
means
Capital Expenditures paid in cash (other than cash that constitutes the proceeds
of Indebtedness). However, Capital Expenditures incurred using the proceeds
of a
Revolving Advance shall not constitute Unfinanced Capital Expenditures for
purposes of this definition.
“Unused
Amount”
has
the
meaning set forth in Section
2.9(b).
“Unused
Line Fee Rate”
means,
from the date hereof until the date of the first adjustment described below,
the
rate per annum applicable to Level 1 as reflected on the grid below, and
thereafter, a rate per annum determined by reference to the following
grid:
Level
|
Senior
Debt to EBITDA Ratio
|
Unused
Line Fee Rate
|
1
|
Less
than or equal to 1.50 to 1.00
|
0.25%
|
2
|
Greater
than or equal to 1.51 to 1.00 but less than or equal to 2.00 to
1.00
|
0.38%
|
3
|
Greater
than or equal to 2.01 to 1.00
|
0.50%
|
Adjustments,
if any, in the Unused Line Fee Rate shall be implemented quarterly, on a
prospective basis, as of the first day of the fiscal quarter following the
date
of delivery to Lender of the quarterly unaudited or annual audited (as
applicable) financial statements evidencing the need for an adjustment,
commencing with the financial statements for the period ending March 31,
2006. Failure to timely deliver such financial statements shall, in addition
to
any other remedy provided for in this Agreement (including, without limitation,
imposing the Default Rate), result in an increase in the Unused Line Fee Rate
to
the highest level set forth in the foregoing grid, until the first day of the
first fiscal quarter following the delivery of those financial statements
demonstrating that such an increase is not required.
Page
20
If
amended or restated financial statements change the previously calculated Unused
Line Fee Rate, Lender may reduce or increase the Unused Line Fee Rate from
the
date of receipt of such amended or restated financial statements, to the
beginning of the appropriate fiscal quarter to which the restated statements
relate or to the beginning of the fiscal quarter in which any Event of Default
has occurred, as Lender in its sole discretion deems appropriate.
“VAT
Tax Reserve”
means
the lesser of (i) $175,000, and (ii) the amount by which the accrued, but unpaid
VAT Taxes exceed the aggregate value of the Accounts on which VAT Taxes would
be
payable.
“VAT
Taxes”
means
all taxes, assessments and other impositions imposed by a Venezuelan
governmental authority.
“Xxxxx
Fargo Bank Affiliate Obligations”
means
all obligations, liabilities, contingent reimbursement obligations, fees, and
expenses owing by a Credit Party to any Person that is owned in material part
by
Lender, and that relates to any service or facility extended to a Credit Party
or its Subsidiaries, including: (a) credit cards, (b) credit card
processing services, (c) debit cards, (d) purchase cards, as well as
any other services or facilities from time to time specified by Lender, whether
direct or indirect, absolute or contingent, due or to become due, and whether
existing now or in the future,
and (e)
treasury management services (including, without limitation, controlled
disbursement, automated clearinghouse transactions, return items, overdrafts,
interstate depository network services and Rate Management Transactions), as
well as any other services or facilities from time to time specified by Lender,
whether direct or indirect, absolute or contingent, due or to become due, and
whether existing now or in the future.
“Wholesale
Lockbox and Collection Account Agreement”
means
the Wholesale Lockbox and Collection Account Agreement between Borrower and
Lender, dated on or about March 1, 2006.
“Working
Capital Adjustment”
means
a
payment made in respect of Working Capital (as defined in the Transaction
Agreement) in accordance with Section
2.1
the
Transaction Agreement.
Section
1.2 Other
Definitional Terms; Rules of Interpretation.
The words “hereof”, “herein” and “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to
any
particular provision of this Agreement. All accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with GAAP.
All
terms defined in the UCC and not otherwise defined herein have the meanings
assigned to them in the UCC. References to Articles, Sections, subsections,
Exhibits, Schedules and the like, are to Articles, Sections and subsections
of,
or Exhibits or Schedules attached to, this Agreement unless otherwise expressly
provided. The words “include”, “includes” and “including” shall be deemed to be
followed by the phrase “without limitation”. Unless the context in which used
herein otherwise clearly requires, “or” has the inclusive meaning represented by
the phrase “and/or”. Defined terms include in the singular number the plural and
in the plural number the singular. Reference to any agreement (including the
Loan Documents), document or instrument means such agreement, document or
instrument as amended or modified and in effect from time to time in accordance
with the terms thereof (and, if applicable, in accordance with the terms hereof
and the other Loan Documents), except where otherwise explicitly provided,
and
reference to any promissory note includes any promissory note which is an
extension or renewal thereof or a substitute or replacement therefor. Reference
to any law, rule, regulation, order, decree, requirement, policy, guideline,
directive or interpretation means as amended, modified, codified, replaced
or
reenacted, in whole or in part, and in effect on the determination date,
including rules and regulations promulgated thereunder.
Page
21
ARTICLE
II
AMOUNT
AND TERMS OF THE CREDIT FACILITY
Section
2.1 Revolving
Advances.
Lender
agrees, subject to the terms and conditions of this Agreement, to make advances
(“Revolving
Advances”)
to
Borrower from time to time from the date that all of the conditions set forth
in
Article IV are satisfied (the “Funding
Date”)
to and
until (but not including) the Termination Date in an amount not in excess of
the
Maximum Line Amount. Lender shall have no obligation to make a Revolving Advance
to the extent that the amount of the requested Revolving Advance exceeds
Availability. Borrower’s obligation to pay the Revolving Advances shall be
evidenced by the Revolving Note and shall be secured by the Collateral. Within
the limits set forth in this Section 2.1, Borrower may borrow, prepay pursuant
to Section 2.13, and reborrow.
Section
2.2 Procedures
for Requesting Advances.
Borrower shall comply with the following procedures in requesting
Revolving Advances:
(a) Type
of Advances. Each
Advance shall be funded as either a Floating Rate Advance or a LIBOR Rate
Advance, as Borrower shall specify in a request delivered to Lender conforming
to the requirements of Section
2.2(b);
Floating Rate Advances and LIBOR Rate Advances may be outstanding at the same
time. Each request for a LIBOR Rate Advance shall be in multiples of $100,000,
with a minimum request of at least $1,000,000. LIBOR Rate Advances shall not
be
available during Default Periods.
(b) Time
for Requests.
Borrower shall request each Advance not later than the Cut-off Time on the
Business Day immediately preceding the Business Day
on
which the Advance is to be made. Each request that conforms to the terms of
this
Agreement shall be effective upon receipt by Lender, shall be in writing or
by
telephone or telecopy transmission, and shall be confirmed in writing by
Borrower if so requested by Lender, by (i) an Officer of Borrower; (ii) a Person
designated as Borrower’s agent by an Officer of Borrower in a writing delivered
to Lender; or (iii) a Person whom Lender reasonably believes to be an Officer
of
Borrower or such a designated agent, which confirmation shall specify whether
the Advance shall be a Floating Rate Advance or a LIBOR Rate Advance and, with
respect to any LIBOR Rate Advance, shall specify the principal amount of the
LIBOR Rate Advance and the Interest Period applicable thereto. Borrower shall
repay all Advances even if Lender does not receive such confirmation and even
if
the Person requesting an Advance was not in fact authorized to do so. Any
request for an Advance, whether written or telephonic, shall be deemed to be
a
representation by Borrower that the conditions set forth in Section
4.2
have
been satisfied as of the time of the request.
(c) Disbursement.
Upon
fulfillment of the applicable conditions set forth in Article
IV,
Lender
shall disburse the proceeds of the requested Advance by crediting the same
to
Borrower’s demand deposit account maintained with Xxxxx Fargo Bank unless Lender
and Borrower shall agree in writing to another manner of
disbursement.
Page
22
Section
2.3 LIBOR
Rate Advances.
(a) Converting
Floating Rate Advances to LIBOR Rate Advances; Procedures.
So long
as no Default Period is in effect and no Notice of Non-Renewal has been given,
Borrower may convert all or any part of the principal amount of any outstanding
Floating Rate Advance into a LIBOR Rate Advance by requesting that Lender
convert same no later than the Cut-off Time on the Business Day immediately
preceding the Business Day on which Borrower wishes the conversion to become
effective. Each request that conforms to the terms of this Agreement shall
be
effective upon receipt by Lender and shall be confirmed in writing by Borrower
if Lender so requests by any Officer or designated agent identified in
Section
2.2(b)
or
Person reasonably believed by Lender to be such an Officer or designated agent,
which request shall specify the Business Day on which the conversion is to
occur, the total amount of the Floating Rate Advance to be converted, and the
applicable Interest Period. Each such conversion shall occur on a Business
Day,
and the aggregate amount of Floating Rate Advances converted to LIBOR Rate
Advances shall be in multiples of $100,000, with a minimum conversion amount
of
at least $1,000,000.
(b) Procedures
at End of an Interest Period.
Unless
Borrower requests a new LIBOR Rate Advance in accordance with the procedures
set
forth below, or prepays the principal of an outstanding LIBOR Rate Advance
at
the expiration of an Interest Period, Lender shall automatically and without
request of Borrower convert each LIBOR Rate Advance to a Floating Rate Advance
on the last day of the relevant Interest Period. So long as no Default exists
and no Notice of Non-Renewal has been given, Borrower may cause all or any
part
of any maturing LIBOR Rate Advance to be renewed as a new LIBOR Rate Advance
by
requesting that Lender continue the maturing Advance as a LIBOR Rate Advance
no
later than the Cut-off Time on the Business Day immediately
preceding the Business Day constituting
the first day of the new Interest Period. Each such request shall be confirmed
in writing by Borrower upon Lender’s request by any Officer or designated agent
identified in Section
2.2(b),
which
confirmation shall be effective upon receipt by Lender, and which shall specify
the amount of the expiring LIBOR Rate Advance to be continued and the applicable
Interest Period. Each new Interest Period shall begin on a Business Day and
the
amount of each LIBOR Rate Advance shall be in multiples of $100,000, with a
minimum Advance of at least $1,000,000.
(c) Setting
and Notice of Rates.
Lender
shall, with respect to any request for a LIBOR Rate Advance under Section
2.2
or a
conversion or renewal of a LIBOR Rate Advance under this Section
2.3,
provide
Borrower with a LIBOR quote for each Interest Period identified by Borrower
on
the Business Day on which the request was made, if the request is received
by
Lender prior to the Cut-off Time, or for requests received by Lender after
the
Cut-off Time, on the next Business Day or on the Business Day on which Borrower
has requested that the LIBOR Rate Advance be made effective. If Borrower does
not immediately accept a LIBOR quote, the quoted rate shall expire and any
subsequent request from Borrower for a LIBOR quote shall be subject to
redetermination by Lender of the applicable LIBOR for the LIBOR Rate
Advance.
(d) Taxes
and Regulatory Costs.
Borrower shall pay Lender with respect to any Advance, upon demand and in
addition to any other amounts due or to become due hereunder, any and all (i)
withholdings, interest equalization taxes, stamp taxes or other taxes (except
income and franchise taxes) imposed by any domestic or foreign governmental
authority and related in any manner to LIBOR, and (ii) future, supplemental,
emergency or other changes in the LIBOR Reserve Percentage, assessment rates
imposed by the Federal Deposit Insurance Corporation, or similar requirements
or
costs imposed by any domestic or foreign governmental authority or resulting
from compliance by Lender with any request or directive (whether or not having
the force of law) from any central bank or other governmental authority and
related in any manner to LIBOR to the extent they are not included in the
calculation of LIBOR. In determining which of the foregoing are attributable
to
any LIBOR option available to Borrower hereunder, any reasonable allocation
made
by Lender among its operations shall be conclusive and binding upon
Borrower.
Page
23
Section
2.4 Letters
of Credit.
(a) Lender
agrees, subject to the terms and conditions of this Agreement, to issue, at
any
time after the Funding Date and before the Termination Date, one or more
irrevocable standby letters of credit (each, a “Letter
of Credit”)
for
Borrower’s account. Lender will not issue any Letter of Credit if the face
amount of the Letter of Credit to be issued would exceed the lesser of:
(i)
|
$1,000,000
less the L/C Amount, or
|
(ii)
|
Availability.
|
Each
Letter of Credit, if any, shall be issued pursuant to a separate L/C Application
made by Borrower to Lender, which must be completed in a manner satisfactory
to
Lender. The terms and conditions set forth in each such L/C Application shall
supplement the terms and conditions of the Standby Letter of Credit
Agreement.
(b) No
Letter
of Credit shall be issued with an expiry date later than one (1) year from
the
date of issuance or the Maturity Date in effect as of the date of issuance,
whichever is earlier.
(c) Any
request for issuance of a Letter of Credit shall be deemed to be a
representation by Borrower that the conditions set forth in Section
4.2
have
been satisfied as of the date of the request.
(d) If
a
draft is submitted under a Letter of Credit when Borrower is unable, because
a
Default Period exists or for any other reason, to obtain a Revolving Advance
to
pay the Obligation of Reimbursement, Borrower shall pay to Lender on demand
and
in immediately available funds, the amount of the Obligation of Reimbursement
together with interest, accrued from the date of the draft until payment in
full
at the Default Rate. Notwithstanding Borrower’s inability to obtain a Revolving
Advance for any reason, Lender is irrevocably authorized, in its sole
discretion, to make a Revolving Advance in an amount sufficient to discharge
the
Obligation of Reimbursement and all accrued but unpaid interest
thereon.
Section
2.5 Special
Account.
If a Credit Facility is terminated for any reason while any Letter of Credit
is
outstanding, Borrower shall thereupon pay Lender in immediately available funds
for deposit in the Special Account an amount equal to the L/C Amount plus any
anticipated fees and costs. If Borrower fails to promptly make any such payment
in the amount required under this Agreement, then Lender may make a Revolving
Advance against a Credit Facility in an amount sufficient to fulfill this
obligation and deposit the proceeds to the Special Account. The Special Account
shall be an interest bearing account either maintained with Lender or with
a
financial institution acceptable to Lender. Any interest earned on amounts
deposited in the Special Account shall be credited to the Special Account.
Lender may apply amounts on deposit in the Special Account at any time or from
time to time to the Obligations in Lender’s sole discretion. Borrower may not
withdraw any amounts on deposit in the Special Account as long as Lender
maintains a security interest therein. Lender agrees to transfer any balance
in
the Special Account to Borrower when the Obligations have been paid in full,
the
Commitment has been terminated and all Letters of Credit have either expired
or
been terminated.
Page
24
Section
2.6 Equipment
Term Advance.
(a) Lender
agrees, subject to the terms and conditions of this Agreement, to make a single
advance to Borrower on the Funding Date (the “Equipment
Term Advance”)
in an
amount not exceeding the least of (i) $9,700,000, (ii) 70% of the Net
Orderly Liquidation Value, or (iii) 80% of the Net Forced Liquidation
Value, as that amount is determined by an independent appraisal acceptable
to
Lender in its sole discretion, of the Eligible Equipment. Borrower’s obligation
to pay the Equipment Term Advance shall be evidenced by the Equipment Term
Note
and shall be secured by the Collateral as provided in Article
III.
(b) Upon
fulfillment of the applicable conditions set forth in Article
IV,
Lender
shall deposit the proceeds of the requested Equipment Term Advance by crediting
the same to Borrower’s demand deposit account specified in Section
2.2(b)
unless
Lender and Borrower shall agree in writing to another manner of disbursement.
Upon Lender’s request, Borrower shall promptly confirm each telephonic request
for the Equipment Term Advance by executing and delivering an appropriate
confirmation certificate to Lender. Borrower shall be obligated to repay the
Equipment Term Advance notwithstanding Lender’s failure to receive such
confirmation and notwithstanding the fact that the Person requesting the same
was not in fact authorized to do so. Any request for an Equipment Term Advance,
whether written or telephonic, shall be deemed to be a representation by
Borrower, upon which Lender may rely, that Borrower is in compliance with the
conditions set forth in Article
IV
as of
the time of the request.
Section
2.7 Payment
of Equipment Term Note.
The outstanding principal balance of the Equipment Term Note shall be due and
payable as follows:
(a) Beginning
on March 31, 2006, and on the last day of each month thereafter, in equal
monthly installments in an amount sufficient to fully amortize the principal
balance of the Equipment Term Note over an assumed term ending on the Assumed
Maturity Date.
(b) If
Lender
at any time obtains an appraisal of the Equipment as permitted under
Section
6.9(d)
herein,
and the appraisal shows the aggregate outstanding principal balance of the
Equipment Term Note to exceed the lesser of (i) 70% of the Net Orderly
Liquidation Value, or (ii) 80% of the Net Forced Liquidation Value, of the
then Eligible Equipment, then Borrower, upon demand by Lender, shall immediately
prepay the Equipment Term Note in the amount of such excess, together with
any
prepayment fee and other fees owed pursuant to Sections
2.9(f)
and
(g).
Page
25
(c) All
prepayments of principal with respect to the Equipment Term Note shall be
applied to the most remote principal installment or installments then
unpaid.
(d) On
the
earlier of the Termination Date or the Assumed Maturity Date, the entire unpaid
principal balance of the Equipment Term Note, and all unpaid interest accrued
thereon, shall in any event be immediately due and payable without notice or
demand therefor.
Section
2.8 Interest;
Default Interest Rate; Application of Payments; Participations;
Usury.
(a) Interest.
Except
as provided in Section
2.3,
Section
2.8(b)
and
Section
2.8(e),
the
principal amount of each Advance shall bear interest at the Floating
Rate.
(b) Default
Interest Rate.
At any
time during any Default Period or following the Termination Date, in Lender’s
sole discretion and without waiving any of its other rights or remedies, the
principal of the Notes shall bear interest at the Default Rate or such lesser
rate as Lender may determine, effective as of the first day of any Default
Period begins through the last day of such Default Period, or any shorter time
period that Lender may determine. The decision of Lender to impose a rate that
is less than the Default Rate or to not impose the Default Rate for the entire
duration of the Default Period shall be made by Lender in its sole discretion
and shall not be a waiver of any of its other rights and remedies, including
its
right to retroactively impose the full Default Rate for the entirety of any
such
Default Period or following the Termination Date.
(c) Application
of Payments.
Payments shall be applied to the Obligations on the Business Day of receipt
by
Lender in Lender’s general account, but the amount of principal paid shall
continue to accrue interest at the interest rate applicable under the terms
of
this Agreement from the calendar day Lender receives the payment, and continuing
through the end of the first Business Day following receipt of the
payment.
(d) Participations.
If any
Person shall acquire a participation in the Advances or the Obligation of
Reimbursement, Borrower shall be obligated to Lender to pay the full amount
of
all interest calculated under this Section
2.8,
along
with all other fees, charges and other amounts due under this Agreement,
regardless if such Person elects to accept interest with respect to its
participation at a lower rate than that calculated under this Section
2.8,
or
otherwise elects to accept less than its pro-rata share of such fees, charges
and other amounts due under this Agreement.
(e) Usury.
In any
event no rate change shall be put into effect that would result in a rate
greater than the highest rate permitted by law. Notwithstanding anything to
the
contrary contained in any Loan Document, all agreements which either now are
or
which shall become agreements between Borrower and Lender are hereby limited
so
that in no contingency or event whatsoever shall the total liability for
payments in the nature of interest, additional interest and other charges exceed
the applicable limits imposed by any applicable usury laws. If any payments
in
the nature of interest, additional interest and other charges made under any
Loan Document are held to be in excess of the limits imposed by any applicable
usury laws, it is agreed that any such amount held to be in excess shall be
considered payment of principal hereunder, and the indebtedness evidenced hereby
shall be reduced by such amount so that the total liability for payments in
the
nature of interest, additional interest and other charges shall not exceed
the
applicable limits imposed by any applicable usury laws, in compliance with
the
desires of Borrower and Lender. This provision shall never be superseded or
waived and shall control every other provision of the Loan Documents and all
agreements between Borrower and Lender, or their respective successors and
assigns. Unless preempted by federal law or as permitted under the sentence
immediately following this sentence, the Floating Rate, the LIBOR Rate or the
Default Rate, as applicable, from time to time in effect under this Agreement
may not exceed the “weekly ceiling” from time to time in effect under Chapter
303 of the Texas Finance Code (Vernon’s Texas Code Annotated), as amended from
time to time (the “Texas
Finance Code”).
If
the applicable state or federal law is amended in the future to allow a greater
rate of interest to be charged under this Agreement than is presently allowed
by
applicable state or federal law, then the limitation of interest hereunder
shall
be increased to the maximum rate of interest allowed by applicable state or
federal law as amended, which increase shall be effective hereunder on the
effective date of such amendment, and all interest charges owing to Lender
by
reason thereof shall be payable in accordance with Section
2.8
hereof.
Page
26
Section
2.9 Fees.
(a) Closing
Fee.
Borrower shall pay Lender a fully earned and non-refundable closing fee of
$50,000, due and payable upon the execution of this Agreement.
(b) Unused
Line Fee.
For the
purposes of this Section
2.9(b),
“Unused
Amount”
means
the Maximum Line Amount reduced by outstanding Revolving Advances plus the
L/C
Amount. Borrower agrees to pay to Lender an unused line fee at the applicable
Unused Line Fee Rate on the average daily Unused Amount from the date of this
Agreement to and including the Termination Date, due and payable monthly in
arrears on the first day of the month and on the Termination Date.
(c) Collateral
Exam Fees.
Borrower shall pay Lender fees in connection with any collateral exams, audits
or inspections (including all exams occurring before the date of this Agreement)
conducted by or on behalf of Lender of any Collateral or Borrower’s operations
or business at the rates established from time to time by Lender as its
collateral exam fees (which fees are currently $106.25 per hour per collateral
examiner), together with all actual out-of-pocket costs and expenses incurred
in
conducting any such collateral examination or inspection.
(d) Letter
of Credit Fees.
Borrower shall pay to Lender a fee with respect to each Letter of Credit, if
any, accruing on a daily basis and computed at an annual rate of two and
75/100ths percent (2.75%) of the aggregate amount that may then be drawn,
assuming compliance with all conditions for drawing (the “Aggregate
Face Amount”),
from
and including the date of issuance of such Letter of Credit until such date
as
such Letter of Credit shall terminate by its terms or be returned to Lender,
due
and payable monthly in arrears on the first day of each month and on the date
that the Letter of Credit shall terminate by its terms or be returned to Lender;
provided,
however,
effective as of the first day any Default Period begins through the last day
of
such Default Period, or any shorter time period that Lender may determine,
in
Lender’s sole discretion and without waiving any of its other rights and
remedies, such fee shall increase to five
and
75/100ths percent (5.75%) of the Aggregate Face Amount. The foregoing fee shall
be in addition to any and all fees, commissions and charges imposed by Lender
with respect to or in connection with such Letter of Credit.
Page
27
(e) Letter
of Credit Administrative Fees.
Borrower shall pay all administrative fees charged by Lender, upon Lender’s
request, in connection with the honoring of drafts under any Letter of Credit,
amendments thereto, transfers thereof and all other activity with respect to
the
Letters of Credit at the then current rates published by Lender for such
services rendered on behalf of customers of Lender generally.
(f) Termination
and Maximum Facility Amount Reduction Fees.
If
(i) Lender terminates a Credit Facility during a Default Period, or
(ii) Borrower terminates or reduces a Credit Facility on a date before the
Maturity Date (other than by, with respect to the Equipment Term Note, making
the required principal payments under Section
2.7(a)
of this
Agreement), then Borrower shall pay Lender as liquidated damages (and not as
a
penalty), a termination fee in an amount equal to the reduction of the Maximum
Facility Amount as reduced by the principal payments actually made by Borrower
on the Equipment Term Note pursuant to Section 2.7(a)
(for the
purpose of calculating the reduction with respect with to the revolving facility
component of the Maximum Facility Amount, such reduction shall equal the average
of the outstanding principal balance of the Revolving Note measured on the
last
day of each of preceding twelve calendar months) multiplied by the applicable
percentage determined as follows: (A) three percent (3%) if the termination
or reduction occurs on or before the first anniversary of the Funding Date;
(B) two percent (2%) if the termination or reduction occurs after the first
anniversary of the Funding Date, but on or before the second anniversary of
the
Funding Date; and (C) one percent (1%) if the termination or reduction
occurs after the second anniversary of the Funding Date, but before the Maturity
Date.
(g) Contracted
Funds Breakage Fees.
In
addition to payment of the fees under Section
2.9(f),
Borrower shall pay to Lender the following amount in connection with any
prepayment of the principal amount of the Notes, whether such prepayment is
voluntary or by acceleration:
(i) If
the
principal amount of any LIBOR Rate Advance is prepaid, Borrower shall pay to
Lender immediately upon demand a contracted funds breakage fee equal to the
sum
of the discounted monthly differences for each month from the month of
prepayment through the month in which such Interest Period matures, calculated
as follows for each such month:
(A)
|
Determine
the amount of interest which would have accrued each month on the
amount
prepaid at the LIBOR Rate applicable to such amount had it remained
outstanding until the last day of the applicable Interest
Period.
|
(B)
|
Subtract
from the amount determined in (A) above the amount of interest which
would
have accrued for the same month on the amount prepaid for the remaining
term of such Interest Period at LIBOR in effect on the date of prepayment
for new loans made for such term in a principal amount equal to the
amount
prepaid.
|
Page
28
(C)
|
If
the result obtained in (B) for any month is greater than zero, discount
that difference by LIBOR used in (B)
above.
|
(ii) Borrower
acknowledges that a prepayment may result in Lender incurring additional costs,
expenses or liabilities, and that it is difficult to ascertain the full extent
of such costs, expenses or liabilities. Borrower therefore agrees to pay the
above-described prepayment fee and agrees that said prepayment fee represents
a
reasonable estimate of the prepayment costs, expenses or liabilities of
Lender.
(h) Waiver
of Termination and Prepayment Fees. Borrower
will be excused from the payment of termination and prepayment fees otherwise
due under Section
2.9(f)
and
Section
2.9(g)
if such
termination or prepayment is made because of refinancing through another
division of Lender that closes more than eighteen months (18) after the Funding
Date.
(i) Overadvance
Fees.
Borrower shall pay an Overadvance fee in the amount of $500 for
each
day or portion thereof during which an Overadvance exists, regardless of how
the
Overadvance arises or whether or not the Overadvance has been agreed to in
advance by Lender. The acceptance of payment of an Overadvance fee by Lender
shall not be deemed to constitute either consent to the Overadvance or a waiver
of the resulting Event of Default, unless Lender specifically consents to the
Overadvance in writing and waives the Event of Default on whatever conditions
Lender deems appropriate.
(j) Other
Fees and Charges; Payment of Fees.
Lender
may from time to time impose additional fees and charges as consideration for
Revolving Advances made in excess of Availability or for other events that
constitute an Event of Default or a Default hereunder, including fees and
charges for the administration of Collateral by Lender, and fees and charges
for
the late delivery of reports, which may be assessed in Lender’s sole discretion
on either an hourly, periodic, or flat fee basis, and in lieu of or in addition
to imposing interest at the Default Rate.
Section
2.10 Time
for Interest Payments; Payment on Non-Business Days; Computation of Interest
and
Fees.
(a) Time
For Interest Payments.
Accrued
and unpaid interest accruing on each Floating Rate Advance shall be due and
payable in arrears on the first day of each month and on the Termination Date
(each an “Interest
Payment Date”),
or if
any such day is not a Business Day, on the next succeeding Business Day.
Interest will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from the date of advance to the Interest
Payment Date. Interest accruing on each LIBOR Rate Advance shall be due and
payable on the last day of the applicable Interest Period; provided,
however,
for
Interest Periods that are longer than one month, interest shall nevertheless
be
due and payable monthly on the last day of each month and on the last day of
the
Interest Period.
(b) Payment
on Non-Business Days.
Whenever any payment to be made hereunder shall be stated to be due on a day
which is not a Business Day, such payment may be made on the next succeeding
Business Day, and such extension of time shall in such case be included in
the
computation of interest on the Advances or the fees hereunder, as the case
may
be.
Page
29
(c) Computation
of Interest and Fees.
Interest accruing on the outstanding principal balance of the Advances and
fees
hereunder outstanding from time to time shall be computed on the basis of actual
number of days elapsed in a year of 360 days.
Section
2.11 Lockbox
and Collateral Account; Sweep of Funds.
(a) Lockbox
and Collateral Account.
(i) Borrower
shall instruct all account debtors to pay all Accounts directly to the Lockbox.
If, notwithstanding such instructions, Borrower receives any payments on
Accounts, Borrower shall deposit such payments into the Collateral Account.
Borrower shall also deposit all other cash proceeds of Collateral regardless
of
source or nature directly into the Collateral Account. Until so deposited,
Borrower shall hold all such payments and cash proceeds in trust for and as
the
property of Lender and shall not commingle such property with any of its other
funds or property. All deposits in the Collateral Account shall constitute
proceeds of Collateral and shall not constitute payment of the
Obligations.
(ii) All
items
deposited in the Collateral Account shall be subject to final payment. If any
such item is returned uncollected, Borrower will immediately pay Lender, or,
for
items deposited in the Collateral Account, the bank maintaining such account,
the amount of that item, or such bank at its discretion may charge any
uncollected item to Borrower’s commercial account or other account. Borrower
shall be liable as an endorser on all items deposited in the Collateral Account,
whether or not in fact endorsed by Borrower.
(b) Sweep
of Funds.
Lender
shall from time to time, in accordance with the Wholesale Lockbox and Collection
Account Agreement, cause funds in the Collateral Account to be transferred
(at
Borrower’s expense) to Lender’s general account for payment of the Obligations,
after giving effect to a collection period of at least two Business Days, in
addition to any period imposed after such transfer pursuant to Section
2.8(c).
Amounts
deposited in the Collateral Account shall not be subject to withdrawal by
Borrower, except after payment in full and discharge of all Obligations.
Section
2.12 Term.
This Agreement and the other Loan Documents shall become effective as of
the Funding Date and shall continue in full force and effect until and including
March 3, 2010 (the “Renewal
Date”);
however, (i) if the Notice of Non-Renewal (as defined below) has not been
given, or this Agreement has not been otherwise terminated, and (ii) the
maturity date of each Senior Subordinated Promissory Note and all other terms
of
those notes (including, without limitation, the subordination provisions) have
been extended in writing by BNC and Subordinated Creditor for an additional
year, this Agreement, the other Loan Documents and all Liens and Security
Interests relating thereto shall automatically renew, without the necessity
of
any further documentation or action, on a year to year basis thereafter and
otherwise on the same terms and conditions set forth in this Agreement and
the
other Loan Documents. Lender or Borrower may terminate this Agreement and the
other Loan Documents (other than those provisions that expressly survive the
termination of this Agreement or any Loan Document, which provisions shall
survive in accordance with their respective terms) effective on the Renewal
Date
or on the anniversary of the Renewal Date by giving to the other party at least
30 days’ prior written notice, or such additional notice as may be required
under Section 2.13 (the “Notice
of Non-Renewal”),
provided this Agreement and all other Loan Documents must be terminated
simultaneously. Any notice requesting termination of this Agreement shall
constitute a request to terminate both this Agreement and the other Loan
Documents.
Page
30
Section
2.13 Voluntary
Prepayment; Reduction of the Maximum Facility Amount; Termination of a Credit
Facility by Borrower.
Except as otherwise provided in this Agreement, Borrower may prepay the Advances
in whole at any time or from time to time in part. Borrower may terminate a
Credit Facility or reduce the Maximum Facility Amount at any time if it
(i) gives Lender at least 90 days advance written notice prior to the
proposed Termination Date, and (ii) pays Lender applicable termination and
Maximum Facility Amount reduction fees in accordance with Section 2.9(f)
and the contracted funds breakage fees of Section 2.9(g). Any reduction
in the Maximum Line Amount shall be in multiples of $100,000, and with a minimum
reduction of at least $500,000. If Borrower terminates a Credit Facility or
reduces the Maximum Line Amount to zero, all Obligations shall be immediately
due and payable, and if Borrower gives Lender less than the required 90 days
advance written notice, then the interest rate applicable to borrowings
evidenced by Revolving Note shall be the Default Rate for the period of time
commencing 90 days prior to the proposed Termination Date through the date
that
Lender actually receives such written notice. If Borrower does not wish Lender
to consider renewal of the Credit Facility on the next Maturity Date, then
Borrower shall give Lender at least 90 days written notice before the Maturity
Date that it will not be requesting renewal. If Borrower fails to give Lender
such timely notice, then the interest rate applicable to borrowings evidenced
by
the Revolving Note shall be the Default Rate for the period of time commencing
90 days prior to the Maturity Date through the date that Lender actually
receives such written notice.
Section
2.14 Mandatory
Prepayment.
Without notice or demand, if Overadvance exists, Borrower shall immediately
(i)
first, prepay the Revolving Advances to the extent necessary to eliminate the
Overadvance; and (ii) if prepayment in full of the Revolving Advances is
insufficient to eliminate the Overadvance, pay to Lender in immediately
available funds for deposit in the Special Account an amount equal to the
remaining excess. Any payment received by Lender under this Section 2.14
or under Section 2.13 may be applied to the Obligations, in such order
and in such amounts as Lender in its sole discretion may
determine from time to time.
Section
2.15 Revolving
Advances to Pay Obligations.
Notwithstanding the terms of Section 2.1, Lender may, in its discretion
at any time or from time to time, without Borrower’s request and even if the
conditions set forth in Article IV would not be satisfied, make a
Revolving Advance in an amount equal to the portion of the Obligations from
time
to time due and payable, and may deliver the proceeds of any such Revolving
Advance to any affiliate of Lender in satisfaction of any Xxxxx Fargo
Bank
Affiliate Obligations.
Section
2.16 Use
of
Proceeds.
Borrower shall use the proceeds of Advances for the purposes (in the following
order) of repaying Borrower’s existing lenders, repurchasing certain capital
stock and warrants in BNC pursuant to the Securities Repurchase Agreement,
funding ordinary working capital needs, paying fees and expenses incurred in
connection with the transaction contemplated
by this Agreement, and consummating the acquisition and merger transactions
contemplated by the Transaction Agreement.
Page
31
Section
2.17 Liability
Records.
Lender may maintain from time to time, at its discretion, records as to the
Obligations. All entries made on any such record shall be presumed correct
until
Borrower establishes the contrary. Upon Lender’s demand, Borrower will admit and
certify in writing the exact principal balance of the Obligations that Borrower
then asserts to be outstanding. Any billing statement or accounting rendered
by
Lender shall be conclusive and fully binding on Borrower unless Borrower gives
Lender specific written notice of exception within 30 days after
receipt.
ARTICLE
III
SECURITY
INTEREST; OCCUPANCY; SETOFF
Section
3.1 Grant
of Security Interest.
Borrower hereby pledges, assigns and grants to Lender for the benefit of
itself and as agent for any affiliate of Lender that may provide credit or
services to Borrower that constitute Xxxxx Fargo Bank Affiliate Obligations,
a
lien and security interest (collectively referred to as the “Security
Interest”)
in the
Collateral, as security for the payment and performance of the Obligations.
Upon
request by Lender, Borrower will grant Lender, for the benefit of itself and
as
agent for any affiliate of Lender that may provide credit or services to
Borrower that constitute Xxxxx Fargo Bank Affiliate Obligations, a security
interest in all commercial tort claims that Borrower may have against any
Person.
Section
3.2 Notification
of Account Debtors and Other Obligors.
Lender may at any time (after the occurrence and during the continuance of
a
Default) notify any account debtor or other Person obligated to pay the amount
due that such right to payment has been assigned or transferred to Lender for
security and shall be paid directly to Lender. Borrower will join in giving
such
notice if Lender so requests. At any time after Borrower or Lender gives such
notice to an account debtor or other obligor, Lender may, but need not, in
Lender’s name or in Borrower’s name, demand, xxx for, collect or receive any
money or property at any time payable or receivable on account of, or securing,
any such right to payment, or grant any extension to, make any compromise or
settlement with or otherwise agree to waive, modify, amend or change the
obligations (including collateral obligations) of any such account debtor or
other obligor. Lender may, in Lender’s name or in Borrower’s name, as Borrower’s
agent and attorney-in-fact, notify the United States Postal Service to change
the address for delivery of Borrower’s mail to any address designated by Lender,
otherwise intercept Borrower’s mail, and receive, open and dispose of Borrower’s
mail, applying all Collateral as permitted under this Agreement and holding
all
other mail for Borrower’s account or forwarding such mail to Borrower’s last
known address.
Section
3.3 Assignment
of Insurance.
As additional security for the payment and performance of the Obligations,
Borrower hereby assigns to Lender any and all monies (including proceeds of
insurance and refunds of unearned premiums) due or to become due under, and
all
other rights of Borrower with respect to, any and all policies of insurance
now
or at any time hereafter covering the Collateral or any evidence thereof or
any
business records or valuable papers pertaining thereto, and Borrower hereby
directs the issuer of any such policy to pay all such monies directly to Lender.
At any time a Default Period exists or the time period for taking any action
described in this sentence will expire or lapse within thirty (30) days and
Borrower has not taken such action before such time, Lender may (but need not),
in Lender’s name or in Borrower’s name, execute and deliver proof of claim,
receive all such monies, endorse checks and other instruments representing
payment of such monies, and adjust, litigate, compromise or release any claim
against the issuer of any such policy. Any monies received as payment for any
loss under any insurance policy mentioned above (other than liability insurance
policies) or as payment of any award or compensation for condemnation or taking
by eminent domain, shall be paid over to Lender to be applied, at the option
of
Lender, either to the prepayment of the Obligations or shall be disbursed to
Borrower under staged payment terms reasonably satisfactory to Lender for
application to the cost of repairs, replacements, or restorations. Any such
repairs, replacements, or restorations shall be effected with reasonable
promptness and shall be of a value at least equal to the value of the items
or
property destroyed prior to such damage or destruction.
Page
32
Section
3.4 Occupancy.
(a) Borrower
hereby irrevocably grants to Lender the right to non-exclusive possession of
the
Premises at any time during a Default Period without notice or
consent.
(b) Lender
may use the Premises only to hold, process, manufacture, sell, use, store,
liquidate, realize upon or otherwise dispose of goods that are Collateral and
for other purposes that Lender may in good xxxxx xxxx to be related or
incidental purposes.
(c) Lender’s
right to hold the Premises shall cease and terminate upon the earlier of
(i) payment in full and discharge of all Obligations and termination of the
entire Credit Facility, and (ii) final sale or disposition of all items
constituting Collateral at the Premises and delivery of all such items to
purchasers.
(d) Lender
shall not be obligated to pay or account for any rent or other compensation
for
the possession, occupancy or use of any of the Premises; provided,
however,
that if
Lender does pay or account for any rent or other compensation for the
possession, occupancy or use of any of the Premises, Borrower shall reimburse
Lender promptly for the full amount thereof. In addition, Borrower will pay,
or
reimburse Lender for, all taxes, fees, duties, impositions, charges and expenses
at any time incurred by or imposed upon Lender by reason of the execution,
delivery, existence, recordation, performance or enforcement of this Agreement
or the provisions of this Section
3.4.
Section
3.5 License.
Without limiting the generality of any other Security Document, Borrower hereby
grants to Lender a non-exclusive, worldwide and royalty-free license to use
or
otherwise exploit all Intellectual Property Rights of Borrower for the purpose
of: (a) completing the manufacture of any in-process materials during any
Default Period so that such materials become saleable Inventory, all in
accordance with the same quality standards previously adopted by Borrower for
its own manufacturing and subject to Borrower’s reasonable exercise of quality
control; and (b) selling, leasing or otherwise disposing of any or all
Collateral during any Default Period.
Section
3.6 Financing
Statement.
Borrower authorizes Lender to file from time to time, such financing statements
against collateral described as “all personal property” or “all assets” or
describing specific items of collateral including commercial tort claims as
Lender deems necessary or useful to perfect the Security Interest. All financing
statements filed before the date hereof to perfect the Security Interest were
authorized by Borrower and are hereby re-authorized. A carbon, photographic
or
other reproduction of this Agreement or of any financing statements signed
by
Borrower is sufficient as a financing statement and may be filed as a financing
statement in any state to perfect the security interests granted hereby. For
this purpose, Borrower represents and warrants that the following information
is
true and correct:
Page
33
Name
and
address of Debtor:
IWC
Services, LLC
c/o
Boots
& Xxxxx International Well Control, Inc.
00000
X.
Xxxxxxx - Xxxxxxx Xxxx
Xxxxxxx,
Xxxxx 00000
Federal
Employer Identification No. 00-0000000
Organizational
Identification No. 136090400
Name
and
address of Secured Party:
Xxxxx
Fargo Bank, National Association
MAC-T5698-030
00
XX
Xxxx 000, Xxxxx 000
Xxx
Xxxxxxx, Xxxxx 00000
Section
3.7 Setoff.
Lender may at any time or from time to time after the occurrence and during
the
continuance of a Default Period, at its sole discretion and without demand
and
without notice to anyone, setoff any liability owed to Borrower by Lender,
whether or not due, against any Obligation, then due. In addition, each other
Person holding a participating interest in any Obligations shall have the right
to appropriate or setoff any deposit or other liability then owed by such Person
to Borrower, whether or not due, and apply the same to the payment of said
participating interest, as fully as if such Person had lent directly to Borrower
the amount of such participating interest.
Section
3.8 Collateral.
This Agreement does not contemplate a sale of accounts, contract rights or
chattel paper, and, as provided by law, Borrower is entitled to any surplus
and
shall remain liable for any deficiency. Lender’s duty of care with respect to
Collateral in its possession (as imposed by law) shall be deemed fulfilled
if it
exercises reasonable care in physically keeping such Collateral, or in the
case
of Collateral in the custody or possession of a bailee or other third Person,
exercises reasonable care in the selection of the bailee or other third Person,
and Lender need not otherwise preserve, protect, insure or care for any
Collateral. Lender shall not be obligated to preserve any rights Borrower may
have against prior parties, to realize on the Collateral at all or in any
particular manner or order or to apply any cash proceeds of the Collateral
in
any particular order of application. Lender has no obligation to clean-up or
otherwise prepare the Collateral for sale. Borrower waives any right it may
have
to require Lender to pursue any third Person for any of the
Obligations.
ARTICLE
IV
CONDITIONS
OF LENDING
Section
4.1 Conditions
Precedent to the Initial Advances
and
Letter of Credit.
Lender’s obligation to make the initial Advances or to cause any Letters of
Credit to be issued shall be subject to the condition precedent that Lender
shall have received all of the following, each properly executed by the
appropriate party and in form and substance satisfactory to Lender:
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34
(a)
|
This
Agreement.
|
(b)
|
The
Notes.
|
(c) A
Standby
Letter of Credit Agreement, and L/C Application for each Letter of Credit that
Borrower wishes to have issued thereunder.
(d)
|
The
Guaranties.
|
(e)
|
The
Collateral Assignment of Transaction Agreement.
|
(f)
|
The
Collateral Assignment of Securities Repurchase
Agreement.
|
(g) The
Pledge Agreements (along with the original stock certificates pledged
thereunder, with stock powers endorsed in blank); provided,
however,
neither
BNC, Borrower nor any of its other Domestic Subsidiaries shall be required
to
pledge more than sixty-five percent (65%) of the voting Equity Interests of
any
Foreign Subsidiary.
(h)
|
The
Wholesale Lockbox and Collection Account
Agreement.
|
(i) Control
agreements with each bank at which a Credit Party maintains deposit accounts,
except those listed on Schedule
5.18.
(j) A
Patent
and Trademark Security Agreement.
(k) A
true,
correct and complete copy of the Transaction Agreement.
(l) A
true,
correct and complete copy of the Securities Repurchase Agreement.
(m) A
true,
correct and complete copy of the Senior Subordinated Promissory Notes.
(n) All
other
Loan Documents.
(o) A
true
and correct copy of any and all leases pursuant to which Borrower is leasing
the
Premises, together with a landlord’s disclaimer and consent with respect to each
such lease.
(p) A
true
and correct copy of any and all mortgages pursuant to which Borrower has
mortgaged the Premises, together with a mortgagee’s disclaimer and consent with
respect to each such mortgage.
(q) A
true
and correct copy of any and all agreements pursuant to which Borrower’s property
is in the possession of any Person other than Borrower, together with, in the
case of any goods held by such Person for resale, (i) a consignee’s
acknowledgment and waiver of Liens, (ii) UCC financing statements
sufficient to protect Borrower’s and Lender’s interests in such goods, and
(iii) UCC searches showing that no other secured party has filed a
financing statement against such Person and covering property similar to
Borrower’s other than Borrower, or if there exists any such secured party,
evidence that each such secured party has received notice from Borrower and
Lender sufficient to protect Borrower’s and Lender’s interests in Borrower’s
goods from any claim by such secured party.
Page
35
(r) An
acknowledgment and waiver of Liens from each warehouse in which Borrower is
storing Inventory.
(s) A
true
and correct copy of any and all agreements pursuant to which Borrower’s property
is in the possession of any Person other than Borrower, together with,
(i) an acknowledgment and waiver of Liens from each subcontractor who has
possession of Borrower’s goods from time to time, (ii) UCC financing
statements sufficient to protect Borrower’s and Lender’s interests in such
goods, and (iii) UCC searches showing that no other secured party has filed
a financing statement covering such Person’s property other than Borrower, or if
there exists any such secured party, evidence that each such secured party
has
received notice from Borrower and Lender sufficient to protect Borrower’s and
Lender’s interests in Borrower’s goods from any claim by such secured
party.
(t) An
acknowledgment and agreement from each licensor in favor of Lender, together
with a true, correct and complete copy of all license agreements.
(u) Current
searches of appropriate filing offices showing that (i) no Liens have been
filed and remain in effect against BNC, Borrower or any other Domestic
Subsidiary except Permitted Liens or Liens held by Persons who have agreed
in
writing that upon receipt of proceeds of the initial Advances, they will
satisfy, release or terminate such Liens in a manner satisfactory to Lender,
and
(ii) Lender has duly filed all financing statements necessary to perfect
the Security Interest, to the extent the Security Interest is capable of being
perfected by filing.
(v) A
certificate of BNC’s, Borrower’s and each Domestic Subsidiary’s Secretary or
Assistant Secretary certifying that attached to such certificate are
(i) the resolutions of each such Credit Party’s Directors and, if required,
Owners, authorizing the execution, delivery and performance of the Loan
Documents, (ii) true, correct and complete copies of each such Credit
Party’s Constituent Documents, and (iii) examples of the signatures of each
such Credit Party’s Officers or agents authorized to execute and deliver the
Loan Documents and other instruments, agreements and certificates, including
Advance requests, on each such Credit Party’s behalf.
(w) A
current
certificate issued by each Secretary of State where BNC, Borrower and each
other
Domestic Subsidiary is organized, certifying that each such Credit Party is
in
existence and good standing in its state of organization.
(x) Evidence
that BNC, Borrower and each other Domestic Subsidiary is duly licensed or
qualified to transact business in all jurisdictions in the United States of
America where the character of the property owned or leased or the nature of
the
business transacted by it makes such licensing or qualification
necessary.
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36
(y) A
certificate of an Officer of Borrower confirming, in his corporate capacity,
the
representations and warranties set forth in Article
V.
(z) An
opinion of counsel for BNC, Borrower and the other Domestic Subsidiaries,
addressed to Lender, covering, among other things, the due authorization,
execution and enforceability of the Loan Documents to which such Credit Parties
are party, which shall be satisfactory to Lender in its sole
discretion.
(aa) Certificates
of the insurance required hereunder, with all hazard insurance containing a
lender’s loss payable endorsement in Lender’s favor and with all liability
insurance naming Lender as an additional insured.
(bb) Payment
of the fees and commissions due under Section
2.9
through
the date of the initial Advance or issuance of the first Letter of Credit and
expenses incurred by Lender through such date and required to be paid by
Borrower under Section
8.5,
including all legal expenses incurred through the Funding Date.
(cc) Evidence
that after making the initial Revolving Advance, satisfying all obligations
owed
to BNC’s or Borrower’s existing lenders, satisfying all trade payables older
than 60 days from invoice date, book overdrafts and closing costs, Availability
shall be not less than $2,500,000.
(dd) A
Customer Identification Information form and such other forms and verification
as Lender may need to comply with the U.S.A. Patriot Act.
(ee) Satisfactory
credit and background checks on key officers of BNC, Affiliates of BNC, HWC
and
each Owner having an Equity Interest in any such entity greater than
20%.
(ff) Receipt
of pay-off letters from BNC’s and Borrower’s existing lenders being repaid
providing (with respect to a secured lender) that upon payment of a certain
amount such lender agrees that its security interests shall terminate and Lender
shall be entitled to file the appropriate terminations for such interests,
with
such letter being in form and substance satisfactory to Lender in its sole
discretion.
(gg) Receipt
of all documents, materials and other information, confirmation or verification
requested by Lender in connection with its due diligence examination of BNC’s
and its Subsidiaries’ business operations, financial condition and properties,
including, but not limited to, (i) all corporate records of BNC and its
Subsidiaries, including but not limited to the applicable organizational
documents of BNC and its Subsidiaries, (ii) all documents, agreements and
contracts evidencing borrowings, assets pledged to secure such borrowings,
guaranties, and documents, agreements and contracts evidencing all other
material financing agreements, (iii) all documents, agreements and contracts
with respect to compensation or bonus plans and outstanding director or officer
loans and all documents, agreements and contracts with respect to employee
benefits, salaries or labor disputes, (iv) all documents, agreements and
contracts with respect to pending or threatened litigation, claims,
administrative proceedings or environmental matters and (v) all material
agreements of BNC or any of its Subsidiaries, including without limitation,
leases, supplier contracts, merchant agreements, shareholder agreements,
licenses and any and all agreements restricting BNC or any of its Subsidiaries
from borrowing money or granting security interests in Collateral, and the
results of such due diligence review shall have been satisfactory to Lender
in
its sole discretion.
Page
37
(hh) Absence
of the occurrence of any event that has had or could reasonably be expected
to
result in a Material Adverse Effect on the financial condition of BNC or
Borrower since the date of the financial statements dated August 31, 2005
delivered to Lender.
(ii)
Satisfactory
inspection of the Premises and examination and audit of BNC’s and Borrower’s
books and records.
(jj)
Evidence
that Lender has a perfected first priority security interest in the Collateral,
including, without limitation, any Collateral that is located
Offshore.
(kk) Receipt
and satisfactory review of BNC’s and HWC’s prepared projections (i.e., balance
sheet and income statement projections by month) for the period from September
2005 to December 2006 reflecting the proposed debt structure and the pro forma
balance sheet.
(ll)
All
instruments, documents and chattel paper constituting Collateral, duly endorsed
or assigned to Lender,
(mm) Satisfactory
resolution of any actual or potential fraudulent conveyance issues arising
from
the transactions contemplated by this Agreement, the Securities Repurchase
Agreement or the Transaction Agreement.
(nn) Evidence
that the HWC Transactions, the BNC Merger and the transactions contemplated
under the Securities Repurchase Agreement have been consummated.
(oo) Evidence
that IWC Services, Inc., a Texas corporation has been converted into a Texas
limited liability company named “IWC Services, LLC”.
(pp) The
Funding Date occurring not later than April 1, 2006.
(qq) Such
other documents as Lender in its sole discretion may require.
Section
4.2 Conditions
Precedent to All Advances
and
All Issuances of a Letter of Credit.
Lender’s obligation to make each Advance or to cause the issuance of a
Letter of Credit shall be subject to the further conditions precedent
that:
(a) the
representations and warranties contained in Article
V
are
correct on and as of the date of such Advance or issuance of a Letter of Credit
as though made on and as of such date, except to the extent that such
representations and warranties relate solely to an earlier date;
(b) all
requirements under the Post-Closing Agreement have been satisfied as and when
due; and
(c) no
event
has occurred and is continuing, or would result from such Advance or issuance
of
a Letter of Credit that constitutes a Default or an Event of
Default.
Page
38
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES
BNC
and
Borrower jointly and severally represent and warrant to Lender as
follows:
Section
5.1 Existence
and Power; Name; Chief Executive Office; Inventory and Equipment Locations;
Federal Employer Identification Number and Organizational Identification
Number.
Each
Credit Party is a duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and is duly licensed or
qualified to transact business in all jurisdictions where the character of
the
property owned or leased or the nature of the business transacted by it makes
such licensing or qualification necessary and where the failure to be so
licensed or qualified would have a Material Adverse Effect. BNC, Borrower and
each other Domestic Subsidiary have all requisite power and authority to conduct
its business, to own its properties and to execute and deliver, and to perform
all of its obligations under, the Loan Documents. During their respective
existence, BNC and Borrower have done business solely under the names set forth
in Schedule 5.1. BNC’s and Borrower’s chief executive office and
principal place of business is located at the address set forth in Schedule
5.1, and all of that BNC’s and Borrower’s records relating to its business
or the Collateral are kept at that location. All Inventory and Equipment is
located at that location or at one of the other locations listed in Schedule
5.1. Borrower’s federal employer identification number and organization
identification number are correctly set forth in Section
3.6.
Section
5.2 Capitalization.
Schedule 5.2 constitutes a correct and complete list of all Persons
holding ownership interests and rights to acquire ownership interests that
if
fully exercised would cause such Person to hold more than ten percent (10%)
of
all ownership interests of BNC on a fully diluted basis, and an organizational
chart showing the ownership structure of BNC’s Subsidiaries, including
Borrower.
Section
5.3 Authorization
of Borrowing under the Loan Documents and Senior Subordinated Loan Documents
and
consummation of the HWC Transactions; No Conflict as to Law or
Agreements.
The
execution, delivery and performance by each Credit Party of the HWC Transaction
Documents, Securities Repurchase Agreement, Senior Subordinated Loan Documents,
the Loan Documents to which it is a party and the borrowings from time to time
under the Loan Documents and the Senior Subordinated Loan Documents and the
consummation of the transactions under the HWC Transaction Documents and the
Securities Repurchase Agreement have been duly authorized by all necessary
action and do not and will not (i) require any consent or approval of a Credit
Party’s Owners, except such approval and consent as has been obtained,
accomplished or given prior to the date hereof; (ii) require any authorization,
consent or approval by, or registration, declaration or filing with, or notice
to, any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or any third party, except such
authorization, consent, approval, registration, declaration, filing or notice
as
has been obtained, accomplished or given prior to the date hereof; (iii) violate
any provision of any law, rule or regulation (including Regulation X of the
Board of Governors of the Federal Reserve System) or of any order, writ,
injunction or decree presently in effect having applicability to a Credit Party
or of such Credit Party’s Constituent Documents; (iv) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other material agreement, lease or instrument to which a Credit Party is a
party
or by which it or its properties may be bound or affected; or (v) result in,
or
require, the creation or imposition of any Lien (other than the Security
Interest) upon or with respect to any of the properties now owned or hereafter
acquired by a Credit Party.
Page
39
Section
5.4 Legal
Agreements.
This Agreement constitutes and, upon due execution by Borrower and BNC, the
other Loan Documents will constitute the legal, valid and binding obligations
of
each Credit Party to which it is party, enforceable against Borrower and the
other Credit Parties in accordance with their respective terms.
Section
5.5 Subsidiaries.
Except as set forth in Schedule 5.5 hereto, BNC and Borrower have no
other Subsidiaries. The Inactive Subsidiaries conduct no business operations
and
do not own or hold assets of any kind.
Section
5.6 Financial
Condition; No Adverse Change.
BNC and Borrower have furnished to Lender its audited financial statements
for
its fiscal year ended December 31, 2004 and unaudited financial statements
for
the fiscal-year-to-date period ended January 31, 2006 and those statements
fairly present BNC’s and its Subsidiaries’ financial condition on a consolidated
basis on the dates thereof and the results of its operations and cash flows
for
the periods then ended and were prepared in accordance with GAAP. Since the
date
of the most recent financial statements, there has been no change in BNC’s or
Borrower’s business, properties or condition (financial or otherwise) that has
had a Material Adverse Effect.
Section
5.7 Litigation.
There are no actions, suits or proceedings pending or, to BNC’s or Borrower’s
knowledge, threatened against or affecting a Credit Party or any of its
Affiliates or the properties of a Credit Party or any of its Affiliates before
any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which, if determined adversely to a Credit
Party or any of its Affiliates, would have a Material Adverse Effect. Seller
has
agreed to indemnify BNC and its Affiliates from the matters disclosed in
Schedule 10.2 to the Transaction Agreement.
Section
5.8 Regulation
U.
No Credit Party has engaged in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of Regulation U
of
the Board of Governors of the Federal Reserve System), and no part of the
proceeds of any Advance will be used to purchase or carry any margin stock
or to
extend credit to others for the purpose of purchasing or carrying any margin
stock.
Section
5.9 Taxes.
Each Credit Party and its Affiliates have paid or caused to be paid to the
proper authorities when due all federal, state and local taxes required to
be
withheld by each of them. Each Credit Party and its Affiliates have filed all
federal, state and local tax returns which to the knowledge of the Officers
of
such Credit Party or any Affiliate, as the case may be, are required to be
filed, and each Credit Party and its Affiliates have paid or caused to be paid
to the respective taxing authorities all taxes as shown on said returns or
on
any assessment received by any of them to the extent such taxes have become
due.
Section
5.10 Titles
and Liens.
Borrower has good, indefeasible and marketable title to all Collateral and
all
of its other assets free and clear of all Liens other than Permitted Liens.
No
financing statement naming any Credit Party as debtor is on file in any office
except to perfect only Permitted Liens.
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40
Section
5.11
|
Intellectual
Property Rights.
|
(a) Owned
Intellectual Property.
Schedule
5.11
is a
complete list of all patents, applications for patents, trademarks, applications
to register trademarks, service marks, applications to register service marks,
mask works, trade dress and copyrights for which a Credit Party is the owner
of
record (the “Owned
Intellectual Property”).
Except as disclosed on Schedule
5.11,
(i) each Credit Party owns the Owned Intellectual Property free and clear
of all restrictions (including covenants not to xxx a third party), court
orders, injunctions, decrees, writs or Liens, whether by written agreement
or
otherwise, (ii) no Person other than a Credit Party owns or has been
granted any right in the Owned Intellectual Property, (iii) all Owned
Intellectual Property is valid, subsisting and enforceable, and (iv) each
Credit Party has taken all commercially reasonable action necessary to maintain
and protect the Owned Intellectual Property.
(b) Intellectual
Property Rights Licensed from Others.
Schedule
5.11
is a
complete list of all agreements under which a Credit Party has licensed
Intellectual Property Rights from another Person (“Licensed
Intellectual Property”)
other
than readily available, non-negotiated licenses of computer software and other
intellectual property used solely for performing accounting, word processing
and
similar administrative tasks (“Off-the-shelf
Software”)
and a
summary of any ongoing payments a Credit Party is obligated to make with respect
thereto. Except as disclosed on Schedule
5.11
and in
written agreements, copies of which have been given to Lender, each Credit
Party’s licenses to use the Licensed Intellectual Property are free and clear of
all restrictions, Liens, court orders, injunctions, decrees, or writs, whether
by written agreement or otherwise. Except as disclosed on Schedule
5.11,
no
Credit Party is obligated or under any liability whatsoever to make any payments
of a material nature by way of royalties, fees or otherwise to any owner of,
licensor of, or other claimant to, any Intellectual Property
Rights.
(c) Other
Intellectual Property Needed for Business.
Except
for Off-the-shelf Software and as disclosed on Schedule
5.11,
the
Owned Intellectual Property and the Licensed Intellectual Property constitute
all Intellectual Property Rights used or necessary to conduct each Credit
Party’s business as it is presently conducted or as the Credit Party reasonably
foresees conducting it.
(d) Infringement.
Except
as disclosed on Schedule
5.11,
no
Credit Party has knowledge of, and has not received any written claim or notice
alleging, any Infringement of another Person’s Intellectual Property Rights
(including any written claim that a Credit Party must license or refrain from
using the Intellectual Property Rights of any third party) nor, to BNC’s or
Borrower’s knowledge, is there any threatened claim or any reasonable basis for
any such claim.
Section
5.12 Plans.
Except as disclosed to Lender in writing prior to the date hereof, neither
any
Credit Party nor any ERISA Affiliate (i) maintains or has maintained any
Pension Plan, (ii) contributes or has contributed to any Multiemployer Plan
or (iii) provides or has provided post-retirement medical or insurance
benefits with respect to employees or former employees (other than benefits
required under Section 601 of ERISA, Section 4980B of the IRC or applicable
state law). Neither any Credit Party nor any ERISA Affiliate has received any
notice or has any knowledge to the effect that it is not in full compliance
with
any of the requirements of ERISA, the IRC or applicable state law with respect
to any Plan. No Reportable Event exists in connection with any Pension Plan.
Each Plan that is intended to qualify under the IRC is so qualified, and no
fact
or circumstance exists which may have an adverse effect on the Plan’s
tax-qualified status. Neither any Credit Party nor any ERISA Affiliate has
(i) any accumulated funding deficiency (as defined in Section 302 of ERISA
and Section 412 of the IRC) under any Plan, whether or not waived,
(ii) any liability under Section 4201 or 4243 of ERISA for any withdrawal,
partial withdrawal, reorganization or other event under any Multiemployer Plan
or (iii) any liability or knowledge of any facts or circumstances which
could result in any liability to the Pension Benefit Guaranty Corporation,
the
Internal Revenue Service, the Department of Labor or any participant in
connection with any Plan (other than routine claims for benefits under the
Plan).
Page
41
Section
5.13 Default.
Each Credit Party is in compliance with all provisions of all agreements,
instruments, decrees and orders to which it is a party or by which it or its
property is bound or affected, the breach or default of which could have a
Material Adverse Effect.
Section
5.14 Environmental
Matters.
(a) Except
as
disclosed on Schedule
5.14,
to
BNC’s or Borrower’s knowledge there are not present in, on or under the Premises
any Hazardous Substances in such form or quantity as to create any material
liability or obligation for either a Credit Party or Lender under the common
law
of any jurisdiction or under any Environmental Law, and no Hazardous Substances
have ever been stored, buried, spilled, leaked, discharged, emitted or released
in, on or under the Premises in such a way as to create any such material
liability.
(b) Except
as
disclosed on Schedule
5.14,
to
BNC’s or Borrower’s knowledge no Credit Party has disposed of Hazardous
Substances in such a manner as to create any material liability under any
Environmental Law.
(c) Except
as
disclosed on Schedule
5.14,
to
BNC’s or Borrower’s knowledge there have not existed in the past, nor are there
any threatened or impending requests, claims, notices, investigations, demands,
administrative proceedings, hearings or litigation relating in any way to the
Premises or any Credit Party, alleging material liability under, violation
of,
or noncompliance with any Environmental Law or any license, permit or other
authorization issued pursuant thereto.
(d) Except
as
disclosed on Schedule
5.14,
to
BNC’s or Borrower’s knowledge each Credit Party’s businesses are and have in the
past always been conducted in accordance with all Environmental Laws and all
licenses, permits and other authorizations required pursuant to any
Environmental Law and necessary for the lawful and efficient operation of such
businesses are in each Credit Party’s possession and are in full force and
effect, nor has any Credit Party been denied insurance on grounds related to
potential environmental liability. No permit required under any Environmental
Law is scheduled to expire within 12 months and there is no threat that any
such
permit will be withdrawn, terminated, limited or materially
changed.
(e) Except
as
disclosed on Schedule
5.14,
to
BNC’s or Borrower’s knowledge the Premises are not and never have been listed on
the National Priorities List, the Comprehensive Environmental Response,
Compensation and Liability Information System or any similar federal, state
or
local list, schedule, log, inventory or database.
Page
42
(f) BNC
and
Borrower have delivered to Lender all environmental assessments, audits,
reports, permits, licenses and other documents describing or relating in any
way
to the Premises or any Credit Party’s businesses.
Section
5.15 Submissions
to Lender.
All financial and other information provided to Lender by or on behalf of BNC
or
Borrower in connection with BNC’s and Borrower’s request for the credit
facilities contemplated hereby (i) is true and correct in all material
respects, (ii) does not omit any material fact necessary to make such
information not misleading and, (iii) as to projections, valuations or
pro-forma financial statements, present a good faith opinion as to such
projections, valuations and pro-forma condition and results.
Section
5.16 Financing
Statements.
Borrower has authorized the filing of financing statements sufficient when
filed
to perfect the Security Interest and the other security interests created by
the
Security Documents. When such financing statements are filed in the offices
noted therein, Lender will have a valid and perfected security interest in
all
Collateral that is capable of being perfected by filing financing statements.
No
filing is or will be necessary with the United States Department of Interior
Mineral Management Service to perfect the Security Interest (including, without
limitation, any Security Interest with respect to a Snubbing Unit located
Offshore). None of the Collateral is or will become a fixture on real estate,
or
is or will constitute immovable property, as applicable, unless a sufficient
fixture filing has been previously filed in favor of Lender and remains in
effect with respect thereto. Article 9 of the UCC governs exclusively with
respect to the grant, perfection and enforcement of a security interest and
Lien
upon any Snubbing Unit, including, without limitation, those Snubbing Units
that
may be located Offshore from time to time.
Section
5.17 Rights
to Payment.
Each right to payment and each instrument, document, chattel paper and other
agreement constituting or evidencing Collateral is (or, in the case of all
future Collateral, will be when arising or issued) the valid, genuine and
legally enforceable obligation, subject to no defense, setoff or counterclaim,
of the account debtor or other obligor named therein or in Borrower’s records
pertaining thereto as being obligated to pay such obligation.
Section
5.18 Deposit
Accounts, Tort Claims and Investment Property.
Except for the Collateral Account and the deposit accounts disclosed on
Schedule 5.18, BNC and Borrower have no other deposit accounts. BNC
and Borrower have no knowledge of any commercial tort claims that it may have
against another Person. BNC and Borrower have no Investment Property, except
for
their ownership of the Equity Interests in the Subsidiaries set forth on
Schedule 5.2.
Section
5.19 No
Labor Disputes.
All employees of each Credit Party are employed at will, and no such
employees are represented by a union. No Credit Party is a party to any
agreement for the provision of labor from any outside agency. No Credit Party
is
a party to any collective bargaining agreement. Each Credit Party has complied
in all material respects with all laws related to the employment of employees.
No Credit Party has received any written notice of any claim that it has not
complied in any material respect with any laws relating to the employment of
employees, including, without limitation, any provisions thereof relating to
wages, hours, collective bargaining, the payment of Social Security and similar
taxes, equal employment opportunity, employment discrimination, the WARN Act,
employee safety, or that it is liable for any arrearages of wages or any taxes
or penalties for failure to comply with any of the foregoing.
Page
43
Section
5.20 Compliance
with Laws.
Each Credit Party is in compliance with all material laws, rules, regulations,
orders and decrees applicable to it and its properties.
Section
5.21 Brokers.
Except for the amounts to be paid to Growth Capital Partners, L.P. pursuant
to
the letter agreement dated March 24, 2004 with BNC and to be paid to Oak Hollow
Consulting, L.L.C. pursuant to the Consulting Agreement between Oak Hollow
Consulting, L.L.C. and BNC dated August 16, 2002, all of which amounts will
be
paid in full on the date hereof, no Credit Party has incurred, nor will incur,
directly or indirectly, as a result of any action taken or permitted to be
taken
by or on behalf of a Credit Party, any liability for brokerage or finders’ fees
or agents’ commissions or similar charges in connection with the execution and
performance of the transactions contemplated by this Agreement.
Section
5.22 Insurance.
Schedule 5.22 attached hereto lists all insurance policies of the
Credit Parties. Those policies (i) are in amounts and have coverages that,
in
the judgment of BNC and Borrower, are reasonable and adequate in amount and
(ii)
are in amounts and have coverages as required by any agreement to which a Credit
Party is a party or by which any of its assets or properties is bound. Each
policy listed in Schedule 5.22 is valid and binding and in full force and
effect, and no Credit Party has received any notice of cancellation or
termination in respect of any such policy or is in default thereunder, and
no
Credit Party has knowledge of any reason or state of facts that could reasonably
be expected to lead to the cancellation of such policies.
Section
5.23 Existing
Indebtedness and Guaranties.
The Credit Parties have no Indebtedness (other than the Senior Subordinated
Loans and as disclosed on Schedule 6.4), and none of the Credit Parties
are a party to any guaranty (other than the Guaranties or as disclosed on
Schedule 6.4).
Section
5.24 Affiliate
Agreements.
Except as disclosed on Schedule 5.24, no Owner of BNC (having
“beneficial ownership” of more than five percent (5%) of the voting power of all
classes of capital stock of BNC on a fully-diluted basis) or any Person related
by blood, marriage or adoption to any such Person or any Affiliate is a party
to
any agreement, contract, commitment or transaction with a Credit Party or has
any material interest in any material property used by a Credit
Party.
Section
15.25 Investment
Company Act.
Neither any Credit Party nor an Affiliate of a Credit Party is required to
be
registered as an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.
Section
5.26 Public
Utility Holding Company Act.
No Credit Party 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.
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44
Section
5.27 Interests
in Real Property.
Except for the Premises that Borrower owns or leases and listed on
Exhibit D, neither BNC nor Borrower owns, leases or has an option to
purchase any real property.
Section
5.28 Senior
Subordinated Loan Documents and the HWC Transaction Documents.
BNC and Borrower have delivered to Lender true, correct and complete copies
of
the
Senior Subordinated Loan Documents, the Securities Repurchase Agreement and
the
HWC Transaction Documents.
Section
5.29 Snubbing
Units.
A complete record of all Snubbing Units as of the date of this Agreement
(including (w) identification of the serial number of each Snubbing Unit
and the owner thereof, (x) identification of the location of each Snubbing
Unit (by jurisdiction), (y) a notation of whether or not the Snubbing Unit
located at a customer’s working job site pursuant to a written contract) and (z)
whether such Snubbing Unit is a Mobile Snubbing Unit and, if so, annotation
of
whether such Mobile Snubbing Unit is covered by a certificate of title and
the
jurisdiction of issuance thereof) is set forth in Schedule 5.29
hereto. No Snubbing Unit that constitutes Eligible Equipment is located outside
the control and jurisdiction of the United States of America. Borrower has
an
express right of access to the Snubbing Units wherever located pursuant to
the
related Snubbing Unit Agreement, and without limiting the foregoing, Borrower
has the right to enter on property where a Snubbing Unit is located and to
remove such Snubbing Unit therefrom without interference from, or imposition
of
any Lien on such Snubbing Unit by, any owner, landlord, tenant or other Person
with an interest in such property. Each Snubbing Unit is (a) a movable good,
of
a type normally used in more than one jurisdiction and not designed to be
permanently used in any one location; (b) not a fixture, or immoveable property,
as the case may be, under the laws of any jurisdiction in which a Snubbing
Unit
may be located; (c) not part of a “vessel”, as defined under applicable maritime
law; and (d) not subject to, and is not being utilized pursuant to, a maritime
contract. The Snubbing Units (including the Mobile Snubbing Units) are not
“motor vehicles” under any statute, law, regulation or rule of any jurisdiction
in which any of the Snubbing Units is located and are not certificated as motor
vehicles under the laws of any jurisdiction. Borrower has delivered to Lender
a
true, correct and complete copy of its and HWC’s Snubbing Unit Agreement
forms.
Section
5.30 Financial
Solvency.
Both before and after giving effect to the transactions contemplated in the
Loan
Documents (including the making of any loan or Advance under this Agreement),
neither any Credit Party nor any of its Affiliates:
(a) Was
or
will be insolvent, as that term is used and defined in Section 101(32) of the
Bankruptcy Code and Section 2 of the Uniform Fraudulent Transfer Act, provided
the foregoing representation excludes any Credit Party that is an Inactive
Subsidiary;
(b) Has
unreasonably small capital or is engaged or about to engage in a business or
a
transaction for which any remaining assets of such Credit Party or such
Affiliate are unreasonably small, provided the foregoing representation excludes
any Credit Party that is an Inactive Subsidiary;
(c) By
executing, delivering or performing its obligations under the Loan Documents
or
other documents to which it is a party or by taking any action with respect
thereto, intends to, nor believes that it will, incur debts beyond its ability
to pay them as they mature, provided the foregoing representation excludes
any
Credit Party that is an Inactive Subsidiary;
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45
(d) By
executing, delivering or performing its obligations under the Loan Documents
or
other documents to which it is a party or by taking any action with respect
thereto, intends to hinder, delay or defraud either its present or future
creditors; and
(e) At
this
time contemplates filing a petition in bankruptcy or for an arrangement or
reorganization or similar proceeding under any law of any jurisdiction, nor,
to
the best knowledge of BNC and Borrower, is the subject of any actual, pending
or
threatened bankruptcy, insolvency or similar proceedings under any law of any
jurisdiction.
Section
5.31 Personal
Property Evidenced by a Certificate of Title.
Schedule 5.31 sets forth a true, correct and complete list of all motor
vehicles or other personal property evidenced by a certificate of title owned
by
Borrower.
Section
5.32 Contracts
and Agreements. No Credit Party is (a) a party to any
judgment, order or decree or any agreement, document or instrument, or subject
to any restriction, which would have a Material Adverse Effect on its ability
to
execute and deliver, or perform under, any Loan Document or to pay and perform
the Obligations or (b) a party or subject to any agreement, document or
instrument with respect to, or obligation to pay any, service or management
fee
with respect to, the ownership, operation, leasing or performance of any of
its
business.
ARTICLE
VI
COVENANTS
Until
the
last to occur of the following events: (i) the Obligations have been paid
and performed in full and (ii) the entire Credit Facility has been
terminated, Borrower and BNC jointly and severally will comply with the
following requirements, unless Lender shall otherwise consent in
writing:
Section
6.1 Reporting
Requirements.
BNC and Borrower will deliver, or cause to be delivered, to Lender each of
the
following, which shall be in form and detail acceptable to Lender:
(a) Annual
Financial Statements.
As soon
as available, and in any event within 90 days after the end of each fiscal
year
of BNC, BNC’s audited financial statements with the unqualified opinion of
independent certified public accountants selected by BNC and reasonably
acceptable to Lender, which annual financial statements shall include BNC’s
balance sheet as at the end of such fiscal year and the related statements
of
BNC’s income, retained earnings and cash flows for the fiscal year then ended,
prepared on a consolidated basis to include any Affiliates, all in reasonable
detail and prepared in accordance with GAAP, together with (i) copies of
all management letters prepared by such accountants; (ii) a report signed
by such accountants stating that in making the investigations necessary for
said
opinion they obtained no knowledge, except as specifically stated, of any
Default or Event of Default and all relevant facts in reasonable detail to
evidence, and the computations as to, whether or not BNC is in compliance with
the Financial Covenants; and (iii) a certificate of BNC’s chief financial
officer stating that such financial statements have been prepared in accordance
with GAAP, fairly represent BNC’s and its Subsidiaries financial position and
the results of their operations, and whether or not such Officer has knowledge
of the occurrence of any Default or Event of Default and, if so, stating in
reasonable detail the facts with respect thereto.
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46
(b) Monthly
Financial Statements.
As soon
as available and in any event within 30 days after the end of each month, the
unaudited/internal balance sheet and statements of income and retained earnings
of BNC and its Subsidiaries as at the end of and for such month and for the
year
to date period then ended, prepared, if Lender so requests, on a consolidating
and consolidated basis to include any Affiliates, in reasonable detail and
stating in comparative form the figures for the corresponding date and periods
in the previous year, all prepared in accordance with GAAP, subject to year-end
audit adjustments and which fairly represent BNC’s and its Subsidiaries
financial position and the results of their operations; and accompanied by
a
certificate of BNC’s chief financial officer, substantially in the form of
Exhibit
C
hereto
stating (i) that such financial statements have been prepared in accordance
with GAAP, subject to year-end audit adjustments, and fairly represent BNC’s and
its Subsidiaries financial position and the results of their operations,
(ii) whether or not such Officer has knowledge of the occurrence of any
Default or Event of Default not theretofore reported and remedied and, if so,
stating in reasonable detail the facts with respect thereto, and (iii) all
relevant facts in reasonable detail to evidence, and the computations as to,
whether or not BNC and Borrower are in compliance with its covenants under
this
Agreement.
(c) Collateral
Reports.
Within
15 days after the end of each month or more frequently if Lender so requires,
Borrower’s accounts receivable and its accounts payable (listing all receivables
and payables and the aging of each), in form and substance satisfactory to
Lender in its sole discretion, which specifies, among other things, a detailed
Inventory report, an Inventory certification report, and a calculation of
Borrower’s ineligible Accounts, Eligible Unbilled Accounts, and Eligible
Accounts, as of the end of such month or shorter time period.
(d) Projections.
No
later than 30 days before the last day of each fiscal year, the Credit Parties’
projected balance sheets, income statements, statements of cash flow and
Borrower’s projected Availability for each month of the succeeding fiscal year,
each in reasonable detail. Such items will be certified by the Officer who
is
BNC’s chief financial officer as being the most accurate projections available
and identical to the projections used by a Credit Party for internal planning
purposes and be delivered with a statement of underlying assumptions and such
supporting schedules and information as Lender may in its discretion
require.
(e) Supplemental
Reports.
Weekly,
or more frequently if Lender so requires, Borrower’s “daily collateral reports”,
Snubbing Unit status report that identifies, among other things, the location
of
each Snubbing Unit, receivables schedules, sales reports and journals, cash
receipt journals, copies of deposit tickets, collection reports, copies of
credit memos, reports of Inventory levels, copies of invoices to account
debtors, signed
and dated shipment documents and delivery receipts for goods sold to said
account debtors. Within 15 days after the end of each month or more frequently
if Lender so requires, a report detailing the amount of accrued, but unpaid,
VAT
Taxes.
(f) Litigation.
Within
five (5) Business Days after the commencement thereof, notice in writing of
all
litigation and of all proceedings before any governmental or regulatory agency
affecting a Credit Party (i) of the type described in Section
5.14(c)
or
(ii) which seek a monetary recovery against a Credit Party in excess of
$250,000.
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47
(g) Defaults.
When
any Officer of a Credit Party becomes aware of the probable occurrence of any
Default or Event of Default, and no later than 3 Business Days after such
Officer becomes aware of such Default or Event of Default, notice of such
occurrence, together with a detailed statement by a responsible Officer of
the
Credit Party of the steps being taken by the Credit Party to cure the effect
thereof.
(h) Plans.
As soon
as possible, and in any event within 30 days after a Credit Party knows or
has
reason to know that any Reportable Event with respect to any Pension Plan has
occurred, a statement signed by the Officer who is BNC’s chief financial officer
setting forth details as to such Reportable Event and the action which such
Credit Party proposes to take with respect thereto, together with a copy of
the
notice of such Reportable Event to the Pension Benefit Guaranty Corporation.
As
soon as possible, and in any event within 10 days after a Credit Party fails
to
make any quarterly contribution required with respect to any Pension Plan under
Section 412(m) of the IRC, Borrower and BNC will deliver to Lender a statement
signed by the Officer who is BNC’s chief financial officer setting forth details
as to such failure and the action which such Credit Party proposes to take
with
respect thereto, together with a copy of any notice of such failure required
to
be provided to the Pension Benefit Guaranty Corporation. As soon as possible,
and in any event within ten days after a Credit Party knows or has reason to
know that it has or is reasonably expected to have any liability under Sections
4201 or 4243 of ERISA for any withdrawal, partial withdrawal, reorganization
or
other event under any Multiemployer Plan, BNC and Borrower will deliver to
Lender a statement of BNC’s chief financial officer setting forth details as to
such liability and the action which such Credit Party proposes to take with
respect thereto.
(i) Disputes.
Promptly upon knowledge thereof, notice of (i) any disputes or claims by
Borrower’s customers, (ii) credit memos, and (iii) any goods returned
to or recovered by Borrower, where the amount involved in clauses (i), (ii)
or
(iii) is more than $25,000 in each occurrence.
(j) Officers
and Directors.
Promptly upon knowledge thereof, notice of any change in the Persons
constituting a Credit Party’s Officers and Directors.
(k) Collateral.
Promptly upon knowledge thereof, notice of any loss of, or material damage
to,
any Collateral or any substantial adverse change in any Collateral or the
prospect of payment thereof where the amount involved is more than
$25,000.
(l) Commercial
Tort Claims.
Promptly upon knowledge thereof, notice of any commercial tort claims it may
bring against any Person, including the name and address of each defendant,
a
summary of the facts, an estimate of the Credit Party’s damages, copies of any
complaint or demand letter submitted by a Credit Party, and such other
information as Lender may request.
(m) Intellectual
Property.
(i) 30
days
prior written notice of a Credit Party’s intent to acquire material Intellectual
Property Rights; except for transfers permitted under Section
6.17,
BNC and
Borrower will give Lender 30 days prior written notice of a Credit Party’s
intent to dispose of material Intellectual Property Rights and upon request
shall provide Lender with copies of all proposed documents and agreements
concerning such rights.
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48
(ii) Promptly
upon knowledge thereof, notice of (A) any Infringement of its Intellectual
Property Rights by others, (B) claims that a Credit Party is Infringing
another Person’s Intellectual Property Rights and (C) any threatened
cancellation, termination or material limitation of its Intellectual Property
Rights.
(iii) Promptly
upon receipt, copies of all registrations and filings with respect to its
Intellectual Property Rights.
(n) Reports
to Owners.
Promptly upon their distribution, copies of all financial statements, reports
and proxy statements which a Credit Party may send to its Owners, excluding
any
material provided to Owner in their capacity as Directors of BNC.
(o) SEC
Filings.
Promptly after the sending or filing thereof, copies of all regular and periodic
reports which a Credit Party shall file with the Securities and Exchange
Commission, or any national securities exchange.
(p) Tax
Returns.
As soon
as possible, and in any event no later than five (5) Business Days after they
are due to be filed, copies of the state and federal income tax returns and
all
schedules thereto of a Credit Party.
(q) Violations
of Law.
Promptly upon knowledge thereof, BNC and Borrower shall give Lender written
notice of a Credit Party’s violation of any law, rule or regulation, the
non-compliance with which could have a Material Adverse Effect on a Credit
Party.
(r) Other
Reports.
From
time to time, with reasonable promptness, any and all receivables schedules,
Inventory reports, collection reports, Snubbing Unit status reports, deposit
records, equipment schedules, copies of invoices to account debtors, shipment
documents and delivery receipts for goods sold, and such other material,
reports, records or information as Lender may request and is customary for
transactions of the type contemplated by this Agreement.
Section
6.2 Financial
Covenants.
(a) Minimum
Book Net Worth. BNC
and
its Subsidiaries will on a consolidated basis maintain, during each period
described below, the applicable Minimum Book Net Worth, determined as of the
end
of each fiscal month in such period, in an amount not less than the amount
set
forth for each such fiscal period (numbers appearing between “< >“ are
negative):
Period
|
Minimum
Book Net Worth
|
March
31, 2006 through December 31, 2006
|
90%
of the Book Net Worth calculated as of March 1, 2006 on the basis
of a pro
forma balance sheet giving effect to the HWC Transactions and the
BNC
Merger delivered to Lender reflecting the Book Net Worth as of that
date
(which balance sheet shall be delivered to Lender on or before April
15,
2006) but in no event shall 90% of the Book Net Worth be less than
$25,000,000
|
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49
Period
|
Minimum
Book Net Worth
|
For
each fiscal year ending thereafter and continuing until the Maturity
Date
|
The
greater of (i) the Minimum Book Net Worth required pursuant to this
Section
6.2(a)
for the immediately preceding fiscal year, and (ii) 85% of the Book
Net
Worth calculated as of last day of the preceding fiscal year based
on the
unaudited or annual audited (as applicable) financial statements
covering
the preceding fiscal year.
If
amended or restated financial statements change the previously calculated
applicable Minimum Book Net Worth, Lender may reduce or increase
the
applicable Minimum Book Net Worth from the date of receipt of such
amended
or restated financial statements, to the beginning of the then current
fiscal year or to the beginning of the fiscal month of the then current
year, as Lender in its sole discretion deems
appropriate.
|
(b) Minimum
Debt Service Coverage Ratio.
BNC and
its Subsidiaries will on a consolidated basis maintain, as of each fiscal
quarter end commencing with the fiscal quarter ending March 31, 2006, a Debt
Service Coverage Ratio of not less than 1.50 to 1.0.
(c) Capital
Expenditures.
BNC and
its Subsidiaries, including Borrower, will not incur or contract to incur
Capital Expenditures (whether financed or Unfinanced Capital Expenditures)
of
more than $3,000,000 in the aggregate during any fiscal year.
Section
6.3 Permitted
Liens; Financing Statements.
(a) BNC
and
Borrower will not, and will not permit any other Credit Party to, create, incur
or suffer to exist any Lien upon or of any of its assets, now owned or hereafter
acquired, to secure any indebtedness; excluding, however, from the operation
of
the foregoing, the following (each a “Permitted
Lien”;
collectively, “Permitted
Liens”):
(i) In
the
case of any of BNC’s or Borrower’s property which is not Collateral, covenants,
restrictions, rights, easements and minor irregularities in title which do
not
materially interfere with BNC’s or Borrower’s business or operations as
presently conducted;
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50
(ii) Liens
in
existence on the date hereof and listed in Schedule
6.3
hereto,
securing indebtedness for borrowed money permitted under Section
6.4
and
renewals and extensions (but not increases, refinancings, or other amendments
affecting more than the extension of the term of the indebtedness) of such
indebtedness;
(iii) The
Security Interest and Liens created by the Security Documents; and
(iv) Purchase
money Liens relating to the acquisition of machinery and equipment of Borrower
not exceeding the lesser of cost or fair market value thereof, not exceeding
$2,000,000 in the aggregate during any fiscal year, and so long as no Default
Period is then in existence and none would exist immediately after such
acquisition;
(v)
Liens
imposed by law for taxes that are not yet due or are being contested in
compliance with Section 6.12;
(vi) carriers’,
warehousemen’s, mechanics’, materialmen’s repairmen’s and other like Liens
imposed by law, arising in the ordinary course of business and securing
obligations that are not overdue or are being contested in compliance with
Section 6.12,
and in
any event, no action to exercise or enforce such Lien has been
commenced;
(vii) pledges
and deposits made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security laws or
regulations; and
(viii) deposits
to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations
(other than obligations for the repayment of Indebtedness, but excluding from
this exception the deposit account reflected on Schedule
5.18
securing
a bank guarantee issued on behalf of Amegy Bank N.A. to ICICI Bank Limited
on
behalf of BNC (the “Bank
Guarantee”))
of
like nature, in each case arising in the ordinary course of business and not
being secured by the Collateral.
(b) BNC
and
Borrower will not amend any financing statements in favor of Lender except
as
permitted by law. Any authorization by Lender to any Person to amend financing
statements in favor of Lender shall be in writing.
Section
6.4 Indebtedness.
BNC and Borrower will not, and will not permit any other Credit Party to, incur,
create, assume or permit to exist any indebtedness or liability on account
of
deposits or advances or any indebtedness for borrowed money or letters of credit
issued on a Credit Party’s behalf, or any other indebtedness or liability
evidenced by notes, bonds, debentures or similar obligations (collectively,
“Indebtedness”),
except:
(a)
|
Indebtedness
arising hereunder;
|
(b)
|
Indebtedness
arising under the Senior Subordinated
Loans;
|
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51
(c) Indebtedness
of Borrower in existence on the date hereof and listed in Schedule
6.4
hereto
and extensions or renewals (but not increases, refinancings or other amendments
affecting more than the extension of the term of the indebtedness) of any such
Indebtedness;
(d) Indebtedness
relating to Permitted Liens; and
(e) Indebtedness
of any wholly-owned Subsidiary to Borrower or any other wholly-owned Subsidiary
of BNC (other than Borrower) that is not evidenced by a promissory note, is
not
secured, and is fully and deeply subordinated to the Obligations.
Section
6.5 Guaranties.
BNC and Borrower will not, and will not permit any other Credit Party to,
assume, guarantee, endorse or otherwise become directly or contingently liable
in connection with any obligations of any other Person, except:
(a) The
Guaranties from time to time in effect pursuant to this Agreement;
(b) The
endorsement of negotiable instruments by a Credit Party for deposit or
collection or similar transactions in the ordinary course of business;
(c) Guaranties,
endorsements and other direct or contingent liabilities in connection with
the
obligations of other Persons, in existence on the date hereof and listed in
Schedule
6.4
hereto;
and
(d) Senior
Subordinated Guarantees by all existing and future Domestic Subsidiaries.
Section
6.6 Investments
and Subsidiaries.
BNC and Borrower will not, and will not permit any other Credit Party to, make
or permit to exist any loans or advances to, or make any investment or acquire
any interest whatsoever in, any other Person or Affiliate, including any
partnership or joint venture, nor purchase or hold beneficially any stock or
other securities or evidence of indebtedness of any other Person or Affiliate,
except:
(a) Investments
in direct obligations of the United States of America or any agency or
instrumentality thereof whose obligations constitute full faith and credit
obligations of the United States of America having a maturity of one year or
less, commercial paper issued by U.S. corporations rated “A-1” or “A-2” by
Standard & Poor’s Ratings Services or “P-1” or “P-2” by Xxxxx’x Investors
Service or certificates of deposit or bankers’ acceptances having a maturity of
one year or less issued by members of the Federal Reserve System having deposits
in excess of $100,000,000 (which certificates of deposit or bankers’ acceptances
are fully insured by the Federal Deposit Insurance Corporation);
(b) Travel
advances or loans to Borrower’s Officers and employees not exceeding at any one
time (i) an aggregate of $15,000 per occurrence per Person, or (ii) $150,000
in
the aggregate outstanding at any time;
(c)
Prepaid
rent not exceeding one month or security deposits; and
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52
(d) Current
investments in the Subsidiaries in existence on the date hereof and listed
in
Schedule
5.5
hereto.
BNC
and
Borrower will cause each of its Domestic Subsidiaries that is formed after
the
Funding Date to become a Guarantor and will cause all Equity Interests in any
Subsidiary to be duly pledged to Lender, subject to the limitations set forth
in
Section
8.4.
Section
6.7 Dividends;
Distributions
and
Equity.
BNC and Borrower will not (a) declare or pay any dividends (other than
dividends payable solely in stock of BNC) on any class of its stock, or make
any
payment on account of the purchase, redemption or other retirement of any shares
of such stock, or other securities or evidence of its indebtedness or make
any
Distribution in respect thereof, either directly or indirectly, except for
(i)
payments made to Lender on account of the Credit Facility, (ii) Distributions
made to wholly-owned Subsidiaries of Borrower, (iii) Permitted Subordinated
Debt
Payments made in accordance with the Senior Subordinated Promissory Notes,
and
(iv) Distributions in cash to Seller in an aggregate amount not to exceed
$6,500,000 on account of the Working Capital Adjustment, provided that such
cash
Distributions may not be made unless Lender has first received and approved
documentation (satisfactory to Lender in its Permitted Discretion) supporting
the amount of the Working Capital Adjustment and (b) sell or issue any Equity
Interests in BNC or Borrower (other than issuances of Equity Interests in BNC
(i) pursuant to a Working Capital Adjustment, (ii) as contemplated by the
Securities Repurchase Agreement or (iii) as contemplated by the Registration
Rights Agreement in connection with the issuance, registration and sale of
the
Equity Interests issued pursuant to the Transaction Agreement and beneficially
owned by Oil States).
Section
6.8 Salaries.
BNC and Borrower will not, and will not permit any other Credit Party to, pay
excessive or unreasonable salaries, bonuses, royalties, license fees,
commissions, consultant fees or other compensation; or increase the salary,
bonus, commissions, consultant fees or other compensation of any Director,
Officer or consultant, or any member of their families, by more than 10% in
any
one year, either individually or for all such Persons in the aggregate, or
pay
any such increase from any source other than profits earned in the year of
payment.
Section
6.9 Books
and Records; Collateral Examination, Inspection and Appraisals.
(a) BNC
and
Borrower will keep, and will cause the other Credit Party’s to keep, accurate
books of record and account for itself pertaining to the Collateral and
pertaining to such Credit Party’s business and financial condition and such
other matters as Lender may from time to time request in which true and complete
entries will be made in accordance with GAAP and, upon Lender’s request, will
permit any officer, employee, attorney, accountant or other agent of Lender
to
audit, review, make extracts from or copy any and all company and financial
books and records of a Credit Party at all times during ordinary business hours,
to send and discuss with account debtors and other obligors requests for
verification of amounts owed to Borrower, and to discuss a Credit Party’s
affairs with any of its Directors, Officers, employees or agents.
(b) BNC
and
Borrower hereby irrevocably authorize all accountants and third parties to
disclose and deliver to Lender or its designated agent, at Borrower’s expense,
all financial information, books and records, work papers, management reports
and other information in their possession regarding a Credit Party.
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53
(c) BNC
and
Borrower will permit, and will cause the other Credit Parties to permit, Lender
or its employees, accountants, attorneys or agents, to examine and inspect
any
Collateral or any other property of a Credit Party at any time during ordinary
business hours.
(d) Lender
may also, from time to time obtain at Borrower’s expense, an appraisal of
Collateral by an appraiser acceptable to Lender in its sole discretion;
provided,
however,
Borrower shall only be obligated to reimburse Lender for one appraisal per
year
if no Event of Default exists at the times of ordering, receiving and seeking
reimbursement for the appraisal.
Section
6.10 Account
Verification.
(a) Lender
or
its agent may at any time and from time to time send or require Borrower to
send
requests for verification of accounts or notices of assignment to account
debtors and other obligors. Lender or its agent may also at any time and from
time to time telephone account debtors and other obligors to verify
accounts.
(b) BNC
and
Borrower shall pay when due each account payable due to a Person holding a
Permitted Lien (as a result of such payable) on any Collateral.
Section
6.11 Compliance
with Laws.
(a) BNC
and
Borrower shall, and shall cause the other Credit Parties to, comply with the
requirements of applicable laws and regulations, the non-compliance with which
would materially and adversely affect its business or its financial condition,
and BNC and Borrower shall use and keep the Collateral, and require that others
use and keep the Collateral, only for lawful purposes, without violation of
any
federal, state or local law, statute or ordinance.
(b) Without
limiting the foregoing undertakings, BNC and Borrower specifically agrees that
it will, and will cause the other Credit Parties to, comply with all applicable
Environmental Laws and obtain and comply with all permits, licenses and similar
approvals required by any Environmental Laws, and will not generate, use,
transport, treat, store or dispose of any Hazardous Substances in such a manner
as to create any material liability or obligation under the common law of any
jurisdiction or any Environmental Law.
(c) BNC
and
Borrower shall, and shall cause the other Credit Parties to, (i) ensure
that neither BNC, Borrower nor any other Credit Party transacts business with
a
Person on the Specially Designated Nationals and Blocked Person List or other
similar lists maintained by the Office of Foreign Assets Control (“OFAC”),
the
Department of the Treasury or included in any Executive Orders, (ii) not
use or permit the use of the proceeds of the Credit Facility or any other
financial accommodation from Lender to violate any of the foreign asset control
regulations of OFAC or other applicable law, (iii) comply with all
applicable Bank Secrecy Act laws and regulations, as amended from time to time,
and (iv) otherwise comply with the USA Patriot Act as required by federal
law and Lender’s policies and practices.
Section
6.12 Payment
of Taxes and Other Claims.
BNC and Borrower will, and will cause the other Credit Parties to, pay or
discharge, when due, (a) all taxes, assessments and governmental charges
levied or imposed upon it or upon its income or profits, upon any properties
belonging to a Credit Party (including the Collateral) or upon or against the
creation, perfection or continuance of the Security Interest, prior to the
date
on which penalties attach thereto, (b) all federal, state and local taxes
required to be withheld by a Credit Party, and (c) all lawful claims for
labor, materials and supplies which, if unpaid, might by law become a Lien
upon
any properties of a Credit Party, provided that a Credit Party shall not be
required to pay any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which proper reserves have been made.
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Section
6.13 Maintenance
of Properties.
(a) BNC
and
Borrower will, and will cause the other Credit Parties to, keep and maintain
the
Collateral and all of its other properties necessary or useful in its business
in good condition, repair and working order (normal wear and tear excepted)
and
will from time to time replace or repair any worn, defective or broken parts.
BNC and Borrower will, and will cause the other Credit Parties to, take all
commercially reasonable steps necessary to protect and maintain a Credit Party’s
Intellectual Property Rights.
(b) BNC
and
Borrower will defend the Collateral against all Liens, claims or demands of
all
Persons (other than Lender or any holder of the Permitted Lien) claiming the
Collateral or any interest therein. BNC and Borrower will keep all Collateral
free and clear of all Liens except Permitted Liens. BNC and Borrower will,
and
will cause the other Credit Parties to, take all commercially reasonable steps
necessary to prosecute any Person infringing a Credit Party’s Intellectual
Property Rights and to defend such Credit Party against any Person accusing
such
Credit Party of infringing any Person’s Intellectual Property
Rights.
(c) BNC
and
Borrower will cause each Snubbing Unit to be kept numbered with identifying
numbers as set forth on Schedule
5.29
hereto.
BNC and Borrower will not change the identifying number of any Snubbing Unit
without prior written consent from Lender.
Section
6.14 Insurance.
BNC and Borrower will, and will cause the other Credit Parties to, obtain and
at
all times maintain insurance with insurers acceptable to Lender, in such
amounts, on such terms (including any deductibles) and against such risks as
may
from time to time be required by Lender, but in all events in such amounts
and
against such risks as is usually carried by companies engaged in similar
business and owning similar properties in the same general areas in which
Borrower operates (including water damage, domestic transit coverage, collapse
coverage and coverage of fire with respect to each Snubbing Unit in an amount
equal to or greater than the Net Orderly Liquidation Value of each Snubbing
Unit
with a deductible not greater than $10,000 per occurrence). Without limiting
the
generality of the foregoing, Borrower will at all times keep all of its tangible
Collateral insured against risks of fire (including so-called extended
coverage), theft, collision (for Collateral consisting of motor vehicles) and
such other risks and in such amounts as Lender may reasonably request, with
any
loss payable to Lender to the extent of its interest, and all policies of such
insurance shall contain a lender’s loss payable endorsement for Lender’s
benefit. All policies of liability insurance required hereunder shall name
Lender as an additional insured.
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55
Section
6.15 Preservation
of Existence.
BNC and Borrower will, and will cause the other Credit Parties to, preserve
and
maintain its existence and all of its rights, privileges and franchises
necessary or desirable in the normal conduct of its business and shall conduct
its business in an orderly, efficient and regular manner.
Section
6.16 Delivery
of Instruments;
New
Deposit Accounts.
BNC and Borrower will promptly deliver to Lender in pledge all instruments,
documents, chattel paper and other Investment Property constituting Collateral,
duly endorsed or assigned by BNC or Borrower upon the creation of such items.
Borrower will utilize its Snubbing Unit Agreement form previously reviewed
and
approved by Lender when leasing a Snubbing Unit and will cause such form to
include a conspicuous notation stating that all of Borrower’s rights to payment
and any security interest arising under the Snubbing Unit Agreement form have
been pledged to Lender. Upon opening any deposit accounts (other than the
deposit accounts described on Schedule 5.18), BNC and Borrower will
immediately deliver notice to Lender of the existence of such account and will,
upon Lender’s request, deliver to Lender the appropriate control agreements to
assure Lender a perfected Security Interest in such account. BNC and Borrower
will not, and will not permit any other Credit Party to, allow (i) the xxxxx
cash deposit account described on Schedule 5.18 maintained with Hibernia
Bank to have an outstanding balance in excess of $10,000 (provided that, during
the thirty (30) day period following the date hereof, the outstanding balance
may exceed $10,000 but may not exceed at any point $50,000), or (ii) the deposit
accounts described on Schedule 5.18 maintained with Amegy Bank N.A. to
have an aggregate, outstanding balance in excess of $500,000. Upon termination
or expiration of the Bank Guarantee, BNC and Borrower will cause the deposit
account previously securing the Bank Guarantee to be closed and all funds
remaining in that deposit account to be promptly deposited into the Collateral
Account.
Section
6.17 Sale
or Transfer of Assets; Suspension of Business Operations.
BNC and Borrower will not, and will not permit any other Credit Party to, sell,
lease, assign, transfer or otherwise dispose of (i) the stock of any
Subsidiary (other than Director’s qualifying shares issued in BNC or shares of a
Foreign Subsidiary (that do not dilute or affect Lender’s pledge of the Equity
Interests in the Foreign Subsidiary) required or deemed advisable to be issued
to a foreign national in connection with any Foreign Subsidiary), (ii) all
or a substantial part of its assets (a “substantial
part”
shall
be triggered if the value of any contemplated sale, lease, assignment, transfer
or other disposition when aggregated all other similar transactions occurring
in
any fiscal year would exceed five percent (5%) of the then applicable Book
Net
Worth), or (iii) any Collateral or any interest therein (whether in one
transaction or in a series of transactions) to any other Person other than
the
sale of Inventory in the ordinary course of business or the disposition of
Equipment (other than Eligible Equipment or any other Equipment financed with
an
Equipment Term Advance) that is used, obsolete, worn out or surplus (the
proceeds of which shall be paid to reduce the Obligations unless used
immediately for the purchase of like Equipment) and will not liquidate, dissolve
or suspend business operations, except that any Subsidiary that is an Inactive
Subsidiary may liquidate or dissolve if (i) BNC determines in good faith
that such liquidation or dissolution is in the best interests of BNC, (ii)
the
liquidation or dissolution shall not have a Material Adverse Effect, and
(iii) any assets of the Inactive Subsidiary are distributed to Borrower.
For purposes of the preceding sentence, no Snubbing Unit shall be deemed part
of
Borrower’s Inventory. BNC and Borrower will not, and will not permit the other
Credit Parties to, transfer any part of a Credit Party’s ownership interest in
any Intellectual Property Rights and will not permit any agreement under which
such Credit Party has licensed Licensed Intellectual Property to lapse, except
that a Credit Party may transfer such rights or permit such agreements to lapse
if it shall have reasonably determined that the applicable Intellectual Property
Rights are no longer useful in its business. If BNC or Borrower transfers any
Intellectual Property Rights for value, BNC and Borrower will pay over the
proceeds to Lender for application to the Obligations. BNC and Borrower will
not
license any other Person to use any of Borrower’s Intellectual Property Rights,
except that Borrower may grant licenses in the ordinary course of its business
in connection with sales of Inventory or provision of services to its customers.
Borrower will not, and will not permit any other Credit Party, to transfer
any
assets of a Credit Party to an Inactive Subsidiary.
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56
Section
6.18 Consolidation
and Merger; Asset Acquisitions.
Except for the BNC Merger, Borrower will not, and will not permit any other
Credit Party to, consolidate with or merge into any Person, or permit any other
Person to merge into it, or acquire (in a transaction analogous in purpose
or
effect to a consolidation or merger) all or substantially all the assets of
any
other Person; except that, if at the time thereof and immediately after giving
effect thereto no Event of Default shall have occurred and be continuing,
(i) any wholly-owned and Domestic Subsidiary of BNC may merge into Borrower
in a transaction in which Borrower is the surviving corporation, and
(ii) any wholly-owned Domestic Subsidiary (other than Borrower) may merge
into another wholly-owned Domestic Subsidiary. BNC and Borrower shall cause
the
BNC Merger to be consummated not later than March 6, 2006.
Section
6.19 Sale
and Leaseback.
BNC and Borrower will not, and will not permit any other Credit Party to,
enter into any arrangement, directly or indirectly, with any other Person
whereby a Credit Party shall sell or transfer any real or personal property,
whether now owned or hereafter acquired, and then or thereafter rent or lease
as
lessee such property or any part thereof or any other property which a Credit
Party intends to use for substantially the same purpose or purposes as the
property being sold or transferred.
Section
6.20 Restrictions
on Nature of Business.
BNC and Borrower will not, and will not permit any other Credit Party to, engage
in any line of business materially different from that presently engaged in
by a
Credit Party and will not purchase, lease or otherwise acquire assets not
related to its business. No Inactive Subsidiary may commence business operations
without Lender’s express, prior and written consent.
Section
6.21 Accounting.
BNC and Borrower will not, and will not permit any other Credit Party to, adopt
any material change in accounting principles other than as required by GAAP.
BNC
and Borrower will not, and will not permit any other Credit Party to, adopt,
permit or consent to any change in its fiscal year.
Section
6.22 Discounts.
After notice from Lender given during the existence and continuance of a
Default and then only, Borrower will not grant any discount, credit or allowance
to any customer of Borrower or accept any return of goods sold. Borrower will
not at any time modify, amend, subordinate, cancel or terminate the obligation
of any account debtor or other obligor of Borrower, except in the normal course
of business and then only if such action is dictated by commercial
considerations in Borrower’s good faith judgment and such action need not be
reported pursuant to Section 6.1(i).
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57
Section
6.23 Plans.
Unless disclosed to Lender pursuant to Section 5.12, neither any Credit Party
nor any ERISA Affiliate will (i) adopt, create, assume or become a party to
any Pension Plan, (ii) incur any obligation to contribute to any
Multiemployer Plan, (iii) incur any obligation to provide post-retirement
medical or insurance benefits with respect to employees or former employees
(other than benefits required by law) or (iv) amend any Plan in a manner
that would materially increase its funding obligations.
Section
6.24 Place
of Business; Name.
BNC and Borrower will not, and will not permit any other Credit Party to,
transfer its chief executive office or principal place of business to a location
outside the state where its chief executive office or principal place of
business is presently located, or move, relocate, close or sell any business
location. BNC and Borrower will not permit any tangible Collateral or any
records pertaining to the Collateral to be located in any state or area in
which, in the event of such location, a financing statement covering such
Collateral would be required to be, but has not in fact been, filed in order
to
perfect the Security Interest. BNC and Borrower will not, and will not permit
any other Credit Party to, change its name or jurisdiction of
organization.
Section
6.25 Constituent
Documents.
BNC and Borrower will not, and will not permit any other Credit Party to,
amend its Constituent Documents if such amendment would be adverse in any way
to
Lender or would affect Lender’s Lien or the classification of the Equity
Interests as “securities” under Article 8 of the UCC.
Section
6.26 Senior
Subordinated Loan Documents, Securities Repurchase Agreement and HWC Transaction
Documents.
BNC and Borrower shall immediately deliver to Lender a true, correct and
complete copy of any notice it or any Subsidiary receives in connection with
the
Senior Subordinated Loans, the Securities Repurchase Agreement or the HWC
Transaction Documents, including notices of default, and BNC and Borrower shall
immediately notify Lender in writing of the name and address of any subsequent
holder of a Senior Subordinated Loan upon learning of a sale, assignment or
other transfer of any Senior Subordinated Loan. BNC and Borrower will (i) timely
comply with, and will cause its Subsidiaries to timely comply with, all of
their
respective obligations relating to the Senior Subordinated Loans, subject to
the
terms of the Subordination Agreement, (ii) timely enforce all of its material
rights and remedies under the Senior Subordinated Loan Documents, the Securities
Repurchase Agreement and the HWC Transaction Documents in accordance with their
respective terms, (iii) not, and will not permit any of its Subsidiaries to,
amend, waive or terminate any provision of the Senior Subordinated Loan
Documents, the Securities Repurchase Agreement or the HWC Transaction Documents
without the express written consent of Lender, and (iv) not make any
Distribution under the Senior Subordinated Loan Documents or the HWC Transaction
Documents, except in each case Permitted Subordinated Debt Payments made in
accordance with the terms of the Senior Subordinated Promissory Notes.
Section
6.27 Transactions
with Affiliates.
BNC and Borrower may not, and will not permit any of the Credit Parties
to, enter into or consummate any transaction of any kind with any of its
Affiliates other than: (a) salary, bonus and other compensation and
employment arrangements as permitted under Section 6.8, (b) as set forth on
Schedule 5.24, or (c) other transactions and payments under and pursuant to
written agreements entered into by and between a Credit Party and one or more
of
its Affiliates that reflect and constitute transactions and payments on overall
terms at least as favorable to the Credit Party as would be the case in an
arm’s
length transaction between unrelated parties of equal bargaining power; however,
except as expressly permitted under this Agreement, no Credit Party may enter
into or consummate any transaction or agreement pursuant to which it becomes
a
party to any mortgage, note, indenture or guarantee evidencing any indebtedness
of any of its Affiliates or otherwise to become responsible or liable, as a
guarantor, surety or otherwise, pursuant to an agreement for any indebtedness
of
any such Affiliate.
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58
Section
6.28 Snubbing
Units.
Borrower shall at all times have access to the Snubbing Units wherever located
pursuant to a Snubbing Unit Agreement, and Borrower shall have the right to
enter on property where a Snubbing Unit is located and to remove such Snubbing
Unit therefrom without interference from, or imposition of any Lien on such
Snubbing Unit by, any owner, landlord, tenant or other Person with an interest
in such property. No Snubbing Unit that constitutes Eligible Equipment may
ever
be located outside the control and jurisdiction of the United States of America.
BNC and Borrower shall ensure that each Snubbing Unit never (a) constitutes
a
fixture, or immoveable property, as the case may be, under the laws of any
jurisdiction in which a Snubbing Unit may be located, (b) constitutes part
of a
“vessel”, as defined under applicable maritime law, (c) becomes subject to, or
is being utilized pursuant to, a maritime contract, (d) constitutes a “motor
vehicle” under any statute, law, regulation or rule of any jurisdiction in which
any Snubbing Unit is located, and (e) is certificated as a motor vehicle under
the laws of any jurisdiction. Each Snubbing Unit that Lender has financed under
the Equipment Term Advance shall at all times constitute Eligible Equipment.
Borrower will use commercially reasonable efforts to timely enforce and realize
upon all rights and remedies it may have from time to time under applicable
law,
including all Lien rights under Chapter 56 of the Texas Property Code, as
amended and in effect, or other analogous rights under the laws of the
jurisdiction where Borrower has provided materials and services pursuant to
a
Snubbing Unit Agreement.
Section
6.29 Performance
by Lender.
If BNC or Borrower, or both of them, at any time fails to perform or observe
any
of the foregoing covenants contained in this Article VI or elsewhere
herein, and if such failure shall continue for a period of ten calendar days
after Lender gives BNC or Borrower written notice thereof (or in the case of
the
agreements contained in Section 6.11 and Section 6.13, immediately
upon the occurrence of such failure, without notice or lapse of time), Lender
may, but need not, perform or observe such covenant on behalf and in the name,
place and stead of Borrower (or, at Lender’s option, in Lender’s name) and may,
but need not, take any and all other actions which Lender may reasonably deem
necessary to cure or correct such failure (including the payment of taxes,
the
satisfaction of Liens, the performance of obligations owed to account debtors
or
other obligors, the procurement and maintenance of insurance, the execution
of
assignments, security agreements and financing statements, and the endorsement
of instruments); and Borrower shall thereupon pay to Lender on demand the amount
of all monies expended and all costs and expenses (including reasonable
attorneys’ fees and legal expenses) incurred by Lender in connection with or as
a result of the performance or observance of such agreements or the taking
of
such action by Lender, together with interest thereon from the date expended
or
incurred at the Default Rate. To facilitate Lender’s performance or observance
of such covenants of BNC and Borrower, BNC and Borrower hereby irrevocably
appoint Lender, or Lender’s delegate, acting alone, as BNC’s and Borrower’s
attorney in fact (which appointment is coupled with an interest) with the right
(but not the duty) from time to time to create, prepare, complete, execute,
deliver, endorse or file in the name and on behalf of BNC and Borrower, or
both
of them, any and all instruments, documents, assignments, security agreements,
financing statements, applications for insurance and other agreements and
writings required to be obtained, executed, delivered or endorsed by BNC and
Borrower hereunder.
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ARTICLE
VII
EVENTS
OF DEFAULT, RIGHTS AND REMEDIES
Section
7.1 Events
of Default.
“Event
of Default”,
wherever used herein, means any one of the following events:
(a) Default
in the payment of any Obligations when they become due and payable and such
Default continuing unremedied for more than three (3) Business
Days;
(b) Default
in the performance, or breach, of any covenant or agreement of BNC or Borrower
contained in this Agreement or any other Loan Document, provided with respect
to
Default of Sections 6.1,
6.11, 6.12
and
6.13,
such
Default continues unremedied for more than two (2) Business Days and with
respect to a Default of Sections 6.10
and
6.26
(other
than with respect to any action affecting the Senior Subordinated Loan
Documents, for which there shall be no cure), such Default continues unremedied
for more than fifteen (15) days;
(c) Any
Guarantor shall repudiate, purport to revoke or fail to perform any obligation
under its Guaranty, any individual Guarantor shall die or any other Guarantor
shall cease to exist (other than an Inactive Subsidiary that has not recommenced
operations and has been dissolved or liquated in accordance with this Agreement)
shall cease to exist;
(d) An
Overadvance arises as the result of any reduction in the Borrowing Base, or
arises in any manner on terms not otherwise approved of in advance by Lender
in
writing;
(e) A
Change
of Control shall occur;
(f) Any
Financial Covenant shall become inapplicable due to the lapse of time and the
failure to amend any such covenant to cover future periods;
(g) A
Credit
Party shall be or become insolvent, or admit in writing its inability to pay
its
debts as they mature, or make an assignment for the benefit of creditors; or
a
Credit Party shall apply for or consent to the appointment of any receiver,
trustee, or similar officer for it or for all or any substantial part of its
property; or such receiver, trustee or similar officer shall be appointed
without the application or consent of the affected Credit Party, as the case
may
be; or a Credit Party shall institute (by petition, application, answer, consent
or otherwise) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or similar proceeding relating
to
it under the laws of any jurisdiction; or any such proceeding shall be
instituted (by petition, application or otherwise) against a Credit Party
(except that any Inactive Subsidiary may, in accordance with this Agreement,
dissolve or liquidate before it re-commences operations); or any judgment,
writ,
warrant of attachment or execution or similar process shall be issued or levied
against a substantial part of the property of a Credit Party;
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60
(h) A
petition shall be filed against a Credit Party under the Bankruptcy Code naming
the Credit Party as debtor and such petition shall continue undismissed for
sixty (60) days, or a petition shall be filed by a Credit Party under the
Bankruptcy Code naming such Credit Party as debtor;
(i) Any
representation or warranty made by BNC or Borrower, or both of them, in this
Agreement or by a Credit Party (or any of their respective Officers) in any
agreement, certificate, instrument or financial statement or other statement
contemplated by or made or delivered pursuant to or in connection with this
Agreement or any such guaranty shall prove to have been incorrect in any
material respect when deemed to be effective;
(j) The
rendering against a Credit Party of an arbitration award, final judgment, decree
or order for the payment of money in excess of $100,000 (or that award, final
judgment, decree or order would when aggregated with all other unsatisfied
awards, final judgments, decrees or orders for the payment of money exceed
$100,000) and the continuance of such arbitration award, judgment, decree or
order unsatisfied and in effect for any period of 30 consecutive days without
a
stay of execution;
(k) A
default
under any bond, debenture, note or other evidence of material indebtedness
of a
Credit Party (including the Senior Subordinated Loans) owed to any Person other
than Lender, or under any indenture or other instrument under which any such
evidence of indebtedness has been issued or by which it is governed, or under
any material lease or other contract, and the expiration of the applicable
period of grace, if any, specified in such evidence of indebtedness, indenture,
other instrument, lease or contract;
(l) Any
Reportable Event, which Lender determines in good faith might constitute grounds
for the termination of any Pension Plan or for the appointment by the
appropriate United States District Court of a trustee to administer any Pension
Plan, shall have occurred and be continuing 30 days after written notice to
such
effect shall have been given to a Credit Party by Lender; or a trustee shall
have been appointed by an appropriate United States District Court to administer
any Pension Plan; or the Pension Benefit Guaranty Corporation shall have
instituted proceedings to terminate any Pension Plan or to appoint a trustee
to
administer any Pension Plan; or any Credit Party or any ERISA Affiliate shall
have filed for a distress termination of any Pension Plan under Title IV of
ERISA; or any Credit Party or any ERISA Affiliate shall have failed to make
any
quarterly contribution required with respect to any Pension Plan under Section
412(m) of the IRC, which Lender determines in good faith may by itself, or
in
combination with any such failures that Lender may determine are likely to
occur
in the future, result in the imposition of a Lien on a Credit Party’s assets in
favor of the Pension Plan; or any withdrawal, partial withdrawal, reorganization
or other event occurs with respect to a Multiemployer Plan which results or
could reasonably be expected to result in a material liability of a Credit
Party
to the Multiemployer Plan under Title IV of ERISA;
(m) A
Credit
Party shall, except as expressly permitted by the terms of this Agreement,
liquidate, dissolve, terminate or suspend its business operations or otherwise
fail to operate its business in the ordinary course, merge with another Person;
or sell or attempt to sell all or substantially all of its assets, without
Lender’s prior written consent;
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61
(n) Default
in the payment of any amount owed by a Credit Party to Lender other than any
indebtedness arising hereunder and the expiration of the applicable period
of
grace, if any, specified in such evidence of indebtedness;
(o) A
Credit
Party shall take or participate in any action that is prohibited under the
provisions of any Senior Subordinated Promissory Note or make any payment on
account of the indebtedness evidenced by the Senior Subordinated Promissory
Notes that any Person is not entitled to receive under the provisions of the
Senior Subordinated Promissory Notes (as initially in effect and without giving
effect to any amendment thereto) or under this Agreement;
(p) Any
breach, default or event of default by or attributable to any Affiliate under
any agreement between such Affiliate and Lender shall occur and such breach,
default or event of default would have a Material Adverse Effect;
or
(q) The
indictment of any Director or Officer of a Credit Party for a felony offence
under state or federal law.
Section
7.2 Rights
and Remedies.
During any Default Period, Lender may exercise any or all of the following
rights and remedies:
(a) Lender
may, by notice to Borrower, declare the Commitment to be terminated, whereupon
the same shall forthwith terminate;
(b) Lender
may, by notice to Borrower, declare the Obligations to be forthwith due and
payable, whereupon all Obligations shall become and be forthwith due and
payable, without presentment, notice of dishonor, notice of intent to
accelerate, notice of acceleration, protest or further notice of any kind,
all
of which Borrower hereby expressly waives;
(c) Lender
may, without notice to Borrower and without further action, apply any and all
money owing by Lender to Borrower to the payment of the
Obligations;
(d) Lender
may exercise and enforce any and all rights and remedies available upon default
to a secured party under the UCC, including the right to take possession of
Collateral, or any evidence thereof, proceeding without judicial process or
by
judicial process (without a prior hearing or notice thereof, which Borrower
hereby expressly waives) and the right to sell, lease or otherwise dispose
of
any or all of the Collateral (with or without giving any warranties as to the
Collateral, title to the Collateral or similar warranties), and, in connection
therewith, Borrower will on demand assemble the Collateral and make it available
to Lender at a place to be designated by Lender which is reasonably convenient
to both parties;
(e) Lender
may make demand upon Borrower and, immediately upon such demand, Borrower will
pay to Lender in immediately available funds for deposit in the Special Account
pursuant to Section
2.5
an
amount equal to the aggregate maximum amount available to be drawn under all
Letters of Credit then outstanding, notwithstanding that the conditions for
drawing thereunder may not yet have been satisfied;
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(f) Lender
may exercise and enforce its rights and remedies under the Loan Documents;
(g) Lender
may without regard to any waste, adequacy of the security or solvency of BNC
or
Borrower, or both of them, apply for the appointment of a receiver of the
Collateral, to which appointment BNC and Borrower hereby consent, whether or
not
foreclosure proceedings have been commenced under the Security Documents and
whether or not a foreclosure sale has occurred; and
(h) Lender
may exercise any other rights and remedies available to it by law or
agreement.
Notwithstanding
the foregoing, upon the occurrence of an Event of Default described in
Section
7.1(g)
or
(h),
the
Obligations shall be immediately due and payable automatically without
presentment, demand, protest or notice of any kind. If Lender sells any of
the
Collateral on credit, the Obligations will be reduced only to the extent of
payments actually received. If the purchaser fails to pay for the Collateral,
Lender may resell the Collateral and shall apply any proceeds actually received
to the Obligations. Lender may apply the proceeds of Collateral to the
Obligations in whatever order and manner as Lender may elect in its sole
discretion.
Section
7.3 Certain
Notices.
If notice to Borrower of any intended disposition of Collateral or any
other intended action is required by law in a particular instance, such notice
shall be deemed commercially reasonable if given (in the manner specified
in
Section 8.3) at least ten calendar days before the date of intended
disposition or other action.
ARTICLE
VIII
MISCELLANEOUS
Section
8.1 No
Waiver; Cumulative Remedies; Compliance with Laws;
No
Marshaling.
No failure or delay by Lender in exercising any right, power or remedy under
the
Loan Documents shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
under the Loan Documents. The remedies provided in the Loan Documents are
cumulative and not exclusive of any remedies provided by law. Lender may comply
with any applicable state or federal law requirements in connection with a
disposition of the Collateral and such compliance will not be considered
adversely to affect the commercial reasonableness of any sale of the Collateral.
Borrower consents and agrees that Lender shall be under no obligation to marshal
any of Borrower’s assets or Lender’s Liens against or in payment of any or all
of the Obligations.
Section
8.2 Amendments,
Etc.
No amendment, modification, termination or waiver of any provision of any Loan
Document or consent to any departure by Borrower therefrom or any release of
a
Security Interest shall be effective unless the same shall be in writing and
signed by Lender, and then such waiver or consent shall be effective only in
the
specific instance and for the specific purpose for which given. No notice to
or
demand on Borrower in any case shall entitle Borrower to any other or further
notice or demand in similar or other circumstances.
Page
63
Section
8.3 Notices;
Communication of Confidential Information; Requests for
Accounting.
Except as otherwise expressly provided herein, all notices, requests, demands
and other communications provided for under the Loan Documents shall be in
writing and shall be (a) personally delivered, (b) sent by first class
United States mail, (c) sent by overnight courier of national reputation,
(d) transmitted by telecopy, or (e) sent as electronic mail, in each
case delivered or sent to the party to whom notice is being given to the
business address, telecopier number, or e mail address set forth below next
to
its signature or, as to each party, at such other business address, telecopier
number, or e mail address as it may hereafter designate in writing to the other
party pursuant to the terms of this Section. All such notices, requests, demands
and other communications shall be deemed to be an authenticated record
communicated or given on (a) the date received if personally delivered,
(b) when deposited in the mail if delivered by mail, (c) the date
delivered to the courier if delivered by overnight courier, or (d) the date
of transmission if sent by telecopy or by e mail, except that notices or
requests delivered to Lender pursuant to any of the provisions of Article II
shall not be effective until received by Lender. All notices, financial
information, or other business records sent by either party to this Agreement
may be transmitted, sent, or otherwise communicated via such medium as the
sending party may deem appropriate and commercially reasonable; provided,
however, that the risk that the confidentiality or privacy of such notices,
financial information, or other business records sent by either party may be
compromised shall be borne exclusively by Borrower. All requests for an
accounting under Section 9.210 of the UCC (i) shall be made in a writing
signed by a Person authorized under Section 2.2(a), (ii) shall be
personally delivered, sent by registered or certified mail, return receipt
requested, or by overnight courier of national reputation, (iii) shall be
deemed to be sent when received by Lender and (iv) shall otherwise comply
with the requirements of Section 9.210 of the UCC. Borrower requests that Lender
respond to all such requests that on their face appear to come from an
authorized individual and releases Lender from any liability for so responding.
Borrower shall pay Lender the maximum amount allowed by law for responding
to
such requests.
Section
8.4 Further
Documents.
Borrower will from time to time execute, deliver, endorse and authorize the
filing of any and all instruments, documents, conveyances, assignments, security
agreements, financing statements, control agreements and other agreements and
writings that Lender may reasonably request in order to secure, protect, perfect
or enforce the Security Interest or Lender’s rights under the Loan Documents
(but any failure to request or assure that Borrower executes, delivers, endorses
or authorizes the filing of any such item shall not affect or impair the
validity, sufficiency or enforceability of the Loan Documents and the Security
Interest, regardless of whether any such item was or was not executed, delivered
or endorsed in a similar context or on a prior occasion); provided, however,
Borrower shall not be required to pledge more than sixty-five percent (65%)
of
the voting Equity Interests of any Foreign Subsidiary, to the extent such a
pledge of additional Equity Interests would result in material and adverse
tax
consequences to Borrower under Section 956 of the IRC as determined by Lender
in
its sole discretion.
Section
8.5 Costs
and Expenses.
Borrower shall pay on demand all costs and expenses, including reasonable
attorneys’ fees, closing costs, appraisal fees, UCC search and recording fees,
costs of individual and corporate credit reports, surveys, and real estate
title
searches, environmental assessment fees and Collateral auditing fees, incurred
by Lender in connection with the Obligations, this Agreement, the Loan
Documents, and any other document or agreement related hereto or thereto, and
the transactions contemplated hereby, including all such costs, expenses and
fees incurred in connection with the negotiation, preparation, execution,
amendment, administration, performance, collection and enforcement of the
Obligations and all such documents and agreements and the creation, perfection,
protection, satisfaction, foreclosure or enforcement of the Security
Interest.
Page
64
Section
8.6 Indemnity.
In addition to the payment of expenses pursuant to Section 8.5, Borrower
and BNC shall indemnify, defend and hold harmless Lender, and any of its
participants assigns, parent corporations, subsidiary corporations, affiliated
corporations, successor corporations, and all present and future officers,
directors, employees, attorneys and agents of the foregoing (the “Indemnitees”)
from
and against any of the following (collectively, “Indemnified
Liabilities”):
(i) Any
and
all transfer taxes, documentary taxes, assessments or charges made by any
governmental authority by reason of the execution and delivery of the Loan
Documents or the making of the Advances;
(ii) Any
claims, loss or damage to which any Indemnitee may be subjected if any
representation or warranty contained in Section
5.14
proves
to be incorrect in any respect or as a result of any violation of the covenant
contained in Section
6.11(b);
and
(iii) Any
and
all other liabilities (INCLUDING ALL STRICT LIABILITIES), losses, damages,
penalties, judgments, suits, claims, costs and expenses of any kind or nature
whatsoever (including the reasonable fees and disbursements of counsel) in
connection with the foregoing and any other investigative, administrative or
judicial proceedings, whether or not such Indemnitee shall be designated a
party
thereto, which may be imposed on, incurred by or asserted against any such
Indemnitee, in any manner related to or arising out of or in connection with
the
making of the Advances and the Loan Documents or the use or intended use of
the
proceeds of the Advances.
If
any
investigative, judicial or administrative proceeding arising from any of the
foregoing is brought against any Indemnitee, upon such Indemnitee’s request,
Borrower and BNC, or counsel designated by Borrower and BNC and satisfactory
to
the Indemnitee, will resist and defend such action, suit or proceeding to the
extent and in the manner directed by the Indemnitee, at Borrower’s and BNC’s
sole costs and expense. Each Indemnitee will use its best efforts to cooperate
in the defense of any such action, suit or proceeding. If the foregoing
undertaking to indemnify, defend and hold harmless may be held to be
unenforceable because it violates any law or public policy, Borrower and BNC
shall nevertheless make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities that is permissible under applicable
law.
IT
IS THE INTENTION OF BORROWER AND BNC, AND BORROWER AND BNC AGREE, THAT THE
INDEMNITIES CONTAINED IN THIS AGREEMENT SHALL APPLY WITH RESPECT TO THE
INDEMNIFIED MATTERS, WHICH MAY BE IN WHOLE OR IN PART CAUSED BY OR MAY ARISE
OUT
OF THE SOLE, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OR ANY STRICT LIABILITY
OF
ANY INDEMNITEE;
HOWEVER,
SUCH INDEMNITIES SHALL NOT EXTEND TO AN OTHERWISE INDEMNIFIED MATTER TO THE
EXTENT THAT IT ARISES OUT OF THE INDEMNITEE’S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
Borrower’s and BNC’s obligation under this Section
8.6
shall
survive the termination of this Agreement and the discharge of Borrower’s and
BNC’s other obligations hereunder.
Page
65
Section
8.7 Participants.
Lender and its participants, if any, are not partners or joint venturers,
and Lender shall not have any liability or responsibility for any obligation,
act or omission of any of its participants. All rights and powers specifically
conferred upon Lender may be transferred or delegated to any of Lender’s
participants, successors or assigns.
Section
8.8 Execution
in Counterparts; Telefacsimile Execution.
This Agreement and other Loan Documents may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed
to be
an original and all of which counterparts, taken together, shall constitute
but
one and the same instrument. Delivery of an executed counterpart of this
Agreement by telefacsimile shall be equally as effective as delivery of an
original executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telefacsimile also shall deliver
an
original executed counterpart of this Agreement but the failure to deliver
an
original executed counterpart shall not affect the validity, enforceability,
and
binding effect of this Agreement.
Section
8.9 Retention
of Borrower’s Records.
Lender shall have no obligation to maintain any electronic records or any
documents, schedules, invoices, agings, or other papers delivered to Lender
by
Borrower or in connection with the Loan Documents for more than 30 days after
receipt by Lender. If there is a special need to retain specific records,
Borrower must inform Lender of its need to retain those records with
particularity, which must be delivered in accordance with the notice provisions
of Section 8.3 within 30 days of Lender taking control of same.
Section
8.10 Binding
Effect; Assignment; Complete Agreement; Sharing Information.
The Loan Documents shall be binding upon and inure to the benefit of BNC,
Borrower and Lender and their respective successors and assigns, except that
BNC
and Borrower shall not have the right to assign any rights thereunder or any
interest therein without Lender’s prior written consent. To the extent permitted
by law, BNC and Borrower waive and will not assert against any assignee any
claims, defenses or set-offs that BNC or Borrower could assert against Lender.
This Agreement shall also bind all Persons who become a party to this Agreement
as a borrower. This Agreement, together with the Loan Documents, comprises
the
complete and integrated agreement of the parties on the subject matter hereof
and supersedes all prior agreements, written or oral, on the subject matter
hereof, AND
WITHOUT LIMITING THE FOREGOING, BNC AND BORROWER AGREE THAT THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG
THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.
To the
extent that any provision of this Agreement contradicts other provisions of
the
Loan Documents, this Agreement shall control. Without limiting Lender’s right to
share information regarding BNC, Borrower and their respective Affiliates with
Lender’s participants, accountants, lawyers and other advisors, Lender may share
any and all information they may have in their possession regarding BNC,
Borrower and their respective Affiliates, and BNC and Borrower waive any right
of confidentiality they may have with respect to such sharing of
information.
Page
66
Section
8.11 Severability
of Provisions.
Any provision of this Agreement that is prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof.
Section
8.12 Headings.
Article, Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
Section
8.13 Governing
Law; Jurisdiction, Venue; Waiver of Jury Trial.
The Loan Documents shall be governed by and construed in accordance with the
substantive laws (other than conflict laws) of the State of Texas. The parties
hereto hereby (i) consent to the personal jurisdiction of the state and
federal courts located in the State of Texas in connection with any controversy
related to this Agreement; (ii) waive any argument that venue in any such
forum is not convenient; (iii) agree that any litigation initiated by
Lender, BNC or Borrower in connection with this Agreement or the other Loan
Documents may be venued in either the state or federal courts located in the
City of San Antonio, County of Bexar, Texas;
and (iv) agree that a final judgment in any such suit, action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
Section
8.14 Non-applicability
of Chapter 346.
Borrower and Lender hereby agree that, except for the opt-out provisions of
Section 346.004 thereof, the provisions of Chapter 346 of the Texas
Finance Code (regulating certain revolving credit loans and revolving tri-party
accounts) shall not apply to this Agreement or any of the other Loan
Documents.
Section
8.15 BNC’s
and Borrower’s Waiver of Rights Under Texas Deceptive Trade Practices
Act.
BNC AND BORROWER HEREBY WAIVE ANY RIGHTS UNDER THE DECEPTIVE TRADE
PRACTICES—CONSUMER PROTECTION ACT, SECTION § 17.41 ET
SEQ.
TEXAS
BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND
PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF BNC’S AND BORROWER’S OWN
SELECTION, BNC AND BORROWER VOLUNTARILY CONSENT TO THIS WAIVER. BNC AND BORROWER
EXPRESSLY WARRANT AND REPRESENT THAT EACH PERSON (A) IS NOT IN A SIGNIFICANTLY
DISPARATE BARGAINING POSITION RELATIVE TO LENDER, AND (B) HAS BEEN REPRESENTED
BY LEGAL COUNSEL IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.
BNC,
BORROWER AND LENDER WAIVE ANY
RIGHT TO TRIAL BY JURY IN ANY ACTION AT LAW OR IN EQUITY OR IN ANY
OTHER
PROCEEDING BASED ON OR PERTAINING TO THIS AGREEMENT OR ANY OTHER
LOAN
DOCUMENT.
|
[SIGNATURE
PAGE FOLLOWS]
Page
67
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by
their respective officers thereunto duly authorized as of the date first above
written.
Boots
& Xxxxx International Well Control, Inc.
|
BOOTS
& XXXXX INTERNATIONAL
|
|
00000
X. Xxxxxxx - Rosslyn Road
|
WELL
CONTROL, INC., a Delaware
|
|
Xxxxxxx,
Xxxxx 00000
|
corporation
|
|
Telecopier:
(000) 000-0000
|
||
Attention:
Xxxxx Xxxxx, General Counsel
|
By:
|
|
e-mail:
Xxxxxx@xxxx.xxx
|
Name:
Xxxxx Xxxxxxxxxx
|
|
Title:
President and CEO
|
||
IWC
Services, LLC
|
IWC
SERVICES, LLC, a Texas limited
|
|
c/o
Boots & Xxxxx International Well Control,
|
liability
company
|
|
Inc.
|
||
00000
X. Xxxxxxx - Xxxxxxx Xxxx
|
By:
|
|
Xxxxxxx,
Xxxxx 00000
|
Name:
Xxxxx Xxxxxxxxxx
|
|
Telecopier:
(000) 000-0000
|
Title:
President and CEO
|
|
Attention:
Xxxxx Xxxxx, General Counsel
|
||
e-mail:
Xxxxxx@xxxx.xxx
|
||
Xxxxx
Fargo Bank, National Association,
|
XXXXX
FARGO BANK, NATIONAL
|
|
acting
through its Xxxxx Fargo Business Credit
|
ASSOCIATION,
acting through its Xxxxx Fargo
|
|
operating
division
|
Business
Credit operating division
|
|
MAC-T5698-030
|
||
00
XX Xxxx 000, Xxxxx 000
|
By:
|
|
Xxx
Xxxxxxx, Xxxxx 00000
|
Name:
Xxxx X. Xxxx
|
|
Telecopier:
(000) 000-0000
|
Title:
Vice President
|
|
Attention:
Xxxx Xxxx
|
||
e-mail:
Xxxx.X.Xxxx@xxxxxxxxxx.xxx
|
Table
of Exhibits and Schedules
Exhibit
A
|
Form
of Revolving Note
|
Exhibit
B
|
Form
of Equipment Term Note
|
Exhibit
C
|
Compliance
Certificate
|
Exhibit
D
|
Premises
|
Schedule
5.1
|
Trade
Names, Chief Executive Office, Principal Place of Business, and Locations
of Collateral
|
Schedule
5.2
|
Capitalization
and Organizational Chart
|
Schedule
5.5
|
Subsidiaries
|
Schedule
5.7
|
Litigation
Matters
|
Schedule
5.11
|
Intellectual
Property Disclosures
|
Schedule
5.14
|
Environmental
Matters
|
Schedule
5.18
|
Deposit
Accounts
|
Schedule
5.22
|
Insurance
Policies
|
Schedule
5.24
|
Affiliate
Agreements
|
Schedule
5.29
|
Snubbing
Unit Schedule
|
Schedule
5.31
|
Personal
Property Evidenced by a Certificate of
Title
|
Schedule
6.3
|
Permitted
Liens
|
Schedule
6.4
|
Permitted
Indebtedness and Guaranties
|
Exhibit
A to Credit and Security Agreement
REVOLVING
NOTE
$10,300,000
U.S.
|
March
3, 2006
|
For
value
received, the undersigned, IWC SERVICES, LLC, a Texas limited liability company
(“Borrower”),
hereby promises to pay on the Termination Date under the Credit Agreement
(defined below), to the order of XXXXX FARGO BANK, NATIONAL ASSOCIATION (the
“Lender”),
acting through its Xxxxx Fargo Business Credit operating division, at its office
at 00 XX Xxxx 000, Xxxxx 000, Xxx Xxxxxxx, Xxxxx 00000, or at any other place
designated at any time by the holder hereof, in lawful money of the United
States of America and in immediately available funds, the principal sum of
Ten
Million Three Hundred Thousand Dollars ($10,300,000) or the aggregate unpaid
principal amount of all Revolving Advances made by Lender to Borrower under
the
Credit Agreement (defined below), together with interest on the principal amount
hereunder remaining unpaid from time to time, computed on the basis of the
actual number of days elapsed and a 360-day year, from the date hereof until
this Note is fully paid at the rate from time to time in effect under the Credit
and Security Agreement dated the same date as this Note (as the same may
hereafter be amended, supplemented, restated or extended from time to time,
the
“Credit
Agreement”)
by and
among Lender, BNC and Borrower. The principal hereof and interest accruing
thereon shall be due and payable as provided in the Credit Agreement. This
Note
may be prepaid only in accordance with the Credit Agreement.
This
Note
is issued pursuant, and is subject, to the Credit Agreement, which provides,
among other things, for acceleration hereof. This Note is the Revolving Note
referred to in the Credit Agreement. This Note is secured, among other things,
pursuant to the Credit Agreement and the Security Documents as therein defined,
and may now or hereafter be secured by one or more other security agreements,
mortgages, deeds of trust, assignments or other instruments or agreements.
This
Note shall be governed by and construed in accordance with the laws of the
State
of Texas.
Borrower
shall pay all costs of collection, including reasonable attorneys’ fees and
legal expenses if this Note is not paid when due, whether or not legal
proceedings are commenced.
Presentment
or other demand for payment, notice of dishonor and protest are expressly
waived.
[SIGNATURE
PAGE FOLLOWS]
A-1
IWC
SERVICES, LLC, a Texas limited liability company
|
||
By:
|
||
Name:
|
||
Title:
|
Exhibit
B to Credit and Security Agreement
EQUIPMENT
TERM NOTE
$9,700,000
U.S.
|
March
3, 2006
|
For
value
received, the undersigned, IWC SERVICES, LLC, a Texas limited liability company
(“Borrower”),
hereby promises to pay on the Termination Date under the Credit Agreement
(defined below), to the order of XXXXX FARGO BANK, NATIONAL ASSOCIATION (the
“Lender”),
acting through its Xxxxx Fargo Business Credit operating division, at its office
at 00 XX Xxxx 000, Xxxxx 000, Xxx Xxxxxxx, Xxxxx 00000, or at any other place
designated at any time by the holder hereof, in lawful money of the United
States of America and in immediately available funds, the principal sum of
Nine
Million Seven Hundred Thousand Dollars ($9,700,000) or the aggregate unpaid
principal amount of all Equipment Term Advances made by Lender to Borrower
under
the Credit Agreement (defined below), together with interest on the principal
amount hereunder remaining unpaid from time to time, computed on the basis
of
the actual number of days elapsed and a 360-day year, from the date hereof
until
this Note is fully paid at the rate from time to time in effect under the Credit
and Security Agreement dated the same date as this Note (as the same may
hereafter be amended, supplemented or restated from time to time, the
“Credit
Agreement”)
by and
among Lender, BNC and Borrower. The principal hereof and interest accruing
thereon shall be due and payable as provided in the Credit Agreement. This
Note
may be prepaid only in accordance with the Credit Agreement.
This
Note
is issued pursuant, and is subject, to the Credit Agreement, which provides,
among other things, for acceleration hereof. This Note is the Equipment Term
Note referred to in the Credit Agreement.
This
Note
is secured, among other things, pursuant to the Credit Agreement and the
Security Documents as therein defined, and may now or hereafter be secured
by
one or more other security agreements, mortgages, deeds of trust, assignments
or
other instruments or agreements. This Note shall be governed by and construed
in
accordance with the laws of the State of Texas.
Borrower
shall pay all costs of collection, including attorneys’ fees and legal expenses
in the event this Note is not paid when due, whether or not legal proceedings
are commenced.
Presentment
or other demand for payment, notice of dishonor and protest are expressly
waived.
[SIGNATURE
PAGE FOLLOWS]
B-1
IWC
SERVICES, LLC, a Texas limited liability company
|
||
By:
|
||
Name:
|
||
Title:
|
Exhibit
C to Credit and Security Agreement
COMPLIANCE
CERTIFICATE
To:
|
Xxxxx
Fargo Business Credit
|
Date:
|
[___________________,
200____]
|
Subject:
|
Financial
Statements
|
In
accordance with our Credit and Security Agreement dated as of March 3,
2006 (as
amended from time to time, the “Credit
Agreement”),
attached are the consolidated financial statements of IWC SERVICES, LLC, a
Texas
limited liability company (“Borrower”)
and
BOOTS & XXXXX INTERNATIONAL WELL CONTROL, INC. as of and for [_________________,
200__ _] (the
“Reporting
Date”)
and
the year-to-date period then ended (the “Current
Financials”).
All
terms used in this certificate have the meanings given in the Credit
Agreement.
I
certify
that the Current Financials have been prepared in accordance with GAAP, subject
to year-end audit adjustments, and fairly present BNC’s and its Subsidiaries’
financial condition as of the date thereof.
I
further
hereby certify as follows: Events
of Default.
(Check
one):
*
|
The
undersigned does not have knowledge of the occurrence of a Default
or
Event of Default under the Credit Agreement except as previously
reported
in writing to Lender.
|
*
|
The
undersigned has knowledge of the occurrence of a Default or Event
of
Default under the Credit Agreement not previously reported in writing
to
Lender and attached hereto is a statement of the facts with respect
to
thereto. Borrower acknowledges that pursuant to Section
2.8(b)
of
the Credit Agreement, Lender may impose the Default Rate at any time
during the resulting Default Period.
|
Material
Adverse Change in Litigation Matters of Credit Parties.
I
further hereby certify as follows (check one):
*
|
The
undersigned has no knowledge of any material adverse change to the
litigation exposure of any Credit Party or any of their respective
Affiliates.
|
*
|
The
undersigned has knowledge of material adverse changes to the litigation
exposure of any Credit Party or any of their respective Affiliates
not
previously disclosed in Schedule
5.7.
Attached to this Certificate is a statement of the facts with respect
thereto.
|
Financial
Covenants.
I
further hereby certify as follows (check and complete each of the
following):
1. Minimum
Debt Service Coverage Ratio.
Pursuant to Section
6.2(b)
of the
Credit Agreement, as of the Reporting Date, BNC’s and its Subsidiaries’ Debt
Service Coverage Ratio on a consolidated basis was [______
_] to
1.00,
which *
satisfies *
does not
satisfy the requirement that such ratio be no less than 1.50 to 1.00 on the
Reporting Date.
C-1
2. Minimum
Book Net Worth.
Pursuant to Section
6.2(a)
of the
Credit Agreement, as of the Reporting Date, BNC’s and its Subsidiaries’ Book Net
Worth on a consolidated basis was $____________ , which *
satisfies *
does not
satisfy the requirement that such amount be not less than the
applicable amount set forth in the table below (numbers appearing between “<
>“ are negative) on the Reporting Date:
Period
|
Minimum
Book Net Worth
|
March
31, 2006 through December 31, 2006
|
90%
of the Book Net Worth calculated as of March 1, 2006 on the basis
of a pro
forma balance sheet giving effect to the HWC Transactions and the
BNC
Merger delivered to Lender reflecting the Book Net Worth as of that
date
(which balance sheet shall be delivered to Lender on or before April
15,
2006) but in no event shall 90% of the Book Net Worth be less than
$25,000,000
|
For
each fiscal year ending thereafter and continuing until the Maturity
Date
|
The
greater of (i) the Minimum Book Net Worth required pursuant to
Section
6.2(a)
for the immediately preceding fiscal year, and (ii) 85% of the Book
Net
Worth calculated as of last day of the preceding fiscal year based
on the
unaudited or annual audited (as applicable) financial statements
covering
the preceding fiscal year.
|
3. Capital
Expenditures.
Pursuant to Section
6.2(c)
of the
Credit Agreement, for the year-to-date period ending on the Reporting Date,
the
Credit Parties have expended or contracted to expend during the fiscal year
ended [_______________,
200___,_]
for
Capital Expenditures, [_$___________________]
in the
aggregate, which *
satisfies *
does not
satisfy the requirement that such expenditures not exceed $3,000,000 in the
aggregate during such year.
4. Salaries.
As of
the Reporting Date, the Credit Parties have not paid excessive or unreasonable
salaries, bonuses, commissions, consultant fees or other compensation, or
increased the salary, bonus, commissions, consultant fees or other compensation
of any Director, Officer or consultant, or any member of their families, by
more
than 10% over the amount paid in the BNC’s and Borrower’s previous fiscal year,
either individually or for all such persons in the aggregate, and has not paid
any increase from any source other than profits earned in the year of payment,
and as a consequence *
is
*
is not
in compliance with Section 6.8 of the Credit Agreement.
C-2
Attached
hereto are all relevant facts in reasonable detail to evidence, and the
computations of the financial covenants referred to above. These computations
were made in accordance with GAAP.
BOOTS
& XXXXX INTERNATIONAL WELL CONTROL, INC.
|
||
By:
|
||
Name:
|
||
Title:
Chief Financial Officer
|
||
IWC
SERVICES, LLC
|
||
By:
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Name:
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Title:
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C-3
Exhibit
D to Credit and Security Agreement
PREMISES
The
Premises referred to in the Credit and Security Agreement are legally described
as follows:
[To
be completed by Borrower]