1
EXHIBIT 10.2
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (the "Agreement") is made
effective the 11th day of April, 1997, by and among FWA DRILLING COMPANY,
INC. ("FWA"), INTERNATIONAL PETROLEUM SERVICE COMPANY ("IPSCO"),
TRIAD DRILLING COMPANY ("Triad"), UNIVERSAL WELL SERVICES, INC.
("Universal"), USC, INCORPORATED ("USC"), UTI ENERGY CORP. ("UTI"),
UTICO, INC. ("UTICO"), PANTHER DRILLING, INC., formerly known as
VIERSEN & XXXXXXX DRILLING COMPANY ("Viersen") and MELLON BANK,
N.A. ("Bank"). FWA, IPSCO, Triad, Universal, USC, UTI, UTICO and Viersen are
hereinafter sometimes collectively referred to as the "Borrowers" and
individually as a "Borrower".
BACKGROUND
A. Pursuant to that certain Amended and Restated Loan and Security
Agreement dated December 7, 1995 (as it may be amended from time to time,
including without limitation the fourth amendment of even date herewith the
"Prior Loan Agreement"), FWA, IPSCO, Triad, Universal and USC (collectively, the
"Prior Borrowers") requested and Bank agreed to extend to the Prior Borrowers
certain credit facilities as further described in the Prior Loan Agreement.
B. Pursuant to those certain Surety Agreements dated December 7, 1995
(for UTI and UTICO) and August IS, 1996 (for Viersen) (collectively, the "Prior
Surety Agreements"), UTI, UTICO and Viersen agreed to act as surety for and
guarantee the obligations of the Prior Borrowers under the Prior Loan Documents
(as hereinafter defined). The Prior Loan Agreement, the Prior Surety Agreements
and all other documents executed in connection therewith may hereinafter be
collectively referred to as the "Prior Loan Documents".
C. Borrowers have requested that Bank extend a certain term loan credit
facility to Borrowers, which Bank is willing to do on the terms set forth
herein.
D. Capitalized terms not otherwise defined herein will have the
meanings set forth therefor in Section 13 of this Agreement. Capitalized terms
not otherwise defined in Section 13 of this Agreement or elsewhere in this
Agreement shall have the meanings set forth therefor in the Prior Loan
Agreement.
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, and of any extensions of credit now or hereafter made to or for the
benefit of Borrowers by Bank, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. THE LOAN; USE OF PROCEEDS.
1.1 THE LOAN. Bank will lend to Borrowers and Borrowers will borrow
from Bank the aggregate amount of Twenty-Five Million Dollars
($25,000,000.00)(the "Loan"). Borrowers' obligation to repay the Loan shall be
evidenced by Borrowers' promissory note in the face amount of Twenty-Five
Million Dollars ($25,000,000.00)(the "Note"), which shall be in the form
attached hereto as Exhibit "A", with the blanks appropriately filled in.
2
1.2 SAVINGS CLAUSE. Anything contained in this Agreement or any other
Loan Documents to the contrary notwithstanding, the obligations of each Borrower
with respect to the repayment of the Loan shall be limited to the lesser of: (i)
the total amount of the Loan, or (ii) a maximum aggregate amount equal to the
largest amount that would not render its obligations with respect thereto
subject to avoidance as a fraudulent transfer or conveyance under Section 548 of
Title 11 of the United States Code or any applicable provisions of comparable
state law (collectively, the "Fraudulent Transfer Laws"), if and to the extent
such Borrower (or trustee on its behalf) has properly invoked the protections of
the Fraudulent Transfer Laws. In making such determination, all rights of
subrogation and contribution of a Borrower with respect to such obligations
shall be deemed to be an asset of such Borrower.
1.3 USE OF PROCEEDS. The proceeds of the Loan shall be advanced to
Borrowers in accordance with procedures reasonably acceptable to Bank. Borrowers
agree that the proceeds of the Loan shall be used (i) to partially fund the
purchase of certain assets of Southland, as further described in the Southland
Acquisition Agreement, which acquisition has been consented to by the Bank, (ii)
to repay existing indebtedness of Borrowers to CIT and the Xxx X. Xxxxxxx, Xx.
Revocable Trust, (iii) to repay an existing $4,000,000 term loan previously
extended by Bank to Borrowers to finance the Xxxxxxx Acquisition, and (iv) to
repay a portion of the balance of the Line under the Prior Loan Agreement used
to finance the Xxxxxxx acquisition.
1.4 CLOSING. Closing hereunder will take place at a time and place
mutually acceptable to Borrowers and Bank effective on the date of this
Agreement.
2. INTEREST RATE.
2.1 INTEREST ON THE LOAN. Interest on the unpaid principal balance of
the Loan will accrue until final payment thereof at the rate per annum which is
equal to the Prime Rate in effect from time to time (such interest rate to
change immediately upon any change in the Prime Rate).
2.2 DEFAULT INTEREST. Interest will accrue on the principal balance of
the Loan after the occurrence of an Event of Default at a rate which is two
percent (2%) in excess of the non-default rate otherwise set forth above for the
Loan.
2.3 POST JUDGMENT INTEREST. Any judgment obtained for sums due
hereunder or under the Loan Documents will accrue interest at the applicable
default rate set forth above until paid.
2.4 CALCULATION. Interest will be computed on the basis of a
year of 365/366 days and paid for the actual number of days elapsed.
2.5 LIMITATION OF INTEREST TO MAXIMUM LAWFUL RATE. In no event will the
rate of interest payable hereunder exceed the maximum rate of interest permitted
to be charged by applicable law (including the choice of law rules) and any
interest paid in excess of the permitted rate will be refunded to Borrowers.
Such refund will be made by application of the excessive amount of interest paid
against any sums outstanding hereunder and will be applied in such order as Bank
may determine. If the excessive amount of interest paid exceeds the sums
outstanding, the portion exceeding the sums outstanding will be refunded in cash
by Bank. Any such crediting or refunding will not cure or waive any default by
Borrowers. Borrowers agree, however, that in determining whether or not any
interest payable hereunder exceeds the highest rate permitted by law, any
non-principal payment, including without
-2-
3
limitation late charges, will be deemed to the extent permitted by law to be
an expense fee, premium or penalty rather than interest.
3. PAYMENTS AND FEES.
3.1 INTEREST PAYMENTS ON THE LOAN. Borrowers will pay interest on the
outstanding principal balance of the Loan monthly, on the first day of each
calendar month commencing the first day of the first calendar month following
the date hereof.
3.2 PRINCIPAL PAYMENTS ON THE LOAN.
(a) Borrowers will pay the outstanding principal balance of
the Loan as follows:
(i) twelve (12) equal and consecutive monthly
installments of Four Hundred Twenty-Five Thousand Dollars ($425,000.00) each,
payable on the first day of each calendar month commencing on May 1, 1997 and
continuing through and including April 1, 1998;
(ii) twelve (12) equal and consecutive monthly
installments of Five Hundred Thousand Dollars ($500,000.00) each, payable on the
first day of each calendar month commencing on May 1, 1998 and continuing
through and including April 1, 1999;
(iii) thirteen (13) equal and consecutive monthly
installments of Six Hundred Fifty Thousand Dollars ($650,000.00) each, payable
on the first day of each calendar month commencing on May 1, 1999 and continuing
through and including May 1, 2000; and
(iv) one (1) final payment of the remaining
principal balance hereof plus all accrued and unpaid interest thereon on
June 1, 2000.
(b) In addition to the foregoing sums, Borrower agrees that
Borrower shall, one Business Day after the closing of any Public Offering by UTI
of UTI's Equity Securities, pay to Bank as a prepayment of principal of the
Note, the Net Cash Proceeds (not to exceed the unpaid principal balance of the
Note and all accrued unpaid interest thereon) received by UTI from such Public
Offering. Such prepayment shall be applied as set forth in Section 3.5 to
principal payments in the inverse order in which they are due.
For purposes of this Section 3.2(b) the following terms shall
have the following meanings:
(i) "Public Offering" shall mean the sale by
UTI of its Equity Securities in any public offering pursuant to an effective
registration statement filed with the securities and Exchange Commission,
provided that "Public Offering" shall not include (i) any offering or sale by
UTI of its Equity Securities in connection with an employee benefit plan, (ii)
any offering or sale by UTI of its Equity Securities in connection with a merger
and using a registration statement on Form 5-4 promulgated by the Securities and
Exchange Commission or any successor thereto, (iii) any offering or sale of
Equity Securities for or on behalf of any other person or selling stockholder,
including pursuant to any registration rights (demand, piggyback or otherwise)
of any kind, and (iv) any offering or sale of Equity Securities for which no
cash proceeds are received by UTI.
-3-
4
(ii) "Equity Securities" shall mean, for any
person, such person's common stock, preferred stock, warrants, options or other
rights to acquire common stock or preferred stock of such person, and all
securities of such person convertible into or exchangeable for common stock or
preferred stock of such person.
(iii) "Net Cash Proceeds" shall mean the total
gross proceeds from the Public Offering by UTI of its Equity Securities, less
(i) all expenses associated with the sale of such Equity Securities, including
without limitation all underwriters' fees, cost, expenses and discounts,
brokers' fees, printing fees, filing and other fees paid to the Securities and
Exchange Commission or similar governmental authorities outside the United
States, Blue Sky fees and expenses, attorneys' fees, accountants' fees, other
experts' fees, and all other expenses incurred in connection with the Public
Offering by UTI of its Equity Securities, (ii) such amounts as persons other
than UTI are entitled to receive under the terms of such Public Offering; (iii)
such amounts as UTI and the underwriters employed by UTI in such Public Offering
may determine to be necessary to satisfy the purchase price payment obligations
of UTI in connection with a business acquisition identified in such Public
Offering and for which the Bank has given its consent pursuant to the terms of
this Agreement and (iv) all expenses associated with the consummation of such
business acquisition, including all attorney's fees, accountants' fees, other
experts' fees, Xxxx Xxxxx Xxxxxx Antitrust Improvements Act and other
governmental (including state and local) fees, broker and finders fees and all
other expenses incurred in connection with such business acquisition.
(c) Borrowers also agree to make the prepayments required
under Section 6.6.
3.3 FACILITY FEE. Borrowers shall pay to Bank a facility fee of Two
Hundred Fifty Thousand Dollars ($250,000.00) (the "Facility Fee"). The Facility
Fee shall be deemed fully earned and non- refundable and shall be paid by
Borrowers to Bank upon execution of this Agreement.
3.4 LATE CHARGE. In the event that Borrowers fail to pay when due any
principal, interest or other fees or expenses payable hereunder for a period of
at least fifteen (15) days, in addition to paying such sums, Borrowers will pay
to Bank a late charge equal to five percent (5%), of such past due payment as
compensation for the expenses incident to such past due payment.
3.5 PREPAYMENT OF LOAN. Borrowers may prepay all or any part of the
principal balance of the Loan without any premium or fee, at any time, following
delivery of not less than five (5) days prior written notice to Bank. Certain
prepayments are required as a result of the sale of assets by Borrower or in
connection with certain Public Offerings by UTI and as a result of a Change of
Control. All prepayments will be applied to the regularly scheduled payments in
the inverse order in which they are due.
3.6 PAYMENT METHOD. Borrowers irrevocably authorize Bank to debit all
payments required to be made by Borrowers hereunder, under the Loan, on the date
due, from any deposit account maintained by any Borrower with Bank. Otherwise,
Borrowers will be obligated to make such payments directly to Bank. All payments
are to be made in immediately available funds. If Bank accepts payment in any
other form, such payment shall not be deemed to have been made until the funds
comprising such payment have actually been received by or made available to
Bank.
3.7 APPLICATION OF PAYMENTS. Any and all payments on account of the
Loan will be applied to accrued and unpaid interest, outstanding principal and
other sums due hereunder or under the Loan Documents, in such order as Bank, in
-4-
5
its discretion, elects. If Borrowers make a payment or payments and such payment
or payments, or any part thereof, are subsequently invalidated, declared to be
fraudulent or preferential, set aside or are required to be repaid to a trustee,
receiver, or any other person under any bankruptcy act, state or federal law,
common law or equitable cause, then to the extent of such payment or payments,
the obligations or part thereof hereunder intended to be satisfied shall be
revived and continued in full force and effect as if said payment or payments
had not been made.
3.8 LOAN ACCOUNT. Bank will open and maintain on its books a loan
account (the "Loan Account") with respect to advances made, repayments,
prepayments, the computation and payment of interest and fees and the
computation and final payment of all other amounts due and sums paid to Bank
under this Agreement. Except in the case of manifest error in computation, the
Loan Account will be conclusive and binding on the Borrowers as to the amount at
any time due to Bank from Borrowers under this Agreement or the Note.
3.9 INDEMNITY; LOSS OF MARGIN. Borrowers will indemnify Bank against
any loss or expense which Bank sustains or incurs as a consequence of an Event
of Default, including, without limitation, any failure of Borrowers to pay when
due (at maturity, by acceleration or otherwise) any principal, interest, fee or
any other amount due under this Agreement or the other Loan Documents. If Bank
sustains or incurs any such loss or expense it will from time to time notify
Borrowers in writing of the amount reasonably determined in good faith by the
Bank to be necessary to indemnify Bank for the loss or expense. Such amount will
be due and payable by Borrowers to Bank within ten (10) days after presentation
by Bank of a statement setting forth a brief explanation of and Bank's
calculation of such amount, which statement shall be presumed correct absent
manifest error. Any amount payable to the Bank under this section will bear
interest at the default rate payable under the Loan from the due date until
paid, both before and after judgment.
In the event that any future law, rule, regulation, treaty or official
directive, interpretation or application by any central bank, monetary authority
or governmental authority, or the future compliance with any guideline or
request of any central bank, monetary authority or governmental authority
(whether or not having the force of law):
(a) subjects Bank to any tax with respect to any amounts
payable under this Agreement or the other Loan Documents by Borrowers or
otherwise with respect to the transactions contemplated under this Agreement or
the other Loan Documents (except for taxes on or determined by the overall net
income of Bank imposed by the United States of America or any political
subdivision thereof); or
(b) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit, capital maintenance, capital adequacy, or
similar requirement against assets held by, or deposits in or for the account
of, or loans or advances or commitment to make loans or advances by the Bank; or
(c) imposes upon Bank any other condition with respect to
advances or extensions of credit or the commitment to make advances or
extensions of credit under this Agreement, and the result of any of the
foregoing is to increase the costs of Bank, reduce the income receivable by or
return on equity of Bank or impose any expense upon Bank with respect to any
advances or extensions of credit or commitments to make advances or extensions
of credit under this Agreement, Bank shall so notify Borrowers in writing.
Borrowers agree to pay Bank the amount of such increase in cost, reduction in
income, reduced return on equity or capital, or additional expense within ten
(10) days after presentation by Bank of a statement concerning such increase in
-5-
6
cost, reduction in income, reduced return on equity or capital, or additional
expense. Such statement shall set forth a brief explanation of the amount and
Bank's calculation of the amount (in determining such amount the Bank may use
any reasonable averaging and attribution methods), which statement shall be
presumed correct absent manifest error. If the amount set forth in such
statement is not paid within ten (10) days after such presentation of such
statement, interest will be payable on the unpaid amount at the default rate
payable under the Loan from the due date until paid, both before and after
judgment.
4. SECURITY.
4.1 PERSONAL PROPERTY. As security for the full and timely payment and
performance of the Bank Indebtedness, each Borrower hereby ratifies, confirms
and grants to Bank a security interest in all of the following:
(a) All of such Borrower's present and future accounts,
contract rights, chattel paper, instruments and documents and all other rights
to the payment of money whether or not yet earned, for services rendered or
goods sold, consigned, leased or furnished by such Borrower or otherwise,
together with (i) all goods (including any returned, rejected, repossessed or
consigned goods), the sale, consignment, lease or other furnishings of which
shall be given or may give rise to any of the foregoing, (ii) all of such
Borrower's rights as a consignor, consignee, unpaid vendor or other lienor in
connection therewith, including stoppage in transit, set-off, detinue, replevin
and reclamation, (ill) all general intangibles related thereto, (iv) all
guaranties, mortgages, security interests, assignments, and other encumbrances
on real or personal property, leases and other agreements or property securing
or relating to any accounts, (v) chooses-in-action, claims and judgments, (vi)
any return or unearned premiums, which may be due upon cancellation of any
insurance policies, and (vii) all products and proceeds of any of the foregoing.
(b) All of such Borrower's present and future inventory
(including but not limited to goods held for sale or lease or furnished or to be
furnished under contracts for service, raw materials, work-in-process, finished
goods and goods used or consumed in such Borrower's business) whether owned,
consigned or held on consignment, together with all merchandise, component
materials, supplies, packing, packaging and shipping materials, and all
returned, rejected or repossessed goods sold, consigned, leased or otherwise
furnished by such Borrower, all documents of title covering any of such goods or
inventory and all products and proceeds of any of the foregoing.
(c) All of such Borrower's right, title and interest in
present and future general intangibles (including but not limited to tax refunds
and rebates, manufacturing and processing rights, designs, patent rights and
applications therefor, trademarks and registration or applications therefor,
trade names, brand names, logos, inventions, copyrights and all applications and
registrations therefor), licenses, permits, approvals, software and computer
programs, license rights, royalties, trade secrets, methods, processes,
know-how, formulas, drawings, specifications, descriptions, label designs,
plans, blueprints, patterns and all memoranda, notes and records with respect to
any research and development, and all products and proceeds of any of the
foregoing.
(d) All of such Borrower's present and future machinery,
equipment, furniture, fixtures, motor vehicles, tools, dies, jigs, molds,
drilling rigs, xxxxx and production equipment, pipe, engines, fittings,
computers, pumps, barrels, stores and other articles of tangible personal
property of every type together with all parts, substitutions, accretions,
-6-
7
accessions, attachments, accessories, additions, components and replacements
thereof, all documents of title covering any of such goods or inventory and all
manuals of operation, maintenance or repair, and all products and proceeds of
any of the foregoing.
(e) All of such Borrower's present and future general ledger
sheets, files, records, customer lists, books of account, invoices, bills,
certificates or documents of ownership, bills of sale, business papers,
correspondence, credit files, tapes, cards, computer runs and all other data and
data storage systems whether in the possession of any Borrower or any service
bureau.
(f) All letters of credit now existing or hereafter issued
naming any Borrower as a beneficiary or assigned to any Borrower, including the
right to receive payment thereunder, and all documents and records associated
therewith.
(g) All present and future deposits, funds, instruments,
documents, policies, evidences and certificates of insurance, securities,
investment property, chattel paper and other assets of such Borrower or in which
such Borrower has an interest and all proceeds thereof, including without
limitation, those now or at any time hereafter on deposit with or in the
possession or control of Bank or owing by Bank to such Borrower or in transit by
mail or carrier to Bank or in the possession of any other Person acting on
Bank's behalf, without regard to whether Bank received the same in pledge, for
safekeeping, as agent for collection or otherwise, or whether Bank has
conditionally released the same, and in all assets of such
Borrower in which Bank now has or may at any time hereafter obtain a lien,
mortgage, or security interest for any reason.
(h) All proceeds of the foregoing.
In addition to Borrowers' obligations under the Prior Loan Documents,
Borrowers agree that the Collateral shall also secure Borrowers' obligations to
Bank under this Agreement. Borrowers acknowledge and agree that all security
interests granted to Bank pursuant to the Prior Loan Agreement are continued and
remain in effect, that the Bank's lien position with respect to the Collateral
shall relate back to the date referenced in the Prior Loan Agreement and that
all financing statements previously filed with respect to the Collateral shall
remain in full force and effect.
The security interest granted in this Section 4 shall include, without
limitation: (i) drilling rigs, inventory and other equipment and assets and all
proceeds thereof, in which CIT previously held a security interest under the CIT
Loan Documents, (ii) any assets (other than real property, if any) which
previously secured that certain promissory note in the original principal amount
of Eight Million Dollars ($8,000,000.00) dated August 14, 1996 made by UTI
payable to the order of the Xxx X. Xxxxxxx, Xx. Revocable Trust (the "Viersen
Note") and all other documents in connection therewith (collectively, the
"Viersen Loan Documents"), and (iii) the assets (other than any real property)
acquired by Triad from Southland pursuant to the Southland Acquisition
Agreement. The Borrowers represent and warrant that the obligations of Borrowers
under the CIT Loan Documents and the Viersen Loan Documents (collectively, the
"Prior Obligation Documents") have been paid in full or will be paid ii) full at
the closing hereunder by Borrowers and that the Prior Obligation Documents upon
payment in full will be terminated and of no further force or effect.
4.2 GENERAL. The collateral described above in Section 4.1 is
collectively referred to herein as the "Collateral". The above-described
security interests and liens shall not be rendered void by the fact that no Bank
-7-
8
Indebtedness exists as of any particular date, but shall continue in full force
and effect until all ]Bank Indebtedness has been repaid, Bank has no agreement
or commitment outstanding pursuant to which Bank may extend credit to or on
behalf of any Borrower. IT IS THE EXPRESS INTENT OF THE BORROWERS THAT ALL OF
THE COLLATERAL SHALL SECURE NOT ONLY THE OBLIGATIONS UNDER THE LOAN DOCUMENTS,
BUT ALSO ALL OTHER PRESENT AND FUTURE OBLIGATIONS (NOW EXISTING OR HEREAFTER
ARISING) OF EACH BORROWER TO BANK.
5. REPRESENTATIONS AND WARRANTIES. Borrowers represent and
warrant as follows:
5.1 CONFIRMATION OF PRIOR REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Obligors as set forth in the Prior Loan
Agreement, including without limitation those in Section 5 of the Prior Loan
Agreement are true and complete as of the date hereof, except for such
representations and warranties as are by their express terms limited to a prior
specific date. Such representations are hereby incorporated into this Agreement
by reference with the same effect as if they were set forth in this Agreement in
their entirety.
5.2 TITLE TO ACQUIRED ASSETS. The Collateral, including without
limitation the assets acquired pursuant to the Southland Acquisition Agreement
(the "Southland Assets"), is and will be owned by Borrowers free and clear of
all liens and other encumbrances of any kind, except liens in favor of the Bank
and such other liens as may be permitted under the Prior Loan Agreement. The
Southland Assets shall constitute part of the Collateral, and Borrower will
defend all of the Collateral against any claims of all persons or entities other
than (i) claims of the Bank, and (ii) liens permitted under the Prior Loan
Agreement.
5.3 DUE AUTHORIZATION; NO LEGAL RESTRICTIONS. The execution and
delivery by Borrowers of the Loan Documents, the consummation of the
transactions contemplated by the Loan Documents and the fulfillment and
compliance with the respective terms, conditions and provisions of the Loan
Documents: (a) have been duly authorized by all requisite corporate action of
each Borrower, (b) will not conflict with or result in a breach of, or
constitute a default (or might, upon the passage of time or the giving of notice
or both, constitute a default) under, any of the terms, conditions or provisions
of any applicable statute, law, rule, regulation or ordinance or any Borrower's
Certificate or Articles of Incorporation or By-laws, or any indenture, mortgage,
loan or credit agreement or instrument to which any Borrower is a party or by
which it may be bound or affected, or any judgment or order of any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, and (c) will not result in the creation or imposition of
any lien, charge or encumbrance of any nature whatsoever upon any of the
property or assets of any Borrower under the terms or provisions of any such
agreement or instrument, except liens in favor of Bank.
5.4 ENFORCEABILITY. The Loan Documents have been duly executed by
Borrowers and delivered to Bank and constitute legal, valid and binding
obligations of Borrowers, enforceable in accordance with their terms.
5.5 CONSENTS. No consent, approval or authorization of or designation,
declaration or filing with any governmental authority or any other Person on the
part of Borrowers are required in connection with the execution, delivery or
performance by Borrowers of the Loan Documents or the consummation of the
transactions contemplated thereby.
-8-
9
5.6 CURRENT COMPLIANCE. Borrowers are currently in compliance with all
of the terms and conditions of the Loan Documents.
5.7 INTERRELATEDNESS OF BORROWERS. The business operations of Borrowers
are interrelated and complement one another, and such entities have a common
business purpose, with intercompany bookkeeping and accounting adjustments used
to separate their respective properties, liabilities, and transactions. To
permit their uninterrupted and continuous operations, such entities now require
and will from time to time hereafter require funds and credit accommodations for
general business purposes. The proceeds of advances under the Loan will directly
or indirectly benefit each Borrower hereunder, severally and jointly, regardless
of which Borrower requests or receives part or all of the proceeds of such
advances. The Southland Assets, although owned by Triad, will be used by or for
the benefit of all Borrowers from time to time.
5.8 ACCURACY OF REPRESENTATIONS AND WARRANTIES. No representation or
warranty by Borrowers contained herein or in any certificate or other document
furnished by Borrowers pursuant hereto or in connection herewith fails to
contain any statement of material fact necessary to make such representation or
warranty not misleading in any material respect in light of the circumstances
under which it was made.
5.9 DRILLING RIGS AND RELATED EQUIPMENT. All drilling rigs and related
drilling equipment (collectively, the "Drilling Equipment") used by Borrowers in
drilling operations on their own behalf or on behalf of their customers are
owned by the entities described on Schedule 5.9 attached hereto. Schedule 5.9
sets forth the respective owners of the Drilling Equipment and the states in
which the Drilling Equipment is located. None of the Drilling Equipment consists
of, is located upon or will be part of any vehicle for which a certificate of
title is issued.
6. GENERAL COVENANTS. Except with the prior written consent of Bank,
Borrowers will comply with the following:
6.1 CONFIRMATION OF PRIOR GENERAL COVENANTS. Borrowers acknowledge,
confirm and agree to comply with all covenants of Obligors as set forth in
Section 6 of the Prior Loan Agreement, as amended on the date hereof and as
amended from time to time. Such covenants are hereby incorporated into this
Agreement by reference with the same effect as if they were set forth in the
Agreement in their entirety.
6.2 RESTRICTIONS ON USE OF PROCEEDS. No Borrower will carry or purchase
with the proceeds of the Loan any "margin security" within the meaning of
Regulations U, G, T or X of the Board of Governors of the Federal Reserve
System.
6.3 DRILLING EQUIPMENT. With respect to the Drilling Equipment:
(i) Bank may at any reasonable time inspect the
Drilling Equipment.
(ii) The Drilling Equipment shall at all times remain
separately identifiable personal property and shall not become affixed to any
real property so as to become a fixture.
-9-
10
(iii) If requested by Bank in writing, Borrowers
will attach to the Drilling Equipment in which Bank has a security interest, a
notice satisfactory to Bank, disclosing Bank's security interest in such
Drilling Equipment.
(iv) Borrowers will not move any of the Drilling
Equipment in which Bank has a security interest, out of any of the states
described in Schedule 5.9 attached hereto or any of the other states in which
Bank has filed UCC financing statements sufficient to perfect Bank's security
interest, naming the owner of such Drilling Equipment, as debtor, and describing
such Drilling Equipment as collateral, unless such Borrower gives the Bank at
least ten (10) Business Days prior written notice and, with such written notice
also provides Bank with duly executed financing statements to perfect Bank's
security interest in such Drilling Equipment upon filing in such new state.
(v) Borrowers will not permit any certificates
of title to exist or to be issued for any of the Drilling Equipment, unless the
Bank's security interest is duly noted thereon, the certificate of title is
delivered to Bank and Borrowers take all other actions which Bank deems
necessary or advisable to protect and perfect Bank's security interest in such
Drilling Equipment.
6.4 SUBORDINATED TERM LOAN. Borrowers will close the financing
contemplated under the Subordinated Debt Loan Documents and utilize the funds
thereunder for payment of the purchase price of the Southland Acquisition.
Borrowers will not amend, modify or restate any of the provisions of the
Subordinated Term Loan or any of the Subordinated Debt Loan Documents, in any
way which in Bank's judgment would adversely affect the Bank Indebtedness, the
Collateral, the Subordination Agreement, any Borrower's business, operations or
financial condition, or any rights or remedies of Bank. Without limitation, no
modification shall be made which increases the interest rate, fees or other sums
payable in connection with the Subordinated Term Loan or under the Subordinated
Debt Loan Documents, shortens or accelerates the maturity or due date of any
payments under the Subordinated Term Loan, grants any security interest to
secure all or any part of the Subordinated Term Loan, makes any financial
covenant or ratio more restrictive, or results in any situation in which a
default could occur under the Subordinated Term Loan without such event
constituting an Event of Default hereunder.
The provisions in the Subordination Agreement permitting the
Subordinated Lender to enter into amendments or modifications of the
Subordinated Debt Loan Documents with respect to interest rate increases and
fees shall not be deemed to be a consent or agreement by Bank to any increase in
the interest rate of the Subordinated Term Loan or any new or increased fees
payable in connection with the Subordinated Term Loan. Such amendments or
modifications shall still require the consent by Bank. Obligors will give Bank a
copy of any proposed amendment, modification or restatement of any Subordinated
Debt Loan Document at least ten (10) days prior to the execution thereof.
Obligors will not enter into any such amendment, modification or restatement, if
Bank has notified Obligors that it would be a violation of this Section 6.4.
No Borrower will, directly or indirectly, repurchase, redeem,
or defease prior to the date when due or otherwise make any prepayment prior to
the date when due, or effect any prepayment that is optional on the part of such
Borrower, on any of the Subordinated Term Loan or any other Indebtedness for
borrowed money without the prior written consent of Bank, except that no such
consent is required for and UTI may effect (A) any transaction in which UTI's
capital stock is exchanged for Indebtedness owed by any of the Borrowers,
including any cashless warrant exercise arrangements in which warrants are
exercised without cash payment by the Person so exercising, or exchange of
indebtedness owed by any of the Borrowers for capital stock of UTI, (B)
-10-
11
prepayment permitted by Section 13 of the Prior Loan Agreement, (C) mandatory
prepayments required under the terms of the Subordinated Debt Loan Documents,
and (D) prepayments of Indebtedness owed to Bank in accordance with or required
under this Agreement or the Prior Loan Agreement. Borrowers will give Bank a
copy of each notice of default or other substantive notice received by any
Borrower from any Subordinated Lender, as soon as possible but no later than two
(2) Business Days after such Borrowers' receipt. Borrowers will also deliver to
Bank a copy of each compliance certificate or other report or certificate
delivered by any Borrower to any Subordinated Lender simultaneously with
delivery to such Subordinated Lender. Nothing contained in this Section 6.4
shall limit, restrict, waive or adversely affect any of Bank's rights or
remedies under the Subordination Agreement.
Promptly upon becoming aware of the existence of any default
or event of default under the Subordinated Debt Loan Documents, Borrowers will
give Bank written notice specifying the nature thereof and describing what
action the Borrowers are taking or propose to take with respect thereto.
6.5 SOUTHLAND ACQUISITION. Borrowers will not amend or modify the
Southland Acquisition Agreement or any documents collateral thereto in any
material way or waive any material rights thereunder.
6.6 CHANGE OF CONTROL. Promptly and in any event within ten (10)
Business Days after the occurrence of any Change of Control, the Borrowers will
give written notice of such transaction or event to Bank, which notice shall
state the date of such Change of Control, shall describe such Change of Control
in reasonable detail and shall contain an offer to prepay the unpaid balance of
the Line and the Loan, all interest thereon and all sums due in connection
therewith and to terminate the Prior Loan Agreement on the date specified
therein (the "Change In Control Prepayment Date"), which Change in Control
Prepayment Date shall be a Business Day not less than one (I) Business Day prior
to the date upon which Borrowers have offered to prepay the Subordinated Term
Loan as a result of such Change of Control pursuant to the terms of Subordinated
Debt Loan Documents. Bank shall have the option to require the Borrowers to
prepay all or any part of the Line, the Loan and all interest thereon and to
terminate the Prior Loan Agreement, and Borrowers hereby, jointly and severally,
agree to make such prepayment and to terminate the Prior Loan Agreement. Such
option may be exercised by Bank by written notice to the Borrowers given no
later than ten (10) days prior to the Change in Control Prepayment Date,
specifying the amount to be prepaid. On the Change in Control Prepayment Date,
Borrowers shall pay such amount to Bank and, if requested by Bank, shall execute
a termination of agreement for the Prior Loan Agreement; provided that,
notwithstanding its exercise of the option herein provided, Bank may at any time
prior to the Change in Control Prepayment Date waive or revoke in whole or in
part by written notice to Borrowers the exercise of its option hereunder.
6.7 AMENDED, RESTATED AND CONSOLIDATED LOAN AGREEMENT. Borrowers agree
that they will execute and deliver to Bank, an Amended, Restated and
Consolidated Loan and Security Agreement, consistent with and setting forth the
terms of this Loan Agreement and the Prior Loan Agreement, together with such
other collateral documents and agreements, opinions of counsel and other related
items as Bank may request within 60 days after the date of this Agreement.
7. FINANCIAL COVENANTS. Except with the prior written consent of Bank, Borrowers
will comply with the financial covenants of Obligors as set forth in Section 7
of the Prior Loan Agreement, as amended on the date hereof and as amended from
time to time. Such covenants are hereby incorporated into this Agreement by
reference with the same effect as if they were set forth in this Agreement in
their entirety.
-11-
12
8. ACCOUNTING RECORDS, REPORTS AND FINANCIAL STATEMENTS.
8.1 CONFIRMATION OF PRIOR REPORTING REQUIREMENTS. Borrowers agree to
comply with the financial reporting and other requirements of Obligors as set
forth in Section 8 of the Prior Loan Agreement. Such covenants are hereby
incorporated into this Agreement by reference with the same effect as if they
were set forth in this Agreement in their entirety.
9. ENVIRONMENTAL REPRESENTATIONS AND COVENANTS.
9.1 CONFIRMATION OF PRIOR REPRESENTATIONS. Borrowers represent and
warrant that all representations of Obligors as set forth in Section 9 of the
Prior Loan Agreement are true and complete as of the date hereof, as amended as
of the date hereof. Such representations and warranties are hereby incorporated
into this Agreement by reference with the same effect as if they were set forth
in this Agreement in their entirety.
9.2 CONFIRMATION OF PRIOR COVENANTS. Borrowers acknowledge, confirm and
agree to comply with all environmental covenants and other obligations of
Obligors as set forth in Section 9 of the Prior Loan Agreement, as amended as of
the date hereof. Such covenants are hereby incorporated into this Agreement by
reference with the same effect as if they were set forth in this Agreement in
their entirety.
10. CONDITIONS OF CLOSING. The obligation of Bank to make available the
Loan is subject to the performance by Borrowers of all of their agreements to be
performed hereunder and to the following further conditions (any of which may be
waived by Bank):
10.1 LOAN DOCUMENTS. Borrowers and all other required persons and
entities will have executed and delivered to Bank the Loan Documents, the Fourth
Amendment to the Prior Loan Agreement and all other documents collateral to such
Fourth Amendment.
10.2 REPRESENTATIONS AND WARRANTIES. All representations and warranties
of Borrowers set forth in the Loan Documents, the Prior Loan Documents, the
Subordinated Debt Loan Documents will be true at and as of the date hereof,
except for such representations and warranties that are by their express terms
limited to a specific prior date.
10.3 NO DEFAULT. No condition or event shall exist or have occurred
which would constitute an Event of Default hereunder, under the Prior Loan
Documents or under the Subordinated Loan Documents (or would, upon the giving of
notice or the passage of time or both, constitute such an Event of Default).
10.4 PROCEEDINGS AND DOCUMENTS. All proceedings taken by Borrowers in
connection with the transactions contemplated by this Agreement and all
documents incident to such transactions shall be satisfactory in form and
substance to Bank and Bank's counsel, and Bank shall have received all documents
or other evidence which it reasonably may request in connection with such
proceedings and transactions. Each Borrower shall have delivered to Bank a
certificate, in form and substance satisfactory to Bank, dated the date hereof
and signed on behalf of that Borrower by an officer of that Borrower, certifying
(a) true copies of the Articles of Incorporation and Bylaws of that Borrower in
effect on such date, (b) true copies of all corporate actions taken by that
-12-
13
Borrower relative to the Loan Documents, and (c) the names, true signatures and
incumbency of the officers of that Borrower in effect on such date, (b) true
copies of all corporate actions taken by that Borrower relative to the Loan
Documents, and (c) the names, true signatures and incumbency of the officers of
that Borrower authorized to execute and deliver this Agreement and the other
Loan Documents. Bank may conclusively rely on such certificate unless and until
a later certificate revising the prior certificate has been received by Bank.
10.5 AMENDMENT TO PRIOR LOAN AGREEMENT. Bank shall have received from
Borrowers a duly executed Fourth Amendment to the Prior Loan Agreement together
with all documents collateral thereto as required by Bank, all of which must be
m form and content satisfactory to Bank and closing shall have been completed
thereunder.
10.6 DELIVERY OF OTHER DOCUMENTS. The following documents shall have
been delivered by or on behalf of Borrowers to Bank, all of which must be in
form and content satisfactory to Bank:
(a) Good Standing Certificates. A good standing certificate
certifying to the good standing and corporate status of each Borrower in its
state of incorporation, good standing/foreign qualification certificates from
all other jurisdictions in which Borrowers are required to be qualified to do
business, as the Bank may require.
(b) Authorization Documents. Evidence of authorization of each
Borrower's execution and full performance of this Agreement, the Loan Documents
and all other documents and actions required hereunder.
(c) Landlord's Release and Waiver Agreements. Bank shall have
received a landlord's release and waiver agreement, satisfactory in form and
substance to Bank, from each landlord for each location leased by any Borrower,
as required by Bank.
(d) Opinion of Counsel. An opinion of counsel for Borrowers in
form and content satisfactory to Bank, covering matters related to the laws of
Pennsylvania, Oklahoma, Texas, Delaware and such other jurisdictions as required
by Bank.
(e) Southland Acquisition Agreement. A copy of the fully
executed Southland Acquisition Agreement and all exhibits and schedules thereto
and all documents collateral thereto, certified to be true and complete.
(f) Assignment of Rights. An Assignment of Rights,
satisfactory to Bank, collaterally assigning Triad's and UTI's rights under the
Southland Acquisition Agreement to Bank.
(g) Lien Search. Copies of record searches (including UCC
searches and judgments, suits, tax and other lien searches) confirming that
Bank has a first priority security interest in the Collateral, acceptable to
Bank.
(h) Appraisal. An appraisal of Borrowers' equipment in form,
content, amount and performed by an appraiser approved by and acceptable to Bank
or its agent or designee in its sole discretion. Such appraisal shall include,
without limitation, an orderly liquidation value of fixed equipment (operating
and idle rigs) and tubular equipment of not less than $50,000.00.
-13-
14
(i) Financial Statements. Copies of Borrowers' audited
financial statements for the 1996 fiscal year end. Such financial statements
shall be subject to the satisfactory review of Bank in its sole discretion.
(j) Insurance. Evidence of the insurance required under
Section 6.12 of the Prior Loan Agreement, including without limitation insurance
on all Collateral (including Drilling Rigs) naming Bank as loss payee with a
lender's loss payable endorsement.
(k) Releases. Originals of such pay-off letters, releases,
UCC-3 termination statement and other agreements as Bank may require with
respect to Indebtedness owed to CIT and to the Xxx X. Xxxxxxx, Xx. Revocable
Trust and all collateral securing such Indebtedness.
(l) Other Documents. Such other documents as may be required
by Bank.
10.7 SUBORDINATED TERM LOAN CLOSING. Closing shall have been completed
under the Subordinated Debt Loan Documents, Obligors shall have received the
$24,500,000 in proceeds thereunder and Obligors shall have utilized such funds
to complete closing of the Southland Acquisition. Bank shall have received
signed copies of all Subordinated Debt Loan Documents and the signed
Subordination Agreement all of which must be in form and content acceptable to
Bank in its sole discretion.
10.8 NON-WAIVER OF RIGHTS. By completing the closing hereunder, or by
making advances hereunder, Bank does not thereby waive a breach of any warranty
or representation made by any Borrower hereunder or any agreement, document, or
instrument delivered to Bank or otherwise referred to herein, and any claims and
rights of Bank resulting from any breach or misrepresentation by any Borrower
are specifically reserved by Bank.
11. DEFAULT AND REMEDIES.
11.1 EVENTS OF DEFAULT. The occurrence and continuation, of any one or
more of the following events shall constitute an Event or Events of Default
hereunder:
(a) The failure of Borrowers to pay any amount of principal or
interest on the Note, or any fee or other sums payable hereunder, or any other
Bank Indebtedness on the date on which such payment is due, whether on demand,
at the stated maturity or due date therefor by reason of any requirement for the
prepayment thereof, by acceleration or otherwise, provided that, with respect to
payments of sums other than principal and interest, such failure to pay
continues unremedied for a period of ten (10) days after such sums are first
due;
(b) The failure of any Borrower to duly perform or observe any
obligation, covenant or agreement on its part contained herein under the Prior
Loan Agreement, or m any other Loan Document, provided that, notwithstanding the
foregoing, Borrowers' failure to comply with the provisions of Sections 6.4,
6.11. 6.12 (other than the requirement that insurance coverage be maintained at
all times), 8.3 and 8.8 of the Prior Loan Agreement shall not constitute an
Event of Default hereunder unless such failure to comply continues unremedied
for a period of fifteen (15) days after the earlier of (i) any Borrower receives
notice from Bank of such failure, or (ii) a responsible officer of any Borrower
has actual notice of such failure;
-14-
15
(c) Any Event of Default (as defined in the Prior Loan
Agreement) shall occur and be continuing; or
(d) The continuing failure of any Borrower to perform any
obligation under the Subordinated Debt Loan Documents regardless of whether any
Subordinated Lender shall call a default as a result thereof, or the occurrence
and continuation of any event of default or event which with the giving of
notice, passage of time or both would constitute an event of default under the
Subordinated Debt Loan Documents; or
(e) Any default occurs and is continuing under the
Subordination Agreement.
11.2 REMEDIES. At the option of the Bank, upon the occurrence and
during the continuance of an Event of Default:
(a) The entire unpaid principal of the Loan, all other Bank
Indebtedness, or any part thereof, all interest accrued thereon, all fees due
hereunder and all other obligations of Borrowers to Bank hereunder or under any
other agreement, note or otherwise arising will become immediately due and
payable without any further demand or notice;
(b) Bank may increase the interest rate on the Loan to the
default rate set forth herein, without notice;
(c) Bank may exercise each and every right and remedy granted
to it under the Prior Loan Documents, all of which are hereby incorporated by
reference with the same effect as if they were set forth in this Agreement in
their entirety.
(d) Bank may enter any premises occupied by any Borrower and
take possession of the Collateral and any records relating thereto;
(e) Bank may exercise each and every right and remedy granted
to it under the Loan Documents, the Prior Loan Documents, under the Uniform
Commercial Code and under any other applicable law or at equity; and/or
(f) Bank may exercise each and every right and remedy under
the Subordination Agreement.
If an Event of Default occurs under SECTION 12.1(E) or (F) of the Prior
Loan Agreement, all Bank Indebtedness shall become immediately due and payable.
11.3 SET-OFF. Without limiting the rights of Bank under applicable law,
Bank has and may exercise a right of set-off, a lien against and a security
interest in all property of any Borrower now or at any time in Bank's possession
in any capacity whatsoever, including but not limited to any balance of any
deposit, trust or agency account, or any other bank account with Bank, as
security Indebtedness. At any time and from time to time following the
occurrence of an Event of Default, or any event which with the giving of notice
or passage of time or both would constitute an Event of Default, Bank may
without notice or demand, set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by Bank to or for the credit of any Borrower
against any or all of the Bank Indebtedness and each Borrower's obligations
-15-
16
under the Loan Documents. Bank shall use its best efforts to provide to the
Borrower prompt written notice of the exercise of any set-off rights, provided
that the failure of Bank to provide such notice shall not limit or affect the
validity or effectiveness of such set-off.
11.4 TURNOVER OF PROPERTY HELD BY BANK. Each Borrower irrevocably
authorizes- any Affiliate of Bank, upon and following the occurrence of an Event
of Default, at the request of Bank and without further notice, to turnover to
Bank any property of any Borrower held by such Affiliate, including without
limitation, funds and securities for any Borrower's account and to debit, for
the benefit of Bank, any deposit account maintained by any Borrower with such
Affiliate (even if such deposit account is not then due or there results a loss
or reduction of interest or the imposition of a penalty in accordance with law
applicable to the early withdrawal of time deposits), in the amount requested by
Bank up to the amount of the Bank Indebtedness, and to pay or transfer such
amount or property to Bank for application to the Bank Indebtedness.
11.5 DELAY OR OMISSION NOT WAIVER. Neither the failure nor any delay on
the part of Bank to exercise any right, remedy, power or privilege under the
Loan Documents upon the occurrence of any Event of Default or otherwise shall
operate as a waiver thereof or impair any such right, remedy, power or
privilege. No waiver of any Event of Default shall affect any later Event of
Default or shall impair any rights of Bank. No single, partial or full exercise
of any rights, remedies, powers and privileges by the Bank shall preclude
further or other exercise thereof. No course of dealing between Bank and
Borrowers shall operate as or be deemed to constitute a waiver of Bank's rights
under the Loan Documents or affect the duties or obligations of Borrowers.
11.6 REMEDIES CUMULATIVE; CONSENTS. The rights, remedies, powers and
privileges provided for herein shall not be deemed exclusive, but shall be
cumulative and shall be in addition to all other rights, remedies, powers and
privileges in Bank's favor at law or in equity. Whenever the Bank's consent or
approval is required or permitted, such consent or approval shall be at the sole
and absolute discretion of Bank.
11.7 CERTAIN FEES, COSTS. EXPENSE EXPENDITURES AND INDEMNIFICATION.
Each Borrower agrees to pay on demand all costs and expenses of Bank, including
without limitation:
(a) all costs and expenses in connection with (i) the
preparation, review, negotiation, execution, delivery and administration of the
Loan Documents, and the other documents to be delivered in connection therewith,
or any waivers, consents, amendments, extensions and increases to any of the
foregoing, (ii) the preparation for, negotiations regarding, consultations
concerning, or the defense or prosecution of legal proceedings involving any
claims made or threatened against Bank arising out of or related to the Loan
Documents, the transactions contemplated hereunder as to the protection of any
of the Collateral, or (iii) obtaining any appraisals or reappraisals of
Collateral, periodic lien searches and tax clearance certificates, as Bank in
its discretion deems necessary (including in all cases, without limitation,
reasonable attorney's fees and
(b) all losses, costs and expenses in connection with the
interpretation, enforcement, protection and preservation of the Bank's rights or
remedies under the Loan Documents, or any other agreement relating to any Bank
Indebtedness, or in connection with legal advice relating to the rights or
responsibilities of Bank (including without limitation court costs, reasonable
attorney's fees, reasonable expenses of accountants and appraiser and the cost
of all appeals); and
-16-
17
(c) any and all stamp and other taxes payable or determined to
be payable in connection with the execution and delivery of the Loan Documents,
and all liabilities to which Bank may become subject as the result of delay in
paying or omission to pay such taxes.
In the event any Borrower shall fail to pay taxes, insurance,
assessments, costs or expenses which ft is required to pay hereunder, or fails
to keep the Collateral free from security interests or lien (except as expressly
permitted herein), or fails to maintain or repair the Collateral as required
hereby, or otherwise breaches any obligations under the Loan Documents, Bank in
its discretion, may make expenditures for such purposes and the amount so
expended (including attorney's fees and expenses, filing fees and other charges)
shall be payable by Borrowers on demand and shall constitute part of the Bank
Indebtedness.
With respect to any amount required to be paid by Borrowers under this
section, in the event Borrowers fail to pay such amount on demand, Borrowers
shall also pay to Bank interest thereon at the default rate set forth for the
Loan.
Borrowers agree to indemnify and hold harmless, Bank and Bank's
officers, directors, shareholders, employees and agents, from and against any
and all claims, liabilities, losses, damages, costs and expenses (whether or not
such Person is a party to any litigation), including attorney's fees and costs
and costs of investigation, document production, attendance at depositions or
other discovery with respect to or arising out of this Agreement, the use of any
proceeds advanced hereunder, the transactions contemplated hereunder, or any
claim, demand, action or cause of action being asserted against any Borrower or
any of its Affiliates.
Borrowers' obligations under this section shall survive termination of
this Agreement and repayment of the Bank Indebtedness.
11.8 TIME IS OF THE ESSENCE. Time is of the essence in Borrowers'
performance of their obligations under the Loan Documents.
11.9 INDEMNIFICATION. Borrowers, jointly and severally shall indemnify,
defend and hold Bank, and its directors, agents, employees and counsel, harmless
from and against any and all losses, claims, damages, liabilities, deficiencies,
judgments, penalties, costs or expenses imposed on, incurred by or asserted
against any of them in connection with any litigation, investigation, claim or
proceeding commenced or threatened related to the negotiation, preparation,
execution, delivery, enforcement, performance or administration of this
Agreement, any other Loan Documents, the Prior Loan Documents or any undertaking
or proceeding related to any of the transactions contemplated hereby or any act,
omission to act, event or transaction related or attendant thereto including,
without limitation, anything related in any way to any claim by CIT against
Borrowers or the Bank related to the transactions contemplated hereunder or in
connection with the CIT Loan Documents and including, without limitation,
amounts paid in settlement, court costs, and the fees and expenses of counsel,
except that Borrowers shall not be required to indemnify, defend or hold
harmless Bank from or against any such loss, claim, damage, liability,
deficiency, judgment, penalty or cost to the extent that the undertaking to
indemnify, pay and hold harmless set forth in this section may be unenforceable
because it violates any law or public policy or results from Bank's gross
negligence or wilful misconduct. Borrowers shall pay the maximum portion which
it is permitted to pay under applicable law to Bank in satisfaction of
indemnified matters under this section. The foregoing indemnity shall survive
the payment of the Bank of the Bank Indebtedness and the termination or
non-renewal of this Agreement.
-17-
18
11.10 LIMITATIONS AFTER DEFAULT. To the extent that any of the
covenants set forth or incorporated by reference in this Loan Agreement permit
exceptions for any general prohibitions or requirements, such exceptions are
permitted only provided that (a) no Event of Default has occurred and is
continuing, and (b) any action taken by any Borrower which would have
constituted a permitted exception would not cause or result in an Event of
Default.
12. COMMUNICATIONS AND NOTICES. All notices, requests and other communications
made or given in connection with the Loan Documents shall be in writing and,
unless receipt is stated herein to be required, shall be deemed to have been
validly given if delivered personally to the individual or division or
department to whose attention notices to a party are to be addressed, or by
private carrier, or registered or certified mail, return receipt requested, in
all cases, with charges prepaid, addressed as follows, until some other address
(or individual or division or department for attention) shall have been
designated by notice given by one party to the other:
To Borrowers:
UTI Energy Corp.
000 Xxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxx, XX 00000
Attention: P. Xxxxx Xxxxxx, Chief
Financial Officer
To Bank:
Mellon Bank, N.A.
Plymouth Meeting Executive Campus 000
Xxxx Xxxxxxxxxx Xxxx,
Xxxxx 000 Xxxxxxxx Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx, Asst.
Vice President
ALL "PAYMENT IN FULL" CHECKS OR OTHER MEDIA OF PAYMENT MUST BE SENT TO
BANK ONLY TO THE ABOVE ADDRESS.
13. DEFINITIONS. Capitalized terms not otherwise defined herein shall have
the meanings set forth therein in the Prior Loan Agreement. The following words
and phrases as used in capitalized form in this Agreement, whether in the
singular or plural, shall have the meanings indicated:
13.1 "ACCOUNTING TERM". As used in this Agreement, or any certificate,
report or other document made or delivered pursuant to this Agreement,
accounting terms not defined elsewhere in this Agreement shall have the
respective meanings given to them under GAAP.
13.2 "AFFILIATE", as to any Person, means each other Person that
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person in question.
13.3 "BANK INDEBTEDNESS" shall mean all obligations and Indebtedness of
any Borrower to Bank, whether now or hereafter owing or existing, including,
without limitation, all obligations under the Loan Documents and the Prior Loan
Documents, all obligations to reimburse Bank for payments made by Bank pursuant
-18-
19
to any letter of credit issued for the account or benefit of any Borrower by
Bank, all other obligations or undertakIngs now or hereafter made by or for the
benefit of any Borrower to or for the benefit of Bank under any other agreement,
promissory note or undertaking now existing or hereafter entered into by any
Borrower with Bank, including, without limitation, all obligations of any
Borrower to Bank under the Note, the Loan Documents, any guaranty or surety
agreement and all obligations of any Borrower to immediately pay to Bank the
amount of any overdraft on any deposit account maintained with Bank, together
with all interest and other sums payable in connection with any of the
foregoing.
13.4 "BUSINESS DAY" means any day except a Saturday, Sunday or other
day on which commercial banks in Pennsylvania are authorized by law to close.
13.5 "CIT" means the CIT Group/Equipment Financing, Inc.
13.6 "CHANGE OF CONTROL" shall mean the occurrence of both of the
following: (a) Remy Capital Partners III and its Affiliates as a group
(collectively, Remy") shall cease to be the largest beneficial owner of the
total votIng power of all issued and outstanding shares of the capital stock of
UTI (or successor thereto) entitled to vote generally in the election of
directors; and (b) any Person or group (within the meanIng of Rule 13d-5 as in
effect on the date hereof under the Securities Exchange Act of 1934, as amended)
shall be the beneficial owner, directly or indirectly, through a purchase,
merger, consolidation or other acquisition transaction of more than 35% of the
total voting power of all issued and outstanding shares of the capital stock of
UTI (or successor thereto) entitled to vote generally in the election of
directors; provided, however, that a Person shall not be deemed to have
beneficial ownership of the shares of UTI solely by reason of one or more of (i)
the granting of a proxy or agreement to such Person to vote in a particular
manner in connection with a transaction of the type described in clause (b),
(ii) the granting of a revocable proxy to such Person in connection with a
matter to be considered by stockholders of UTI, (iii) that Person's ownership of
a right to purchase or acquire stock in connection with such Person's purchase
of stock of UTI from UTI or Remy, or (iv) by reason of the ownership of an
underwriter of shares of the capital stock of UTI in connection with a public
offering of such shares; provided, further, that, in the case of subclauses (i),
(ii) and (iii), no payment or consideration in the form of cash or property
shall have been received in connection with such grants or purchases.
13.7 "CORPORATION" means a corporation, partnership, trust,
unincorporated organization, association, joint stock company, limited liability
company or other legal entity.
13.8 "EVENT OF DEFAULT" means each of the events specified in
Section 11.1.
13.9 "GAAP" means generally accepted accountIng principles in the
United States of America, in effect from time to time, consistently applied and
maintained.
13.10 "INDEBTEDNESS", as applied to a Person, means:
(a) all items (except items of capital stock or of surplus)
which in accordance with GAAP would be included in determining total liabilities
as shown on the liability side of a balance sheet of such Person as at the date
as of which Indebtedness is to be determined;
(b) to the extent not included in the foregoing, all
indebtedness, obligations, and liabilities secured by any mortgage, pledge,
lien, conditional sale or other title retention agreement or other security
interest to which any property or asset owned or held by such Person is subject,
-19-
20
whether or not the indebtedness, obligations or liabilities secured thereby
shall have been assumed by such Person; and
(c) to the extent not included in the foregoing, all
indebtedness, obligations and liabilities of others which such Person has
directly or indirectly guaranteed, endorsed (other than for collection or
deposit in the ordinary course of business), sold with recourse, or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire or in
respect of which such Person has agreed to supply or advance funds (whether by
way of loan, stock purchase, capital contribution or otherwise) or otherwise to
become directly or indirectly liable.
13.11 "LOAN DOCUMENTS" means this Agreement, the Note, the
Subordination Agreement and all other documents, executed or delivered by
Borrower pursuant to this Agreement, as they may be amended from time to time.
13.12 "NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement
executed as part of the Subordinated Term Loan.
13.13 "PERSON" means an individual, a 'Corporation or a government or
any agency or subdivision thereof, or any other entity.
13.14 "PRIME RATE" means the annual interest rate established from time
to time by Bank and generally known by Bank as its ?$prime rate", whether
published by it publicly or only for the internal guidance of its loan officers.
The Prime Rate is used merely as a pricing index and is not and should not be
considered to represent the lowest or best rate available to a borrower.
13.15 "SOUTHLAND" means Southland Drilling Company, Ltd.
13.16 "SOUTHLAND ACQUISITION" means the acquisition by Triad of
substantially all of the assets of Southland in accordance with the terms of the
Southland Acquisition Agreement.
13.17 "SOUTHLAND ACQUISITION AGREEMENT" means the Asset Purchase
Agreement dated March 5, 1997 between UTI and Southland.
13.18 "SUBORDINATED DEBT LOAN DOCUMENTS" means all of the documents
executed and delivered in connection with the Loan, including without
limitation, the Note Purchase Agreement, the Note, the Subordination Agreement
and the Warrant Agreement.
13.19 "SUBORDINATED LENDERS" means collectively Canpartners Investment
IV, LLC and its permitted successors and assigns.
13.20 "SUBORDINATED TERM LOAN" means the subordinated term loan in the
face amount of $25,000,000 to be extended by the Subordinated Lenders to certain
of the Obligors in accordance with the terms of the Subordinated Debt Loan
Documents, the terms of which must be acceptable to Bank.
13.21 "SUBORDINATION AGREEMENT" means the Subordination and
Intercreditor Agreement among Obligors, the Subordinated Lenders and Bank, in
form and content acceptable to Bank.
-20-
21
13.22 "SUBSIDIARY" means a Corporation (a) which is organized under the
laws of the United States or any State thereof, or any other county or
jurisdiction, (b) which conducts substantially all of its business and has
substantially all of its assets within the United States, and (c) of which more
than fifty percent (50%) of its outstanding voting stock of every class (or
other voting equity interest) is owned by any Borrower or one or more of its
Subsidiaries.
14. WAIVERS.
14.1 WAIVERS. In connection with any proceedings under the Loan
Documents, including without limitation any action by Bank in replevin,
foreclosure or other court process or in connection with any other action
related to the Loan Documents or the transactions contemplated hereunder,
Borrowers waive:
(a) all errors, defects and imperfections in such proceedings;
(b) all benefits under any present or future laws exempting
any property, real or personal, or any part of any proceeds thereof from
attachment, levy or sale under execution, or providing for any stay of execution
to be issued on any judgment recovered under any of the Loan Documents or in any
replevin or foreclosure proceeding, or otherwise providing for any valuation,
appraisal or exemption;
(c) all rights to inquisition on any real estate, which real
estate may be levied upon pursuant to a judgment obtained under any of the Loan
Documents and sold upon any writ of execution issued thereon in whole or in
part, in any order desired by Bank;
(d) presentment for payment, demand, notice of demand,
notice of nonpayment, protest and notice of protest of any of the Loan
Documents, including the Note;
(e) any requirement for bonds, security or sureties required
by statute, court rule or otherwise;
(f) any demand for possession of Collateral prior to
commencement of any suit; and
(g) all rights to claim or recover attorney's fees and costs
in the event that any Borrower is successful in any action to remove, suspend or
prevent the enforcement of a judgment entered by confession.
14.2 FORBEARANCE. Bank may release, compromise, forbear with respect
to, waive, suspend, extend or renew any of the terms of the Loan Documents,
without notice to any Borrower
14.3 LIMITATION ON LIABILITY. Borrowers shall be responsible for and
Bank is hereby released from any claim or liability in connection with:
(a) Safekeeping any Collateral;
(b) Any loss or damage to any Collateral;
(c) Any diminution in value of the Collateral; or
-21-
22
(d) Any act or default of another Person.
Bank shall only be liable for any act or omission on its part
constituting gross negligence or wilful misconduct. In the event that Bank
breaches its required standard of conduct, Borrowers agree that Bank's liability
shall be only for direct damages suffered and shall not extend to consequential
or incidental damages. In the event any Borrower brings suit against Bank in
connection with the transactions contemplated hereunder and Bank is found not to
be liable, Borrowers will indemnify and hold Bank harmless from all costs and
expenses, including attorney's fees, incurred by Bank in connection with such
suit. This Agreement is not intended to obligate Bank to take any action with
respect to the Collateral or to incur expenses or perform any obligation or duty
of any Borrower.
14.4 SUBROGATION; SUBORDINATION. Any and all rights of subrogation that
any Borrower have against another Borrower or against any collateral or security
for any Bank Indebtedness may and any and all rights of contribution, indemnity
and/or substitution that any Borrower may have against another Borrower shall be
junior and subordinate to all Bank Indebtedness, to any rights that Bank may
have against all Borrowers, and to all right, title and interest that Bank may
have in any such collateral or security for the Bank Indebtedness. Bank may use,
sell or dispose of any item of collateral or security for the Bank Indebtedness
as it sees fit without regard to any subrogation rights any Borrower may have,
and upon any such disposition or sale of such collateral or security any rights
of subrogation that any Borrower may have with respect to such collateral or
security shall terminate.
Until the Bank Indebtedness shall have been indefeasibly paid in full,
no Borrower shall take, or permit to be taken, any action to exercise (a) any
right of subrogation arising in respect of the Bank Indebtedness, (b) any right
of contribution arising in respect of the Bank Indebtedness that any Borrower
may have, (c) any right to enforce any remedy which Bank now has or may
hereafter have against any Borrower or (d) any benefit of, and any right to
participate in, any security now or hereafter held by Bank. If any amount shall
be paid to any Borrower on account of such subrogation or contribution rights at
any time when all Bank Indebtedness shall not have been paid in full, such
amount shall be held in trust for Bank and shall forthwith be paid over to Bank
to be credited and applied against the Bank Indebtedness, whether matured or
unmatured, in accordance with the terms hereof.
15. SUBMISSION TO JURISDICTION. Borrowers hereby consent to the jurisdiction of
any state or federal court located within the Commonwealth of Pennsylvania, and
irrevocably agree that, subject to the Bank's election, all actions or
proceedings relating to the Loan Documents or the transactions contemplated
hereunder shall be litigated in such courts. Borrowers waive any objection which
they may have based on lack of personal jurisdiction, improper venue or forum
non conveniens to the conduct of any proceeding in any such court and waive
personal service of any and all process upon them, and consent that all such
service of process be made by mail or messenger directed to them at the address
set forth in Section 12. Nothing contained in this Section 15 shall affect the
right of Bank to serve legal process in any other manner permitted by law or
affect the right of Bank to bring any action or proceeding against any Borrower
or its property in the courts of any other jurisdiction.
16. MISCELLANEOUS.
16.1 INCORPORATION BY REFERENCE. All of the representations,
warranties, covenants and conditions set forth in the Prior Loan Agreement are
hereby incorporated into this Agreement by reference with the same effect as if
they were set forth in this Agreement in their entirety. Such representations,
-22-
23
warranties, covenants and conditions shall survive repayment of the Line and
termination of the Prior Loan Agreement.
All representations, warranties, covenants and conditions set
forth in the Subordinated Debt Loan Documents are hereby incorporated by
reference with the same effect as if they were set forth in this Agreement in
their entirety, provided that such representations, warranties and covenants
shall terminate upon repayment in full of the Subordinated Term Loan.
16.2 BROKERS. The transaction contemplated hereunder was brought about
and entered into by Bank and Borrowers acting as principals and without any
brokers, agents or finders being the effective procuring cause hereof. Borrowers
represent to Bank that Borrowers have not committed Bank to the payment of any
brokerage fee or commission in connection with this transaction. If any such
claim is made against Bank by any broker, finder or agent or any other Person,
Borrowers agree to indemnify, defend and hold Bank harmless against any such
claim, at Borrowers' own cost and expense, including Bank's attorneys' fees.
Borrowers further agree that until any such claim or demand is adjudicated in
Bank's favor, the amount claimed and/or demanded shall be deemed part of the
Bank Indebtedness secured by the Collateral.
16.3 USE OF BANK'S NAME. No Borrower shall use Bank's name or the name
of any of Bank's Affiliates in connection with any of its business or activities
except as may otherwise be required by the rules and regulations of the
Securities and Exchange Commission or any like regulatory body and except as may
be required in its dealings with any governmental agency.
16.4 NO JOINT VENTURE. Nothing contained herein is intended to permit
or authorize any Borrower to make any contract on behalf of Bank, nor shall this
Agreement be construed as creating a partnership, joint venture or making Bank
an investor in any Borrower.
16.5 SURVIVAL. All covenants, agreements, representations and
warranties made by Borrowers in the Loan Documents or made by or on their behalf
in connection with the transactions contemplated herein shall be true at all
times this Agreement is in effect and shall survive the execution and delivery
of the Loan Documents, any investigation at any time made by Bank or on its
behalf and the making by Bank of the loans or advances to Borrowers. All
statements contained in any certificate, statement or other document delivered
by or on behalf of any Borrower pursuant hereto or in connection with the
transactions contemplated hereunder shall be deemed representations and
warranties by Borrowers.
16.6 NO ASSIGNMENT BY BORROWERS. No Borrower may assign any of its
rights hereunder without the prior written consent of Bank, and Bank shall not
be required to lend hereunder except to Borrowers as they presently exist.
16.7 ASSIGNMENT OR SALE BY BANK. Bank may sell, assign or participate
all or a portion of its interest in the Loan Documents and in connection
therewith may make available to any prospective purchaser, assignee or
participant any information relative to any Borrower in its --possession,
provided that there are at no time more than six (6) other co-lenders or
participants, and provided further that, the amount of each co-lender's or
participant's interest in the commitments under the Line and the original
balance of their respective interests in the Loan are not less than $5,000,000
in the aggregate at the time of assignment or purchase.
-23-
24
16.8 BINDING EFFECT. This Agreement and all rights and powers granted
hereby will bind and inure to the benefit of the parties hereto and their
respective permitted successors and assigns.
16.9 SEVERABILITY. The provisions of this Agreement and all other Loan
Documents are deemed to be severable, and the invalidity or unenforceability of
any provision shall not affect or impair the remaining provisions which shall
continue in full force and effect.
16.10 NO THIRD PARTY BENEFICIARIES. The rights and benefits of this
Agreement and the Loan Documents shall not inure to the benefit of any third
party.
16.11 MODIFICATIONS. No modification of this Agreement or any of the
Loan Documents shall be binding or enforceable unless in writing and signed by
or on behalf of the party against whom enforcement is sought.
16.12 HOLIDAYS. If the day provided herein for the payment of any
amount or the taking of any action falls on a Saturday, Sunday or public holiday
at the place for payment or action, then the due date for such payment or action
will be the next succeeding Business Day.
16.13 LAW GOVERNING. This Agreement has been made, executed and
delivered in the Commonwealth of Pennsylvania and will be construed in
accordance with and governed by the laws of such Commonwealth, without regard to
any rules or principles regarding conflict of laws or any rule or canon of
construction which interprets agreements against the draftsman.
16.14 INTEGRATION. The Loan Documents shall be construed as integrated
and complementary of each other, and as augmenting and not restricting Bank's
rights, powers, remedies and security. The Loan Documents contain the entire
understanding of the parties thereto with respect to the matters contained
therein and supersede all prior agreements and understandings between the
parties with respect to the subject matter thereof and do not require parol or
extrinsic evidence in order to reflect the intent of the parties. In the event
of any inconsistency between the terms of this Agreement and the terms of the
other Loan Documents, the terms of this Agreement shall prevail. All references
to the Prior Loan Agreement shall mean the Prior Loan Agreement as it may from
time to time be amended. If the Prior Loan Agreement is terminated or ceases to
be effective for any reason, the provision thereof specifically referenced or
incorporated by reference in this Agreement shall remain a part of this
Agreement.
16.15 EXHIBITS AND SCHEDULES. All exhibits and schedules attached
hereto are hereby made a part of this Agreement.
16.16 HEADINGS. The headings of the Articles, Sections, paragraphs and
clauses of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part of this Agreement.
16.17 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
16.18 JOINT AND SEVERAL LIABILITY. If there is more than one Borrower
hereunder, all agreements, conditions, covenants and provisions of the Loan
Documents shall be the joint and several obligation of each Borrower.
-24-
25
16.19 WAIVER OF RIGHT TO TRIAL BY JURY. BORROWERS AND BANK WAIVE ANY
RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a)
ARISING UNDER ANY OF THE LOAN DOCUMENTS OR (b) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF BORROWERS OR BANK WITH RESPECT TO ANY
OF THE LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH
CASE WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. BORROWERS AND BANK AGREE
AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF BORROWERS AND BANK TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY. BORROWERS ACKNOWLEDGE THAT THEY HAVE HAD THE OPPORTUNITY TO
CONSULT WITH COUNSEL REGARDING THIS SECTION, THAT THEY FULLY UNDERSTAND ITS
TERMS, CONTENT AND EFFECT, AND THAT THEY VOLUNTARILY AND KNOWINGLY AGREE TO THE
TERMS OF THIS SECTION.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
FWA DRILLING COMPANY, INC.
By: /s/ P. Xxxxx Xxxxxx
-----------------------------------
P. Xxxxx Xxxxxx, Vice President
(CORPORATE SEAL)
INTERNATIONAL PETROLEUM SERVICE COMPANY
By: /s/ P. Xxxxx Xxxxxx
-----------------------------------
P. Xxxxx Xxxxxx, Vice President
(CORPORATE SEAL)
TRIAD DRILLING COMPANY
By: /s/ P. Xxxxx Xxxxxx
-----------------------------------
P. Xxxxx Xxxxxx, Vice President
(CORPORATE SEAL)
[SIGNATURES CONTINUED ON NEXT PAGE]
-25-
26
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
UNIVERSAL WELL SERVICES, INC.
By: /s/ P. Xxxxx Xxxxxx
-----------------------------------
P. Xxxxx Xxxxxx, Vice President
(CORPORATE SEAL)
USC, INCORPORATED
By: /s/ P. Xxxxx Xxxxxx
-----------------------------------
P. Xxxxx Xxxxxx, Vice President
(CORPORATE SEAL)
UTI ENERGY CORP.
By: /s/ P. Xxxxx Xxxxxx
-----------------------------------
P. Xxxxx Xxxxxx, Vice President
(CORPORATE SEAL)
UTICO, INC.
By: /s/ P. Xxxxx Xxxxxx
-----------------------------------
P. Xxxxx Xxxxxx, Vice President
(CORPORATE SEAL)
PANTHER DRILLING, INC.,
FORMERLY KNOWN AS
VIERSEN & XXXXXXX
DRILLING COMPANY
By: /s/ P. Xxxxx Xxxxxx
-----------------------------------
P. Xxxxx Xxxxxx, Vice President
(CORPORATE SEAL)
[SIGNATURES CONTINUED ON NEXT PAGE]
-26-
27
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
MELLON BANK, N.A.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxx, Asst. Vice President
-27-
28
EXHIBIT
Exhibit "A" - Note
SCHEDULE
Schedule 5.9 - Location of Drilling Equipment
-28-
29
NOTE
Philadelphia, Pennsylvania
Dated: April 11, 1997
$25,000,000.00
FOR VALUE RECEIVED AND INTENDING TO BE LEGALLY BOUND,the undersigned
(collectively, the "Borrowers") hereby promise to pay to the order of MELLON
BANK, N.A. ("Bank"), the principal sum of Twenty-Five Million Dollars
($25,000,000.00), together with Interest thereon upon the following terms:
1. TERM NOTE. This Note is the "Note" as defined in that certain Loan
and Security Agreement of even date herewith between Borrowers and Bank (such
Loan and Security Agreement, as the sane may be amended, supplemented or
restated from time to time, being the "Loan Agreement") and, as such, shall be
construed in accordance with all terms and conditions thereof. Capitalized terms
not defined herein shall have such meaning as provided in the Loan Agreement.
This Note is entitled to all the rights and remedies provided in the Loan
Agreement and the Loan Documents and is secured by all Collateral as described
therein.
2. INTEREST RATE. Interest on the unpaid principal balance hereof will
accrue from the date of advance until final payment thereof at the rate per
annum which is equal to the Prime Rate of Bank in effect from time to time (such
interest rate to change immediately upon any change in the Prime Rate).
3. DEFAULT INTEREST. Interest will accrue on the outstanding principal
amount hereof following the occurrence of an Event of Default or the final
maturity date hereof, until paid at a rate per annum which is two percent (2%)
in excess of the non-default rate otherwise payable under Paragraph 2 above (the
"Default Rate").
4. POST JUDGMENT INTEREST. Any judgment obtained for sums due
hereunder or under the Loan Documents will accrue interest at the Default Rate
until paid.
5. COMPUTATION. Interest will be computed on the basis of a year
365/366 days and paid for the actual number of days elapsed.
6. PRINCIPAL AND INTEREST PAYMENTS.
(a) Interest Payments. Borrowers will pay interest on the
outstanding principal balance hereof monthly, on the first day of each calendar
month commencing on the first day of the first calendar month following the date
hereof.
(b) Principal Payments. Borrowers will pay the outstanding
principal balance hereof as follows:
(i) twelve (12) equal and consecutive monthly
installments of Four Hundred Twenty-Five Thousand Dollars ($425,000.00) each,
payable on the first day of each calendar month commencing on May 1, 1997 and
contInuing through and including April 1, 1998;
-29-
30
(ii) twelve (12) equal and consecutive monthly
installments of Five Hundred Thousand Dollars ($500,000.00) each, payable on
the first day of each calendar month commencing on May I, 1998 and continuing
through and including April I, 1999;
(iii) thirteen (13) equal and consecutive monthly
installments of Six Hundred Fifty Thousand Dollars ($650,000.00) each, payable
on the first day of each calendar month commencing on May 1, 1999 and
continuing through and including May 1, 2000; and
(iv) one (I) final payment of the remaining
principal balance hereof plus all accrued and unpaid interest thereon on
June 1, 2000.
Borrowers also agree to make the prepayments required under SECTION
3.2(B) and SECTION 6.6 of the Loan Agreement.
7. PLACE OF PAYMENT. Principal and interest hereunder shall be payable
as provided in the Loan Agreement, or at such other place as Bank, from time to
time, may designate in writIng.
8. DEFAULT: REMEDIES. Upon the occurrence of an Event of Default and so
long as same shall be contInuing, Bank, at its option and without notice to
Borrowers, may declare immediately due and payable the entire unpaid balance of
principal and all other sums due by Borrowers hereunder and under the other Loan
Documents, together with interest accrued thereon at the applicable rate
specified above to the date of the Event of Default and thereafter at the
Default Rate. Payment thereof may be enforced and recovered in whole or in part
at any time and from time to time by one or more of the remedies provided to
Bank in this Note or in the Loan Documents or as otherwise provided at law or in
equity, all of which remedies are cumulative and concurrent.
9. WAIVERS. Borrowers and all endorsers hereby, jointly and severally,
waive presentment for payment, demand, notice of demand, notice of nonpayment or
dishonor, protest and notice of protest of this Note, and all other notices in
connection with the delivery, acceptance, performance, default or enforcement of
the payment of this Note.
10. MISCELLANEOUS. If any provisions of this Note shall be held invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provision hereof. This Note has been delivered in and shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
without regard to the law of conflicts. This Note shall be binding upon
Borrowers and upon Borrowers' successors and assigns and shall benefit Bank and
its successors and assigns. The prompt and faithful performance of all of
Borrowers' obligations hereunder, including without limitation, time of payment,
is of the essence of this Note.
11. JOINT AND SEVERAL LIABILITY. If there is more than one Borrower
executing this Note, all agreements, conditions, covenants and provisions of
this Note shall be the joint and several obligation of each Borrower.
IN WITNESS WHEREOF, Borrowers, intending to be legally bound hereby,
have caused this Note to be duly executed the day and year first above written.
-30-
31
FWA DRILLING COMPANY, INC.
By:_____________________________________
P. Xxxxx Xxxxxx, Vice President
(CORPORATE SEAL)
INTERNATIONAL PETROLEUM SERVICE COMPANY
By:_____________________________________
P. Xxxxx Xxxxxx, Vice President
(CORPORATE SEAL)
TRIAD DRILLING COMPANY
By:______________________________________
P. Xxxxx Xxxxxx, Vice President
(CORPORATE SEAL)
UNIVERSAL WELL SERVICES, INC.
By:______________________________________
P. Xxxxx Xxxxxx, Vice President
(CORPORATE SEAL)
USC, INCORPORATED
By:______________________________________
P. Xxxxx Xxxxxx, Vice President
(CORPORATE SEAL)
[SIGNATURES CONTINUED ON NEXT PAGE]
-31-
32
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
UTI ENERGY CORP.
By:______________________________________
P. Xxxxx Xxxxxx, Vice President
(CORPORATE SEAL)
UTICO, INC.
By:______________________________________
P. Xxxxx Xxxxxx, Vice President
(CORPORATE SEAL)
PANTHER DRILLING, INC.,
FORMERLY KNOWN AS
VIERSEN & XXXXXXX
DRILLING COMPANY
By:______________________________________
P. Xxxxx Xxxxxx, Vice President
(CORPORATE SEAL)
-32-
