1
LOAN AND SECURITY AGREEMENT
dated as of October 22, 1999
among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as Lenders,
BANK OF AMERICA, NATIONAL ASSOCIATION
as the Agent,
XXXXXX DRILLING COMPANY
and
THE SUBSIDIARIES OF XXXXXX DRILLING COMPANY NAMED HEREIN
as the Borrowers
BANK OF AMERICA, NATIONAL ASSOCIATION
Lead Arranger and Sole Book Runner
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TABLE OF CONTENTS
ARTICLE 1 INTERPRETATION OF THIS AGREEMENT................................................................2
Section 1.1 Definitions...................................................................2
Section 1.2 Accounting Terms.............................................................31
Section 1.3 Interpretive Provisions......................................................31
ARTICLE 2 LOANS AND LETTERS OF CREDIT....................................................................32
Section 2.1 Total Facility...............................................................32
Section 2.2 Revolving Loans..............................................................33
Section 2.3 Reserved.....................................................................40
Section 2.4 Letters of Credit............................................................40
Section 2.5 Bank Products................................................................47
ARTICLE 3 INTEREST AND FEES..............................................................................47
Section 3.1 Interest.....................................................................47
Section 3.2 Conversion and Continuation Elections. .....................................48
Section 3.3 Maximum Interest Rate........................................................49
Section 3.4 Unused Line Fee. ...........................................................50
Section 3.5 Letter of Credit Fee. ......................................................50
Section 3.6 Other Fees...................................................................50
Section 3.7 Interest Limitation..........................................................50
ARTICLE 4 PAYMENTS AND PREPAYMENTS.......................................................................51
Section 4.1 Revolving Loans. ...........................................................51
Section 4.2 Reduction of Commitments; Termination of Facility. .........................52
Section 4.3 Reserved.....................................................................53
Section 4.4 Prepayments from Capex Reimbursements........................................53
Section 4.5 Prepayments from Asset Dispositions..........................................53
Section 4.6 Payments by the Borrower.....................................................53
Section 4.7 Payments as Revolving Loans..................................................54
Section 4.8 Apportionment, Application and Reversal of Payments..........................54
Section 4.9 Indemnity for Returned Payments..............................................54
Section 4.10 The Agent's and the Lenders' Books and Records; Monthly Statements...........55
ARTICLE 5 TAXES, YIELD PROTECTION AND ILLEGALITY.........................................................55
Section 5.1 Taxes........................................................................55
Section 5.2 Illegality...................................................................56
Section 5.3 Increased Costs and Reduction of Return......................................57
Section 5.4 Funding Losses...............................................................57
Section 5.5 Inability to Determine Rates.................................................58
Section 5.6 Certificates of Lenders......................................................58
Section 5.7 Survival.....................................................................58
Section 5.8 Replacement of Affected Lender...............................................58
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ARTICLE 6 COLLATERAL.....................................................................................59
Section 6.1 Grant of Security Interest...................................................59
Section 6.2 Perfection and Protection of Security Interest...............................60
Section 6.3 Location of Collateral.......................................................61
Section 6.4 Title to, Liens on, and Sale and Use of Collateral...........................62
Section 6.5 Appraisals...................................................................62
Section 6.6 Access and Examination; Confidentiality......................................62
Section 6.7 Collateral Reporting.........................................................63
Section 6.8 Accounts.....................................................................64
Section 6.9 Collection of Accounts; Payments.............................................65
Section 6.10 Inventory....................................................................66
Section 6.11 Rig Equipment................................................................67
Section 6.12 Reserved.....................................................................67
Section 6.13 Documents, Instruments, and Chattel Paper....................................67
Section 6.14 Right to Cure................................................................67
Section 6.15 Power of Attorney............................................................67
Section 6.16 The Agent's and Lenders' Rights, Duties and Liabilities......................68
Section 6.17 Site Visits, Observations and Testing........................................68
Section 6.18 Guaranties; Loan Party Joinder...............................................69
Section 6.19 Voting Rights, Distributions, Etc. in Respect of Investment Property.........69
ARTICLE 7 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES..............................................70
Section 7.1 Books and Records............................................................70
Section 7.2 Financial Information........................................................71
Section 7.3 Notices to the Lenders.......................................................73
Section 7.4 Revisions or Updates to Schedules............................................75
ARTICLE 8 GENERAL WARRANTIES AND REPRESENTATIONS.........................................................76
Section 8.1 Authorization, Validity, and Enforceability of this Agreement and
the Loan Documents; No Conflicts...........................................76
Section 8.2 Validity and Priority of Security Interest...................................76
Section 8.3 Organization and Qualification...............................................76
Section 8.4 Corporate Name; Prior Transactions...........................................77
Section 8.5 Subsidiaries and Affiliates..................................................77
Section 8.6 Financial Statements and Projections.........................................77
Section 8.7 Capitalization...............................................................77
Section 8.8 Solvency.....................................................................77
Section 8.9 Debt. ......................................................................78
Section 8.10 Distributions................................................................78
Section 8.11 Title to Property............................................................78
Section 8.12 Real Estate; Leases..........................................................78
Section 8.13 Reserved.....................................................................78
Section 8.14 Trade Names..................................................................78
Section 8.15 Litigation...................................................................78
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Section 8.16 Restrictive Agreements.......................................................78
Section 8.17 Labor Disputes...............................................................79
Section 8.18 Environmental Laws...........................................................79
Section 8.19 No Violation of Law..........................................................80
Section 8.20 No Default...................................................................80
Section 8.21 ERISA Compliance.............................................................80
Section 8.22 Taxes........................................................................81
Section 8.23 Regulated Entities...........................................................81
Section 8.24 Use of Proceeds; Margin Regulations..........................................81
Section 8.25 Copyrights, Patents, Trademarks and Licenses, etc............................81
Section 8.26 No Material Adverse Change...................................................82
Section 8.27 Full Disclosure..............................................................82
Section 8.28 Material Agreements..........................................................82
Section 8.29 Bank Accounts................................................................82
Section 8.30 Governmental Authorization...................................................82
Section 8.31 Investment Property..........................................................82
Section 8.32 Mutual Benefit...............................................................83
Section 8.33 Loan Parties.................................................................83
Section 8.34 Non-Material Subsidiaries....................................................83
ARTICLE 9 AFFIRMATIVE AND NEGATIVE COVENANTS.............................................................83
Section 9.1 Taxes and Other Obligations..................................................83
Section 9.2 Existence and Good Standing..................................................84
Section 9.3 Compliance with Law and Agreements; Maintenance of Licenses..................84
Section 9.4 Maintenance of Property......................................................84
Section 9.5 Insurance....................................................................84
Section 9.6 Condemnation.................................................................85
Section 9.7 Environmental Laws...........................................................86
Section 9.8 Compliance with ERISA........................................................86
Section 9.9 Mergers, Consolidations or Sales.............................................87
Section 9.10 Distributions; Capital Change; Restricted Investments........................87
Section 9.11 Transactions Affecting Collateral or Obligations.............................87
Section 9.12 Guaranties...................................................................87
Section 9.13 Debt.........................................................................87
Section 9.14 Prepayment...................................................................88
Section 9.15 Transactions with Affiliates.................................................88
Section 9.16 Investment Banking and Finder's Fees.........................................88
Section 9.17 Reserved.....................................................................89
Section 9.18 Business Conducted...........................................................89
Section 9.19 Liens........................................................................89
Section 9.20 Sale and Leaseback Transactions..............................................89
Section 9.21 New Subsidiaries.............................................................89
Section 9.22 Fiscal Year..................................................................89
Section 9.23 Capital Expenditures.........................................................89
Section 9.24 Operating Lease Obligations..................................................89
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Section 9.25 Fixed Charge Coverage Ratio..................................................90
Section 9.26 Adjusted Tangible Net Worth..................................................90
Section 9.27 Use of Proceeds..............................................................90
Section 9.28 Further Assurances...........................................................90
ARTICLE 10 CONDITIONS OF LENDING..........................................................................90
Section 10.1 Conditions Precedent to Making of Loans on the Closing Date..................90
Section 10.2 Conditions Precedent to Each Loan............................................94
ARTICLE 11 DEFAULT; REMEDIES..............................................................................95
Section 11.1 Events of Default............................................................95
Section 11.2 Remedies.....................................................................98
ARTICLE 12 TERM AND TERMINATION..........................................................................100
Section 12.1 Term and Termination........................................................100
ARTICLE 13 AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS...................................101
Section 13.1 No Waivers; Cumulative Remedies.............................................101
Section 13.2 Amendments and Waivers......................................................101
Section 13.3 Assignments; Participations.................................................102
ARTICLE 14 THE AGENT.....................................................................................104
Section 14.1 Appointment and Authorization...............................................104
Section 14.2 Delegation of Duties........................................................105
Section 14.3 Liability of the Agent......................................................105
Section 14.4 Reliance by the Agent.......................................................105
Section 14.5 Notice of Default...........................................................106
Section 14.6 Credit Decision.............................................................106
Section 14.7 Indemnification.............................................................106
Section 14.8 The Agent in Individual Capacity............................................107
Section 14.9 Successor Agent.............................................................107
Section 14.10 Withholding Tax.............................................................108
Section 14.11 Reserved....................................................................109
Section 14.12 Collateral Matters..........................................................109
Section 14.13 Restrictions on Actions by Lenders; Sharing of Payments.....................110
Section 14.14 Agency for Perfection.......................................................111
Section 14.15 Payments by the Agent to Lenders............................................111
Section 14.16 Concerning the Collateral and the Related Loan Documents....................111
Section 14.17 Field Audit and Examination Reports; Disclaimer by Lenders..................111
Section 14.18 Relation Among Lenders......................................................112
ARTICLE 15 MISCELLANEOUS.................................................................................112
Section 15.1 Cumulative Remedies; No Prior Recourse to Collateral........................112
Section 15.2 Severability................................................................113
Section 15.3 Governing Law; Choice of Forum; Service of Process..........................113
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Section 15.4 Waiver of Jury Trial........................................................114
Section 15.5 Survival of Representations and Warranties..................................114
Section 15.6 Other Security and Guaranties...............................................114
Section 15.7 Fees and Expenses...........................................................114
Section 15.8 Notices.....................................................................115
Section 15.9 Waiver of Notices...........................................................116
Section 15.10 Binding Effect..............................................................116
Section 15.11 Indemnity of the Agent and the Lenders by the Loan Parties..................116
Section 15.12 Limitation of Liability.....................................................117
Section 15.13 Final Agreement.............................................................118
Section 15.14 Counterparts................................................................118
Section 15.15 Captions....................................................................118
Section 15.16 Right of Setoff.............................................................118
Section 15.17 Joint and Several Liability.................................................118
Section 15.18 Contribution and Indemnification among the Loan Parties.....................119
Section 15.19 Express Waivers By Loan Parties In Respect of Cross Guaranties
and Cross Collateralization...............................................120
Section 15.20 Exception to Covenants......................................................121
Section 15.21 Judgment Currency...........................................................121
Section 15.22 Agency of the Parent for each other Loan Party..............................122
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EXHIBITS
Exhibit A Form of Revolving Note
Exhibit B Form of Borrowing Base Certificate
Exhibit C Financial Statements
Exhibit D Form of Notice of Borrowing
Exhibit E Form of Notice of Conversion/Continuation
Exhibit F Form of Assignment and Acceptance
Exhibit G Form of Drilling Contract Report
Exhibit H Form of Rig Report
SCHEDULES
Schedule 1.1 Liens
Schedule 1.2 Rig Equipment
Schedule 1.3 Rig 75 Property
Schedule 6.3 Chief Executive Offices; Locations
Schedule 8.3 State(s) of Organization and Qualification
Schedule 8.4 Other Names; Previous Transactions
Schedule 8.5 Subsidiaries and Affiliates
Schedule 8.9 Debt
Schedule 8.12 Premises Address(es); Real Estate; Leases
Schedule 8.14 Trade Names
Schedule 8.15 Litigation
Schedule 8.17 Labor Matters
Schedule 8.18 Environmental Matters
Schedule 8.21 ERISA Matters
Schedule 8.28 Material Agreements
Schedule 8.29 Bank Accounts
Schedule 8.31 Investment Property
Schedule 9.9 Non-material Subsidiaries
Schedule 9.5 Insurance
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LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement, dated as of October 22, 1999, is
among the financial institutions listed on the signature pages hereof (such
financial institutions, together with their respective successors and assigns,
are referred to hereinafter each individually as a "Lender" and collectively as
the "Lenders"), Bank of America, National Association (the "Bank"), with an
office at 000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, as agent for the Lenders (in its
capacity as agent, the "Agent"), Xxxxxx Drilling Company, a Delaware corporation
(the "Parent"), each of Anachoreta, Inc., a Nevada corporation, Canadian Rig
Leasing, Inc., an Oklahoma corporation, Choctaw International Rig Corp., a
Nevada corporation, Creek International Rig Corp., a Nevada corporation, DGH,
Inc., a Texas corporation, Indocorp of Oklahoma, Inc., an Oklahoma corporation,
Mallard Peru Holdings, Inc., a Delaware corporation, Management Service
Logistics, Inc., a Nevada corporation, OIME, Inc., an Oklahoma corporation,
Parco Masts and Substructures, Inc., an Oklahoma corporation, Parco, Inc., an
Oklahoma corporation, Pardril, Inc., an Oklahoma corporation, Xxxxxx-VSE, Inc.,
a Nevada corporation, Xxxxxx Aviation Inc., an Oklahoma corporation, Xxxxxx
Drilling (Kazakstan), Ltd., an Oklahoma corporation, Xxxxxx Drilling Company
Eastern Hemisphere, Ltd., an Oklahoma corporation, Xxxxxx Drilling Company
International Limited, a Nevada corporation, Xxxxxx Drilling Company
International, Inc., a Delaware corporation, Xxxxxx Drilling Company Limited, a
Nevada corporation, Xxxxxx Drilling Company Limited, an Oklahoma corporation,
Xxxxxx Drilling Company North America, Inc., a Nevada corporation, Xxxxxx
Drilling Company of Argentina, Inc., a Nevada corporation, Xxxxxx Drilling
Company of Bolivia, Inc., an Oklahoma corporation, Xxxxxx Drilling Company of
Indonesia, Inc., an Oklahoma corporation, Xxxxxx Drilling Company of Mexico,
Ltd., an Oklahoma corporation, Xxxxxx Drilling Company of New Guinea, Inc., an
Oklahoma corporation, Xxxxxx Drilling Company of Niger, an Oklahoma corporation,
Xxxxxx Drilling Company of Oklahoma, Incorporated, an Oklahoma corporation,
Xxxxxx Drilling Company of Singapore, Ltd., an Oklahoma corporation, Xxxxxx
Drilling Company of South America, Inc., an Oklahoma corporation, Xxxxxx
Drilling Company of South Texas, Inc., an Oklahoma corporation, Xxxxxx Drilling
Offshore Corporation, a Texas corporation, Xxxxxx Drilling Offshore USA, L.L.C.,
an Oklahoma limited liability company, Xxxxxx Drilling U.S.A., Ltd., a Nevada
corporation, Xxxxxx Energy Resources, Inc., a Texas corporation, Xxxxxx
Measurement, Inc., a Texas corporation, Xxxxxx North America Operations, Inc., a
Nevada corporation, Xxxxxx Pipeline Company, Inc., a Texas corporation, Xxxxxx
Technology, Inc., an Oklahoma corporation, Xxxxxx Technology, L.L.C., a
Louisiana limited liability company, Xxxxxx USA Drilling Company, a Nevada
corporation, Xxxxxx Valve Company, a Texas corporation, Quail Tools, L.L.P., an
Oklahoma limited liability partnership, Saints Acquisition Company, a Delaware
corporation, Selective Drilling Corporation, and Oklahoma corporation, Total
Coverage Services, a Nevada corporation, Total Funds Management Corporation, a
Nevada corporation, Total Logistics Corporation, a Nevada corporation, Universal
Rig Service Corp., a Nevada corporation (including the Parent each a "Borrower"
and collectively the "Borrowers") and the other "Loan Parties" (as defined
herein) party hereto.
LOAN AND SECURITY AGREEMENT - Page 1
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WITNESSETH
WHEREAS, the Loan Parties have requested the Lenders to make available
to the Borrowers a revolving line of credit for loans and letters of credit in
an amount not to exceed $50,000,000, which extensions of credit the Borrowers
will use for working capital needs and general business purposes;
WHEREAS, the Lenders have agreed to make available to the Borrowers a
revolving credit facility upon the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the Lenders, the Agent, and the
Loan Parties hereby agree as follows.
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
Section 1.1 Definitions. As used herein:
"Accounts" means, with respect to a Person, all of such Person's now
owned or hereafter acquired or arising accounts, and any other rights to payment
for the sale or lease of goods or rendition of services, whether or not they
have been earned by performance.
"Account Debtor" means each Person obligated in any way on or in
connection with an Account.
"ACH Transactions" means any cash management or related services
including the automated clearing house transfer of funds by the Bank for the
account of any Loan Party pursuant to agreement or overdrafts.
"Adjusted Tangible Assets" means, as applied to any Person, all of such
Person's assets except: (a) deferred assets, other than prepaid insurance and
prepaid taxes; (b) patents, copyrights, trademarks, trade names, franchises,
goodwill, and other similar intangibles; (c) Restricted Investments; (d)
unamortized debt discount and expense; (e) in the case of a Loan Party, assets
of such Loan Party included in Intercompany Accounts; and (f) fixed assets to
the extent of any write-up in the book value thereof resulting from a
revaluation effective after the Closing Date.
"Adjusted Tangible Net Worth" means, as applied to any Person, at any
date: (a) the book value (after deducting related depreciation, obsolescence,
amortization, valuation, and other proper reserves as determined in accordance
with GAAP) at which the Adjusted Tangible Assets would be shown on a balance
sheet of such Person at such date prepared in accordance with GAAP less (b) the
amount at which such Person's liabilities would be shown on such balance sheet,
including as liabilities all reserves for contingencies and other potential
liabilities which would be required to be
LOAN AND SECURITY AGREEMENT - Page 2
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shown on such balance sheet plus, in the case of a Loan Party, liabilities of
such Loan Party included in Intercompany Accounts.
"Adjusted Tangible Net Worth Requirement" means, at any time, an amount
equal to the following amounts for the periods indicated:
Period Amount
------ ------
December 31, 1999 $90,000,000
March 31, 2000 $90,000,000
June 31, 2000 $85,000,000
September 30, 2000 $78,000,000
December 31, 2000 $70,000,000
March 31, 2001 and thereafter $70,000,000 plus the Adjusted TNW
Requirement Increase
"Adjusted TNW Requirement Increase" means an amount, determined as of
the end of any fiscal quarter for Parent and its consolidated Subsidiaries,
commencing on and after March 31, 2001, equal to the sum of (i) seventy-five
percent (75%) of the amount (not less than zero dollars) of Net Income for such
fiscal quarter plus (ii) the amount of all equity proceeds (net of transaction
costs) received during such fiscal quarter.
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person or which owns, directly or indirectly, ten percent (10%) or
more of the outstanding equity interest of such Person. A Person shall be deemed
to control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Agent" means the Bank, solely in its capacity as administrative agent
for the Lenders, and any successor agent.
"Agent Advances" has the meaning specified in Section 2.2(i).
"Agent's Liens" means the Liens in the Collateral granted to the Agent,
for the benefit of the Lenders, the Bank, and the Agent pursuant to this
Agreement and the other Loan Documents.
"Agent Related Persons" means the Agent, together with its Affiliates,
and the officers, directors, employees, agents and attorneys-in-fact of the
Agent and its Affiliates.
"Aggregate Revolver Outstandings" means, at any time: the sum of (a)
the unpaid balance of Revolving Loans, (b) the aggregate amount of Pending
Revolving Loans, (c) one hundred percent (100%) of the aggregate undrawn face
amount of all outstanding Letters of Credit, and (d) the aggregate amount of any
unpaid reimbursement obligations in respect of Letters of Credit.
LOAN AND SECURITY AGREEMENT - Page 3
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"Agreement" means this Loan and Security Agreement and any and all
amendments, restatements, or other modifications hereof.
"Anniversary Date" means each anniversary of the Closing Date.
"Applicable Margin" means
(a) with respect to Base Rate Revolving Loans and all other
Obligations (other than LIBOR Rate Loans), one-half of one percent
(0.50%); and
(b) with respect to LIBOR Revolving Loans two and one-half
percent (2.50%);
in each case subject to adjustment from time to time thereafter to the
applicable percentage specified corresponding to the Leverage Ratio, as set
forth below, respectively:
Base Rate LIBOR
Leverage Ratio Revolving Loans Revolving Loans
-------------- --------------- ---------------
Greater than or equal to 7.0 to 1.0 0.75% 2.75%
Less than 7.0 to 1.0 but greater 0.50% 2.50%
than or equal to 4.0 to 1.0
Less than 4.0 to 1.0 but greater 0.25% 2.25%
than or equal to 3.2 to 1.0
Less than 3.2 to 1.0 0.25% 2.00%
For the purpose of determining any such adjustments to the Applicable Margin,
the Leverage Ratio shall be determined based upon the Parent's consolidated
financial statements for its respective fiscal quarter periods, beginning with
the fiscal quarter ending December 31, 1999, delivered to the Agent as required
by Section 7.2(c), and any such adjustment, if any, shall become effective as of
the date, on or after the first day of the calendar month following the month in
which such financial statements are delivered to the Agent, when any Revolving
Loan is made, or any LIBOR Revolving Loan is continued or converted, as the case
may be.
"Approved Foreign Account" means an Eligible Foreign Account of a
Borrower which is approved by the Agent in its sole discretion for inclusion in
the Borrowing Base.
"Assignee" has the meaning specified in Section 13.3(a).
"Assignment and Acceptance" has the meaning specified in Section
13.3(a).
"Attorney Costs" means and includes all fees, expenses and
disbursements of any law firm or other counsel engaged by the Agent.
LOAN AND SECURITY AGREEMENT - Page 4
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"Availability" means, at any time, (a) the Borrowing Base minus (b) the
Aggregate Revolver Outstandings.
"Bank" means Bank of America, National Association, a national banking
association, or any successor entity thereto.
"Bank Products" means any one or more of the following types of
services or facilities extended to any Loan Party by the Bank or any Affiliate
of the Bank in reliance on the Bank's agreement to indemnify such Affiliate: (a)
credit cards; (b) ACH Transactions; (c) Interest Rate Protection Agreements; and
(d) foreign exchange contracts.
"Bank Product Reserves" means all reserves which the Agent from time to
time establishes in its sole discretion for the Bank Products then provided and
outstanding.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
Section 101 et seq.).
"Base Rate" means, for any day, the rate of interest in effect for such
day as publicly announced from time to time by the Bank in Charlotte, North
Carolina as its "prime rate" (the "prime rate" being a rate set by the Bank
based upon various factors including the Bank's costs and desired return,
general economic conditions and other factors, and is used as a prime point for
pricing some loans, which may be priced at, above, or below such announced
rate). Any change in the prime rate announced by the Bank shall take effect at
the opening of business on the day specified in the public announcement of such
change. Each Interest Rate based upon the Base Rate shall be adjusted
simultaneously with any change in the Base Rate.
"Base Rate Loans" means the Base Rate Revolving Loans.
"Base Rate Revolving Loan" means a Revolving Loan during any period in
which it bears interest based on the Base Rate.
"Blocked Account Agreement" means an agreement among one or more of the
Loan Parties, the Agent and a Clearing Bank, in form and substance satisfactory
to the Agent, concerning the collection of payments which represent the proceeds
of Accounts or of any other Collateral.
"Book Value of Rig Materials and Supplies" means the book value of Rig
Materials and Supplies, determined according to GAAP.
"Borrower" and "Borrowers" have the meanings specified for such terms
in the introductory paragraph of this Agreement.
"Borrowing" means a borrowing hereunder consisting of Revolving Loans
made on the same day by the Lenders to the Borrowers (or by the Bank in the case
of a Borrowing funded by Non-Ratable Loans) or by the Agent in the case of a
Borrowing consisting of an Agent Advance.
LOAN AND SECURITY AGREEMENT - Page 5
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"Borrowing Base" means, at any time, an amount equal to the lesser of
(a) the Maximum Revolver Amount or
(b) the sum of
(i) eighty percent (80.0%) of the Net Amount of
Eligible Accounts; plus
(ii) eighty percent (80.0%) of the Net Amount of
Approved Foreign Accounts, provided, that
the amount includable under this clause
(b)(ii) shall not exceed twenty-five percent
(25.0%) of the sum of the Net Amount of
Eligible Accounts plus the Net Amount of
Eligible Foreign Accounts; plus
(iii) the lesser of
(1) forty percent (40.0%) of the
aggregate Orderly Liquidation Value
of Rig Equipment or
(2) the Rig Component Maximum or
(3) 50% of the Book Value of Rig
Materials and Supplies, minus
(iv) the sum of (A) reserves for accrued interest
on the Obligations, (B) the Environmental
Compliance Reserve, (C) the Bank Product
Reserves, and (D) all other reserves which
the Agent deems necessary in the exercise of
its reasonable credit judgment to maintain
with respect to any Borrower, including
reserves for any amounts which the Agent or
any Lender may be obligated to pay in the
future for the account of any Loan Party.
"Borrowing Base Certificate" means a certificate by a Responsible
Officer of each of the Borrowers, substantially in the form of Exhibit B (or
another form acceptable to the Agent) setting forth the calculation of the
Borrowing Base, including a calculation of each component thereof, as of the
close of business no more than five (5) Business Days prior to the date of such
certificate, all in such detail as shall be satisfactory to the Agent. All
calculations of the Borrowing Base in connection with the preparation of any
Borrowing Base Certificate shall originally be made by the Borrowers and
certified to the Agent; provided that the Agent shall have the right to review
and adjust, in the exercise of its reasonable credit judgment, any such
calculation (a) to reflect its reasonable estimate of declines in value of any
of the Collateral described therein, and (b) to the extent that such calculation
is not in accordance with this Agreement.
"Business Day" means (a) any day that is not a Saturday, Sunday, or a
day on which banks in Dallas, Texas or Charlotte, North Carolina are required or
permitted to be closed, and (b) with respect to all notices, determinations,
fundings and payments in connection with the LIBOR Rate or
LOAN AND SECURITY AGREEMENT - Page 6
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LIBOR Rate Loans, any day that is a Business Day pursuant to clause (a) above
and that is also a day on which trading in Dollars is carried on by and between
banks in the London interbank market.
"Capex Reimbursements" means cash payments paid to Parent or a
Restricted Subsidiary by an Account Debtor in respect of Capital Expenditures
previously made by Parent or such Restricted Subsidiary pursuant to an agreement
between Parent or such Restricted Subsidiary and such Account Debtor.
"Capital Adequacy Regulation" means any guideline, request or directive
of any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means all payments due (whether or not paid) in
respect of the cost of any fixed asset or improvement, or replacement,
substitution, or addition thereto, which has a useful life of more than one
year, including, without limitation, those costs arising in connection with the
direct or indirect acquisition of such asset by way of increased product or
service charges or in connection with a Capital Lease.
"Capital Lease" means any lease of property which, in accordance with
GAAP, should be reflected as a capital lease on a balance sheet.
"Capital Stock" means any and all corporate stock, units, shares,
partnership interests, limited partnership interests, membership interests,
equity interests, rights, securities or other equivalent evidences of ownership
(however designated) issued by any entity (whether a corporation, partnership,
limited liability company, limited partnership or any other type of entity).
"Change of Control" means the occurrence of any of the following: (a)
except as allowed by Section 9.9, the adoption of a plan relating to the
liquidation or dissolution of the Parent or any Borrower, (b) the acquisition by
any Person or group (as such term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended) of a direct or indirect majority in interest
(more than 50%) of the voting power of the voting stock of the Parent by way of
merger or consolidation or otherwise, (c) the first day on which a majority of
the members of the Management Group of the Parent are not Continuing Directors,
(d) except as allowed by Section 9.9, any Borrower shall cease to be a
Wholly-Owned Subsidiary of the Parent.
"Clearing Bank" means the Bank or any other banking institution with
whom a Payment Account has been established pursuant to a Blocked Account
Agreement.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute, and regulations promulgated thereunder.
"Collateral" has the meaning specified in Section 6.1.
LOAN AND SECURITY AGREEMENT - Page 7
15
"Commitment" means, at any time with respect to a Lender, the principal
amount set forth beside such Lender's name under the heading "Commitment" on the
signature pages of this Agreement or on the signature page of the Assignment and
Acceptance pursuant to which such Lender became a Lender hereunder in accordance
with the provisions of Section 13.3, as such Commitment may be adjusted from
time to time in accordance with the provisions of Section 13.3, and
"Commitments" means, collectively, the aggregate amount of the commitments of
all of the Lenders; provided, that the aggregate amount of the Commitments shall
be deemed automatically reduced (with each Commitment being simultaneously
reduced pro-rata) by the amount of any reduction of the Maximum Revolver Amount
pursuant to Section 4.2.
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or any constituent of any such substance or waste.
"Continuing Directors" means, with respect to any Loan Party, as of any
date of determination, any duly appointed member of the Management Group of such
Loan Party or any general partner of such Loan Party, who (a) was a member of
such Management Group on the Closing Date or (b) was nominated for election or
elected to such Management Group with the affirmative vote of a majority of the
Management Group who were members of such Management Group at the time of such
nomination or election.
"Credit Support" has the meaning specified in Section 2.4(a).
"Current Assets" means, with respect to a Person, at any date the
amount at which the current assets of such Person (other than assets
constituting Intercompany Accounts) would be shown on a balance sheet of such
Person, prepared in accordance with GAAP.
"Current Liabilities" means, with respect to a Person, at any date the
amount at which the current liabilities of such Person would be shown on a
balance sheet of such Person, prepared in accordance with GAAP.
"Debt" means, with respect to a Person, all liabilities, obligations,
and indebtedness of such Person to any other Person, of any kind or nature, now
or hereafter owing, arising, due or payable, howsoever evidenced, created,
incurred, acquired or owing, whether primary, secondary, direct, contingent,
fixed or otherwise, and including, without in any way limiting the generality of
the foregoing (without duplication): (a) liabilities and obligations to trade
creditors; (b) in the case of a Loan Party, all Obligations; (c) all obligations
and liabilities of any Person, whether or not owed by such Person, secured by
any Lien on such Person's property, even though such Person shall not have
assumed or become liable for the payment thereof; provided, however, that all
such obligations and liabilities which are limited in recourse to such property
shall be included in Debt only to the extent of the book value of such property
as would be shown on a balance sheet of such Person prepared in accordance with
GAAP; (d) all obligations or liabilities created or arising under any Capital
Lease or conditional sale or other title retention agreement with respect to
property used or acquired by such Person, even if the rights and remedies of the
lessor, seller or lender thereunder are limited to repossession of such
property; provided, however, that all such obligations and liabilities which are
LOAN AND SECURITY AGREEMENT - Page 8
16
limited in recourse to such property shall be included in Debt only to the
extent of the book value of such property as would be shown on a balance sheet
of such Person prepared in accordance with GAAP; and (e) all obligations and
liabilities under Guaranties.
"Debt For Borrowed Money" means, with respect to any Person (and
without duplication with respect to Parent and its subsidiaries on a
consolidated basis), Debt for borrowed money or as evidenced by notes, bonds,
debentures or similar evidences of any such Debt of such Person, the deferred
and unpaid purchase price of any property or business (other than trade accounts
payable incurred in the ordinary course of business and constituting current
liabilities) and all obligations under Capital Leases. "Debt for Borrowed Money"
includes Debt for interest which is capitalized but excludes Debt for interest
that is not capitalized.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"Defaulting Lender" has the meaning specified in Section 2.2(g)(ii).
"Default Rate" means a fluctuating per annum interest rate at all times
equal to the sum of (a) the otherwise applicable Interest Rate plus (b) two
percent (2.0%). The Default Rate shall be adjusted simultaneously with any
change in the applicable Interest Rate. In addition, with respect to Letters of
Credit, the Default Rate shall mean an increase in the Letter of Credit Fee by
two percent (2.0%).
"Distribution" means, in respect of any Person: (a) the payment or
making of any dividend or other distribution of property in respect of its
Capital Stock (or any options or warrants therefor), other than distributions in
its Capital Stock (or any options or warrants therefor) of the same class; or
(b) the redemption or other acquisition by such Person of any of its Capital
Stock (or any options or warrants therefor) (except when solely in exchange for
such Capital Stock or any options or warrants therefor) unless made
contemporaneously from the net proceeds of a sale of such Capital Stock.
"DOL" means the United States Department of Labor or any successor
department or agency.
"Dollar" and "$" means dollars in the lawful currency of the United
States.
"Drilling Contract" means a written agreement between a Loan Party and
a Person pursuant to which such Loan Party agrees to perform services for such
Person and such Person agrees to pay such Loan Party for such services, on terms
specified therein.
"Drilling Contract Report" means a report prepared by or for the Loan
Parties, in the ordinary course of business, reflecting Drilling Contract day
rates, rig utilization and related gross margins, in form as appears in Exhibit
G or otherwise in form satisfactory to the Agent.
"Domestic Subsidiary" means each direct or indirect Subsidiary of
Parent formed under the laws of the United States or any state thereof.
LOAN AND SECURITY AGREEMENT - Page 9
17
"EBITDA" means, for any period, the sum of Net Income, plus, the sum of
the following to the extent included in the determination of Net Income: the
amount, if any, by which Interest Expense exceeds interest income, plus any
provision for (or minus any credit for or with respect to) income or franchise
taxes (including without limitation, reserves for deferred taxes), plus
depreciation and amortization expense.
"Eligible Accounts" means the Accounts of a Borrower which the Agent in
the exercise of its reasonable commercial discretion determines to be Eligible
Accounts. Without limiting the discretion of the Agent to establish other
criteria of ineligibility, Eligible Accounts shall not, unless the Agent in its
sole discretion elects, include any Account:
(a) with respect to which more than ninety (90) days have
elapsed since the date of the original invoice therefor or it is more
than sixty (60) days past due;
(b) with respect to which any of the representations,
warranties, covenants, and agreements contained in Section 6.8 are not
or have ceased to be complete and correct or have been breached;
(c) with respect to which, in whole or in part, a check,
promissory note, draft, trade acceptance or other instrument for the
payment of money has been received, presented for payment and returned
uncollected for any reason;
(d) which represents a progress billing (as hereinafter
defined) or as to which such Borrower has extended the time for payment
without the consent of the Agent; for the purposes hereof, "progress
billing" means any invoice for goods sold or leased or services
rendered under a contract or agreement pursuant to which the Account
Debtor's obligation to pay such invoice is conditioned upon such
Borrower's completion of any further performance under the contract or
agreement;
(e) with respect to which any one or more of the following
events has occurred to the Account Debtor on such Account: death or
judicial declaration of incompetency of an Account Debtor who is an
individual; the filing by or against the Account Debtor of a request or
petition for liquidation, reorganization, arrangement, adjustment of
debts, adjudication as a bankrupt, winding-up, or other relief under
the bankruptcy, insolvency, or similar laws of the United States, any
state or territory thereof, or any foreign jurisdiction, now or
hereafter in effect; the making of any general assignment by the
Account Debtor for the benefit of creditors; the appointment of a
receiver or trustee for the Account Debtor or for any of the assets of
the Account Debtor, including, without limitation, the appointment of
or taking possession by a "custodian," as defined in the Bankruptcy
Code; the institution by or against the Account Debtor of any other
type of insolvency proceeding (under the Bankruptcy Code or otherwise)
or of any formal or informal proceeding for the dissolution or
liquidation of, settlement of claims against, or winding up of affairs
of, the Account Debtor; the sale, assignment, or transfer of all or any
material part of the assets of the Account Debtor; the nonpayment
generally by the Account Debtor of its debts as they become due; or the
cessation of the business of the Account Debtor as a going concern;
LOAN AND SECURITY AGREEMENT - Page 10
18
(f) if fifty percent (50.0%) or more of the aggregate Dollar
amount of outstanding Accounts owed at such time by the Account Debtor
thereon is classified as ineligible under the other criteria set forth
herein or otherwise established by the Agent;
(g) owed by an Account Debtor which: (i) does not maintain its
chief executive office in the United States or Canada; or (ii) is not
organized under the laws of the United States or Canada or any state or
province thereof; or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality, or other
political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof; except to the extent
that such Account is secured or payable by a letter of credit
satisfactory to the Agent in its discretion;
(h) owed by an Account Debtor which is an Affiliate or
employee of such Borrower;
(i) except as provided in clause (k) below, with respect to
which either the perfection, enforceability, or validity of the Agent's
Lien in such Account, or the Agent's right or ability to obtain direct
payment to the Agent of the proceeds of such Account, is governed by
any federal, state, or local statutory requirements other than those of
the UCC;
(j) owed by an Account Debtor to which a Loan Party is
indebted in any way, or which is subject to any right of setoff or
recoupment by the Account Debtor, unless the Account Debtor has entered
into an agreement acceptable to the Agent to waive setoff rights; or if
the Account Debtor thereon has disputed liability or made any claim
with respect to any other Account due from such Account Debtor; but in
each such case only to the extent of such indebtedness, setoff,
recoupment, dispute, or claim;
(k) owed by the government of the United States, or any
department, agency, public corporation, or other instrumentality
thereof, unless the Federal Assignment of Claims Act of 1940, as
amended (31 U.S.C. Section 3727 et seq.), and any other steps necessary
to perfect the Agent's Lien therein, have been complied with to the
Agent's satisfaction with respect to such Account;
(l) owed by any state, municipality, or other political
subdivision of the United States, or any department, agency, public
corporation, or other instrumentality thereof and as to which the Agent
determines that its Lien therein is not or cannot be perfected;
(m) which represents a sale on a xxxx-and-hold, guaranteed
sale, sale and return, sale on approval, consignment, or other
repurchase or return basis;
(n) which is evidenced by a promissory note or other
instrument or by chattel paper;
LOAN AND SECURITY AGREEMENT - Page 11
19
(o) if the Agent believes, in the exercise of its reasonable
judgment, that the prospect of collection of such Account is impaired
or that the Account may not be paid by reason of the Account Debtor's
financial inability to pay;
(p) with respect to which the Account Debtor is located in any
state requiring the filing of a Notice of Business Activities Report or
similar report in order to permit such Borrower to seek judicial
enforcement in such State of payment of such Account, unless such
Borrower has qualified to do business in such state or has filed a
Notice of Business Activities Report or equivalent report for the then
current year; or
(q) which arises out of a sale not made in the ordinary course
of such Borrower's business;
(r) with respect to which the goods giving rise to such
Account have not been shipped and delivered to and accepted by the
Account Debtor or the services giving rise to such Account have not
been performed by such Borrower, and, if applicable, accepted by the
Account Debtor, or the Account Debtor revokes its acceptance of such
goods or services;
(s) owed by an Account Debtor which is obligated to such
Borrower respecting Accounts the aggregate unpaid balance of which
exceeds twenty-five percent (25.0%) of the aggregate unpaid balance of
all Accounts owed to such Borrower at such time by all of such
Borrower's Account Debtors, but only to the extent of such excess;
(t) which arises out of an enforceable contract or order
which, by its terms, forbids, restricts or makes void or unenforceable
the granting of a Lien by such Borrower to the Agent with respect to
such Account; or
(u) which is not subject to a first priority and perfected
security interest in favor of the Agent for the benefit of the Lenders.
If any Account at any time ceases to be an Eligible Account, then such Account
shall promptly be excluded from the calculation of Eligible Accounts.
"Eligible Assignee" means (a) a commercial bank, commercial finance
company or other asset based lender, having total assets in excess of
$1,000,000,000; (b) any Lender listed on the signature page of this Agreement;
(c) any Affiliate of any Lender; and (d) if an Event of Default exists, any
Person reasonably acceptable to the Agent.
"Eligible Foreign Account" means an Account which is excluded from
Eligible Accounts solely by application of paragraph (i), paragraph (u) and
clauses (i) or (ii) of paragraph (g) of the definition of "Eligible Accounts" in
this Section 1.1, in each case due solely to the fact that the Account Debtor
thereon does not maintain its chief executive office in the United States or
Canada or is not organized under the laws of the United States or Canada or any
state or province thereof
LOAN AND SECURITY AGREEMENT - Page 12
20
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for a Release or
injury to the environment.
"Environmental Compliance Reserve" means any reserve which the Agent,
after the Closing Date, establishes in its reasonable discretion from time to
time for amounts that are reasonably likely to be expended by a Loan Party in
order for such Loan Party and its operations and property (a) to comply with any
notice from a Governmental Authority asserting material non-compliance with
Environmental Laws, or (b) to correct any such material non-compliance
identified in a report delivered to the Agent and the Lenders pursuant to
Section 9.7.
"Environmental Laws" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, licenses, authorizations and permits of,
and agreements with, any Governmental Authority, in each case relating to
environmental, health, safety and land use matters.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for (a) any liability under Environmental Laws, or (b) damages arising
from, or costs incurred by such Governmental Authority in response to, a Release
or threatened Release of a Contaminant into the environment.
"Environmental Property Transfer Act" means any applicable requirement
of law that conditions, restricts, prohibits or requires any notification or
disclosure triggered by the closure of any property or the transfer, sale or
lease of any property or deed or title for any property for environmental
reasons, including, but not limited to, any so-called "Environmental Cleanup
Responsibility Acts" or "Responsible Property Transfer Acts."
"Equipment" means, with respect to a Person, all of such Person's now
owned and hereafter acquired machinery, equipment, furniture, furnishings,
fixtures, and other tangible personal property (except Inventory), including
motor vehicles with respect to which a certificate of title has been issued,
aircraft, dies, tools, jigs, drilling rigs, and office equipment, as well as all
of such types of property leased by such Person and all of such Person's rights
and interests with respect thereto under such leases (including, without
limitation, options to purchase); together with all present and future additions
and accessions thereto, replacements therefor, component and auxiliary parts and
supplies used or to be used in connection therewith, and all substitutes for any
of the foregoing, and all manuals, drawings, instructions, warranties and rights
with respect thereto; wherever any of the foregoing is located. "Equipment"
includes, without limitation, the Rig Equipment.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with a Loan Party within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
LOAN AND SECURITY AGREEMENT - Page 13
21
"ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan, (b) a withdrawal by a Loan Party or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA, (c) a complete or partial withdrawal by a Loan Party or any ERISA
Affiliate from a Multi-employer Plan or notification that a Multi-employer Plan
is in reorganization, (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multi-employer Plan, (e) the occurrence of an event or condition which
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multi-employer Plan, or (f) the imposition of any liability
under Title IV of ERISA, other than for PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon a Loan Party or any ERISA Affiliate.
"Event of Default" has the meaning specified in Section 11.1.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"Existing Obligations" has the meaning specified for such term within
the definition of "Obligations" as provided in this Section 1.1.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on
that day by each of three leading brokers of Federal funds transactions in New
York City selected by the Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"Financial Statements" means, according to the context in which it is
used, the financial statements referred to in Section 8.6 or any other financial
statements required to be given to the Lenders pursuant to this Agreement.
"Fiscal Year" means the Parent's fiscal year for financial accounting
purposes. The current Fiscal Year of the Parent will end on December 31, 1999.
LOAN AND SECURITY AGREEMENT - Page 14
22
"Fixed Assets" means, with respect to a Person, the Equipment and Real
Estate of such Person.
"Fixed Charge Coverage Ratio" means, for any period, determined for the
Parent and the Restricted Subsidiaries in accordance with GAAP, the ratio of (a)
EBITDA, minus (i) an amount, not less than zero Dollars ($0.00), equal to the
remainder of (A) Capital Expenditures, minus (B) the gross amount of assets
sold, minus (C) the principal amount of Purchase Money Indebtedness incurred in
connection with the Capital Expenditures included in clause (A) preceding, minus
(D) Capex Reimbursements paid to the Agent pursuant to Section 4.4, minus (E) an
amount, not less than zero Dollars ($0.00), equal to cash and cash equivalents
as of the first day of such period less the unpaid balance of Revolving Loans as
of such day, minus (ii) the cash amount of Distributions paid (other than
Distributions paid to the Parent or a Restricted Subsidiary of the Parent) minus
cash taxes paid plus proceeds received from the issuance of Capital Stock, in
each case during such period to (b) the sum of (i) current maturities of long
term debt plus (ii) Interest Expense.
"Foreign Currency Reimbursements" means reimbursement obligations,
denominated and payable in a currency other than Dollars, owing to a Loan Party
by an Account Debtor pursuant to an agreement between such Loan Party and such
Account Debtor, representing reimbursement in respect of costs or expenses
incurred by such Loan Party in connection with services rendered, or to be
rendered, by such Loan Party for such Account Debtor.
"Foreign Subsidiary" means each direct or indirect Subsidiary of Parent
that is not a Domestic Subsidiary.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the Closing Date.
"General Intangibles" means, with respect to a Person, all of such
Person's now owned or hereafter acquired general intangibles (excluding patents,
copyrights and trademarks), choses in action and causes of action and all other
intangible personal property of such Person of every kind and nature (other than
Accounts), including, without limitation, all contract rights, corporate or
other business records, blueprints, plans, specifications, computer software,
customer lists, registrations, licenses, franchises, tax refund claims, any
funds which may become due to such Person in connection with the termination of
any Plan or other employee benefit plan or any rights thereto and any other
amounts payable to such Person from any Plan or other employee benefit plan,
rights and claims against carriers and shippers, rights to indemnification,
business interruption insurance and proceeds thereof, property, casualty or any
similar type of insurance and any proceeds thereof, proceeds of insurance
covering the lives of key employees on which such Person is beneficiary, and any
letter of credit, guarantee, claim, security interest or other security held by
or granted to such Person.
LOAN AND SECURITY AGREEMENT - Page 15
23
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guaranty" means, with respect to any Person, all obligations of such
Person which in any manner directly or indirectly guarantee or assure, or in
effect guarantee or assure, the payment or performance of any indebtedness,
dividend or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including any such obligations
incurred through an agreement, contingent or otherwise: (a) to purchase the
guaranteed obligations or any property constituting security therefor; (b) to
advance or supply funds for the purchase or payment of the guaranteed
obligations or to maintain a working capital or other balance sheet condition;
or (c) to lease property or to purchase any debt or equity securities or other
property or services.
"Guaranty Agreement" means a Parent Guaranty or a Subsidiary Guaranty,
as the case may be.
"Indentures" means, collectively, Indenture 1996, Indenture 1998 and
Indenture 1997.
"Indenture 1996" means the certain Indenture dated as of November 12,
1996, as supplemented by the certain First Supplemental Indenture dated as of
April 1, 1997, the Second Supplemental Indenture dated as of May 30, 1997 and
the Third Supplemental Indenture dated as of March 13, 1998, between Xxxxxx
Drilling Company and certain of its Subsidiaries and Texas Commerce Bank
National Association, Trustee, in respect of $300,000,000 9 3/4% Senior Notes
due 2006, as such indenture may be renewed, supplemented, amended, or otherwise
modified.
"Indenture 1997" means the certain Indenture dated as of July 25, 1997
between Xxxxxx Drilling Company and Texas Commerce Bank National Association,
Trustee, in respect of $175,000,000 5 1/2% Convertible Subordinated Notes due
2004, as such indenture may be renewed, supplemented, amended, or otherwise
modified.
"Indenture 1998" means the certain Indenture dated as of March 11, 1998
between Xxxxxx Drilling Company and certain of its Subsidiaries and Texas
Commerce Bank National Association, Trustee, in respect of $450,000,000 9 3/4%
Senior Notes due 2006, as such indenture may be renewed, supplemented, amended,
or otherwise modified.
"Intercompany Accounts" means all assets and liabilities, however
arising, which are due to any Loan Party from, which are due from any Loan Party
to, or which otherwise arise from any transaction by any Loan Party with, any
Affiliate.
"Intercompany Debt" means Debt owing by a Loan Party to the Parent or
to any Subsidiary of the Parent.
LOAN AND SECURITY AGREEMENT - Page 16
24
"Intercompany Subordination Agreement" means the certain Subordination
Agreement dated as of the Closing Date among the Agent, the Loan Parties and any
other Subsidiary of the Parent to whom any Intercompany Debt is owing, and any
renewals, extensions, modifications, amendments or restatements thereof.
"Interest Expense" means, for any period, the interest expense for such
period, determined on a consolidated basis in accordance with GAAP.
"Interest Period" means, as to any LIBOR Rate Loan, the period
commencing on the Funding Date of such Loan or on the Conversion/Continuation
Date on which the Loan is converted into or continued as a LIBOR Rate Loan, and
ending on the date one, two, three or six months thereafter as selected by the
Borrowers in a Notice of Borrowing or Notice of Conversion/Continuation, as the
case may be; provided that:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, that Interest Period shall be extended to the
following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the preceding Business Day;
(ii) any Interest Period pertaining to a LIBOR Rate Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day
of the calendar month at the end of such Interest Period; and
(iii) no Interest Period shall extend beyond the Stated
Termination Date.
"Interest Rate" means each or any of the interest rates, including the
Default Rate, set forth in Section 3.1.
"Interest Rate Protection Agreement" means (a) any and all rate swap
transactions, basis swaps, forward rate transactions, commodity swaps, commodity
options, forward commodity contracts, equity or equity index swaps or options,
bond or bond price or bond index swaps or options or forward bond or forward
bond price or forward bond index transactions, interest rate options, forward
foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions,
currency options, or any other similar transactions or any combination of any of
the foregoing (including any options to enter into any of the foregoing),
whether or not any such transaction is governed by or subject to any master
agreement, or (b) any and all transactions of any kind, and the related
confirmations, which are subject to the terms and conditions of, or governed by,
any form of master agreement published by the International Swaps and
Derivatives Associations, Inc., or any other master agreement (any such master
agreement, together with any related schedules, as amended, restated, extended,
supplemented or otherwise modified in writing from time to time, a "Master
Agreement), including but not limited to any such obligations or liabilities
under any Master Agreement.
LOAN AND SECURITY AGREEMENT - Page 17
25
"Inventory" means, with respect to a Person, all of such Person's now
owned and hereafter acquired inventory, goods and merchandise, wherever located,
to be furnished under any contract of service or held for sale or lease, all
returned goods, raw materials, other materials and supplies (including without
limitation rig materials and supplies and other materials and supplies used or
consumed in connection with maintaining or operating drilling rigs) of any kind,
nature or description which are or might be consumed in such Person's business
or used in connection with the packing, shipping, advertising, selling or
finishing of such goods, merchandise and such other personal property, and all
documents of title or other documents representing them.
"Investment Property" means, with respect to a Person, all of such
Person's right title and interest in and to any and all: (a) securities whether
certificated or uncertificated; (b) securities entitlements; (c) securities
accounts; (d) commodity contracts; or (e) commodity accounts.
"IRS" means the Internal Revenue Service and any Governmental Authority
succeeding to any of its principal functions under the Code.
"Latest Projections" means: (a) on the Closing Date and thereafter
until the Agent receives new projections pursuant to Section 7.2(f), the
projections of the financial condition, results of operations, and cash flow, in
each case for the Loan Parties for the period commencing on January 1, 1999, and
ending on December 31, 2000, and delivered to the Agent prior to the Closing
Date; and (b) thereafter, the projections most recently received by the Agent
pursuant to Section 7.2(f).
"Lender" and "Lenders" have the meanings specified in the introductory
paragraph hereof and shall include the Agent to the extent of any Agent Advance
outstanding and the Bank to the extent of any Non-Ratable Loan outstanding;
provided that no such Agent Advance or Non-Ratable Loan shall be taken into
account in determining any Lender's Pro Rata Share.
"Letter of Credit" means a letter of credit issued or caused to be
issued for the account of a Loan Party pursuant to Section 2.4.
"Letter of Credit Fee" has the meaning specified in Section 3.6.
"Letter of Credit Fee Percentage" means, as of the Closing Date, two
percent (2.00%), subject to adjustment from time to time thereafter to the
percentage specified corresponding to the Leverage Ratio, as set forth below,
respectively:
Letter of Credit
Leverage Ratio Fee Percentage
-------------- ----------------
Greater than or equal to 7.0 to 1.0 2.25%
Less than 7.0 to 1.0 but greater 2.00%
than or equal to 4.0 to 1.0
Less than 4.0 to 1.0 1.75%
LOAN AND SECURITY AGREEMENT - Page 18
26
For the purpose of determining any such adjustments to the Letter of Credit Fee
Percentage, the Leverage Ratio shall be determined based upon Parent's
consolidated financial statements for its respective fiscal quarter periods,
beginning with the fiscal quarter ending December 31, 1999, delivered to the
Agent as required by Section 7.2(c), and any such adjustment, if any, shall
become effective as of the first day of the calendar month following the month
in which such financial statements are delivered to the Agent.
"Letter of Credit Issuer" means the Bank, any affiliate of the Bank or
any other financial institution that issues any Letter of Credit pursuant to
this Agreement.
"Leverage Ratio" means, as of any date, the ratio (determined for the
Parent and its Subsidiaries on a consolidated basis in accordance with GAAP) of
(a) the sum of (i) Debt for Borrowed Money (but excluding Debt outstanding under
the Indenture 1997 and Debt owed by a Loan Party to a Subsidiary that is not a
Loan Party, provided that such Debt is Subordinated Debt), minus cash and cash
equivalents, plus (ii) the unfunded amount of all Letters of Credit, to (b)
EBITDA.
"LIBOR Interest Payment Date" means, with respect to a LIBOR Rate Loan,
the last day of each Interest Period applicable to such Loan.
"LIBOR Rate" means, for any Interest Period, with respect to LIBOR Rate
Loans, the rate of interest per annum determined pursuant to the following
formula:
Offshore Base Rate
LIBOR Rate = ------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Offshore Base Rate" means the rate per annum appearing on
Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior
to the first day of such Interest Period for a term comparable
to such Interest Period. If for any reason such rate is not
available, the Offshore Base Rate shall be, for any Interest
Period, the rate per annum appearing on Reuters Screen LIBO
Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more
than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such
rates. If for any reason none of the foregoing rates is
available, the Offshore Base Rate shall be, for any Interest
Period, the rate per annum determined by the Agent as the rate
of interest at which dollar deposits in the approximate amount
of the LIBOR Rate Loan comprising part of such Borrowing would
be offered by the Bank's London Branch to major banks in the
offshore dollar market at their request at or about 11:00 a.m.
LOAN AND SECURITY AGREEMENT - Page 19
27
(London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period.
"Eurodollar Reserve Percentage" means, for any day during any
Interest Period, the reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1%) in effect
on such day applicable to the Bank under regulations issued
from time to time by the Federal Reserve Board for determining
the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with
respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities"). The Offshore Rate for each
outstanding LIBOR Rate Loan shall be adjusted automatically as
of the effective date of any change in the Eurodollar Reserve
Percentage.
"LIBOR Rate Loans" means, collectively, the LIBOR Revolving Loans.
"LIBOR Revolving Loan" means a Revolving Loan during any period in
which it bears interest based on the LIBOR Rate.
"Lien" means: (a) any interest in property securing an obligation owed
to, or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including a
security interest, charge, claim, or lien arising from a mortgage, deed of
trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement,
agreement, security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes; (b) to the extent not included
under clause (a), any reservation, exception, encroachment, easement,
right-of-way, covenant, condition, restriction, lease or other title exception
or encumbrance affecting property; and (c) any contingent or other agreement to
provide any of the foregoing.
"Loan Account" means the loan account of the Borrowers, which account
shall be maintained by the Agent.
"Loan Documents" means this Agreement, the Revolving Notes, each
Guaranty Agreement, the Maritime Security Documents, the Intercompany
Subordination Agreement and any other agreements, instruments, and documents
heretofore, now or hereafter evidencing, securing, guaranteeing or otherwise
relating to the Obligations, the Collateral, or any other aspect of the
transactions contemplated by this Agreement.
"Loan Party" means the Parent and each Domestic Subsidiary of the
Parent, and in each case their respective successors and assigns, and "Loan
Parties" means all of such Persons, collectively.
"Loans" means, collectively, all loans and advances provided for in
Article 2.
"Majority Lenders" means at any time Lenders whose Pro Rata Shares
aggregate more than fifty-one percent (51.0%) as such percentage is determined
under the definition of Pro Rata Share set forth herein.
LOAN AND SECURITY AGREEMENT - Page 20
28
"Management Group" means, as of any date of determination, the board of
directors, board of managers or similar constituency having management authority
in respect of an entity under any Requirement of Law.
"Margin Stock" means "margin stock" as such term is defined in
Regulation T, U or X of the Federal Reserve Board.
"Maritime Security Documents" means the certain Preferred Fleet
Mortgage dated as of the Closing Date executed by Xxxxxx Drilling Offshore USA,
L.L.C. in favor of the Agent, for the benefit of the Lenders, and any other
agreements, documents, or instruments executed or delivered in connection
therewith, in each case as such agreements, documents, or instruments may be
renewed, extended, amended, restated, or otherwise modified.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Parent or any Borrower, or of the
Loan Parties taken as a whole, or the Collateral; (b) a material impairment of
the ability of any Loan Party to perform under any Loan Document and to avoid
any Event of Default; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against any Loan Party of any Loan
Document.
"Maximum Rate" means, at any time, the maximum rate of interest the
Lenders may lawfully contract for, charge or receive in respect of the
Obligations as allowed by Requirements of Law. For purposes of determining the
Maximum Rate under the Requirements of Law of the State of Texas, the applicable
rate ceiling shall be (a) the weekly rate ceiling described in and computed in
accordance with the provisions of Section 303.003 of the Texas Finance Code, as
amended or (b) if the parties subsequently contract as allowed by Requirements
of Law, the quarterly ceiling or the annualized ceiling computed pursuant to
Section 303.008 of the Texas Finance Code, as amended; provided, however, that
at any time the weekly rate ceiling, the quarterly ceiling or the annualized
ceiling shall be less than 18% per annum or more than 24% per annum, the
provisions of Section 303.009(a) and Section 303.009(b) of the Texas Finance
Code, as amended, shall control for purposes of such determination, as
applicable.
"Maximum Revolver Amount" means $50,000,000.
"Multi-employer Plan" means a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding six (6) years contributed to by a Loan Party or any
ERISA Affiliate.
"Negative Pledge" means any agreement, contract or other arrangement
whereby any Loan Party or any Subsidiary of a Loan Party is prohibited from, or
would otherwise be in default as a result of, creating, assuming, incurring or
suffering to exist, directly or indirectly, any Lien on any of its assets in
favor of the Agent under the Loan Documents.
"Net Amount of Approved Foreign Accounts" means, at any time, the gross
amount (in Dollars) of Approved Foreign Accounts less sales, excise or similar
taxes, and less returns, discounts,
LOAN AND SECURITY AGREEMENT - Page 21
29
claims, credits and allowances of any nature at any time issued, owing, granted,
outstanding, available or claimed.
"Net Amount of Eligible Accounts" means, at any time, the gross amount
(in Dollars) of Eligible Accounts less sales, excise or similar taxes, and less
returns, discounts, claims, credits and allowances of any nature at any time
issued, owing, granted, outstanding, available or claimed.
"Net Amount of Eligible Foreign Accounts" means, at any time, the gross
amount (in Dollars) of Eligible Foreign Accounts less sales, excise or similar
taxes, and less returns, discounts, claims, credits and allowances of any nature
at any time issued, owing, granted, outstanding, available or claimed.
"Net Income" means, as applied to any Person, the net income (or net
loss) of such Person for the period in question after giving effect to deduction
of or provision for all operating expenses, all taxes and reserves (including
without limitation, reserves for deferred taxes) and all other proper
deductions, all determined in accordance with GAAP, provided that there shall be
excluded:
(a) the net income (or net loss) of any Person accrued prior
to the date it becomes a Subsidiary of, or is merged into or
consolidated with, the Person whose Net Income is being determined or a
consolidated Subsidiary of such Person;
(b) any net gains or losses on the sale or other disposition,
not in the ordinary course of business, of investments and other
capital assets, provided that there shall also be excluded any related
charges for taxes thereon;
(c) any net gain arising from the collection of the proceeds
of any insurance policy;
(d) any write-up or write-down of any asset; and
(e) any other extraordinary item as defined by GAAP.
"Net Transfers" means an amount, determined for any period in the
aggregate for all Loan Parties, equal to (A) the aggregate amount of loans
funded by the Loan Parties during such period to, and capital contributions made
by the Loan Parties during such period in, Restricted Subsidiaries that are not
Loan Parties less (B) the aggregate amount of cash loan proceeds, cash loan
payments and cash Distributions received by the Loan Parties during such period
from Restricted Subsidiaries that are not Loan Parties.
"Net Transfers Allowed" means, as of the last day of any fiscal quarter
(each a "Measuring Date") for any period (each a "Specified Period"), the amount
set forth for such Measuring Date for the corresponding Specified Period, as
specified below:
LOAN AND SECURITY AGREEMENT - Page 22
30
Measuring Date Specified Period Amount
-------------- ---------------- ------
December 31, 1999 Closing Date through December 31, 1999 $ 2,500,000
March 31, 2000 Closing Date through March 31, 2000 $ 5,000,000
June 30, 2000 Closing Date through June 30, 2000 $ 7,500,000
September 30, 2000 Closing Date through September 30, 2000 $10,000,000
Last day of each
fiscal quarter
thereafter Preceding 12 months ending on such Measuring Date $10,000,000
"Newly Obligated Party" has the meaning specified for such term within
the definition of "Obligations" as provided in this Section 1.1.
"Non-Ratable Loan" and "Non-Ratable Loans" have the meanings specified
in Section 2.2(h).
"Notice of Borrowing" has the meaning specified in Section 2.2(b). The
form of Notice of Borrowing is attached hereto as Exhibit D.
"Notice of Conversion/Continuation" has the meaning specified in
Section 3.2(b). The form of Notice of Conversion/Continuation is attached hereto
as Exhibit E.
"Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by the Loan
Parties, or any of them, to the Agent and/or any Lender, arising under or
pursuant to this Agreement or any of the other Loan Documents, whether or not
evidenced by any note, or other instrument or document, whether arising from an
extension of credit, opening of a letter of credit, acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including those
acquired by assignment from others, and any participation by the Agent and/or
any Lender in any Loan Party's debts owing to others), absolute or contingent,
due or to become due, primary or secondary, as principal or guarantor, and
including all principal, interest, charges, expenses, fees, attorneys' fees,
filing fees and any other sums chargeable to any Loan Party hereunder or under
any of the other Loan Documents. "Obligations" includes, without limitation, (a)
all debts, liabilities, and obligations now or hereafter arising from or in
connection with the Letters of Credit and (b) all debts, liabilities and
obligations now or hereafter arising from or in connection with Bank Products;
provided, however, that notwithstanding the forgoing, in the case of and with
regard to or in connection with any Newly Obligated Party (defined hereinbelow),
the term "Obligations," wherever in any manner used in the Loan Documents,
excludes Existing Obligations (defined hereinbelow). As used herein, (A) "Newly
Obligated Party" means each Person, if any, who becomes party to this Agreement
as a Borrower effective as of any date after the Closing Date, and (B) "Existing
Obligations" means, in the case of a Newly Obligated Party described in clause
(A) preceding, any Obligations which are outstanding and unpaid as of the time
such Newly Obligated Party becomes a Borrower.
LOAN AND SECURITY AGREEMENT - Page 23
31
"Orderly Liquidation Value" means, with respect to the Rig Equipment,
the orderly liquidation value thereof as determined in a manner acceptable to
the Agent by an experienced and reputable appraiser acceptable to the Agent.
"Other Taxes" means any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder or from the execution, delivery or registration of,
or otherwise with respect to, this Agreement or any other Loan Documents.
"Parent" means Xxxxxx Drilling Company, a Delaware corporation.
"Parent Guaranty" means a Guaranty Agreement dated as of the Closing
Date executed by the Parent pursuant to Section 6.18.
"Participant" means any Person who shall have been granted the right by
any Lender to participate in the financing provided by such Lender under this
Agreement, and who shall have entered into a participation agreement in form and
substance satisfactory to such Lender.
"Payment Account" means each bank account established pursuant to
Section 6.9, to which the funds of the Borrowers (including proceeds of Accounts
and other Collateral) are deposited or credited, and which is maintained in the
name of the Agent or the Borrowers, or any of them, as the Agent may determine,
on terms acceptable to the Agent.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
"Pending Revolving Loans" means, at any time, the aggregate principal
amount of all Revolving Loans requested in any Notice of Borrowing received by
the Agent which have not yet been advanced.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which any Loan Party sponsors, maintains, or
to which it makes, is making, or is obligated to make contributions, or in the
case of a Multiple-employer Plan has made contributions at any time during the
immediately preceding five (5) plan years.
"Permitted Liens" means:
(a) Liens for taxes not delinquent or statutory Liens for
taxes in an amount not to exceed $1,000,000, provided that the payment
of such taxes which are due and payable is being contested in good
faith and by appropriate proceedings diligently pursued and as to which
adequate financial reserves have been established on the appropriate
Loan Party's books and records and a stay of enforcement of any such
Lien is in effect;
(b) the Agent's Liens;
LOAN AND SECURITY AGREEMENT - Page 24
32
(c) Liens consisting of deposits made in the ordinary course
of business in connection with, or to secure payment of, obligations
under worker's compensation, unemployment insurance, social security
and other similar laws, or to secure the performance of bids, tenders
or contracts (other than for the repayment of borrowed money) or to
secure indemnity, performance or other similar bonds for the
performance of bids, tenders or contracts (other than for the repayment
of borrowed money) or to secure statutory obligations (other than liens
arising under ERISA or Environmental Liens) or surety or appeal bonds,
or to secure indemnity, performance or other similar bonds, or arising
under a Requirement of Law to secure customs and duties;
(d) Liens securing the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons,
provided that if any such Lien arises from the nonpayment of such
claims or demand when due, such claims or demands do not exceed
$3,000,000 in the aggregate;
(e) Liens constituting encumbrances in the nature of
reservations, exceptions, encroachments, easements, rights of way,
covenants running with the land, and other similar title exceptions or
encumbrances affecting any Real Estate; provided that they do not in
the aggregate materially detract from the value of the Real Estate or
materially interfere with its use in the ordinary conduct of a Loan
Party's business;
(f) Liens arising from judgments and attachments in connection
with court proceedings, provided that the attachment or enforcement of
such Liens would not result in an Event of Default hereunder and such
Liens are being contested in good faith by appropriate proceedings,
adequate reserves have been set aside and no material Property is
subject to a material risk of loss or forfeiture and the claims in
respect of such Liens are fully covered by insurance (subject to
ordinary and customary deductibles);
(g) The Rig 75 Lien, provided that such Lien secures only the
Rig 75 Purchase Money Debt and attaches only to the Rig 75 Property;
and
(h) Liens listed in Schedule 1.1.
"Permitted Rentals" has the meaning specified in Section 9.24.
"Person" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority, or any other entity.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which any Loan Party sponsors or maintains or to which any Loan Party
makes, is making, or is obligated to make contributions and includes any Pension
Plan.
"Premises" means the land identified by address on Schedule 8.12,
together with all buildings, improvements, and fixtures thereon and all
tenements, hereditaments, and appurtenances belonging
LOAN AND SECURITY AGREEMENT - Page 25
33
or in any way appertaining thereto, which constitutes all of the real property
in which any Loan Party has any interest.
"Pro Rata Share" means, with respect to a Lender, a fraction (expressed
as a percentage), the numerator of which is the amount of such Lender's
Commitment and the denominator of which is the sum of the amounts of all of the
Lenders' Commitments, or if no Commitments are outstanding, a fraction
(expressed as a percentage), the numerator of which is the amount of Obligations
owed to such Lender and the denominator of which is the aggregate amount of the
Obligations owed to the Lenders.
"Real Estate" means, with respect to a Person, all of such Person's
present and future interests, as owner, lessee, or otherwise, in the Premises,
including any interest arising from an option to purchase or lease the Premises
or any portion thereof.
"Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any Real
Estate or other property, including the movement of Contaminants through or in
the air, soil, surface water, groundwater or Real Estate or other property.
"Rentals" has the meaning specified in Section 9.24.
"Reportable Event" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"Required Lenders" means at any time Lenders whose Pro Rata Shares
aggregate more than 66.67% as such percentage is determined under the definition
of Pro Rata Share set forth herein.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject. In
respect of contracts relating to interest or finance charges that are made or
performed in the State of Texas, "Requirement of Law" means the laws of the
United States, including without limitation 12 USC Sections 85 and 86(a), as
amended from time to time, and any other statute of the United States now or at
any time hereafter prescribing the maximum rates of interest on loans and
extensions of credit, and the laws of the State of Texas, including, without
limitation, Section 306 of the Texas Finance Code, if applicable, and if Section
306 of the Texas Finance Code is not applicable, Section 303 of the Texas
Finance Code, and any other statute of the State of Texas now or at any time
hereafter prescribing maximum rates of interest on loans and extensions of
credit; provided that the parties hereto agree pursuant to Texas Finance Code
Section 346.004 that the provisions of Chapter 346 of the Texas Finance Code
shall not apply to Revolving Loans, this Agreement or any other Loan Documents.
"Responsible Officer" means, with respect to a Loan Party, the chief
executive officer or the president of such Loan Party; or, with respect to
compliance with financial covenants, the chief
LOAN AND SECURITY AGREEMENT - Page 26
34
financial officer or the treasurer of Parent; or with respect to the preparation
of any Borrowing Base Certificate, the chief financial officer or the treasurer
of each Borrower; and in each case any other officer having substantially the
same authority and responsibility.
"Restricted Investment" means, as to any Loan Party, any acquisition of
property by such Loan Party in exchange for cash or other property, whether in
the form of an acquisition of stock, debt, or other indebtedness or obligation,
or the purchase or acquisition of any other property, or a loan, advance,
capital contribution, or subscription, except the following:
(a) acquisitions of Equipment to be used in the business of
such Loan Party so long as the acquisition costs thereof constitute
Capital Expenditures permitted hereunder;
(b) acquisitions of Inventory in the ordinary course of
business of such Loan Party;
(c) acquisitions of current assets acquired in the ordinary
course of business of such Loan Party;
(d) direct obligations of the United States, or any agency
thereof, or obligations guaranteed by the United States, provided that
such obligations mature within one year from the date of acquisition
thereof;
(e) acquisitions of certificates of deposit maturing within
one year from the date of acquisition, bankers' acceptances, Eurodollar
bank deposits, or overnight bank deposits, in each case issued by,
created by, or with a bank or trust company organized under the laws of
the United States or any state thereof having capital and surplus
aggregating at least $100,000,000;
(f) acquisitions of commercial paper given a rating of "A2" or
better by Standard & Poor's Rating Services, a division of McGraw Hill
Companies, Inc., or "P2" or better by Xxxxx'x Investors Service, Inc.
and maturing not more than ninety (90) days from the date of creation
thereof;
(g) Interest Rate Protection Agreements;
(h) loans by the Parent or a Restricted Subsidiary to, and
capital contributions by the Parent or a Restricted Subsidiary in, a
Loan Party;
(i) loans by a Loan Party or a Restricted Subsidiary to, and
capital contributions by a Loan Party or a Restricted Subsidiary in, a
Restricted Subsidiary that is not a Loan Party, provided, that Net
Transfers, measured as of the end of each fiscal quarter ending after
the Closing Date (measured (i) from the Closing Date through the end of
such fiscal quarter in the case of each of the fiscal quarters ending
December 31, 1999, March 31, 2000, June 30, 2000 and September 30,
2000, respectively, and (ii) for the preceding four fiscal quarters in
LOAN AND SECURITY AGREEMENT - Page 27
35
the case of the fiscal quarter ending December 31, 2000 and each fiscal
quarter thereafter) shall not exceed Net Transfers Allowed;
(j) loans by a Loan Party to, and capital contributions by a
Loan Party in, a Subsidiary that is organized after the Closing Date as
and to the extent allowed by Section 9.21, provided that no Default or
Event of Default exists as of the time of such investment or would
result therefrom; and
(k) redemptions or other acquisitions by a Restricted
Subsidiary of its Capital Stock from the Parent or a Restricted
Subsidiary.
"Restricted Subsidiary" means any Subsidiary of the Parent other than
an Unrestricted Subsidiary, and "Restricted Subsidiaries" means two or more of
such Persons, collectively.
"Revolving Loans" has the meaning specified in Section 2.2 and includes
each Agent Advance and Non-Ratable Loan.
"Revolving Note" means a Revolving Note made by the Borrowers payable
to the order of a Lender evidencing the obligation of the Borrowers to pay the
aggregate unpaid principal amount of the Revolving Loans made to each of the
Borrowers by such Lender (and any promissory note or notes that may be issued
from time to time in substitution, renewal, extension, replacement, or exchange
thereof whether payable to such Lender or to a different Lender in connection
with a Person becoming a Lender after the Agreement Date or otherwise)
substantially in the form of Exhibit A, with all of the blanks properly
completed, either as originally executed or as such promissory note may be
renewed, extended, modified, amended, supplemented, or restated from time to
time.
"Rig Component Maximum" means an amount, at any time on and after the
Closing Date, equal to $25,000,000 reduced by $1,562,500 on December 31, 1999
and on each March 31, June 30, September 30 and December 31 thereafter.
"Rig Equipment" means the Equipment described in Schedule 1.2 as such
schedule may be supplemented or amended in accordance with this Agreement.
"Rig Materials and Supplies" means Inventory of a Borrower consisting
of rig materials and supplies.
"Rig Report" means a report prepared by or for the Loan Parties, in the
ordinary course of business, reflecting, for each Loan Party, each active
drilling rig and its related location, status, customer, condition, contract
duration and day rate, in form as appears in Exhibit H or otherwise in form
reasonably satisfactory to the Agent.
"Rig 75 Lien" means a Lien in the Rig 75 Property granted by Xxxxxx
Drilling Offshore International, Inc., a Wholly-Owned Subsidiary of the Parent,
in favor of Boeing Capital Corporation to secure the Rig 75 Purchase Money Debt.
LOAN AND SECURITY AGREEMENT - Page 28
36
"Rig 75 Property" means property of Xxxxxx Drilling Offshore
International, Inc., a Wholly- Owned Subsidiary of the Parent, covered by the
Rig 75 Lien as described in Schedule 1.3.
"Rig 75 Purchase Money Debt" means purchase money Debt incurred by
Xxxxxx Drilling Offshore International, Inc., a Wholly-Owned Subsidiary of the
Parent, in favor of Boeing Capital Corporation in an amount equal to $28,840,000
in connection with financing the purchase of a certain new drilling rig
designated as "Xxxxxx Rig 75" and constituting the Rig 75 Property.
"Settlement" and "Settlement Date" have the meanings specified in
Section 2.2(j)(i).
"Solvent" means when used with respect to any Person that at the time
of determination:
(a) the assets of such Person, at a fair valuation, are in
excess of the total amount of its debts (including contingent
liabilities); and
(b) the present fair saleable value of its assets is greater
than its probable liability on its existing debts as such debts become
absolute and matured; and
(c) it is then able and expects to be able to pay its debts
(including contingent debts and other commitments) as they mature; and
(d) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Stated Termination Date" means October 22, 2003.
"Subordinated Debt" means (i) the Indenture 1997, (ii) Debt of a Loan
Party or a Subsidiary of a Loan Party which, if owing to a Loan Party or a
Subsidiary of a Loan Party, is subordinated to payment of the Obligations on
terms substantially the same as are provided by the Intercompany Subordination
Agreement, (iii) other Debt of any Loan Party or any Subsidiary which has
maturities and terms, and which is subordinated to payment of the Obligations in
a manner, approved in writing by the Agent and the Majority Lenders, and in each
such case any renewals, modifications or amendments thereof which are approved
in writing by the Agent and the Majority Lenders.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than fifty
percent (50.0%) of the voting stock or other equity interests (in the case of
Persons other than corporations), is owned or controlled directly or indirectly
by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of a Loan Party.
LOAN AND SECURITY AGREEMENT - Page 29
37
"Subsidiary Guaranty" means a Guaranty Agreement dated as of the
Closing Date executed by each Loan Party other than Parent pursuant to Section
6.18.
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, such taxes (including
income taxes or franchise taxes) as are imposed on or measured by each Lender's
net income by the jurisdiction (or any political subdivision thereof) under the
laws of which such Lender or the Agent, as the case may be, is organized or
maintains a lending office.
"Termination Date" means the earliest to occur of (a) the Stated
Termination Date, (b) the date the Total Facility is terminated either by the
Borrowers pursuant to Section 4.2 or by the Majority Lenders pursuant to Section
11.2, and (c) the date this Agreement is otherwise terminated for any reason
whatsoever.
"Total Facility" has the meaning specified in Section 2.1.
"UCC" means the Uniform Commercial Code (or any successor statute) of
the State of Texas or of any other state the laws of which are required by
Section 9-103 thereof to be applied in connection with the issue of perfection
of security interests.
"United States" means the United States of America.
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.
"Unrestricted Subsidiary" means each of PKD Sales Corporation, an
Oklahoma corporation, Casuarina Limited, a Bermuda corporation, and Xxxxxx
Drilling Investment Company, an Oklahoma corporation, Production Control
Systems, Inc., a Delaware corporation, and any other Person created and
designated as an Unrestricted Subsidiary after the Closing Date in accordance
with Section 9.21, and "Unrestricted Subsidiaries" means two or more of such
Persons, collectively.
"Unused Letter of Credit Subfacility" means an amount equal to
$30,000,000 minus the sum of (a) the aggregate undrawn amount of all outstanding
Letters of Credit plus (b) the aggregate unpaid reimbursement obligations with
respect to all Letters of Credit.
"Unused Line Fee" has the meaning specified in Section 3.4.
"Unused Line Fee Percentage" means, as of the Closing Date,
three-eighths percent (0.375%), subject to adjustment thereafter from time to
time to the percentage specified corresponding to the Leverage Ratio as set
forth below, respectively:
LOAN AND SECURITY AGREEMENT - Page 30
38
Leverage Ratio Percentage
-------------- ----------
Greater than 7.0 to 1.0 0.500%
Less than or equal to 7.0 to 1.0 but 0.375%
greater than 4.0 to 1.0
Less than or equal to 4.0 to 1.0 0.250%
For the purpose of determining the Unused Line Fee Percentage the Leverage Ratio
shall be determined based upon Parent's consolidated financial statements for
its respective fiscal quarter periods, beginning with the fiscal quarter ending
December 31, 1999, delivered to the Agent as required by Section 7.2(c), and any
resulting change, if any, in the Unused Commitment Percentage shall become
effective as of the first day of the calendar month following the month in which
such financial statements are delivered to the Agent.
"Wholly-Owned Subsidiary" when used to determine the relationship of a
Subsidiary to a Person, means a Subsidiary all of the issued and outstanding
Capital Stock (other than directors' qualifying shares) of which shall at the
time be owned by such Person or one or more of such Person's Wholly-Owned
Subsidiaries or by such Person and one or more of such Person's Wholly- Owned
Subsidiaries.
"Working Capital" at any date means Current Assets minus Current
Liabilities.
Section 1.2 Accounting Terms. Any accounting term used in this
Agreement shall have, unless otherwise specifically provided herein, the meaning
customarily given in accordance with GAAP, and all financial computations
hereunder shall be computed, unless otherwise specifically provided herein, in
accordance with GAAP as consistently applied and using the same method for
inventory valuation as used in the preparation of the Financial Statements.
Unless otherwise requested by the Agent pursuant to Section 7.2(l), the term
"consolidating," when used in Section 7.2 in connection with any financial
statement or other financial reporting requirement, shall mean such accounting
term determined with reference to the Parent and its consolidated Subsidiaries,
as consolidated according to GAAP, therein making separate presentations for the
Loan Parties and the Restricted Subsidiaries on the one hand, and the
Unrestricted Subsidiaries on the other.
Section 1.3 Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to
the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar
words refer to this Agreement as a whole and not to any particular
provision of this Agreement; and Subsection, Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
LOAN AND SECURITY AGREEMENT - Page 31
39
(i) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures,
notices and other writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a
specified date to a later specified date, the word "from"
means "from and including," the words "to" and "until" each
mean "to but excluding" and the word "through" means "to and
including."
(c) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual
instruments shall be deemed to include all subsequent amendments and
other modifications thereto, but only to the extent such amendments and
other modifications are not prohibited by the terms of any Loan
Document, and (ii) references to any statute or regulation are to be
construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the
statute or regulation.
(d) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation
of this Agreement.
(e) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are
cumulative and shall each be performed in accordance with their terms.
(f) This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the Agent,
the Loan Parties and the other parties, and are the products of all
parties. Accordingly, they shall not be construed against the Lenders
or the Agent merely because of the Agent's or Lenders' involvement in
their preparation.
ARTICLE 2
LOANS AND LETTERS OF CREDIT
Section 2.1 Total Facility. Subject to all of the terms and conditions
of this Agreement, the Lenders severally agree to make available a total credit
facility of up to $50,000,000 (the "Total Facility") for any Borrower's use from
time to time during the term of this Agreement. The Total Facility shall be
composed of a revolving line of credit consisting of Revolving Loans and Letters
of Credit up to the Borrowing Base, as described in Sections 2.2 and 2.4.
LOAN AND SECURITY AGREEMENT - Page 32
40
Section 2.2 Revolving Loans.
(a) Amounts. Subject to the satisfaction of the conditions
precedent set forth in Article 10, each Lender severally, but not
jointly, agrees, upon a Borrower's request from time to time on any
Business Day during the period from the Closing Date to the Termination
Date, to make revolving loans (the "Revolving Loans") to the Borrowers
in amounts not to exceed (except for the Bank with respect to
Non-Ratable Loans or for the Agent with respect to Agent Advances) such
Lender's Pro Rata Share of the Borrowing Base. The Lenders, however, in
their unanimous discretion, may elect to make Revolving Loans or issue
or arrange to have issued Letters of Credit in excess of the
Availability on one or more occasions, but if they do so, neither the
Agent nor the Lenders shall be deemed thereby to have changed the
limits of the Borrowing Base or to be obligated to exceed such limits
on any other occasion. If the Aggregate Revolver Outstandings exceed
the Borrowing Base, the Lenders may refuse to make or otherwise
restrict the making of Revolving Loans as the Lenders determine until
such excess has been eliminated, subject to the Agent's authority, in
its sole discretion, to make Agent Advances pursuant to the terms of
Section 2.2(i).
(b) Procedure for Borrowing.
(i) Each Borrowing shall be made upon a Borrower's
irrevocable written notice delivered to the Agent in the form
of a notice of borrowing (a "Notice of Borrowing") which must
be received by the Agent prior to 11:00 a.m. (Dallas, Texas
time) (y) three (3) Business Days prior to the requested
Funding Date, in the case of LIBOR Rate Loans and (z) no later
than 11:00 a.m. on the requested Funding Date, in the case of
Base Rate Loans, specifying:
(A) the amount of the Borrowing (which,
if a LIBOR Revolving Loan, shall be
in an amount that is not less than
$500,000 or that is in an integral
multiple of $100,000 in excess
thereof);
(B) the requested Funding Date, which
shall be a Business Day;
(C) whether the Revolving Loans
requested are to be Base Rate
Revolving Loans or LIBOR Revolving
Loans; and
(D) the duration of the Interest Period
if the requested Revolving Loans
are to be LIBOR Revolving Loans. If
the Notice of Borrowing fails to
specify the duration of the
Interest Period for any Borrowing
comprised of LIBOR Rate Loans, such
Interest Period shall be one month;
provided, however, that with respect to any Borrowing to be
made on the Closing Date (if any), such Borrowing will consist
of Base Rate Revolving Loans.
(ii) With respect to any request for Base Rate
Revolving Loans, in lieu of delivering the above-described
Notice of Borrowing a Borrower may give the Agent
LOAN AND SECURITY AGREEMENT - Page 33
41
telephonic notice of such request by the required time, with
such telephonic notice to be confirmed in writing within 24
hours of the giving of such notice but the Agent shall be
entitled to rely on the telephonic notice in making such
Revolving Loans.
(c) Reliance upon Authority. On or prior to the Closing Date
and thereafter prior to any change with respect to any of the
information contained in the following clauses (i) and (ii), the
Borrowers shall deliver to the Agent a writing setting forth (i) the
account of the Borrowers to which the Agent is authorized to transfer
the proceeds of the Revolving Loans requested pursuant to this Section
2.2, and (ii) the names of the individuals authorized to request
Revolving Loans on behalf of each Borrower, and shall provide the Agent
with a specimen signature of each such individual. The Agent shall be
entitled to rely conclusively on any such individual's authority to
request Revolving Loans on behalf of a Borrower, the proceeds of which
are to be transferred to the account specified by the Borrowers
pursuant to the immediately preceding sentence or disbursed in such
other manner as such individual requesting such Borrowing may direct to
the Agent, until the Agent receives written notice to the contrary. The
Agent shall have no duty to verify the identity of any individual
representing him or herself as one of the officers authorized by any
Borrower to make such requests on its behalf. Each Borrower, as to
itself, hereby irrevocably appoints each other Borrower as its
attorney, with power to make withdrawals and transfers from, and
deliver to the Agent instructions in respect of, the account of the
Borrowers referenced in clause (i) preceding, and hereby irrevocably
authorizes the Agent to rely upon the acts and instructions of each
such other Borrower in accordance with the authority delegated pursuant
to this sentence.
(d) No Liability. The Agent shall not incur any liability to
the Loan Parties as a result of acting upon any notice referred to in
Sections 2.2(b) and (c), which notice the Agent believes in good faith
to have been given by an officer duly authorized by a Borrower to
request Revolving Loans on its behalf or for otherwise acting in good
faith under this Section 2.2, and the crediting of Revolving Loans to
the Borrower's deposit account, or transmittal to such Person as the
Borrower shall direct, shall conclusively establish the obligation of
the Borrowers to repay such Revolving Loans as provided herein.
(e) Notice Irrevocable. Any Notice of Borrowing (or telephonic
notice in lieu thereof) made pursuant to Section 2.2(b) shall be
irrevocable and the Borrowers shall be bound to borrow the funds
requested therein in accordance therewith.
(f) The Agent's Election. Promptly after receipt of a Notice
of Borrowing (or telephonic notice in lieu thereof) pursuant to Section
2.2(b), the Agent shall elect, in its discretion, (i) to have the terms
of Section 2.2(g) apply to such requested Borrowing, or (ii) to request
the Bank to make a Non-Ratable Loan pursuant to the terms of Section
2.2(h) in the amount of the requested Borrowing; provided, however,
that if the Bank declines in its sole discretion to make a Non-Ratable
Loan pursuant to Section 2.2(h), the Agent shall elect to have the
terms of Section 2.2(g) apply to such requested Borrowing.
LOAN AND SECURITY AGREEMENT - Page 34
42
(g) Making of Revolving Loans.
(i) In the event that the Agent shall elect to have
the terms of this Section 2.2(g) apply to a requested
Borrowing as described in Section 2.2(f), then promptly after
receipt of a Notice of Borrowing or telephonic notice pursuant
to Section 2.2(b), the Agent shall notify the Lenders by
telecopy, telephone or other similar form of transmission, of
the requested Borrowing. Each Lender shall make the amount of
such Lender's Pro Rata Share of the requested Borrowing
available to the Agent in immediate available funds, to such
account of the Agent as the Agent may designate, not later
than 2:00 p.m., (Dallas, Texas time) on the Funding Date
applicable thereto. After the Agent's receipt of the proceeds
of such Revolving Loans, upon satisfaction of the applicable
conditions precedent set forth in Article 10, the Agent shall
make the proceeds of such Revolving Loans available on the
applicable Funding Date by transferring same day funds equal
to the proceeds of such Revolving Loans received by the Agent
to the account designated pursuant to clause (i) of Section
2.2(c) or disbursing such funds in such other manner as the
Borrower requesting such Borrowing may direct to the Agent;
provided, however, that the amount of Revolving Loans so made
on any date shall in no event result in Availability of less
than zero Dollars ($0).
(ii) Unless the Agent receives notice from a Lender
on or prior to the Closing Date or, with respect to any
Borrowing after the Closing Date, at least one Business Day
prior to the date of such Borrowing, that such Lender will not
make available as and when required hereunder to the Agent for
the account of the Borrowers the amount of that Lender's Pro
Rata Share of the Borrowing, the Agent may assume that each
Lender has made such amount available to the Agent in
immediately available funds on the Funding Date and the Agent
may (but shall not be so required), in reliance upon such
assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent any Lender shall
not have made its full amount available to the Agent in
immediately available funds and the Agent in such
circumstances has made available to the Borrower such amount,
that Lender shall on the Business Day following such Funding
Date make such amount available to the Agent, together with
interest at the Federal Funds Rate for each day during such
period. A notice by the Agent submitted to any Lender with
respect to amounts owing under this subsection shall be
conclusive, absent manifest error. If such amount is so made
available, such payment to the Agent shall constitute such
Lender's Revolving Loan for all purposes of this Agreement. If
such amount is not made available to the Agent on the Business
Day following the Funding Date, the Agent will notify the
Borrower of such failure to fund and, upon demand by the
Agent, the Borrower shall pay such amount to the Agent for the
Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum
equal to the Interest Rate applicable at the time to the
Revolving Loans comprising such Borrowing. The failure of any
Lender to make any Revolving Loan on any Funding Date (any
such Lender, prior to the cure of such failure, being
hereinafter referred to as a "Defaulting Lender") shall not
relieve any other Lender of
LOAN AND SECURITY AGREEMENT - Page 35
43
any obligation hereunder to make a Revolving Loan on such
Funding Date, but no Lender shall be responsible for the
failure of any other Lender to make the Revolving Loan to be
made by such other Lender on any Funding Date.
(iii) The Agent shall not be obligated to transfer to
a Defaulting Lender any payments made by any Borrower to the
Agent for the Defaulting Lender's benefit; nor shall a
Defaulting Lender be entitled to the sharing of any payments
hereunder. Amounts payable to a Defaulting Lender shall
instead be paid to or retained by the Agent. The Agent may
hold and, in its discretion, re-lend to any Borrower the
amount of all such payments received or retained by it for the
account of such Defaulting Lender. Any amounts so re-lent to a
Borrower shall bear interest at the rate applicable to Base
Rate Revolving Loans and for all other purposes of this
Agreement shall be treated as if they were Revolving Loans,
provided, however, that for purposes of voting or consenting
to matters with respect to the Loan Documents and determining
Pro Rata Shares, such Defaulting Lender shall be deemed not to
be a "Lender". Until a Defaulting Lender cures its failure to
fund its Pro Rata Share of any Borrowing (A) such Defaulting
Lender shall not be entitled to any portion of the Unused Line
Fee and (B) the Unused Line Fee shall accrue in favor of the
Lenders which have funded their respective Pro Rata Shares of
such requested Borrowing and shall be allocated among such
performing Lenders ratably based upon their relative
Commitments. This Section shall remain effective with respect
to such Lender until such time as the Defaulting Lender shall
no longer be in default of any of its obligations under this
Agreement. The terms of this Section shall not be construed to
increase or otherwise affect the Commitment of any Lender, or
relieve or excuse the performance by any Borrower of its
duties and obligations hereunder.
(h) Making of Non-Ratable Loans.
(i) In the event the Agent shall elect, with the
consent of the Bank, to have the terms of this Section 2.2(h)
apply to a requested Borrowing as described in Section 2.2(f),
the Bank shall make a Revolving Loan in the amount of such
Borrowing (any such Revolving Loan made solely by the Bank
pursuant to this Section 2.2(h) being referred to as a
"Non-Ratable Loan" and such Revolving Loans being referred to
collectively as "Non-Ratable Loans") available to a Borrower
on the Funding Date applicable thereto by transferring same
day funds to an account of such Borrower, designated in
writing by such Borrower and acceptable to the Agent. Each
Non-Ratable Loan is a Revolving Loan hereunder and shall be
subject to all the terms and conditions applicable to other
Revolving Loans except that all payments thereon shall be
payable to the Bank solely for its own account (and for the
account of the holder of any participation interest with
respect to such Revolving Loan). The Agent shall not request
the Bank to make any Non-Ratable Loan if (A) the Agent shall
have received written notice from any Lender that one or more
of the applicable conditions precedent set forth in Article 10
will not be satisfied on the requested Funding Date for the
applicable Borrowing, or (B) the requested Borrowing would
exceed the Availability on such Funding Date. The Bank shall
not otherwise be required to
LOAN AND SECURITY AGREEMENT - Page 36
44
determine whether the applicable conditions precedent set
forth in Article 10 have been satisfied or the requested
Borrowing would exceed the Availability on the Funding Date
applicable thereto prior to making, in its sole discretion,
any Non-Ratable Loan.
(ii) The Non-Ratable Loans shall be secured by the
Agent's Liens in and to the Collateral, shall constitute
Revolving Loans and Obligations hereunder, and shall bear
interest at the rate applicable to the Revolving Loans from
time to time.
(i) Agent Advances.
(i) Subject to the limitations set forth in the
provisos contained in this Section 2.2(i), the Agent is hereby
authorized by the Borrowers and the Lenders, from time to time
in the Agent's sole discretion, (A) after the occurrence of a
Default or an Event of Default, or (B) at any time that any of
the other applicable conditions precedent set forth in Article
10 have not been satisfied, to make Base Rate Revolving Loans
to any Borrower on behalf of the Lenders which the Agent, in
its reasonable business judgment, deems necessary or desirable
(1) to preserve or protect the Collateral, or any portion
thereof, (2) to enhance the likelihood of, or maximize the
amount of, repayment of the Loans and other Obligations, or
(3) to pay any other amount chargeable to the Borrowers
pursuant to the terms of this Agreement, including costs, fees
and expenses as described in Section 15.7 (any of the advances
described in this Section 2.2(i) being hereinafter referred to
as "Agent Advances"); provided, that the Required Lenders may
at any time revoke the Agent's authorization contained in this
Section 2.2(i) to make Agent Advances, any such revocation to
be in writing and to become effective prospectively upon the
Agent's receipt thereof;
(ii) The Agent Advances shall be repayable on demand
and secured by the Agent's Liens in and to the Collateral,
shall constitute Revolving Loans and Obligations hereunder,
and shall bear interest at the rate applicable to Base Rate
Revolving Loans from time to time. The Agent shall notify each
Lender in writing of each such Agent Advance.
(j) Settlement. It is agreed that each Lender's funded portion
of the Revolving Loans is intended by the Lenders to be equal at all
times to such Lender's Pro Rata Share of the outstanding Revolving
Loans. Notwithstanding such agreement, the Agent, the Bank, and the
other Lenders agree (which agreement shall not be for the benefit of or
enforceable by the Borrowers) that in order to facilitate the
administration of this Agreement and the other Loan Documents,
settlement among them as to the Revolving Loans, the Non-Ratable Loans
and the Agent Advances shall take place on a periodic basis in
accordance with the following provisions:
(i) The Agent shall request settlement ("Settlement")
with the Lenders on at least a weekly basis, or on a more
frequent basis if so determined by the Agent, (A) on behalf of
the Bank, with respect to each outstanding Non-Ratable Loan,
LOAN AND SECURITY AGREEMENT - Page 37
45
(B) for itself, with respect to each Agent Advance, and (C)
with respect to collections received, in each case, by
notifying the Lenders of such requested Settlement by
telecopy, telephone or other similar form of transmission, of
such requested Settlement, no later than 11:00 a.m. (Dallas,
Texas time) on the date of such requested Settlement (the
"Settlement Date"). Each Lender (other than the Bank, in the
case of Non-Ratable Loans and the Agent in the case of Agent
Advances) shall make the amount of such Lender's Pro Rata
Share of the outstanding principal amount of the Non-Ratable
Loans and Agent Advances with respect to which Settlement is
requested available to the Agent, to such account of the Agent
as the Agent may designate, not later than 2:00 p.m. (Dallas,
Texas time), on the Settlement Date applicable thereto, which
may occur before or after the occurrence or during the
continuation of a Default or an Event of Default and whether
or not the applicable conditions precedent set forth in
Article 10 have then been satisfied. Such amounts made
available to the Agent shall be applied against the amounts of
the applicable Non-Ratable Loan or Agent Advance and, together
with the portion of such Non-Ratable Loan or Agent Advance
representing the Bank's Pro Rata Share thereof, shall
constitute Revolving Loans of such Lenders. If any such amount
is not made available to the Agent by any Lender on the
Settlement Date applicable thereto, the Agent shall be
entitled to recover such amount on demand from such Lender
together with interest thereon at the Federal Funds Rate for
the first three (3) days from and after the Settlement Date
and thereafter at the Interest Rate then applicable to the
Revolving Loans.
(ii) Notwithstanding the foregoing, not more than one
(1) Business Day after demand is made by the Agent (whether
before or after the occurrence of a Default or an Event of
Default and regardless of whether the Agent has requested a
Settlement with respect to a Non-Ratable Loan or Agent
Advance), each other Lender (A) shall irrevocably and
unconditionally purchase and receive from the Bank or the
Agent, as applicable, without recourse or warranty, an
undivided interest and participation in such Non-Ratable Loan
or Agent Advance equal to such Lender's Pro Rata Share of such
Non-Ratable Loan or Agent Advance and (B) if Settlement has
not previously occurred with respect to such Non-Ratable Loans
or Agent Advances, upon demand by the Bank or the Agent, as
applicable, shall pay to the Bank or the Agent, as applicable,
as the purchase price of such participation an amount equal to
one-hundred percent (100%) of such Lender's Pro Rata Share of
such Non-Ratable Loans or Agent Advances. If such amount is
not in fact made available to the Agent by any Lender, the
Agent shall be entitled to recover such amount on demand from
such Lender together with interest thereon at the Federal
Funds Rate for the first three (3) days from and after such
demand and thereafter at the Interest Rate then applicable to
Base Rate Revolving Loans.
(iii) From and after the date, if any, on which any
Lender purchases an undivided interest and participation in
any Non-Ratable Loan or Agent Advance pursuant to clause (ii)
preceding, the Agent shall promptly distribute to such Lender
at such address as such Lender may request in writing, such
Lender's Pro Rata Share
LOAN AND SECURITY AGREEMENT - Page 38
46
of all payments of principal and interest and all proceeds of
Collateral received by the Agent in respect of such
Non-Ratable Loan or Agent Advance.
(iv) Between Settlement Dates, the Agent, to the
extent no Agent Advances or Non-Ratable Loans are outstanding,
may pay over to the Bank any payments received by the Agent,
which in accordance with the terms of this Agreement would be
applied to the reduction of the Revolving Loans, for
application to the Bank's Revolving Loans. If, as of any
Settlement Date, collections received since the immediately
preceding Settlement Date have been applied to the Bank's
Revolving Loans (other than to Non-Ratable Loans or Agent
Advances in which such Lender has not yet funded its purchase
of a participation pursuant to Section 2.2(j)(ii)), as
provided for in the previous sentence, the Bank shall pay to
the Agent for the accounts of the Lenders, to be applied to
the outstanding Revolving Loans of such Lenders, an amount
such that each Lender shall, upon receipt of such amount,
have, as of such Settlement Date, its Pro Rata Share of the
Revolving Loans. During the period between Settlement Dates,
the Bank with respect to Non-Ratable Loans, the Agent with
respect to Agent Advances, and each Lender with respect to the
Revolving Loans other than Non-Ratable Loans and Agent
Advances, shall be entitled to interest at the applicable rate
or rates payable under this Agreement on the actual average
daily amount of funds employed by the Bank, the Agent and the
other Lenders.
(k) Notation. The Agent shall record on its books the
principal amount of the Revolving Loans owing to each Lender, including
the Non-Ratable Loans owing to the Bank, and the Agent Advances owing
to the Agent, from time to time. In addition, each Lender is
authorized, at such Lender's option, to note the date and amount of
each payment or prepayment of principal of such Lender's Revolving
Loans in its books and records, including computer records, such books
and records constituting presumptive evidence, absent manifest error,
of the accuracy of the information contained therein.
(l) Lenders' Failure to Perform. All Revolving Loans (other
than Non-Ratable Loans and Agent Advances) shall be made by the Lenders
simultaneously and in accordance with their Pro Rata Shares. It is
understood that (i) no Lender shall be responsible for any failure by
any other Lender to perform its obligation to make any Revolving Loans
hereunder, nor shall any Commitment of any Lender be increased or
decreased as a result of any failure by any other Lender to perform its
obligation to make any Revolving Loans hereunder, (ii) no failure by
any Lender to perform its obligation to make any Revolving Loans
hereunder shall excuse any other Lender from its obligation to make any
Revolving Loans hereunder, and (iii) the obligations of each Lender
hereunder shall be several, not joint and several.
(m) Revolving Notes. The Borrowers shall execute and deliver
to the Agent, on behalf of each Lender, effective as of the Closing
Date and on the date of the assignment of any portion of any Lender's
Revolving Loans, a Revolving Note, to evidence such Lender's Revolving
Loans, in the principal amount equal to the amount of such Lender's
Commitment with respect to the Revolving Loans.
LOAN AND SECURITY AGREEMENT - Page 39
47
Section 2.3 Reserved.
Section 2.4 Letters of Credit.
(a) Agreement to Issue or Cause To Issue. Subject to the terms
and conditions of this Agreement, and in reliance upon the
representations and warranties of the Loan Parties herein set forth,
the Agent agrees (i) to issue or cause to be issued for the account of
any Borrower one or more commercial/documentary and standby letters of
credit ("Letters of Credit") and (ii) to provide credit support or
other enhancement to a Letter of Credit Issuer acceptable to the Agent,
which issues Letters of Credit for the account of a Borrower (any such
credit support or enhancement being herein referred to as a "Credit
Support") in accordance with this Section 2.4 from time to time during
the term of this Agreement.
(b) Amounts; Outside Expiration Date. The Agent shall not have
any obligation to take steps to issue or cause to be issued any Letter
of Credit or to provide Credit Support for any Letter of Credit at any
time if: (i) the maximum undrawn amount of the requested Letter of
Credit is greater than the Unused Letter of Credit Subfacility at such
time; (ii) the maximum undrawn amount of the requested Letter of Credit
and all commissions, fees, and charges due from the Borrower in
connection with the opening thereof exceed the Availability at such
time; or (iii) such Letter of Credit has an expiration date later than
thirty (30) days prior to the Stated Termination Date or more than
twelve (12) months from the date of issuance.
(c) Other Conditions. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in
Article 10, the obligation of the Agent to issue or to cause to be
issued any Letter of Credit or to provide Credit Support for any Letter
of Credit is subject to the following conditions precedent having been
satisfied in a manner satisfactory to the Agent:
(i) The Letter of Credit Issuer shall have received,
at such times and in such manner as such Letter of Credit
Issuer may prescribe, an application in form and substance
satisfactory to such Letter of Credit Issuer and the Agent for
the issuance of the Letter of Credit and such other documents
as may be required pursuant to the terms thereof, and the form
and terms of the proposed Letter of Credit shall be
satisfactory to the Agent and the Letter of Credit Issuer; and
(ii) As of the date of issuance, no order of any
court, arbitrator or Governmental Authority shall purport by
its terms to enjoin or restrain money center banks generally
from issuing letters of credit of the type and in the amount
of the proposed Letter of Credit, and no law, rule or
regulation applicable to money center banks generally and no
request or directive (whether or not having the force of law)
from any Governmental Authority with jurisdiction over money
center banks generally shall prohibit, or request that the
proposed Letter of Credit Issuer refrain from, the issuance of
letters of credit generally or the issuance of such Letters of
Credit.
LOAN AND SECURITY AGREEMENT - Page 40
48
(d) Issuance of Letters of Credit.
(i) Request for Issuance. Any Borrower that wishes to
cause the issuance of a Letter of Credit shall give the Agent
two (2) Business Days prior written notice of the request for
the issuance of such Letter of Credit. Such notice shall be
irrevocable and shall specify the original face amount of the
Letter of Credit requested, the effective date (which date
shall be a Business Day) of issuance of such requested Letter
of Credit, whether such Letter of Credit may be drawn in a
single or in partial draws, the date on which such requested
Letter of Credit is to expire (which date shall be a Business
Day), the purpose for which such Letter of Credit is to be
issued, and the beneficiary of the requested Letter of Credit
and, in addition, shall include as an attachment the proposed
form of the Letter of Credit.
(ii) Responsibilities of the Agent; Issuance. The
Agent shall determine, as of the Business Day immediately
preceding the requested effective date of issuance of the
Letter of Credit set forth in the notice from a Borrower
pursuant to Section 2.4(d)(i), (A) the amount of the
applicable Unused Letter of Credit Subfacility and (B) the
Availability as of such date. If (Y) the undrawn amount of the
requested Letter of Credit is not greater than the Unused
Letter of Credit Subfacility and (Z) the issuance of such
requested Letter of Credit and all commissions, fees, and
charges due from the Borrower in connection with the opening
thereof would not exceed the Availability the Agent shall, so
long as the other conditions hereof are met, issue or cause
the Letter of Credit Issuer, if not the Bank, to issue the
requested Letter of Credit on such requested effective date of
issuance.
(iii) Notice of Issuance. On each Settlement Date,
the Agent shall give notice to each Lender of the issuance of
all Letters of Credit issued since the last Settlement Date.
(iv) No Extensions or Amendment. The Agent shall not
be obligated to extend or amend any Letter of Credit issued
hereunder unless the requirements of this Section 2.4 are met
as though a new Letter of Credit were being requested and
issued. With respect to any Letter of Credit which contains
any "evergreen" or automatic renewal provision, each Lender
shall be deemed to have consented to any such extension or
renewal unless any such Lender shall have provided to the
Agent, not less than sixty (60) days prior to the last date on
which the applicable issuer can in accordance with the terms
of the applicable Letter of Credit decline to extend or renew
such Letter of Credit, written notice that it declines to
consent to any such extension or renewal; provided, that if
all of the requirements of this Section 2.4 are met and no
Default or Event of Default exists, no Lender shall decline to
consent to any such extension or renewal.
LOAN AND SECURITY AGREEMENT - Page 41
49
(e) Payments Pursuant to Letters of Credit.
(i) Payment of Letter of Credit Obligations. The
Borrower on whose account any Letter of Credit is issued
agrees to reimburse immediately the Letter of Credit Issuer
for any draw under any such Letter of Credit and the Agent for
the account of the Lenders upon any payment pursuant to any
related Credit Support immediately upon demand, and to pay the
Letter of Credit Issuer the amount of all other obligations
and other amounts payable to such Letter of Credit Issuer
under or in connection with any Letter of Credit immediately
when due, irrespective of any claim, setoff, defense or other
right which such Borrower may have at any time against such
issuer or any other Person.
(ii) Revolving Loans to Satisfy Reimbursement
Obligations. In the event that the Letter of Credit Issuer of
any Letter of Credit honors a draw under such Letter of Credit
or the Agent shall have made any payment pursuant to any
Credit Support and the Borrower on whose account such Letter
of Credit was issued shall not have repaid such amount to the
Letter of Credit Issuer of such Letter of Credit or the Agent,
as applicable, pursuant to Section 2.4(e)(i), the Agent shall,
upon receiving notice of such failure, notify each Lender of
such failure, and each Lender shall unconditionally pay to the
Agent, for the account of the Letter of Credit Issuer or the
Agent, as applicable, as and when provided hereinbelow, an
amount equal to such Lender's Pro Rata Share of the amount of
such payment in Dollars and in same day funds. If the Agent so
notifies the Lenders prior to 11:00 a.m. (Dallas, Texas time)
on any Business Day, each Lender shall make available to the
Agent the amount of such payment, as provided in the
immediately preceding sentence, on such Business Day. Such
amounts paid by the Lenders to the Agent shall constitute
Revolving Loans which shall be deemed to have been requested
by such Borrower pursuant to Section 2.2 as set forth in
Section 4.7.
(f) Participations.
(i) Purchase of Participations. Immediately upon
issuance of any Letter of Credit in accordance with Section
2.4(d), each Lender shall be deemed to have irrevocably and
unconditionally purchased and received without recourse or
warranty, an undivided interest and participation equal to
such Lender's Pro Rata Share of the face amount of such Letter
of Credit or the Credit Support provided through the Agent to
the Letter of Credit Issuer, if not the Agent, in connection
with the issuance of such Letter of Credit (including all
obligations with respect thereto of the Borrower for whose
account such Letter of Credit was issued, with respect
thereto, and any security therefor or guaranty pertaining
thereto).
(ii) Sharing of Reimbursement Obligation Payments.
Whenever the Agent receives a payment from a Borrower on
account of reimbursement obligations in respect of a Letter of
Credit or Credit Support as to which the Agent has previously
received for the account of the Letter of Credit Issuer
thereof payment from a Lender
LOAN AND SECURITY AGREEMENT - Page 42
50
pursuant to Section 2.4(e)(ii), the Agent shall promptly pay
to such Lender such Lender's Pro Rata Share of such payment
from such Borrower in Dollars. Each such payment shall be made
by the Agent on the Business Day on which the Agent receives
immediately available funds paid to such Person pursuant to
the immediately preceding sentence, if received prior to 2:00
p.m. (Dallas, Texas time) on such Business Day and otherwise
on the next succeeding Business Day.
(iii) Documentation. Upon the request of any Lender,
the Agent shall furnish to such Lender copies of any Letter of
Credit, reimbursement agreements executed in connection
therewith, application for any Letter of Credit and credit
support or enhancement provided through the Agent in
connection with the issuance of any Letter of Credit, and such
other documentation as may reasonably be requested by such
Lender.
(iv) Obligations Irrevocable. The obligations of each
Lender to make payments to the Agent with respect to any
Letter of Credit or with respect to any Credit Support
provided through the Agent with respect to a Letter of Credit,
and the obligations of the Borrower for whose account such
Letter of Credit was issued to make payments to the Agent, for
the account of the Lenders, shall be irrevocable, not subject
to any qualification or exception whatsoever (except, in the
case of any such obligations of such Borrower, as may be
specifically provided in any agreement executed in connection
with such Letter of Credit by such Borrower and the Letter of
Credit Issuer) including any of the following circumstances:
(A) any lack of validity or enforceability
of this Agreement or any of the other Loan Documents;
(B) the existence of any claim, setoff,
defense or other right which such Borrower may have
at any time against a beneficiary named in a Letter
of Credit or any transferee of any Letter of Credit
(or any Person for whom any such transferee may be
acting), any Lender, the Agent, the issuer of such
Letter of Credit, or any other Person, whether in
connection with this Agreement, any Letter of Credit,
the transactions contemplated herein or any unrelated
transactions (including any underlying transactions
between such Borrower or any other Person and the
beneficiary named in any Letter of Credit);
(C) any draft, certificate or any other
document presented under the Letter of Credit proving
to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or
inaccurate in any respect;
(D) the surrender or impairment of any
security for the performance or observance of any of
the terms of any of the Loan Documents; or
(E) the occurrence of any Default or Event
of Default.
LOAN AND SECURITY AGREEMENT - Page 43
51
(g) Recovery or Avoidance of Payments. In the event any
payment by or on behalf of any Borrower received by the Agent with
respect to any Letter of Credit or Credit Support provided for any
Letter of Credit and distributed by the Agent to the Lenders on account
of their respective participations therein is thereafter set aside,
avoided or recovered from the Agent in connection with any
receivership, liquidation or bankruptcy proceeding, the Lenders shall,
upon demand by the Agent, pay to the Agent their respective Pro Rata
Shares of such amount set aside, avoided or recovered, together with
interest at the rate required to be paid by the Agent upon the amount
required to be repaid by it.
(h) Compensation for Letters of Credit.
(i) Letter of Credit Fee. Each Borrower for whose
account any Letter of Credit is issued agrees to pay to the
Agent with respect to each such Letter of Credit, for the
account of the Lenders, the Letter of Credit Fee specified in,
and in accordance with the terms of, Section 3.5.
(ii) Issuer Fees and Charges. Each Borrower for whose
account any Letter of Credit is issued shall pay to the Letter
of Credit Issuer of any such Letter of Credit, or to the Agent
for the account of the Letter of Credit Issuer of any such
Letter of Credit, solely for such Letter of Credit Issuer's
account, such fees and other charges as are charged by such
Letter of Credit Issuer for letters of credit issued by it,
including its standard fees for issuing, administering,
amending, renewing, paying and canceling letters of credit and
all other fees associated with issuing or servicing letters of
credit, as and when assessed.
(i) Indemnification; Exoneration; Power of Attorney.
(i) Indemnification. IN ADDITION TO AMOUNTS PAYABLE
AS ELSEWHERE PROVIDED IN THIS SECTION 2.4, EACH LOAN PARTY
HEREBY AGREES TO PROTECT, INDEMNIFY, PAY AND SAVE THE LENDERS
AND THE AGENT HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, LIABILITIES, DAMAGES, LOSSES, COSTS, CHARGES AND
EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) WHICH ANY
LENDER OR THE AGENT (OTHER THAN THE AGENT IN ITS CAPACITY AS
LETTER OF CREDIT ISSUER) MAY INCUR OR BE SUBJECT TO AS A
CONSEQUENCE, DIRECT OR INDIRECT, OF THE ISSUANCE OF ANY LETTER
OF CREDIT OR THE PROVISION OF ANY CREDIT SUPPORT OR
ENHANCEMENT IN CONNECTION THEREWITH OTHER THAN ANY CLAIMS,
DEMANDS, LIABILITIES, DAMAGES, LOSSES, COSTS, CHARGES, AND
EXPENSES RESULTING SOLELY FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF ANY SUCH INDEMNIFIED PERSON. THE AGREEMENT IN
THIS SECTION 2.4(i)(i) SHALL SURVIVE PAYMENT OF ALL
OBLIGATIONS. NOTHING CONTAINED IN THIS AGREEMENT IS INTENDED
TO LIMIT ANY BORROWER'S RIGHTS, IF ANY, WITH RESPECT TO THE
LETTER OF
LOAN AND SECURITY AGREEMENT - Page 44
52
CREDIT ISSUER WHICH ARISE BY OPERATION OF LAW OR AS A RESULT
OF THE LETTER OF CREDIT APPLICATION AND RELATED DOCUMENTS
EXECUTED BY AND BETWEEN ANY BORROWER AND THE LETTER OF CREDIT
ISSUER.
(ii) Assumption of Risk by the Loan Parties. As among
the Loan Parties, the Lenders, and the Agent, the Loan Parties
assume all risks of the acts and omissions of, or misuse of
any of the Letters of Credit by, the respective beneficiaries
of such Letters of Credit. In furtherance and not in
limitation of the foregoing, the Lenders and the Agent shall
not be responsible for: (A) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document
submitted by any Person in connection with the application for
and issuance of and presentation of drafts with respect to any
of the Letters of Credit, even if it should prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent
or forged; (B) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (C) the failure of the
beneficiary of any Letter of Credit to comply duly with
conditions required in order to draw upon such Letter of
Credit; (D) errors, omissions, interruptions, or delays in
transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in
cipher; (E) errors in interpretation of technical terms; (F)
any loss or delay in the transmission or otherwise of any
document required in order make a drawing under any Letter of
Credit or of the proceeds thereof; (G) the misapplication by
the beneficiary of any Letter of Credit of the proceeds of any
drawing under such Letter of Credit; or (H) any consequences
arising from causes beyond the control of the Lenders or the
Agent, including any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto
Governmental Authority. None of the foregoing shall affect,
impair or prevent the vesting of any rights or powers of the
Agent or any Lender under this Section 2.4(i).
(iii) Exoneration. In furtherance and extension, and
not in limitation, of the specific provisions set forth above,
any action taken or omitted by the Agent or any Lender under
or in connection with any of the Letters of Credit or any
related certificates, if taken or omitted in good faith, shall
not put the Agent or any Lender under any resulting liability
to any Loan Party or relieve any Loan Party of any of its
obligations hereunder to any such Person.
(iv) Indemnification by Lenders. The Lenders agree to
indemnify the Letter of Credit Issuer (to the extent not
reimbursed by the Borrowers and without limiting the
obligations of the Borrowers hereunder) ratably in accordance
with their respective Pro Rata Shares, for any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including attorneys' fees)
or disbursements of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against the Letter of
Credit Issuer in any way relating to or arising out
LOAN AND SECURITY AGREEMENT - Page 45
53
of any Letter of Credit or the transactions contemplated
thereby or any action taken or omitted by the Letter of Credit
Issuer under any Letter of Credit or any Loan Document in
connection therewith; provided that no Lender shall be liable
for any of the foregoing to the extent it arises from the
gross negligence or willful misconduct of the Person to be
indemnified. Without limitation of the foregoing, each Lender
agrees to reimburse the Letter of Credit Issuer promptly upon
demand for its Pro Rata Share of any costs or expenses payable
by any Borrower to the Letter of Credit Issuer, to the extent
that the Letter of Credit Issuer is not promptly reimbursed
for such costs and expenses by a Loan Party. The agreement
contained in this section shall survive payment in full of all
Obligations.
(v) Power of Attorney. In connection with all
Inventory financed by Letters of Credit, each Borrower hereby
appoints the Agent, or the Agent's designee, as its attorney,
with full power and authority: (A) to sign and/or endorse such
Borrower's name upon any warehouse or other receipts; (B) to
sign such Borrower's name on bills of lading and other
negotiable and non-negotiable documents; (C) to clear
Inventory through customs in the Agent's or such Borrower's
name, and to sign and deliver to customs officials powers of
attorney in such Borrower's name for such purpose; (D) to
complete in such Borrower's or the Agent's name, any order,
sale, or transaction, obtain the necessary documents in
connection therewith, and collect the proceeds thereof; and
(E) to do such other acts and things as are necessary in order
to enable the Agent to obtain possession or control of the
Inventory and to obtain payment of the Obligations. Neither
the Agent nor its designee, as such Borrower's attorney, will
be liable for any acts or omissions, nor for any error of
judgement or mistakes of fact or law. This power, being
coupled with an interest, is irrevocable until all Obligations
have been paid and satisfied.
(vi) Account Party. Each Borrower hereby authorizes
and directs any Letter of Credit Issuer to name any Borrower
as the "Account Party" therein and to deliver to the Agent all
instruments, documents and other writings and property
received by the Letter of Credit Issuer pursuant to the Letter
of Credit, and to accept and rely upon the Agent's
instructions and agreements with respect to all matters
arising in connection with the Letter of Credit or the
application therefor.
(vii) Control of Inventory. In connection with all
Inventory financed by Letters of Credit, each Borrower for
whose account such Letter of Credit was issued will, at the
Agent's request, instruct all suppliers, carriers, forwarders,
warehouses or others receiving or holding cash, checks,
Inventory, documents or instruments in which the Agent holds a
security interest to deliver them to the Agent and/or subject
to the Agent's order, and if they shall come into such
Borrower's possession, to deliver them, upon request, to the
Agent in their original form. Each such Borrower shall also,
at the Agent's request, designate the Agent as the consignee
on all bills of lading and other negotiable and non-negotiable
documents.
LOAN AND SECURITY AGREEMENT - Page 46
54
(j) Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of Section 2.4(b) and Section 12.1 any
Letter of Credit is outstanding upon the termination of this Agreement,
then upon such termination the Borrower for whose account such Letter
of Credit was issued shall deposit with the Agent, for the ratable
benefit of the Agent and the Lenders, with respect to each Letter of
Credit then outstanding, as the Majority Lenders in their discretion
shall specify, either (i) a standby letter of credit (a "Supporting
Letter of Credit") in form and substance satisfactory to the Agent,
issued by an issuer satisfactory to the Agent in an amount equal to the
greatest amount for which such Letter of Credit may be drawn plus any
fees and expenses associated with such Letter of Credit, under which
Supporting Letter of Credit the Agent is entitled to draw amounts
necessary to reimburse the Agent and the Lenders for payments to be
made by the Agent and the Lenders under such Letter of Credit or under
any credit support or enhancement provided through the Agent with
respect thereto and any fees and expenses associated with such Letter
of Credit, or (ii) cash in amounts necessary to reimburse the Agent and
the Lenders for payments made by the Agent or the Lenders under such
Letter of Credit or under any credit support or enhancement provided
through the Agent with respect thereto and any fees and expenses
associated with such Letter of Credit. Such Supporting Letter of Credit
or deposit of cash shall be held by the Agent, for the ratable benefit
of the Agent and the Lenders, as security for, and to provide for the
payment of, the aggregate undrawn amount of such Letters of Credit
remaining outstanding. Interest shall accrue on any such cash deposit
at a rate acceptable to the Bank, which accrued interest shall be for
the account of the Borrowers, subject to this Agreement.
Section 2.5 Bank Products. Any Loan Party may request and the Bank
may, in its sole and absolute discretion, arrange for such Loan Party to obtain
from the Bank or the Bank's Affiliates Bank Products although no Loan Party is
required to do so. Each Loan Party agrees to indemnify and hold the Bank and the
Lenders harmless from any and all obligations now or hereafter owing to any
other Person by the Bank or any of the Lenders or the Bank's Affiliates arising
from or related to such Bank Products. Each Loan Party acknowledges and agrees
that the obtaining of Bank Products from the Bank or the Bank's Affiliates (a)
is in the sole and absolute discretion of the Bank or the Bank's Affiliates, and
(b) is subject to all rules and regulations of the Bank or the Bank's
Affiliates.
ARTICLE 3
INTEREST AND FEES
Section 3.1 Interest.
(a) Interest Rates. All outstanding Obligations shall bear
interest on the unpaid principal amount thereof (including, to the
extent permitted by law, on interest thereon not paid when due) from
the date made until paid in full in cash at a rate determined by
reference to the Base Rate or the LIBOR Rate and Sections 3.1(a)(i) or
(ii), as applicable, but not to exceed the Maximum Rate described in
Section 3.3. Subject to the provisions of Section 3.2, any of the Loans
may be converted into, or continued as, Base Rate Loans or LIBOR Rate
LOAN AND SECURITY AGREEMENT - Page 47
55
Loans in the manner provided in Section 3.2. If at any time Loans are
outstanding with respect to which notice has not been delivered to the
Agent in accordance with the terms of this Agreement specifying the
basis for determining the interest rate applicable thereto, then those
Loans shall be Base Rate Loans and shall bear interest at a rate
determined by reference to the Base Rate until notice to the contrary
has been given to the Agent in accordance with this Agreement and such
notice has become effective. Except as otherwise provided herein, the
outstanding Obligations shall bear interest as follows:
(i) For all Base Rate Revolving Loans and other
Obligations (other than LIBOR Rate Loans) at a fluctuating per
annum rate equal to the lesser of (A) the Base Rate plus the
Applicable Margin or (B) the Maximum Rate; and
(ii) For all LIBOR Revolving Loans at a per annum
rate equal to the lesser of (A) the LIBOR Rate plus the
Applicable Margin or (B) the Maximum Rate.
Each change in the Base Rate shall be reflected in the interest rate
described in clause (i) above as of the effective date of such change.
Subject to Section 3.7, all interest charges shall be computed on the
basis of a year of 360 days and actual days elapsed (which results in
more interest being paid than if computed on the basis of a 365-day
year). Interest accrued on all Loans will be payable in arrears (A)
with respect to Base Rate Loans, on the next Business Day following the
last day of each calendar month and (B) with respect to LIBOR Rate
Loans, on the last day of each corresponding Interest Period (and in
the case of an Interest Period of greater than three (3) months, at
three-month intervals after the first day of such Interest Period), in
each case continuing until all Obligations have been irrevocably paid
in full.
(b) Default Rate. If any Default or Event of Default occurs
and is continuing and the Majority Lenders in their discretion so
elect, then, while any such Default or Event of Default is outstanding,
all of the Obligations shall bear interest at a per annum rate equal to
the lesser of (A) the Default Rate applicable thereto or (B) the
Maximum Rate.
Section 3.2 Conversion and Continuation Elections.
(a) The Borrowers may, upon irrevocable written notice to the
Agent in accordance with Section 3.2(b):
(i) elect, as of any Business Day, in the case of
Base Rate Loans to convert any such Loans (or any part thereof
in an amount not less than $500,000, or that is in an integral
multiple of $100,000 in excess thereof) into LIBOR Rate Loans;
or
(ii) elect, as of the last day of the applicable
Interest Period, to continue any LIBOR Rate Loans having
Interest Periods expiring on such day (or any part thereof in
an amount not less than $500,000, or that is in an integral
multiple of $100,000 in excess thereof);
LOAN AND SECURITY AGREEMENT - Page 48
56
provided, that if at any time the aggregate amount of LIBOR Rate Loans
in respect of any Borrowing is reduced, by payment, prepayment, or
conversion of part thereof to be less than $500,000, such LIBOR Rate
Loans shall automatically convert into Base Rate Loans, and on and
after such date the right of the Borrowers to continue such Loans as,
and convert such Loans into, LIBOR Rate Loans, as the case may be,
shall terminate.
(b) The Borrowers shall deliver a notice of
conversion/continuation ("Notice of Conversion/Continuation") to be
received by the Agent not later than 11:00 a.m. (Dallas, Texas time) at
least three (3) Business Days in advance of the Conversion/Continuation
Date, if the Loans are to be converted into or continued as LIBOR Rate
Loans and specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the aggregate amount of Loans to be converted or
renewed;
(iii) the type of Loans resulting from the proposed
conversion or continuation; and
(iv) the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable
to LIBOR Rate Loans, the Borrowers have failed to select timely a new
Interest Period to be applicable to LIBOR Rate Loans or if any Default
or Event of Default then exists, the Borrowers shall be deemed to have
elected to convert such LIBOR Rate Loans into Base Rate Loans effective
as of the expiration date of such Interest Period.
(d) The Agent will promptly notify each Lender of its receipt
of a Notice of Conversion/Continuation. All conversions and
continuations shall be made ratably according to the respective
outstanding principal amounts of the Loans with respect to which the
notice was given held by each Lender.
(e) During the existence of a Default or Event of Default, the
Borrowers may not elect to have a Loan converted into or continued as a
LIBOR Rate Loan.
(f) After giving effect to any conversion or continuation of
Loans, there may not be more than six (6) different Interest Periods in
effect hereunder.
Section 3.3 Maximum Interest Rate. If, in any month, any interest
rate, absent such limitation, would have exceeded the Maximum Rate, then the
interest rate for that month shall be the Maximum Rate, and, if in future
months, that interest rate would otherwise be less than the Maximum Rate, then
that interest rate shall remain at the Maximum Rate until such time as the
amount of interest paid hereunder equals the amount of interest which would have
been paid if the same had not been limited by the Maximum Rate. In the event
that, upon payment in full of the Obligations, the total amount of interest paid
or accrued under the terms of this Agreement is less than the total
LOAN AND SECURITY AGREEMENT - Page 49
57
amount of interest which would, but for this Section 3.3, have been paid or
accrued if the interest rates otherwise set forth in this Agreement had at all
times been in effect, then the Borrowers shall, to the extent permitted by
applicable law, pay the Agent, for the account of the Lenders, an amount equal
to the excess of (a) the lesser of (i) the amount of interest which would have
been charged if the Maximum Rate had, at all times, been in effect or (ii) the
amount of interest which would have accrued had the interest rates otherwise set
forth in this Agreement, at all times, been in effect over (b) the amount of
interest actually paid or accrued under this Agreement.
Section 3.4 Unused Line Fee. Until the Loans have been paid in full
and the Agreement terminated, the Borrowers agree to pay, on the first day of
each month and on the Termination Date, to the Agent, for the account of the
Lenders, in accordance with their respective Pro Rata Shares, an unused line fee
(the "Unused Line Fee") equal to the Unused Line Fee Percentage times the amount
by which the Maximum Revolver Amount exceeded the sum of the average daily
outstanding amount of Revolving Loans and the average daily undrawn face amount
of all outstanding Letters of Credit, during the immediately preceding month or
shorter period if calculated on the Termination Date. The Unused Line Fee shall
be computed on the basis of a 360-day year for the actual number of days
elapsed. All payments received by the Agent on account of Accounts or as
proceeds of other Collateral shall be deemed to be credited to the Borrowers'
Loan Account immediately upon receipt for purposes of calculating the Unused
Line Fee pursuant to this Section 3.4.
Section 3.5 Letter of Credit Fee. The Borrowers agree to pay to the
Agent, for the account of the Lenders, in accordance with their respective Pro
Rata Shares, for each Letter of Credit, a fee (the "Letter of Credit Fee") equal
to the Letter of Credit Fee Percentage per annum of the undrawn face amount of
each Letter of Credit, plus all out-of-pocket costs, fees and expenses incurred
by the Agent in connection with the application for, processing of, issuance of,
or amendment to any Letter of Credit, which costs, fees and expenses could
include a "fronting fee" payable to such issuer. The Letter of Credit Fee shall
be payable monthly in arrears on the first day of each month following any month
in which a Letter of Credit was issued and/or in which a Letter of Credit
remains outstanding. The Letter of Credit Fee shall be computed on the basis of
a 360-day year for the actual number of days elapsed.
Section 3.6 Other Fees. The Borrowers agree to pay all other fees and
expenses set forth in the certain letter agreement, dated as of the Closing Date
among the Agent, the Borrowers and the Parent.
Section 3.7 Interest Limitation. The Agent, the Lenders and the Loan
Parties each acknowledges, agrees and declares that it is its intention to
expressly comply with all Requirements of Law in respect of limitations on the
amount or rate of interest that can legally be contracted for, charged or
received under or in connection with the Loan Documents. Notwithstanding
anything to the contrary contained in any Loan Document (even if any such
provision expressly declares that it controls all other provision of the Loan
Documents), in no contingency or event whatsoever shall the amount of interest
(including the aggregate of all charges, fees, benefits or other compensation
which constitutes interest under any Requirement of Law) under the Loan
Documents paid by any Borrower, received by the Agent, the Letter of Credit
Issuer or any Lender, agreed to be paid by any Borrower, or requested or
demanded to be paid by the Agent, the Letter of Credit Issuer or any
LOAN AND SECURITY AGREEMENT - Page 50
58
Lender, exceed the Maximum Rate, and all provisions of the Loan Documents in
respect of the contracting for, charging, or receiving compensation for the use,
forbearance, or detention of money shall be limited as provided by this Section
3.7. In the event any such interest is paid to the Agent, the Letter of Credit
Issuer or any Lender by the Borrowers, or any of them, in an amount or at a rate
which would exceed the Maximum Rate, the Agent, the Letter of Credit Issuer or
such Lender, as the case may be, shall automatically apply such excess to any
unpaid amount of the Obligations other than interest, in inverse order of
maturity, or if the amount of such excess exceeds said unpaid amount, such
excess shall be paid to the paying Borrowers or Borrower, as applicable. All
interest paid, or agreed to be paid, by any Borrower, or taken, reserved or
received by the Agent, the Letter of Credit Issuer or any Lender, shall be
amortized, prorated, spread, and allocated in respect of the Obligations
throughout the full term of this Agreement. Notwithstanding any provision
contained in any of the Loan Documents, or in any other related documents
executed pursuant hereto, neither the Agent, the Letter of Credit Issuer nor any
Lender shall ever be entitled to charge, receive, take, reserve, collect, or
apply as interest any amount which, together with all other interest under the
Loan Documents would result in a rate of interest under the Loan Documents in
excess of the Maximum Rate and, in the event the Agent, the Letter of Credit
Issuer or any Lender ever charges, receives, takes, reserves, collects, or
applies any amount in respect of the Borrowers, or any of them, that otherwise
would, together with all other interest under the Loan Documents, be in excess
of the Maximum Rate, such amount shall automatically be deemed to be applied in
reduction of the unpaid principal balance of the Obligations and, if such
principal balance is paid in full, any remaining excess shall forthwith be paid
to the applicable Borrowers or Borrower. The Borrowers, the Agent, the Letter of
Credit Issuer and the Lenders shall, to the maximum extent permitted under any
Requirement of Law, (i) characterize any non-principal payment as a standby fee,
commitment fee, prepayment charge, delinquency charge, expense or reimbursement
for a third-party expense rather than as interest and (ii) exclude prepayments,
acceleration and the effect thereof. Nothing in any Loan Document shall be
construed or so operate as to require or obligate the Borrowers, or any of them,
to pay any interest, fees, costs, or charges greater than is permitted by any
Requirement of Law. Subject to the foregoing, the Borrowers hereby agree that
the actual effective rate of interest from time to time existing under the Loan
Documents, including all amounts agreed to by the Borrowers or charged or
received by the Agent, the Letter of Credit Issuer or the Lenders pursuant to
and in accordance with the Loan Documents, which may be deemed to be interest
under any Requirement of Law, shall be deemed to be a rate which is agreed to
and stipulated by the Borrowers and the Lenders in accordance with Requirements
of Law.
ARTICLE 4
PAYMENTS AND PREPAYMENTS
Section 4.1 Revolving Loans. The Borrowers shall repay the outstanding
principal balance of the Revolving Loans, plus all accrued but unpaid interest
thereon, on the Termination Date. The Borrowers may prepay Revolving Loans at
any time, and reborrow subject to the terms of this Agreement; provided,
however, that with respect to any LIBOR Revolving Loans prepaid prior to the
expiration date of the Interest Period applicable thereto, the Borrowers promise
to pay to the Agent for account of the Lenders the amounts described in Section
5.4. In addition, and without limiting the generality of the foregoing, upon
demand the Borrowers promise to pay to the Agent,
LOAN AND SECURITY AGREEMENT - Page 51
59
for account of the Lenders, the amount, without duplication, by which the
Aggregate Revolver Outstanding exceeds the Borrowing Base.
Section 4.2 Reduction of Commitments; Termination of Facility.
(a) The Borrowers may reduce the Maximum Revolver Amount to an
amount, not less than $40,000,000, as may be designated by the
Borrowers at any time effective upon thirty (30) days prior written
notice thereof to the Agent and the Lenders, provided, that (i) the
first of any such reductions shall be in an amount of at least
$5,000,000 and any such subsequent reduction shall be in an amount of
at least $1,000,000 or any integral multiple of $1,000,000 in excess
thereof and (ii) each such reduction shall be permanent. The Lenders
shall have no obligation at any time to increase the Maximum Revolver
Amount following any such reduction. No notice of reduction shall be
effective to reduce the Maximum Revolver Amount to an amount less than
$40,000,000.
(b) The Borrowers may terminate this Agreement upon at least
thirty (30) Business Days' notice to the Agent and the Lenders, upon
(a) the payment in full of all outstanding Revolving Loans, together
with accrued interest thereon, and the cancellation and return of all
outstanding Letters of Credit, (b) the payment of the early termination
fee set forth in the next sentence, (c) the payment in full in cash of
all other Obligations together with accrued interest thereon, and (d)
with respect to any LIBOR Rate Loans prepaid in connection with such
termination prior to the expiration date of the Interest Period
applicable thereto, the payment of the amounts described in Section
5.4. If this Agreement is terminated at any time prior to the Stated
Termination Date, whether pursuant to this Section or pursuant to
Section 11.2, the Loan Parties shall pay to the Agent, for the account
of the Lenders, an early termination fee determined in accordance with
the following table:
Period during which early termination occurs Early Termination Fee
-------------------------------------------- ---------------------
On or prior to the first Anniversary Date 0.75% of the average Loans and
Letters of Credit outstanding during
the 180 days (or lesser period if
within 180 days of the Closing Date)
prior to the date of termination.
After the first Anniversary Date but on 0.50% of the average Loans and
or prior to the second Anniversary Date Letters of Credit outstanding during
the 180 days prior to the date of
termination.
After the second Anniversary Date but 0.25% of the average Loans and
prior to the third Anniversary Date Letters of Credit outstanding during
the 180 days prior to the date of
termination.
LOAN AND SECURITY AGREEMENT - Page 52
60
Notwithstanding the foregoing, no such early termination fee shall be payable in
the event this Agreement is terminated at any time after the first Anniversary
Date in connection with refinancing the Obligations in a transaction in which
the Bank or any of its Affiliates is administrative agent and a lender.
Section 4.3 Reserved.
Section 4.4 Prepayments from Capex Reimbursements. An amount equal to
all Capex Reimbursements shall be paid to the Agent, promptly upon receipt
thereof, for application to the Obligations in such manner as the Agent shall
determine in its sole discretion.
Section 4.5 Prepayments from Asset Dispositions. All proceeds or other
cash payments received by any Loan Party or Restricted Subsidiary pursuant to
any transaction of merger, reorganization, consolidation, transfer, sale,
assignment, lease or other disposition allowed by clauses (a) and (c) through
(g) of Section 9.9, net of reasonable costs and expenses, shall be paid to the
Agent, promptly upon such receipt, for application to the Obligations in such
manner as the Agent shall determine in its sole discretion.
Section 4.6 Payments by the Borrower.
(a) All payments to be made by the Borrowers shall be made
without setoff, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Borrowers shall be made
to the Agent for the account of the Lenders at the Agent's address set
forth in Section 15.8, and shall be made in Dollars and in immediately
available funds, no later than 2:00 p.m. (Dallas, Texas time) on the
date specified herein. Any payment received by the Agent later than
2:00 p.m. (Dallas, Texas time) shall be deemed to have been received on
the following Business Day and any applicable interest or fee shall
continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other
than a Business Day, such payment shall be made on the following
Business Day, and such extension of time shall in such case be included
in the computation of interest or fees, as the case may be.
(c) Unless the Agent receives notice from the Borrowers prior
to the date on which any payment is due to the Lenders that the
Borrowers will not make such payment in full as and when required, the
Agent may assume that the Borrowers have made such payment in full to
the Agent on such date in immediately available funds and the Agent may
(but shall not be so required), in reliance upon such assumption,
distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrowers have
not made such payment in full to the Agent, each Lender shall repay to
the Agent on demand such amount distributed to such Lender, together
with interest thereon at the Federal Funds Rate for each day from the
date such amount is distributed to such Lender until the date repaid.
LOAN AND SECURITY AGREEMENT - Page 53
61
Section 4.7 Payments as Revolving Loans. All payments of principal,
interest, reimbursement obligations in connection with Letters of Credit, fees,
premiums and other sums payable hereunder, including all reimbursement for
expenses pursuant to Section 15.7, may, at the option of the Agent, in its sole
discretion, subject only to the terms of this Section 4.7, be paid from the
proceeds of Revolving Loans made hereunder, whether made following a request by
the Borrowers pursuant to Section 2.2 or a deemed request as provided in this
Section 4.7. The Borrowers hereby irrevocably authorize the Agent to charge the
Loan Account for the purpose of paying principal, interest, reimbursement
obligations in connection with Letters of Credit, fees, premiums and other sums
payable hereunder, including reimbursing expenses pursuant to Section 15.7, and
agrees that all such amounts charged shall constitute Revolving Loans (including
Non-Ratable Loans and Agent Advances) and that all such Revolving Loans so made
shall be deemed to have been requested by Borrowers pursuant to Section 2.2.
Section 4.8 Apportionment, Application and Reversal of Payments.
Aggregate principal and interest payments shall be apportioned ratably among the
Lenders (according to the unpaid principal balance of the Loans to which such
payments relate held by each Lender) and payments of the fees shall, as
applicable, be apportioned ratably among the Lenders. All payments shall be
remitted to the Agent and all such payments not relating to principal or
interest of specific Loans, or not constituting payment of specific fees, and
all proceeds of Accounts or other Collateral received by the Agent, shall be
applied, ratably, subject to the provisions of this Agreement, first, to pay any
fees, indemnities or expense reimbursements then due to the Agent from the
Borrowers; second, to pay any fees or expense reimbursements then due to the
Lenders from the Borrowers; third, to pay interest due in respect of all
Revolving Loans, including Non-Ratable Loans and Agent Advances; fourth, to pay
or prepay principal of the Non-Ratable Loans and Agent Advances; fifth, to pay
or prepay principal of the Revolving Loans (other than Non-Ratable Loans and
Agent Advances) and unpaid reimbursement obligations in respect of Letters of
Credit; sixth, to the payment of any other Obligation due to the Agent or any
Lender by the Borrowers; and seventh, to the payment of all Obligations, if any,
arising from or in connection with Bank Products. Notwithstanding anything to
the contrary contained in this Agreement, unless so directed by a Borrower, or
unless an Event of Default is outstanding, neither the Agent nor any Lender
shall apply any payments which it receives to any LIBOR Revolving Loan, except
(a) on the expiration date of the Interest Period applicable to any such LIBOR
Rate Loan, or (b) in the event, and only to the extent, that there are no
outstanding Base Rate Revolving Loans. The Agent shall promptly distribute to
each Lender, pursuant to the applicable wire transfer instructions received from
each Lender in writing, such funds as it may be entitled to receive, subject to
a Settlement delay as provided for in Section 2.2(j). The Agent and the Lenders
shall have the continuing and exclusive right to apply and reverse and reapply
any and all such proceeds and payments to any portion of the Obligations.
Section 4.9 Indemnity for Returned Payments. If after receipt of any
payment which is applied to the payment of all or any part of the Obligations,
the Agent or any Lender is for any reason compelled to surrender such payment or
proceeds to any Person because such payment or application of proceeds is
invalidated, declared fraudulent, set aside, determined to be void or voidable
as a preference, impermissible setoff, or a diversion of trust funds, or for any
other reason, then the Obligations or part thereof intended to be satisfied
shall be revived and continued and this Agreement shall continue in full force
as if such payment or proceeds had not been received by the Agent or such
LOAN AND SECURITY AGREEMENT - Page 54
62
Lender and the Loan Parties shall be liable to pay to the Agent and the Lenders,
and each Loan Party hereby does indemnify the Agent and the Lenders and hold the
Agent and the Lenders harmless for the amount of such payment or proceeds
surrendered. The provisions of this Section 4.9 shall be and remain effective
notwithstanding any contrary action which may have been taken by the Agent or
any Lender in reliance upon such payment or application of proceeds, and any
such contrary action so taken shall be without prejudice to the Agent's and the
Lenders' rights under this Agreement and shall be deemed to have been
conditioned upon such payment or application of proceeds having become final and
irrevocable. The provisions of this Section 4.9 shall survive the termination of
this Agreement.
Section 4.10 The Agent's and the Lenders' Books and Records; Monthly
Statements. The Loan Parties agree that the Agent's and each Lender's books and
records showing the Obligations and the transactions pursuant to this Agreement
and the other Loan Documents shall be admissible in any action or proceeding
arising therefrom, and shall constitute rebuttably presumptive proof thereof,
irrespective of whether any Obligation is also evidenced by a promissory note or
other instrument. The Agent will provide to the Borrowers a monthly statement of
Loans, payments, and other transactions pursuant to this Agreement. Such
statement shall be deemed correct, accurate, and binding on the Borrowers and an
account stated (except for reversals and reapplications of payments made as
provided in Section 4.8 and corrections of errors discovered by the Agent),
unless a Borrower notifies the Agent in writing to the contrary within thirty
(30) days after such statement is rendered. In the event a timely written notice
of objections is given by a Borrower, only the items to which exception is
expressly made will be considered to be disputed.
ARTICLE 5
TAXES, YIELD PROTECTION AND ILLEGALITY
Section 5.1 Taxes.
(a) Any and all payments by or on behalf of the Borrowers, or
any of them, to each Lender or the Agent under this Agreement and any
other Loan Document shall be made free and clear of, and without
deduction or withholding for any Taxes. In addition, the Borrowers
shall pay all Other Taxes.
(b) The Borrowers agree to indemnify and hold harmless each
Lender and the Agent for the full amount of Taxes or Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section) paid by the Lender or the Agent and
any liability (including penalties, interest, additions to tax and
expenses) arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted. Payment
under this indemnification shall be made within 30 days after the date
the Lender or the Agent makes written demand therefor.
(c) If the Borrowers shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Lender or the Agent, then:
LOAN AND SECURITY AGREEMENT - Page 55
63
(i) the sum payable shall be increased as necessary
so that after making all required deductions and withholdings
(including deductions and withholdings applicable to
additional sums payable under this Section) such Lender or the
Agent, as the case may be, receives an amount equal to the sum
it would have received had no such deductions or withholdings
been made;
(ii) the Borrowers shall make such deductions and
withholdings;
(iii) the Borrowers shall pay the full amount
deducted or withheld to the relevant taxing authority or other
authority in accordance with applicable law; and
(iv) the Borrowers shall also pay to each Lender or
the Agent for the account of such Lender, at the time interest
is paid, all additional amounts which the respective Lender
specifies as necessary to preserve the after-tax yield the
Lender would have received if such Taxes or Other Taxes had
not been imposed.
(d) Within 30 days after the date of any payment by the
Borrowers of Taxes or Other Taxes, the Borrowers shall furnish the
Agent the original or a certified copy of a receipt evidencing payment
thereof, or other evidence of payment satisfactory to the Agent.
(e) If the Borrowers are required to pay additional amounts to
any Lender or the Agent pursuant to subsection (c) of this Section,
then such Lender shall use reasonable efforts (consistent with legal
and regulatory restrictions) to change the jurisdiction of its lending
office so as to eliminate any such additional payment by the Borrowers
which may thereafter accrue, if such change in the judgment of such
Lender is not otherwise disadvantageous to such Lender.
Section 5.2 Illegality.
(a) If any Lender determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for any Lender or its applicable lending
office to make LIBOR Rate Loans, then, on notice thereof by the Lender
to the Borrowers through the Agent, any obligation of that Lender to
make LIBOR Rate Loans shall be suspended until the Lender notifies the
Agent and the Borrowers that the circumstances giving rise to such
determination no longer exist.
(b) If a Lender determines that it is unlawful to maintain any
LIBOR Rate Loan, the Borrowers shall, upon receipt of notice of such
fact and demand from such Lender (with a copy to the Agent), prepay in
full such LIBOR Rate Loans of that Lender then outstanding, together
with interest accrued thereon and amounts required under Section 5.4,
either on the last day of the Interest Period thereof, if the Lender
may lawfully continue to maintain such LIBOR Rate Loans to such day, or
immediately, if the Lender may not lawfully continue to
LOAN AND SECURITY AGREEMENT - Page 56
64
maintain such LIBOR Rate Loan. If the Borrowers are required to so
prepay any LIBOR Rate Loans, then concurrently with such prepayment,
the Borrowers shall borrow from the affected Lender, in the amount of
such repayment, a Base Rate Loan.
Section 5.3 Increased Costs and Reduction of Return.
(a) If any Lender determines that due to either (i) the
introduction of or any change in the interpretation of any law or
regulation or (ii) the compliance by that Lender with any guideline or
request from any central bank or other Governmental Authority (whether
or not having the force of law), there shall be any increase in the
cost to such Lender of agreeing to make or making, funding or
maintaining any LIBOR Rate Loans, then the Borrowers shall be liable
for, and shall from time to time, upon demand (with a copy of such
demand to be sent to the Agent), pay to the Agent for the account of
such Lender, additional amounts as are sufficient to compensate such
Lender for such increased costs.
(b) If any Lender shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any
Capital Adequacy Regulation, (iii) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central bank
or other Governmental Authority charged with the interpretation or
administration thereof, or (iv) compliance by the Lender or any
corporation or other entity controlling the Lender with any Capital
Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by the Lender or any corporation
or other entity controlling the Lender and (taking into consideration
such Lender's or such corporation's or other entity's policies with
respect to capital adequacy and such Lender's desired return on
capital) determines that the amount of such capital is increased as a
consequence of its Commitments, loans, credits or obligations under
this Agreement, then, upon demand of such Lender to the Borrowers
through the Agent, the Borrowers shall pay to the Lender, from time to
time as specified by the Lender, additional amounts sufficient to
compensate the Lender for such increase.
Section 5.4 Funding Losses. The Borrowers shall reimburse each Lender
and hold each Lender harmless from any loss or expense which the Lender may
sustain or incur as a consequence of:
(a) the failure of the Borrowers to make on a timely basis any
payment of principal of any LIBOR Rate Loan;
(b) the failure of the Borrowers to borrow, continue or
convert a Loan after the Borrowers have given (or are deemed to have
given) a Notice of Borrowing or a Notice of Conversion/ Continuation;
(c) the prepayment or other payment (including after
acceleration thereof) of any LIBOR Rate Loan on a day that is not the
last day of the relevant Interest Period;
LOAN AND SECURITY AGREEMENT - Page 57
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including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its LIBOR Rate Loans or from fees payable to
terminate the deposits from which such funds were obtained.
Section 5.5 Inability to Determine Rates. If the Agent determines that
for any reason adequate and reasonable means do not exist for determining the
LIBOR Rate for any requested Interest Period with respect to a proposed LIBOR
Rate Loan, or that the LIBOR Rate for any requested Interest Period with respect
to a proposed LIBOR Rate Loan does not adequately and fairly reflect the cost to
the Lenders of funding such Loan, the Agent will promptly so notify the
Borrowers and each Lender. Thereafter, the obligation of the Lenders to make or
maintain LIBOR Rate Loans hereunder shall be suspended until the Agent revokes
such notice in writing. Upon receipt of such notice, the Borrowers may revoke
any Notice of Borrowing or Notice of Conversion/Continuation then submitted by
it. If the Borrowers do not revoke such Notice, the Lenders shall make, convert
or continue the Loans, as proposed by the Borrowers, in the amount specified in
the applicable notice submitted by the Borrowers, but such Loans shall be made,
converted or continued as Base Rate Loans instead of LIBOR Rate Loans.
Section 5.6 Certificates of Lenders. Any Lender claiming reimbursement
or compensation under this Article 5 shall deliver to the Borrowers (with a copy
to the Agent) a certificate setting forth in reasonable detail the amount
payable to the Lender hereunder and such certificate shall be conclusive and
binding on the Borrowers in the absence of manifest error.
Section 5.7 Survival. The agreements and obligations of the Borrower
in this Article 5 shall survive the payment of all other Obligations.
Section 5.8 Replacement of Affected Lender. Within thirty (30) days
after receipt by the Borrowers of written notice and demand from any Lender for
any payment under the terms of Section 5.1 or Section 5.3 then, subject to this
Section 5.8, the Borrowers may, at their option, notify the Agent and such
Lender (the "Affected Lender") of their intention to obtain, at the Borrowers'
sole expense, a replacement Lender ("Replacement Lender") to purchase the
Affected Lender's Revolving Loans and its obligations under the Loan Documents.
Subject to this Section 5.8, the Borrowers shall, within thirty (30) days
following the delivery of such notice from the Borrowers, cause the Replacement
Lender to purchase (and the Affected Lender hereby agrees to sell and convey to
such Replacement Lender) the Revolving Loans of the Affected Lender and assume
the Affected Lender's Commitment and obligations hereunder in accordance with
the terms of an Assignment and Acceptance for cash in an aggregate amount equal
to the aggregate unpaid principal of the Revolving Loans held by such Affected
Lender, all unpaid interest and fees accrued thereon or with respect thereto,
and all other Obligations owed to such Affected Lender, including amounts owed
under Section 5.1 or Section 5.3 (but excluding any amount pursuant to Section
4.2). Notwithstanding the foregoing, the (a) Borrowers shall continue to be
obligated to pay to the Affected Lender in full all amounts then demanded and
due under Section 5.1 or Section 5.3 in accordance with the terms of this
Agreement, (b) neither the Agent nor any Lender shall have any obligation to
find a Replacement Lender, (c) the Replacement Lender must be acceptable to the
Agent in its reasonable discretion and (d) the Bank may not be replaced under
this Section 5.8 without its consent.
LOAN AND SECURITY AGREEMENT - Page 58
66
ARTICLE 6
COLLATERAL
Section 6.1 Grant of Security Interest.
(a) As security for all Obligations (excluding Existing
Obligations in the case of property owned by a Newly Obligated Party),
each Loan Party hereby grants to the Agent, for the benefit of the
Agent and the Lenders, a continuing security interest in, lien on,
assignment of and right of setoff against, all of the following
property and assets of such Loan Party, whether now owned or existing
or hereafter acquired or arising, regardless of where located:
(i) all Accounts (including any credit enhancement
therefor);
(ii) all Inventory;
(iii) all contract rights (excluding any contract
rights which are expressly included within the Rig 75
Property), letters of credit, chattel paper, instruments,
notes, documents, and documents of title;
(iv) all General Intangibles (excluding any General
Intangibles which are expressly included within the Rig 75
Property);
(v) all Rig Equipment;
(vi) all Investment Property, excluding (i)
Investment Property listed in Part I (but only such Part I) of
Schedule 8.31 as of the Closing Date and (ii) Capital Stock
issued by Unrestricted Subsidiaries; provided, that with
respect to any Foreign Subsidiary directly owned by a Loan
Party, the amount of Capital Stock of such Foreign Subsidiary
included in the Collateral shall be limited to 65% of the
issued and outstanding Capital Stock of such Foreign
Subsidiary;
(vii) all money, cash, cash equivalents, securities
and other property of any kind of such Loan Party held
directly or indirectly by the Agent or any Lender;
(viii) all of such Loan Party's deposit accounts,
credits, and balances with and other claims against the Agent
or any Lender or any of their Affiliates or any other
financial institution with which such Loan Party maintains
deposits, including any Payment Accounts;
(ix) all books, records and other property related to
or referring to any of the foregoing, including books,
records, account ledgers, data processing records, computer
software and other property and General Intangibles at any
time evidencing or relating to any of the foregoing; and
LOAN AND SECURITY AGREEMENT - Page 59
67
(x) all accessions to, substitutions for and
replacements, products and proceeds of any of the foregoing,
including, but not limited to, proceeds of any insurance
policies, claims against third parties, and condemnation or
requisition payments with respect to all or any of the
foregoing;
All of the property enumerated in this Section 6.1(a), together with
all other property of such Loan Party in which the Agent or any Lender
may at any time be granted a Lien, is herein collectively referred to
as the "Collateral."
(b) All of the Obligations (excluding Existing Obligations in
the case of property owned by a Newly Obligated party) shall be secured
by all of the Collateral. Each Loan Party that is a Borrower
acknowledges and expressly agrees with the Agent and each Lender that
the grant by such Borrower of the Agent's Lien in the Collateral of
such Borrower as security for Obligations of the other Loan Parties is
required solely as a condition to, and is given solely as inducement
for and in consideration of, credit or accommodations extended or to be
extended under the Loan Documents to any or all of the other Loan
Parties and is not required or given as a condition of extensions of
credit to such Borrower.
Section 6.2 Perfection and Protection of Security Interest.
(a) Each Loan Party shall, at its expense, perform all steps
requested by the Agent at any time to perfect, maintain, protect, and
enforce the Agent's Liens, including: (i) executing and filing
financing or continuation statements, and amendments thereof, in form
and substance satisfactory to the Agent; (ii) executing and delivering
the Maritime Security Documents; (iii) delivering to the Agent the
originals of all instruments, documents, and chattel paper, and all
other Collateral of which the Agent determines it should have physical
possession in order to perfect and protect the Agent's security
interest therein, duly pledged, endorsed or assigned to the Agent
without restriction; (iv) delivering to the Agent warehouse receipts
covering any portion of the Collateral located in warehouses and for
which warehouse receipts are issued and certificates of title covering
any portion of the collateral for which certificates of title have been
issued; (v) when an Event of Default exists, transferring Inventory to
warehouses or other locations designated by the Agent; (vi) placing
notations on its books of account to disclose the Agent's security
interest; (vii) delivering to the Agent all letters of credit on which
it is named beneficiary; and (viii) taking such other steps as are
deemed necessary or desirable by the Agent to maintain and protect the
Agent's Liens. To the extent permitted by applicable law, the Agent may
file, without any Loan Party's signature, one or more financing
statements disclosing the Agent's Liens. Each Loan Party agrees that a
carbon, photographic, photostatic, or other reproduction of this
Agreement or of a financing statement is sufficient as a financing
statement.
(b) If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any Loan Party's agents or
processors, then such Loan Party shall notify the Agent thereof and
shall, at the request of the Agent, notify such Person of the Agent's
security interest in such Collateral and instruct such Person to hold
all such Collateral
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for the Agent's account subject to the Agent's instructions. If at any
time any Collateral is located on any operating facility of a Loan
Party which is not owned by such Loan Party, then such Loan Party
shall, at the request of the Agent, obtain written subordinations, in
form and substance satisfactory to the Agent, of all present and future
Liens to which the owner or lessor of such premises may be entitled to
assert against the Collateral.
(c) From time to time, each Loan Party shall, upon the Agent's
request, execute and deliver confirmatory written instruments pledging
to the Agent, for the ratable benefit of the Agent and the Lenders, the
Collateral with respect to such Loan Party, but the failure to do so
shall not affect or limit any security interest or any other rights of
the Agent or any Lender in and to the Collateral with respect to such
Loan Party. So long as this Agreement is in effect and until all
Obligations have been fully satisfied, the Agent's Liens shall continue
in full force and effect in all Collateral (whether or not deemed
eligible for the purpose of calculating the Availability or as the
basis for any advance, loan, extension of credit, or other financial
accommodation).
(d) To the extent any Loan Party is or becomes the issuer of
any Investment Property that is Collateral, each such Loan Party (in
such capacity, an "Issuer") agrees as follows with respect to such
Investment Property:
(i) All such Investment Property issued by such
Issuer, all warrants, and all non-cash dividends and other
non-cash distributions in respect thereof at any time
registered in the name of, or otherwise deliverable to, any
Loan Party, shall be delivered directly to the Agent, for the
account of such Loan Party, at the Agent's address for notices
set forth in Section 15.8.
(ii) Such Issuer will not acknowledge any transfer or
encumbrance in respect of such Investment Property to or in
favor of any Person other than the Agent or a Person
designated by the Agent in writing.
(iii) With respect to any of such Investment Property
at any time constituting an uncertificated security as defined
by the UCC, the Issuer will comply with instructions
originated by the Agent without further consent by the
registered owner thereof.
Section 6.3 Location of Collateral. Each Loan Party represents and
warrants to the Agent and the Lenders that: Schedule 6.3 is a correct and
complete list of such Loan Party's chief executive office, the location of its
books and records, the locations of the Collateral which is located within the
United States (other than Rig Materials and Supplies which in the ordinary
course of business are located at drilling locations) and the locations of all
of its other places of business. Each Loan Party covenants and agrees that it
will not (i) maintain any Collateral at any location other than those locations
listed for such Loan Party on Schedule 6.3 (other than Rig Materials and
Supplies which in the ordinary course of business are located at drilling
locations), (ii) otherwise change or add to any of such locations or (iii)
change the location of its chief executive office from the location identified
in Schedule 6.3, unless it gives the Agent at least thirty (30) days' prior
written notice
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thereof and executes any and all financing statements and other documents that
the Agent requests in connection therewith. Without limiting the foregoing, each
Loan Party represents that all of its Inventory (other than Inventory in
transit) is, and covenants that all of its Inventory will be, located either (a)
on premises owned by such Loan Party, (b) on premises leased by such Loan Party
provided that the Agent has, if requested by the Agent in its sole discretion,
received an executed landlord waiver from the landlord of such premises in form
and substance satisfactory to the Agent, (c) in a warehouse or with a bailee,
provided that the Agent has, if requested by the Agent in its sole discretion,
received an executed bailee letter from the applicable Person in form and
substance satisfactory to the Agent or (d) on site at drilling locations in the
ordinary course of business.
Section 6.4 Title to, Liens on, and Sale and Use of Collateral. Each
Loan Party represents and warrants to the Agent and the Lenders and agrees with
the Agent and the Lenders that: (a) all of the Collateral is and will continue
to be owned by such Loan Party free and clear of all Liens whatsoever, except
for Permitted Liens; (b) the Agent's Liens in the Collateral will not be subject
to any prior Lien; (c) such Loan Party will use, store, and maintain the
Collateral with all reasonable care and will use such Collateral for lawful
purposes only; and (d) such Loan Party will not, without the Agent's prior
written approval, sell, or dispose of or permit the sale or disposition of any
of the Collateral except for sales of Inventory in the ordinary course of
business and sales of Equipment as permitted by Section 6.11. The inclusion of
proceeds in the Collateral shall not be deemed to constitute the Agent's or any
Lender's consent to any sale or other disposition of the Collateral except as
expressly permitted herein.
Section 6.5 Appraisals. Whenever a Default or Event of Default exists,
and at such other times not more frequently than one time per calendar year as
the Agent requests, the Loan Parties shall, at their expense and upon the
Agent's request, provide the Agent with appraisals or updates thereof of any or
all of the Collateral from an appraiser, and prepared on a basis, satisfactory
to the Agent, such appraisals and updates to include, without limitation,
information required by applicable law and regulation and by the internal
policies of the Lenders.
Section 6.6 Access and Examination; Confidentiality.
(a) The Agent, accompanied by any Lender which so elects, may
at all reasonable times during regular business hours (and at any time
when a Default or Event of Default exists and is continuing) have
access to, examine, audit, make extracts from or copies of and inspect
any or all of the Loan Parties' records, files, and books of account
and the Collateral, and discuss the Loan Parties' affairs with the Loan
Parties' officers and management. The Loan Parties will deliver to the
Agent any instrument necessary for the Agent to obtain records from any
service bureau maintaining records for the Loan Parties. The Agent may,
and at the direction of the Majority Lenders shall, at any time when a
Default or Event of Default exists, and at the Loan Parties' expense,
make copies of all of the Loan Parties' books and records, or require
the Loan Parties to deliver such copies to the Agent. The Agent may,
without expense to the Agent, use such of the Loan Parties' respective
personnel, supplies, and premises as may be reasonably necessary for
maintaining or enforcing the Agent's Liens. The Agent shall have the
right, at any time, in the Agent's name or in the name of a nominee of
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the Agent, to verify the validity, amount or any other matter relating
to the Accounts, Inventory, or other Collateral, by mail, telephone, or
otherwise.
(b) The Loan Parties agree that, subject to their prior
consent for uses other than in a traditional tombstone, which consent
shall not be unreasonably withheld or delayed, the Agent and each
Lender may use any Parent's name in advertising and promotional
material and in conjunction therewith disclose the general terms of
this Agreement. The Agent and each Lender severally agree to take
normal and reasonable precautions and exercise due care to maintain the
confidentiality of all information identified as "confidential" or
"secret" by any Loan Party and provided to the Agent or such Lender by
or on behalf of such Loan Party, under this Agreement or any other Loan
Document, except to the extent that such information (i) was or becomes
generally available to the public other than as a result of disclosure
by the Agent or such Lender, or (ii) was or becomes available on a
nonconfidential basis from a source other than the Loan Parties,
provided that such source is not bound by a confidentiality agreement
with the Loan Parties known to the Agent or such Lender; provided,
however, that the Agent and any Lender may disclose such information
(1) at the request or pursuant to any requirement of any Governmental
Authority to which the Agent or such Lender is subject or in connection
with an examination of the Agent or such Lender by any such
Governmental Authority; (2) pursuant to subpoena or other court
process; (3) when required to do so in accordance with the provisions
of any applicable Requirement of Law; (4) to the extent reasonably
required in connection with any litigation or proceeding (including,
but not limited to, any bankruptcy proceeding) to which the Agent, any
Lender or their respective Affiliates may be party; (5) to the extent
reasonably required in connection with the exercise of any remedy
hereunder or under any other Loan Document; (6) to the Agent's or such
Lender's independent auditors, accountants, attorneys and other
professional advisors; (7) to any prospective Participant or Assignee
under any Assignment and Acceptance, actual or potential, provided that
such prospective Participant or Assignee agrees to keep such
information confidential to the same extent required of the Agent and
the Lenders hereunder; (8) as expressly permitted under the terms of
any other document or agreement regarding confidentiality to which any
Loan Party is party or is deemed party with the Agent or such Lender,
and (9) to its Affiliates.
Section 6.7 Collateral Reporting. The Loan Parties shall provide, or
cause to be provided, to the Agent the following documents at the following
times in form satisfactory to the Agent: (a) on or before the 20th day following
the last day of each calendar month, or more frequently if requested by the
Agent or if Borrower elects in order to recalculate Availability, a schedule of
the Borrower's Accounts created since the last such schedule and a Borrowing
Base Certificate; (b) on a monthly basis, or more frequently if requested by the
Agent, an aging of the Borrower's Accounts, together with a reconciliation to
the previous month's aging of such Borrower's Accounts and to its general
ledger; (c) on a monthly basis, or more frequently if requested by the Agent, an
aging of each Borrower's accounts payable; (d) on a monthly basis, Inventory
reports by category, separately stating the Book Value of Rig Materials and
Supplies as of the last day of the preceding calendar month (or, if requested by
the Agent, more frequently and prepared as of any other day of a calendar month,
to the extent such reports reasonably can be made available by the Loan
Parties); (e) on a monthly basis, a Rig Report as of the last day of the
preceding calendar month, (f) on or before the
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20th day following the last day of each fiscal quarter of each Fiscal Year, a
Drilling Contract Report, (g) upon request, copies of invoices in connection
with each Borrower's Accounts, customer statements, credit memos, remittance
advices and reports, deposit slips, shipping and delivery documents in
connection with each Borrower's Accounts; (h) such other reports as to the
Collateral as the Agent shall reasonably request from time to time; and (i) with
the delivery of each of the foregoing, a certificate of the Loan Parties
executed by an officer thereof certifying as to the accuracy and completeness of
the foregoing. If any of the Loan Parties' records or reports of the Collateral
are prepared by an accounting service or other agent, each Loan Party hereby
authorizes such service or agent to deliver such records, reports, and related
documents to the Agent, for distribution to the Lenders. Each of the items
required on a monthly basis by clauses (b) through (e) preceding shall be
delivered to the Agent not later than 20 days after the last day of each
calendar month. The Borrowers represent and warrant that no Foreign Currency
Reimbursements are included in any Borrowing Base Certificate or otherwise
reported to the Agent as being included in the Borrowing Base.
Section 6.8 Accounts. Each Loan Party covenants, agrees, represents
and warrants, as to itself, as follows:
(a) With respect to such Loan Parties' Accounts: (i) each
existing Account represents, and each future Account will represent, a
bona fide sale or lease and delivery of goods by the Loan Party, or
rendition of services by the Loan Party, in the ordinary course of the
Loan Party's business; (ii) each existing Account is, and each future
Account will be, for a liquidated amount payable by the Account Debtor
thereon on the terms set forth in the invoice therefor or in the
schedule thereof delivered to the Agent, without any offset, deduction,
defense, or counterclaim except those known to the Loan Party and
disclosed to the Agent and the Lenders pursuant to this Agreement;
(iii) no payment will be received with respect to any Account, and no
credit, discount, or extension, or agreement therefor will be granted
on any Account, except as reported to the Agent and the Lenders in
accordance with this Agreement; (iv) each copy of an invoice delivered
to the Agent by the Loan Party will be a genuine copy of the original
invoice sent to the Account Debtor named therein; and (v) all goods
described in any invoice representing a sale of goods will have been
delivered to the Account Debtor and all services of the Loan Party
described in each invoice will have been performed.
(b) The Loan Party shall not redate any invoice or sale or
make sales on extended dating beyond that customary in the Loan Party's
business or extend or modify any Account. If the Loan Party becomes
aware of any matter adversely affecting the collectibility of any
Account or Account Debtor involving an amount greater than $500,000,
including information regarding the Account Debtor's creditworthiness,
the Loan Party will promptly so advise the Agent.
(c) The Loan Party shall not accept any note or other
instrument (except a check or other instrument for the immediate
payment of money) with respect to any Account without the Agent's
written consent. If the Agent consents to the acceptance of any such
instrument, it shall be considered as evidence of the Account and not
payment thereof and the
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Loan Party will promptly deliver such instrument to the Agent, endorsed
by the Loan Party to the Agent in a manner satisfactory in form and
substance to the Agent. Regardless of the form of presentment, demand,
notice of protest with respect thereto, the Loan Party shall remain
liable thereon until such instrument is paid in full.
(d) The Loan Party shall notify the Agent promptly of all
disputes and claims in excess of $500,000 with any Account Debtor, and
agrees to settle, contest, or adjust such dispute or claim at no
expense to the Agent or any Lender. No discount, credit or allowance
shall be granted to any such Account Debtor without the Agent's prior
written consent, except for discounts, credits and allowances made or
given in the ordinary course of the Loan Party's business when no Event
of Default exists hereunder. The Agent may, and at the direction of the
Majority Lenders shall, at all times when an Event of Default exists
hereunder, settle or adjust disputes and claims directly with Account
Debtors of any Loan Party for amounts and upon terms which the Agent or
the Majority Lenders, as applicable, shall consider advisable and, in
all cases with respect to a Borrower, the Agent will credit the
Borrowers' Loan Account with only the net amounts received by the Agent
in payment of any Accounts.
(e) If an Account Debtor returns any Inventory to the Loan
Party when no Event of Default exists, then the Loan Party shall
promptly determine the reason for such return and shall issue a credit
memorandum to the Account Debtor in the appropriate amount. In the
event any Account Debtor returns Inventory to the Loan Party when an
Event of Default exists, the Loan Party, upon request of the Agent,
shall: (i) hold the returned Inventory in trust for the Agent; (ii)
segregate all returned Inventory from all of its other property; (iii)
dispose of the returned Inventory solely according to the Agent's
written instructions; and (iv) not issue any credits or allowances with
respect thereto without the Agent's prior written consent. All returned
Inventory shall be subject to the Agent's Liens thereon. Whenever any
Inventory is returned, the related Account shall be deemed ineligible
to the extent of the amount owing by the Account Debtor with respect to
such returned Inventory.
Section 6.9 Collection of Accounts; Payments.
(a) Until the Agent notifies the Loan Parties to the contrary,
the Loan Parties shall make collection of all Accounts and other
Collateral for the Agent, shall receive all payments as the Agent's
trustee, and shall immediately deliver all payments in their original
form duly endorsed in blank into a Payment Account established for the
account of the Loan Parties at a Clearing Bank acceptable to the Agent,
subject to a Blocked Account Agreement. If the Agent requests, the Loan
Parties shall establish a lock-box service for collections of Accounts
at a Clearing Bank acceptable to the Agent and subject to a Blocked
Account Agreement and other documentation acceptable to the Agent. If
such lock-box service is established, the Loan Parties shall instruct
all Account Debtors to make all payments directly to the address
established for such service. If, notwithstanding such instructions,
any Loan Party receives any proceeds of Accounts, it shall receive such
payments as the Agent's trustee, and shall immediately deliver such
payments to the Agent in their original form duly endorsed in blank or
deposit them into a Payment Account, as the Agent may direct. All
collections received
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in any lock-box or Payment Account or directly by any Loan Party or the
Agent, and all funds in any Payment Account or other account to which
such collections are deposited shall be subject to the Agent's sole
control and withdrawals by any Loan Party shall not be permitted.
Notwithstanding the foregoing, unless and until the Loan Parties are
notified by the Agent to the contrary, the Borrowers may retain
payments of Foreign Currency Reimbursements for use in the ordinary
course of business. The Agent or the Agent's designee may, at any time
after the occurrence of an Event of Default, notify Account Debtors
that the Accounts have been assigned to the Agent and of the Agent's
security interest therein, and may collect them directly and charge the
collection costs and expenses to the Loan Account as a Revolving Loan.
So long as an Event of Default has occurred and is continuing, the Loan
Parties, at the Agent's request, shall execute and deliver to the Agent
such documents as the Agent shall require to grant the Agent access to
any post office box in which collections of Accounts are received.
(b) If sales of Inventory are made or services are rendered by
any Loan Party for cash, such Loan Party shall immediately deliver, or
cause to be delivered to the Agent or deposit into a Payment Account
the cash which such Loan Party receives.
(c) All payments, including immediately available funds
received by the Agent at a bank designated by it, whether or not
received by the Agent on account of Accounts or as proceeds of other
Collateral will be the Agent's sole property for its benefit and the
benefit of the Lenders and will be credited to the Loan Account
(conditional upon final collection) after allowing one (1) Business Day
for collection; provided, however, that such payments shall be deemed
to be credited to the Loan Account immediately upon receipt for
purposes of (i) determining Availability, (ii) calculating the Unused
Line Fee pursuant to Section 3.4, and (iii) calculating the amount of
interest accrued thereon solely for purposes of determining the amount
of interest to be distributed by the Agent to the Lenders (but not the
amount of interest payable by the Borrowers).
(d) In the event all of the Obligations are repaid upon the
termination of this Agreement or upon acceleration of the Obligations,
other than through the Agent's receipt of payments on account of the
Accounts or proceeds of the other Collateral, such payment will be
credited (conditional upon final collection) to the Borrowers' Loan
Account one (1) Business Day after the Agent's receipt of such funds.
Section 6.10 Inventory. Each Loan Party represents and warrants to the
Agent and the Lenders and agrees with the Agent and the Lenders that all of the
Inventory owned by such Loan Party is and will be held for use and consumption
in connection with the rendition of services in the ordinary course of such Loan
Party's business, and is and will be fit for such purposes. Each Loan Party will
keep its Inventory in good and usable condition, at its own expense. The Loan
Parties will conduct a physical count of the Inventory at least once per Fiscal
Year, and after and during the continuation of an Event of Default, at such
other times as the Agent requests. The Loan Parties will not, without the
Agent's written consent, sell any Inventory on a xxxx-and-hold, guaranteed sale,
sale and return, sale on approval, consignment, or other repurchase or return
basis.
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Section 6.11 Rig Equipment.
(a) Each Loan Party represents and warrants to the Agent and
the Lenders and agrees with the Agent and the Lenders that all of the
Rig Equipment owned by such Loan Party is and will be used or held for
use in such Loan Party's business, and is and will be fit for such
purposes. Each Loan Party shall keep and maintain its Rig Equipment in
good operating condition and repair (ordinary wear and tear excepted)
and shall make all necessary replacements thereof.
(b) The Loan Parties shall not permit any Rig Equipment to
become a fixture with respect to real property or to become an
accession with respect to other personal property with respect to which
real or personal property the Agent does not have a Lien. The Loan
Parties will not, without the Agent's prior written consent, alter or
remove any identifying symbol or number on any Rig Equipment consisting
of Collateral.
(c) The Loan Parties shall not, without the Agent's prior
written consent, sell, lease as a lessor, or otherwise dispose of any
Rig Equipment.
Section 6.12 Reserved.
Section 6.13 Documents, Instruments, and Chattel Paper. Each Loan
Party represents and warrants to the Agent and the Lenders that (a) all
documents, instruments, and chattel paper of such Loan Party describing,
evidencing, or constituting Collateral, and all signatures and endorsements
thereon, are and will be complete, valid, and genuine, and (b) all goods
evidenced by such documents, instruments, and chattel paper are and will be
owned by such Loan Party, free and clear of all Liens other than Permitted
Liens.
Section 6.14 Right to Cure. The Agent may, in its discretion, and
shall, at the direction of the Majority Lenders, pay any amount or do any act
required of any Loan Party hereunder or under any other Loan Document in order
to preserve, protect, maintain or enforce the Obligations, the Collateral or the
Agent's Liens therein, and which any Loan Party fails to pay or do, including
payment of any judgment against any Loan Party, any insurance premium, any
warehouse charge, any finishing or processing charge, any landlord's or bailee's
claim, and any other Lien upon or with respect to the Collateral. All payments
that the Agent makes under this Section 6.14 and all out-of-pocket costs and
expenses that the Agent pays or incurs in connection with any action taken by it
hereunder shall be charged to the Borrowers' Loan Account as a Revolving Loan.
Any payment made or other action taken by the Agent under this Section 6.14
shall be without prejudice to any right to assert an Event of Default hereunder
and to proceed thereafter as herein provided.
Section 6.15 Power of Attorney. Each Loan Party, as to itself, hereby
appoints the Agent and the Agent's designee as its attorney, with power: (a) to
endorse such Loan Party's name on any checks, notes, acceptances, money orders,
or other forms of payment or security that come into the Agent's or any Lender's
possession; (b) in connection with the Collateral, to sign such Loan Party's
name on any financing statements and other public records and to file any such
financing statements by electronic means with or without a signature as
authorized or required by applicable law or filing
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procedure; (c) so long as any Event of Default has occurred and is continuing,
to sign such Loan Party's name on any invoice, xxxx of lading, warehouse receipt
or other document of title relating to any Collateral, on drafts against
customers, on assignments of Accounts or on notices of assignment, and to notify
the post office authorities to change the address for delivery of such Loan
Party's mail to an address designated by the Agent and to receive, open and
dispose of all mail addressed to such Loan Party; (d) to send requests for
verification of Accounts to customers or Account Debtors; (e) to clear Inventory
through customs in such Loan Party's name, the Agent's name or the name of the
Agent's designee, and to sign and deliver to customs officials powers of
attorney in such Loan Party's name for such purpose; and (f) to do all things
necessary to carry out this Agreement. Each Loan Party ratifies and approves all
acts of such attorney. None of the Lenders or the Agent nor their attorneys will
be liable for any acts or omissions or for any error of judgment or mistake of
fact or law. This power, being coupled with an interest, is irrevocable until
this Agreement has been terminated and the Obligations have been fully
satisfied.
Section 6.16 The Agent's and Lenders' Rights, Duties and Liabilities.
The Loan Parties assume all responsibility and liability arising from or
relating to the use, sale or other disposition of the Collateral. The
Obligations shall not be affected by any failure of the Agent or any Lender to
take any steps to perfect the Agent's Liens or to collect or realize upon the
Collateral, nor shall loss of or damage to the Collateral release any Loan Party
from any of the Obligations. Following the occurrence and continuation of an
Event of Default, the Agent may (but shall not be required to), and at the
direction of the Majority Lenders shall, without notice to or consent from any
Loan Party, xxx upon or otherwise collect, extend the time for payment of,
modify or amend the terms of, compromise or settle for cash, credit, or
otherwise upon any terms, grant other indulgences, extensions, renewals,
compositions, or releases, and take or omit to take any other action with
respect to the Collateral, any security therefor, any agreement relating
thereto, any insurance applicable thereto, or any Person liable directly or
indirectly in connection with any of the foregoing, without discharging or
otherwise affecting the liability of any Loan Party for the Obligations or under
this Agreement or any other agreement now or hereafter existing between the
Agent and/or any Lender and any Loan Party.
Section 6.17 Site Visits, Observations and Testing. The Agent and its
representatives will have the right at any reasonable time to enter and visit
the Premises and any other place where any property of any Loan Party is located
for the purposes of observing the Premises, taking and removing soil or
groundwater samples, and conducting tests on any part of the Premises. The Agent
is under no duty, however, to visit or observe the Premises or to conduct tests,
and any such acts by the Agent will be solely for the purposes of protecting the
Agent's Liens and preserving the Agent and the Lenders' rights under this
Agreement. No site visit, observation or testing by the Agent and the Lenders
will result in a waiver of any Default or Event of Default or impose any
liability on the Agent or the Lenders. In no event will any site visit,
observation or testing by the Agent be a representation that hazardous
substances are or are not present in, on or under the Premises, or that there
has been or will be compliance with any Environmental Law. Neither any Loan
Party nor any other party is entitled to rely on any site visit, observation or
testing by the Agent. The Agent and the Lenders owe no duty of care to protect
the Loan Parties or any other party against, or to inform the Loan Parties or
any other party of, any hazardous substances or any other adverse condition
affecting the Premises. The Agent may in its discretion disclose to the Loan
Parties or to any other party if so required by law any report or findings made
as a result of, or in connection with, any site
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visit, observation or testing by the Agent. The Loan Parties understand and
agree that the Agent makes no warranty or representation to the Loan Parties or
any other party regarding the truth, accuracy or completeness of any such report
or findings that may be disclosed. The Loan Parties also understand that
depending on the results of any site visit, observation or testing by the Agent
and disclosed to the Loan Parties, the Loan Parties may have a legal obligation
to notify one or more environmental agencies of the results, that such reporting
requirements are site-specific, and are to be evaluated by the Loan Parties
without advice or assistance from the Agent. In each instance, the Agent will
give the Loan Parties reasonable notice before entering the Premises or any
other place the Agent is permitted to enter under this Section 6.17. The Agent
will make reasonable efforts to avoid interfering with the Loan Parties' use of
the Premises or any other property in exercising any rights provided hereunder.
Section 6.18 Guaranties; Loan Party Joinder. Each Loan Party shall
guarantee payment and performance of the Obligations (other than Obligations
owing by itself in a case where such guaranteeing Loan Party is a Borrower and
excluding Existing Obligations in the case of any such guarantee by a Newly
Obligated Party)) pursuant to a Guaranty Agreement, in form and substance
satisfactory to the Agent, duly executed by each such Loan Party. Each such
guaranteeing Loan Party that is a Borrower acknowledges and expressly agrees
with the Agent and each Lender that the Guaranty by such Borrower is required
solely as a condition to, and is given solely as inducement for and in
consideration of, credit or accommodations extended or to be extended under the
Loan Documents to any or all of the other Loan Parties and is not required or
given as a condition to extensions of credit to such Borrower. Promptly upon
creation or acquisition of any Restricted Subsidiary, such Loan Party shall
cause such Restricted Subsidiary to become a Loan Party (but unless otherwise
agreed by the Agent and the Lenders, not as a Borrower) and guarantee the
Obligations by executing and delivering to the Agent such Loan Documents and
other instruments, certificates, and agreements, in each case in form and
substance satisfactory to the Agent, as the Agent may request. Upon execution
and delivery of such Loan Documents and other instruments, certificates, and
agreements, such newly created or acquired Restricted Subsidiary shall
automatically become a Loan Party and thereupon shall have all of the rights,
benefits, duties, and obligations of a Loan Party under the Loan Documents.
Section 6.19 Voting Rights, Distributions, Etc. in Respect of
Investment Property.
(a) So long as no Event of Default shall have occurred and be
continuing (i) each Loan Party shall be entitled to exercise any and
all voting and other consensual rights (including, without limitation,
the right to give consents, waivers, and notifications in respect of
any securities) pertaining to its Investment Property or any part
thereof; provided, however, that without the prior written consent of
the Agent and the Majority Lenders, no vote shall be cast or consent,
waiver, or ratification given or action taken which would (A) be
inconsistent with or violate any provision of this Agreement or any
other Loan Document or (B) amend, modify, or waive any material term,
provision, or condition of the certificate of incorporation, bylaws,
certificate of formation, or other charter document or other agreement
relating to, evidencing, providing for the issuance of, or securing any
such Investment Property, in any manner that would impair such
Investment Property, the transferability thereof, or the Agent's Liens
therein, and (ii) each Loan Party shall be entitled to receive and
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retain any and all dividends and interest paid in respect of any of
such Investment Property (unless otherwise required by this Agreement).
(b) Upon the occurrence and during the continuance of an Event
of Default, (i) the Agent may, without notice to any Loan Party,
transfer or register in the name of the Agent or any of its nominees,
for the ratable benefit of the Agent and the Lenders, any or all of the
Collateral consisting of Investment Property, the proceeds thereof (in
cash or otherwise), and all liens, security, rights, remedies, and
claims of any Loan Party with respect thereto (as used in this Section
6.19 collectively, the "Pledged Collateral") held by the Agent
hereunder, and the Agent or its nominee may thereafter, after delivery
of notice to the applicable Loan Party, exercise all voting and
corporate rights at any meeting of any corporation, partnership, or
other business entity issuing any of the Pledged Collateral and any and
all rights of conversion, exchange, subscription, or any other rights,
privileges, or options pertaining to any of the Pledged Collateral as
if it were the absolute owner thereof, including, without limitation,
the right to exchange at its discretion any and all of the Pledged
Collateral upon the merger, consolidation, reorganization,
recapitalization, or other readjustment of any corporation,
partnership, or other business entity issuing any of such Pledged
Collateral or upon the exercise by any such issuer or the Agent of any
right, privilege, or option pertaining to any of the Pledged
Collateral, and in connection therewith, to deposit and deliver any and
all of the Pledged Collateral with any committee, depositary, transfer
agent, registrar, or other designated agency upon such terms and
conditions as it may determine, all without liability except to account
for property actually received by it, but the Agent shall have no duty
to exercise any of the aforesaid rights, privileges, or options, and
the Agent shall not be responsible for any failure to do so or delay in
so doing, (ii) after the Agent's giving of the notice specified in
clause (i) of this Section 6.19(b), all rights of any Loan Party to
exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section 6.19(a)(i) shall
be suspended until such Event of Default shall no longer exist, and all
such rights shall, until such Event of Default shall no longer exist,
thereupon become vested in the Agent which shall thereupon have the
sole right to exercise such voting and other consensual rights, and
(iii) each Loan Party shall execute and deliver (or cause to be
executed and delivered) to the Agent all such proxies and other
instruments as the Agent may reasonably request for the purpose of
enabling the Agent to exercise the voting and other rights which it is
entitled to exercise pursuant to this Section 6.19(b). The foregoing
shall not in any way limit the Agent's power and authority granted
pursuant to Section 6.15.
ARTICLE 7
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
Section 7.1 Books and Records. The Loan Parties shall maintain, at all
times, correct and complete books, records and accounts in which complete,
correct and timely entries are made of their respective transactions in
accordance with GAAP applied consistently with the audited Financial Statements
required to be delivered pursuant to Section 7.2(a). The Loan Parties shall, by
means of appropriate entries, reflect in such accounts and in all Financial
Statements proper liabilities and reserves for all taxes and proper provision
for depreciation and amortization of property and bad
LOAN AND SECURITY AGREEMENT - Page 70
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debts, all in accordance with GAAP. The Loan Parties shall maintain at all times
books and records pertaining to the Collateral in such detail, form and scope as
the Agent or any Lender shall reasonably require, including, but not limited to,
records of (a) all payments received and all credits and extensions granted with
respect to the Accounts; (b) the return, rejections, repossession, stoppage in
transit, loss, damage, or destruction of any Inventory; and (c) all other
dealings affecting the Collateral.
Section 7.2 Financial Information. The Loan Parties shall promptly
furnish to each Lender, all such financial information as the Agent or any
Lender shall reasonably request, and notify its auditors and accountants that
the Agent, on behalf of the Lenders, is authorized to obtain such information
directly from them. Without limiting the foregoing, the Loan Parties will
furnish, or cause to be furnished, to the Agent, in sufficient copies for
distribution by the Agent to each Lender, in such detail as the Agent or the
Lenders shall request, the following:
(a) As soon as available, but in any event not later than
ninety (90) days after the close of each Fiscal Year, consolidated
audited and consolidating balance sheets, and statements of income and
expense, cash flow and of stockholders' equity for the Parent and its
consolidated Subsidiaries for such Fiscal Year, and the accompanying
notes thereto, setting forth in each case in comparative form figures
for the previous Fiscal Year, all in reasonable detail, fairly
presenting the financial position and the results of operations of the
Parent and its consolidated Subsidiaries as at the date thereof and for
the Fiscal Year then ended, and prepared in accordance with GAAP. Such
statements shall be examined in accordance with generally accepted
auditing standards by and, in the case of such statements performed on
a consolidated basis, accompanied by a report thereon unqualified as to
scope of independent certified public accountants selected by the
Parent and reasonably satisfactory to the Agent. Each Loan Parent
hereby authorizes the Agent to communicate directly with its certified
public accountants and, by this provision, authorizes those accountants
to disclose to the Agent any and all financial statements and other
supporting financial documents and schedules relating to such Loan
Party and to discuss directly with the Agent its finances and affairs.
Each Loan Party will authorize such independent public accountants in
writing (with a copy to the Agent) to comply with the terms of this
Section 7.2(a).
(b) As soon as available, but in any event not later than
thirty (30) days after the end of each month, consolidated and
consolidating unaudited balance sheets of the Parent and its
consolidated Subsidiaries as at the end of such month, and consolidated
and consolidating unaudited statements of income and expense and cash
flow for the Parent and its consolidated Subsidiaries for such month
and for the period from the beginning of the Fiscal Year to the end of
such month, all in reasonable detail, fairly presenting the financial
position and results of operations of the Parent and its consolidated
Subsidiaries as at the date thereof and for such periods, and prepared
in accordance with GAAP applied consistently with the audited Financial
Statements required to be delivered pursuant to Section 7.2(a). The
Parent shall certify by a certificate signed by its chief financial
officer that all such statements have been prepared in accordance with
GAAP and present fairly, subject to normal quarter-end and year-end
adjustments, the financial position of Parent and its consolidated
Subsidiaries as at the dates thereof and its results of operations for
the periods then ended.
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(c) As soon as available, but in any event not later than
forty-five (45) days after the close of each fiscal quarter other than
the fourth quarter of a Fiscal Year, consolidated and consolidating
unaudited balance sheets of the Parent and its consolidated
Subsidiaries as at the end of such quarter, and consolidated and
consolidating unaudited statements of income and expense and statement
of cash flows for the Parent and its consolidated Subsidiaries for such
quarter and for the period from the beginning of the Fiscal Year to the
end of such quarter, all in reasonable detail, fairly presenting the
financial position and results of operation of the Parent and its
consolidated Subsidiaries as at the date thereof and for such periods,
prepared in accordance with GAAP consistent with the audited Financial
Statements required to be delivered pursuant to Section 7.2(a). The
Parent shall certify by a certificate signed by its chief financial
officer that all such statements have been prepared in accordance with
GAAP and present fairly, subject to normal year-end adjustments, the
financial position of Parent and its consolidated Subsidiaries as at
the dates thereof and its results of operations for the periods then
ended.
(d) With each of the audited Financial Statements delivered
pursuant to Section 7.2(a), a certificate of the independent certified
public accountants that examined such statement to the effect that they
have reviewed and are familiar with this Agreement and that, in
examining such Financial Statements, they did not become aware of any
fact or condition which then constituted a Default or Event of Default,
except for those, if any, described in reasonable detail in such
certificate.
(e) With each of the annual audited Financial Statements
delivered pursuant to Section 7.2(a), and within forty-five (45) days
after the end of each fiscal quarter, a certificate of the chief
financial officer of the Parent (i) setting forth in reasonable detail
the calculations required to establish compliance with the covenants
set forth in Section 9.23, Section 9.24, Section 9.25, and Section 9.26
during the period covered in such Financial Statements and as at the
end thereof, and (ii) stating that, except as explained in reasonable
detail in such certificate, (A) all of the representations and
warranties of the Loan Parties contained in this Agreement and the
other Loan Documents are correct and complete in all material respects
as at the date of such certificate as if made at such time, except for
those that speak as of a particular day, (B) the Loan Parties are, at
the date of such certificate, in compliance in all material respects
with all of their respective covenants and agreements in this Agreement
and the other Loan Documents, (C) no Default or Event of Default then
exists or existed during the period covered by such Financial
Statements, (D) describing and analyzing in reasonable detail all
material trends, changes, and developments in each and all Financial
Statements, and (E) explaining the variances of the figures in the
corresponding budgets and prior Fiscal Year financial statements. If
such certificate discloses that a representation or warranty is not
correct or complete, or that a covenant has not been complied with, or
that a Default or Event of Default existed or exists, such certificate
shall set forth what action the Loan Parties have taken or propose to
take with respect thereto.
(f) No sooner than sixty (60) days and not less than fifteen
(15) days prior to the beginning of each Fiscal Year, annual forecasts
(to include forecasted consolidated and
LOAN AND SECURITY AGREEMENT - Page 72
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consolidating balance sheets, statements of income and expenses and
statements of cash flow) for the Parent and its consolidated
Subsidiaries as at the end of and for each month of such Fiscal Year.
(g) Promptly after filing with the PBGC and the IRS, a copy of
each annual report or other filing filed with respect to each Plan of
any Loan Party.
(h) Promptly upon the filing thereof, copies of all reports,
if any, to or other documents filed by any Loan Party or any of its
Subsidiaries with the Securities and Exchange Commission under the
Exchange Act, and all reports, notices, or statements sent or received
by the Borrower or any of its Subsidiaries to or from the holders of
any equity interests of any Loan Party (other than routine non-material
correspondence sent by shareholders of any Loan Party) or any such
Subsidiary or of any Debt for Borrowed Money of any Loan Party or any
of its Subsidiaries registered under the Securities Act of 1933 or to
or from the trustee under any indenture under which the same is issued.
(i) As soon as available, but in any event not later than 15
days after any Loan Party's receipt thereof, a copy of all management
reports and management letters prepared by any independent certified
public accountants of Parent or any Borrower.
(j) Promptly after their preparation, copies of any and all
proxy statements, financial statements, and reports which any Loan
Party makes available to its shareholders.
(k) Promptly upon request by the Agent at any time after
filing with the IRS, a copy of each tax return filed by any Loan Party
or by any of its Subsidiaries.
(l) Such additional information as the Agent and/or any Lender
may from time to time reasonably request regarding the financial and
business affairs of any Loan Party or any Subsidiary.
Section 7.3 Notices to the Lenders. The Loan Parties shall notify the
Agent and the Lenders in writing of the following matters at the following
times:
(a) Immediately after becoming aware of any Default or Event
of Default;
(b) Immediately after becoming aware of the assertion by the
holder of any Capital Stock of any Loan Party or of any Subsidiary or
of any Debt that a default exists with respect thereto or that any Loan
Party or such Subsidiary is not in compliance with the terms thereof,
or the threat or commencement by such holder of any enforcement action
because of such asserted default or non-compliance;
(c) Immediately after becoming aware of any Material Adverse
Effect;
(d) Immediately after becoming aware of any pending or
threatened action, suit, proceeding, or counterclaim by any Person, or
any pending or threatened investigation by a
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Governmental Authority, or of any pending or threatened action or
investigation which may have a Material Adverse Effect;
(e) Immediately after becoming aware of any pending or
threatened strike, work stoppage, unfair labor practice claim, or other
labor dispute affecting any Loan Party or any of its Subsidiaries in a
manner which could reasonably be expected to have a Material Adverse
Effect;
(f) Immediately after becoming aware of any violation of any
law, statute, regulation, or ordinance of a Governmental Authority
affecting any Loan Party or any Subsidiary which could reasonably be
expected to have a Material Adverse Effect;
(g) Immediately after receipt of any notice of any violation
by any Loan Party or any of its Subsidiaries of any Environmental Law
which could reasonably be expected to have a Material Adverse Effect or
that any Governmental Authority has asserted that any Loan Party or any
Subsidiary is not in compliance with any Environmental Law or is
investigating any Loan Party's or such Subsidiary's compliance
therewith, and the assertion or allegation, if true, could reasonably
be expected to have a Material Adverse Effect;
(h) Immediately after receipt of any written notice that any
Loan Party or any of its Subsidiaries is or may be liable to any Person
as a result of the Release or threatened Release of any Contaminant or
that any Loan Party or any Subsidiary is subject to investigation by
any Governmental Authority evaluating whether any remedial action is
needed to respond to the Release or threatened Release of any
Contaminant which, in either case, is reasonably likely to give rise to
liability in excess of $1,000,000;
(i) Immediately after receipt of any written notice of the
imposition of any Environmental Lien against any property of any Loan
Party or any of its Subsidiaries;
(j) Any change in any Loan Party's name, state of
organization, or form of organization, trade names under which any Loan
Party will sell Inventory or create Accounts, or to which instruments
in payment of Accounts may be made payable, in each case at least
thirty (30) days prior thereto;
(k) Within ten (10) Business Days after any Loan Party or any
ERISA Affiliate knows or has reason to know, that an ERISA Event or a
non-exempt prohibited transaction (as defined in Sections 406 of ERISA
and 4975 of the Code) has occurred which could result in liability in
excess of $1,000,000, and, when known, any action taken or threatened
by the IRS, the DOL or the PBGC with respect thereto;
(l) Upon request, or, in the event that such filing reflects a
significant change with respect to the matters covered thereby, within
three (3) Business Days after the filing thereof with the PBGC, the DOL
or the IRS, as applicable, copies of the following: (i) each annual
report (form 5500 series), including Schedule B thereto, filed with the
PBGC, the DOL or the IRS with respect to each Plan, (ii) a copy of each
funding waiver request filed with the
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PBGC, the DOL or the IRS with respect to any Plan and all
communications received by any Loan Party or any ERISA Affiliate from
the PBGC, the DOL or the IRS with respect to such request, and (iii) a
copy of each other filing or notice filed with the PBGC, the DOL or the
IRS, with respect to each Plan of any Loan Party or any ERISA
Affiliate;
(m) Promptly upon request by the Agent, copies of any filing
with any Governmental Authority with respect to any Plan (whether or
not indicating any liabilities).
(n) Upon request, copies of each actuarial report for any Plan
or Multi-employer Plan and annual report for any Multi-employer Plan;
and within three (3) Business Days after receipt thereof by any Loan
Party or any ERISA Affiliate, copies of the following: (i) any notices
of the PBGC's intention to terminate a Plan or to have a trustee
appointed to administer such Plan; (ii) any favorable or unfavorable
determination letter from the IRS regarding the qualification of a Plan
under Section 401(a) of the Code; or (iii) any notice from a
Multi-employer Plan regarding the imposition of withdrawal liability;
(o) Within three (3) Business Days after the occurrence
thereof: (i) any changes in the benefits of any existing Plan which
increase any Loan Party's annual costs with respect thereto by an
amount in excess of $1,000,000, or the establishment of any new Plan or
the commencement of contributions to any Plan to which any Loan Party
or any ERISA Affiliate was not previously contributing; or (ii) any
failure by any Loan Party or any ERISA Affiliate to make a required
installment or any other required payment under Section 412 of the Code
on or before the due date for such installment or payment; or
(p) Within three (3) Business Days after any Loan Party or any
ERISA Affiliate knows or has reason to know that any of the following
events has or will occur: (i) a Multi-employer Plan has been or will be
terminated; (ii) the administrator or plan sponsor of a Multi-employer
Plan intends to terminate a Multi-employer Plan; or (iii) the PBGC has
instituted or will institute proceedings under Section 4042 of ERISA to
terminate a Multi-employer Plan.
Each notice given under this Section shall describe the subject matter thereof
in reasonable detail, and shall set forth the action that any Loan Party, its
Subsidiary, or any ERISA Affiliate, as applicable, has taken or proposes to take
with respect thereto.
Section 7.4 Revisions or Updates to Schedules. Should any of the
information or disclosures provided on any of the schedules originally attached
hereto become outdated or incorrect in any material respect, the Loan Parties
from time to time shall deliver to the Agent and the Lenders, together with an
officer's certificate of the type required pursuant to Section 7.2(e), such
revisions or updates to such schedule(s) as may be necessary or appropriate to
update or correct such schedule(s), whereupon such schedules shall be deemed to
be amended by such revisions or updates, provided that, notwithstanding the
foregoing, no such revisions or updates to Schedules 1.1, 8.15, 8.17, 8.18,
8.21, 8.28 or 9.9 shall be deemed to have amended, modified or superseded any
such schedules as originally attached hereto, or to have cured any breach of
warranty or representation
LOAN AND SECURITY AGREEMENT - Page 75
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resulting from the inaccuracy or incompleteness of any such schedules, unless
and until the Agent and the Majority Lenders shall have accepted in writing such
revisions or updates to any such schedules.
ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS
Each Loan Party warrants and represents to the Agent and the Lenders
that except as hereafter disclosed to and accepted by the Agent and the Majority
Lenders in writing:
Section 8.1 Authorization, Validity, and Enforceability of this
Agreement and the Loan Documents; No Conflicts. Each Loan Party has the power
and authority to execute, deliver and perform this Agreement and the other Loan
Documents, to incur the Obligations, and to grant to the Agent Liens upon and
security interests in the Collateral. Each Loan Party has taken all necessary
action (including obtaining approval of its stockholders, partners, general
partner(s), members or other applicable equity owners, if necessary) to
authorize its execution, delivery, and performance of this Agreement and the
other Loan Documents to which it is a party. This Agreement and the other Loan
Documents have been duly executed and delivered by each Loan Party, and
constitute the legal, valid and binding obligations of each Loan Party,
enforceable against it in accordance with their respective terms without
defense, setoff or counterclaim. Each Loan Party's execution, delivery, and
performance of this Agreement and the other Loan Documents do not and will not
conflict with, or constitute a violation or breach of, or constitute a default
under, or result in the creation or imposition of any Lien upon the property of
any Loan Party or any of its Subsidiaries by reason of the terms of (a) any
contract, mortgage, Lien, lease, agreement, indenture (including, without
limitation, the Indentures), or instrument to which such Loan Party is a party
or which is binding upon it, (b) any Requirement of Law applicable to any Loan
Party or any of its Subsidiaries, or (c) the certificate or articles of
incorporation or by-laws of any Loan Party or any of its Subsidiaries. The
incurrence of "Indebtedness," as such term is defined in each of the Indentures,
respectively, resulting from each Borrowing is permitted by each of the
Indentures, respectively.
Section 8.2 Validity and Priority of Security Interest. The provisions
of this Agreement and the other Loan Documents create legal and valid Liens on
all the Collateral in favor of the Agent, for the ratable benefit of the Agent
and the Lenders, and such Liens constitute perfected and continuing Liens on all
the Collateral, having priority over all other Liens on the Collateral, securing
all the Obligations, and enforceable against the Loan Parties and all third
parties.
Section 8.3 Organization and Qualification. Each Loan Party (a) is
duly formed and organized and validly existing in good standing under the laws
of the state of its formation and organization, (b) is qualified to do business
as a foreign business entity and is in good standing in the jurisdictions set
forth on Schedule 8.3, which are the only jurisdictions in which qualification
is necessary in order for it to own or lease its property and conduct its
business, except where the failure to qualify would not cause a Material Adverse
Effect and (c) has all requisite power and authority to conduct its business and
to own its property.
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Section 8.4 Corporate Name; Prior Transactions. Except as set forth on
Schedule 8.4, during the past five (5) years, no Loan Party has been known by or
used any other corporate or fictitious name, or been a party to any merger or
consolidation, or acquired all or substantially all of the assets of any Person,
or acquired any of its property outside of the ordinary course of business.
Section 8.5 Subsidiaries and Affiliates. Schedule 8.5 is a correct and
complete list of the name and relationship to the Parent of each and all of the
Parent's Subsidiaries and other Affiliates. Each Subsidiary is (a) duly
incorporated and organized and validly existing in good standing under the laws
of its state of formation and organization set forth on Schedule 8.5, and (b)
qualified to do business as a foreign business entity and in good standing in
each jurisdiction in which the failure to so qualify or be in good standing
could reasonably be expected to have a Material Adverse Effect, and (c) has all
requisite power and authority to conduct its business and own its property.
Section 8.6 Financial Statements and Projections.
(a) The Parent has delivered to the Agent and the Lenders the
audited balance sheet and related statements of income, retained
earnings, cash flows, and changes in stockholders equity for the Parent
and its consolidated Subsidiaries as of August 31, 1998, and for the
Fiscal Year then ended, accompanied by the report thereon of the
Parent's independent certified public accountants,
PricewaterhouseCoopers LLP. The Parent has also delivered to the Agent
and the Lenders the unaudited balance sheet and related statements of
income and cash flows for the Parent and its consolidated Subsidiaries
as of June 30, 1999. Such financial statements are attached hereto as
Exhibit C. All such financial statements have been prepared in
accordance with GAAP (subject to normal year-end adjustments for such
financial statements dated as of June 30, 1999) and present accurately
and fairly the financial position of the Parent and its consolidated
Subsidiaries as at the dates thereof and their results of operations
for the periods then ended.
(b) The Latest Projections when submitted to the Lenders as
required herein represent the Loan Parties' good faith estimate of the
future financial performance of the Loan Parties and their consolidated
Subsidiaries for the periods set forth therein. The Latest Projections
have been prepared on the basis of the assumptions set forth therein,
which the Loan Parties believe are fair and reasonable in light of
current and reasonably foreseeable business conditions at the time
submitted to the Lender.
Section 8.7 Capitalization. On the Closing Date the Parent's
authorized Capital Stock consists of 120,000,000 shares of common stock, par
value $0.16 2/3 per share, of which all shares outstanding are fully paid and
non-assessable, and preferred share rights entitling the holders of common
Capital Stock to purchase one-one thousandth of a share of junior participating
preferred Capital Stock, par value $1.00 per share. Each Loan Party other than
Parent is a Wholly-Owned Subsidiary of Parent.
Section 8.8 Solvency. Each Loan Party is Solvent prior to and after
giving effect to the making of the Loans to be made on the Closing Date and the
issuance of the Letters of Credit to be issued on the Closing Date, and shall
remain Solvent during the term of this Agreement.
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Section 8.9 Debt. After giving effect to the making of the Loans to be
made on the Closing Date, the Loan Parties and their Subsidiaries have no Debt,
except (a) the Obligations, (b) Debt described on Schedules 8.9 and 8.9(a), (c)
trade payables and other contractual obligations arising in the ordinary course
of business, (d) other Debt existing on the Closing Date and reflected in the
Financial Statements attached hereto as Exhibit C, and (e) after the Closing
Date, Debt permitted under Section 9.13.
Section 8.10 Distributions. Since June 30, 1999, no Distribution has
been declared, paid, or made upon or in respect of any Capital Stock or other
securities of the Loan Parties or any of their Subsidiaries.
Section 8.11 Title to Property. Each Loan Party has good and
indefeasible title in fee simple to its real property listed in Schedule 8.12
hereto, and has good, indefeasible, and merchantable title to all Collateral and
all other material property (including the assets reflected on the June 30, 1999
financial statements delivered to the Agent and the Lenders, except as disposed
of in the ordinary course of business since the date thereof), free of all Liens
except Permitted Liens.
Section 8.12 Real Estate; Leases. Schedule 8.12 sets forth, as of the
Closing Date, a correct and complete list of all Real Estate owned by each Loan
Party or any of its Subsidiaries, all leases and subleases of real or personal
property by each Loan Party or its Subsidiaries as lessee or sublessee (other
than leases of personal property as to which it is lessee or sublessee for which
the value of such personal property is less than $1,000,000), and all leases and
subleases of real or personal property by each Loan Party or its Subsidiaries as
lessor, lessee, sublessor or sublessee. Each of such leases and subleases is
valid and enforceable in accordance with its terms and is in full force and
effect, and no default by any party to any such lease or sublease exists.
Section 8.13 Reserved.
Section 8.14 Trade Names. All trade names or styles under which any of
the Loan Parties will sell Inventory or create Accounts, or to which instruments
in payment of Accounts may be made payable, are listed on Schedule 8.14.
Section 8.15 Litigation. Except as set forth on Schedule 8.15, there
is no pending or (to the best of any Loan Party's knowledge) threatened, action,
suit, proceeding, or counterclaim by any Person, or investigation by any
Governmental Authority, or any basis for any of the foregoing, which could
reasonably be expected to cause a Material Adverse Effect.
Section 8.16 Restrictive Agreements. No Loan Party nor any of its
Subsidiaries is a party to any contract or agreement, or subject to any charter
or other corporate restriction, which affects its ability to execute, deliver,
and perform the Loan Documents and repay the Obligations or which materially and
adversely affects or, insofar as reasonably foreseen, could reasonably be
expected to materially and adversely affect, the property, business, operations,
or condition (financial or otherwise) of any Loan Party or such Subsidiary, or
would in any respect cause a Material Adverse Effect.
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Section 8.17 Labor Disputes. Except as set forth on Schedule 8.17, (a)
there is no collective bargaining agreement or other labor contract covering
employees of any Loan Party or any of its Subsidiaries, (b) no such collective
bargaining agreement or other labor contract is scheduled to expire during the
term of this Agreement, (c) no union or other labor organization is seeking to
organize, or to be recognized as, a collective bargaining unit of employees of
any Loan Party or any of its Subsidiaries or for any similar purpose, and (d)
there is no pending or (to the best of any Loan Party's knowledge) threatened,
strike, work stoppage, material unfair labor practice claim, or other material
labor dispute against or affecting any Loan Party or its Subsidiaries or their
employees.
Section 8.18 Environmental Laws. Except as otherwise disclosed on
Schedule 8.18:
(a) Each Loan Party and its Subsidiaries have complied in all
material respects with all Environmental Laws applicable to its
Premises and business, and no Loan Party nor any Subsidiary nor any of
its present Premises or operations, nor its past property or
operations, is subject to any enforcement order from or liability
agreement with any Governmental Authority or private Person respecting
(i) compliance with any Environmental Law or (ii) any potential
liabilities and costs or remedial action arising from the Release or
threatened Release of a Contaminant.
(b) Each Loan Party and its Subsidiaries have obtained all
permits necessary for their current operations under Environmental
Laws, and all such permits are in good standing and each Loan Party and
its Subsidiaries are in compliance with all terms and conditions of
such permits.
(c) No Loan Party nor any of its Subsidiaries, nor, to the
best of any Loan Party's knowledge, any of its predecessors in
interest, has in violation of applicable law stored, treated or
disposed of any hazardous waste, as defined pursuant to 40 CFR Part 261
or any equivalent Environmental Law, on any Premises.
(d) No Loan Party nor any of its Subsidiaries has received any
summons, complaint, order or similar written notice indicating that it
is not currently in compliance with, or that any Governmental Authority
is investigating its compliance with, any Environmental Laws or that it
is or may be liable to any other Person as a result of a Release or
threatened Release of a Contaminant.
(e) None of the present or past operations of any Loan Party
or its Subsidiaries is the subject of any investigation by any
Governmental Authority evaluating whether any remedial action is needed
to respond to a Release or threatened Release of a Contaminant.
(f) There is not now, nor to the best of any Loan Party's
knowledge has there ever been on or in the Premises:
(i) any underground storage tanks or surface
impoundments,
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(ii) any asbestos-containing material, or
(iii) any polychlorinated biphenyls (PCBs) used in
hydraulic oils, electrical transformers or other equipment.
(g) No Loan Party nor any of its Subsidiaries has filed any
notice under any requirement of Environmental Law reporting a spill or
accidental and unpermitted Release or discharge of a Contaminant into
the environment.
(h) No Loan Party nor any of its Subsidiaries has entered into
any negotiations or settlement agreements with any Person (including
the prior owner of its property) imposing material obligations or
liabilities on any Loan Party or any of its Subsidiaries with respect
to any remedial action in response to the Release of a Contaminant or
environmentally related claim.
(i) No Loan Party, nor any Subsidiary of a Loan Party,
manufactures, distributes or sells any product that contains asbestos
containing material.
(j) No Environmental Lien has attached to any Premises of any
Loan Party or any of its Subsidiaries.
Section 8.19 No Violation of Law. No Loan Party nor any of its
Subsidiaries is in violation of any law, statute, regulation, ordinance,
judgment, order, or decree applicable to it which violation could reasonably be
expected to have a Material Adverse Effect.
Section 8.20 No Default. No Loan Party nor any of its Subsidiaries is
in default with respect to any note, indenture, loan agreement, mortgage, lease,
deed, or other agreement to which any such Loan Party or Subsidiary is a party
or by which it is bound, which default could reasonably be expected to have a
Material Adverse Effect.
Section 8.21 ERISA Compliance. Except as specifically disclosed in
Schedule 8.21:
(a) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other federal or state
law. Each Plan which is intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the IRS and to
the best knowledge of the Loan Parties, nothing has occurred which
would cause the loss of such qualification. Each Loan Party and each
ERISA Affiliate has made all required contributions to any Plan subject
to Section 412 of the Code, and no application for a funding waiver or
an extension of any amortization period pursuant to Section 412 of the
Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of the Loan
Parties, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan which has resulted or
could reasonably be expected to result in a Material Adverse Effect.
There has been no prohibited transaction or violation of the fiduciary
responsibility rules with
LOAN AND SECURITY AGREEMENT - Page 80
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respect to any Plan which has resulted or could reasonably be expected
to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected
to occur; (ii) no Pension Plan has any Unfunded Pension Liability;
(iii) no Loan Party nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability under Title IV of ERISA with respect to
any Pension Plan (other than premiums due and not delinquent under
Section 4007 of ERISA); (iv) no Loan Party nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability (and no event
has occurred which, with the giving of notice under Section 4219 of
ERISA, would result in such liability) under Section 4201 or 4243 of
ERISA with respect to a Multi-employer Plan; and (v) no Loan Party nor
any ERISA Affiliate has engaged in a transaction that could be subject
to Section 4069 or 4212(c) of ERISA.
Section 8.22 Taxes. Each Loan Party and its Subsidiaries have filed
all federal and other tax returns and reports required to be filed (or
appropriate extensions have been timely filed), and have paid all federal and
other taxes, assessments, fees and other governmental charges levied or imposed
upon them or their properties, income or assets or which otherwise are due and
payable (other than any such taxes, assessments, fees or governmental charges
which, to the Loan Parties' knowledge are not delinquent and in the aggregate do
not exceed $100,000).
Section 8.23 Regulated Entities. No Loan Party, nor any Person
controlling any Loan Party, is an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company Act of
1940. No Loan 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, or is
subject to regulation under the Federal Power Act, the Interstate Commerce Act,
any state public utilities code or law, or any other federal or state statute or
regulation limiting its ability to incur indebtedness.
Section 8.24 Use of Proceeds; Margin Regulations. The proceeds of the
Loans are to be used solely for working capital purposes. No Loan Party nor any
Subsidiary is engaged in the business of purchasing or selling Margin Stock or
extending credit for the purpose of purchasing or carrying Margin Stock.
Section 8.25 Copyrights, Patents, Trademarks and Licenses, etc. Each
Loan Party owns or is licensed or otherwise has the right to use all of the
patents, trademarks, service marks, trade names, copyrights, contractual
franchises, licenses, rights of way, authorizations and other rights that are
reasonably necessary for the operation of its businesses, without conflict with
the rights of any other Person. To the best knowledge of each Loan Party, no
slogan or other advertising device, product, process, method, substance, part or
other material now employed, or now contemplated to be employed, by any Loan
Party or any Subsidiary infringes upon any rights held by any other Person. No
claim or litigation regarding any of the foregoing is pending or threatened, and
no patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of any Loan Party,
proposed, which, in either case, could reasonably be expected to have a Material
Adverse Effect.
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Section 8.26 No Material Adverse Change. No material adverse change
has occurred in the Property, business, operations, or conditions (financial or
otherwise) of any Loan Party since the date of the Financial Statements
delivered to the Lenders. On the basis of a comprehensive review and assessment
undertaken by the Loan Parties of their respective computers and computer
applications and inquiry made of the Loan Party's material suppliers, vendors
and customers, each Loan Party reasonably believes that the "Year 2000 problem"
(that is, the risk that computers and computer applications used by any person
may be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31, 1999) will not
result in a Material Adverse Effect.
Section 8.27 Full Disclosure. None of the representations or
warranties made by any Loan Party or any Subsidiary in the Loan Documents as of
the date such representations and warranties are made or deemed made, and none
of the statements contained in any exhibit, report, statement or certificate
furnished by or on behalf of any Loan Party or any Subsidiary in connection with
the Loan Documents (including the offering and disclosure materials delivered by
or on behalf of any Loan Party to the Lenders prior to the Closing Date),
contains any untrue statement of a material fact or omits any material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they are made, not misleading as of
the time when made or delivered.
Section 8.28 Material Agreements. No Loan Party nor any of its
Subsidiaries is a party to any indenture, agreement, lease or other instrument,
or subject to any charter or corporate restriction, Governmental Authority or
Requirements of Law compliance with the terms of which would reasonably be
expected to have a Materially Adverse Effect. The latest Form 10Q or Form 10K
filed by the Parent, together with those items listed on Schedule 8.28 as of the
Closing Date, discloses all material agreements and contracts to which any Loan
Party or any of its Subsidiaries is a party or is bound as of the date hereof.
Section 8.29 Bank Accounts. Schedule 8.29 contains a complete and
accurate list of all bank accounts maintained by each Loan Party with any bank
or other financial institution.
Section 8.30 Governmental Authorization. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other Person is necessary or required in connection
with the execution, delivery or performance by, or enforcement against, any Loan
Party or any of its Subsidiaries of this Agreement or any other Loan Document.
Section 8.31 Investment Property.
(a) Schedule 8.31 sets forth a correct and complete list of
all Investment Property owned by each Loan Party. Each such Loan Party
is the legal and beneficial owner of such Investment Property, as so
reflected, free and clear of any Lien (other than Permitted Liens), and
has not sold, granted any option with respect to, assigned or
transferred or otherwise disposed of any of its rights or interest
therein.
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(b) To the extent any Loan Party is an Issuer (as defined in
Section 6.2(d)): (i) such Issuer's shareholders that are Loan Parties
and the ownership interest of each such shareholder are as set forth on
Schedule 8.5, and each such shareholder is the registered owner thereof
on the books of such Issuer; (ii) such Issuer acknowledges the
continuing security interest, collateral assignment, lien and pledge in
favor of the Agent granted pursuant to Section 6.1; and (iii) such
Issuer is not aware of any liens, restrictions, or adverse claims which
exist on any such Investment Property other than the continuing
security interest, collateral assignment, lien and pledge in favor of
the Agent granted pursuant to Section 6.1.
Section 8.32 Mutual Benefit. Each of the Loan Parties expects to
derive benefit (and its board of directors has determined that it may reasonably
be expected to derive benefit), directly and indirectly, from successful
operations of the Parent, each of the other Loan Parties and the Parent's
Subsidiaries. Each Loan Party expects to derive benefit (and the boards of
directors or other governing body of each such Loan Party have determined that
it may reasonably be expected to derive benefit), directly and indirectly, from
the credit extended by the Lenders to the Borrowers hereunder, both in their
separate capacities and as members of the group of companies. Each Loan Party
has determined that execution, delivery and performance of this Agreement and
any other Loan Documents to be executed by such Loan Party is within its
corporate purpose, will be of direct and indirect benefit to such Loan Party and
is in its best interest.
Section 8.33 Loan Parties. All Loan Parties are Wholly Owned
Subsidiaries of the Parent. As of the Closing Date the Loan Parties other than
the Parent constitute all Domestic Subsidiaries, other than the Unrestricted
Subsidiaries existing as of the Closing Date.
Section 8.34 Non-Material Subsidiaries. None of the Subsidiaries of
the Parent listed in Schedule 9.9 has any material tangible assets or is
material to any of the operations of any of the Loan Parties.
ARTICLE 9
AFFIRMATIVE AND NEGATIVE COVENANTS
Each Loan Party covenants to the Agent and each Lender that so long as
any of the Obligations remain outstanding or this Agreement is in effect:
Section 9.1 Taxes and Other Obligations. Each Loan Party shall, and
shall cause each of its Subsidiaries to, (a) file when due all tax returns and
other reports which it is required to file; (b) pay, or provide for the payment,
when due, of all taxes, fees, assessments and other governmental charges against
it or upon its property, income and franchises, make all required withholding
and other tax deposits, and establish adequate reserves for the payment of all
such items, and provide to the Agent and the Lenders, upon request, satisfactory
evidence of its timely compliance with the foregoing; and (c) pay when due all
Debt owed by it and all claims of materialmen, mechanics, carriers,
warehousemen, landlords, processors and other like Persons, and all other
indebtedness owed by it and perform and discharge in a timely manner all other
obligations undertaken by it;
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provided, however, so long as such Loan Party has notified the Agent in writing,
neither such Loan Party nor any of its Subsidiaries need pay any tax, fee,
assessment, or governmental charge, that (i) it is contesting in good faith by
appropriate proceedings diligently pursued, (ii) such Loan Party or its
Subsidiary, as the case may be, has established proper reserves for as provided
in GAAP, and (iii) no Lien (other than a Permitted Lien) results from such
non-payment.
Section 9.2 Existence and Good Standing. Except with respect to any
Loan Party that merges into or consolidates with another Loan Party as allowed
by Section 9.9, each Loan Party shall, and shall cause each of its Subsidiaries
to, maintain its entity existence and its qualification and good standing in all
jurisdictions in which the failure to maintain such existence and qualification
or good standing could reasonably be expected to have a Material Adverse Effect.
Section 9.3 Compliance with Law and Agreements; Maintenance of
Licenses. Each Loan party shall comply, and shall cause each Subsidiary to
comply, in all material respects with all Requirements of Law of any
Governmental Authority having jurisdiction over it or its business (including
the Federal Fair Labor Standards Act). Each Loan Party shall, and shall cause
each of its Subsidiaries to, obtain and maintain all licenses, permits,
franchises, and governmental authorizations necessary to own its property and to
conduct its business as conducted on the Closing Date. No Loan Party shall
modify, amend or alter its certificate or article of incorporation other than in
a manner which does not adversely affect the rights of the Lenders or the Agent.
Section 9.4 Maintenance of Property. Each Loan Party shall, and shall
cause each of its Subsidiaries to, maintain all of its property necessary and
useful in the conduct of its business, in good operating condition and repair,
ordinary wear and tear excepted.
Section 9.5 Insurance.
(a) Each Loan Party shall maintain, and shall cause each of
its Subsidiaries to maintain, with financially sound and reputable
insurers having a rating of at least A-VII or better by Best Rating
Guide (or such other rating as is acceptable to the Agent), insurance
in accordance with the minimum coverages set forth in Schedule 9.5,
together with insurance against loss or damage by fire with extended
coverage; theft, burglary, pilferage and loss in transit; public
liability and third party property damage; larceny, embezzlement or
other criminal liability; business interruption; public liability and
third party property damage; and such other hazards or of such other
types as is customary for Persons engaged in the same or similar
business, as the Agent, in its discretion, or acting at the direction
of the Majority Lenders, shall specify, in amounts, and under policies
acceptable to the Agent and the Majority Lenders. Without limiting the
foregoing, each Loan Party shall also maintain, and shall cause each of
its Subsidiaries to maintain, flood insurance on all Inventory and
books and records located on any Real Estate, if any, which has been or
hereafter is designated as "flood prone" or a "flood risk area,"
(hereinafter "SFHA") as defined by the Flood Disaster Protection Act of
1973, in an amount to be reasonably determined by the Agent, and shall
comply with the additional requirements of the National Flood Insurance
Program as set forth in said Act.
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(b) Each Loan Party shall cause the Agent, for the ratable
benefit of the Agent and the Lenders, to be named as secured party or
mortgagee and sole loss payee or additional insured, on all Rig
Equipment in a manner acceptable to the Agent. Each policy of insurance
shall contain a clause or endorsement requiring the insurer to give not
less than thirty (30) days' prior written notice to the Agent in the
event of cancellation of the policy for any reason whatsoever and a
clause or endorsement stating that the interest of the Agent shall not
be impaired or invalidated by any act or neglect of any Loan Party or
of its Subsidiaries or the owner of any premises for purposes more
hazardous than are permitted by such policy. All premiums for such
insurance shall be paid by the Loan Parties when due, and certificates
of insurance and, if requested by the Agent or any Lender, photocopies
of the policies, shall be delivered to the Agent, in each case in
sufficient quantity for distribution by the Agent to each of the
Lenders. If any Loan Party fails to procure such insurance or to pay
the premiums therefor when due, the Agent may, and at the direction of
the Majority Lenders shall, do so from the proceeds of Revolving Loans.
(c) Each Loan Party shall promptly notify the Agent and the
Lenders of any loss, damage, or destruction to the Collateral, whether
or not covered by insurance. The Agent is hereby authorized to collect
all insurance proceeds in respect of Collateral directly and to apply
or remit them as follows:
(i) With respect to insurance proceeds relating to
property other than Collateral, after deducting from such
proceeds the reasonable expenses, if any, incurred by the
Agent in the collection or handling thereof, the Agent shall
promptly remit to the Loan Parties such proceeds.
(ii) With respect to insurance proceeds relating to
Collateral, after deducting from such proceeds the reasonable
expenses, if any, incurred by the Agent in the collection or
handling thereof, the Agent shall apply such proceeds,
ratably, to the reduction of the Obligations in the manner
provided by Section 4.8, or at the option of the Majority
Lenders, may permit or require such money, or any part
thereof, to be used to replace, repair, restore or rebuild the
relevant Collateral in a diligent and expeditious manner with
materials and workmanship of substantially the same quality as
existed before the loss, damage or destruction.
Section 9.6 Condemnation.
(a) Each Loan Party shall, immediately upon learning of the
institution of any proceeding for the condemnation or other taking of
any of its property, notify the Agent of the pendency of such
proceeding, and agrees that the Agent may participate in any such
proceeding, and the Loan Parties from time to time will deliver to the
Agent all instruments reasonably requested by the Agent to permit such
participation.
(b) The Agent is hereby authorized to collect the proceeds of
any condemnation claim or award directly, and to apply or remit them as
follows:
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(i) With respect to condemnation proceeds relating to
property other than Collateral, after deducting from such
proceeds the reasonable expenses, if any, incurred by the
Agent in the collection or handling thereof, the Agent shall
remit to the Loan Parties such proceeds.
(ii) With respect to condemnation proceeds relating
to Collateral, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Agent in the
collection or handling thereof, the Agent shall apply such
proceeds, ratably, to the reduction of the Obligations in the
order provided for in Section 4.8.
Section 9.7 Environmental Laws.
(a) Each Loan Party shall, and shall cause each of its
Subsidiaries to, conduct its business in compliance with all
Environmental Laws applicable to it, including those relating to the
generation, handling, use, storage, and disposal of any Contaminant.
Each Loan Party shall, and shall cause each of its Subsidiaries to,
take prompt and appropriate action to respond to any non-compliance
with Environmental Laws and shall regularly report to the Agent on such
response.
(b) Without limiting the generality of the foregoing, the Loan
Parties shall submit to the Agent and the Lenders annually, commencing
on the first Anniversary Date, and on each Anniversary Date thereafter,
an update of the status of each environmental compliance or liability
issue. The Agent or any Lender may request copies of technical reports
prepared by any Loan Party and its communications with any Governmental
Authority to determine whether such Loan Party or any of its
Subsidiaries is proceeding reasonably to correct, cure or contest in
good faith any alleged non-compliance or environmental liability. Each
Loan Party shall, at the Agent's or the Majority Lenders' request and
at the Loan Party's expense, (i) retain an independent environmental
engineer acceptable to the Agent to evaluate the site, including tests
if appropriate, where the non-compliance or alleged non-compliance with
Environmental Laws has occurred and prepare and deliver to the Agent,
in sufficient quantity for distribution by the Agent to the Lenders, a
report setting forth the results of such evaluation, a proposed plan
for responding to any environmental problems described therein, and an
estimate of the costs thereof, and (ii) provide to the Agent and the
Lenders a supplemental report of such engineer whenever the scope of
the environmental problems, or the response thereto or the estimated
costs thereof, shall change in any material respect.
Section 9.8 Compliance with ERISA. Each Loan Party shall, and shall
cause each of its ERISA Affiliates to: (a) maintain each Plan in compliance in
all material respects with the applicable provisions of ERISA, the Code and
other federal or state law; (b) cause each Plan which is qualified under Section
401(a) of the Code to maintain such qualification; (c) make all required
contributions to any Plan subject to Section 412 of the Code; (d) not engage in
a prohibited transaction or violation of the fiduciary responsibility rules with
respect to any Plan; and (e) not engage in a transaction that could be subject
to Section 4069 or 4212(c) of ERISA.
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Section 9.9 Mergers, Consolidations or Sales. No Loan Party nor any of
its Restricted Subsidiaries shall enter into any transaction of merger,
reorganization, or consolidation, or transfer, sell, assign, lease, or otherwise
dispose of all or any part of its property, or wind up, liquidate or dissolve,
or agree to do any of the foregoing, except for the following, in each case
subject to Section 4.5: (a) property consisting of (i) leased property under any
lease by a Loan Party or a Restricted Subsidiary of a drilling rig and related
equipment in connection with a contract for drilling or workover services by
such Loan Party or a Restricted Subsidiary, provided that the term of such lease
corresponds to the term of such contract for drilling or workover services or
(ii) rented oil tools and equipment in the ordinary course of business, (b)
sales of Inventory in the ordinary course of its business, (c) sale of the
certain drilling rigs designated as "Xxxxxx Rig 245" and "Xxxxxx Rig Global
Explorer," (d) sales of other property (other than drilling rigs constituting
Rig Equipment) in the ordinary course of business for fair consideration in an
aggregate sales price per year not exceeding $15,000,000 in any fiscal year of
the Parent, (e) sales or dispositions of other Equipment (other than Equipment
constituting Rig Equipment) in the ordinary course of business that is obsolete
or no longer used or useful by such Loan Party in its business and sales of
Inventory which is worthless or obsolete, (f) a merger or consolidation of a
Loan Party or a Restricted Subsidiary of a Loan Party with another Loan Party in
a transaction in which the survivor is a Loan Party, provided that the Agent
shall have received at least thirty (30) days prior written notice thereof and
the remaining Loan Parties agree to execute such agreements or provide such
certifications in connection therewith as may be requested by the Agent and (g)
dissolution of any one or more of the Subsidiaries listed on Schedule 9.9,
provided, that (i) no such Subsidiary has any material assets as of the time of
such dissolution and is not material to any of the operations of any Loan Party
and (ii) all assets, if any, owned by such Subsidiary as of the time of such
dissolution are transferred to a Loan Party.
Section 9.10 Distributions; Capital Change; Restricted Investments. No
Loan Party nor any of its Restricted Subsidiaries shall (a) directly or
indirectly declare or make, or incur any liability to make, any Distribution,
except Distributions to the Parent or a Restricted Subsidiary, (b) make any
change in its capital structure which could have a Material Adverse Effect or
(c) make any Restricted Investment; provided, that if no Default or Event of
Default shall have occurred, the Parent may make (i) payments not exceeding
$2,000,000 in the aggregate to redeem its Capital Stock from its executive
officers pursuant to their executive compensation arrangements and (ii) loans to
its executive officers not exceeding the aggregate unpaid balance of $1,000,000
at any time outstanding.
Section 9.11 Transactions Affecting Collateral or Obligations. No Loan
Party nor any of its Subsidiaries shall enter into any transaction which would
be reasonably expected to have a Material Adverse Effect, provided, that this
Section shall not prohibit any Distribution allowed by Section 9.10 or the
payment of any Debt owed to the Parent or any Restricted Subsidiary.
Section 9.12 Guaranties. No Loan Party nor any of its Restricted
Subsidiaries shall make, issue, or become liable on any Guaranty, except
Guaranties of Debt allowed by Section 9.13.
Section 9.13 Debt. No Loan Party nor any of its Subsidiaries shall
incur or maintain any Debt, other than:
(a) the Obligations,
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(b) trade payables and contractual obligations to suppliers
and customers arising in the ordinary course of business,
(c) unsecured Debt owing by a Loan Party to a Loan Party,
provided that such Debt is Subordinated Debt,
(d) unsecured Debt owing by a Loan Party to a Subsidiary of
the Parent that is not a Loan Party, provided that such Debt is
Subordinated Debt,
(e) Debt owing by an Unrestricted Subsidiary to a Loan Party,
provided that such Debt arises from a loan that is not a Restricted
Investment,
(f) the Rig 75 Purchase Money Debt,
(g) Debt described on Schedule 8.9, and renewals or extensions
(but not increases) thereof on terms substantially the same as exist on
the Closing Date,
(h) Debt secured by a Permitted Lien and
(i) other Debt in an aggregate amount at any time outstanding,
for all Loan Parties and Restricted Subsidiaries, not exceeding
$3,000,000.
Section 9.14 Prepayment. No Loan Party nor any of its Subsidiaries
shall voluntarily prepay any Debt, except (i) existing Debt, if any, owed by a
Restricted Subsidiary to the Parent or to a Restricted Subsidiary, (ii) any
"Asset Sale Offer" as defined in, and limited to the extent required by, the
Indenture 1998 and (iii) the Obligations in accordance with the terms of this
Agreement.
Section 9.15 Transactions with Affiliates. Except for this Agreement,
a Guaranty Agreement or as otherwise allowed by this Agreement a Loan Party
shall not, and shall not permit any Restricted Subsidiary to, at any time engage
in any transaction with an Affiliate (other than a Loan Party), nor make an
assignment or other transfer of any of its assets or properties to any Affiliate
(other than a Loan Party), on terms materially less advantageous to such Loan
Party than would be the case if such transaction had been effected with a
non-Affiliate (other than advances to employees in the ordinary course of
business), provided, that this Section shall not prohibit any Distribution
allowed by Section 9.10 or the payment of any Debt owed to the Parent or any
Restricted Subsidiary.
Section 9.16 Investment Banking and Finder's Fees. No Loan Party nor
any of its Restricted Subsidiaries shall pay or agree to pay, or reimburse any
other party with respect to, any investment banking or similar or related fee,
underwriter's fee, finder's fee, or broker's fee to any Person in connection
with this Agreement. The Loan Parties shall defend and indemnify the Agent and
the Lenders against and hold them harmless from all claims of any Person that
any Loan Party is obligated to pay for any such fees, and all costs and expenses
(including attorneys' fees) incurred by the Agent and/or any Lender in
connection therewith.
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Section 9.17 Reserved.
Section 9.18 Business Conducted. The Loan Parties shall not and shall
not permit any of its Subsidiaries to, engage directly or indirectly, in any
line of business other than the businesses in which the Loan Parties are engaged
on the Closing Date.
Section 9.19 Liens. No Loan Party nor any of its Restricted
Subsidiaries shall create, incur, assume, or permit to exist any Lien on any
property now owned or hereafter acquired by any of them, except Permitted Liens.
No Loan Party or Restricted Subsidiary will enter into or become subject to any
Negative Pledge.
Section 9.20 Sale and Leaseback Transactions. No Loan Party nor any of
its Restricted Subsidiaries shall, directly or indirectly, enter into any
arrangement with any Person providing for any Loan Party or such Restricted
Subsidiary to lease or rent property that such Loan Party or such Restricted
Subsidiary has sold or will sell or otherwise transfer to such Person.
Section 9.21 New Subsidiaries. No Loan Party shall directly or
indirectly, organize, create, acquire or permit to exist any Subsidiary other
than (i) those listed on Schedule 8.5, (ii) any Domestic Subsidiary organized
after the Closing Date that is a Wholly-Owned Subsidiary of the Parent and
becomes a Loan Party pursuant to Section 6.18 or (iii) any Subsidiary organized
after the Closing Date that is a Wholly Owned Subsidiary of the Parent and, at
the time of such organization, is designated as an "Unrestricted Subsidiary"
pursuant to, and as provided by, the Indenture 1998 and at the same time is
designated as an Unrestricted Subsidiary by written notice to the Agent signed
by the Parent and such newly organized Unrestricted Subsidiary, provided, the
aggregate unpaid Debt owing by all Unrestricted Subsidiaries to all Loan Parties
plus the aggregate amount of capital contributions by all Loan Parties in all
Unrestricted Subsidiaries shall not at any time exceed $7,500,000.
Section 9.22 Fiscal Year. No Loan Party shall change its Fiscal Year.
Section 9.23 Capital Expenditures. No Loan Party nor any of its
Restricted Subsidiaries shall make or incur any Capital Expenditure if, after
giving effect thereto, the aggregate amount of all Capital Expenditures by the
Loan Parties and its Restricted Subsidiaries, net of all Capex Reimbursements,
would exceed $45,000,000 in the aggregate during any Fiscal Year.
Section 9.24 Operating Lease Obligations. No Loan Party nor any of its
Restricted Subsidiaries shall enter into, or suffer to exist, any lease of real
or personal property as lessee or sublessee (other than a Capital Lease), if,
after giving effect thereto, the aggregate amount of Rentals (as hereinafter
defined) payable by the Parent and its Restricted Subsidiaries on a consolidated
basis in any Fiscal Year in respect of such lease and all other such leases
would exceed $10,000,000 (such amount being referred to herein as "Permitted
Rentals"). The term "Rentals" means all payments due from the lessee or
sublessee under a lease, including, without limitation, basic rent, percentage
rent, property taxes, utility or maintenance costs, and insurance premiums.
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Section 9.25 Fixed Charge Coverage Ratio. The Loan Parties shall not
permit the Fixed Charge Coverage Ratio, determined for the Parent and the
Restricted Subsidiaries, as of the end of any fiscal quarter, determined for the
preceding four fiscal quarters ending as of the end of such period, to be less
than 1.1 to 1.0 as of the end of each such period.
Section 9.26 Adjusted Tangible Net Worth. The Loan Parties shall not
permit the Adjusted Tangible Net Worth, determined for the Parent and the
Restricted Subsidiaries, as of the end of any fiscal quarter, to be less than
the Adjusted Tangible Net Worth Requirement.
Section 9.27 Use of Proceeds. The Loan Parties shall not, and shall
not suffer or permit any Subsidiary to, use any portion of the Loan proceeds,
directly or indirectly, (a) to purchase or carry Margin Stock, (b) to repay or
otherwise refinance indebtedness of the Loan Parties or others incurred to
purchase or carry Margin Stock, (c) to extend credit for the purpose of
purchasing or carrying any Margin Stock, or (d) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange Act.
Section 9.28 Further Assurances. The Loan Parties shall execute and
deliver, or cause to be executed and delivered, to the Agent and/or the Lenders
such documents and agreements, and shall take or cause to be taken such actions,
as the Agent or any Lender may, from time to time, request to carry out the
terms and conditions of this Agreement and the other Loan Documents.
ARTICLE 10
CONDITIONS OF LENDING
Section 10.1 Conditions Precedent to Making of Initial Loans, etc. The
obligation of the Lenders to make the initial Revolving Loans and the obligation
of the Agent to issue or cause to be issued or provide Credit Support for any
Letter of Credit are subject to the following conditions precedent having been
satisfied in a manner satisfactory to the Agent and each Lender:
(a) The Agent shall have received each of the following
documents, all of which shall be satisfactory in form and substance to
the Agent and the Lenders:
(i) certified copies of the certificate of
incorporation, certificate of limited partnership or
comparable organizational document of each of the Loan
Parties, with all amendments, if any, certified by the
appropriate Governmental Authority, and the bylaws,
regulations, operating agreement or similar governing document
of each Loan Party, in each case certified by the corporate
secretary, general partner or comparable authorized
representative of such Loan Party, as being true and correct
and in effect on the Agreement Date;
(ii) certificates of incumbency and specimen
signatures with respect to each Person authorized to execute
and deliver this Agreement and the other Loan Documents on
behalf of each Loan Party and each other Person executing any
document, certificate or instrument to be delivered in
connection with this Agreement
LOAN AND SECURITY AGREEMENT - Page 90
98
and the other Loan Documents and, in the case of each
Borrower, to request Borrowings and Letters of Credit;
(iii) a certificate evidencing the existence of each
Loan Party, and certificates evidencing good standing of each
Loan Party in the jurisdiction of its organization and in each
other jurisdiction in which it is required to be qualified as
a foreign business entity to transact its business as
presently conducted, provided, that upon request by any Loan
Party and with the consent of the Agent, certificates of good
standing for such Loan Party in any state other than the
state(s) of its organization, to the extent not provided on
the Closing Date, may be provided after the Closing Date);
(iv) certified copies of all action taken by each
Loan Party to authorize the execution, delivery and
performance of this Agreement, the other Loan Documents and
the Borrowings and the Letters of Credit;
(v) a certificate of each Loan Party signed by its
Responsible Officer on behalf of such Loan Party:
(A) stating that all of the representations
and warranties made or deemed to be made under this
Agreement are true and correct as of the Closing
Date, after giving effect to the Loans, if any, to be
made at such time and the application of the proceeds
thereof and the issuance of any Letter(s) of Credit
at such time,
(B) stating that no Default or Event of
Default exists,
(C) specifying the account of the Borrowers
to which the Agent is authorized to transfer the
proceeds of the Revolving Loans, as required by
Section 2.2(c), and
(D) certifying as to such other factual
matters as may be reasonably requested by the Agent;
(vi) with respect to any Letter of Credit to be
issued, all documentation required by Section 2.4, duly
executed;
(vii) financing statements with respect to all
Collateral as may be requested by the Agent, duly executed by
each Person a party thereto, and acknowledgment copies
evidencing the filing of such financing statements on or
before the Closing Date under the UCC in all jurisdictions
that the Agent may deem necessary or desirable in order to
perfect the Agent's Lien therein;
(viii) duly executed UCC-3 termination statements and
such other instruments, in form and substance satisfactory to
the Agent, as shall be necessary to
LOAN AND SECURITY AGREEMENT - Page 91
99
terminate and satisfy all Liens on the Property of the Loan
Parties and its Subsidiaries except Permitted Liens;
(ix) the Maritime Security Documents, duly executed
and recorded;
(x) each Guaranty Agreement, duly executed and
delivered by each Person required pursuant to Section 6.18;
(xi) (A) stock certificates and stock powers (duly
executed in blank) for all Capital Stock in each Loan Party
other than Parent (to the extent any such Capital Stock is
certificated), together with acknowledgments executed by the
respective issuers thereof, in form and substance satisfactory
to the Agent and (B) "control" agreements (pursuant to the
UCC), each duly executed, as the Agent may request with
respect to such Capital Stock and any other Investment
Property covered by the Agent's Lien;
(xii) a Borrowing Base Certificate effective as of
the Business Day preceding the day such Loan is to be funded
or any such Letter of Credit is to be issued;
(xiii) each Blocked Account Agreement duly executed
as requested by the Agent;
(xiv) signed opinions of counsel for the Loan
Parties, opining as to such matters in connection with the
transactions contemplated by this Agreement as the Agent may
reasonably request, each such opinion to be in a form, scope,
and substance satisfactory to the Agent, the Lenders, and
their respective counsel;
(xv) The Agent shall have received evidence, in form,
scope, and substance, reasonably satisfactory to the Agent, of
all insurance coverage as required by this Agreement;
(xvi) each of the Financial Statements;
(xvii) evidence satisfactory to the Agent that all
Debt outstanding under the certain Revolving Credit Agreement
dated November 8, 1996 between Parent and ING (US) Capital
Corporation, as agent, and the other Persons party thereto, as
amended, has been paid, that such agreement has been
terminated and that all Liens granted thereunder by any Loan
Party or any Restricted Subsidiary have been released;
(xviii) a copy of the written authorization required
by Section 7.2(a);
(xix) a Revolving Note payable to the order of each
Lender, duly executed and delivered by each Borrower,
complying with the requirements of Section 2.2; and
LOAN AND SECURITY AGREEMENT - Page 92
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(xx) such other documents and instruments as the
Agent or any Lender may reasonably request.
(b) This Agreement and the other Loan Documents shall have
been executed by each party thereto and the Loan Parties shall have
performed and complied with all covenants, agreements and conditions
contained herein and the other Loan Documents which are required to be
performed or complied with by the Loan Parties before or on such
Closing Date.
(c) On the Closing Date and after giving effect to such
initial Revolving Loans (including such Revolving Loans made to finance
the fees, costs and expenses then payable under this Agreement) and any
such Credit Support or Letters of Credit, as the case may be, and with
all its obligations current, the Borrowers would have Availability in
an amount no less than $20,000,000.
(d) All representations and warranties made hereunder and in
the other Loan Documents shall be true and correct as of the Closing
Date as if made on such date.
(e) No Default or Event of Default shall exist on the Closing
Date, or would exist after giving effect to the Loans to be made, the
Letters of Credit to be issued and the Credit Support to be in place on
such date.
(f) The Loan Parties shall have paid all fees and expenses of
the Agent and the Attorney Costs incurred in connection with any of the
Loan Documents and the transactions contemplated thereby to the extent
invoiced.
(g) The Agent and the Lenders shall have had an opportunity,
if they so choose, to examine the books of account and other records
and files of the Loan Parties and to make copies thereof, and to
conduct a pre-closing audit which shall include, without limitation,
verification of Inventory, Accounts, and the Borrowing Base, and the
results of such examination and audit shall have been satisfactory to
the Agent and the Lenders in all respects.
(h) All proceedings taken in connection with the execution of
this Agreement, all other Loan Documents and all documents and papers
relating thereto shall be satisfactory in form, scope, and substance to
the Agent and the Lenders.
(i) No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed by or
before any Governmental Authority to enjoin, restrain or prohibit, or
to obtain damages in respect of, or which is related to or arises out
of this Agreement or the consummation of the transactions contemplated
by this Agreement or which, in the Agent's or the Lenders' reasonable
discretion, would make it inadvisable to consummate the transactions
contemplated by this Agreement.
LOAN AND SECURITY AGREEMENT - Page 93
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(j) The Agent shall have received satisfactory evidence that
the Rig 75 Purchase Money Debt has been funded and that the proceeds
thereof have been received by Xxxxxx Drilling Offshore International,
Inc., a Wholly-Owned Subsidiary of the Parent.
The acceptance by the Borrower of any Loans made or Letters of Credit issued on
the Closing Date shall be deemed to be a representation and warranty made by the
Loan Parties to the effect that all of the conditions precedent to the making of
such Loans or the issuance of such Letters of Credit have been satisfied, with
the same effect as delivery to the Agent and the Lenders of a certificate signed
by a Responsible Officer of the Loan Parties, dated the Closing Date, to such
effect. Execution and delivery to the Agent by a Lender of a counterpart of this
Agreement shall be deemed confirmation by such Lender that (i) all conditions
precedent in this Section 10.1 have been fulfilled to the satisfaction of such
Lender and (ii) the decision of such Lender to execute and deliver to the Agent
an executed counterpart of this Agreement was made by such Lender independently
and without reliance on the Agent or any other Lender as to the satisfaction of
any condition precedent set forth in this Section 10.1.
Section 10.2 Conditions Precedent to Each Loan. The obligation of the
Lenders to make each Loan, including the initial Revolving Loans on the Closing
Date and the obligation of the Agent to issue or cause to be issued or to
provide Credit Support for any Letter of Credit shall be subject to the further
conditions precedent that on and as of the date of any such extension of credit:
(a) the following statements shall be true, and the acceptance
by the Borrowers of any extension of credit shall be deemed to be a
statement to the effect set forth in clauses (i) and (ii), with the
same effect as the delivery to the Agent and the Lenders of a
certificate signed by a Responsible Officer of each Loan Party, dated
the date of such extension of credit, stating that:
(i) The representations and warranties contained in
this Agreement and the other Loan Documents are correct in all
material respects on and as of the date of such extension of
credit as though made on and as of such date, other than any
such representation or warranty which relates to a specified
prior date and except to the extent the Agent and the Lenders
have been notified by the Loan Parties that any representation
or warranty is not correct and the Majority Lenders have
explicitly waived in writing compliance with such
representation or warranty; and
(ii) No event has occurred and is continuing, or
would result from such extension of credit, which constitutes
a Default or an Event of Default;
(b) The amount of the Borrowing Base shall be sufficient to
make such Revolving Loans or issue such Letters of Credit without
exceeding the Availability, provided, however, that the foregoing
conditions precedent are not conditions to each Lender participating in
or reimbursing the Bank or the Agent for such Lenders' Pro Rata Share
of any Non-Ratable Loan or Agent Advance made in accordance with the
provisions of in Sections 2.2(h), (i) and (j);
LOAN AND SECURITY AGREEMENT - Page 94
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(c) The Agent shall have received satisfactory evidence that
the Agent has a valid, exclusive (other than Permitted Liens) and
perfected first priority security interest, lien, collateral assignment
and pledge as of such date in all Collateral and other property, if
any, covered by the Agent Lien;
(d) Except as disclosed in writing to the Agent and the
Lenders on or before the Closing Date, as of the Closing Date and as of
the date of funding such Loan or issuing such Letter of Credit, there
shall not have occurred any change which is materially adverse, in the
Agent's or the Lenders' discretion, to the assets, liabilities,
businesses, operations, or condition (financial or otherwise) of the
Loan Parties in comparison to such conditions as presented by the
Financial Statements and no Material Adverse Effect shall have
occurred.
ARTICLE 11
DEFAULT; REMEDIES
Section 11.1 Events of Default. It shall constitute an event of default
("Event of Default") if any one or more of the following shall occur for any
reason:
(a) any failure of timely payment of any principal of or
interest or premium on any of the Obligations or any fee or other
amount owing hereunder when due, whether upon demand or otherwise;
(b) any representation or warranty made or deemed made by the
Loan Parties in this Agreement or in any of the other Loan Documents,
any Financial Statement, or any certificate furnished by the Loan
Parties or any of their Subsidiaries at any time to the Agent or any
Lender shall prove to be untrue in any material respect as of the date
on which made, deemed made, or furnished;
(c) any default shall occur in
(i) the observance or performance of any of the
covenants and agreements contained in Articles 6 or 7 or
Sections 9.2 (insofar as it requires the preservation of the
existence of the Loan Parties), 9.9 through 9.15 and 9.19
through 9.28, or
(ii) the observance or performance of any of the
covenants and agreements contained in this Agreement, other
than as referenced in Sections 11.1(a) and 11.1(c)(i) of this
Agreement, or any other Loan Documents, or any other agreement
entered into at any time to which the Loan Parties or any
Subsidiary and the Agent or any Lender are party (including in
respect of any Bank Products) and such default shall continue
for a period of thirty (30) days after written notice thereof
has been given to Parent by the Agent, or if any such
agreement or document shall terminate (other than in
accordance with its terms or the terms hereof or with the
written consent of the Agent and the Majority Lenders) or
become void or unenforceable, without the written consent of
the Agent and the Majority Lenders;
LOAN AND SECURITY AGREEMENT - Page 95
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(d) default shall occur with respect to any Debt For Borrowed
Money (other than the Obligations) in an outstanding principal amount
which exceeds $7,500,000, or under any agreement or instrument under or
pursuant to which any such Debt For Borrowed Money may have been
issued, created, assumed, or guaranteed by any Loan Party or any of its
Subsidiaries, and such default shall continue for more than the period
of grace, if any, therein specified, if the effect thereof (with or
without the giving of notice or further lapse of time or both) is to
accelerate, or to permit the holders of any such Debt For Borrowed
Money to accelerate, the maturity of any such Debt For Borrowed Money;
or any such Debt For Borrowed Money shall be declared due and payable
or be required to be prepaid (other than by a regularly scheduled
required prepayment) prior to the stated maturity thereof;
(e) any Loan Party or any of its Restricted Subsidiaries shall
(i) file a voluntary petition in bankruptcy or file a voluntary
petition or an answer or otherwise commence any action or proceeding
seeking reorganization, arrangement or readjustment of its debts or for
any other relief under the federal Bankruptcy Code, as amended, or
under any other bankruptcy or insolvency act or law, state or federal,
now or hereafter existing, or consent to, approve of, or acquiesce in,
any such petition, action or proceeding; (ii) apply for or acquiesce in
the appointment of a receiver, assignee, liquidator, sequestrator,
custodian, monitor, trustee or similar officer for it or for all or any
part of its property; (iii) make an assignment for the benefit of
creditors; or (iv) be unable generally to pay its debts as they become
due;
(f) an involuntary petition or proposal shall be filed or an
action or proceeding otherwise commenced (other than as referenced in
Section 11.1(e)) seeking reorganization, arrangement, consolidation or
readjustment of the debts of any Loan Party or any of its Restricted
Subsidiaries or for any other relief under the federal Bankruptcy Code,
as amended, or under any other bankruptcy or insolvency act or law,
state or federal, now or hereafter existing and either (i) such
petition, proposal, action or proceeding shall not have been dismissed
within a period of sixty (60) days after its commencement or (ii) an
order for relief against any Loan Party or such Subsidiary shall have
been entered in such proceeding;
(g) a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee or similar officer for any Loan Party or any of its
Restricted Subsidiaries or for all or any part of its property shall be
appointed or a warrant of attachment, execution or similar process
shall be issued against any part of the property of any Loan Party or
any of its Restricted Subsidiaries;
(h) any Loan Party or any of its Restricted Subsidiaries shall
file a certificate of dissolution under applicable state law or shall
be liquidated, dissolved or wound-up (except in a transaction allowed
by Section 9.9) or shall commence or have commenced against it any
action or proceeding for dissolution, winding-up or liquidation, or
shall take any corporate action in furtherance thereof;
LOAN AND SECURITY AGREEMENT - Page 96
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(i) all or any material part of the property of any Loan Party
or any of its Restricted Subsidiaries shall be nationalized,
expropriated or condemned, seized or otherwise appropriated, or custody
or control of such property or of any Loan Party or such Restricted
Subsidiary shall be assumed by any Governmental Authority or any court
of competent jurisdiction at the instance of any Governmental
Authority, except instances which are fully insured (net of applicable
deductibles in amounts not more than deductibles existing on the
Closing Date) by political risk insurance, are contested in good faith
by proper proceedings diligently and in which a stay of enforcement is
in effect;
(j) any Guaranty of the Obligations shall be terminated,
revoked or declared void or invalid;
(k) one or more judgments, orders, decrees or arbitration
awards is entered against any Loan Party involving in the aggregate
liability (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage) as to any
single or related or unrelated series of transactions, incidents or
conditions, of $7,500,000 or more, and the same shall remain
unsatisfied, unvacated and unstayed pending appeal for a period of
thirty (30) days after the entry thereof;
(l) any loss, theft, damage or destruction of any item or
items of Collateral or other property of any Loan Party or any
Restricted Subsidiary occurs which materially and adversely affects the
property, business, operation, prospects, or condition of any Loan
Party or any Restricted Subsidiary and is not adequately covered by
insurance;
(m) there occurs a Material Adverse Effect;
(n) there is filed against any Loan Party or any of its
Subsidiaries any civil or criminal action, suit or proceeding under any
federal or state racketeering statute (including the Racketeer
Influenced and Corrupt Organization Act of 1970), which action, suit or
proceeding (i) is not dismissed within one hundred twenty (120) days,
and (ii) could reasonably be expected to result in the confiscation or
forfeiture of any material portion of the Collateral;
(o) for any reason other than the failure of the Agent to take
any action available to it to maintain perfection of the Agent's Liens,
pursuant to the Loan Documents, any Loan Document ceases to be in full
force and effect or any Lien with respect to any material portion of
the Collateral intended to be secured thereby ceases to be, or is not,
valid, perfected and prior to all other Liens (other than Permitted
Liens) or is terminated, revoked or declared void;
(p) an ERISA Event shall occur with respect to a Pension Plan
or Multi-employer Plan which has resulted or could reasonably be
expected to result in liability of any Loan Party under Title IV of
ERISA to the Pension Plan, Multi-employer Plan or the PBGC in an
aggregate amount in excess of $1,000,000; (ii) the aggregate amount of
Unfunded Pension Liability among all Pension Plans at any time exceeds
$1,000,000; or (iii) any Loan Party or
LOAN AND SECURITY AGREEMENT - Page 97
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any ERISA Affiliate shall fail to pay when due, after the expiration of
any applicable grace period, any installment payment with respect to
its withdrawal liability under Section 4201 of ERISA under a
Multi-employer Plan in an aggregate amount in excess of $1,000,000;
(q) there occurs a Change of Control;
(r) an "Event of Default" (as defined in the Indenture 1996)
occurs under the Indenture 1996 prior to the discharge thereof;
(s) an "Event of Default" (as defined in the Indenture 1997)
occurs under the Indenture 1997 prior to the discharge thereof; or
(t) an "Event of Default" (as defined in the Indenture 1998)
occurs under the Indenture 1998 prior to the discharge thereof.
Section 11.2 Remedies.
(a) If a Default or an Event of Default exists, the Agent may,
in its discretion, and shall, at the direction of the Majority Lenders,
do one or more of the following at any time or times and in any order,
without notice to or demand on any Loan Party: (i) reduce the Maximum
Revolver Amount, or the advance rates against Eligible Accounts and/or
Approved Foreign Accounts used in computing the Borrowing Base, or
reduce one or more of the other elements used in computing the
Borrowing Base; (ii) restrict the amount of or refuse to make Revolving
Loans; and (iii) restrict or refuse to provide Letters of Credit or
Credit Support. If an Event of Default exists, the Agent shall, at the
direction of the Majority Lenders, do one or more of the following, in
addition to the actions described in the preceding sentence, at any
time or times and in any order, without notice to or demand on any Loan
Party: (A) terminate the Commitments and this Agreement; (B) declare
any or all Obligations to be immediately due and payable; provided,
however, that upon the occurrence of any Event of Default described in
Sections 11.1(e), 11.1(f), 11.1(g), or 11.1(h), the Commitments shall
automatically and immediately expire and all Obligations shall
automatically become immediately due and payable without notice or
demand of any kind; and (C) pursue its other rights and remedies under
the Loan Documents and applicable law.
(b) If an Event of Default has occurred and is continuing: (i)
the Agent shall have for the benefit of the Lenders, in addition to all
other rights of the Agent and the Lenders, the rights and remedies of a
secured party under the UCC; (ii) the Agent may, at any time, take
possession of the Collateral and keep it on any Loan Party's premises,
at no cost to the Agent or any Lender, or remove any part of it to such
other place or places as the Agent may desire, or any Loan Party shall,
upon the Agent's demand, at any Loan Party's cost, assemble the
Collateral and make it available to the Agent at a place reasonably
convenient to the Agent; and (iii) the Agent may sell and deliver any
Collateral at public or private sales, for cash, upon credit or
otherwise, at such prices and upon such terms as the Agent deems
advisable, in its sole discretion, and may, if the Agent deems it
reasonable, postpone or adjourn any sale of the Collateral by an
announcement at the time and place of sale or of such postponed or
LOAN AND SECURITY AGREEMENT - Page 98
106
adjourned sale without giving a new notice of sale. Without in any way
requiring notice to be given in the following manner, each Loan Party
agrees that any notice by the Agent of sale, disposition or other
intended action hereunder or in connection herewith, whether required
by the UCC or otherwise, shall constitute reasonable notice to the Loan
Parties if such notice is mailed by registered or certified mail,
return receipt requested, postage prepaid, or is delivered personally
against receipt, at least ten (10) Business Days prior to such action
to the Loan Parties' address specified in or pursuant to Section 15.8.
If any Collateral is sold on terms other than payment in full at the
time of sale, no credit shall be given against the Obligations until
the Agent or the Lenders receive payment, and if the buyer defaults in
payment, the Agent may resell the Collateral without further notice to
any Loan Party. In the event the Agent seeks to take possession of all
or any portion of the Collateral by judicial process, each Loan Party
irrevocably waives: (A) the posting of any bond, surety or security
with respect thereto which might otherwise be required; (B) any demand
for possession prior to the commencement of any suit or action to
recover the Collateral; and (C) any requirement that the Agent retain
possession and not dispose of any Collateral until after trial or final
judgment. Each Loan Party agrees that the Agent has no obligation to
preserve rights to the Collateral or marshal any Collateral for the
benefit of any Person. The Agent is hereby granted a license or other
right to use, without charge, each Loan Party's labels, patents,
copyrights, name, trade secrets, trade names, trademarks, and
advertising matter, or any similar property, in completing production
of, advertising or selling any Collateral, and each Loan Party's rights
under all licenses and all franchise agreements shall inure to the
Agent's benefit for such purpose. The proceeds of sale shall be applied
first to all expenses of sale, including attorneys' fees, and then to
the Obligations. The Agent will return any excess to the Loan Parties
and the Loan Parties shall remain liable for any deficiency.
(c) If an Event of Default occurs, each Loan Party hereby
waives all rights to notice and hearing prior to the exercise by the
Agent of the Agent's rights to repossess the Collateral without
judicial process or to reply, attach or levy upon the Collateral
without notice or hearing.
(d) Each Loan Party recognizes that the Agent may be unable to
effect a public sale of any or all of the Collateral or other property
to be sold by reason of certain prohibitions contained in the laws of
any jurisdiction outside the United States or in applicable federal or
state securities laws but may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers who will be
obliged to agree, among other things, to acquire such Collateral or
other property to be sold for their own account for investment and not
with a view to the distribution or resale thereof. Each Loan Party
acknowledges and agrees that any such private sale may result in prices
and other terms less favorable to the seller than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any
such private sale shall, to the extent permitted by law, be deemed to
have been made in a commercially reasonable manner. Unless required by
a Requirement of Law, the Agent shall not be under any obligation to
delay a sale of any of the Collateral or other property to be sold for
the period of time necessary to permit the issuer of such securities to
register such securities under the laws of any jurisdiction outside the
United States under any applicable federal or state securities laws,
even if such issuer would agree to do so. Each Loan Party
LOAN AND SECURITY AGREEMENT - Page 99
107
further agrees to do or cause to be done, to the extent that such Loan
Party may do so under Requirements of Law, all such other acts and
things as may be necessary to make such sales or resales of any portion
or all of the Collateral or other property to be sold valid and binding
and in compliance with any and all Requirements of Law at the Loan
Parties' expense. Each Loan Party further agrees that a breach of any
of the covenants contained in this Section 11.2(d) will cause
irreparable injury to the Agent and the Lenders for which there is no
adequate remedy at law and, as a consequence, agrees that each covenant
contained in this Section 11.2(d) shall be specifically enforceable
against such Loan Party and such Loan Party hereby waives and agrees,
to the fullest extent permitted by law, not to assert as a defense
against an action for specific performance of such covenants that (i)
such Loan Party's failure to perform such covenants will not cause
irreparable injury to the Agent and the Lenders or (ii) the Agent or
the Lenders have an adequate remedy at law in respect of such breach.
Each Loan Party further acknowledges the impossibility of ascertaining
the amount of damages which would be suffered by the Agent and the
Lenders by reason of a breach of any of the covenants contained in this
Section 11.2(d) and, consequently, agrees that, if such Loan Party
shall breach any of such covenants and the Agent or the Lenders shall
xxx for damages for such breach, such Loan Party shall pay to the
Agent, for the benefit of the Agent and the Lenders, as liquidated
damages and not as a penalty, an aggregate amount equal to the value of
the Collateral or other property to be sold on the date the Agent shall
demand compliance with this Section 11.2(d).
ARTICLE 12
TERM AND TERMINATION
Section 12.1 Term and Termination. The term of this Agreement shall end
on the Termination Date. The Agent upon direction from the Majority Lenders may
terminate this Agreement without notice upon the occurrence of an Event of
Default. Upon the effective date of termination of this Agreement for any reason
whatsoever, all Obligations (including all unpaid principal, accrued interest
and any early termination or prepayment fees or penalties, but excluding
indemnification obligations to the extent no claim with respect thereto has been
asserted and remains unsatisfied) shall become immediately due and payable and
the Loan Parties shall immediately arrange for the cancellation and return of
Letters of Credit then outstanding. Notwithstanding the termination of this
Agreement, until all Obligations are indefeasibly paid and performed in full in
cash, the Loan Parties shall remain bound by the terms of this Agreement and
shall not be relieved of any of their Obligations hereunder, and the Agent and
the Lenders shall retain all their rights and remedies hereunder (including the
Agent's Liens in and all rights and remedies with respect to all then existing
and after-arising Collateral).
LOAN AND SECURITY AGREEMENT - Page 100
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ARTICLE 13
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
Section 13.1 No Waivers; Cumulative Remedies. No failure by the Agent
or any Lender to exercise any right, remedy, or option under this Agreement or
any present or future supplement thereto, or in any other agreement between or
among any Loan Party and the Agent and/or any Lender, or delay by the Agent or
any Lender in exercising the same, will operate as a waiver thereof. No waiver
by the Agent or any Lender will be effective unless it is in writing, and then
only to the extent specifically stated. No waiver by the Agent or the Lenders on
any occasion shall affect or diminish the Agent's and each Lender's rights
thereafter to require strict performance by the Loan Parties of any provision of
this Agreement. The Agent's and each Lender's rights under this Agreement will
be cumulative and not exclusive of any other right or remedy which the Agent or
any Lender may have.
Section 13.2 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by any Loan Party therefrom, shall be effective unless
the same shall be in writing and signed by the Majority Lenders (or by the Agent
at the written request of the Majority Lenders) and the Loan Parties and then
any such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, however, that no such
waiver, amendment, or consent shall, unless in writing and signed by all the
Lenders and the Loan Parties and acknowledged by the Agent, do any of the
following:
(a) increase or extend the Commitment of any Lender;
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or
other amounts due to the Lenders (or any of them) hereunder or under
any other Loan Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or any fees or other amounts payable hereunder or
under any other Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for
the Lenders or any of them to take any action hereunder;
(e) increase any of the percentages set forth in the
definition of the Borrowing Base;
(f) amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders;
(g) release Collateral other than as permitted by Section
14.12;
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(h) change the definitions of "Majority Lenders" or "Required
Lenders";
(i) increase the Maximum Revolver Amount and Unused Letter of
Credit Subfacility; or
(j) change Sections 9.23, 9.25 or 9.26, clause (i) of the
definition of "Restricted Investments" or the definitions of "Adjusted
Tangible Assets," "Capital Expenditures," "Capex Reimbursements,"
"Fixed Charge Coverage Ratio," "Adjusted Tangible Net Worth," "Adjusted
Tangible Net Worth Requirement," "Adjusted Tangible Net Worth
Requirement Increase," "Net Transfers" or "Net Transfers Allowed."
provided, however, the Agent may, in its sole discretion and notwithstanding the
limitations contained in clause (e) and clause (i) above and any other terms of
this Agreement, make Revolving Loans (including Agent Advances) in an amount not
to exceed ten percent (10.0%) of the Borrowing Base and, provided further, that
no amendment, waiver or consent shall, unless in writing and signed by the
Agent, affect the rights or duties of the Agent under this Agreement or any
other Loan Document.
Section 13.3 Assignments; Participations.
(a) Any Lender may, with the written consent of the Agent
(which consent shall not be unreasonably withheld by the Agent) and, if
no Default or Event of Default has occurred and is continuing at the
time any assignment is effected in accordance with this Section, Parent
(such approval in each such case not to be unreasonably withheld or
delayed, and in the case of any such approval requested of Parent such
approval shall be deemed given by Parent if no objection from Parent is
received by the assigning Lender and the Agent within four (4) Business
Days after notice of such proposed assignment has been provided to
Parent by the Agent or the assigning Lender), assign and delegate to
one or more Eligible Assignees (provided that no written consent of the
Agent shall be required in connection with any assignment and
delegation by a Lender to an Affiliate of such Lender) (each an
"Assignee") all, or any ratable part of all, of the Loans, the
Commitments and the other rights and obligations of such Lender
hereunder, in a minimum amount of $5,000,000 (provided that, unless an
assignor Lender has assigned and delegated all of its Loans and
Commitments, no such assignment and/or delegation shall be permitted
unless, after giving effect thereto, such assignor Lender retains a
Commitment in a minimum amount of $5,000,000); provided, however, that
the Loan Parties and the Agent may continue to deal solely and directly
with such Lender in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with
payment instructions, addresses and related information with respect to
the Assignee, shall have been given to the Loan Parties and the Agent
by such Lender and the Assignee; (ii) such Lender and its Assignee
shall have delivered to the Loan Parties and the Agent an Assignment
and Acceptance in the form of Exhibit F ("Assignment and Acceptance")
together with any Note or Notes subject to such assignment and (iii)
the assignor Lender or Assignee has paid to the Agent a processing fee
in the amount of $3,000.
(b) From and after the date that the Agent notifies the
assignor Lender that it has received an executed Assignment and
Acceptance and payment of the above-referenced
LOAN AND SECURITY AGREEMENT - Page 102
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processing fee, (i) the Assignee thereunder shall be a party hereto
and, to the extent that rights and obligations, including, but not
limited to, the obligation to participate in Letters of Credit and
Credit Support have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender under the
Loan Documents, and (ii) the assignor Lender shall, to the extent that
rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this
Agreement (and in the case of an Assignment and Acceptance covering all
or the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party
hereto).
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to
and agree with each other and the other parties hereto as follows: (i)
other than as provided in such Assignment and Acceptance, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement or any other Loan Document furnished
pursuant hereto or the attachment, perfection, or priority of any Lien
granted by the Loan Parties to the Agent or any Lender in the
Collateral; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of the Loan Parties or the performance or observance by any
Loan Party of any of its obligations under this Agreement or any other
Loan Document furnished pursuant hereto; (iii) such Assignee confirms
that it has received a copy of this Agreement, together with such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such Assignee will, independently and without reliance
upon the Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such Assignee appoints and authorizes
the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers, including the discretionary
rights and incidental power, as are reasonably incidental thereto; and
(vi) such Assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance, this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary
to reflect the addition of the Assignee and the resulting adjustment of
the Commitments arising therefrom. The Commitment allocated to each
Assignee shall reduce such Commitments of the assigning Lender pro
tanto.
(e) Any Lender may at any time sell to one or more commercial
banks, financial institutions, or other Persons not Affiliates of the
Loan Parties (a "Participant") participating interests in any Loans,
the Commitment of that Lender and the other interests of that Lender
LOAN AND SECURITY AGREEMENT - Page 103
111
(the "Originating Lender") hereunder and under the other Loan
Documents; provided, however, that (i) the originating Lender's
obligations under this Agreement shall remain unchanged, (ii) the
originating Lender shall remain solely responsible for the performance
of such obligations, (iii) the Loan Parties and the Agent shall
continue to deal solely and directly with the originating Lender in
connection with the originating Lender's rights and obligations under
this Agreement and the other Loan Documents, and (iv) no Lender shall
transfer or grant any participating interest under which the
Participant has rights to approve any amendment to, or any consent or
waiver with respect to, this Agreement or any other Loan Document, and
all amounts payable by the Loan Parties hereunder shall be determined
as if such Lender had not sold such participation; except that, if
amounts outstanding under this Agreement are due and unpaid, or shall
have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to
have the right of setoff in respect of its participating interest in
amounts owing under this Agreement to the same extent and subject to
the same limitation as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement.
(f) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or
any portion of its rights under and interest in this Agreement in favor
of any Federal Reserve Bank in accordance with Regulation A of the FRB
or U.S. Treasury Regulation 31 CFR Section 203.14, or otherwise, and
such Federal Reserve Bank may enforce such pledge or security interest
in any manner permitted under applicable law, provided, that no such
action shall release or otherwise relieve any Lender of its obligations
under this Agreement.
ARTICLE 14
THE AGENT
Section 14.1 Appointment and Authorization. Each Lender hereby
designates and appoints the Agent as its agent under this Agreement and the
other Loan Documents and each Lender hereby irrevocably authorizes the Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. The
Agent agrees to act as such on the express conditions contained in this Article
14. The provisions of this Article 14 are solely for the benefit of the Agent
and the Lenders and the Loan Parties shall have no rights as a third party
beneficiary of any of the provisions contained herein. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document, the Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall the Agent have or be deemed to have
any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
Without limiting the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to the Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter of
market custom, and is intended
LOAN AND SECURITY AGREEMENT - Page 104
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to create or reflect only an administrative relationship between independent
contracting parties. Except as expressly otherwise provided in this Agreement,
the Agent shall have and may use its sole discretion with respect to exercising
or refraining from exercising any discretionary rights or taking or refraining
from taking any actions which the Agent is expressly entitled to take or assert
under this Agreement and the other Loan Documents, including (a) the
determination of the applicability of ineligibility criteria and the
determination of Approved Foreign Accounts, in each case with respect to the
calculation of the Borrowing Base, (b) the making of Agent Advances pursuant to
Section 2.2(i), and (c) the exercise of remedies pursuant to Section 11.2, and
any action so taken or not taken shall be deemed consented to by the Lenders.
Section 14.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects as long as such selection was made without gross negligence or
willful misconduct.
Section 14.3 Liability of the Agent. None of the Agent-Related Persons
shall (i) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by the Loan Parties or any
Subsidiary or Affiliate of the Loan Parties, or any officer thereof, contained
in this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document, or
the validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Loan Parties or
any other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Parties or
any of the Loan Party's Subsidiaries or Affiliates.
Section 14.4 Reliance by the Agent.
(a) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the
proper Person or Persons, and upon advice and statements of legal
counsel (including counsel to any Loan Party), independent accountants
and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Majority Lenders as it deems appropriate
and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take
any such action. The Agent shall in all cases be fully protected
LOAN AND SECURITY AGREEMENT - Page 105
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in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the
Majority Lenders (or all Lenders if so required by Section 13.2) and
such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 10.1, each Lender that has executed this Agreement
shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter either sent by the Agent
to such Lender for consent, approval, acceptance or satisfaction, or
required thereunder to be consented to or approved by or acceptable or
satisfactory to the Lender.
Section 14.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, unless
the Agent shall have received written notice from a Lender or any Loan Party
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default." The Agent will notify the
Lenders of its receipt of any such notice. The Agent shall take such action with
respect to such Default or Event of Default as may be requested by the Majority
Lenders in accordance with Section 11; provided, however, that unless and until
the Agent has received any such request, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable.
Section 14.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Loan Parties and their Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their Affiliates, and all applicable
bank regulatory laws relating to the transactions contemplated hereby, and made
its own decision to enter into this Agreement and to extend credit to the Loan
Parties. Each Lender also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Loan
Parties. Except for notices, reports and other documents expressly herein
required to be furnished to the Lenders by the Agent, the Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of any Loan Parties which may come into
the possession of any of the Agent-Related Persons.
Section 14.7 Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent
LOAN AND SECURITY AGREEMENT - Page 106
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not reimbursed by or on behalf of the Loan Parties and without limiting the
obligation of the Loan Parties to do so), pro rata, from and against any and all
Indemnified Liabilities as such term is defined in Section 15.11; provided,
however, that no Lender shall be liable for the payment to the Agent-Related
Persons of any portion of such Indemnified Liabilities resulting solely from
such Person's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender shall reimburse the Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including Attorney Costs) incurred
by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that the Agent
is not reimbursed for such expenses by or on behalf of the Loan Parties. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Agent.
Section 14.8 The Agent in Individual Capacity. The Bank and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with any Loan
Party and its Subsidiaries and Affiliates as though the Bank were not the Agent
hereunder and without notice to or consent of the Lenders. The Lenders
acknowledge that, pursuant to such activities, the Bank or its Affiliates may
receive information regarding any Loan Party or its Subsidiaries (including
information that may be subject to confidentiality obligations in favor of any
such Loan Party or Subsidiary) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to its Loans, the
Bank shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the Agent, and the terms
"Lender" and "Lenders" include the Bank in its individual capacity.
Section 14.9 Successor Agent. The Agent may resign as the Agent upon 30
days' notice to the Lenders and the Loan Parties, such resignation to be
effective upon the acceptance of a successor agent to its appointment as the
Agent. In the event the Bank sells all of its Commitment and Revolving Loans as
part of a sale, transfer or other disposition by the Bank of substantially all
of its loan portfolio, the Bank shall resign as the Agent and such purchaser or
transferee shall become the successor Agent hereunder. If the Agent resigns
under this Agreement, subject to the proviso in the preceding sentence, the
Majority Lenders shall appoint from among the Lenders a successor agent for the
Lenders. If no successor agent is appointed prior to the effective date of the
resignation of the Agent, the Agent may appoint, after consulting with the
Lenders and the Loan Parties, a successor agent from among the Lenders. Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring Agent and the
term "Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as the Agent shall be terminated. After any
retiring Agent's resignation hereunder as the Agent, the provisions of this
Article 14 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was the Agent under this Agreement. If no Default or Event
of Default has occurred and is continuing at the time the appointment of any
successor Agent is effected in accordance with this Section, then such
appointment shall be subject to the approval of the Parent (such approval not to
be unreasonably withheld or delayed, and such approval shall be deemed given by
Parent if no objection from Parent is received by the resigning Agent and the
Lenders within ten
LOAN AND SECURITY AGREEMENT - Page 107
115
(10) Business Days after notice of such proposed assignment has been provided to
Parent by the resigning Agent or any Lender). If a Default or Event of Default
has occurred and is continuing at the time the appointment of any successor
Agent is effected in accordance with this Section, then no such approval by
Parent or any other Loan Party shall be required.
Section 14.10 Withholding Tax.
(a) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the Code and such Lender claims exemption
from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Lender agrees with and in favor of the Agent, to
deliver to the Agent:
(i) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax
treaty, properly completed IRS Forms 1001 and W8 before the
payment of any interest in the first calendar year and before
the payment of any interest in each third succeeding calendar
year during which interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid under
this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade
or business of such Lender, two properly completed and
executed copies of IRS Form 4224 before the payment of any
interest is due in the first taxable year of such Lender and
in each succeeding taxable year of such Lender during which
interest may be paid under this Agreement, and IRS Form W9;
and
(iii) such other form or forms as may be required
under the Code or other laws of the United States as a
condition to exemption from, or reduction of, United States
withholding tax.
Such Lender agrees to promptly notify the Agent of any change in
circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form
1001 and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations owing to such
Lender, such Lender agrees to notify the Agent of the percentage amount
in which it is no longer the beneficial owner of Obligations to such
Lender. To the extent of such percentage amount, the Agent will treat
such Lender's IRS Form 1001 as no longer valid.
(c) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns,
grants a participation in, or otherwise transfers all or part of the
Obligations owing to such Lender, such Lender agrees to undertake sole
responsibility for complying with the withholding tax requirements
imposed by Sections 1441 and 1442 of the Code.
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(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to
such Lender an amount equivalent to the applicable withholding tax
after taking into account such reduction. If the forms or other
documentation required by subsection (a) of this Section are not
delivered to the Agent, then the Agent may withhold from any interest
payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that the Agent did
not properly withhold tax from amounts paid to or for the account of
any Lender (because the appropriate form was not delivered, was not
properly executed, or because such Lender failed to notify the Agent of
a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason)
such Lender shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax or otherwise, including
penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Agent under this Section,
together with all costs and expenses (including Attorney Costs). The
obligation of the Lenders under this subsection shall survive the
payment of all Obligations and the resignation or replacement of the
Agent.
Section 14.11 Reserved.
Section 14.12 Collateral Matters.
(a) The Lenders hereby irrevocably authorize the Agent, at its
option and in its sole discretion, to release any Agent's Lien upon any
Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full of all Loans and reimbursement obligations in
respect of Letters of Credit and Credit Support, and the termination of
all outstanding Letters of Credit (whether or not any of such
obligations are due) and all other Obligations (other that
indemnification obligations to the extent no claim with respect thereto
has been threatened or asserted and remains unsatisfied); (ii)
constituting property being sold or disposed of if the Loan Party
disposing of such property certifies to the Agent that the sale or
disposition is made in compliance with Section 9.9 (and the Agent may
rely conclusively on any such certificate, without further inquiry);
(iii) constituting property in which no Loan Party owned any interest
at the time the Lien was granted or at any time thereafter; or (iv)
constituting property leased to a Loan Party under a lease which has
expired or been terminated in a transaction permitted under this
Agreement. Except as provided above, the Agent will not release any of
the Agent's Liens without the prior written authorization of the
Lenders; provided that the Agent may, in its discretion, release the
Agent's Liens on Collateral valued in the aggregate not in excess of
$7,500,000 during any one year period without the prior written
authorization of the Lenders. Upon request by the Agent or the Loan
Parties at any time, the Lenders will confirm in writing the Agent's
authority to release any Agent's Liens upon particular types or items
of Collateral pursuant to this Section 14.12.
(b) Upon receipt by the Agent of any authorization required
pursuant to Section 14.12(a) from the Lenders of the Agent's authority
to release any Agent's Liens upon
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particular types or items of Collateral, and upon at least five (5)
Business Days' prior written request by the Loan Parties, the Agent
shall (and is hereby irrevocably authorized by the Lenders to) execute
such documents as may be necessary to evidence the release of the
Agent's Liens upon such Collateral; provided, however, that (i) the
Agent shall not be required to execute any such document on terms
which, in the Agent's opinion, would expose the Agent to liability or
create any obligation or entail any consequence other than the release
of such Liens without recourse or warranty, and (ii) such release shall
not in any manner discharge, affect or impair the Obligations or any
Liens (other than those expressly being released) upon (or obligations
of the Loan Parties in respect of) all interests retained by the Loan
Parties, including the proceeds of any sale, all of which shall
continue to constitute part of the Collateral.
(c) The Agent shall have no obligation whatsoever to any of
the Lenders to assure that the Collateral exists or is owned by any
Loan Party or is cared for, protected or insured or has been
encumbered, or that the Agent's Liens have been properly or
sufficiently or lawfully created, perfected, protected or enforced or
are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and
powers granted or available to the Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, the Agent
may act in any manner it may deem appropriate, in its sole discretion
given the Agent's own interest in the Collateral in its capacity as one
of the Lenders and that the Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing.
Section 14.13 Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the
express consent of all Lenders, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of all Lenders, set off
against the Obligations, any amounts owing by such Lender to any Loan
Party or any accounts of any Loan Party now or hereafter maintained
with such Lender. Each of the Lenders further agrees that it shall not,
unless specifically requested to do so by the Agent, take or cause to
be taken any action to enforce its rights under this Agreement or
against any Loan Party, including the commencement of any legal or
equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral.
(b) If at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff or otherwise, any proceeds of Collateral
or any payments with respect to the Obligations owing to such Lender
arising under, or relating to, this Agreement or the other Loan
Documents, except for any such proceeds or payments received by such
Lender from the Agent pursuant to the terms of this Agreement, or (ii)
payments from the Agent in excess of such Lender's ratable portion of
all such distributions by the Agent, such Lender shall promptly (1)
turn the same over to the Agent, in kind, and with such endorsements as
may be required to negotiate the same to the Agent, or in same day
funds, as applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the applicable
provisions of this Agreement, or (2) purchase, without recourse or
warranty, an
LOAN AND SECURITY AGREEMENT - Page 110
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undivided interest and participation in the Obligations owed to the
other Lenders so that such excess payment received shall be applied
ratably as among the Lenders in accordance with their Pro Rata Shares;
provided, however, that if all or part of such excess payment received
by the purchasing party is thereafter recovered from it, those
purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without
interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
Section 14.14 Agency for Perfection. Each Lender hereby appoints each
other Lender as agent for the purpose of perfecting the Lenders' security
interest in assets which, in accordance with Article 9 of the UCC can be
perfected only by possession. Should any Lender (other than the Agent) obtain
possession of any such Collateral, such Lender shall notify the Agent thereof,
and, promptly upon the Agent's request therefor shall deliver such Collateral to
the Agent or in accordance with the Agent's instructions.
Section 14.15 Payments by the Agent to Lenders. All payments to be made
by the Agent to the Lenders shall be made by bank wire transfer or internal
transfer of immediately available funds to each Lender pursuant to wire transfer
instructions delivered in writing to the Agent on or prior to the Closing Date
(or if such Lender is an Assignee, on the applicable Assignment and Acceptance),
or pursuant to such other wire transfer instructions as each party may designate
for itself by written notice to the Agent. Concurrently with each such payment,
the Agent shall identify whether such payment (or any portion thereof)
represents principal, premium or interest on the Loans, or otherwise.
Section 14.16 Concerning the Collateral and the Related Loan Documents.
Each Lender authorizes and directs the Agent to enter into this Agreement and
the other Loan Documents relating to the Collateral, for the ratable benefit of
the Agent and the Lenders. Each Lender agrees that any action taken by the
Agent, Majority Lenders or Required Lenders, as applicable, in accordance with
the terms of this Agreement or the other Loan Documents relating to the
Collateral, and the exercise by the Agent, the Majority Lenders, or the Required
Lenders, as applicable, of their respective powers set forth therein or herein,
together with such other powers that are reasonably incidental thereto, shall be
binding upon all of the Lenders.
Section 14.17 Field Audit and Examination Reports; Disclaimer by
Lenders. By signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit
or examination report (each a "Report" and collectively, "Reports")
prepared by the Agent;
(b) expressly agrees and acknowledges that neither the Bank
nor the Agent (i) makes any representation or warranty as to the
accuracy of any Report, or (ii) shall be liable for any information
contained in any Report;
LOAN AND SECURITY AGREEMENT - Page 111
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(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or other party
performing any audit or examination will inspect only specific
information regarding the Loan Parties and will rely significantly upon
Loan Parties' books and records, as well as on representations of the
Loan Parties' personnel;
(d) agrees to keep all Reports confidential and strictly for
its internal use, and not to distribute except to its participants, or
use any Report in any other manner; and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to
hold the Agent-Related Persons and any such other Lender preparing a
Report harmless from any action the indemnifying Lender may take or
conclusion the indemnifying Lender may reach or draw from any Report in
connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to the Borrowers, or the
indemnifying Lender's participation in, or the indemnifying Lender's
purchase of, a loan or loans of the Borrowers; and (ii) to pay and
protect, and indemnify, defend and hold the Agent-Related Persons and
any such other Lender preparing a Report harmless from and against, the
claims, actions, proceedings, damages, costs, expenses and other
amounts (including Attorney Costs) incurred by any Agent-Related Person
and any such other Lender preparing a Report as the direct or indirect
result of any third parties who might obtain all or part of any Report
through the indemnifying Lender; provided, however, that no Lender
shall be liable for the payment to any such Agent-Related Person or any
such other Lender of any portion of such Indemnified Liabilities
resulting solely from any such Agent-Related Person's or any such
other Lender's gross negligence or willful misconduct.
Section 14.18 Relation Among Lenders. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent) authorized to act
for, any other Lender.
ARTICLE 15
MISCELLANEOUS
Section 15.1 Cumulative Remedies; No Prior Recourse to Collateral. The
enumeration herein of the Agent's and each Lender's rights and remedies is not
intended to be exclusive, and such rights and remedies are in addition to and
not by way of limitation of any other rights or remedies that the Agent and the
Lenders may have under the UCC or other applicable law. The Agent and the
Lenders shall have the right, in their sole discretion, to determine which
rights and remedies are to be exercised and in which order. The exercise of one
right or remedy shall not preclude the exercise of any others, all of which
shall be cumulative. The Agent and the Lenders may, without limitation, proceed
directly against any Person liable therefor to collect the Obligations without
any prior recourse to the Collateral. No failure to exercise and no delay in
exercising, on the part of the Agent or any Lender, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.
LOAN AND SECURITY AGREEMENT - Page 112
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Section 15.2 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
Section 15.3 Governing Law; Choice of Forum; Service of Process.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED
THAT PERFECTION ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE
EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET FORTH IN
ARTICLE 9 OF THE UCC) OF THE STATE OF TEXAS; PROVIDED THAT THE AGENT
AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF
THE XXXXX XX XXXXX XX XX XXX XXXXXX XXXXXX FOR THE NORTHERN DISTRICT OF
TEXAS, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE
LOAN PARTIES, THE AGENT AND THE LENDERS CONSENTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. EACH OF THE LOAN PARTIES, THE AGENT AND THE LENDERS IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED
HERETO. NOTWITHSTANDING THE FOREGOING: (i) THE AGENT AND THE LENDERS
SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY LOAN
PARTY OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE AGENT
OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE
COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (ii) EACH OF THE
PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED
IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE THOSE JURISDICTIONS.
(c) EACH LOAN PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY
AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT
REQUESTED) DIRECTED TO SUCH LOAN PARTY AT ITS ADDRESS SET FORTH
IN SECTION 15.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO
DEPOSITED IN THE U.S. MAILS. NOTHING CONTAINED HEREIN SHALL AFFECT
LOAN AND SECURITY AGREEMENT - Page 113
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THE RIGHT OF THE AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY
OTHER MANNER PERMITTED BY LAW.
Section 15.4 Waiver of Jury Trial. TO THE FULLEST EXTENT ALLOWED BY LAW
EACH LOAN PARTY, THE LENDERS AND THE AGENT EACH WAIVES ITS RESPECTIVE RIGHTS TO
A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF
ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY
AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH LOAN PARTY, THE LENDERS AND THE AGENT
EACH AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE
THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS
SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE
OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
Section 15.5 Survival of Representations and Warranties. All of the
representations and warranties of each Loan Party contained in this Agreement
shall survive the execution, delivery, and acceptance thereof by the parties,
notwithstanding any investigation by the Agent or the Lenders or their
respective agents.
Section 15.6 Other Security and Guaranties. The Agent, may, without
notice or demand and without affecting the Loan Parties' obligations hereunder,
from time to time: (a) take from any Person and hold collateral (other than the
Collateral) for the payment of all or any part of the Obligations and exchange,
enforce or release such collateral or any part thereof; and (b) accept and hold
any endorsement or guaranty of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or any
part of the Obligations, or any other Person in any way obligated to pay all or
any part of the Obligations.
Section 15.7 Fees and Expenses. Each Loan Party agrees to pay to the
Agent, for its benefit, on demand, all reasonable costs and expenses that the
Agent pays or incurs in connection with the negotiation, preparation,
syndication, consummation, administration, enforcement, and termination of this
Agreement or any of the other Loan Documents, including: (a) Attorney Costs; (b)
costs and expenses (including attorneys' and paralegals' fees and disbursements)
for any amendment, supplement, waiver, consent, or subsequent closing in
connection with the Loan Documents and the transactions contemplated thereby;
(c) costs and expenses of lien and title searches; (d) taxes, fees and other
charges for recording or filing financing statements and continuations, and
other actions to perfect, protect, and continue the Agent's Liens (including
costs
LOAN AND SECURITY AGREEMENT - Page 114
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and expenses paid or incurred by the Agent in connection with the consummation
of this Agreement); (e) sums paid or incurred to pay any amount or take any
action required of any Loan Party under the Loan Documents that such Loan Party
fails to pay or take; (f) costs of appraisals, inspections, and verifications of
the Collateral, including travel, lodging, and meals for inspections of the
Collateral and the Loan Parties' operations by the Agent; (g) costs and expenses
of forwarding Loan proceeds, collecting checks and other items of payment, and
establishing and maintaining Payment Accounts and lock boxes; (h) costs and
expenses of preserving and protecting the Collateral; and (i) costs and expenses
(including attorneys' and paralegals' fees and disbursements) paid or incurred
to obtain payment of the Obligations, enforce the Agent's Liens, sell or
otherwise realize upon the Collateral, and otherwise enforce the provisions of
the Loan Documents, or to defend any claims made or threatened against the Agent
or any Lender arising out of the transactions contemplated hereby (including
preparations for and consultations concerning any such matters). The foregoing
shall not be construed to limit any other provisions of the Loan Documents
regarding costs and expenses to be paid by the Loan Parties. All of the
foregoing costs and expenses may be charged to the Borrowers' Loan Account as
Revolving Loans pursuant to and as provided by Section 4.7.
Section 15.8 Notices. Except as otherwise provided herein, all notices,
demands and requests that any party is required or elects to give to any other
shall be in writing, or by a telecommunications device capable of creating a
written record, and any such notice shall become effective (a) upon personal
delivery thereof, including, but not limited to, delivery by overnight mail and
courier service, (b) four (4) days after it shall have been mailed by United
States mail, first class, certified or registered, with postage prepaid, or (c)
in the case of notice by such a telecommunications device, when properly
transmitted, in each case addressed to the party to be notified as follows:
If to the Agent or to the Bank:
Bank of America, N.A.
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Business Credit/Regional Manager: URGENT
Telecopy No.: 000-000-0000
with a copy to:
Jenkens & Xxxxxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy No.: 000-000-0000
LOAN AND SECURITY AGREEMENT - Page 115
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If to the Loan Parties:
Xxxxxx Drilling Company
0 Xxxx 0xx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Telecopy: 000-000-0000
with a copy to:
Xxxxxx & Xxxxxx L.L.P.
0000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Telecopy No.: 000-000-0000
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
Section 15.9 Waiver of Notices. Unless otherwise expressly provided
herein, each Loan Party waives presentment, protest and notice of demand or
dishonor and protest as to any instrument, notice of intent to accelerate the
Obligations and notice of acceleration of the Obligations, as well as any and
all other notices to which it might otherwise be entitled. No notice to or
demand on any Loan Party which the Agent or any Lender may elect to give shall
entitle any Loan Party to any or further notice or demand in the same, similar
or other circumstances.
Section 15.10 Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective representatives,
successors, and assigns of the parties hereto; provided, however, that no
interest herein may be assigned by any Loan Party without prior written consent
of the Agent and each Lender. The rights and benefits of the Agent and the
Lenders hereunder shall, if such Persons so agree, inure to any party acquiring
any interest in the Obligations or any part thereof.
Section 15.11 Indemnity of the Agent and the Lenders by the Loan
Parties.
(a) EACH LOAN PARTY AGREES TO DEFEND, INDEMNIFY AND HOLD THE
AGENT-RELATED PERSONS, AND EACH LENDER AND EACH OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, COUNSEL, AGENTS AND ATTORNEYS-IN-FACT
(EACH, AN "INDEMNIFIED PERSON") HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, CHARGES, EXPENSES AND DISBURSEMENTS (INCLUDING
ATTORNEY COSTS) OF ANY KIND OR NATURE WHATSOEVER WHICH MAY AT ANY TIME
(INCLUDING AT ANY TIME FOLLOWING REPAYMENT OF THE LOANS AND THE
TERMINATION,
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RESIGNATION OR REPLACEMENT OF THE AGENT OR REPLACEMENT OF ANY LENDER)
BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST ANY SUCH PERSON IN ANY
WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY DOCUMENT
CONTEMPLATED BY OR REFERRED TO HEREIN, OR THE TRANSACTIONS CONTEMPLATED
HEREBY, OR ANY ACTION TAKEN OR OMITTED BY ANY SUCH PERSON UNDER OR IN
CONNECTION WITH ANY OF THE FOREGOING, INCLUDING WITH RESPECT TO ANY
INVESTIGATION, LITIGATION OR PROCEEDING (INCLUDING ANY INSOLVENCY
PROCEEDING OR APPELLATE PROCEEDING) RELATED TO OR ARISING OUT OF THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT, OR THE LOANS OR THE USE OF THE
PROCEEDS THEREOF, WHETHER OR NOT ANY INDEMNIFIED PERSON IS A PARTY
THERETO (ALL THE FOREGOING, COLLECTIVELY, THE "INDEMNIFIED
LIABILITIES"); PROVIDED, THAT THE LOAN PARTIES SHALL HAVE NO OBLIGATION
HEREUNDER TO ANY INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED
LIABILITIES RESULTING SOLELY FROM THE WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE OF SUCH INDEMNIFIED PERSON. THE AGREEMENTS IN THIS SECTION
SHALL SURVIVE PAYMENT OF ALL OTHER OBLIGATIONS.
(b) EACH LOAN PARTY AGREES TO INDEMNIFY, DEFEND AND HOLD
HARMLESS THE AGENT AND THE LENDERS FROM ANY LOSS OR LIABILITY DIRECTLY
OR INDIRECTLY ARISING OUT OF THE USE, GENERATION, MANUFACTURE,
PRODUCTION, STORAGE, RELEASE, THREATENED RELEASE, DISCHARGE, DISPOSAL
OR PRESENCE OF A HAZARDOUS SUBSTANCE RELATING TO ANY LOAN PARTY'S
OPERATIONS, BUSINESS OR PROPERTY. THIS INDEMNITY WILL APPLY WHETHER THE
HAZARDOUS SUBSTANCE IS ON, UNDER OR ABOUT ANY LOAN PARTY'S PROPERTY OR
OPERATIONS OR PROPERTY LEASED TO ANY LOAN PARTY. THE INDEMNITY INCLUDES
BUT IS NOT LIMITED TO ATTORNEYS' FEES (INCLUDING THE REASONABLE
ESTIMATE OF THE ALLOCATED COST OF IN-HOUSE COUNSEL AND STAFF). THE
INDEMNITY EXTENDS TO THE AGENT AND THE LENDERS, THEIR PARENTS,
AFFILIATES, SUBSIDIARIES AND ALL OF THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, SUCCESSORS, ATTORNEYS AND ASSIGNS. "HAZARDOUS
SUBSTANCES" MEANS ANY SUBSTANCE, MATERIAL OR WASTE THAT IS OR BECOMES
DESIGNATED OR REGULATED AS "TOXIC," "HAZARDOUS," "POLLUTANT," OR
"CONTAMINANT" OR A SIMILAR DESIGNATION OR REGULATION UNDER ANY FEDERAL,
STATE OR LOCAL LAW (WHETHER UNDER COMMON LAW, STATUTE, REGULATION OR
OTHERWISE) OR JUDICIAL OR ADMINISTRATIVE INTERPRETATION OF SUCH,
INCLUDING PETROLEUM OR NATURAL GAS. THIS INDEMNITY WILL SURVIVE
REPAYMENT OF ALL OTHER OBLIGATIONS.
Section 15.12 Limitation of Liability. No claim may be made by any Loan
Party, any Lender or other Person against the Agent, any Lender, or the
affiliates, directors, officers, officers, employees, or agents of any of them
for any special, indirect, consequential or punitive damages in
LOAN AND SECURITY AGREEMENT - Page 117
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respect of any claim for breach of contract or any other theory of liability
arising out of or related to the transactions contemplated by this Agreement or
any other Loan Document, or any act, omission or event occurring in connection
therewith, and each Loan Party and each Lender hereby waives, releases and
agrees not to xxx upon any claim for such damages, whether or not accrued and
whether or not known or suspected to exist in its favor.
Section 15.13 Final Agreement. This Agreement and the other Loan
Documents are intended by the Loan Parties, the Agent and the Lenders to be the
final, complete, and exclusive expression of the agreement between them. This
Agreement supersedes any and all prior oral or written agreements relating to
the subject matter hereof. No modification, rescission, waiver, release, or
amendment of any provision of this Agreement or any other Loan Document shall be
made, except by a written agreement signed by the Loan Parties and a duly
authorized officer of each of the Agent and the requisite Lenders.
Section 15.14 Counterparts. This Agreement may be executed in any
number of counterparts, and by the Agent, each Lender and the Loan Parties in
separate counterparts, each of which shall be an original, but all of which
shall together constitute one and the same agreement; signature pages may be
detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
Section 15.15 Captions. The captions contained in this Agreement are
for convenience of reference only, are without substantive meaning and should
not be construed to modify, enlarge, or restrict any provision.
Section 15.16 Right of Setoff. In addition to any rights and remedies
of the Lenders provided by law, if an Event of Default exists or the Loans have
been accelerated, each Lender is authorized at any time and from time to time,
without prior notice to the Loan Parties, any such notice being waived by the
Loan Parties to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held by, and other indebtedness at any time owing by, such Lender to or
for the credit or the account of any Loan Party against any and all Obligations
owing to such Lender by such Loan Party, now or hereafter existing, irrespective
of whether or not the Agent or such Lender shall have made demand under this
Agreement or any Loan Document and although such Obligations may be contingent
or unmatured. Each Lender agrees promptly to notify the Loan Parties and the
Agent after any such setoff and application made by such Lender; provided,
however, that the failure to give such notice shall not affect the validity of
such setoff and application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL
EXERCISE ANY RIGHT OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT
ACCOUNT OR PROPERTY OF ANY LOAN PARTY HELD OR MAINTAINED BY SUCH LENDER WITHOUT
THE PRIOR WRITTEN UNANIMOUS CONSENT OF THE LENDERS.
Section 15.17 Joint and Several Liability. All Loans, upon funding,
shall be deemed to be jointly funded to and received by the Borrowers. Each Loan
Party jointly and severally agrees to pay, and shall be jointly and severally
liable under this Agreement for, all Obligations (excluding Existing Obligations
in the case of a Newly Obligated Party), regardless of the manner or amount in
which
LOAN AND SECURITY AGREEMENT - Page 118
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proceeds of Loans are used, allocated, shared or disbursed by or among the Loan
Parties themselves, or the manner in which the Agent and/or any Lender accounts
for such Loans or other extensions of credit on its books and records. The
Borrowers acknowledge and expressly agree with the Agent and each Lender that
the joint and several liability of each Borrower is required solely as a
condition to, and is given solely as inducement for and in consideration of,
credit or accommodations extended or to be extended under the Loan Documents to
any or all of the other Loan Parties and is not required or given as a condition
of extensions of credit to such Borrower. Each Loan Party's obligations under
this Agreement and as an obligor under a Guaranty Agreement shall be separate
and distinct obligations. Each Loan Party's obligations under this Agreement
shall, to the fullest extent permitted by law, be unconditional irrespective of
(i) the validity or enforceability, avoidance, or subordination of the
Obligations of any other Loan Party or of any promissory note or other document
evidencing all or any part of the Obligations of any other Loan Party, (ii) the
absence of any attempt to collect the Obligations from any other Loan Party, any
other guarantor, or any other security therefor, or the absence of any other
action to enforce the same, (iii) the waiver, consent, extension, forbearance,
or granting of any indulgence by the Agent and/or any Lender with respect to any
provision of any instrument evidencing the Obligations of any other Loan Party,
or any part thereof, or any other agreement now or hereafter executed by any
other Loan Party and delivered to the Agent and/or any Lender, (iv) the failure
by the Agent and/or any Lender to take any steps to perfect and maintain its
security interest in, or to preserve its rights to, any security or collateral
for the Obligations of any other Loan Party, (v) the Agent's and/or any Lender's
election, in any proceeding instituted under the Bankruptcy Code, of the
application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or
grant of a security interest by any other Loan Party, as debtor-in-possession
under Section 364 of the Bankruptcy Code, (vii) the disallowance of all or any
portion of the Agent's and/or any Lender's claim(s) for the repayment of the
Obligations of any other Loan Party under Section 502 of the Bankruptcy Code, or
(viii) any other circumstances which might constitute a legal or equitable
discharge or defense of a guarantor or of any other Loan Party. With respect to
any Loan Party's Obligations arising as a result of the joint and several
liability of the Loan Parties hereunder with respect to Loans or other
extensions of credit made to any of the other Loan Parties hereunder, such Loan
Party waives, until the Obligations shall have been paid in full and the Loan
Agreement shall have been terminated, any right to enforce any right of
subrogation or any remedy which the Agent and/or any Lender now has or may
hereafter have against any other Loan Party, any endorser or any guarantor of
all or any part of the Obligations, and any benefit of, and any right to
participate in, any security or collateral given to the Agent and/or any Lender
to secure payment of the Obligations or any other liability of any Loan Party to
the Agent and/or any Lender. Upon any Event of Default, the Agent may proceed
directly and at once, without notice, against any Loan Party to collect and
recover the full amount, or any portion of the Obligations, without first
proceeding against any other Loan Party or any other Person, or against any
security or collateral for the Obligations. Each Loan Party consents and agrees
that the Agent shall be under no obligation to marshal any assets in favor of
any Loan Party or against or in payment of any or all of the Obligations.
Section 15.18 Contribution and Indemnification among the Loan Parties.
To the extent that any Loan Party or any Subsidiary of a Loan Party shall repay
any of the Obligations (an "Accommodation Payment"), then the Loan Party or such
Subsidiary making such Accommodation Payment shall be entitled to contribution
and indemnification from, and be reimbursed by, each of the
LOAN AND SECURITY AGREEMENT - Page 119
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other Loan Parties in an amount, for each of such other Loan Parties, equal to a
fraction of such Accommodation Payment, the numerator of which fraction is such
other Loan Party's Allocable Amount (as defined below) and the denominator of
which is the sum of the Allocable Amounts of all of the Loan Parties. As of any
date of determination, the "Allocable Amount" of each Loan Party shall be equal
to the maximum amount of liability for Accommodation Payments which could be
asserted against such Loan Party hereunder without (a) rendering such Loan Party
"insolvent" within the meaning of Section 101 (31) of the Bankruptcy Code,
Section 2 of the Uniform Fraudulent Transfer Act ("UFTA") or Section 2 of the
Uniform Fraudulent Conveyance Act ("UFCA"), (b) leaving such Loan Party with
unreasonably small capital or assets, within the meaning of Section 548 of the
Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the UFCA, or (c) leaving
such Loan Party unable to pay its debts as they become due within the meaning of
Section 548 of the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the
UFCA. All rights and claims of contribution, indemnification, and reimbursement
under this section shall be subordinate in right of payment to the prior payment
in full of the Obligations. The provisions of this section shall, to the extent
expressly inconsistent with any provision in any Loan Document, supersede such
inconsistent provision.
Section 15.19 Express Waivers By Loan Parties In Respect of Cross
Guaranties and Cross Collateralization. Each Loan Party agrees as follows:
(a) Each Loan Party hereby waives: (1) notice of acceptance of
this Agreement; (2) notice of the making of any Loans, the issuance of
any Letter of Credit or any other financial accommodations made or
extended under the Loan Documents or the creation or existence of any
Obligations; (3) notice of the amount of the Obligations, subject,
however, to such Loan Party's right to make inquiry of the Agent to
ascertain the amount of the Obligations at any reasonable time; (4)
notice of any adverse change in the financial condition of any other
Loan Party or of any other fact that might increase such Loan Party's
risk with respect to such other Loan Party under the Loan Documents;
(5) notice of presentment for payment, demand, protest and notice
thereof as to any promissory notes or other instruments among the Loan
Documents; and (6) all other notices (except if such notice is
specifically required to be given to such Loan Party hereunder or under
any of the other Loan Documents to which such Loan Party is a party)
and demands to which such Loan Party might otherwise be entitled;
(b) Each Loan Party hereby waives the right by statute or
otherwise to require the Agent or any Lender to institute suit against
any other Loan Party or to exhaust any rights and remedies which the
Agent or any Lender has or may have against any other Loan Party. Each
Loan Party further waives any defense arising by reason of any
disability or other defense of any other Loan Party (other than the
defense that the Obligations shall have been fully and finally
performed and indefeasibly paid) or by reason of the cessation from any
cause whatsoever of the liability of any such Loan Party in respect
thereof.
(c) Each Loan Party hereby waives and agrees not to assert
against the Agent, any Lender or the Letter of Credit Issuer: (i) any
defense (legal or equitable), set-off, counterclaim or claim which such
Loan Party may now or at any time hereafter have against any other Loan
LOAN AND SECURITY AGREEMENT - Page 120
128
Party or any other party liable under the Loan Documents; (ii) any
defense, set-off, counterclaim or claim of any kind or nature available
to any other Loan Party against the Agent, any Lender or the Letter of
Credit Issuer, arising directly or indirectly from the present or
future lack of perfection, sufficiency, validity or enforceability of
the Obligations or any security therefor; (iii) any right or defense
arising by reason of any claim or defense based upon an election of
remedies by the Agent, any Lender or the Letter of Credit Issuer under
any applicable law; (iv) the benefit of any statute of limitations
affecting any other Loan Party's liability hereunder;
(d) Each Loan Party consents and agrees that, without notice
to or by such Loan Party and without affecting or impairing the
obligations of such Loan Party hereunder, the Agent may (subject to any
requirement for consent of any of the Lenders to the extent required by
this Agreement), by action or inaction: (a) compromise, settle, extend
the duration or the time for the payment of, or discharge the
performance of, or may refuse to or otherwise not enforce the Loan
Documents; (b) release all or any one or more parties to any one or
more of the Loan Documents or grant other indulgences to any other Loan
Party in respect thereof; (c) amend or modify in any manner and at any
time (or from time to time) any of the Loan Documents; or (d) release
or substitute any Person liable for payment of the Obligations, or
enforce, exchange, release or waive any security for the Obligations or
any Guaranty of the Obligations;
(e) Each Loan Party represents and warrants to the Agent and
the Lenders that such Loan Party is currently informed of the financial
condition of all other Loan Parties and all other circumstances which a
diligent inquiry would reveal and which bear upon the risk of
nonpayment of the Obligations. Each Loan Party further represents and
warrants that such Loan Party has read and understands the terms and
conditions of the Loan Documents. Each Loan Party agrees that neither
the Agent, nor any Lender nor the Letter of Credit Issuer has any
responsibility to inform any Loan Party of the financial condition of
any other Loan Party or of any other circumstances which bear upon the
risk of nonpayment or nonperformance of the Obligations.
Section 15.20 Exception to Covenants. No Loan Party nor any Subsidiary
shall be deemed to be permitted to take any action or fail to take any action
which is permitted as an exception to any of the covenants contained herein or
which is within the permissible limits of any of the covenants contained herein
if such action or omission would result in the breach of any other covenant
contained herein.
Section 15.21 Judgment Currency. The payment obligations of any Loan
Party under this Agreement or any of the other Loan Documents shall not be
discharged by an amount paid in any currency other than Dollars, or in any other
place than required by this Agreement or any such Loan Documents, to the extent
that the amount so paid on conversion to Dollars and transferred to the Agent in
Dallas, Dallas County, Texas under normal banking procedures does not yield the
amount of Dollars due under this Agreement or any such other Loan Document. If
for the purpose of obtaining judgment in any court it is necessary to convert a
sum due under this Agreement or any of the other Loan Documents in any currency
to another currency (the "Other Currency"), then the rate
LOAN AND SECURITY AGREEMENT - Page 121
129
of exchange which shall be applied shall be the Spot Rate, determined as of the
Business Day preceding the date on which such judgment is signed by the judge or
other Person acting on behalf of such court. The payment obligations of any Loan
Party in respect of any such amount due by it pursuant to such judgment,
notwithstanding the rate of exchange actually applied in rendering such
judgment, shall be discharged only to the extent that on the Business Day
following receipt by the Agent or the Lenders of any such sum in the Other
Currency pursuant to such judgment, the Agent or the Lenders may, in accordance
with normal banking procedures, purchase and transfer to Dallas, Dallas County,
Texas, Dollars with the amount of the Other Currency so received. As used
herein, "Spot Rate" means, as of any date of determination with respect to the
conversion of an amount denominated in one currency (the "Original Currency") to
the Other Currency, the rate of exchange at which, in accordance with customary
banking procedures and at such time and in such foreign exchange market as the
Agent shall determine consistent with such procedures, the Agent on such date
could purchase such amount of the Original Currency with the Other Currency.
Section 15.22 Agency of the Parent for each other Loan Party. Each of
the other Loan Parties irrevocably appoints the Parent as its agent for all
purposes relevant to this Agreement, including the giving and receipt of notices
and execution and delivery of all documents, instruments and certificates
contemplated herein (including without limitation execution and delivery to the
Agent of Borrowing Base Certificates, Notices of Borrowing and Notices of
Conversion/Continuation) and all modifications hereto. Any acknowledgment,
consent, direction, certification or other action which might otherwise be valid
or effective only if given or taken by all or any of the Loan Parties or acting
singly, shall be valid and effective if given or taken only by the Parent,
whether or not any of the other Loan Parties joins therein, and the Agent and
the Lenders shall have no duty or obligation to make further inquiry with
respect to the authority of the Parent under this Section 15.22, provided, that
nothing in this Section 15.22 shall limit the effectiveness of, or the right of
the Agent and the Lenders to rely upon, any notice (including without limitation
a Notice of Borrowing), document, instrument, certificate, acknowledgment,
consent, direction, certification or other action delivered by any Borrower
pursuant to this Agreement.
THIS WRITTEN LOAN AND SECURITY AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[Remainder of this page intentionally left blank]
LOAN AND SECURITY AGREEMENT - Page 122
130
IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
THE LOAN PARTIES:
XXXXXX DRILLING COMPANY, ANACHORETA, INC.,
a Delaware corporation a Nevada corporation
By: /s/ XXXXX X. XXXXXX By: /s/ XXXXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxx
----------------------- -----------------------
Title: Treasurer Title: VP
----------------------- -----------------------
CANADIAN RIG LEASING, INC., CHOCTAW INTERNATIONAL
an Oklahoma corporation RIG CORP., a Nevada corporation
By: /s/ XXXXX X. XXXXXX By: /s/ XXXXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxx
----------------------- -----------------------
Title: Assistant Secretary Title: VP
----------------------- -----------------------
CREEK INTERNATIONAL RIG CORP., DGH, INC., a Texas corporation
a Nevada corporation
By: /s/ XXXXXXX X. XXXXX By: /s/ XXXXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxx
----------------------- -----------------------
Title: VP Title: VP
----------------------- -----------------------
INDOCORP OF OKLAHOMA, INC., MALLARD PERU HOLDINGS,
an Oklahoma corporation INC., a Delaware corporation
By: /s/ XXXXXXX X. XXXXX By: /s/ XXXXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxx
----------------------- -----------------------
Title: VP Title: VP
----------------------- -----------------------
LOAN AND SECURITY AGREEMENT
131
MANAGEMENT SERVICE LOGISTICS, INC., OIME, INC., an Oklahoma
a Nevada corporation corporation
By: XXXXX X. XXXXXX By: XXXXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxx
----------------------- -----------------------
Title: Vice President Title: VP
----------------------- -----------------------
PARCO MASTS AND SUBSTRUCTURES, PARCO, INC., an Oklahoma
INC., an Oklahoma corporation corporation
By: XXXXXXX X. XXXXX By: XXXXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxx X. Xxxxx
----------------------- -----------------------
Title: VP Title: VP
----------------------- -----------------------
PARDRIL, INC., an Oklahoma corporation XXXXXX-VSE, INC., a Nevada
corporation
By: XXXXXXX X. XXXXX By: XXXXX X. XXXXXX
----------------------- -----------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxx
----------------------- -----------------------
Title: VP Title: Treasurer
----------------------- -----------------------
XXXXXX AVIATION INC., an Oklahoma XXXXXX DRILLING
corporation (KAZAKSTAN), LTD., an Oklahoma
corporation
By: XXXXXXX X. XXXXX By: XXXXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxx
----------------------- -----------------------
Title: VP Title: VP
----------------------- -----------------------
LOAN AND SECURITY AGREEMENT
132
XXXXXX DRILLING COMPANY XXXXXX DRILLING COMPANY
EASTERN HEMISPHERE, LTD., INTERNATIONAL LIMITED,
an Oklahoma corporation a Nevada corporation
By: /s/ XXXXXXX X. XXXXX By: /s/ XXXXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxx
----------------------- -----------------------
Title: VP Title: VP
----------------------- -----------------------
XXXXXX DRILLING COMPANY XXXXXX DRILLING COMPANY
INTERNATIONAL, INC., LIMITED, a Nevada corporation
a Delaware corporation
By: /s/ XXXXXXX X. XXXXX By: /s/ XXXXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxx
----------------------- -----------------------
Title: VP Title: VP
----------------------- -----------------------
XXXXXX DRILLING COMPANY LIMITED, XXXXXX DRILLING COMPANY
an Oklahoma corporation NORTH AMERICA, INC.,
a Nevada corporation
By: /s/ XXXXXXX X. XXXXX By: /s/ XXXXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxx
----------------------- -----------------------
Title: VP Title: VP
----------------------- -----------------------
XXXXXX DRILLING COMPANY OF XXXXXX DRILLING COMPANY
ARGENTINA, INC., a Nevada corporation OF BOLIVIA, INC., an Oklahoma
corporation
By: /s/ XXXXXXX X. XXXXX By: /s/ XXXXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxx
----------------------- -----------------------
Title: VP Title: VP
----------------------- -----------------------
LOAN AND SECURITY AGREEMENT
133
XXXXXX DRILLING COMPANY OF XXXXXX DRILLING COMPANY
INDONESIA, INC., an Oklahoma corporation OF MEXICO, LTD., an Oklahoma
corporation
By: /s/ XXXXXXX X. XXXXX By: /s/ XXXXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxx
----------------------- -----------------------
Title: VP Title: VP
----------------------- -----------------------
XXXXXX DRILLING COMPANY OF XXXXXX DRILLING COMPANY
NEW GUINEA, INC., an Oklahoma corporation OF NIGER, an Oklahoma corporation
By: /s/ XXXXXXX X. XXXXX By: /s/ XXXXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxx
----------------------- -----------------------
Title: VP Title: VP
----------------------- -----------------------
XXXXXX DRILLING COMPANY OF XXXXXX DRILLING COMPANY
OKLAHOMA, INCORPORATED, OF SINGAPORE, LTD.,
an Oklahoma corporation an Oklahoma corporation
By: /s/ XXXXXXX X. XXXXX By: /s/ XXXXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxx
----------------------- -----------------------
Title: VP Title: VP
----------------------- -----------------------
XXXXXX DRILLING COMPANY OF XXXXXX DRILLING COMPANY
SOUTH AMERICA, INC., OF SOUTH TEXAS, INC.,
an Oklahoma corporation an Oklahoma corporation
By: /s/ XXXXXXX X. XXXXX By: /s/ XXXXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxx
----------------------- -----------------------
Title: VP Title: VP
----------------------- -----------------------
LOAN AND SECURITY AGREEMENT
134
XXXXXX DRILLING OFFSHORE XXXXXX DRILLING OFFSHORE
CORPORATION, a Texas corporation USA, L.L.C., an Oklahoma limited
liability company
By: /s/ XXXXXXX X. XXXXX By: /s/ XXXXX X. XXXXXX
----------------------- -----------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxx
----------------------- -----------------------
Title: VP Title: Treasurer
----------------------- -----------------------
XXXXXX DRILLING U.S.A., LTD., XXXXXX ENERGY RESOURCES,
a Nevada corporation INC., a Texas corporation
By: /s/ XXXXXXX X. XXXXX By: /s/ XXXXX X. XXXXXX
----------------------- -----------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxx
----------------------- -----------------------
Title: VP Title: Vice President
----------------------- -----------------------
XXXXXX MEASUREMENT, INC., XXXXXX NORTH AMERICA
a Texas corporation OPERATIONS, INC., a Nevada
corporation
By: /s/ XXXXX X. XXXXXX By: /s/ XXXXX X. XXXXXX
----------------------- -----------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
----------------------- -----------------------
Title: Vice President Title: President
----------------------- -----------------------
XXXXXX PIPELINE COMPANY, INC., XXXXXX TECHNOLOGY, INC.,
a Texas corporation an Oklahoma corporation
By: /s/ XXXXX X. XXXXXX By: /s/ XXXXX X. XXXXXX
----------------------- -----------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
----------------------- -----------------------
Title: Vice President Title: Assistant Secretary
----------------------- -----------------------
LOAN AND SECURITY AGREEMENT
135
XXXXXX TECHNOLOGY, L.L.C., XXXXXX USA DRILLING
a Louisiana limited liability company COMPANY, a Nevada corporation
By: /s/ XXXXX X. XXXXXX By: /s/ XXXXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxx
----------------------- -----------------------
Title: Assistant VP Title: VP
----------------------- -----------------------
XXXXXX VALVE COMPANY, QUAIL TOOLS, L.L.P.,
a Texas corporation an Oklahoma limited liability partnership
By: /s/ XXXXX X. XXXXXX By: /s/ XXXXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxx
----------------------- -----------------------
Title: Assistant VP Title: Secretary
----------------------- -----------------------
SAINTS ACQUISITION SELECTIVE DRILLING
COMPANY, a Delaware corporation CORPORATION, an Oklahoma
corporation
By: /s/ XXXXX X. XXXX By: /s/ XXXXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxx X. Xxxx Name: Xxxxxxx X. Xxxxx
----------------------- -----------------------
Title: Vice President Title: VP
----------------------- -----------------------
TOTAL COVERAGE SERVICES, TOTAL FUNDS MANAGEMENT
a Nevada corporation CORPORATION, a Nevada corporation
By: /s/ XXXXXXX X. XXXXX By: /s/ XXXXX X. XXXXXX
----------------------- -----------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxx
----------------------- -----------------------
Title: VP Title: President
----------------------- -----------------------
LOAN AND SECURITY AGREEMENT
136
TOTAL LOGISTICS CORPORATION, UNIVERSAL RIG SERVICE CORP.,
a Nevada corporation a Nevada corporation
By: /s/ XXXXX X. XXXXXX By: /s/ XXXXX X. XXXXXX
----------------------- -----------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
----------------------- -----------------------
Title: President Title: Assistant VP
----------------------- -----------------------
LOAN AND SECURITY AGREEMENT
137
THE AGENT:
BANK OF AMERICA, NATIONAL
ASSOCIATION, as the Agent
By: /s/ XXX XXXX
---------------------------
Xxx Xxxx
Vice President
LOAN AND SECURITY AGREEMENT
138
THE LENDERS:
BANK OF AMERICA, NATIONAL
ASSOCIATION
Commitment: $30,000,000
Pro Rata Share: 60%
By: /s/ XXX XXXX
---------------------------
Xxx Xxxx
Vice President
LOAN AND SECURITY AGREEMENT
139
CONGRESS FINANCIAL CORPORATION
Commitment: $15,000,000
Pro Rata Share: 30%
By: /s/ XXXX X. XXXXXXX
---------------------------
Xxxx X. Xxxxxxx
Vice President
LOAN AND SECURITY AGREEMENT
140
BANK OF OKLAHOMA, N.A.
Commitment: $5,000,000
Pro Rata Share: 10%
By: /s/ XXXXX X. XXXXX
---------------------------
Name: Xxxxx X. Xxxxx
-------------------------
Title: Vice President
------------------------
LOAN AND SECURITY AGREEMENT
141
EXHIBIT A
FORM OF REVOLVING NOTE
Exhibit A; Cover Page
142
EXHIBIT B
FORM OF BORROWING BASE CERTIFICATE
Exhibit B; Cover Page
143
EXHIBIT C
FINANCIAL STATEMENTS
Exhibit C; Cover Page
144
XXXXXX DRILLING COMPANY
CONSOLIDATED SUBSIDIARIES
FINANCIAL STATEMENTS AS OF
JULY 31, 1999 AND
AUGUST 31, 1998 AND
FOR THE SEVEN MONTHS ENDED
JULY 31, 1999 AND 1998
145
XXXXXX DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
(Dollars in Thousands)
(Unaudited)
July 31, Dec. 31,
1999 1998
---------- ----------
Current assets:
Cash and cash equivalents $ 15,204 $ 24,314
Other short-term investments 300 --
Accounts and notes receivable, net
of allowance for bad debts of $6,164
at July 31, 1999 and $3,002 at
December 31, 1998 87,261 105,810
Rig materials and supplies 12,031 18,755
Other current assets 10,963 13,224
---------- ----------
Total current assets 125,759 162,103
---------- ----------
Property, plant and equipment, at cost:
Drilling equipment 951,602 957,672
Rental equipment 42,160 38,784
Buildings, land and improvements 19,722 23,329
Other 26,296 29,222
Construction in progress 145,078 126,330
---------- ----------
1,184,858 1,175,337
Less accumulated depreciation
and amortization 466,222 445,464
---------- ----------
Net property, plant and equipment 718,636 729,873
---------- ----------
Deferred charges and other assets:
Goodwill 207,208 214,232
Rig materials and supplies 14,937 8,900
Assets held for disposition (Note 5) 8,436 11,010
Debt issuance costs 13,843 15,052
Other 18,772 18,156
---------- ----------
Total deferred charges and other assets 263,196 267,350
---------- ----------
Total assets $1,107,591 $1,159,326
========== ==========
The accompanying notes are an integral
part of the consolidated financial statements.
1
146
XXXXXX DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(Dollars in Thousands)
(Unaudited)
July 31, Dec. 31,
1999 1998
----------- -----------
Current liabilities:
Current portion of long-term debt $ 41,186 $ 31,404
Accounts payable 25,818 39,114
Accrued liabilities 30,792 33,323
Accrued income taxes 7,134 7,576
----------- -----------
Total current liabilities 104,930 111,417
----------- -----------
Long-term debt (Note 3) 629,062 630,479
Deferred income tax 27,805 41,253
Other long-term obligations 12,208 12,227
Stockholders' equity:
Common stock, $.16 2/3 par value,
authorized 120,000,000 shares, issued
and outstanding 77,169,309 shares
(76,886,806 shares at December 31, 1998) 12,868 12,815
Capital in excess of par value 342,703 341,699
Retained earnings (accumulated deficit) (21,985) 9,436
----------- -----------
Total stockholders' equity 333,586 363,950
----------- -----------
Total liabilities and stockholders' equity $ 1,107,591 $ 1,159,326
=========== ===========
The accompanying notes are an integral
part of the consolidated financial statements.
2
147
XXXXXX DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in Thousands)
(Unaudited)
Seven Months Ended July 31,
---------------------------------
1999 1998
------------ ------------
Revenues:
Domestic drilling $ 65,623 $ 127,486
International drilling 113,751 144,311
Rental tools 15,733 18,931
Other 262 1,103
------------ ------------
Total revenues 195,369 291,831
------------ ------------
Operating expenses:
Domestic drilling 59,385 82,155
International drilling 76,955 99,959
Rental tools 6,432 8,127
Other 206 1,246
Depreciation and amortization 46,899 42,310
General and administrative 9,558 10,666
Restructuring charges 3,000 --
Provision for reduction in
carrying value of certain assets 5,250 --
------------ ------------
Total operating expenses 207,685 244,463
------------ ------------
Operating income (loss) (12,316) 47,368
------------ ------------
Other income and (expense):
Interest expense (31,382) (29,998)
Interest income 776 1,638
Other income (expense) - net 4,085 (446)
------------ ------------
Total other income and (expense) (26,521) (28,806)
------------ ------------
Income (loss) before income taxes (38,837) 18,562
------------ ------------
Income tax expense (benefit)
Current 6,032 7,763
Deferred (13,448) 2,100
------------ ------------
Total income tax expense (benefit) (7,416) 9,863
------------ ------------
Net income (loss) $ (31,421) $ 8,699
============ ============
Earnings (loss) per share,
Basic (.41) .11
Diluted (.41) .11
Number of common shares used in computing earnings per share:
Basic 77,039,523 76,717,778
Diluted 77,039,523 77,580,927
The accompanying notes are an integral
part of the consolidated financial statements.
3
148
XXXXXX DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(Dollars in Thousands)
(Unaudited)
Seven Months Ended July 31,
---------------------------
1999 1998
--------- ---------
Cash flows from operating activities:
Net income (loss) $ (31,421) $ 8,699
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 46,899 42,310
Loss (gain) on disposition of
property, plant and equipment (1,682) (1,014)
Provision for reduction in carrying
value of certain assets 5,250 --
Deferred income tax expense (benefit) (13,448) 2,100
Expenses not requiring cash 2,635 2,635
Change in assets and liabilities:
Accounts and notes receivable 17,623 17,751
Rig materials and supplies 232 (3,253)
Other current assets 2,261 1,459
Accounts payable and accrued
liabilities (15,846) 36,722
Accrued income taxes (442) 101
Other assets 206 1,633
--------- ---------
Net cash provided by (used in)
operating activities 12,267 109,143
--------- ---------
Cash flows from investing activities:
Acquisition of Hercules, net of cash acquired -- (1,147)
Acquisition of Bolifor -- (2,189)
Proceeds from the sale of property,
plant and equipment 12,351 3,570
Capital expenditures (42,400) (139,322)
Decrease (increase) in short-term and
long-term investments (300) (17,222)
Other-net 463 (802)
--------- ---------
Net cash provided (used) by investing activities $ (29,886) $(157,112)
--------- ---------
The accompanying notes are an integral
part of the consolidated financial statements.
4
149
XXXXXX DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
Increase (Decrease) in Cash and Cash Equivalents
(Dollars in Thousands)
(Unaudited)
Seven Months Ended July 31,
---------------------------
1999 1998
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of debt $ 10,252 $ 162,736
Principal payments under debt obligations (1,677) (119,352)
Other (66) (157)
--------- ---------
Net cash provided (used) by financing
activities 8,509 43,227
--------- ---------
Net change in cash and cash equivalents (9,110) (4,742)
--------- ---------
Cash and cash equivalents at beginning
of period 24,314 32,444
--------- ---------
Cash and cash equivalents at
the end of period $ 15,204 $ 27,702
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 33,370 $ 24,416
Income taxes $ 6,474 $ 7,052
The accompanying notes are an integral
part of the consolidated financial statements.
5
150
XXXXXX DRILLING COMPANY AND SUBSIDIARIES
STATEMENT OF PREFERRED STOCK, COMMON STOCK
AND OTHER STOCKHOLDERS' EQUITY
For the Seven Months Ended July 31, 1999
(Dollars in Thousands)
(Unaudited)
Retained
Capital in Earnings
Common Excess of (Accumulated
Stock Par Value Deficit)
--------- ---------- ------------
Balance,
December 31, 1998 $ 12,815 $ 341,699 $ 9,436
Activity in employees'
stock option and
career stock plan 56 1,067 --
Acquisition of stock
from certain employees (3) (63) --
Net income (loss) for the
seven months ended
July 31, 1999 -- -- (31,421)
--------- --------- ---------
Balance,
July 31, 1999 $ 12,868 $ 342,703 $ (21,985)
========= ========= =========
The accompanying notes are an integral
part of the consolidated financial statements.
6
151
XXXXXX DRILLING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies
Consolidation - The consolidated financial statements include the accounts of
Xxxxxx Drilling Company ("Xxxxxx Drilling") and all of its majority-owned
subsidiaries (collectively, the "Company").
Operations - The Company provides land and offshore contract drilling
services and rental tools on a worldwide basis to major, independent and foreign
national oil companies. Xxxxxx'x rig fleet consists of 34 barge drilling and
workover rigs, eight offshore jackup rigs, six offshore platform rigs and 75
land rigs. The Company specializes in the drilling of deep and difficult xxxxx,
drilling in remote and harsh environments, drilling in transition zones and
offshore waters and in providing specialized rental tools. The Company also
provides a range of services that are ancillary to its principal drilling
services, including engineering, logistics and construction, as well as various
types of project management.
Drilling Contracts - The Company recognizes revenue and expenses on dayrate
contracts as the drilling progresses (percentage-of-completion method) because
the Company does not bear the risk of completion of the well. For meterage
contracts, the Company recognizes the revenue and expenses upon completion of
the well (completed-contract method).
Cash and Cash Equivalents - For purposes of the balance sheet and the
statement of cash flows, the Company considers cash equivalents to be all highly
liquid debt instruments that had a remaining maturity of three months or less at
the date of purchase.
Other Short-term Investments - Other short-term investments include
primarily certificates of deposit, U.S. government securities and commercial
paper having remaining maturities of greater than three months at the date of
purchase and are stated at the lower of cost or market.
Property, Plant and Equipment - The Company provides for depreciation of
property, plant and equipment primarily on the straight-line method over the
estimated useful lives of the assets after provision for salvage value. In the
third quarter of fiscal 1998, the Company reviewed the estimated useful life of
its land drilling fleet used for financial depreciation purposes. As a result,
the estimated life was extended from 10 to 15 years with a five percent salvage
value for most of the major rig components. The Company's historical experience
and a comparison with other firms in the industry indicates that its land
drilling equipment has a useful life of at least 15 years. The depreciable lives
for offshore drilling equipment, 15 to 20 years, remained unchanged. The
depreciable lives for certain other equipment, ranging from three to seven
years, including drill pipe, also were not extended. The Company estimates the
change in depreciable lives will result in a reduction in calendar 1999
depreciation expense of $5.2 million. When properties are retired or otherwise
disposed of, the related
7
152
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 1 - Summary of Significant Accounting Policies (continued)
cost and accumulated depreciation are removed from the accounts and any gain or
loss is included in operations. Management periodically evaluates the Company's
assets to determine if they are not in excess of their net realizable value.
Management considers a number of factors such as estimated future cash flows,
appraisals and current market value analysis in determining net realizable
value. Assets are written down to reflect any decrease in net realizable value
below their net carrying value. In addition, interest charges totaling
approximately $3.0 million for the seven months ended July 31, 1999, $1.7
million for the four months ended December 31, 1998 and $3.5 million for the
fiscal year ended August 31, 1998 were capitalized.
Goodwill - Goodwill is being amortized on a straight-line basis over 30
years commencing on the dates of the respective acquisitions. The Company
assesses whether the excess of cost over net assets acquired is impaired based
on the ability of the operation to which it relates to generate cash flows in
amounts adequate to cover the future amortization of such assets. If an
impairment is determined, the amount of such impairment is calculated based on
the estimated fair value of the related assets.
Rig Materials and Supplies - Since the Company's foreign drilling generally
occurs in remote locations, making timely outside delivery of spare parts
uncertain, a complement of parts and supplies is maintained for each rig either
at the drilling site or in warehouses close to the operations. During periods of
high rig utilization, these parts are generally consumed and replenished within
a one-year period. During a period of lower rig utilization in a particular
location, the parts, like the related idle rigs, are generally not transferred
to other foreign locations until new contracts are obtained because of the
significant transportation costs which would result from such transfers. The
Company classifies those parts which are not expected to be utilized in the
following year as long-term assets. These assets are carried at the lower of
cost or market.
Other Long-term Obligations - Included in this account is the accrual of
workers' compensation and deferred revenue related to prepayments received for
certain daywork drilling revenues. These prepayments are recognized over the
related contract term.
Income Taxes - The Company has adopted Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes." Under this method,
deferred tax liabilities and assets are determined based on the difference
between the financial statement and tax basis of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to reverse.
Earnings (Loss) Per Share (EPS) - The Company has adopted Statement of
Financial Accounting Standard No. 128, "Earnings per Share." The statement
requires a presentation of both basic and diluted EPS. Basic earnings (loss) per
share is computed by dividing net income (loss), as adjusted for dividends on
preferred stock, by the weighted average number of common shares outstanding
during the period. The effect of dilutive securities is included in the diluted
EPS calculation when applicable.
8
153
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 1 - Summary of Significant Accounting Policies (continued)
Concentrations of Credit Risk - Financial instruments which potentially
subject the Company to concentrations of credit risk consist primarily of trade
receivables with a variety of national and international oil and natural gas
companies. The Company generally does not require collateral on its trade
receivables. Such credit risk is considered by management to be limited, except
as noted in the following, due to the large number of customers comprising the
Company's customer base. The Company places substantially all its
interest-bearing investments with major financial institutions and, by policy,
limits the amount of credit exposure to any one financial institution. In
calendar 1999, the Company increased its allowance for doubtful accounts by $3.2
million as the depressed oil industry conditions have negatively impacted
several of the Company's customers' ability to pay the Company for services
provided.
The current political and currency instability in Indonesia has created
uncertainty regarding the Company's Indonesian operations. The Company provides
management, technical and training support to an Indonesian-owned drilling
contractor, whose services include the drilling of geothermal xxxxx, related to
power plant projects. Due to the uncertain economic conditions, certain of these
power plant projects have been postponed or delayed. As a result, payments from
a significant customer for services provided by the contractor have been
delayed. The Company and the contractor will vigorously pursue all alternatives
to expedite payment. The Company believes that resolution of this matter will
not have a material adverse effect on the Company's results of operations or
financial position.
Fair Market Value of Financial Instruments - The carrying amount of the
Company's cash and short-term investments and short-term and long-term debt had
fair values that approximated their carrying amounts.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Note 2 - Acquisitions
On December 30, 1997, the Company acquired all of the outstanding capital
stock of Hercules Offshore Corporation, a Texas corporation ("HOC"), and all of
the outstanding capital stock of Hercules Rig Corp., a Texas corporation ("HRC")
and an affiliate of HOC (HOC and HRC being collectively referred to as
"Hercules"), for $195.6 million, including acquisition costs. The purchase
prices for the acquisitions were adjusted for certain debt assumed by the
Company, for capital expenditures incurred subsequent to the purchase agreement
date and for levels of working capital at closing. Hercules owns three
self-erecting platform rigs and seven offshore jackup rigs.
9
154
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 2 - Acquisitions (continued)
The acquisition has been accounted for by the purchase method of
accounting, and the reported financial results include the Hercules operations
from the date of acquisition. The excess of purchase price over the fair values
of the net assets acquired was $83.9 million and has been recorded as goodwill,
which is being amortized on a straight-line basis over 30 years.
The acquisition of Hercules was primarily funded with proceeds from the
July 1997 issuance of the Company's $175 million 5 1/2% Convertible Subordinated
Notes.
10
155
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 3 - Long-term Debt (Dollars in Thousands)
July 31, Dec. 31,
1999 1998
-------- --------
Xxxxxx Drilling
Senior Notes payable in November 2006 with interest of 9.75% payable
semi-annually in May and November, net of discount of $1,715 at July 31,
1999 and $1,852 at December 31, 1998
(effective interest rate of 9.88%) $298,285 $298,148
Senior Notes payable in November 2006 with interest of 9.75% payable
semi-annually in May and November, net of premium of $4,819 at July 31,
1999 and $5,202 at December 31, 1998 (effective
interest rate of 8.97%) 154,819 155,202
Convertible Notes payable in
July 2004 with interest of 5 1/2%
payable semi-annually in August
and February 175,000 175,000
Revolving Credit Facility with interest at prime plus 0.50% or LIBOR plus
1.75% to 2.25%
(7.4375% as of August 31, 1998) 40,000 30,000
Other 2,144 3,533
Total debt 670,248 661,883
Less current portion 41,186 31,404
-------- --------
Total long-term debt $629,062 $630,479
======== ========
11
156
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 3 - Long-term Debt (continued)
The aggregate maturities of long-term debt for the five years ending December
31, 2003, are as follows (000's): 1999 - $ 41,186; 2000 - $ 696; 2001 - $ 613;
2002 - $ 285 and 2003 - $5.
The Senior Notes, which mature in 2006, were initially issued in November
1996 and in March 1998 in amounts of $300 million (Series B) and $150 million
(Series C), respectively. The $300 million issuance was sold at a $2.4 million
discount while the $150 million issuance was sold at a premium of $5.7 million.
In May 1998, a registration statement was filed by the Company which offered to
exchange the Series B and C notes for new Series D Senior Notes. The form and
terms of the Series D notes are identical in all material respects to the form
and terms of the Series B and C notes, except for certain transfer restrictions
and registration rights relating to the Series C Notes. All of the Series B and
C notes were exchanged for new Series D notes per this offering. The notes have
an interest rate of 9 3/4% and are guaranteed by substantially all subsidiaries
of Xxxxxx Drilling, all of which are wholly owned. The guarantees are joint and
several, full, complete and unconditional. There are currently no restrictions
on the ability of the subsidiaries to transfer funds to Xxxxxx Drilling in the
form of cash dividends, loans or advances. Xxxxxx Drilling is a holding company
with no operations, other than through its subsidiaries. The non-guarantors are
inconsequential, individually and in the aggregate, to the consolidated
financial statements and separate financial statements of the guarantors are not
presented because management has determined that they would not be material to
investors.
In anticipation of funding the Hercules acquisition, in July 1997 the
Company issued $175 million of Convertible Subordinated Notes due 2004. The
Notes bear interest at 5.5% payable semi-annually in February and August. The
Notes are convertible at the option of the holder into shares of common stock of
Xxxxxx Drilling at $15.39 per share at any time prior to maturity. The Notes
will be redeemable at the option of the Company at any time after July 2000 at
certain stipulated prices.
The $75 million revolving credit facility under the Company's Senior
Credit Facility is available for working capital requirements, general corporate
purposes and to support letters of credit. At July 31, 1999, $40 million was
outstanding under the revolving credit facility and $6.5 million in letters of
credit had been issued. Availability under the revolving credit facility is
subject to certain borrowing base limitations based on 80% of eligible accounts
receivable plus 50% of supplies in inventory. All advances to the Company under
the revolving credit facility bear interest, at the option of the Company, at
prime to prime plus 0.50% or at l.75% to 2.25% above the one-, two-, three- and
seven-month reserve-adjusted LIBOR rate, depending on the percentage of the
credit facility utilized. The revolving credit facility is collateralized by a
first lien on the Company's accounts receivable and inventory. The revolving
credit facility matures on December 31, 2000.
12
157
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The Senior Credit Facility also included a $100 million term loan that was
used to partially fund the Mallard and Quail acquisitions. The $90 million which
was outstanding at August 31, 1997 was fully repaid during fiscal 1998, $83
million of which was from proceeds received in March 1998 from the issuance of
the Senior Notes.
Each of the 9 3/4% Senior Notes, 5 1/2% Convertible Notes and the
Senior Credit Facility contains customary affirmative and negative covenants,
including restrictions on incurrence of debt and sales of assets. The Senior
Credit Facility prohibits payment of dividends and the indenture for the 9 3/4%
Senior Notes restricts the payment of dividends.
Note 4 - Common Stock and Stockholders' Equity
Stock Plans
The Company's employee, non-employee director and consultant stock plans
are summarized as follows:
The 1994 Non-Employee Director Stock Option Plan ("Director Plan") provides
for the issuance of options to purchase up to 200,000 shares of the Company's
common stock. The option price per share is equal to the fair market value of a
Xxxxxx Drilling share on the date of grant. The term of each option is ten
years, and an option first becomes exercisable six months after the date of
grant. Under the Director Plan, on the first trade day of each calendar year,
each person who is then a non-employee director of the Company will be
automatically granted an option to purchase 5,000 shares of common stock.
The 1994 Executive Stock Option Plan provides for the granting of a maximum
of 2,400,000 shares to key employees and consultants of the Company and its
subsidiaries through the granting of stock options, stock appreciation rights
and restricted and deferred stock awards. The option price per share may not be
less than 50% of the fair market value of a share on the date the option is
granted, and the maximum term of a non-qualified option may not exceed fifteen
years and the maximum term of an incentive option is ten years.
The 1997 Stock Plan is a "broad-based" stock plan that provides for the
granting of a maximum of 4,000,000 shares to all employees and consultants of
the Company who in the opinion of the board of directors are in a position to
contribute to the growth, management and success of the Company through the
granting of stock options and restricted stock awards. The option price per
share may not be less than 100% of the fair market value on the date the option
is granted for incentive options and not less than par value of a share of
common stock for non-qualified options. The maximum term of an incentive option
is ten years and the maximum term of a non-qualified option is fifteen years.
In July 1999, 2,000,000 additional shares were registered with the SEC for
granting under the 1997 Stock Plan. In July 1999, 1,884,000 shares were granted
under this plan, leaving 1,120,500 available for granting under this plan. All
shares have been granted under the 1994 Executive Stock Option Plan and the 1994
Non-Employee Director Stock Option Plan.
13
158
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Information regarding the Company's stock option plans is summarized
below:
1994 1997
Director Stock
Plan Plan
---------------------------- -----------------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
---------- ---------- ---------- ----------
Shares under option:
Outstanding at Sept. 1, 1995 15,000 $ 4.563 -- $ --
Granted 15,000 6.125 -- --
Exercised -- -- -- --
Cancelled -- -- -- --
---------- ---------- ---------- ----------
Outstanding at Aug. 31, 1996 30,000 $ 5.344 -- $ --
Granted 140,000 8.938 1,800,000 8.875
Exercised -- -- -- --
Cancelled -- -- -- --
---------- ---------- ---------- ----------
Outstanding at Aug. 31, 1997 170,000 $ 8.303 1,800,000 $ 8.875
Granted 20,000 12.094 1,410,500 11.798
Exercised -- -- -- --
Cancelled -- -- (15,000) 12.188
---------- ---------- ---------- ----------
Outstanding at Aug. 31, 1998 190,000 $ 8.702 3,195,500 $ 10.149
Granted -- -- 1,884,000 3.2087
Exercised -- -- -- --
Cancelled -- -- -- --
---------- ---------- ---------- ----------
Outstanding at Dec. 31, 1998 190,000 $ 8.702 3,195,500 $ 10.149
Granted 10,000 3.281 1,884,000 --
Exercised -- -- -- --
Cancelled -- -- (200,000) 10.813
---------- ---------- ---------- ----------
Outstanding at July 31, 1999 200,000 $ 8.426 4,879,500 $ 7.442
---------- ---------- ---------- ----------
14
159
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Information regarding the Company's stock option plans is summarized
below: (continued)
1994 Option Plan
------------------------------------------------------------------
Incentive Non-Qualified
Options Options
----------------------------- -----------------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
---------- ---------- ---------- ----------
Shares under option:
Outstanding at Sept. 1, 1995 733,000 $ 4.500 140,000 $ 2.250
Granted -- -- -- --
Exercised (57,000) 4.500 (29,652) 2.250
Cancelled -- -- -- --
---------- ---------- ---------- ----------
Outstanding at Aug. 31, 1996 676,000 $ 4.500 110,348 $ 2.250
Granted 1,520,000 8.875 -- --
Exercised (62,000) 4.500 (30,348) 2.250
Cancelled -- -- -- --
---------- ---------- ---------- ----------
Outstanding at Aug. 31, 1997 2,134,000 $ 7.616 80,000 $ 2.250
Granted -- -- -- --
Exercised -- -- (2,000) --
Cancelled -- -- -- --
---------- ---------- ---------- ----------
Outstanding at Aug. 31, 1998 2,134,000 $ 7.616 78,000 $ 2.250
Granted -- -- -- --
Exercised -- -- (2,500) 2.250
Cancelled -- -- -- --
---------- ---------- ---------- ----------
Outstanding at Dec. 31, 1998 2,134,000 $ 7.616 75,500 $ 2.250
Granted -- -- -- --
Exercised -- -- -- --
Cancelled -- -- -- --
---------- ---------- ---------- ----------
Outstanding at July 31, 1999 2,134,000 $ 7.616 75,500 $ 2.250
---------- ---------- ---------- ----------
15
160
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Outstanding Options
--------------------------
Weighted Weighted
Average Average
Number of Remaining Exercise
Plan Exercise Prices Shares Contractual Life Price
---- ----------------- --------- ---------------- --------
1994 Director Plan $ 3.281 - $ 6.125 40,000 6.8 years $ 4.828
$ 8.875 - $12.094 160,000 8.7 years $ 9.332
1994 Option Plan $ 4.500 614,000 6.3 years $ 4.500
Incentive Option $ 8.875 1,520,000 8.7 years $ 8.875
1994 Option Plan
Nonqualified $ 2.250 75,500 11.3 years $ 2.250
1997 Stock Plan
Incentive Option $ 3.188 988,318 7.0 years $ 3.188
1997 Stock Plan
Nonqualified $ 3.188 - $ 3.688 895,682 7.0 years $ 3.232
1997 Stock Plan $ 8.875 - $12.188 2,995,500 9.0 years $10.105
Exercisable Options
-------------------------
Weighted
Number of Average
Plan Exercise Prices Shares Exercise Price
---- ----------------- --------- --------------
1994 Director Plan $ 4.563 - $ 6.125 30,000 $ 5.344
$ 8.875 - $12.094 112,000 $ 7.528
1994 Option Plan $ 4.500 614,000 $ 4.500
Incentive Option $ 8.875 1,520,000 $ 8.875
1994 Option Plan
Nonqualified $ 2.250 75,500 $ 2.250
1997 Stock Plan
Incentive Option $ 8.875 - $12.188 958,200 $ 10.413
1997 Stock Plan
Incentive Option $ 3.188 451,000 $ 3.188
1997 Stock Plan
Nonqualified $ 3.188 - $ 3.688
16
161
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 4 - Common Stock and Stockholders' Equity (continued)
The Company has three additional stock plans which provide for the
issuance of stock for no cash consideration to officers and key non-officer
employees. Under two of the plans, each employee receiving a grant of shares may
dispose of 15 percent of his/her grant on each annual anniversary date from the
date of grant for the first four years and the remaining 40 percent on the fifth
year anniversary. These plans have a total of 11,375 shares reserved and
available for granting. Shares granted under the third plan are fully vested no
earlier than 24 months from the effective date of the grant and not later than
36 months. The plan has a total of 1,562,195 shares reserved and available for
granting. 18,000 shares granted in fiscal 1996 were the last shares granted
under these plans.
The fair market value of the common stock at date of grant which
exceeds the option price of shares granted under any of the plans is recorded as
deferred compensation and amortized to expense over the period during which the
restrictions lapse. Deferred compensation is shown as a deduction from
stockholders' equity. All such costs have been fully amortized as of June 30,
1999.
During calendar year 1999, the Company has purchased 15,195 shares at
an average price of $4.31 per share from certain of its employees who had
received stock grants under the Company's stock plans. During fiscal 1998, 1997
and 1996, the Company purchased 36,562, 42,875 and 59,347 shares, respectively,
from certain of its employees who had received stock grants under the Company's
stock plans, while no shares were purchased during the four month transition
period ended December 31, 1998. Total shares purchased from employees and
treated as treasury stock are 402,607, 445,482 and 482,044 for the four years
ended August 31, 1998. Currently, 497,239 shares are held in Treasury. The
Company acquired the shares at then current market prices (weighted average
price was $8.28 per share in fiscal 1998, $10.08 per share in fiscal 1997 and
$6.44 per share in fiscal 1996). The proceeds were used to pay the employees'
tax withholding obligations arising from the vesting of shares under the Plans.
Stock Reserved For Issuance
The following is a summary of common stock reserved for issuance as of
the dates noted:
July 31, Dec. 31, Aug. 31, Aug. 31,
1999 1998 1998 1997
---------- ---------- ---------- ----------
Stock Plans 9,983,070 7,983,070 7,985,570 7,987,570
Stock Bonus Plan 965,621 1,301,792 1,421,182 1,540,991
Convertible Notes 11,371,020 11,371,020 11,371,020 11,371,020
---------- ---------- ---------- ----------
Total shares
reserved for
issuance 22,319,711 20,655,882 20,777,772 20,899,581
========== ========== ========== ==========
17
162
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 4 - Common Stock and Stockholders' Equity (continued)
Stockholder Rights Plan
The Company adopted a stockholder rights plan on June 25, 1998 to
assure that the Company's stockholders receive fair and equal treatment in the
event of any proposed takeover of the Company and to guard against partial
tender offers and other abusive takeover tactics to gain control of the Company
without paying all stockholders a fair price. The rights plan was not adopted in
response to any specific takeover proposal. Under the rights plan, the Company's
Board of Directors declared a dividend of one right to purchase one
one-thousandth of a share of a new series of junior participating preferred
stock for each outstanding share of common stock.
The rights may only be exercised ten days following a public
announcement that a third party has acquired 15% or more of the outstanding
common shares of the Company or ten days following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer, the
consummation of which would result in the beneficial ownership by a third party
of 15% or more of the common shares. The 15% excludes one institutional
stockholder that currently owns in excess of 15% of the outstanding common
shares of the Company solely as an investment, unless such shareholder acquires
in excess of 20% or otherwise gives notice of its intent to hold said shares to
effect a change of control. When exercisable, each right will entitle the holder
to purchase one one-thousandth share of the new series of junior participating
preferred stock at an exercise price of $30, subject to adjustment. If a person
or group acquires 15% or more of the outstanding common shares of the Company,
each right, in the absence of timely redemption of the rights by the Company,
will entitle the holder, other than the acquiring party, to purchase for $30,
common shares of the Company having a market value of twice that amount.
The rights, which do not have voting privileges, expire June 30, 2008,
and at the Company's option, may be redeemed by the Company in whole, but not in
part, prior to expiration for $.01 per right. Until the rights become
exercisable, they have no dilutive effect on earnings per share.
Note 5 - Assets Held for Disposition
In December 1998, the Company determined that its operations in
Argentina do not meet its strategic objectives and, therefore, has decided that
such assets would be actively marketed. The assets in Argentina consist of 13
drilling rigs and inventories related to these rigs. The Company had previously
recognized six of the thirteen rigs as held for sale. The current decision
includes all Argentina assets. Due to depressed industry conditions impairment
losses of $4,055,000 and $2,100,000 were recognized in December 1998 and June
1999, respectively. The net realizable value of the Argentina assets ($6.6
million) is included in other non-current assets.
18
163
EXHIBIT D
NOTICE OF BORROWING
Exhibit D; Cover Page
164
NOTICE OF BORROWING
Date: ______________, ____
To: [Bank of America, N.A.] as Agent for the Lenders who are parties to the
Loan and Security Agreement dated as of ___________, ____ (as extended,
renewed, amended or restated from time to time, the "Loan and Security
Agreement") among [_________________] and the other Loan Parties
defined therein, certain Lenders which are signatories thereto and
[Bank of America, N.A.,] as Agent
Ladies and Gentlemen:
Reference is made to the above described Loan and Security Agreement.
Terms defined in the Loan and Security Agreement, where used herein, shall have
the same meanings herein as are prescribed by the Loan and Security Agreement.
The undersigned Borrowers hereby irrevocably notify you of the Borrowing
specified below:
1. The Business Day of the proposed Borrowing is
_________________, ____.
2. The aggregate amount of the proposed Borrowing is $_________ .
3. The Borrowing is to be comprised of a Base Rate Loan in the
amount of $__________ and a LIBOR Rate Loan in the amount of
$____________.
4. The duration of the Interest Period for the LIBOR Rate Loan,
if any, included in the Borrowing shall be _______ months.
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:
(a) The representations and warranties of the Loan Parties
contained in the Loan and Security Agreement are true and
correct as though made on and as of such date;
(b) No Default or Event of Default has occurred and is continuing,
or would result from such proposed Borrowing; and
(c) The proposed Borrowing will not cause the aggregate principal
amount of all outstanding Revolving Loans plus the aggregate
amount available for drawing under all outstanding Letters of
Credit to (i) exceed the Availability, (ii) cause the
Availability to be less than the Minimum Availability
Requirement or (iii) exceed the combined Commitments of the
Lenders.
Exhibit D - Page 1
165
This Notice of Borrowing is issued pursuant to and is subject to the Loan and
Security Agreement.
Signed effective as of the date hereof.
[signature block for each Borrower]
Exhibit D - Page 2
166
EXHIBIT E
NOTICE OF CONVERSION/CONTINUATION
Date: ________________, _____
To: [Bank of America, N.A.] as Agent for the Lenders who are parties to the
Loan and Security Agreement dated as of ___________, 1999 (as extended,
renewed, amended or restated from time to time, the "Loan and Security
Agreement") among [___________________] and the other Loan Parties
defined therein, certain Lenders which are signatories thereto and
[Bank of America, N.A.,] as Agent
Ladies and Gentlemen:
Reference is made to the above described Loan and Security
Agreement. Terms defined in the Loan and Security Agreement, where used herein,
shall have the same meanings herein as are prescribed by the Loan and Security
Agreement. The undersigned Borrowers hereby irrevocably notify you of the
[conversion] [continuation] of Loans as specified below:
1. The conversion/continuation date is ____________, ____.
2. The aggregate amount of the Loans to be [converted]
[continued] is $_____________.
3. The Loans are to be [converted into] [continued as] [LIBOR
Rate] [Base Rate] Loans.
4. The duration of the Interest Period for the LIBOR Rate Loans,
if any, included in the [conversion] [continuation] shall be
______ months.
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the proposed conversion/continuation
date, before and after giving effect thereto and to the application of the
proceeds therefrom:
(a) The representations and warranties of the Loan Parties
contained in the Loan and Security Agreement are true and
correct as though made on and as of such date;
(b) No Default or Event of Default has occurred and is continuing,
or would result from such proposed [conversion]
[continuation]; and
(c) The proposed Borrowing will not cause the aggregate principal
amount of all outstanding Revolving Loans plus the aggregate
amount available for drawing under all outstanding Letters of
Credit to (i) exceed the Availability, (ii) cause the
Availability to be less than the Minimum Availability
Requirement or (iii) exceed the combined Commitments of the
Lenders.
Exhibit E - Page 1
167
This Notice of Conversion/Continuation is issued pursuant to and is subject to
the Loan and Security Agreement.
Signed effective as of the date hereof.
[signature block for each Borrower]
Exhibit E - Page 2
168
EXHIBIT F
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
Exhibit F; Cover Page
169
ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
Acceptance") dated as of __________, ____ is made between _____________________
(the "Assignor") and __________________________ (the "Assignee").
RECITALS
The Assignor is party to that certain Loan and Security Agreement dated
as of _____________, 1999 (as amended, amended and restated, modified,
supplemented or renewed, the "Credit Agreement") among [______________________],
the other Loan Parties defined therein, the several financial institutions from
time to time party thereto as Lenders (including the Assignor, the "Lenders"),
and [Bank of America, N. A.], as agent for the Lenders (the "Agent"). Terms
defined by the Credit Agreement, where used herein, shall have the same meanings
herein as are prescribed by the Credit Agreement.
As provided under the Credit Agreement, the Assignor has committed to
making Loans (the "Committed Loans") to the Borrowers in an aggregate amount not
to exceed $__________ (the "Commitment");
The Assignor has made Committed Loans in the aggregate principal amount
of $__________ to the Borrowers.
[The Assignor has acquired a participation in its pro rata share of the
Lenders' liabilities under Letters of Credit in an aggregate principal amount of
$____________ (the "L/C Obligations")] [No Letters of Credit are outstanding
under the Credit Agreement].
The Assignor wishes to assign to the Assignee [part of the] [all]
rights and obligations of the Assignor under the Credit Agreement in respect of
its Commitment, together with a corresponding portion of each of its outstanding
Committed Loans [and L/C Obligations], in an amount equal to $__________ (the
"Assigned Amount") on the terms and subject to the conditions set forth herein
and the Assignee wishes to accept assignment of such rights and to assume such
obligations from the Assignor on such terms and subject to such conditions.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
(a) Subject to the terms and conditions of this Assignment and
Acceptance, (i) the Assignor hereby sells, transfers and assigns to the
Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from
the Assignor, without recourse and without representation or warranty (except as
provided in this Assignment and Acceptance) ________ percent (__%) (the
"Assignee's Percentage Share") of (A) the Commitment, the Committed Loans and
the L/C Obligations of the
Exhibit F - Page 1
170
Assignor and (B) all related rights, benefits, obligations, liabilities and
indemnities of the Assignor under and in connection with the Credit Agreement
and the Loan Documents.
(b) With effect on and after the Effective Date (as defined in
Section 5 hereof), the Assignee shall be a party to the Credit Agreement and
succeed to all of the rights and be obligated to perform all of the obligations
of a Lender under the Credit Agreement, including the requirements concerning
confidentiality and the payment of indemnification, with a Commitment in an
amount equal to the Assigned Amount. The Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement and the other Loan Documents are required to be performed by it
as a Lender. It is the intent of the parties hereto that the Commitment of the
Assignor shall, as of the Effective Date, be reduced by an amount equal to the
Assigned Amount and the Assignor shall relinquish its rights and be released
from its obligations under the Credit Agreement to the extent such obligations
have been assumed by the Assignee; provided, however, the Assignor shall not
relinquish its rights under Sections 2.4(i)(i), 2.5, 4.9, 5.1(b), 9.16 and 15.11
of the Credit Agreement to the extent such rights relate to the time prior to
the Effective Date.
(c) After giving effect to the assignment and assumption set
forth herein, on the Effective Date the Assignee's Commitment will be
$__________.
(d) After giving effect to the assignment and assumption set
forth herein, on the Effective Date the Assignor's Commitment will be
$__________.
2. Payments.
(a) As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, the Assignee shall pay to the Assignor on the
Effective Date in immediately available funds an amount equal to $__________,
representing the Assignee's Pro Rata Share of the principal amount of all
Committed Loans.
(b) The Assignee further agrees to pay to the Agent a
processing fee in the amount specified in Section 13.3(a) of the Credit
Agreement.
3. Reallocation of Payments.
Any interest, fees and other payments accrued to the Effective Date
with respect to the Commitment, and Committed Loans and L/C Obligations shall be
for the account of the Assignor. Any interest, fees and other payments accrued
on and after the Effective Date with respect to the Assigned Amount shall be for
the account of the Assignee. Each of the Assignor and the Assignee agrees that
it will hold in trust for the other party any interest, fees and other amounts
which it may receive to which the other party is entitled pursuant to the
preceding sentence and pay to the other party any such amounts which it may
receive promptly upon receipt.
Exhibit F - Page 2
171
4. Independent Credit Decision.
The Assignee (a) acknowledges that it has received a copy of the Credit
Agreement and the Schedules and Exhibits thereto, together with copies of the
most recent financial statements of the Borrowers, and such other documents and
information as it has deemed appropriate to make its own credit and legal
analysis and decision to enter into this Assignment and Acceptance; and (b)
agrees that it will, independently and without reliance upon the Assignor, the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit and legal
decisions in taking or not taking action under the Credit Agreement.
5. Effective Date; Notices.
(a) As between the Assignor and the Assignee, the effective
date for this Assignment and Acceptance shall be __________, _____ (the
"Effective Date"); provided that the following conditions precedent have been
satisfied on or before the Effective Date:
(i) this Assignment and Acceptance shall be executed
and delivered by the Assignor and the Assignee;
(ii) the consent of the Agent required for an
effective assignment of the Assigned Amount by the Assignor to the Assignee
shall have been duly obtained and shall be in full force and effect as of the
Effective Date;
(iii) the Assignee shall pay to the Assignor all
amounts due to the Assignor under this Assignment and Acceptance;
[(iv) the Assignee shall have complied with Section
14.10 of the Credit Agreement (if applicable);]
(v) the processing fee referred to in Section 2(b)
hereof and in Section 13.3(a) of the Credit Agreement shall have been paid to
the Agent; and
(b) Promptly following the execution of this Assignment and
Acceptance, the Assignor shall deliver to the Borrowers and the Agent for
acknowledgment by the Agent, a Notice of Assignment in the form attached hereto
as Schedule 1.
6. [Agent. [INCLUDE ONLY IF ASSIGNOR IS AGENT]
(a) The Assignee hereby appoints and authorizes the Assignor
to take such action as agent on its behalf and to exercise such powers under the
Credit Agreement as are delegated to the Agent by the Lenders pursuant to the
terms of the Credit Agreement.
(b) The Assignee shall assume no duties or obligations held by
the Assignor in its capacity as Agent under the Credit Agreement.]
Exhibit F - Page 3
172
7. Withholding Tax.
The Assignee (a) represents and warrants to the Lender, the Agent and
the Borrowers that under applicable law and treaties no tax will be required to
be withheld by the Lender with respect to any payments to be made to the
Assignee hereunder, (b) agrees to furnish (if it is organized under the laws of
any jurisdiction other than the United States or any State thereof) to the Agent
and the Borrowers prior to the time that the Agent or any Borrower is required
to make any payment of principal, interest or fees hereunder, duplicate executed
originals of either U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 (wherein the Assignee claims entitlement to the
benefits of a tax treaty that provides for a complete exemption from U.S.
federal income withholding tax on all payments hereunder) and agrees to provide
new Forms 4224 or 1001 upon the expiration of any previously delivered form or
comparable statements in accordance with applicable U.S. law and regulations and
amendments thereto, duly executed and completed by the Assignee, and (c) agrees
to comply with all applicable U.S. laws and regulations with regard to such
withholding tax exemption.
8. Representations and Warranties.
(a) The Assignor represents and warrants that (i) it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any Lien or other adverse claim; (ii) it
is duly organized and existing and it has the full power and authority to take,
and has taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or obtained)
for its due execution, delivery and performance of this Assignment and
Acceptance, and apart from any agreements or undertakings or filings required by
the Credit Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; and (iv)
this Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor, enforceable
against the Assignor in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles.
(b) The Assignor makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement or any other instrument or document furnished pursuant
thereto. The Assignor makes no representation or warranty in connection with,
and assumes no responsibility with respect to, the solvency, financial condition
or statements of any of the Borrowers or other Loan Parties, or the performance
or observance by any of the Borrowers or other Loan Parties, of any of its
respective obligations under the Credit Agreement or any other instrument or
document furnished in connection therewith.
Exhibit F - Page 4
173
(c) The Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder; (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance; and apart from any agreements or undertakings or
filings required by the Credit Agreement, no further action by, or notice to, or
filing with, any Person is required of it for such execution, delivery or
performance; (iii) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of the
Assignee, enforceable against the Assignee in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles; and (iv) it is an
Eligible Assignee.
9. Further Assurances.
The Assignor and the Assignee each hereby agree to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to the Borrowers or the Agent, which may be required in
connection with the assignment and assumption contemplated hereby.
10. Miscellaneous.
(a) Any amendment or waiver of any provision of this
Assignment and Acceptance shall be in writing and signed by the parties hereto.
No failure or delay by either party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof and any waiver of any
breach of the provisions of this Assignment and Acceptance shall be without
prejudice to any rights with respect to any other or further breach thereof.
(b) All payments made hereunder shall be made without any
set-off or counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs
and expenses incurred in connection with the negotiation, preparation, execution
and performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF TEXAS. The Assignor and the
Assignee each irrevocably submits to the non-exclusive jurisdiction of any State
or Federal court sitting in the State of Texas over any suit, action or
proceeding arising out of or relating
Exhibit F - Page 5
174
to this Assignment and Acceptance and irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in such court.
Each party to this Assignment and Acceptance hereby irrevocably waives, to the
fullest extent it may effectively do so, the defense of an inconvenient forum to
the maintenance of such action or proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY
RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR
STATEMENTS (WHETHER ORAL OR WRITTEN).
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By:
-------------------------------------
Title:
----------------------------------
Address:
--------------------------------
[ASSIGNEE]
By:
-------------------------------------
Title:
----------------------------------
Address:
--------------------------------
Exhibit F - Page 6
175
SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
---------------, ----
Bank of America, N.A.
---------------------
---------------------
Attn:
----------------
Re: [Bank of America, N.A.] as Agent for the Lenders who are parties to the
Loan and Security Agreement dated as of ___________, 1999 (as extended,
renewed, amended or restated from time to time, the "Loan and Security
Agreement") among [___________________] and the other Loan Parties
defined therein, certain Lenders which are signatories thereto and
[Bank of America, N.A.,] as Agent
Ladies and Gentlemen:
Reference is made to the above described Loan and Security Agreement.
Terms defined in the Loan and Security Agreement, where used herein, shall have
the same meanings herein as are prescribed by the Loan and Security Agreement.
Terms defined in the Credit Agreement are used herein as therein defined.
1. We hereby give you notice of, and request your consent to, the
assignment by __________________ (the "Assignor") to _______________ (the
"Assignee") of _____% of the right, title and interest of the Assignor in and to
the Credit Agreement (including the right, title and interest of the Assignor in
and to the Commitments of the Assignor, all outstanding Loans made by the
Assignor and the Assignor's participation in the Letters of Credit pursuant to
the Assignment and Acceptance Agreement attached hereto (the "Assignment and
Acceptance"). We understand and agree that the Assignor's Commitment, as of
____________, ____, is $____________, the aggregate amount of its outstanding
Loans is $_____________, and its participation in L/C Obligations is
$_____________.
2. The Assignee agrees that, upon receiving the consent of the Agent
[and, if and to the extent applicable and required by the Credit Agreement, the
Borrowers,] to such assignment, the Assignee will be bound by the terms of the
Credit Agreement as fully and to the same extent as if the Assignee were the
Lender originally holding such interest in the Credit Agreement.
Schedule 1 - Page 1
176
3. The following administrative details apply to the Assignee:
(A) Notice Address:
Assignee name:
-----------------------------
Address:
--------------------------------
--------------------------------
--------------------------------
Attention:
--------------------------------
Telephone: ( )
--- --------------------------
Telecopier: ( )
--- --------------------------
Telex (Answerback):
-----------------------------
(B) Payment Instructions:
Account No.:
--------------------------------
At:
--------------------------------
--------------------------------
--------------------------------
Reference:
--------------------------------
Attention:
--------------------------------
4. You are entitled to rely upon the representations, warranties and
covenants of each of the Assignor and Assignee contained in the Assignment and
Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Notice of Assignment and Acceptance to be executed by their respective duly
authorized officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Schedule 1 - Page 2
177
[NAME OF ASSIGNEE]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
Bank of America, N. A.
as Agent
By:
--------------------------------------
Title:
-----------------------------------
Schedule 1 - Page 3
178
EXHIBIT G
FORM OF DRILLING CONTRACT REPORT
Exhibit G; Cover Page
179
EXHIBIT H
FORM OF RIG REPORT
Exhibit H; Cover Page
180
Xxxxxx Drilling Company
Schedule 1.1 Permitted Liens
Liens Asset
----- -----
ING Capital Corp. Cash Account at Bank of Oklahoma for L/Cs
GE Capital - Operating Lease Airplane
Xxxxxx Financial - Operating Lease Top Drive
IBM - Capital Lease Computer
Xxxxxxx Manufacturing Corp. Equipment
Xxxxxx Business Systems Copiers & Fax Machines
NTFC Capital Corp. Phone System
Citicorp Forklift
1
181
Xxxxxx Drilling Company
Schedule 1.2 Rig Equipment
Top Location
Rig No. Dwks Power Pumps Mast Drive Substructure (County/Parish)
------- ---- ----- ----- ---- ----- ------------ ---------------
50 SBNE 12 (SCR) (3) 399 (2) B1600T SM 1.000 CAMRIG 500 17.3 Terrebonne, LA
51 SBNE 12 (SCR) (3) 399 (2) B1600T SM 1.000 -- 17.3 Plaquemine, LA
53 SBN 75 (2) 398 (1) PZ 9 & (1) PZ 10 SB .750 -- 27.0 Xxxxxxxxxx, LA
54 O.W. E-2000 (SCR) (4) 399 (2) A-1700 PT XXXXX 0.000 XXXXXX 000 00.0 Xxxxxx, XX
00 O.W. E-2000 (SCR) (3) 399 (2) A-1700 PT PYRMD 1.330 -- 30.7 Terrebonne, LA
56 O.W. E-2000 (SCR) (3) 399 (2) A-1700 PT PYRMD 1.330 -- 30.3 Xxxxxxxxxx, XX
00 XX 0000 (2) D398TA (2) NAT 10P-130 PYRMD 1.000 -- 28.0 Terrebonne, LA
Owner: Xxxxxx Drilling Offshore USA, L.L.C.
1
182
SCHEDULE 1.3
XXXXXX DRILLING COMPANY
RIG 75 PROPERTY
One hundred percent (100%) of the Vessel, together with all of the boilers,
engines, machinery, masts, spars, boats, anchors, cables, chains, rigging,
tackle, capstans, outfit, tools, pumps and pumping equipment, apparel,
furniture, fittings, equipment, spare parts and all other appurtenances
(including without limitation drilling masts, rotary tables, substructures, draw
work, engines, pumps, blowout prevention equipment, drill pipe and drill bits)
to said Vessel appertaining or belonging, whether now owned or hereafter
acquired, whether on board or not, and also any and all additions, improvements
and replacements in general effected subsequently on or to the Vessel, or any
part thereof, or appurtenance thereto, but always excluding therefrom leased
equipment and equipment owned by third parties. The "Vessel" means XXXXXX RIG
#75, duly documented in the name of the Shipowner under the laws and flag of the
Republic of Panama with Provisional Patente No. 28299-NO, Radio Call Letter
HP-9648, of 5,265 gross tonnage, 1,579 net tonnage, and 240 feet in length, 70
feet in width and 18 feet in depth.
183
Xxxxxx Drilling Company
Schedule 6.3 Location of Collateral
Company Chief Executive Location of Books &
No. Loan Party Office Records
------- ---------- --------------- -------------------
01 Xxxxxx Drilling Company 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
02 Parco, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
03 Xxxxxx Drilling Company of Oklahoma, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
04 Pardril, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
05 Xxxxxx Drilling Company Eastern Hemisphere, Ltd. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
00 Xxxxxx Xxxxxxxx Xxxxxxx xx Xxxxx Xxxxxxx, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
07 Xxxxxx Drilling Company of Indonesia, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
08 Xxxxxx Drilling Company of Bolivia, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
09 Anachoreta, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
10 Canadian Rig Leasing, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
12 Xxxxxx Technology, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
00 Xxxxxx Xxxxxxxx Xxxxxxx xx Xxxxx Xxxxx, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
16 Parco Masts and Substructures, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
17 Xxxxxx Drilling Company Kuwait Limited (CFC) 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
00 Xxxxxx Xxxxxxxx X.X.X. Ltd. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
19 Xxxxxx Drilling Company International Limited (NV) 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
20 Xxxxxx Drilling Company of Mexico, Ltd. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
21 Saints Acquisition Company 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
22 Xxxxxx Drilling Company Limited (NV) 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
Company
No. Loan Party Location of Collateral Other US Locations
--- ---------- ---------------------- ------------------
01 Xxxxxx Drilling Company
02 Parco, Inc.
03 Xxxxxx Drilling Company of Oklahoma, Inc.
04 Pardril, Inc.
05 Xxxxxx Drilling Company Eastern Hemisphere, Ltd.
00 Xxxxxx Xxxxxxxx Xxxxxxx xx Xxxxx Xxxxxxx, Inc.
07 Xxxxxx Drilling Company of Indonesia, Inc.
08 Xxxxxx Drilling Company of Bolivia, Inc.
09 Anachoreta, Inc.
10 Canadian Rig Leasing, Inc.
12 Xxxxxx Technology, Inc.
15 Xxxxxx Drilling Company of South Texas, Inc.
16 Parco Masts and Substructures, Inc.
17 Xxxxxx Drilling Company Kuwait Limited (CFC)
00 Xxxxxx Xxxxxxxx X.X.X. Ltd.
19 Xxxxxx Drilling Company International Limited (NV)
20 Xxxxxx Drilling Company of Mexico, Ltd.
21 Saints Acquisition Company
22 Xxxxxx Drilling Company Limited (NV)
1
184
Xxxxxx Drilling Company
Schedule 6.3 Location of Collateral
Company Chief Executive Location of Books &
No. Loan Party Office Records
------- ---------- --------------- -------------------
25 Xxxxxx Drilling Company of Singapore, Ltd. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
28 Xxxxxx Aviation Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
30 Xxxxxx USA Drilling Company 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
31 Universal Rig Service Corp. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
32 Xxxxxx - VSE, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
34 Xxxxxx Energy Resources, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
36 Total Coverage Services 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
37 Choctaw International Rig Corp. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
38 Xxxxxx Measurement, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
39 DGH, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
42 Xxxxxx Drilling Company of Niger 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
47 Xxxxxx Drilling Company of Argentina, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
48 Xxxxxx Technology, L.L.C. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
50 Xxxxxx Pipeline Company, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
51 Total Logistics Corporation 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
62 Management Service Logistics, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
63 Total Funds Management Corporation 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
64 Quail Tools, L.L.P. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
Company
No. Loan Party Location of Collateral Other US Locations
--- ---------- ---------------------- ------------------
25 Xxxxxx Drilling Company of Singapore, Ltd.
28 Xxxxxx Aviation Inc.
30 Xxxxxx USA Drilling Company
31 Universal Rig Service Corp.
32 Xxxxxx - VSE, Inc.
34 Xxxxxx Energy Resources, Inc.
36 Total Coverage Services
37 Choctaw International Rig Corp.
38 Xxxxxx Measurement, Inc.
39 DGH, Inc.
42 Xxxxxx Drilling Company of Niger
47 Xxxxxx Drilling Company of Argentina, Inc.
Rig materials & supplies
48 Xxxxxx Technology, L.L.C. 0000 Xxxx Xxxx
Xxx Xxxxxx, XX 00000
50 Xxxxxx Pipeline Company, Inc.
51 Total Logistics Corporation
62 Management Service Logistics, Inc.
63 Total Funds Management Corporation
0000 Xxx 00
Xxx Xxxxxx, XX 00000 and
64 Quail Tools, L.L.P. 0000 XX Xxx 00X
Xxxxxxxx, XX 00000
2
185
Xxxxxx Drilling Company
Schedule 6.3 Location of Collateral
Company Chief Executive Location of Books &
No. Loan Party Office Records
------- ---------- --------------- -------------------
65 Xxxxxx North American Operations, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
66 Xxxxxx Drilling Company International, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
72 Xxxxxx Drilling (Kazakstan), Ltd. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
73 Xxxxxx Drilling Company Limited (OK) 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
74 OIME, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
75 Xxxxxx Drilling Company of New Guinea, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
77 Indocorp of Oklahoma, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
78 Creek International Rig Corp. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
93 Production Control Systems, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
94 Selective Drilling Corporation 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
96 Xxxxxx Valve Company 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
99 Xxxxxx Drilling Company North America, Inc. (NV) 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
000 Xxxxxx Xxxxxxxx Xxxxxxxx XXX, L.L.C. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
000 Xxxxxx Xxxxxxxx Xxxxxxxx XXX, L.L.C. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
Mallard Peru Holdings, Inc. 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
201 Xxxxxx Drilling Offshore Corporation 0 Xxxx Xxxxx Xxxxxx, 8 East Third Street,
Tulsa, Oklahoma Tulsa, Oklahoma
Company
No. Loan Party Location of Collateral Other US Locations
--- ---------- ---------------------- ------------------
65 Xxxxxx North American Operations, Inc.
66 Xxxxxx Drilling Company International, Inc.
72 Xxxxxx Drilling (Kazakstan), Ltd.
73 Xxxxxx Drilling Company Limited (OK)
74 OIME, Inc.
75 Xxxxxx Drilling Company of New Guinea, Inc.
77 Indocorp of Oklahoma, Inc.
78 Creek International Rig Corp.
93 Production Control Systems, Inc.
94 Selective Drilling Corporation
96 Xxxxxx Valve Company
99 Xxxxxx Drilling Company North America, Inc. (NV)
00000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX and
000 Xxxxxx Xxxxxxxx Xxxxxxxx XXX, L.L.C. 50 series barge rigs 0000 Xxxx Xxxx
(See Schedule 6.3A) New Iberia, LA
104 Xxxxxx Drilling Offshore USA, L.L.C.
Mallard Peru Holdings, Inc.
00000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX and
201 Xxxxxx Drilling Offshore Corporation 0000 Xxxx Xxxx
Xxx Xxxxxx, XX
3
186
Xxxxxx Drilling Company
Schedule 6.3A 50 Series Rigs
RIG # OPERATOR FIELD/BLOCK DOCK DOCK DIRECTIONS
----- -------- ----------- ---- ---------------
Take Xxx 00 into Xxxxxx City. Take
second exit at red light. Take Hwy 70
toward Belle River. Stay on 70 past
Xxxxxxx'x Landing. Take right at stop
sign. Continue across Pontoon bridge
on 70 until Pierre Part. Take right
on Xxxxxx Xxxx 0000-0 right before
bridge. Go down about 1/2 mile, look
for 2-story houseboat loading ramp on
00X Xxxxxxxxxxxx Xxxxxx Xxxxx Xxxxx Xx. Xxxxxxx Xxxxxxx Pierre Part right of same.
FROM HOUMA TAKE HWY 24 to Presque Isle
(just past the Houma Airport). At the
traffic light GO STRAIGHT this becomes
Hwy 56 to Chauvin and Cocodrie. At
Cocodrie, go to the end of the road
and the Texaco dock is at the end of
51B Texaco E&P Lake Barre Texaco/Cocodrie the road on the right.
FROM I10 EAST OR WEST exit south onto
Xxx 00 at the Rayne exit. Stay on Hwy
35 through Kaplan, LA and Hwy 35 will
become Hwy 82. Stay on Xxx 00 and you
will cross a high-rise bridge over the
Intracoastal Canal followed by a draw
bridge over Schooner Bayou followed by
about 6 miles of straight highway. Hwy
82 will begin to make a long sweeping
curve toward the right. Right at the
beginning of the curve there will be a
shell road going straight off the
curve. Take the shell road. Hwy 3147
to a blacktop raod and turn right onto
to the blacktop road. The EXXON dock
will be about 3/4 of a mile down the
blacktop road on the left. The parking
53B Exxon Pecan Island Exxon lot is across the road from the dock.
FROM HWY 90 take the "Centerville"
exit onto Hwy 317 South, go about 5
miles. Go over the high-rise bridge.
Go about 6.5 miles past the bridge and
look for a road going off to the left.
Turn left onto that road. The dock wil
be at the end of this road. Park on
the left behind the dispatcher's
office. If you get to a road going to
the right towards "Luke's Landing" you
00X Xxxxx Xxxx Xxxxx Xxxxx Xxxx/Xxxx Xxxxx Xxxxx went about 2 miles too far.
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Xxxxxx Drilling Company
Schedule 6.3A 50 Series Rigs
RIG # OPERATOR FIELD/BLOCK DOCK DOCK DIRECTIONS
----- -------- ----------- ---- ---------------
FROM HOUMA TAKE HWY 90 WEST, take the
"Xxxxxxx/Louisa" exit, on an overpass,
and at the stop sign turn right onto
Xxx 00 Xxxxx. Go about 10 miles and
the dock will be on the left. FROM NEW
IBERIA ON HWY 90 EAST, TAKE a right
onto Hwy 95 South to Hwy 83. Go left
on Xxx 00. Stay on Hwy 83 and the dock
will be about 17 miles down on the
55B Texaco E&P Xxxxxxxxxx Texaco/Ivanhoe right.
FROM HOUMA take Hwy 90 West toward
Xxxxxx City. When you get to Gibson,
LA you will come to a fork in the road
near the Gibson water tower. Stay to
the left on Hwy 90. You will cross a
green draw bridge and immediately
after the bridge turn left onto Xxxxxx
Road. The dock is on Xxxxxx Road. FROM
XXXXXX CITY, take Hwy 90 East toward
Houma. Before you ge to the Xxx 00 /
Xxx 00 split you will see MAX WELDERS
on the right. Turn right onto the
first road past Max Welders. This will
be Xxxxxx Road. The dock is on Xxxxxx
56B Meridian Resources Xxxxx Xxxx Dock @ Gibson Road.
FROM HWY 90 BUSINESS IN MARRERO, LA
take Xxx 00 Xxxxx xx XxXxxxx, XX.
Follow the signs to Hwy 3134 to
LaFitte. Go over the highrise bridge.
After the turn @ the sign that says to
Hwy 45, go into LaFitte to the caution
light (Piggly Wiggly on the left), go
1/4 of a mile. A&A Marina is on the
57B Dimension Big Bayou Pigeon A&A Marina @ LaFitte right.
2
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Xxxxxx Drilling Company
Schedule 8.3 Organization Qualification
Company
No. Company Name State of Incorporation States Registered
------- ------------ ---------------------- -----------------
Alaska - 3/2/76; California - 10/3/86;
Colorado - 9/4/79; Hawaii - 4/13/89;
Louisiana - 9/28/78; Montana - 2/9/78;
North Dakota - 3/12/79; New Mexico -
3/19/76; Nevada - 11/30/89; Oklahoma
3/26/76; Texas - 3/4/76; Utah -
3/8/76; Washington - 9/24/90; Wyoming
01 Xxxxxx Drilling Company Delaware - 8/4/70 - 3/10/76
California - 5/9/85; Colorado -
4/18/89; Nevada - 8/14/89; Washington
02 Parco, Inc. Oklahoma - 12/30/63 - 4/28/82
Guatemala - 3/21/75; Colombia -
03 Xxxxxx Drilling Company of Oklahoma, Inc. Oklahoma - 4/21/71 8/26/89; Peru - 4/12/95
04 Pardril, Inc. Oklahoma - 2/15/68 Pakistan - 3/10/82
New Zealand - 6/1/84; Papua New Guinea
- 1/27/75; Bangladesh - 6/1/84; Sudan
- 12/27/76; Chad - 7/10/73; Kenya -
5/1/75; Pakistan - 7/10/73; Western
Australia - 3/31/81; Malagasy -
7/10/73; Mogadiscio Somalia - 6/7/72;
Somali Democratic Republic - 11/14/79;
Peoples' Republic of China - 3/11/85;
Mozambique - 6/19/85; Tanzania -
05 Xxxxxx Drilling Company Eastern Hemisphere, Ltd. Oklahoma - 7/10/73 8/22/85; Indonesia - 9/1/81
Brazil - 1/1/89; Peru - 2/16/67;
Colombia - 8/25/67; Paraguay -
1/18/67; Bolivia - 11/1/68; Ecuador -
9/1/69; Republic of Argentina -
06 Xxxxxx Drilling Company of South America, Inc. Oklahoma - 1/17/67 2/17/70; Jamaica - 11/23/81
07 Xxxxxx Drilling Company of Indonesia, Inc. Oklahoma - 6/24/71 Indonesia - 10/1/81
08 Xxxxxx Drilling Company of Bolivia, Inc. Oklahoma - 03/19/76 Bolivia - 3/6/75
09 Anachoreta, Inc. Nevada - 11/14/67
10 Canadian Rig Leasing, Inc. Oklahoma - 9/21/73 Alberta - 5/31/77
12 Xxxxxx Technology, Inc. Oklahoma - 1/28/76 Texas - 3/1/76
14 Xxxxxx Drilling Company Limited (Bahamas) (CFC) Bahamas - 5/10/76
15 Xxxxxx Drilling Company of South Texas, Inc. Oklahoma 10/15/76
16 Parco Masts and Substructures, Inc. Oklahoma - 12/20/76
17 Xxxxxx Drilling Company Kuwait Limited (CFC) Bahamas - 1/11/77
Arkansas - 12/19/80; California -
5/20/85; Colorado - 5/17/84; Idaho -
5/7/79; Louisiana - 9/29/77;
Mississippi - 11/15/79; Montana -
7/8/85; New Mexico - 10/28/81;
Oklahoma - 9/27/77; Texas - 9/27/77;
00 Xxxxxx Xxxxxxxx X.X.X. Ltd. Nevada - 8/1/77 Utah - 10/26/81; Wyoming - 9/27/77
1
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Xxxxxx Drilling Company
Schedule 8.3 Organization Qualification
Company
No. Company Name State of Incorporation States Registered
------- ------------ ---------------------- -----------------
Kazakhstan - 11/15/95; Kazakhstan -
7/30/97; Guatemala - 7/1/80;
Bangladesh - 7/1/80; Syria - 9/22/80;
Thailand - 12/5/80; Sudan - 6/15/81;
Chad - 9/11/84; Central African
Republic - 9/1/85; Kenya - 4/18/86;
Colombia - 1/23/89; Myanmar -
10/31/90; Gabon - 4/26/90; Pakistan -
2/28/91; Congo - 10/22/91; Philippines
- 9/9/93; Peru - 6/24/96; Venezuela -
19 Xxxxxx Drilling Company International Limited (NV) Nevada - 5/22/78 5/6/94; Indonesia - 9/11/78
20 Xxxxxx Drilling Company of Mexico, Ltd. Oklahoma - 3/5/79
21 Saints Acquisition Company Delaware - 12/28/98
22 Xxxxxx Drilling Company Limited (NV) Nevada - 5/24/79 New Mexico - 11/19/86
00 Xxxxxx Xxxxxxxx Xxxxxxxxxxxxx xx Xxx Xxxxxxx Limited (CFC) New Zealand - 1/10/86
24 Perforadora Ecuatoriana S.A. - Petrodrilling Ecuador - 12/30/97
25 Xxxxxx Drilling Company of Singapore, Ltd. Oklahoma - 12/3/79 Singapore - 12/3/79
28 Xxxxxx Aviation Inc. Oklahoma - 7/21/81
Louisiana - 6/6/99; Oklahoma -
5/26/99; Texas - 5/4/99; Utah -
30 Xxxxxx USA Drilling Company Nevada - 6/17/80 8/3/99; Wyoming - 5/6/99
31 Universal Rig Service Corp. Nevada - 6/17/80
32 Xxxxxx - VSE, Inc. Nevada - 8/25/99
34 Xxxxxx Energy Resources, Inc. Texas - 9/26/74
36 Total Coverage Services Nevada - 7/17/91
37 Choctaw International Rig Corp. Nevada - 5/31/78
38 Xxxxxx Measurement, Inc. Texas - 3/23/77
39 DGH, Inc. Texas - 10/1/80
41 Xxxxxx Drilling Company of New Zealand Limited (CFC) New Zealand - 9/20/84
42 Xxxxxx Drilling Company of Niger Oklahoma 12/19/91
43 Universal Rig Leasing B.V. (CFC) Netherlands 6/13/97
44 Xxxxxx Drilling Company (Bolivia) S.A. (CFC) Bolivia - 5/28/97
47 Xxxxxx Drilling Company of Argentina, Inc. Nevada - 7/29/98
48 Xxxxxx Technology, L.L.C. Louisiana - 4/1/97
50 Xxxxxx Pipeline Company, Inc. Texas - 4/8/74
51 Total Logistics Corporation Nevada - 6/17/99
56 Challenger Limited (CFC) Switzerland - 7/1/77
57 Xxxxxx Drilling Company of Siberia (CFC) Russia - 4/12/93
Alaska - 7/9/99; Louisiana - 7/8/99;
62 Management Service Logistics, Inc. Nevada - 6/17/99 Oklahoma 7/8/99; Wyoming 7/899
63 Total Funds Management Corporation Nevada - 6/17/99 Oklahoma - 7/12/99
2
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Xxxxxx Drilling Company
Schedule 8.3 Organization Qualification
Company
No. Company Name State of Incorporation States Registered
------- ------------ ---------------------- -----------------
64 Quail Tools, L.L.P. Oklahoma - 3/28/97 Louisiana - 3/31/97; Texas - 4/14/97
00 Xxxxxx Xxxxx Xxxxxxx Operations, Inc. Nevada - 8/24/99
66 Xxxxxx Drilling Company International, Inc. Delaware - 6/3/99 Louisiana - 6/7/99; Texas 6/4/99
71 PKD Sales Corporation Oklahoma - 3/24/88
72 Xxxxxx Drilling (Kazakhstan), Ltd. Oklahoma - 3/30/88 Russia - 6/14/91
73 Xxxxxx Drilling Company Limited (OK) Oklahoma - 11/20/86 Montana - 4/18/86; Utah - 4/5/88
74 O.I.M.E., Inc. Oklahoma - 6/7/88
75 Xxxxxx Drilling Company of New Guinea, Inc. Oklahoma - 8/4/88 Papua New Guinea - 11/1/88
76 Casuarina Limited (CFC) Bermuda - 6/11/81
77 Indocorp of Oklahoma, Inc. Oklahoma - 12/7/88
78 Creek International Rig Corp. Nevada - 5/31/78 Colombia - 1/28/97; Ecuador - 7/24/98
90 Xxxxxx Drilling Investment Company Oklahoma - 9/4/84
92 Compania Nacional De Servicios S.A. (Cinasersa) (CFC) Peru - 9/24/87
93 Production Control Systems, Inc. Delaware - 10/21/85 Oklahoma - 12/2/85
94 Selective Drilling Corporation Oklahoma - 4/1/86
96 Xxxxxx Valve Company Texas - 10/14/86
Alabama - 9/17/97; Alaska - 9/17/97;
Colorado - 3/21/97; Hawaii - 1/22/99;
Idaho - 3/5/97; Louisiana - 2/10/97;
Mississippi - 3/18/97; Montana -
3/6/97; North Dakota - 3/6/97; New
Mexico - 3/19/97; Oklahoma - 10/25/96;
Texas - 10/29/96; Utah - 10/31/96;
99 Xxxxxx Drilling Company North America, Inc. (NV) Nevada - 10/4/96 Wyoming 3/5/97
Louisiana - 3/31/97; Texas - 5/15/98
000 Xxxxxx Xxxxxxxx Xxxxxxxx XXX, L.L.C. Oklahoma - 3/28/97 Thailand - 9/5/97
102 Xxxxxx Drilling Offshore International, Inc. Cayman Islands - 2/20/91
Argentina - 1/12/95; United Arab
000 Xxxxxxx Xxxxxxxx xx Xxxxx Xxxxxxx, Inc. Cayman Islands 6/24/91 Emirates - 6/28/91
000 Xxxxxxx Xxx Xxxxxxxx Xxxxxxx Limited (CFC) Nigeria - 4/22/91
107 Mallard Drilling of Venezuela, Inc. (CFC) Xxxxxx Xxxxxxx - 0/0/00 Xxxxxxxxx
Xxxxxxx Xxxx Holdings, Inc. Delaware - 4/3/92 empty shell - no books
Mallard Argentine Holdings, Ltd. (CFC) Cayman Islands - 9/30/96 empty shell - no books
000 Xxxxxx Xxxxxxxx Xxxxxxxx Xxxxxxxxxxx Xxxxx - 6/25/93 Louisiana - 1/3/97; Alabama - 6/28/99
3
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Xxxxxx Drilling Company
Schedule 8.4 Corporate Name
Company
No. Company Name History
------- ------------ -------
01 Xxxxxx Drilling Company
02 Parco, Inc.
03 Xxxxxx Drilling Company of Oklahoma, Inc.
04 Pardril, Inc.
05 Xxxxxx Drilling Company Eastern Hemisphere, Ltd.
00 Xxxxxx Xxxxxxxx Xxxxxxx xx Xxxxx Xxxxxxx, Inc.
07 Xxxxxx Drilling Company of Indonesia, Inc.
08 Xxxxxx Drilling Company of Bolivia, Inc.
09 Anachoreta, Inc.
10 Canadian Rig Leasing, Inc. formerly PDC of Canada, Inc.
12 Xxxxxx Technology, Inc. formerly O.I.M.E., Inc.
14 Xxxxxx Drilling Company Limited (Bahamas) (CFC)
15 Xxxxxx Drilling Company of South Texas, Inc.
16 Parco Masts and Substructures, Inc.
17 Xxxxxx Drilling Company Kuwait Limited (CFC)
00 Xxxxxx Xxxxxxxx X.X.X. Ltd.
19 Xxxxxx Drilling Company International Limited (NV) formerly Rig Holding Corporation
20 Xxxxxx Drilling Company of Mexico, Ltd.
21 Saints Acquisition Company
22 Xxxxxx Drilling Company Limited (NV)
00 Xxxxxx Xxxxxxxx Xxxxxxxxxxxxx xx Xxx Xxxxxxx Limited (CFC) Was 23-45 and 10-45
24 Perforadora Ecuatoriana S.A. - Petrodrilling (CFC)
25 Xxxxxx Drilling Company of Singapore, Ltd.
28 Xxxxxx Aviation, Inc.
30 Xxxxxx USA Drilling Company formerly Parcan Limited
31 Universal Rig Service Corp.
32 Xxxxxx - VSE, Inc. formerly Xxxxx Systems Engineering, Inc.
34 Xxxxxx Energy Resources, Inc.
36 Total Coverage Services
37 Choctaw International Rig Corp.
38 Xxxxxx Measurement, Inc.
39 DGH, Inc.
00 Xxxxxx Xxxxxxxx Xxxxxxx xx Xxx Xxxxxxx, Ltd. (CFC) Was 23-92 until 8/31/98
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Xxxxxx Drilling Company
Schedule 8.4 Corporate Name
Company
No. Company Name History
------- ------------ -------
42 Xxxxxx Drilling Company of Niger formerly Xxxxxx Drilling Alpha, Ltd.
43 Universal Rig Leasing B.V. (CFC)
44 Xxxxxx Drilling Company (Bolivia) S.A. (CFC)
47 Xxxxxx Drilling Company of Argentina, Inc.
48 Xxxxxx Technology, L.L.C..
50 Xxxxxx Pipeline Company, Inc.
51 Total Logistics Corporation
56 Challenger Limited (CFC)
57 Xxxxxx Drilling Company of Siberia
62 Management Service Logistics, Inc.
63 Total Funds Management Corporation
64 Quail Tools, L.L.P.. formerly Quail Tools, Inc.
65 Xxxxxx North American Operations, Inc.
66 Xxxxxx Drilling Company International, Inc.
71 PKD Sales Corporation
72 Xxxxxx Drilling (Kazakhstan), Ltd.
Formerly Xxxxxx Drilling Company International, Ltd. (OK)
73 Xxxxxx Drilling Company Limited (OK)
74 O.I.M.E., Inc.
75 Xxxxxx Drilling Company of New Guinea, Inc.
76 Casuarina Limited (CFC)
77 Indocorp of Oklahoma, Inc.
78 Creek International Rig Corp.
90 Xxxxxx Drilling Investment Company
92 Compania Nacional De Servicios S.A. (Cinasersa) (CFC)
93 Production Control Systems, Inc. 80% owned by Xxxxxx Drilling Company
94 Selective Drilling Corporation
96 Xxxxxx Valve Company
99 Xxxxxx Drilling Company North America, Inc. (NV) Formed 10/04/96
000 Xxxxxx Xxxxxxxx Xxxxxxxx XXX, L.L.C.. formerly Mallard Bay Drilling, L.L.C.. Formerly Co. 61 prior to FY99
000 Xxxxxxx Xxxxxxxx Xxxxxxxx (Branch of 101)
Mallard Peru Holdings, Inc. formerly EV International, Inc.
Xxxxxx Drilling Offshore International, Inc. formerly Mallard Drilling
International, Inc.; formerly
102 Energy Ventures International, Inc.
Mallard Argentine Holdings, Ltd. (CFC)
2
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Xxxxxx Drilling Company
Schedule 8.4 Corporate Name
Company
No. Company Name History
------- ------------ -------
107 Mallard Drilling of Venezuela, Inc. (CFC) Mallard Drilling of Venezuela
108 Mallard International Ven - Sucursal (Branch of 107) (CFC) Mallard Drilling of Venezuela
000 Xxxxxxx Xxx Xxxxxxxx Xxxxxxx Limited (CFC)
000 Xxxxxxx Xxxxxxxx xx Xxxxx Xxxxxxx, Inc. (CFC) Formerly Energy Ventures Mid-East, Inc.
000 Xxxxxxx Xxxxxxxx Xxxxxxxxx (Branch of 106) (CFC) Mallard Drilling of S.A., Inc.
201 Xxxxxx Drilling Offshore Corporation formerly Hercules Offshore Corporation Acquired HOC 12/30/97
3
194
Xxxxxx Pipeline Company
Schedule 8.5 Subsidiaries Affiliates Amendment 1
Delete the following subsidiary.
CORPORATE NAME INCORPORATED OWNERSHIP
-------------- ------------ ---------
Xxxxxx Pipeline Company, Inc. Texas Xxxxxx Energy Resources, Inc.
merged into Xxxxxx Energy Resources, Inc. on 4/10/00
1
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Xxxxxx Pipeline Company
Schedule 8.5 Subsidiaries Affiliates
CORPORATE NAME INCORPORATED OWNERSHIP
-------------- ------------ ---------
Xxxxxx Drilling Company Delaware Xxxxxx Drilling Company
Xxxxxx Drilling Company of Oklahoma, Inc. Oklahoma Xxxxxx Drilling Company
Xxxxxx Drilling Company Limited Nevada Xxxxxx Drilling Company
Xxxxxx Drilling Company Limited Oklahoma Xxxxxx North America Operations, Inc.
Choctaw International Rig Corp. Nevada Xxxxxx Drilling Company International Limited
Xxxxxx Drilling Company of New Guinea, Inc. Oklahoma Xxxxxx Drilling Company
Xxxxxx Drilling Company North America, Inc. Nevada Xxxxxx North America Operations, Inc.
Xxxxxx-VSE, Inc. Nevada Xxxxxx Drilling Company
DGH, Inc. Texas Xxxxxx Drilling Company
Xxxxxx Drilling Offshore USA, L.L.C. Oklahoma Xxxxxx Drilling USA Ltd. - 99%
Xxxxxx Drilling Company Ltd. - 1% (OK)
Xxxxxx USA Drilling Company Nevada Xxxxxx North America Operations, Inc.
Quail Tools, L.L.P. Oklahoma Xxxxxx Drilling USA Ltd. - 99%
Xxxxxx Drilling Company Ltd. - 1% (OK)
Xxxxxx Drilling U.S.A. Ltd. Nevada Xxxxxx North America Operations, Inc. (Common)
Xxxxxx Drilling Company (Preferred)
Xxxxxx Technology, Inc. Oklahoma Xxxxxx Drilling Company
Xxxxxx Drilling Company International Limited Nevada Xxxxxx Drilling Company
Xxxxxx Technology, L.L.C. Louisiana Xxxxxx Drilling USA Ltd. - 99%
Xxxxxx Drilling Company Ltd. - 1% (OK)
Xxxxxx Drilling Company of Niger Oklahoma Xxxxxx Drilling Company
Xxxxxx Drilling (Kazakstan), Ltd. Oklahoma Xxxxxx Drilling Company
PKD Sales Corporation Oklahoma Xxxxxx Drilling Company
Xxxxxx Drilling Company of Siberia Russia Xxxxxx Drilling Company International, Ltd.
Selective Drilling Corporation Oklahoma Xxxxxx Drilling Company
Challenger Limited Switzerland Selective Drilling Corp.
Total Logistics Corporation Nevada Xxxxxx Drilling Company
Management Service Logistics, Inc. Nevada Total Logistics Corp.
Total Funds Management Corp. Nevada Total Logistics Corp.
Casuarina Limited Bermuda Xxxxxx Drilling Company
Xxxxxx Drilling Company Kuwait Limited Bahamas Xxxxxx Drilling Company
Compania Nacional De Servicios S.A. Peru Xxxxxx Drilling Company
Production Control Systems, Inc. Delaware PDC - 80%
Indocorp of Oklahoma, Inc. Oklahoma Xxxxxx Drilling Company
Xxxxxx Drilling Investment Company Oklahoma Xxxxxx Drilling Company
Universal Rig Service Corp. Nevada Xxxxxx Drilling Company
Xxxxxx Drilling Company Limited Bahamas Xxxxxx-VSE, Inc.
Xxxxxx Drilling Company Eastern Hemisphere, Ltd. Oklahoma Xxxxxx-VSE, Inc. - 100% common
Xxxxxx-VSE, Inc. - 83% non-voting shares
Xxxxxx Drilling Company Limited (Bahamas) -
17% non-voting shares
Universal Rig Leasing, B.V. Netherlands Xxxxxx Drilling Company
Xxxxxx Drilling Offshore Corporation Texas Xxxxxx Drilling Company
Canadian Rig Leasing, Inc. Oklahoma Xxxxxx Drilling Company
Xxxxxx Energy Resources, Inc. Texas Xxxxxx Drilling USA Ltd.
Parker Pipeline Company, Inc. Texas Xxxxxx Energy Resources, Inc.
Xxxxxx Measurement, Inc. Texas Xxxxxx Energy Resources, Inc.
Mallard Peru Holdings, Inc. Delaware Xxxxxx Drilling USA Ltd.
1
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Xxxxxx Pipeline Company
Schedule 8.5 Subsidiaries Affiliates
CORPORATE NAME INCORPORATED OWNERSHIP
-------------- ------------ ---------
Mallard Argentine Holdings, Ltd. Cayman Islands Xxxxxx Drilling USA Ltd.
Mallard Drilling of Venezuela, Inc. Cayman Islands Xxxxxx Drilling USA Ltd.
Mallard Drilling of South America, Inc. Cayman Islands Xxxxxx Drilling USA Ltd.
Xxxxxx Drilling Offshore International, Inc. Cayman Islands Xxxxxx Drilling USA Ltd.
Mallard Bay Drilling Nigeria Limited Nigeria Xxxxxx Drilling Offshore International, Inc.
Parco, Inc. Oklahoma Xxxxxx Drilling Company
Pardril, Inc. Oklahoma Xxxxxx Drilling Company
Xxxxxx Drilling Company of South America, Inc. Oklahoma Xxxxxx Drilling Company
Xxxxxx Drilling Company of Bolivia, Inc. Oklahoma Xxxxxx Drilling Company
Anachoreta, Inc. Nevada Xxxxxx Drilling Company
Xxxxxx Valve Company Texas Xxxxxx Technology Inc.
Parco Masts and Substructures, Inc. Oklahoma Xxxxxx Technology Inc.
Xxxxxx Drilling Company (Bolivia) S.A. Bolivia Xxxxxx Drilling Company
Xxxxxx Drilling Company of New Zealand Limited New Zealand Xxxxxx Xxx Xxxxxx nominally owns and holds .5% for
Xxxxxx Drilling Company's benefit, and Xxxxxx Drilling
Company owns directly the remaining 99.5%
Xxxxxx Aviation, Inc. Oklahoma Xxxxxx Drilling Company
Total Coverage Services Nevada Xxxxxx Drilling Company
OIME, Inc. Oklahoma Xxxxxx Drilling Company
Xxxxxx Drilling Company of South Texas, Inc. Oklahoma Xxxxxx Drilling Company
Xxxxxx Drilling Company of Mexico, Ltd. Oklahoma Xxxxxx Drilling Company
Xxxxxx Drilling Company International, Inc. Delaware Xxxxxx Drilling Company
Xxxxxx Drilling Company of Argentina, Inc. Nevada Xxxxxx Drilling Company International Limited
Xxxxxx Drilling International of New Zealand Limited New Zealand Xxxxxx Xxx Xxxxxx nominally owns and holds .5% for
Xxxxxx Drilling Company International Limited's
benefit, and Xxxxxx Drilling Company International
Limited owns directly the remaining 99.5%
Xxxxxx Drilling Company of Indonesia, Inc. Oklahoma Choctaw International Rig Corp.
Creek International Rig Corp. Nevada Xxxxxx Drilling Company International Limited
Perfordora Ecuatoriana S.A. Petrodrilling Ecuador Creek International Rig Corp.
Xxxxxx North America Operations, Inc. Nevada Xxxxxx Drilling Company
Xxxxxx Drilling Company of Singapore, Ltd. Oklahoma Xxxxxx Drilling Company
Saints Acquisition Company Delaware Xxxxxx Drilling Company
2
197
Xxxxxx Drilling Company
Schedule 8.9 Debt Activity Balances
DEBT INSTRUMENT
---------------
NOTES AND LOANS
Cananwill 7,101,754 Insurance premium finance
Senior Notes $300mm 300,000,000
Senior Notes $150mm 150,000,000
Convertible Debt 175,000,000
CIRI 792,857 Purchase of interest in Rig 141 & 217
Boeing Capital Corp. 25,000,000 Rig 75 Financing
CAPITAL LEASES
IBM 669,395 Financial Information System & Phone Lease
Xxxxxxx Mfg. Corp 525,808 Mud Equipment for Rig 61& Rig 55
Xxxxxx 29,271 copiers & fax machines
NTFC Capital Corp 8,379 Phone system
Citicorp 19,425 Forklift
-------------
TOTAL DEBT 659,146,890
1
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Xxxxxx Drilling Company
Schedule 8.12 Real Estate
OWNER LOCATION DESCRIPTION IMPROVEMENTS
----- -------- ----------- ------------
DOMESTIC
Xxxxxx Drilling Company of North America, Inc. Casper, WY 10.34 Acres 19,000 office
shop and whse
Xxxxxx Drilling Company of North America, Inc. Xxxxxx, XX 0 Acres Fenced
Xxxxxx Drilling Company of North America, Inc. Odessa, TX 10 Acres Shop, 3000 SF
Office, 2 bldgs
Xxxxxx Drilling Company of North America, Inc. Pecos, TX 3.866 Acres Fenced
Houston, TX Office Space
Quail Tools, L.L.P. Victoria, TX 11 Acres Quail Office/Yard
Xxxxxx Drilling Company King Ranch, TX Hunting Lease Camp
Xxxxxx Drilling Company of North America, Inc. Anchorage, AK 6.83 Acres 4 Bldgs, total
Xxxxxx Drilling Company of North America, Inc. Deadhorse, AK 1 Acre Shop/Camp
Pardril, Inc. Tulsa, OK Downtown 10 story office
Home office Bldg
Pardril, Inc. Tulsa, OK Hangar/office
Pardril, Inc. Tulsa, OK Warehouse Shop/Whse
Pardril, Inc. Tulsa, OK Warehouse bldg
Xxxxxx Drilling Company Maize, OK Ranch Lodge
Quail Tools, L.L.P. New Iberia 15 Acres Quail Office/Yd
Xxxxxx Technology, L.L.C. New Iberia 00 Xxxxx Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxxx Xxxxxxxx XXX, L.L.C. Office/Whse
PERSONAL Xxxxxx Aviation, Inc. Tulsa, OK 1956 DeHavilland
PROPERTY Xxxxxx Aviation, Inc. Tulsa, OK 1996 Xxxx 60
Xxxxxx Aviation, Inc. Tulsa, OK 1993 Cessna
Citation 525
IMPROVEMENT LEASED/ CONTENTS
OWNER VALUE OWNED VALUE
----- ----- ----- -----
DOMESTIC
Xxxxxx Drilling Company of North America, Inc. $575,000.00 Owned $50,000
Xxxxxx Drilling Company of North America, Inc. Owned
Xxxxxx Drilling Company of North America, Inc. $255,000.00 Owned $50,000
Xxxxxx Drilling Company of North America, Inc. Owned
Leased $200,000
Quail Tools, L.L.P. $2,613,254.00 Owned Included
Xxxxxx Drilling Company $132,000.00 Leased Included
Xxxxxx Drilling Company of North America, Inc. Owned
$1,075,000.00 Bldg/Owned Included
Xxxxxx Drilling Company of North America, Inc. Land/Leased Included
$2,550,000.00 Bldg/Owned
Pardril, Inc. $7,710,000.00 Owned Included
Pardril, Inc. Leased $250,000
Pardril, Inc. $295,000.00 Owned
Pardril, Inc. $110,000.00 Owned
Xxxxxx Drilling Company $75,000.00 Owned
Quail Tools, L.L.P. $3,090,919.00 Owned Included
Xxxxxx Technology, L.L.C. $4,550,000.00 Owned $2,500,000
Xxxxxx Drilling Offshore USA, L.L.C. $9,360,000.00 Owned Included
PERSONAL Xxxxxx Aviation, Inc. $290,000.00 Owned
PROPERTY Xxxxxx Aviation, Inc. $10,100,000.00 Leased
Xxxxxx Aviation, Inc. $2,800,000.00 Owned
1
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Xxxxxx Drilling Company
Schedule 8.14 Trade Names
Trade Name/DBA Owner
-------------- -----
Partech Xxxxxx Technology, L.L.C
OIME Xxxxxx Technology, L.L.C
Parco Xxxxxx Technology, L.L.C
Parco Mast and Substructure Xxxxxx Technology, L.L.C
Nevada Xxxxxx Drilling Limited Xxxxxx Drilling Company Limited (Nevada)
Xxxxxx Drilling Company Limited of Oklahoma Xxxxxx Drilling Company Limited (Oklahoma)
AT-2000-E Xxxxxx Drilling Company (Delaware)
All Terrain 2000-E Xxxxxx Drilling Company
Xxxxxx Xxxxxx Drilling Company
XX Xxxxxx Drilling Company
Heli-Hoist Xxxxxx Drilling Company
TBA Xxxxxx Drilling Company
1
200
Xxxxxx Drilling Company
Schedule 8.15 Litigation
Case No. Style Xxxxxx Party
-------- ----- ------------
236/98 Enafor vs. Partech Xxxxxx Technology, Inc.
Xxxxxx Drilling Company v. Underwriters at Lloyds Xxxxxx Drilling Company
G-99-480 (Russian Camp Vandalism)
38-94 In the matter of arbitration of Cousa Xxxxxx Drilling Company of Oklahoma, Inc.
10234/OL P.T. Xxxx Xxxx Tehnik Inti vs. Himpurna California Indonesian Partner
Energy Ltd.
96-G0201 Hercules Marine Services Corporation vs. Xxx Xxxxxx Xxxxxx Drilling Offshore Corporation
99CV0069 Mallard Bay Drilling, LLC vs. TransTexas Gas Xxxxxx Drilling Offshore USA, L.L.C.
Corporation
97-1642 F consolidated Xxxxxxx X. Xxxxxx and Xxxxx Xxxxxx Xxxxxxxxx vs. Xxxxxx Drilling Offshore Corporation
with 97-1780 Samedan Oil Corporation and Xxxxx Xxxxxx
88448-C Xxxxxxx X. Xxxxxxx vs. Ensco Marine Company and Xxxxxx Drilling Offshore USA, L.L.C.
Mallard Bay Drilling, Inc.
97-1223 In Re: The Matter of Mallard Bay Drilling, L.L.C., as Xxxxxx Drilling Offshore USA, L.L.C.
Owner and Operator of Xx. Xxxxxx, Otherwise
Designated Mallard Rig 52, Praying for Exoneration
from and/or Limitation of Liability
Case No. Opened
-------- ------
236/98 Defendant 06/15/98
Plantiff 09/02/99
G-99-480
38-94 Plantiff 01/12/94
10234/OL Plantiff 11/25/98
96-G0201 Defendant 06/18/05
99CV0069 Plantiff 01/22/99
97-1642 F consolidated Defendant 06/18/97
with 97-1780
88448-C Defendant 03/24/98
97-1223 06/19/97
1
201
Xxxxxx Drilling Company
Schedule 8.15 Litigation
Case No. Style Xxxxxx Party
-------- ----- ------------
98 07358 Xxxxx Xxxxxx, et al. vs. Union Pacific Resources Xxxxxx Drilling Company
Corp., et al. including Xxxxxx Drilling Company
Xxxxxxx Xxxxxxx individually and as Tutor of the
Minors, vs. Union Pacific, et al, Xxxxxxxxx Xxxxx and
Xxxxx Xxxxx vs. Union Pacific, et al; Xxxxxx Xxxxxxx
and Xxxx Xxxxxxx vs Union Pacific, et al; Xxxxxx
Xxxxxxxx individually and as Tutrix of the minor, vs.
Union Pacific, et al; Xxxxxx Xxxxxxxxx et al, vs.
Union Pacific, et al; Xxxxxx Xxx and Xxxxxxx Xxx vs.
Union Pacific, et al; Xxxxxx Xxxxxxxx et al vs. Union
Pacific, et al; Xxxxx Xxxx, Xx. and Xxxxxx Xxxx vs.
Union Pacific, et al; Xxxxxxx Xxxxxxx, et al vs.
Union Pacific, et al; Xxxxxxx Xxx, et al vs. Union
Pacific, et al; Xxxxxxx Xxxxxxx, et al vs. Union
Pacific, et al; Xxxxx Fee, et al vs. Union Pacific,
et al; Xxxxxxx Fee, et al vs. Union Pacific, et al;
Xxxxx Xxxxx vs. Union Pacific, et al; Xxxxxxx Xxxxxxx
vs Union Pacific, et al; Xxxxxx Xxxxxx vs Union
Pacific, et al; Xxxxxxxx Xxxxxxxx, et al vs. Union
Pacific, et al; Xxxxxxx Xxxxx & Xxxxxxx Xxxxx vs
UPRC, et al
18.728 In re: Argentina Customs Dispute Mallard Drilling of South America, Inc.
XX00-0000 Xxxxx Xxxxx, Xx. and Xxxxxxx Xxxxx Xxxxx vs. Samedan Xxxxxx Drilling Offshore Corporation
Oil Corporation and Hercules Offshore Corporation
98CV1070 Xxxxxx Xxxxxx Xxxxxx, Xx. and Xxxxxx Xxxxxx, et al. Xxxxxx Drilling Offshore USA, L.L.C.
vs. Mallard Drilling, Inc. et al. (including The
Meridian Resource and Exploration Company)
99CV0009 Xxxxxxx and Xxxxxxxxx Xxxxxx & American Interstate Xxxxxx Technology, Inc.
Insurance Company vs. Xxxxxx Technology, Inc. et al.
90386-D Xxxxxx Xxxxx and Xxxxxxxx Xxxxx vs. Texas Meridian Xxxxxx Drilling Offshore USA, L.L.C.
Corporation and Mallard Bay Drilling LLC
Case No. Opened
-------- ------
98 07358 Defendant 04/24/98
18.728 Defendant 06/18/05
CV98-1619 Defendant 08/28/98
98CV1070 Defendant 01/14/99
99CV0009 Defendant 01/12/99
90386-D Defendant 01/15/99
2
202
Xxxxxx Drilling Company
Schedule 8.15 Litigation
Case No. Style Xxxxxx Party
-------- ----- ------------
00000-X Xxxxx Xxxxxx vs. Xxxxxxx Bay Drilling, LLC, D&D Xxxxxx Drilling Offshore USA, L.L.C.
Enterprises, Xxxxxxxx Enterprises; Santa Xxxxxxx
Chemical & Environmental Inc. and The Red Fox
Companies Defense tendered by letter of May 24, 1999.
If no response by July 24, then consider third party
claim.
86296 Xxxx Xxxxxx, Xx., et al. vs. Liberty Mutual Fire Quail Tools, L.L.P.
Insurance Co., et al. Xxxxx Xxxxxx vs. Liberty Mutual
Fire Insurance Co.
992792 Xxxxxxx Xxxxxxx v. Xxxxx X. Xxxxx, et xx Xxxxx Tools, L.L.P.
539-295 DIVISION "G" Xxxxxx Xxxxxxx and Xxxxx Xxx Company a/k/a Vinka Xxx Xxxxxx Drilling Offshore USA, L.L.C.
Oyster Company v. Texaco Producing, Inc. f/k/a Texaco
Exploration and Production, Inc., Mallard Bay
Drilling, Inc., d/b/a Mallard Bay Drilling, L.L.C.,
ABC Towing Company and XYZ Construction Company, Inc.
44-600 Grasshopper Oysters, Inc., et al. vs. Badger Oil Xxxxxx Drilling Offshore USA, L.L.C.
Corporation, et al.
33,826-D Xxxxxxx Xxxxxx, et al. vs. Amoco Production Company, Xxxxxx Drilling Company
Inc. and Xxxxxx Drilling Company, Inc.
No. 539-039 Vatro Xxxxxx v. Texaco Producing, Inc. f/k/a Texaco Mallard Bay Drilling, L.L.C.
Exploration and Production, Inc., Mallard Bay
Drilling, Inc. d/b/a Mallard Bay Drilling, LLC, ABC
Towing Company and XYZ Construction Company, Inc.
c.1046 Xxxxx Xxxxxxx Xxxx vs. Xxxxxxx Drilling Mallard Drilling
Case No. Opened
-------- ------
90826-C Defendant
86296 Defendant 04/09/99
992792 Defendant 06/21/99
539-295 DIVISION "G" Defendant 06/29/99
44-600 Defendant 07/29/99
33,826-D Defendant 07/29/99
No. 539-039 Defendant 08/23/99
c.1046 Defendant
3
203
Xxxxxx Drilling Company
Schedule 8.15 Litigation
Case No. Style Xxxxxx Party
-------- ----- ------------
00-000 Xxxxxx Xxxxxxxx Xxxxxxxx XXX, LLC, Zurich Insurance Xxxxxx Drilling Offshore USA, L.L.C.
Company, Continental Insurance Company, AXA Global
Risks U.S. Insurance Company, Commonwealth Insurance
Company, QBE International Insurance, Limited,
Arig-Arab Insurance Group (B.S.C.), Reliance
Insurance Company, Lloyds Syndicate 1308 (Xxxxxxx),
trading as Xxxxxxxxx & Hold Sundicate Management,
Lloyds Syndicate 0741, Lloyds Syndicate 2741 and HIH
Casualty & General Insurance, Limited vs. Lexington
Insurance Company and National Uniton Fire Insurance
Company of Pittsburgh, PA (Equinox)
00-00000 Xxx. X, Xxxx. 8 Xxxx Xxxxx Xxxxxxx (Secretary of Department of Mallard Bay Drilling, L.L.C.
Revenue) vs. Mallard Bay Drilling, LLC
Case No. Opened
-------- ------
45-132 Plantiff 09/29/99
00-00000 Xxx. X, Xxxx. 8 Defendant 12/18/98
4
204
Xxxxxx Drilling Company
Schedule 8.17 Labor Disputes
Matter Number Title Xxxxxx Party Opened
------------- ----- ------------ ------
97 5A Xxxx Xxxxxx Panoja vs. Helimar Perfuacoes Maritimas e Xxxxxx Drilling Company of South
Terrestres Leda. America, Inc. 08/18/97
98 38 Ex-workers vs. Xxxxxx Drilling Company of South America, Xxxxxx Drilling Company of South America, 08/17/98
Inc. and Xxxxxx Drilling Company of Oklahoma, Inc. Inc. and Xxxxxx Drilling Company of
Oklahoma Inc.
M95 1 Xxxxx Xxxxxxx vs Energy Ventures Mallard Drilling of South America, Inc. 1995
M95 2 Xxxxxx Xxxxxxx Xxxxxx vs. Energy Ventures Mallard Drilling of South America, Inc. 1995
M95 3 Xxxx Xxxxxxx Xxxxxxxx vs. Energy Ventures Mallard Drilling of South America, Inc. 1995
M96 1 Xxxxxx Xxxxxxxxx vs. Xxxxxxx Drilling Mallard Drilling of South America, Inc. 1996
M96 2 Xxxx de la Xxxx Xxxxxxx vs. Energy Ventures Mallard Drilling of South America, Inc. 1996
M96 3 Geronimo Xxxxx Xxxxxx vs. Energy Ventures Mallard Drilling of South America, Inc. 1996
M96 4 Xxxxxx Xxxxxxxx Weeiser Xxxx vs. Energy Ventures Mallard Drilling of South America, Inc. 1996
M96 5 Xxxxxx Xxxxxx vs. Energy Ventures Mallard Drilling of South America, Inc. 1996
M96 6 Xxxx Xxxxxxxx Grijera vs. Energy Ventures Mallard Drilling of South America, Inc. 1996
M97 1 Xxxxx Xxxxxxx Xxxxxxxx vs. Xxxxxxx Drilling Mallard Drilling of South America, Inc. 1997
M97 3 Xxxxxxx Xxxxxxx Xxxx vs. Energy Ventures Mallard Drilling of South America, Inc. 1997
M97 4 Xxxx Xxxxxx Alguieta vs. Energy Ventures Mallard Drilling of South America, Inc. 1997
M97 5 Fabian Xxxxxxx Xxxxx vs. Xxxxxxx Drilling Mallard Drilling of South America, Inc. 1997
M97 6 Xxxxxx Xxxxxxx Xxxxxx vs. Energy Ventures Mallard Drilling of South America, Inc. 1997
1
205
Xxxxxx Drilling Company
Schedule 8.18 Environmental Disclosures
None
1
206
Xxxxxx Drilling Company
Schedule 8.21 ERISA Disclosures
None
1
207
Xxxxxx Drilling Company
Schedule 8.21 ERISA Disclosures
2
208
Xxxxxx Drilling Company
Schedule 8.28 Material Contracts
None
1
209
Xxxxxx Drilling Company
Schedule 8.28 Material Contracts
2
210
XXXXXX DRILLING COMPANY
JANUARY 31, 2001
RIG RIG RIG YEAR
NO. TYPE DESIGN BUILT LOCATION STATUS CUSTOMER
--- ---- ------ ----- -------- ------ --------
58B BARGE 3000 HP 1982 PORT OF IBERIA LA STACKED
59B BARGE 3000 HP 1972 PORT OF IBERIA LA STACKED
50B BARGE/DEEP SB NE 12 (SCR) 1993 R IBERIA PARISH LA DRILLING STONE ENERGY CORPORATION
51B BARGE/DEEP SB NE 12 (SCR) 1993 R TERREBONNE LA DRILLING TEXACO EXPLORATION &
PRODUCTION, INC.
53B BARGE/DEEP GD 1100 1995 R CAMERON LA DRILLING XXXXXXXX OPERATING CO.
54B BARGE/DEEP O.W. E-2000 (SCR) 1995 R TERREBONNE LA DRILLING CLIFF'S OIL & GAS CO.
55B BARGE/DEEP O.W. E-2000 (SCR) 1993 R TERREBONNE LA DRILLING TEXACO EXPLORATION &
PRODUCTION, INC.
56B BARGE/DEEP O.W. E-2000 (SCR) 0000 X XXXXXXXXX XX XXXXXXXX XXXXXXXXXX RESOURCES
57B BARGE/DEEP GD 1500 1997 R JEFFERSON LA DRILLING STONE ENERGY CORPORATION
76B BARGE/DEEP E-3000 OILWELL 1997 R OFFSHORE LA DRILLING XXXXXXXX OIL CORP.
12B BARGE/INTERMEDIATE GD 1100 1990 R IBERIA PARISH LA DRILLING TEXACO EXPLORATION &
PRODUCTION, INC.
15B BARGE/INTERMEDIATE 1000 HP 1998 R PLAQUEMINES LA DRILLING CHEVRON OIL CO.
17B BARGE/INTERMEDIATE XXXXXX 90 1993 R XXXXXXXXXX LA WORKOVER HILCORP ENERGY COMPANY
21B BARGE/INTERMEDIATE SB N75 1995 R CAMERON LA DRILLING XXXXXXX XXXXXXXX ENERGY, INC.
8B BARGE/INTERMEDIATE NATIONAL 80B 1995 R PLAQUEMINES LA DRILLING NORTHCOAST OIL CO.
6B BARGE/WORKOVER OIME 000 XXXXXX XXXXXX XX STACKED
7B BARGE/WORKOVER IR 1500E 1985 RED FOX LA STACKED
9B BARGE/WORKOVER XXXXXX 65 PLAQUEMINES LA WORKOVER ENERGY PARTNERS LTD
16B BARGE/WORKOVER 800 HP 1994 R TERREBONNE LA WORKOVER CASTEX ENERGY INC.
18B BARGE/WORKOVER 800 HP 1993 R LAFOURCHE LA WORKOVER XXXXX PROD.
20B BARGE/WORKOVER 800 HP 1995 R MERIDIAN / WEEKS IS STACKED
23B BARGE/WORKOVER XXXXXX 90 1993 R ST. XXXX LA WORKOVER GULFPORT
24B BARGE/WORKOVER XXXXXX 90 1992 R MERIDIAN / WEEKS IS STACKED
25B BARGE/WORKOVER XXXXXX 90 1993 R MERIDIAN / WEEKS IS STACKED
26B BARGE/WORKOVER XXXXXX 65 TERREBONNE LA WORKOVER APACHE CORP.
11J JACKUP MAT SUPPORTED,
CANTILEVER OFFSHORE LA DRILLING ENERGY PARTNERS LTD
14J JACKUP INDEPENDENT LEG,
SLOT OFFSHORE LA DRILLING MATRIX OIL & GAS CO.
15J JACKUP INDEPENDENT LEG,
SLOT OFFSHORE LA DRILLING LLOG EXPLORATION CO.
20J JACKUP MAT SUPPORTED,
CANTILEVER OFFSHORE LA DRILLING BOIS 'D ARC OFFSHORE, LTD.
21J JACKUP MAT SUPPORTED,
CANTILEVER OFFSHORE LA DRILLING CHEVRON OIL CO.
RIG RIG CONTRACT
NO. TYPE CONDITION DURATION COMMENTS
--- ---- --------- -------- --------
00X XXXXX XXXX XXXX
00X XXXXX XXXX ONLY
50B BARGE/DEEP GOOD 07/31/01
51B BARGE/DEEP GOOD 12/31/01
53B BARGE/DEEP GOOD 03/15/01 THEN TO BADGER
54B BARGE/DEEP EXCELLENT 02/15/01 THEN TO CABOT
55B BARGE/DEEP GOOD 12/31/01
56B BARGE/DEEP GOOD 03/01/01
57B BARGE/DEEP GOOD 06/30/01
76B BARGE/DEEP EXCELLENT 02/21/01 THEN TO EXXON
12B BARGE/INTERMEDIATE GOOD 02/14/01 THEN TO KCM/SWGD
15B BARGE/INTERMEDIATE EXCELLENT 03/07/01
17B BARGE/INTERMEDIATE GOOD 04/15/01
21B BARGE/INTERMEDIATE GOOD 03/07/01 THEN TO HULL REPAIR
8B BARGE/INTERMEDIATE FAIR 02/14/01 THEN TO X'XXXXX
6B BARGE/WORKOVER EXCELLENT
7B BARGE/WORKOVER POOR
9B BARGE/WORKOVER GOOD 02/14/01 THEN TO VINTAGE
16B BARGE/WORKOVER FAIR 03/07/01
18B BARGE/WORKOVER GOOD 02/10/01 THEN TO APACHE
20B BARGE/WORKOVER FAIR
23B BARGE/WORKOVER GOOD 04/15/01
24B BARGE/WORKOVER GOOD
25B BARGE/WORKOVER GOOD
26B BARGE/WORKOVER GOOD 02/28/01
11J JACKUP GOOD 03/21/01
14J JACKUP GOOD 02/10/01 THEN TO 3TEC
15J JACKUP GOOD 04/15/01
20J JACKUP GOOD 03/15/01
21J JACKUP GOOD 03/21/01 OPTION PERIOD
1
211
XXXXXX DRILLING COMPANY
JANUARY 31, 2001
RIG RIG RIG YEAR
NO. TYPE DESIGN BUILT LOCATION STATUS CUSTOMER
--- ---- ------ ----- -------- ------ --------
22J JACKUP MAT SUPPORTED,
CANTILEVER OFFSHORE LA STACKED
25J JACKUP INDEPENDENT LEG,
CANTILEVER OFFSHORE LA DRILLING ENERGY PARTNERS LTD
2P PLATFORM 1000 HP, SELF
ERECTING, SCR PORT OF IBERIA LA STACKED
3P PLATFORM 1000 HP, SELF
ERECTING, SCR OFFSHORE LA DRILLING ANADARKO PETROLEUM CORP.
10P PLATFORM 650 HP, SELF
ERECTING PORT OF IBERIA LA STACKED
41P PLATFORM XXXXXXXX XX-800E OFFSHORE LA DRILLING PANACO INC.
47P PLATFORM 750 HP PORT OF IBERIA LA STACKED
110 LAND OIME SL-7 BOLIVIA STACKED
111 LAND OIME SL 1500 BOLIVIA STACKED
117 LAND OIME SL-7 BOLIVIA STACKED
118 LAND OIME SL-7 BOLIVIA STACKED
120 LAND OIME SL-1500 XXXXXXX XXXXXXX
000 XXXX XX 0000-X XXXXXXX DRILLING RESPOL
122 LAND GD 1500-E BOLIVIA MOVING RIG
255 LAND TBA 2000 1977 BOLIVIA DRILLING PLUSPETROL
256 LAND OIME 3000E 1994 BOLIVIA DRILLING TOTAL EXPLORATION PRODUCTION
BOLIVIE
227 LAND XXXXXX 350 1989 XXXX STACKED
165 LAND OIME 3000E 0000 XXXXXXXX DRILLING BP EXPLORATION COMPANY
(COLOMBIA) LTD
174 LAND OIME 3000E 0000 XXXXXXXX DRILLING BP EXPLORATION COMPANY
(COLOMBIA) LTD
197 LAND TBA 2000 0000 XXXXXXXX STACKED
216 LAND OIME 2000E 0000 XXXXXXXX STANDBY PERENCO
221 LAND OIME 3000 1979 COLOMBIA RIGGING UP BP EXPLORATION COMPANY
(COLOMBIA) LTD
222 LAND OIME XX-0 0000 XXXXXXXX DRILLING PETROBRAS INTERNACIONAL S.A. -
BRASPETRO
223 LAND TBA 2000 0000 XXXXXXXX STACKED
248 LAND M CON 1220E 0000 XXXXXXXX STACKED
247 LAND GD 1100E DUBAI STACKED
115 LAND TBA 1500 1972 INDONESIA STACKED
146 LAND TBA 2000 1980 INDONESIA STACKED
RIG RIG CONTRACT
NO. TYPE CONDITION DURATION COMMENTS
--- ---- --------- -------- --------
22J JACKUP GOOD SHIPYARD 150 DAYS
25J JACKUP GOOD 04/07/01
2P PLATFORM GOOD
3P PLATFORM GOOD 02/14/01 THEN TO BASIN
10P PLATFORM GOOD
41P PLATFORM 02/07/01 RENEWAL OPTION
47P PLATFORM
110 LAND EXCELLENT
111 LAND EXCELLENT
117 LAND EXCELLENT
118 LAND EXCELLENT
120 LAND EXCELLENT
121 LAND EXCELLENT 1 WELL
122 LAND EXCELLENT
255 LAND EXCELLENT 03/30/01
256 LAND EXCELLENT 1 WELL OPTION WELL
227 LAND EXCELLENT
165 LAND EXCELLENT 12/31/01
174 LAND EXCELLENT 12/31/01
197 LAND GOOD
216 LAND EXCELLENT MODIFYING RIG
221 LAND EXCELLENT 12/31/01
222 LAND EXCELLENT 12/31/01
223 LAND GOOD
248 LAND
247 LAND EXCELLENT
115 LAND GOOD
146 LAND EXCELLENT
2
212
XXXXXX DRILLING COMPANY
JANUARY 31, 2001
RIG RIG RIG YEAR
NO. TYPE DESIGN BUILT LOCATION STATUS CUSTOMER
--- ---- ------ ----- -------- ------ --------
190 LAND TBA 2000 1979 INDONESIA STACKED
206 LAND TBA 2000 1981 INDONESIA STACKED
231 LAND D3 II (SCR) 1996 INDONESIA STACKED
239 LAND WM T38H 1989 INDONESIA XXXXXXX
000 XXXX XXX'X X-00 0000 XXXXXXXXX STACKED
242 LAND NAT'L 4-10 1989 INDONESIA STACKED
253 LAND C1 II (SCR) 1996 INDONESIA DRILLING PERTIMA - SANTA FE TUBAN
101 LAND CHALL. 361 1985 KAZAHKSTAN STACKED
102 LAND XXXXXX 750 1993 KAZAHKSTAN RUNNING TEXACO EXPLORATION &
PRODUCTION, INC.
107 LAND IR 1500E 1985 KAZAHKSTAN DRILLING TENGIZCHEVROIL
230 LAND CE D - 3E 1988 KAZAHKSTAN RIGGING UP KPO
249 LAND GD 3000E 1994 KAZAHKSTAN DRILLING TENGIZCHEVROIL
OFFSHORE KAZAKHSTAN
INTERNATIONAL OPERATING
257 BARGE/DEEP E-3000 OILWELL 1998 KAZAHKSTAN DRILLING COMPANY N.V.
225 LAND TBA 2000 1974 KENYA STACKED
125 LAND TBA 1500 1972 NEW GUINEA STACKED
140 LAND TBA 2000 1975 NEW GUINEA STACKED
160 LAND TBA 2000 1977 NEW GUINEA STACKED
226 LAND A.T. 2000E 1980 NEW GUINEA XXXXXXX
000 XXXX XXX 0000X 0000 XXX XXXXXXX DRILLING XXXXXXXX CHALLENGE
000 XXXX XX 0000X XXX XXXXXXX DRILLING SWIFT ENERGY
252 LAND IR 900 1995 NEW ZEALAND DRILLING INDO-PACIFIC
72 BARGE/DEEP E-3000 OILWELL 1991 R NIGERIA DRILLING SHELL PETROLEUM DEVELOPMENT
COMPANY OF NIGERIA LTD.
73 BARGE/DEEP 3000 IDECO 1991 R NIGERIA DRILLING SHELL PETROLEUM DEVELOPMENT
COMPANY OF NIGERIA LTD.
74 BARGE/DEEP E-3000 OILWELL 1996 NIGERIA DRILLING CHEVRON NIGERIA LTD.
75 BARGE/DEEP 1999 NIGERIA DRILLING SHELL PETROLEUM DEVELOPMENT
COMPANY OF NIGERIA LTD.
220 LAND OIME SL1000 1978 NIGERIA STACKED
131 LAND TBA 2000 1974 XXXX XXXXXXX
000 XXXX XXX 0000 0000 XXXX STACKED
250 LAND TBA 2000 0000 XXXX STACKED
RIG RIG CONTRACT
NO. TYPE CONDITION DURATION COMMENTS
--- ---- --------- -------- --------
190 LAND EXCELLENT
206 LAND EXCELLENT
231 LAND EXCELLENT
239 LAND GOOD
241 LAND GOOD
242 LAND GOOD
253 LAND EXCELLENT 1 YEAR 1YR OPTION
101 LAND EXCELLENT WORKOVER RIG
102 LAND GOOD 12/28/01 OPTION PERIOD
107 LAND EXCELLENT WELL TO WELL
230 LAND EXCELLENT 02/01/04
249 LAND EXCELLENT 5 YEARS
257 BARGE/DEEP EXCELLENT 3 YEARS
225 LAND GOOD
125 LAND GOOD
140 LAND EXCELLENT
160 LAND EXCELLENT
226 LAND EXCELLENT
188 LAND GOOD 1 WELL OPTION WELL
246 LAND EXCELLENT 1 WELL 2 OPTION XXXXX
252 LAND EXCELLENT 1 WELL 2 OPTION XXXXX
72 BARGE/DEEP EXCELLENT 9/25/01
73 BARGE/DEEP EXCELLENT 11/03/02
74 BARGE/DEEP EXCELLENT 03/28/01
75 BARGE/DEEP EXCELLENT 5 YEARS
220 LAND EXCELLENT
131 LAND GOOD
145 LAND GOOD
250 LAND GOOD
3
213
Xxxxxx Pipeline Company
Schedule 8.29 Bank Accounts
ACCOUNT NAME ACCOUNT OWNER TYPE
------------ ------------- ----
Xxxxxx Drilling Master Funding Xxxxxx Drilling Company
Xxxxxx Drilling Concentration Xxxxxx Drilling Company Concentration
Xxxxxx Drilling Intl/Dom Payroll Xxxxxx Drilling Co. Intl Ltd. Payroll (ZBA)
Xxxxxx Drilling Accts Payable Xxxxxx Drilling Company A/P Contrl Disb
Xxxxxx Drilling Tulsa Payroll Xxxxxx Drilling Company Payroll (ZBA)
Anachoreta Anachoreta, Inc. DDA
Total Coverage Services Total Coverage Services DDA
DDA
DGH DGH, Inc. DDA
Xxxxxx Drlg Intl Ltd Pakistan Br Xxxxxx Drilling Co. Intl Ltd. Payroll (ZBA)
Xxxxxx Drilling Offshore Xxxxxx Drilling Co. Offshore Concentration
USA, LLC Concentration USA, L.L.C.
Xxxxxx Drilling Offshore USA, LLC A/P Xxxxxx Drilling Co. Offshore USA, L.L.C. Accts Payable
Xxxxxx Drilling Offshore Intl, Inc. Xxxxxx Drilling Offshore Intl, Inc. Receivables
Xxxxxx Drilling Offshore Corp. Concentration Xxxxxx Drilling Co. Offshore USA, L.L.C. Concentration
Xxxxxx Drilling Offshore Corp. Payroll Xxxxxx Drilling Co. Offshore USA, L.L.C. Payroll (ZBA)
Xxxxxx Drilling Offshore Corp. A/P Xxxxxx Drilling Co. Offshore USA, L.L.C. Accts Payable
Xxxxxx Drilling Company Xxxxxx Drilling Company DDA
Xxxxxx Drilling Houston Xxxxxx Drilling Offshore Corp. ZBA Xxxxx Cash
Partech LLC Xxxxxx Technology, L.L.C. ZBA Xxxxx Cash
Xxxxxx Drilling Manual Cks Xxxxxx Drilling Company Xxxxx Cash
Xxxxxx Drilling - MSA Ins Xxxxxx Drilling Company Health Ins
Xxxxxx Drilling - Coresource Xxxxxx Drilling Company Health Ins
Xxxxxx Emp Health Contributions Xxxxxx Drilling Company Interest Bearing
Selective Drilling Co Selective Drilling Corp. DDA
SOURCE BLOCKED
ACCOUNT NAME BANK NAME OF FUNDS ACCT.
------------ --------- -------- -------
Xxxxxx Drilling Master Funding Bank of America From Concentration no
Acct
Xxxxxx Drilling Concentration Bank of America, Tulsa Receivables no
Xxxxxx Drilling Intl/Dom Payroll Bank of America, Tulsa Concentration Acct no
Xxxxxx Drilling Accts Payable Bank of America, Tulsa Concentration Acct no
Xxxxxx Drilling Tulsa Payroll Bank of America, Tulsa Concentration Acct no
Anachoreta Bank of America, Tulsa Receivables no
Total Coverage Services Bank of America, Austin Receivables/Dati Ins no
Bank of America, Tulsa Receivables no
DGH Bank of America, Tulsa Receivables no
Parker Drlg Intl Ltd Pakistan Br Bank of America, Tulsa Concentration Acct no
Parker Drilling Offshore Bank of America, Tulsa Receivables & Parker no
USA, LLC Concentration
Parker Drilling Offshore USA, LLC A/P Bank of America, Tulsa Mallard Concentration no
Parker Drilling Offshore Intl, Inc. Bank of America, Tulsa Receivables no
Parker Drilling Offshore Corp. Concentration Bank of America, Tulsa Parker Master Funding no
Parker Drilling Offshore Corp. Payroll Bank of America, Tulsa Hercules Conc no
Parker Drilling Offshore Corp. A/P Bank of America, Tulsa Hercules Conc no
Parker Drilling Company Bank of Oklahoma Local Ck Deposits & no
wires from Nations
Parker Drilling Houston Bank of Oklahoma ZBA to BOK DDA no
Partech LLC Bank of Oklahoma ZBA to BOK DDA no
Parker Drilling Manual Cks Bank of Oklahoma ZBA to BOK DDA no
Parker Drilling - MSA Ins Bank of Oklahoma ZBA to BOK DDA no
Parker Drilling - Coresource Bank of Oklahoma ZBA to BOK DDA no
Parker Emp Health Contributions Bank of Oklahoma Empl. Health Contrib no
Selective Drilling Co Bank of Oklahoma Receivables no
FUNDS
ACCOUNT NAME WIRED TO
------------ --------
Parker Drilling Master Funding ZBA with Conc.Acct
Sweep Investments
Parker Drilling Concentration ZBA Accts, Divisions
& Vender Wire pmts
Parker Drilling Intl/Dom Payroll Employees
Parker Drilling Accts Payable Checks to Venders
Parker Drilling Tulsa Payroll Tulsa Office Employees
Anachoreta Parker Drilling
Total Coverage Services Parker Drilling
Parker Drilling
DGH Parker Drilling
Parker Drlg Intl Ltd Pakistan Br Employees
Parker Drilling Offshore ZBA accts, Parker
USA, LLC Concentration Master Funding Acct
Parker Drilling Offshore USA, LLC A/P Last Ck Written 7/15/99
Parker Drilling Offshore Intl, Inc. Parker Master Funding
Parker Drilling Offshore Corp. Concentration ZBA accounts
Parker Drilling Offshore Corp. Payroll Payroll
Parker Drilling Offshore Corp. A/P Vendor Payments
Parker Drilling Company Fund ZBA accts &
payroll tax pmts
Parker Drilling Houston Local Cks
Partech LLC Local Cks
Parker Drilling Manual Cks Local Cks
Parker Drilling - MSA Ins Health Ins Checks-old
Parker Drilling - Coresource Health Ins Checks-new
Parker Emp Health Contributions Reimb Parker
Selective Drilling Co none
2
214
Parker Pipeline Company
Schedule 8.29 Bank Accounts
ACCOUNT BANK DIVISION
ACCOUNT NAME OWNER ACCT # BANK COUNTRY CURR COUNTRY
------------ ------- ------ ---- ------- ---- ---------
Parker Drilling Co. Parker Drilling Co. of 9070-5151 Lloyds Bank Argentina ARS Argentina
South America South America, Inc. Av. Callao 1065
Buenos Aires
Argentina
Parker Drilling Co. Parker Drilling Co. of 4596-8121 Lloyds Bank Argentina USD Argentina
South America South America, Inc. Av. Callao 1065
Buenos Aires
Argentina
Parker Drilling Co. Parker Drilling Co. of 4596-8121 Lloyds Bank Argentina ARS Argentina
South America South America, Inc. Av. Callao 1065
Buenos Aires
Argentina
Parker Drilling Co. Parker Drilling Company 072-02645-3 Bancafe, Aguachica Colombia COP Colombia
Intl Limited International Limited Calle 5a No. 25A-10
Aguachica, Colombia
Parker Drilling Co. Parker Drilling Company 010-900667-5 Banco Angle, Ahorros Colombia COP Colombia
Intl Limited International Limited Carrera 68a, No. 22-63
Bogota, Colombia
Parker Drilling Co. Parker Drilling Company 237-00813-1 Bancafe Viani Colombia COP Colombia
Intl Limited International Limited Palaao Municipal
Viani
Parker Drilling Co. Parker Drilling Company 010-18-013-1 Banco de Credito-CKNG Colombia COP Colombia
Intl Limited International Limited Kr. 68 No. 14-36
Santafe de Bogota DC
Parker Drilling Co. Parker Drilling Company 010-01784-6 Banco Anglo Colombiano Colombia COP Colombia
Intl Limited International Limited Carrera 68A No. 22-73
Santafe de Dogota DC
Parker Drilling Co. Parker Drilling Company 178-01100-3 Banco Cafetero-Bancafe Colombia COP Colombia
Intl Limited International Limited Carrera 9a No. 19-56
Yopal, Casanare
ACCOUNT NAME DIV/CO
------------ ------
Parker Drilling Co. 3006
South America
Parker Drilling Co. 3006
South America
Parker Drilling Co. 3006
South America
Parker Drilling Co. 3419
Intl Limited
Parker Drilling Co. 3419
Intl Limited
Parker Drilling Co. 3419
Intl Limited
Parker Drilling Co. 3419
Intl Limited
Parker Drilling Co. 3419
Intl Limited
Parker Drilling Co. 3419
Intl Limited
3
215
Parker Pipeline Company
Schedule 8.29 Bank Accounts
ACCOUNT BANK
ACCOUNT NAME OWNER ACCT # BANK COUNTRY CURR
------------ ------- ------ ---- ------- ----
Creek Intl. Rig Creek International 010-02046-9 Banco de Credito-CKNG Colombia COP
Rig Corp. Carrera 68 No. 14-36
Santafe de Bogota DC
Creek Intl. Rig Creek International 010-25578-4 Banco de Credito-SVNG Colombia COP
Rig Corp. Carrera 68 No. 14-36
Santafe de Bogota DC
Parker Drilling Co. Parker Drilling Co. 760-1023974 Banco Wiese Ltd Peru USD
of Oklahoma, Inc. of Oklahoma, Inc. Jr. Cuzco 246
Lima 1
Parker Drilling Co. Parker Drilling Co. 760-2722232 Banco Wiese Ltd Peru PEN
of Oklahoma, Inc. of Oklahoma, Inc. Jr. Cuzco 246
Lima 1
Parker Drilling Co. Parker Drilling Company 000-3898040 Banco Wiese Ltd Peru PEN
Jr. Cuzco 246
Lima 1
Parker Drilling Co. Parker Drilling Company 000-3345882 Banco Wiese Ltd Peru PEN
Intl Ltd Sucursal del Peru International Limited Jr. Cuzco 246
Lima 1
Parker Drilling Co. Parker Drilling Company 000-1902430 Banco Wiese Ltd Peru USD
Intl Ltd Sucursal del Peru International Limited Jr. Cuzco 246
Lima 1
Creek Intl. Rig Creek International 0079242/012 Citibank Ecuador ECS
Rig Corp. Av. Republica del
Salvador y NN.UU.-Esquina
Quito-Ecuador
Creek Intl. Rig Creek International 079242/036 Citibank Ecuador USD
Rig Corp. OR /039 Av. Republica del
Salvador y NN.UU.-Esquina
Quito-Ecuador
Parker Drilling Co. Parker Drilling Company 1077464053 Mercantile Forex Venezuela
DIVISION
ACCOUNT NAME COUNTRY DIV/CO
------------ --------- ------
Creek Intl. Rig Colombia 3478
Creek Intl. Rig Colombia 3478
Parker Drilling Co. Peru 3603
of Oklahoma, Inc.
Parker Drilling Co. Peru 3603
of Oklahoma, Inc.
Parker Drilling Co. Peru 3603
Parker Drilling Co. Peru 3619
Intl Ltd Sucursal del Peru
Parker Drilling Co. Peru 3619
Intl Ltd Sucursal del Peru
Creek Intl. Rig Ecuador 3778
Creek Intl. Rig Ecuador 3778
Parker Drilling Co. Venezuela 3919
4
216
Parker Pipeline Company
Schedule 8.29 Bank Accounts
ACCOUNT BANK
ACCOUNT NAME OWNER ACCT # BANK COUNTRY CURR
------------ ------- ------ ---- ------- ----
Parker Drilling Co. Parker Drilling Co. 0-119376-009 Citibank, Singapore Singapore SGD
of Singapore, Ltd. of Singapore, Ltd. Robinson Road, PO Box 330
Singapore 900630
Parker Drilling Co. Parker Drilling Co. 4-119376-004 Citibank, Singapore Singapore USD
of Singapore, Ltd. of Singapore, Ltd. Robinson Road, PO Box 330
Singapore 900630
Choctaw Intl Rig Choctaw Intl Rig Corp. 0-102549-007 Citibank NA Indonesia IDR
Parker Drilling Co. Parker Drilling Co. 180697-00 Westpac Trust New Zealand NZD
Intl Limited Intl Limited Westpac Banking Corp (NZ LTD)
196 Devon Street, PO Box 4241
New Plymouth, New Zealand
Parker Drilling Co. Parker Drilling Co. 80249-010 Bank of America-Hanoi Vietnam USD
Intl Limited Intl Limited 27 Ly Thuong Kiet Street
Hanoi, Vietnam
Parker Drilling Co. Parker Drilling Co. 6440-787 PNG Banking, Port Moresby PNG PGK
Eastern Hemisphere, Ltd. Eastern Hemisphere, Ltd. P.O. Box 78
Port Moresby, PNG
Parker Drilling Co. Parker Drilling Co. 294006243812 PNG Banking Corp PNG PGK
of New Guinea-Moro Division of New Guinea, Inc. P.O. Box 78
Port Moresby NCD, PNG
Parker Drilling Co. Parker Drilling Co. (06 4439) 10080663 Commonwealth Bank of Australia Australia AUD
of New Guinea of New Guinea, Inc. 114 Poinciana Ave
Tewantin Qld 4565 Australia
Parker Drilling Co. Parker Drilling Co. 6599-202 PNG Banking, Port Moresby PNG PGK
of New Guinea of New Guinea, Inc.
DIVISION
ACCOUNT NAME COUNTRY DIV/CO
------------ --------- ------
Parker Drilling Co. Singapore 4225
of Singapore, Ltd.
Parker Drilling Co. Singapore 4225
of Singapore, Ltd.
Choctaw Intl Rig Indonesia 4237
Parker Drilling Co. New Zealand 4523
Intl Limited
Parker Drilling Co. Vietnam 5119
Intl Limited
Parker Drilling Co. PNG 5805
Eastern Hemisphere, Ltd.
Parker Drilling Co. PNG 5875
of New Guinea-Moro Division
Parker Drilling Co. Australia 5875
of New Guinea
Parker Drilling Co. PNG 5875
of New Guinea
5
217
Parker Pipeline Company
Schedule 8.29 Bank Accounts
ACCOUNT
ACCOUNT NAME OWNER ACCT # BANK
------------ ------- ------ ----
Parker Drilling Co. Parker Drilling Co. 300004400 Citibank Kazakhstan
Intl Limited Intl Limited Park Palace
41 Kazibek Bi Str (2nd Floor)
Almaty 480100 Republic of Kazakhstan
Parker Drilling Co. Parker Drilling Co. 070609 Almaty Merchant Bank
Intl Limited Intl Limited 100 Furmanov Str.
Almaty 480091 Kazakhstan
Parker Drilling Co. Parker Drilling Co. 36-012494-Q Banque Intl Pour L'Afrique au Tchad
Intl Limited Intl Limited Av Charles De Gaulle
BP 87
Ndjamena, Chad
Parker Drilling Co. Parker Drilling Co. 36280038Y Banque Intl Pour L'Afrique au Tchad
Intl Limited Intl Limited BP 256
Moundou, Chad
Mr. Ngiam Tong Beow & Parker Drilling Co. 581-066701-888 Hongkong & Shanghai Banking
Mr. Gass John Robert Intl Limited Shop No 1, Promenade Level
c/o Parker Drilling Co. Tower 3, China Hong Kong City, 33 Canton Rd
Intl Limited Kowloon, Hong Kong SAR
Mr. Ngiam Tong Beow & Parker Drilling Co. 581-066701-888 Hongkong & Shanghai Banking
Mr. Gass John Robert Intl Limited Savings Account Shop No 1, Promenade Level
c/o Parker Drilling Co. Tower 3, China Hong Kong City, 33 Canton Rd
Intl Limited Kowloon, Hong Kong SAR
Mr. Ngiam Tong Beow & Parker Drilling Co. 581-066701-888 Hongkong & Shanghai Banking
Mr. Gass John Robert Intl Limited Shop No 1, Promenade Level
c/o Parker Drilling Co. Tower 3, China Hong Kong City, 33 Canton Rd
Intl Limited Kowloon, Hong Kong SAR
Parker Drilling Co. Parker Drilling Co. 40804810380000005627 Development & Restructuring Bank
Eastern Hemisphere, Ltd. Eastern Hemisphere, Ltd. 7 Gashek Sreet
Dukat Place 11 Business Center
Moscow, Russia
BANK DIVISION
ACCOUNT NAME COUNTRY CURR COUNTRY DIV/CO
------------ ------- ---- --------- ------
Parker Drilling Co. Kazakhstan USD Kazakhstan 5319
Intl Limited
Parker Drilling Co. Kazakhstan USD Kazakhstan 5319
Intl Limited
Parker Drilling Co. Chad XAF Chad 5419
Intl Limited
Parker Drilling Co. Chad XAF Chad 5419
Intl Limited
Mr. Ngiam Tong Beow & Hongkong USD China 5519
Mr. Gass John Robert
c/o Parker Drilling Co.
Intl Limited
Mr. Ngiam Tong Beow & Hongkong HKD China 5519
Mr. Gass John Robert
c/o Parker Drilling Co.
Intl Limited
Mr. Ngiam Tong Beow & Hongkong HKD China 5519
Mr. Gass John Robert
c/o Parker Drilling Co.
Intl Limited
Parker Drilling Co. Russia RUB Russia 5705
Eastern Hemisphere, Ltd.
6
218
Parker Pipeline Company
Schedule 8.29 Bank Accounts
ACCOUNT BANK
ACCOUNT NAME OWNER ACCT # BANK COUNTRY CURR
------------ ------- ------ ---- ------- ----
Parker Drilling Co. 40807840580000005627 Development & Restructuring Bank Russia USD
Eastern Hemisphere, Ltd. Parker Drilling Co. 7 Gashek Sreet
Eastern Hemisphere, Ltd. Dukat Place 11 Business Center
Moscow, Russia
Parker Drilling Co. Parker Drilling Co. 1070567 Kazkommertsbank Kazakhstan USD
Intl Limited Intl Limited Branch of Atyrau
Atyrau, Lenin St. 61
Kazakhstan
DIVISION
ACCOUNT NAME COUNTRY DIV/CO
------------ --------- ------
Parker Drilling Co. Russia 5705
Eastern Hemisphere, Ltd.
Parker Drilling Co. Kazakhstan 7019
Intl Limited
7
219
Parker Pipeline Company
Schedule 8.31 Investment Property
MARKET VALUE LOCATION
COMPANY NAME SHARES AT 9/30/99 OF CERTIFICATE
------------ ------ ---------- --------------
Cardinal Healthcare, Inc. 239 $13,190 55.19 Merrill Lynch Office
Corixa Corporation 822 $10,587 12.88 Merrill Lynch Office
Baxter International 964 $57,117 59.25 Merrill Lynch Office
Bell Microproducts, Inc. 14,962 $119,696 8 Merrill Lynch Office
Genlabs Technologies, Inc. 25,000 $71,000 2.84 Merrill Lynch Office
IKOS Systems, Inc. 23,936 $176,648 7.38 Merrill Lynch Office
Matria Healthcare, Inc. 9,980 $52,395 5.25 Merrill Lynch Office
Network Peripherals 40,906 $723,627 17.69 Merrill Lynch Office
Pinnacle Systems 24,937 $988,253 39.63 Merrill Lynch Office
Superconductor Technologies, Inc. 74,591 $235,708 3.16 Merrill Lynch Office
UTI Energy Corp. 1,000,000 $7,562,500 7.5625 Parker Office
Twin Disc, Inc. 450 $7,425 16.5 Parker Office
$10,018,146
===========
Alpha III Limited Partnership (Venture Capital Investment) $1,400,932
1
220
Parker Drilling Company
Schedule 8.31 Investment Property
Certificate
Company Name Shares No. Owner of Stock
----------------------------------------------------- ---------- ----------- ------------------------------------------------
INVESTMENTS IN SUBSIDIARIES. INCLUDED IN COLLATERAL
Anachoreta, Inc. 500 8 Parker Drilling Company
Canadian Rig Leasing, Inc. 500 2 Parker Drilling Company
Choctaw International Rig Corp. 1,000 1 Parker Drilling Company International Limited
Creek International Rig Corp. 1,000 1 Parker Drilling Company International Limited
DGH, Inc. 1,000 4 Parker Drilling Company
Indocorp of Oklahoma, Inc. 500 1 Parker Drilling Company
Mallard Peru Holdings, Inc. 1,000 3 Parker Drilling U.S.A. Ltd.
Management Service Logistics, Inc. 1,000 1 Total Logistics Corporation
OIME, Inc. 500 1 Parker Drilling Company
Parco Masts and Substructures, Inc. 2,500 4 Parker Technology, Inc.
Parco, Inc. 5 1 Parker Drilling Company
Parco, Inc. 95 2 Parker Drilling Company
Pardril, Inc. 5 1 Parker Drilling Company
Parker Aviation Inc. 500 1 Parker Drilling Company
Parker Drilling (Kazakstan), Ltd. 500 2 Parker Drilling Company
Parker Drilling Company Eastern Hemisphere, Ltd. 500 3 Parker-VSE, Inc.
Parker Drilling Company Eastern Hemisphere, Ltd.
(non-voting stock) 55 3 Parker Drilling Company Limited (Bahamas)
Parker Drilling Company Eastern Hemisphere, Ltd.
(non-voting stock) 270 4 Parker-VSE, Inc.
Parker Drilling Company International Limited 1,000 1 Parker Drilling Company
Parker Drilling Company International, Inc. 1,000 1 Parker Drilling Company
Parker Drilling Company Limited (Nevada) 1,000 1 Parker Drilling Company
Parker Drilling Company Limited (Oklahoma) 500 2 Parker North America Operations, Inc.
Parker Drilling Company North America, Inc. 1,500 12 Parker North America Operations, Inc.
Parker Drilling Company of Argentina, Inc. 1,000 1 Parker Drilling Company International Limited
Parker Drilling Company of Bolivia, Inc. 500 1 Parker Drilling Company
Parker Drilling Company of Indonesia, Inc. 500 2 Choctaw International Rig Corp.
Parker Drilling Company of Mexico, Ltd. 500 1 Parker Drilling Company
Parker Drilling Company of New Guinea, Inc. 500 1 Parker Drilling Company
Parker Drilling Company of New Guinea, Inc. 500 2 Parker Drilling Company
Parker Drilling Company of Niger 500 3 Parker Drilling Company
Parker Drilling Company of Oklahoma, Incorporated 5 1 Parker Drilling Company
Parker Drilling Company of Singapore, Ltd. 500 1 Parker Drilling Company
Parker Drilling Company of South America, Inc. 5 1 Parker Drilling Company
Market Value Location of
Company Name at 9/3/99 Certificate
----------------------------------------------------- ------------- ---------------
INVESTMENTS IN SUBSIDIARIES. INCLUDED IN COLLATERAL
Anachoreta, Inc.
Canadian Rig Leasing, Inc.
Choctaw International Rig Corp.
Creek International Rig Corp.
DGH, Inc.
Indocorp of Oklahoma, Inc.
Mallard Peru Holdings, Inc.
Management Service Logistics, Inc.
OIME, Inc.
Parco Masts and Substructures, Inc.
Parco, Inc.
Parco, Inc.
Pardril, Inc.
Parker Aviation Inc.
Parker Drilling (Kazakstan), Ltd.
Parker Drilling Company Eastern Hemisphere, Ltd.
Parker Drilling Company Eastern Hemisphere, Ltd.
(non-voting stock)
Parker Drilling Company Eastern Hemisphere, Ltd.
(non-voting stock)
Parker Drilling Company International Limited
Parker Drilling Company International, Inc.
Parker Drilling Company Limited (Nevada)
Parker Drilling Company Limited (Oklahoma)
Parker Drilling Company North America, Inc.
Parker Drilling Company of Argentina, Inc.
Parker Drilling Company of Bolivia, Inc.
Parker Drilling Company of Indonesia, Inc.
Parker Drilling Company of Mexico, Ltd.
Parker Drilling Company of New Guinea, Inc.
Parker Drilling Company of New Guinea, Inc.
Parker Drilling Company of Niger
Parker Drilling Company of Oklahoma, Incorporated
Parker Drilling Company of Singapore, Ltd.
Parker Drilling Company of South America, Inc.
2
221
Certificate
Company Name Shares No. Owner of Stock
----------------------------------------------------- ----------- ----------- ------------------------------------------------
Parker Drilling Company of South America, Inc. 45 2 Parker Drilling Company
Parker Drilling Company of South America, Inc. 10 3 Parker Drilling Company
Parker Drilling Company of South Texas, Inc. 500 1 Parker Drilling Company
Parker Drilling Offshore Corporation 18,034,384 9 Parker Drilling Company
Parker Drilling Offshore Corporation (non-voting stock) 4,000,000 4 Parker Drilling Company
Parker Drilling Offshore USA, L.L.C. 99 3 Parker Drilling U.S. A. Ltd.
Parker Drilling Offshore USA, L.L.C. 1 4 Parker Drilling Company Limited (Oklahoma)
Parker Drilling U.S.A. Ltd. 1,000 6 Parker North America Operations, Inc.
Parker Drilling U.S.A. Ltd. (Series A Preferred Stock) 20,000 2 Parker Drilling Company
Parker Energy Resources, Inc. 71,442 30 Parker Drilling U.S.A. Ltd.
Parker Measurement, Inc. 1,000 11 Parker Energy Resources, Inc.
Parker North America Operations, Inc. 1,000 1 Parker Drilling Company
Parker Pipeline Company, Inc. 1,000 5 Parker Energy resources, Inc.
Parker Technology, Inc. 500 1 Parker Drilling Company
Parker Technology, L.L.C. 1 2 Parker Drilling Company Limited (Oklahoma)
Parker Technology, L.L.C. 99 6 Parker Drilling U.S.A. Ltd.
Parker USA Drilling Company 1,000 5 Parker North America Operations, Inc.
Parker Valve Company 1,000 2 Parker Technology, Inc.
Parker-VSE, Inc. 1,000 1 Parker Drilling Company
Production Control Systems, Inc. 120,000 1 Parker Drilling Company
Production Control Systems, Inc. (Preferred stock) 9,800 1 Parker Drilling Company
Saints Acquisition Company 1,000 1 Parker Drilling Company
Selective Drilling Corporation 500 1 Parker Drilling Company
Total Coverage Services 500 1 Parker Drilling Company
Total Funds Management Corporation 1,000 1 Total Logistics Corporation
Total Logistics Corporation 1,000 1 Parker Drilling Company
Universal Rig Service Corp. 1,000 2 Parker Drilling Company
Market Value Location of
Company Name at 9/3/99 Certificate
----------------------------------------------------- ------------- -----------
Parker Drilling Company of South America, Inc.
Parker Drilling Company of South America, Inc.
Parker Drilling Company of South Texas, Inc.
Parker Drilling Offshore Corporation
Parker Drilling Offshore Corporation (non-voting stock)
Parker Drilling Offshore USA, L.L.C.
Parker Drilling Offshore USA, L.L.C.
Parker Drilling U.S.A. Ltd.
Parker Drilling U.S.A. Ltd. (Series A Preferred Stock)
Parker Energy Resources, Inc.
Parker Measurement, Inc.
Parker North America Operations, Inc.
Parker Pipeline Company, Inc.
Parker Technology, Inc.
Parker Technology, L.L.C.
Parker Technology, L.L.C.
Parker USA Drilling Company
Parker Valve Company
Parker-VSE, Inc.
Production Control Systems, Inc.
Production Control Systems, Inc. (Preferred stock)
Saints Acquisition Company
Selective Drilling Corporation
Total Coverage Services
Total Funds Management Corporation
Total Logistics Corporation
Universal Rig Service Corp.
3
222
Certificate
Company Name Shares No. Owner of Stock
----------------------------------------------------- ---------- ----------- ------------------------
SECURITIES HELD FOR INVESTMENT. NOT INCLUDED IN COLLATERAL
Cardinal Healthcare, Inc. 239
Corixa Corporation 822
Baxter International 964
Bell Microproducts, Inc. 14,962
Genlabs Technologies, Inc. 25,000
IKOS Systems, Inc. 23,936
Matria Healthcare, Inc. 9,980
Network Peripherals 40,906
Pinnacle Systems 24,937
Superconductor Technologies, Inc. 74,591
Unit Corp. 1,000,000
Twin Disc, Inc. 450
Alpha Partners III (a limited partnership)
Market Value Location of
Company Name at 9/3/99 Certificate
----------------------------------------------------- ------------- ---------------
SECURITIES HELD FOR INVESTMENT. NOT INCLUDED IN COLLATERAL
Cardinal Healthcare, Inc. $13,190 Merrill Lynch Office
Corixa Corporation $10,587 Merrill Lynch Office
Baxter International $57,117 Merrill Lynch Office
Bell Microproducts, Inc. $119,696 Merrill Lynch Office
Genlabs Technologies, Inc. $71,000 Merrill Lynch Office
IKOS Systems, Inc. $176,648 Merrill Lynch Office
Matria Healthcare, Inc. $52,395 Merrill Lynch Office
Network Peripherals $723,627 Merrill Lynch Office
Pinnacle Systems $988,253 Merrill Lynch Office
Superconductor Technologies, Inc. $235,708 Merrill Lynch Office
Unit Corp. $7,562,500 Parker Office
Twin Disc, Inc. $7,425 Parker Office
Alpha Partners III (a limited partnership) $1,400,932
4
223
Parker Drilling Company
Schedule 9.5 Insurance
POLICY CARRIER POLICY PERIOD DEDUCTIBLE LIMIT
------ ------- ------------- ---------- -----
Auto / Domestic Liberty Mutual 9/1/99 to 8/31/2000 $250,000 $1,000,000
Hull value and
Aviation Associated Aviation 05/01/99 to 05/01/00 No deductible $50,000,000
Underwriters on liability
Boiler & Machinery W.H.McGee 2/1/00 to 1/31/01 $1,000 Per Schedule
(Fireman's Fund) of Agreed Value
Building & Contents W.H.McGee 2/1/00 to 1/31/01 $25,000 Per Schedule
(Fireman's Fund) of Agreed Value
Fidelity Liability Federal Insurance Co. 5/1/98 to 5/1/00 $250,000 $10,000,000
Commercial Crime (Chubb) $25,000
Fiduciary Liability Federal Insurance Co. 5/1/99 to 5/1/02 None and $10,000,000
(Chubb) $100,000 $10,000,000
Executive D&O Federal Insurance Co. 8/16/97 to 8/16/01 $250,000 $20,000,000
(Chubb)
Maritime Employer's Clarendon 9/1/99 to 9/1/2002 $250,000 $1,000,000
Liability
USL & H Signal Mutual 10/1/99 to 10/1/2000 No deductible $10,000,000
GL Domestic AIG 9/1/99 to 2000 $100,000 $1,000,000
GL / Auto Foreign AIU 9/1/98 to 9/1/2000 No deductible $1,000,000
Foreign Workers Comp AIU 9/1/99 to 2000 No deductible $1,000,000
& Employer's Liability
1
224
Parker Drilling Company
Schedule 9.5 Insurance
POLICY CARRIER POLICY PERIOD DEDUCTIBLE LIMIT
------ ------- ------------- ---------- -----
Political Risk Primary Lloyds, etc... 9/1/99 to 2000 20% of Loss $5,000,000
Political Risk X/S Zurich, etc... 9/1/98 to 2001 No deductible Per Schedule
of Agreed Value
Rig Package Primary Zurich, etc... 9/1/99 to 2000 $10,000 on Mob. Per Schedule
$100,000 barge of Agreed Value
$250,000 land
X/S Liability AIG 2/1/98 to 9/1/2001 No deductible $50,000,000
$50mm Umbrella
X/S Liability Gotham Insurance Co. 4/17/98 to 9/1/01 No deductible $100,000,000
$100mm xs $50mm
X/S Liability/ Package Lloyds, etc... 4/17/98 to 9/1/01 No deductible Per Schedule
$50mm xs $150mm
Domestic Workers Comp Liberty Mutual 9/1/99 to 2000 $250,000 $1,000,000
2
225
COLLATERAL REPORT NO. 1 AS OF: 8/31/99
------------------------------------------------------------------------------------------------------------------------------------
ACCOUNTS RECEIVABLE INVENTORY
------------------------------------------------------------------------------------------------------------------------------------
COLLATERAL DESCRIPTION:
------------------------------------------------------------------------------------------------------------------------------------
1. Balance Forward (Prior Line 8)
-------------------------------------------------------------------------
2. Add: Sales Purchases
------------------------- -------------------------------
3. Add: Other Debits other Debits
------------------------- -------------------------------
4. Deduct: Other Credits other Credits
------------------------- -------------------------------
5. Deduct: Net Cash OTHER
------------------------- -------------------------------
6. Deduct: Discounts
------------------------- -------------------------------
7. Deduct: Credit Memos Cost of Sales
------------------------- -------------------------------
8. Current Balance: 77,016,026.63 26,250,000.00
-------------------------------------------------------------------------
9. Deduct Ineligibles: (49,422,837.57)
=========================================================================
10. Eligible Collateral: 27,593,189.06 26,250,000.00 --
-------------------------------------------------------------------------
11. Lesser of Available Value or Line Limit: 80% 22,074,551.25 40% 10,500,000.00 --
-------------------------------------------------------------------------
12. Deduct Reserve(s):
-------------------- ------------------------------------------------
13. Loan Value: 22,074,551.25 10,500,000.00 10,500,000.00 --
-------------------------------------------------------------------------
--------------------
14. (Total, Line 13 AR AND INV) 32,574,551.25
------------------------------------------------------------------------------------------------------------------------------------
LOAN TRANSACTIONS: ACCOUNTS
------------------------------------------------------------------------------------------------------------------------------------
15. Balance Forward (Prior Line 19)
-------------------- ----------------- --------------
16. Add New Advances/Letters of Credit:
-------------------- ----------------- --------------
17. Deduct Cash/Payments:
-------------------- ----------------- --------------
18. Adjustments (+/-):
-------------------- ----------------- --------------
19. Current Loan/Letter of Credit Balance: --
-------------------- ----------------- --------------
20. Net Availability: 32,574,551.25
-------------------- ----------------- --------------
--------------------
====================
====================================================================================================================================
For value received, the undersigned hereby assigns, transfers and
pledges to Bank of Amercia, N. A. ("Bank"), its successors and assigns, in
accordance with and pursuant to the Financing and Security Agreement, as
amended, by and between the undersigned and the Bank (the "Agreement"), the
terms of which are incorporated herein by reference as if fully set forth
herein, all accounts and inventory now or hereafter owned by the undersigned,
including without limitation the accounts and inventory evidenced by the
invoices or schedules attached hereto, and grants to the Bank a security
interest therein, and the undersigned further represents and certifies that the
foregoing Collateral Report is true and correct in every respect and that all
existing accounts and inventory, including
226
the accounts and inventory assigned hereby, described above as collateral
available for loans represent acceptable accounts and inventory in accordance
with the representations and warranties set forth in the Agreements. The
undersigned warrants that all collections received or credits allowed on
accounts previously assigned to the Bank have been duly and regularly entered to
the credit of respective debtors on the books and accounts of the undersigned
and that all collections have been remitted and that all credits have been
reported to date to Bank.
-----------------------------------------------
Borrower
Bank of Amercia, N. A. PARKER DRILLING COMPANY
-----------------------------------------------
Authorized Signature & Title
-----------------------------------------------
227
BANK OF AMERICA BUSINESS CREDIT Worksheet
RECONCILIATION OF ACCOUNTS RECEIVABLE AND INVENTORY
ACCOUNTS RECEIVABLE
---------------------------------------------------------------------
CLIENT'S NAME: Parker Drilling Company AGING DATE 7/31/99
--------------------------------------------------------------------- ---------------------------------------------
1. A/R BALANCE PER REPORT # DATED: $
-------------------- ---------------------------------------------
2. ADD: SALES INCLUDED IN AGING BUT SUBMITTED AFTER REPORT ABOVE:
REPORT # INV. DATE AMOUNT
------------------------------------------------------
------------------------------------------------------
ADD: $
---------------------------
3. LESS: PAYMENTS, CREDIT MEMOS, DISCOUNTS INCLUDED IN AGING
BUT SUBMITTED AFTER REPORT ABOVE:
REPORT # INV. DATE AMOUNT
------------------------------------------------------
LESS: $
------------------------------------------------------
4. ADJUSTED COLLATERAL BALANCE: $
---------------------------
30,269,406.85 2,467,046.76 16,191,176.36 7,329,205.90 20,759,190.76 77,016,026.63
-------------------------------------------------------------------------------------------------------------------
PERIOD 1 PERIOD 2 PERIOD 3 PERIOD 4 PERIOD 5 --
--------
5. COLLATERAL BALANCE IS OVER/ (SHORT) AGING TOTAL $ --
--------
INELIGIBLES CALCULATION: PRIOR MONTH 6/30/99 THIS MONTH 8/31/99
--------------------------
1. AMOUNT OVER 60 DAYS 21,393,317.00 20,759,190.76
------------------------------------ ---------------------------
2. AGED CREDITS OVER 60 217,286.00 58,260.67
------------------------------------ ---------------------------
3. CONTRAS -- --
------------------------------------ ---------------------------
4. 50% CROSS-AGING 1,624,504.00 31,369.55
------------------------------------ ---------------------------
5. FOREIGN A/R ALLOWANCE (25% OF NET) (5,518,637.81)
------------------------------------ ---------------------------
6. PARKER FOREIGN SUBSIDIARIES 37,369,386.00 13,703,234.59
------------------------------------ ---------------------------
7. PARKER U.S. SUB, FOREIGN INCORPORATED 20,389,419.81
------------------------------------ ---------------------------
8. ACCRUED CHARGEBACKS
------------------------------------ ---------------------------
9. RECONCILLIATION DIFFERENCE
------------------------------------ ---------------------------
10.OTHER INELIGIBLES, INTERCOMPANY 178,110.00
------------------------------------ ---------------------------
TOTALS 60,782,603.00 49,422,837.57
==================================== ===========================
---------------------------
---------------------------
INVENTORY
--------------- ---------------------------
---------------------------
---------------------------
1. INV BALANCE PER REPORT # DATED --
-------------------- ---------------------------------------------
2. ADD: PURCHASES POSTED TO BOOKS BUT REPORTED AFTER EOM
ON REPORT (S) --
----------------- ---------------------------
3. LESS: SALES/TRANSFERS/ADJ(S) POSTED TO BOOKS BUT REPORTED
AFTER EOM ON REPORT (S) --
-------------------- ---------------------------
4. ADJUSTED BALANCE: --
---------------------------
5. ENDING BALANCE PER COMPANY'S BOOKS: --
---------------------------
6. DIFFERENCES: --
---------------------------
7. GENERAL LEDGER BALANCE: MONTH/YEAR: --
---------------- ---------------------------
8. DIFFERENCES: --
---------------------------
INELIGIBLES CALCULATION: PRIOR MONTH THIS MONTH
1. NEW PRODUCT RESERVE
------------------------------------ ---------------------------
2. WIP
------------------------------------ ---------------------------
3. SLOW MOVING
------------------------------------ ---------------------------
4. PACKAGING, PRIVATE LABELS AND
OTHER SUPPLIES
------------------------------------ ---------------------------
5. RETAINAGE
------------------------------------ ---------------------------
6. RECONCILING ADJUSTMENTS
------------------------------------ ---------------------------
7. OTHER INELIGIBLE INVENTORY
==================================== ===========================
TOTALS -- --
Page 5
228
BC
REFERENCE COLLATERAL REPORT-SUPPORT DOCUMENTS
------------------------------------------------------------------------------
ACCOUNTS RECEIVABLE INVENTORY
==============================================================================
LINE #2 SALES JOURNAL PURCHASE JOURNAL
LINE #3 DEBIT JOURNAL DEBIT JOURNAL
LINE #4 AS NEEDED AS NEEDED
LINE #5 CASH RECEIPTS JOURNAL COST OF SALES *
LINE #6 CASH RECEIPTS JOURNAL
LINE #7 CREDIT MEMO JOURNAL
LINE #9 INELIGIBLE WORKPAPER INELIGIBLE WORKPAPER
* THIS MAY BE ACTUAL OR ESTIMATED. IN EITHER CASE, PLEASE SUPPORT
NUMBER USED.
WEEKLY REPORTING COLLATERAL REPORT WITH SUPPORT DOCUMENTS OTHER
MONTHLY REPORTING AR-AGING RECONCILED TO REPORT G.L. TO REPORT
INVENTORY RECONCILED TO REPORT G.L. TO REPORT
AP-AGING
FINANCIALS
OTHER
QUARTERLY AS NEEDED
YEARLY AUDITED FINANCIALS
UPDATED CUSTOMER ADDRESS
LIST
FINANCIAL PROJECTIONS UPDATE
Page 6
BC
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Page 7
229
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
This First Amendment to Loan and Security Agreement ("Amendment"),
dated effective as of December 31, 1999 (the "Effective Date"), is among the
financial institutions listed on the signature pages hereof (such financial
institutions, together with their respective successors and assigns, are
referred to hereinafter each individually as a "Lender" and collectively as the
"Lenders"), Bank of America, National Association (the "Bank"), with an office
at 901 Main Street, Dallas, Texas 75202, as agent for the Lenders (in its
capacity as agent, the "Agent"), Parker Drilling Company, a Delaware corporation
(the "Parent"), each of Anachoreta, Inc., a Nevada corporation, Canadian Rig
Leasing, Inc., an Oklahoma corporation, Choctaw International Rig Corp., a
Nevada corporation, Creek International Rig Corp., a Nevada corporation, DGH,
Inc., a Texas corporation, Indocorp of Oklahoma, Inc., an Oklahoma corporation,
Mallard Peru Holdings, Inc., a Delaware corporation, Management Service
Logistics, Inc., a Nevada corporation, OIME, Inc., an Oklahoma corporation,
Parco Masts and Substructures, Inc., an Oklahoma corporation, Parco, Inc., an
Oklahoma corporation, Pardril, Inc., an Oklahoma corporation, Parker-VSE, Inc.,
a Nevada corporation, Parker Aviation Inc., an Oklahoma corporation, Parker
Drilling (Kazakstan), Ltd., an Oklahoma corporation, Parker Drilling Company
Eastern Hemisphere, Ltd., an Oklahoma corporation, Parker Drilling Company
International Limited, a Nevada corporation, Parker Drilling Company
International, Inc., a Delaware corporation, Parker Drilling Company Limited, a
Nevada corporation, Parker Drilling Company Limited, an Oklahoma corporation,
Parker Drilling Company North America, Inc., a Nevada corporation, Parker
Drilling Company of Argentina, Inc., a Nevada corporation, Parker Drilling
Company of Bolivia, Inc., an Oklahoma corporation, Parker Drilling Company of
Indonesia, Inc., an Oklahoma corporation, Parker Drilling Company of Mexico,
Ltd., an Oklahoma corporation, Parker Drilling Company of New Guinea, Inc., an
Oklahoma corporation, Parker Drilling Company of Niger, an Oklahoma corporation,
Parker Drilling Company of Oklahoma, Incorporated, an Oklahoma corporation,
Parker Drilling Company of Singapore, Ltd., an Oklahoma corporation, Parker
Drilling Company of South America, Inc., an Oklahoma corporation, Parker
Drilling Company of South Texas, Inc., an Oklahoma corporation, Parker Drilling
Offshore Corporation, a Texas corporation, Parker Drilling Offshore USA, L.L.C.,
an Oklahoma limited liability company, Parker Drilling U.S.A., Ltd., a Nevada
corporation, Parker Energy Resources, Inc., a Texas corporation, Parker
Measurement, Inc., a Texas corporation, Parker North America Operations, Inc., a
Nevada corporation, Parker Pipeline Company, Inc., a Texas corporation, Parker
Technology, Inc., an Oklahoma corporation, Parker Technology, L.L.C., a
Louisiana limited liability company, Parker USA Drilling Company, a Nevada
corporation, Parker Valve Company, a Texas corporation, Quail Tools, L.L.P., an
Oklahoma limited liability partnership, Saints Acquisition Company, a Delaware
corporation, Selective Drilling Corporation, and Oklahoma corporation, Total
Coverage Services, a Nevada corporation, Total Funds Management Corporation, a
Nevada corporation, Total Logistics Corporation, a Nevada corporation, Universal
Rig Service Corp., a Nevada corporation (including the Parent each a "Borrower"
and collectively the "Borrowers") and the other "Loan Parties" (as defined
herein) party hereto.
230
RECITALS:
A. Borrower and Agent are parties to the certain Loan and Security
Agreement dated as of October 22, 1999 (hereinafter called the "Agreement").
Unless otherwise defined in this Amendment, terms defined by the Agreement,
where used in this Amendment, shall have the same meanings as are prescribed by
the Agreement, as amended by this Amendment.
B. Borrower and Agent have agreed to amend the Agreement as provided
hereinbelow.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
Definitions
Section 1.1 Definitions. Unless otherwise defined in this Amendment,
terms defined by the Agreement, where used in this Amendment, shall have the
same meaning in this Amendment as are given to such terms in the Agreement, as
amended by this Amendment.
ARTICLE 2
Amendments
Section 2.1 Amendment to Section 1.1 of the Agreement.
(a) The definition of "Fixed Charge Coverage Ratio" contained
in Section 1.1 of the Agreement is hereby amended and restated to read
in its entirety as follows:
"Fixed Charge Coverage Ratio" means, for any period, determined for the
Parent and the Restricted Subsidiaries in accordance with GAAP, the ratio of
(a) the sum of:
(i) EBITDA, minus
(ii) an amount, not less than zero Dollars ($0.00), equal
to the remainder of
(A) Capital Expenditures, minus
(B) the gross amount of assets sold, minus
(C) the principal amount of Purchase Money
Indebtedness incurred in connection with the
Capital Expenditures included in clause (A)
preceding, minus
2
231
(D) Capex Reimbursements paid to the Agent
pursuant to Section 4.4, plus
(iii) an amount, not less than zero Dollars ($0.00), equal
to cash and cash equivalents as of the first day of
such period less the unpaid balance of Revolving
Loans as of such day, minus
(iv) the amount, if any, by which the cash amount of
Distributions paid (other than Distributions paid to
the Parent or a Restricted Subsidiary of the Parent)
exceeds proceeds received from the issuance of
Capital Stock, minus
(v) cash taxes paid,
to
(b) the sum of:
(vi) current maturities of long term debt, plus
(vii) Interest Expense.
Section 2.2 Amendment to Section 9.25 of the Agreement. Section 9.25 of
the Agreement is hereby amended and restated to read in its entirety as follows:
Section 9.25 Fixed Charge Coverage Ratio. The Loan Parties
shall not permit the Fixed Charge Coverage Ratio, determined for the
Parent and the Restricted Subsidiaries, as of the end of any fiscal
quarter, to be less than 1.1 to 1.0, determined (i) in the case of the
fiscal quarters ending December 31, 1999, March 31, 2000, June 30, 2000
and September 30, 2000, for the period from October 1, 1999 through the
end of each such fiscal quarter, respectively, and (ii) in the case of
each fiscal quarter ending December 31, 2000 and thereafter, for the
preceding four fiscal quarters ending as of the end of such fiscal
quarter.
ARTICLE 3
Miscellaneous
Section 3.1 Conditions Precedent. The effectiveness of this Amendment
is subject to the satisfaction of each of the following conditions precedent:
(a) Agent shall have received all of the following, each dated
the date of this Amendment (unless otherwise indicated), in form and
substance satisfactory to Agent:
(i) Amendment Documents. This Amendment and any other
instrument, document or certificate reasonably required by
Agent to be executed or delivered by Borrower in connection
with this Amendment, in each case duly executed (the
"Amendment Documents"); and
3
232
(ii) Additional Information. Agent shall have
received such additional documents, instruments and
information as Agent may reasonably request to effect the
transactions contemplated hereby;
(b) The representations and warranties contained herein, in
the Agreement and in all other Loan Documents, as amended hereby, shall
be true and correct in all material respects as of the date hereof as
if made on the date hereof (except those, if any, which by their terms
specifically relate only to a different date);
(c) All corporate proceedings taken in connection with the
transactions contemplated by this Amendment and all other agreements,
documents and instruments executed and/or delivered pursuant hereto,
and all legal matters incident thereto, shall be reasonably
satisfactory to Agent; and
(d) No Default or Event of Default shall have occurred and be
continuing.
Section 3.2 Representations and Warranties. Borrower hereby represents
and warrants to Agent that, as of the date of and after giving effect to this
Amendment, (a) the execution, delivery and performance of this Amendment and any
and all other Amendment Documents executed and/or delivered in connection
herewith have been authorized by all requisite corporate action on the part of
Borrower and will not violate Borrower's certificate of incorporation or bylaws,
(b) all representations and warranties set forth in the Agreement and in any
other Loan Document are true and correct in all material respects as if made
again on and as of such date (except those, if any, which by their terms
specifically relate only to a different date), (c) no Default or Event of
Default has occurred and is continuing, and (d) the Agreement (as amended by
this Amendment), and all other Loan Documents are and remain legal, valid,
binding and enforceable obligations in accordance with the terms thereof except
as enforceability may be limited by applicable debtor relief laws and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or law).
Section 3.3 Survival of Representations and Warranties. All
representations and warranties made in this Amendment or any other Loan Document
shall survive the execution and delivery of this Amendment and the other Loan
Documents, and no investigation by Agent or any Lender, or any closing, shall
affect the representations and warranties or the right of Agent and the Lenders
to rely upon them.
Section 3.4 Reference to Agreement. Each of the Loan Documents,
including the Agreement, the Amendment Documents and any and all other
agreements, documents or instruments now or hereafter executed and/or delivered
pursuant to the terms hereof or pursuant to the terms of the Agreement as
amended hereby, are hereby amended so that any reference in such Loan Documents
to the Agreement, whether direct or indirect, shall mean a reference to the
Agreement as amended hereby.
4
233
Section 3.5 Severability. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 3.6 General. This Amendment, when signed by the Agent, each
Lender and each Loan Party, as provided hereinbelow (i) shall be deemed
effective prospectively as of the Effective Date, (ii) contains the entire
agreement among the parties and may not be amended or modified except in writing
signed by all parties, (iii) shall be governed and construed according to the
laws of the State of Texas, (iv) may be executed in any number of counterparts,
each of which shall be valid as an original and all of which shall be one and
the same agreement and (vi) shall constitute a Loan Document. A telecopy or
other electronic transmission of any executed counterpart shall be deemed valid
as an original.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized officers in several counterparts
effective as of the Effective Date specified in the preamble hereof.
[Remainder of this page intentionally left blank]
5
234
IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
THE LOAN PARTIES:
PARKER DRILLING COMPANY, ANACHORETA, INC.,
a Delaware corporation a Nevada corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
CANADIAN RIG LEASING, INC., CHOCTAW INTERNATIONAL
an Oklahoma corporation RIG CORP., a Nevada corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
CREEK INTERNATIONAL RIG CORP., DGH, INC., a Texas corporation
a Nevada corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
INDOCORP OF OKLAHOMA, INC., MALLARD PERU HOLDINGS,
an Oklahoma corporation INC., a Delaware corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
6
235
MANAGEMENT SERVICE LOGISTICS, INC., OIME, INC., an Oklahoma
a Nevada corporation corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
PARCO MASTS AND SUBSTRUCTURES, PARCO, INC., an Oklahoma
INC., an Oklahoma corporation corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
PARDRIL, INC., an Oklahoma corporation PARKER-VSE, INC., a Nevada corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
PARKER AVIATION INC., an Oklahoma PARKER DRILLING
corporation (KAZAKSTAN), LTD., an Oklahoma
corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
PARKER DRILLING COMPANY PARKER DRILLING COMPANY
EASTERN HEMISPHERE, LTD., INTERNATIONAL LIMITED,
an Oklahoma corporation a Nevada corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
7
236
PARKER DRILLING COMPANY PARKER DRILLING COMPANY
INTERNATIONAL, INC., LIMITED, a Nevada corporation
a Delaware corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
PARKER DRILLING COMPANY LIMITED, PARKER DRILLING COMPANY
an Oklahoma corporation NORTH AMERICA, INC.,
a Nevada corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
PARKER DRILLING COMPANY OF PARKER DRILLING COMPANY
ARGENTINA, INC., a Nevada corporation OF BOLIVIA, INC., an Oklahoma
corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
PARKER DRILLING COMPANY OF PARKER DRILLING COMPANY
INDONESIA, INC., an Oklahoma OF MEXICO, LTD., an Oklahoma
corporation corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
8
237
PARKER DRILLING COMPANY OF PARKER DRILLING COMPANY
NEW GUINEA, INC., an Oklahoma OF NIGER, an Oklahoma corporation
corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
PARKER DRILLING COMPANY OF PARKER DRILLING COMPANY
OKLAHOMA, INCORPORATED, OF SINGAPORE, LTD.,
an Oklahoma corporation an Oklahoma corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
PARKER DRILLING COMPANY OF PARKER DRILLING COMPANY
SOUTH AMERICA, INC., OF SOUTH TEXAS, INC.,
an Oklahoma corporation an Oklahoma corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
PARKER DRILLING OFFSHORE PARKER DRILLING OFFSHORE
CORPORATION, a Texas corporation USA, L.L.C., an Oklahoma limited
liability company
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
9
238
PARKER DRILLING U.S.A., LTD., PARKER ENERGY RESOURCES,
a Nevada corporation INC., a Texas corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
PARKER MEASUREMENT, INC., PARKER NORTH AMERICA
a Texas corporation OPERATIONS, INC., a Nevada
corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
PARKER PIPELINE COMPANY, INC., PARKER TECHNOLOGY, INC.,
a Texas corporation an Oklahoma corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
PARKER TECHNOLOGY, L.L.C., PARKER USA DRILLING
a Louisiana limited liability company COMPANY, a Nevada corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
PARKER VALVE COMPANY, QUAIL TOOLS, L.L.P.,
a Texas corporation an Oklahoma limited liability
partnership
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
10
239
SAINTS ACQUISITION SELECTIVE DRILLING
COMPANY, a Delaware corporation CORPORATION, an Oklahoma
corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
TOTAL COVERAGE SERVICES, TOTAL FUNDS MANAGEMENT
a Nevada corporation CORPORATION, a Nevada corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
TOTAL LOGISTICS CORPORATION, UNIVERSAL RIG SERVICE CORP.,
a Nevada corporation a Nevada corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
11
240
THE AGENT:
BANK OF AMERICA, NATIONAL
ASSOCIATION, as the Agent
By:
-----------------------------------
Doug Motl
Vice President
12
241
THE LENDERS:
BANK OF AMERICA, NATIONAL
ASSOCIATION
Commitment: $30,000,000
Pro Rata Share: 60%
By:
-----------------------------------
Doug Motl
Vice President
13
242
CONGRESS FINANCIAL CORPORATION
Commitment: $15,000,000
Pro Rata Share: 30%
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
14
243
BANK OF OKLAHOMA, N.A.
Commitment: $5,000,000
Pro Rata Share: 10%
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
15
244
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Second Amendment to Loan and Security Agreement ("Amendment"),
dated effective as of October 4, 2000 (the "Effective Date"), is among the
financial institutions listed on the signature pages hereof (such financial
institutions, together with their respective successors and assigns, are
referred to hereinafter each individually as a "Lender" and collectively as the
"Lenders"), Bank of America, National Association (the "Bank"), with an office
at 901 Main Street, Dallas, Texas 75202, as agent for the Lenders (in its
capacity as agent, the "Agent"), Parker Drilling Company, a Delaware corporation
(the "Parent"), each of Anachoreta, Inc., a Nevada corporation, Canadian Rig
Leasing, Inc., an Oklahoma corporation, Choctaw International Rig Corp., a
Nevada corporation, Creek International Rig Corp., a Nevada corporation, DGH,
Inc., a Texas corporation, Indocorp of Oklahoma, Inc., an Oklahoma corporation,
Mallard Peru Holdings, Inc., a Delaware corporation, Management Service
Logistics, Inc., a Nevada corporation, OIME, Inc., an Oklahoma corporation,
Parco Masts and Substructures, Inc., an Oklahoma corporation, Parco, Inc., an
Oklahoma corporation, Pardril, Inc., an Oklahoma corporation, Parker-VSE, Inc.,
a Nevada corporation, Parker Aviation Inc., an Oklahoma corporation, Parker
Drilling (Kazakstan), Ltd., an Oklahoma corporation, Parker Drilling Company
Eastern Hemisphere, Ltd., an Oklahoma corporation, Parker Drilling Company
International Limited, a Nevada corporation, Parker Drilling Company
International, Inc., a Delaware corporation, Parker Drilling Company Limited, a
Nevada corporation, Parker Drilling Company Limited, an Oklahoma corporation,
Parker Drilling Company North America, Inc., a Nevada corporation, Parker
Drilling Company of Argentina, Inc., a Nevada corporation, Parker Drilling
Company of Bolivia, Inc., an Oklahoma corporation, Parker Drilling Company of
Indonesia, Inc., an Oklahoma corporation, Parker Drilling Company of Mexico,
Ltd., an Oklahoma corporation, Parker Drilling Company of New Guinea, Inc., an
Oklahoma corporation, Parker Drilling Company of Niger, an Oklahoma corporation,
Parker Drilling Company of Oklahoma, Incorporated, an Oklahoma corporation,
Parker Drilling Company of Singapore, Ltd., an Oklahoma corporation, Parker
Drilling Company of South America, Inc., an Oklahoma corporation, Parker
Drilling Company of South Texas, Inc., an Oklahoma corporation, Parker Drilling
Offshore Corporation, a Texas corporation, Parker Drilling Offshore USA, L.L.C.,
an Oklahoma limited liability company, Parker Drilling U.S.A., Ltd., a Nevada
corporation, Parker Energy Resources, Inc., a Texas corporation, Parker
Measurement, Inc., a Texas corporation, Parker North America Operations, Inc., a
Nevada corporation, Parker Pipeline Company, Inc., a Texas corporation, Parker
Technology, Inc., an Oklahoma corporation, Parker Technology, L.L.C., a
Louisiana limited liability company, Parker USA Drilling Company, a Nevada
corporation, Parker Valve Company, a Texas corporation, Quail Tools, L.L.P., an
Oklahoma limited liability partnership, Saints Acquisition Company, a Delaware
corporation, Selective Drilling Corporation, and Oklahoma corporation, Total
Coverage Services, a Nevada corporation, Total Funds Management Corporation, a
Nevada corporation, Total Logistics Corporation, a Nevada corporation, Universal
Rig Service Corp., a Nevada corporation (including the Parent each a "Borrower"
and collectively the "Borrowers") and the other "Loan Parties" (as defined
herein) party hereto.
245
RECITALS:
A. Borrower, Lenders, and Agent are parties to the certain Loan and
Security Agreement dated as of October 22, 1999 and the certain First Amendment
to Loan and Security Agreement dated as of December 31, 1999 (hereinafter called
the "Agreement"). Unless otherwise defined in this Amendment, terms defined by
the Agreement, where used in this Amendment, shall have the same meanings as are
prescribed by the Agreement, as amended by this Amendment.
B. Borrower, Lenders, and Agent have agreed to amend the Agreement as
provided hereinbelow.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
Definitions
Section 1.1 Definitions. Unless otherwise defined in this Amendment,
terms defined by the Agreement, where used in this Amendment, shall have the
same meaning in this Amendment as are given to such terms in the Agreement, as
amended by this Amendment.
ARTICLE 2
Amendments
Section 2.1 Amendment to Section 9.23 of the Agreement. Section 9.23 of
the Agreement is hereby amended and restated to read in its entirety as follows:
Section 9.23 Capital Expenditures. No Loan Party nor any of
its Restricted Subsidiaries shall make or incur any Capital
Expenditures if, after giving effect thereto, the aggregate amount of
all Capital Expenditures by the Loan Parties and its Restricted
Subsidiaries, net of all Capital Reimbursements, would exceed (a) in
the aggregate during the Fiscal Year ending 2000, $100,000,000, (b) in
the aggregate during the Fiscal Year ending 2001, (i) $45,000,000 plus,
if applicable, (ii) the amount, if any, by which $100,000,000 exceeds
the aggregate amount of all Capital Expenditures by the Loan Parties
and its Restricted Subsidiaries, net of all Capital Reimbursements, for
the Fiscal Year ending 2000, and (c) in the aggregate during any Fiscal
Year thereafter, $45,000,000.
246
ARTICLE 3
Miscellaneous
Section 3.1 Conditions Precedent. The effectiveness of this Amendment
is subject to the satisfaction of each of the following conditions precedent:
(a) Agent shall have received all of the following, each dated
the date of this Amendment (unless otherwise indicated), in form and
substance satisfactory to Agent:
(i) Amendment Documents. This Amendment and any other
instrument, document or certificate reasonably required by
Agent to be executed or delivered by Borrower in connection
with this Amendment, in each case duly executed (the
"Amendment Documents"); and
(ii) Additional Information. Agent shall have
received such additional documents, instruments and
information as Agent may reasonably request to effect the
transactions contemplated hereby;
(b) The representations and warranties contained herein, in
the Agreement and in all other Loan Documents, as amended hereby, shall
be true and correct in all material respects as of the date hereof as
if made on the date hereof (except those, if any, which by their terms
specifically relate only to a different date);
(c) All corporate proceedings taken in connection with the
transactions contemplated by this Amendment and all other agreements,
documents and instruments executed and/or delivered pursuant hereto,
and all legal matters incident thereto, shall be reasonably
satisfactory to Agent; and
(d) No Default or Event of Default shall have occurred and be
continuing.
Section 3.2 Representations and Warranties. Borrower hereby represents
and warrants to Agent and the Lenders that, as of the date of and after giving
effect to this Amendment, (a) the execution, delivery and performance of this
Amendment and any and all other Amendment Documents executed and/or delivered in
connection herewith have been authorized by all requisite corporate action on
the part of Borrower and will not violate Borrower's certificate of
incorporation or bylaws, (b) all representations and warranties set forth in the
Agreement and in any other Loan Document are true and correct in all material
respects as if made again on and as of such date (except those, if any, which by
their terms specifically relate only to a different date), (c) no Default or
Event of Default has occurred and is continuing, and (d) the Agreement (as
amended by this Amendment), and all other Loan Documents are and remain legal,
valid, binding and enforceable obligations in accordance with the terms thereof
except as enforceability may be limited by applicable debtor relief laws and by
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or law).
247
Section 3.3 Survival of Representations and Warranties. All
representations and warranties made in this Amendment or any other Loan Document
shall survive the execution and delivery of this Amendment and the other Loan
Documents, and no investigation by Agent or any Lender, or any closing, shall
affect the representations and warranties or the right of Agent and the Lenders
to rely upon them.
Section 3.4 Reference to Agreement. Each of the Loan Documents,
including the Agreement, the Amendment Documents and any and all other
agreements, documents or instruments now or hereafter executed and/or delivered
pursuant to the terms hereof or pursuant to the terms of the Agreement as
amended hereby, are hereby amended so that any reference in such Loan Documents
to the Agreement, whether direct or indirect, shall mean a reference to the
Agreement as amended hereby.
Section 3.5 Severability. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 3.6 General. This Amendment, when signed by the Agent, each
Lender and each Loan Party, as provided hereinbelow (i) shall be deemed
effective prospectively as of the Effective Date, (ii) contains the entire
agreement among the parties and may not be amended or modified except in writing
signed by all parties, (iii) shall be governed and construed according to the
laws of the State of Texas, (iv) may be executed in any number of counterparts,
each of which shall be valid as an original and all of which shall be one and
the same agreement and (vi) shall constitute a Loan Document. A telecopy or
other electronic transmission of any executed counterpart shall be deemed valid
as an original.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers in several
counterparts effective as of the Effective Date specified in the preamble
hereof.
[Remainder of this page intentionally left blank]
248
IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
THE LOAN PARTIES:
PARKER DRILLING COMPANY, ANACHORETA, INC.,
a Delaware corporation a Nevada corporation
By: By:
----------------------- ------------------------
Name: Name:
----------------------- ------------------------
Title: Title:
----------------------- ------------------------
CANADIAN RIG LEASING, INC., CHOCTAW INTERNATIONAL
an Oklahoma corporation RIG CORP., a Nevada corporation
By: By:
----------------------- ------------------------
Name: Name:
----------------------- ------------------------
Title: Title:
----------------------- ------------------------
CREEK INTERNATIONAL RIG CORP., DGH, INC., a Texas corporation
a Nevada corporation
By: By:
----------------------- ------------------------
Name: Name:
----------------------- ------------------------
Title: Title:
----------------------- ------------------------
INDOCORP OF OKLAHOMA, INC., MALLARD PERU HOLDINGS,
an Oklahoma corporation INC., a Delaware corporation
By: By:
----------------------- ------------------------
Name: Name:
----------------------- ------------------------
Title: Title:
----------------------- ------------------------
249
MANAGEMENT SERVICE LOGISTICS, INC., OIME, INC., an Oklahoma
a Nevada corporation corporation
By: By:
----------------------- ----------------------
Name: Name:
----------------------- ----------------------
Title: Title:
----------------------- ----------------------
PARCO MASTS AND SUBSTRUCTURES, PARCO, INC., an Oklahoma
INC., an Oklahoma corporation corporation
By: By:
----------------------- ----------------------
Name: Name:
----------------------- ----------------------
Title: Title:
----------------------- ----------------------
PARDRIL, INC., an Oklahoma corporation PARKER-VSE, INC., a Nevada
corporation
By: By:
----------------------- ----------------------
Name: Name:
----------------------- ----------------------
Title: Title:
----------------------- ----------------------
PARKER AVIATION INC., an Oklahoma PARKER DRILLING
corporation (KAZAKSTAN), LTD., an Oklahoma
corporation
By: By:
----------------------- ----------------------
Name: Name:
----------------------- ----------------------
Title: Title:
----------------------- ----------------------
PARKER DRILLING COMPANY PARKER DRILLING COMPANY
EASTERN HEMISPHERE, LTD., INTERNATIONAL LIMITED,
an Oklahoma corporation a Nevada corporation
By: By:
----------------------- ----------------------
Name: Name:
----------------------- ----------------------
Title: Title:
----------------------- ----------------------
250
PARKER DRILLING COMPANY PARKER DRILLING COMPANY
INTERNATIONAL, INC., LIMITED, a Nevada corporation
a Delaware corporation
By: By:
----------------------- ----------------------
Name: Name:
----------------------- ----------------------
Title: Title:
----------------------- ----------------------
PARKER DRILLING COMPANY LIMITED, PARKER DRILLING COMPANY
an Oklahoma corporation NORTH AMERICA, INC.,
a Nevada corporation
By: By:
----------------------- ----------------------
Name: Name:
----------------------- ----------------------
Title: Title:
----------------------- ----------------------
PARKER DRILLING COMPANY OF PARKER DRILLING COMPANY
ARGENTINA, INC., a Nevada corporation OF BOLIVIA, INC., an Oklahoma
corporation
By: By:
----------------------- ----------------------
Name: Name:
----------------------- ----------------------
Title: Title:
----------------------- ----------------------
PARKER DRILLING COMPANY OF PARKER DRILLING COMPANY
INDONESIA, INC., an Oklahoma corporation OF MEXICO, LTD., an Oklahoma
corporation
By: By:
----------------------- ----------------------
Name: Name:
----------------------- ----------------------
Title: Title:
----------------------- ----------------------
251
PARKER DRILLING COMPANY OF PARKER DRILLING COMPANY
NEW GUINEA, INC., an Oklahoma corporation OF NIGER, an Oklahoma corporation
By: By:
----------------------- ---------------------------
Name: Name:
----------------------- ---------------------------
Title: Title:
----------------------- ---------------------------
PARKER DRILLING COMPANY OF PARKER DRILLING COMPANY
OKLAHOMA, INCORPORATED, OF SINGAPORE, LTD.,
an Oklahoma corporation an Oklahoma corporation
By: By:
----------------------- ---------------------------
Name: Name:
----------------------- ---------------------------
Title: Title:
----------------------- ---------------------------
PARKER DRILLING COMPANY OF PARKER DRILLING COMPANY
SOUTH AMERICA, INC., OF SOUTH TEXAS, INC.,
an Oklahoma corporation an Oklahoma corporation
By: By:
----------------------- ---------------------------
Name: Name:
----------------------- ---------------------------
Title: Title:
----------------------- ---------------------------
PARKER DRILLING OFFSHORE PARKER DRILLING OFFSHORE
CORPORATION, a Texas corporation USA, L.L.C., an Oklahoma limited
liability company
By: By:
----------------------- ---------------------------
Name: Name:
----------------------- ---------------------------
Title: Title:
----------------------- ---------------------------
252
PARKER DRILLING U.S.A., LTD., PARKER ENERGY RESOURCES,
a Nevada corporation INC., a Texas corporation
By: By:
----------------------- ---------------------------
Name: Name:
----------------------- ---------------------------
Title: Title:
----------------------- ---------------------------
PARKER MEASUREMENT, INC., PARKER NORTH AMERICA
a Texas corporation OPERATIONS, INC., a Nevada
corporation
By: By:
----------------------- ---------------------------
Name: Name:
----------------------- ---------------------------
Title: Title:
----------------------- ---------------------------
PARKER PIPELINE COMPANY, INC., PARKER TECHNOLOGY, INC.,
a Texas corporation an Oklahoma corporation
By: By:
----------------------- ---------------------------
Name: Name:
----------------------- ---------------------------
Title: Title:
----------------------- ---------------------------
PARKER TECHNOLOGY, L.L.C., PARKER USA DRILLING
a Louisiana limited liability company COMPANY, a Nevada corporation
By: By:
----------------------- ---------------------------
Name: Name:
----------------------- ---------------------------
Title: Title:
----------------------- ---------------------------
PARKER VALVE COMPANY, QUAIL TOOLS, L.L.P.,
a Texas corporation an Oklahoma limited liability
partnership
By: By:
----------------------- ---------------------------
Name: Name:
----------------------- ---------------------------
Title: Title:
----------------------- ---------------------------
253
SAINTS ACQUISITION SELECTIVE DRILLING
COMPANY, a Delaware corporation CORPORATION, an Oklahoma
corporation
By: By:
----------------------- ---------------------------
Name: Name:
----------------------- ---------------------------
Title: Title:
----------------------- ---------------------------
TOTAL COVERAGE SERVICES, TOTAL FUNDS MANAGEMENT
a Nevada corporation CORPORATION, a Nevada corporation
By: By:
----------------------- ---------------------------
Name: Name:
----------------------- ---------------------------
Title: Title:
----------------------- ---------------------------
TOTAL LOGISTICS CORPORATION, UNIVERSAL RIG SERVICE CORP.,
a Nevada corporation a Nevada corporation
By: By:
----------------------- ---------------------------
Name: Name:
----------------------- ---------------------------
Title: Title:
----------------------- ---------------------------
254
THE AGENT:
BANK OF AMERICA, NATIONAL
ASSOCIATION, as the Agent
By:
--------------------------------
Doug Motl
Vice President
255
THE LENDERS:
BANK OF AMERICA, NATIONAL
ASSOCIATION
Commitment: $30,000,000
Pro Rata Share: 60%
By:
--------------------------------
Doug Motl
Vice President
256
CONGRESS FINANCIAL CORPORATION
Commitment: $15,000,000
Pro Rata Share: 30%
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
257
BANK OF OKLAHOMA, N.A.
Commitment: $5,000,000
Pro Rata Share: 10%
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
