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EXHIBIT 10.2
THIRD AMENDMENT AND MODIFICATION
TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT
(the "AMENDMENT") is made effective as of the 23rd day of January, 1997 by and
among FWA DRILLING COMPANY, INC. ("FWA") INTERNATIONAL PETROLEUM SERVICE
COMPANY ("IPSCO"), TRIAD DRILLING COMPANY ("TRIAD"), UNIVERSAL WELL SERVICES,
INC. ("UNIVERSAL"), USC, INCORPORATED, formerly known as UNION SUPPLY COMPANY
("UNION"), UTI ENERGY CORP. ("UTI"), UTICO, INC. ("UTICO"), VIERSEN & XXXXXXX
DRILLING COMPANY ("VIERSEN") and MELLON BANK, N.A. ("BANK"). FWA, IPSCO,
Triad, Universal and Union are hereinafter sometimes collectively referred to
as the "BORROWERS" and individually as a "BORROWER". UTI, UTICO and Viersen
are hereinafter sometimes collectively referred to as the "GUARANTORS" and
individually as a "GUARANTOR". The Borrowers and the Guarantors are
hereinafter sometimes collectively referred to as the "OBLIGORS" and
individually as an "OBLIGOR".
BACKGROUND
A. Pursuant to the terms of the certain Amended and Restated Loan
and Security Agreement dated December 7, 1995, as amended, by and among
Obligors and Bank (the "LOAN AGREEMENT"), Bank agreed, inter alia, to extend to
Borrowers a line of credit up to a maximum outstanding principal amount of
Eight Million Four Hundred Thousand Dollars ($8,400,000.00).
B. Obligors have requested and Bank has agreed to amend the terms of
the Loan Agreement in accordance with the terms and conditions hereof.
C. Capitalized terms used herein and not otherwise defined shall
have such meaning as provided in the Loan Agreements.
NOW THEREFORE, the parties hereto, intending to be legally bound, agree
as follows:
1. USE OF PROCEEDS. Bank agrees that Borrowers may use
advances under the Line up to an aggregate amount of Four Million One Hundred
Thousand Dollars ($4,100,000.00) (the "Line") to partially fund the Xxxxxxx
Asset Acquisition (as hereinafter defined).
2. COLLATERAL. SECTION 4.1(d) of the Loan Agreement is
hereby amended and restated in its entirety to read as follows and each Obligor
hereby grants Bank a security interest in the following:
"all of such Obligor's present and future drilling rigs, xxxxx
and production equipment, machinery, equipment, tools, pipe and
spare parts, together with all parts, substitutions, accretions,
accessions, attachments, accessories, additions, components and
replacements thereof, all documents of title covering any of such
items and all manuals of operation, maintenance or repair, and
all products and proceeds of any of the foregoing.
The collateral described in this revised SECTION 4.1(d) shall be
included within the defined term "Collateral".
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3. EXCLUDED ASSETS. Notwithstanding anything to the contrary
contained in the Loan Agreement, the security interests granted in SECTION 4 of
the Loan Agreement shall not include drilling rigs, and all proceeds thereof,
in which the CIT Group/Equipment Financing Company, Inc. currently holds a
security interest under the CIT Loan Documents, and (ii) the Collateral Assets
currently securing that certain promissory note in the original amount of Eight
Million Dollars ($8,000,000.00) dated August 14, 1996 made by UTI payable to
the order of Vierser Note"). For purposes hereof, "Collateral Assets" shall
mean the Assets as defined in that certain Stock Purchase Agreement dated
August 14, 1996 between the Xxx X. Xxxxxxx, Xx. Revocable Trust and UTI, as
amended, securing the Viersen Note.
4. DRILLING RIGS AND RELATED COLLATERAL.
(a) REPRESENTATIONS. Obligors represent and warrant as
follows:
(i) All drilling rigs and related drilling
equipment (collectively, the "DRILLING EQUIPMENT") used by Obligors in drilling
operations on their own behalf or on behalf of their customers are owned by the
entities and described on SCHEDULE 4 attached hereto. SCHEDULE 4 sets forth
the owner of the Drilling Equipment, the states in which the Drilling Equipment
is located and any Person that holds a lien or encumbrance against the Drilling
Equipment.
(ii) Except for liens permitted under SECTION 6.9
of the Loan Agreement, such Drilling Equipment is free and clear of all other
liens and encumbrances.
(b) COVENANTS. Obligors agree as follows:
(i) Bank may at any reasonable time inspect the
Drilling Equipment in which Bank now has or may hereafter acquire a security
interest (collectively, the "ENCUMBERED EQUIPMENT").
(ii) The Encumbered Equipment shall at all times
remain separately identifiable personal property and shall not become affixed
to real property so as to become a fixture.
(iii) If requested by Bank, in writing, Obligors
will attach to the Encumbered Equipment a notice satisfactory to Bank,
disclosing Bank's security interest in the Encumbered Equipment.
(iv) Obligors will not move any of the Encumbered
Equipment owned by an Obligor out of any of the states described in SCHEDULE 4
attached hereto or any of the other states in which Bank has filed UCC
financing statements naming the owner of such Encumbered Equipment, as debtor,
and describing such Encumbered Equipment as collateral, unless such Obligor
notifies Bank and provides Bank with duly executed financing statements to
perfect Bank's security interest in such Encumbered Equipment upon filing in
such new state.
5. BUSINESS ACQUISITION. The Xxxxxxx Asset Acquisition shall
constitute a permitted acquisition under SECTION 6.7 of the Loan Agreement,
notwithstanding any other restrictions set forth in SECTION 6.7.
6. CAPITAL EXPENDITURES. The expenditures related to the
Xxxxxxx Asset Acquisition shall not be included as Capital Expenditures for
purposes of complying with SECTION 7.4 of the Loan Agreement.
7. XXXXXXX ASSET ACQUISITION. Without the prior written
consent of the Bank, Obligors will not amend or modify the Asset Purchase
Agreement dated December 31, 1996 between UTI and Xxxxxxx Drilling Corporation
("XXXXXXX"), which was subsequently assigned by UTI to Triad (the "ASSET
PURCHASE AGREEMENT"), wherein Triad agreed to purchase certain assets of
Xxxxxxx on terms and conditions as further described therein (the "XXXXXXX
ASSET ACQUISITION").
8. CROSS DEFAULT. Notwithstanding anything to the contrary
contained in the Loan Documents, the occurrence of an Event of Default under
that certain Loan and Security Agreement of even date herewith (the "New
Loan Agreement") and all other documents executed in connection therewith shall
constitute an Event of Default under the Line and the other Loan Documents.
Following the occurrence of such Event of Default, Bank may, at Bank's option
and without further notice to any Obligor, exercise any and all rights
available to Bank under any of the Loan Documents, at law, in equity or
otherwise.
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9. CROSS COLLATERALIZATION. In addition to Obligors'
obligations to Bank under the Line and the other Loan Documents, Obligors agree
that the Collateral shall also secure Obligors' obligations to Bank under the
New Loan Agreement.
10. CONDITIONS. The obligation of Bank to enter into this
Amendment is subject to the following conditions (any of which may be waived by
Bank):
(a) LOAN DOCUMENTS. Obligors and all other required
person and entities will have executed and delivered to Bank this Amendment and
such other documents as Bank may require.
(b) REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Obligors set forth in the Loan Documents, as
amended hereby, will be true at and as of the date hereof, except for such
representations and warranties that are by their express terms limited to a
specific date.
(c) NO DEFAULT. No condition or event shall exist or
have occurred which would constitute an Event of Default hereunder (or would,
upon the giving of notice or the passage of time or both, constitute such an
Event of Default).
(d) PROCEEDINGS AND DOCUMENTS. All proceedings taken
by Obligors in connection with the transactions contemplated by this Amendment
and all documents incident to such transactions shall be satisfactory in form
and substance to Bank and Bank's counsel, and Bank shall have received all
documents or other evidence which it reasonably may request in connection with
such proceedings and transactions.
(e) DELIVERY OF OTHER DOCUMENTS. The following
documents shall have been delivered by or on behalf of Obligors to Bank:
(i) AUTHORIZATION DOCUMENTS. Evidence of
authorization of Obligors' execution and full performance of this Amendment,
the Loan Documents and all other documents and actions required hereunder.
(ii) OTHER DOCUMENTS. Such other documents as
may be required to be submitted to Bank by the terms hereof or any of the Loan
Documents.
(iii) CIT CONSENT. The written consent of CIT to
the Xxxxxxx Asset Acquisition and the transactions contemplated in connection
therewith.
(iv) OTHER DOCUMENTS. Such other documents as
may be required to be submitted to Bank by the terms hereof or any of the Loan
Documents.
11. CHALLENGE TO ENFORCEMENT. Obligors acknowledge and agree
that they do not have any defense, set-off, counterclaim or challenge against
the payment of any sums owing under the Loan Documents, or the enforcement of
any of the terms or conditions thereof.
12. CONFIRMATION OF COLLATERAL. Nothing contained herein
shall be deemed to be a compromise, satisfaction, accord and satisfaction,
novation or release of any of the Loan Documents, or any rights or obligations
thereunder, or a waiver by Bank of any of its rights under the Loan Documents
or at law or in equity. All liens, security interest, rights and remedies
granted to the Bank in the Loan Documents are hereby ratified, confirmed and
continued.
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13. REPRESENTATIONS, WARRANTIES AND COVENANTS. Obligors
represent, warrant and covenant, as applicable, which representations,
warranties and covenants shall survive until all Bank Indebtedness and all
other obligations of Obligors to Bank are paid and satisfied in full, as
follows:
(a) All representations and warranties of Obligors set
forth in the Loan Documents, as amended hereby, except for such representations
and warranties that are by their express terms limited to a specific date, are
true and correct as of the date hereof.
(b) No condition or event exists or has occurred which
would constitute an Event of Default under the Loan Documents (or would, upon
the giving of notice or the passage of time or both, constitute an event of
default).
(c) The execution and delivery of this Amendment by
Obligors and all documents and agreements to be executed and delivered pursuant
to the terms hereof;
(i) have been duly authorized by all requisite
corporate action by Obligors;
(ii) will not conflict with or result in the
breach of or constitute a default (upon the passage of time, delivery of notice
or both) under any applicable statute, law, rule, regulation or ordinance or
any indenture, mortgage, loan or other document or agreement to which any
Obligor is a party or by which any of them is bound or affected; or
(iii) will not result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the property or assets of any Obligor, except liens in favor of the Bank.
(d) Obligors agree that none of their obligations under
any of the Loan Documents, including without limitation, the Line Note, shall
in any way be adversely affected by this Amendment.
(e) Obligors ratify and confirm all of their
obligations under the Loan Documents.
14. NO WAIVER. Except as otherwise provided herein, nothing
contained and no actions taken by Bank in connection herewith shall constitute
nor shall they be deemed to be a waiver, release or amendment of or to any
rights, remedies, or privileges afforded to Bank under the Loan Documents or
under the Uniform Commercial Code. Nothing herein shall constitute a waiver by
Bank of Obligors' compliance with the terms of the Loan Documents, nor shall
anything contained herein constitute an agreement by Bank to enter into any
further amendments with Obligors.
15. INCONSISTENCIES. To the extent of any inconsistency
between the terms and conditions of this Amendment and the terms and conditions
of the other Loan Documents, the terms and conditions of this Amendment shall
prevail. All terms and conditions of the Loan Documents not inconsistent
herewith shall remain in full force and effect and are hereby ratified and
confirmed by Obligors.
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16. CONSTRUCTION. All references to the Loan Agreement
therein or in any other Loan Documents shall be deemed to be a reference to the
Loan Agreement as hereby amended.
17. BINDING EFFECT. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
18. GOVERNING LAW. This Amendment shall be governed and
construed in accordance with the laws of the Commonwealth of Pennsylvania.
19. SUCCESSORS AND ASSIGNS. This Amendment and all rights and
powers granted hereby will bind and inure to the benefit of the parties hereto
and their respective successors and assigns.
20. HEADINGS. The headings of the sections of this Amendment
are inserted for convenience only and shall not be deemed to constitute a part
of this Amendment.
21. CONFESSION OF JUDGMENT. EACH OBLIGOR HEREBY AUTHORIZES
AND EMPOWERS ANY ATTORNEY OR THE PROTHONOTARY OR CLERK OF ANY COURT IN THE
COMMONWEALTH OF PENNSYLVANIA, OR IN ANY OTHER JURISDICTION WHICH PERMITS THE
ENTRY OF JUDGMENT BY CONFESSION, TO APPEAR FOR SUCH OBLIGOR AT ANY TIME AFTER
DEMAND UNDER THE LINE NOTE OR AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT UNDER
THE LOAN AGREEMENT IN ANY ACTION BROUGHT AGAINST SUCH OBLIGOR ON OR UNDER ANY
OF THE LOAN DOCUMENTS AT THE SUIT OF BANK, WITH OR WITHOUT COMPLAINT OR
DECLARATION FILED, WITHOUT STAY OF EXECUTION, AS OF ANY TERM OR TIME, AND
THEREIN TO CONFESS OR ENTER JUDGMENT AGAINST SUCH OBLIGOR FOR THE ENTIRE UNPAID
OUTSTANDING PRINCIPAL AMOUNT OF THE BANK INDEBTEDNESS AND ALL OTHER SUMS TO BE
PAID BY SUCH OBLIGOR TO OR ON BEHALF OF BANK PURSUANT TO THE TERMS OF THE LOAN
DOCUMENTS AND ALL ARREARAGES OF INTEREST THEREON, TOGETHER WITH ALL COSTS AND
OTHER EXPENSES AND AN ATTORNEY'S COLLECTION COMMISSION OF FIFTEEN PERCENT (15%)
OF THE AGGREGATE AMOUNT OF THE FOREGOING SUMS, BUT IN NO EVENT LESS THAN FIVE
THOUSAND DOLLARS ($5,000.00); AND FOR SO DOING THIS AMENDMENT OR A COPY HEREOF
VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT.
THE AUTHORITY GRANTED HEREIN TO CONFESS JUDGMENT SHALL NOT BE
EXTINGUISHED BY ANY EXERCISE THEREOF, BUT SHALL CONTINUE FROM TIME TO TIME AND
AT ALL TIMES UNTIL PAYMENT IN FULL OF ALL THE BANK INDEBTEDNESS. OBLIGORS
ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED BY COUNSEL IN CONNECTION WITH THE
EXECUTION AND DELIVERY OF THIS AMENDMENT AND THAT THEY KNOWINGLY WAIVE THEIR
RIGHT TO BE HEARD PRIOR TO THE ENTRY OF SUCH JUDGMENT AND UNDERSTANDS THAT,
UPON SUCH ENTRY, SUCH JUDGMENT SHALL BECOME A LIEN ON ALL REAL PROPERTY OF EACH
OBLIGOR IN THE COUNTY WHERE SUCH JUDGMENT IS ENTERED.
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22. WAIVER OF RIGHT TO TRIAL BY JURY. OBLIGORS AND BANK WAIVE
ANY RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER ANY OF THE LOAN DOCUMENTS, INCLUDING THIS AMENDMENT OR (B) IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF OBLIGORS OR BANK
WITH RESPECT TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR
THERETO, IN EACH CASE WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE,
OBLIGORS AND BANK AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS AMENDMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF OBLIGORS AND BANK
TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. OBLIGORS ACKNOWLEDGE THAT THEY
HAVE HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL REGARDING THIS SECTION, THAT
THEY FULLY UNDERSTAND ITS TERMS, CONTENT AND EFFECT, AND THAT THEY VOLUNTARILY
AND KNOWINGLY AGREE TO THE TERMS OF THIS SECTION.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the date first above written.
INTERNATIONAL PETROLEUM SERVICE COMPANY
By:/s/ P. XXXXX XXXXXX
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P. Xxxxx Xxxxxx, Vice President
[CORPORATE SEAL]
TRIAD DRILLING COMPANY
By:/s/ P. XXXXX XXXXXX
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P. Xxxxx XxXxxx, Vice President
[CORPORATE SEAL]
UNIVERSAL WELL SERVICES, INC.
By:/s/ P. XXXXX XXXXXX
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P. Xxxxx XxXxxx, Vice President
[CORPORATE SEAL]
[SIGNATURES CONTINUED ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
USC INCORPORATED, FORMERLY KNOWN AS UNION
SUPPLY COMPANY
By:/s/ P. XXXXX XXXXXX
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P. Xxxxx XxXxxx, Vice President
[CORPORATE SEAL]
UTI ENERGY CORP.
By:/s/ P. XXXXX XXXXXX
---------------------------------------
P. Xxxxx XxXxxx, Vice President
[CORPORATE SEAL]
UTICO, INC.
By:/s/ P. XXXXX XXXXXX
---------------------------------------
P. Xxxxx XxXxxx, Vice President
[CORPORATE SEAL]
FWA DRILLING COMPANY, INC.
By:/s/ P. XXXXX XXXXXX
---------------------------------------
P. Xxxxx XxXxxx, Vice President
[CORPORATE SEAL]
VIERSEN & XXXXXXX DRILLING COMPANY
By:/s/ P. XXXXX XXXXXX
---------------------------------------
P. Xxxxx XxXxxx, Vice President
[CORPORATE SEAL]
MELLON BANK, N.A.
By:/s/ P. XXXXX XXXXXX
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Xxxxx X. Xxxxxx, First Vice President
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