Exhibit 10.9
[LETTERHEAD OF BANK OF SCOTLAND]
PRIVATE & CONFIDENTIAL
Dril-Quip (Europe) Ltd
Stoneywood Park
Dyce
ABERDEEN
AB2 0DF
TERM LOAN
The Bank is pleased to offer a facility to the undernoted Borrower on the
following terms and conditions ("this Offer"):
1. MAIN FINANCIAL PROVISIONS
1.1. Name and Address of each Borrower:
Dril-Quip (Europe) Limited (Company No. 81748) incorporated under the
Companies Acts and having its Registered Office at 18 Golden Square,
Aberdeen.
Where there is more than one Borrower any reference to "the Borrower"
shall mean and include each of the above and their obligations and
liabilities under this facility shall be joint and several.
1.2. Amount of facility: (Pounds)460,000
1.3. Period of facility: 120 months from the date of the drawing under
the facility.
1.4. An Arrangement Fee of (Pounds)Nil is payable on acceptance of
this Offer and will be debited to the Servicing Account unless
otherwise agreed.
1.5. The Servicing Account is Account Number 00361710 with the Bank.
The Borrower must ensure that at all times there are sufficient
funds available in the Servicing
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Account to pay the amounts debited under this Offer as soon as
those amounts are debited.
1.6 Interest will be calculated by the Bank on a day-to-day basis on the
outstanding balance of the facility owing to the Bank. Interest
accruing will be added to the outstanding balance on the last business
day of each month. The interest rate will be 1.75% per annum over the
Bank's Base Rate, as fluctuating from time to time.
1.7. The Bank's Base Rate at the date of this Offer is 6.00% per annum.
Changes are notified in national newspapers and all the Bank's
Branches.
1.8. The amount drawn under the facility, plus interest, must be repaid as
follows:
(a) Number of repayments: 120
(b) The amounts of the repayments will be as fixed by the Bank for 12
months at a time and notified to the Borrower. (When the Bank
calculates repayments it will do so having regard to the interest
rate as at the date of calculation and how long the period of
facility then has to run).
(c) Repayments will be debited to the Servicing Account at intervals
of one month after the date of the drawing under the facility.
(d) Depending upon the movements of Base Rate in the final 12 months
of repayment, the repayments fixed for these 12 months may not
exactly match the amount outstanding. The Bank will calculate the
amount of any necessary balancing payment to or from the Bank in
this connection, and the amount of that balancing payment will be
debited or credited to the Servicing Account by the Bank as
appropriate.
(e) If the Bank's Base Rate does not change after the date of this
Offer, repayments for the first 12 months will be
(Pounds)5,520.48 per month. Please note however that the
repayments for the first 12 months will in fact be calculated by
reference to the level of the Bank's Base Rate at the date of the
first drawing under the facility, and may not be the same as the
figure given above.
1.9. Following upon the drawdown in full of the Facilities the Borrower may
elect to convert the Term Loan Facilities to U.S. Dollar Term Loan
Facilities, at an interest rate of 1.75 % over cost of funds, by
service of notice (an "Election Notice") upon the same terms and
conditions as are provided herein.
An Election Notice must be served by the Borrower on the Bank not
later than fourteen Business Days before the proposed date of
conversion. In the event that the loan is converted to a U.S. Dollar
loan, this will not constitute an early repayment per Clause 3.
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2. USE OF FACILITY
The facility may be used only to assist with the extension of the machine
shop, refurbishment workshop and off-line fabrication facility.
Where the facility is to be used for the purchase of an asset (or assets)
or property then any proceeds of sale of such asset (or assets) or property
shall be paid to the Bank in reduction or repayment of the facility.
3. EARLY REPAYMENT OF THE FACILITY
3.1. The facility may be repaid earlier than as specified in paragraph 1.8
of this Offer provided repayment takes place on the last business day
of a month and the Borrower shall:
(a) give at least 30 days' prior notice to the Bank;
(b) at the time of early repayment, pay an additional amount equal to
one month's interest (at the rate then applicable to the facility)
on the amount of the early repayment; and
(c) pay an administration fee to the Bank; the minimum such fee at the
date of this Offer is (Pounds)50.00.
3.2. If only part of the facility is repaid early the Borrower shall ensure
that the repayments required under this Offer shall continue to be
paid until all sums due under this Offer have been paid.
3.3. Where the Bank has to recalculate the amount of repayments from time
to time in terms of this Offer, such recalculation will be on the
assumption that the period of the facility specified in paragraph 1.3
expires earlier than as stated, at a date determined by the Bank
having regard to the proportion which the sums owing, after taking
into account the early repayment, bear to the sums which would have
been owing if the early repayment had not been made.
3.4. Any sums repaid early may not be redrawn.
3.5. This paragraph also applies where a Borrower is required to repay part
of the facility early because an asset purchased by using the facility
has been sold.
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4. FINANCIAL INFORMATION
Throughout the period the facility is available (including any extension of
the facility) the Borrower must provide the Bank with the following
financial information:
Annual audited financial statements for the Borrower within four
months after the end of the financial year to which they relate;
Budget and cash flow projections, not less than one month before the
start of the period to which they relate;
Quarterly management accounts, within one month after the end of the
period to which they relate.
5. EVENTS OF DEFAULT
5.1 The Bank may declare that an event of default has occurred upon or at
any time after the happening of any of the following events:
(a) if the Borrower fails to pay any sum on the due date for payment
under this Offer or any other sum due and payable to the Bank;
(b) if a petition is presented or an order is made or resolution is
passed for the bankruptcy, sequestration, winding-up or
administration of the Borrower or (in Scotland) the appointment of
a judicial factor to the Borrower;
(c) if any diligence, distress, execution, sequestration or other
legal process is levied or enforced or sued out against any of the
assets of the Borrower;
(d) if any person takes possession of, or a receiver is appointed
over, the whole or any part of the assets of the Borrower;
(e) if the Borrower ceases or suspends payment of sums due or is
unable to pay debts as they fall due or is deemed unable to pay
sums due or is deemed apparently insolvent under insolvency
legislation;
(f) if any of the events specified in clauses (a) to (e) inclusive
above happen in regard to a Guarantor of the Borrower; or
(g) if the Borrower is a limited company and control of the Borrower
passes to any person without the Bank's prior consent.
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5.2. If the Bank declares that an event of default has occurred the Bank
may at (or at any time after) the time of making the declaration:
(a) cancel the facility; and/or
(b) demand immediate payment of the sums outstanding (in which case
the sums outstanding shall become immediately due and payable by
the Borrower) or declare that the sums outstanding shall become
due and payable on demand; and/or
(c) elect that interest at the default rate (being 2% over the rate
specified in this Offer) will apply in which case interest under
the facility will become payable at that rate before or after any
court decree or judgement; and/or
(d) charge an administration fee to compensate it for the additional
time spent in administering the facility.
6. GENERAL ADMINISTRATIVE PROVISIONS
6.1. The Bank can withdraw this Offer at any time prior to acceptance.
However, unless it is withdrawn, this Offer is open for acceptance
which must reach the Bank within three calendar months of this Offer.
If this Offer, duly signed, is not received by the Bank within that
period, then, unless the Bank agrees otherwise, this Offer shall
lapse.
6.2. If the term loan remains undrawn twelve months from the date of this
Offer (or such longer period as the Bank may agree) then it shall
automatically cease to be available.
6.3. A statement of the sums outstanding at any time and/or interest and/or
charges due to the Bank at any time, duly certified by a Bank
authorised official, shall (except where the Bank has made an obvious
error) be final and conclusive.
6.4. No delay by the Bank in exercising any right, power or privilege under
this Offer shall prevent the Bank from exercising it at a later date
and the Bank can exercise any of the powers conferred on more than one
occasion.
6.5. Unless the Bank otherwise agrees in this Offer, this Offer will be
governed by the law of the country in which the branch of the Bank
specified in this Offer is situated and the courts of that country
will have jurisdiction in relation to any matter relating to this
Offer.
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6.6. Any notice from the Bank shall be effectively given if sent by post to
the Registered Office/place of business/residence of the addressee
last known to the Bank. Any notice shall be deemed to have been given
and received forty eight hours after being sent by first class post.
6.7. The Borrower shall reimburse the Bank for all legal fees and expenses
relating to this Offer and any security that may be required.
7. ADDITIONAL CONDITIONS
The conditions in the attached Appendix shall also apply.
8. SECURITY
The following security ALREADY HELD by the Bank shall be available as
security for the amounts owing to the Bank under this Offer (as well as for
any other amounts covered by that security):
Standard Security over 4.6 acre site, Stoneywood Park, Dyce, Aberdeen
Standard Security over office, workshop and yard on 5.5 acre site at
Stoneywood Park, Dyce, Aberdeen
Any security WHICH MAY SUBSEQUENTLY BE HELD by the Bank shall be available
to secure the amounts owing to the Bank under this Offer and all other sums
due to the Bank, to the full extent that the terms of such security permit.
A charge of (Pounds)Nil will be made to cover the Bank's security
administration costs and will be debited on acceptance of this Offer. This
is in addition to any costs and expenses charged by any firm of solicitors
employed by the Bank to complete the documentation and procedures for the
above security requirements which will be paid by the Borrower.
9. TIME LIMIT FOR ACCEPTANCE OF OFFER
To accept this Offer, each Borrower named in paragraph 1.1. should please
sign below where indicated, and the completed Offer should be returned to
the Bank at the above address within three calendar months from the date of
this Offer. A duplicate of this Offer is enclosed for the Borrower to keep.
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/s/ D.W Date of Offer 26th March 1996
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For and on behalf of the Bank
I/We accept the above Offer.
Signed for and on behalf of Dril-Quip (Europe) Ltd
/s/ J. Mike Walker Director
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/s/ Gary D. Smith Director/Secretary
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June 7, 1997 Date
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Appendix of Additional Conditions for Offer to Dril-Quip (Europe) Ltd
Dated 26th March 1996
Drawdown may be made upon satisfaction of the following conditions precedent:
1. The Bank to receive confirmation that planning permission has been obtained
together with the building warrant to enable the building work to be
carried out.
2. The Borrower to provide the Bank with detailed costings in respect of the
building work with confirmation that the work will be undertaken on a fixed
price contract basis.
3. The Borrower to provide the Bank with a schedule detailing the proposed
payments against surveyor's certificates.
4. The Bank to receive and be satisfied with the letters of appointment for
the professional team.
5. The Bank to receive confirmation from the Borrower's solicitors that the
property extension will be on land covered by the existing standard
securities.
The following condition shall continue to apply while the borrowing is bridged
on overdraft pending receipt of the completion certificate:
1) Drawdowns in respect of the building works to be made against surveyor's
certificates.
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For and on behalf of the Bank Date of signing 26th March 1996
Signed for and on behalf of Dril-Quip (Europe) Ltd
_____________________________ Director
_____________________________ Director/Secretary
_____________________________ Date
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