Exhibit 10.4
THIRD AMENDMENT TO
CREDIT AGREEMENT
This Third Amendment to Credit Agreement (the "Third Amendment"), dated as
of February 14, 1997 is entered into by and between DRIL-QUIP, INC., a Texas
corporation ("Borrower"), and BANK ONE, TEXAS, NATIONAL ASSOCIATION, a national
banking association ("Lender").
W I T N E S S E T H:
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WHEREAS, pursuant to that certain Credit Agreement dated March 30, 1994 as
amended by that certain First Amendment to Credit Agreement dated December 20,
1994 and that certain Second Amendment to Credit Agreement dated December 13,
1995 (collectively, the "Credit Agreement"), Lender agreed to make available to
Borrower certain loans upon the terms and conditions and for the purposes
therein contained;
WHEREAS, Borrower has requested that its revolving line of credit be
increased up to a maximum of TWENTY-FIVE MILLION AND NO/100 DOLLARS
($25,000,000.00) and extended to June 1, 1999 and Lender has agreed to such
increase and extension;
WHEREAS, Borrower has requested Lender to make available to Borrower an
additional advancing line of credit of up to THREE MILLION AND NO/100 DOLLARS
($3,000,000.00) and Lender has agreed to make such loan to Borrower;
WHEREAS, Borrower has requested Lender to consolidate certain term loans;
WHEREAS, Borrower has requested Lender to make certain other changes to the
Credit Agreement; and
WHEREAS, Borrower and Lender desire to amend the Credit Agreement so that
the Credit Agreement evidences such increase and extension of the revolving line
of credit, governs such additional advancing line of credit, consolidates
certain term loans and effects such other changes;
NOW THEREFORE, the parties hereto agree as follows:
1. Amendments to Credit Agreement. The Credit Agreement is modified as
follows:
1.1 Wherever the term "Agreement" is used in the Credit Agreement,
such term shall refer to the Credit Agreement as amended by this
Third Amendment;
1.2 Article I - Definitions. The definition of the term "Commitment"
is deleted in its entirety, and the following is substituted in
place thereof:
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"Commitment" means (i) the commitment of Lender to make
available the Revolving Credit Loan hereunder, (ii) the
commitment of Lender to make available the Fourth Advancing
Credit Loan hereunder, (iii) the commitment of Lender to
make available the Term Loan hereunder and (iv) the
commitment of Lender to issue the Letters of Credit
hereunder.
1.3 Article I - Definitions. The definition of the term "Loans" is
deleted in its entirety, and the following is substituted in
place thereof:
"Loans" means, collectively, the Revolving Credit Loan, the
Fourth Advancing Credit Loan and the Term Loan, and "Loan"
means singly, the Revolving Credit Loan, the Fourth
Advancing Credit Loan or the Term Loan.
1.4 Article I - Definitions. The definition of the term "Notes" is
deleted in its entirety, and the following is substituted in
place thereof:
"Notes" shall mean the Revolving Credit Note, the Fourth
Advancing Credit Note and the Term Note and all extensions,
renewals and modifications thereof.
1.5 Article I - Definitions. The definition of the term "Revolving
Credit Committed Sum" is deleted in its entirety, and the
following is substituted in place thereof:
"Revolving Credit Committed Sum" means TWENTY-FIVE MILLION
AND NO/100 DOLLARS ($25,000,000.00), as such amount may be
reduced pursuant to Section 2.06.
1.6 Article I - Definitions. The definition of the term "Revolving
Credit Note" is deleted in its entirety, and the following is
substituted in place thereof:
"Revolving Credit Note" means the promissory note in favor
of Lender in substantially the form of Exhibit O hereto, and
all extensions, renewals and modifications thereof.
1.7 Article I - Definitions. The definition of the term "Revolving
Credit Termination Date" is deleted in its entirety, and the following is
substituted in place thereof:
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"Revolving Credit Termination Date" means June 1, 1999, or
such earlier date as the Revolving Credit Commitment
terminates as provided in this Agreement.
1.8 Article I - Definitions. The definition of the term "Term Note"
is deleted in its entirety, and the following is substituted in
place thereof:
"Term Note" means the promissory note described in Section
4.01 hereof in favor of Lender in substantially the form of
Exhibit P hereto, and all extensions, renewals and
modifications thereof.
1.9 Article I - Definitions. Article I-Section 1.01 of the Agreement
is hereby amended to add thereto the following definitions:
"Fourth Advancing Credit Commitment Fee" shall have the
meaning set forth in Section 3.28 hereof.
"Fourth Advancing Credit Commitment Period" means the period
commencing on February 14, 1997 and ending on the Fourth
Advancing Credit Termination Date.
"Fourth Advancing Credit Committed Sum" means THREE MILLION
AND NO/100 DOLLARS ($3,000,000.00), as such amount may be
reduced pursuant to Section 3.27 or otherwise.
"Fourth Advancing Credit Loan" means the Loan made by Lender
to Borrower, in one or more Advances, during the Fourth
Advancing Credit Commitment Period, pursuant to Section
3.22.
"Fourth Advancing Credit Note" means the promissory note in
favor of Lender in substantially the form of Exhibit Q
hereto, and all extensions, renewals and modifications
thereof.
"Fourth Advancing Credit Termination Date" means 11:00 a.m.
Houston, Texas, time on December 31, 1997, or such earlier
date as the Commitment to make Advances pursuant to Section
3.22 terminates as provided in this Agreement.
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1.10 Article II. Article 11 is hereby amended to substitute the
following for Section 2.02 in its entirety:
Section 2.02. Revolving Credit Note. The obligation of
Borrower to repay the Revolving Credit Loan shall be
evidenced by the Revolving Credit Note executed by Borrower,
payable to the order of Lender, in the principal amount of
the Revolving Credit Committed Sum and dated February 14,
1997. The principal of the Revolving Credit Loan shall be
due and payable on the Revolving Credit Termination Date.
The Revolving Credit Loan shall bear interest prior to
maturity at a varying rate per annum equal from day to day
to the lesser of (a) the maximum rate permitted from day to
day by applicable law ("Maximum Rate"), including as to
Article 5069-1.04 Vernon's Texas Civil Statutes (and as the
same may be incorporated by reference in other Texas
statutes), but otherwise without limitation, that rate based
upon the "indicated rate ceiling", or (b) the sum of the
Bank One Texas Base Rate in effect from day to day plus one-
fourth of one percent (1/4%), each such change in the rate
of interest charged hereunder to become effective, without
notice to Borrower, on the effective date of each change in
the Bank One Texas Base Rate; provided, however, if at any
time the rate of interest specified in clause (b) preceding
shall exceed the Maximum Rate, thereby causing the interest
on the Revolving Credit Loan to be limited to the Maximum
Rate, then any subsequent reduction in the Bank One Texas
Base Rate shall not reduce the rate of interest on the
Revolving Credit Loan below the Maximum Rate until the
aggregate amount of interest accrued on the Revolving Credit
Loan equals the aggregate amount of interest which would
have accrued on the Revolving Credit Loan if the interest
rate specified in clause (b) preceding had at all times been
in effect. Accrued and unpaid interest on the Revolving
Credit Loan shall be due and payable (a) quarterly in
arrears, on the 1st day of each successive April, July,
October and January commencing on April 1, 1997, until
payment in full of the outstanding principal under the
Revolving Credit Note and (b) on the Revolving Credit
Termination Date. All past due principal and interest shall
bear interest at the Maximum Rate.
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1.11 Article III. Article III is hereby amended to delete Section
3.15 through and including Section 3.21.
1.12 Article III. Article III is hereby amended to add thereto the
following Sections:
Section 3.22. Commitment for Fourth Advancing Credit Loan.
Subject to the terms and conditions of this Agreement, and
provided that no Default or Event of Default has occurred or
is continuing, Lender agrees to lend to Borrower, pursuant
to this Agreement, such amounts as the Borrower may request
in one or more Advances, from time to time during the Fourth
Advancing Credit Commitment Period to and including the
Fourth Advancing Credit Termination Date; provided, however,
that such Advances shall not exceed either singularly or
cumulatively the Fourth Advancing Credit Committed Sum; and
further provided that Lender shall not be obligated to make
such Loans pursuant to this Section 3.22 in excess of
eighty-five percent (85%) of the cost of improvements,
eighty percent (80%) of the cost of new equipment, eighty
percent (80%) of the cost of used, refurbished equipment and
sixty percent (60%) of the cost of used, unrefurbished
equipment; provided, however, that with respect to any used,
unrefurbished equipment, if Borrower should subsequently
refurbish such equipment, then the limit shall be increased
to eighty percent (80%) and Borrower may increase the amount
borrowed hereunder on account of such equipment to bring the
total to eighty percent (80%) of the cost of such equipment
and the cost of refurbishing such equipment.
Section 3.23. Fourth Advancing Credit Note. The
obligation of Borrower to repay the Fourth Advancing Credit
Loan shall be evidenced by the Fourth Advancing Credit Note
executed by Borrower, payable to the order of Lender, in the
principal amount of the Fourth Advancing Credit Committed
Sum and dated February 14, 1997. The principal of the
Fourth Advancing Credit Loan outstanding on the Fourth
Advancing Credit Termination Date, plus accrued and unpaid
interest thereon, shall be due and payable: (a) in three (3)
installments of accrued and unpaid interest only due and
payable on April 1, 1997, July 1, 1997 and October 1, 1997;
(b) in fifteen (15) installments each equal to ONE HUNDRED
THOUSAND
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AND NO/100 DOLLARS ($100,000.00) of principal, together with
all accrued and unpaid interest, the first of such
installments being due and payable on or before January 1,
1998 and like installments being due and payable on the
first day of each succeeding third calendar month thereafter
through and including July 1, 2001; and (c) a final
installment shall be due on or before October 1, 2001 in an
amount equal to the remaining unpaid principal outstanding
on the Fourth Advancing Credit Loan together with all
accrued and unpaid interest. The Fourth Advancing Credit
Loan shall bear interest prior to maturity at a varying rate
per annum equal from day to day to the lesser of (a) the
Maximum Rate, or (b) the sum of the Bank One Base Rate in
effect from day to day plus one-half of one percent (1/2%),
each such change in the rate of interest charged hereunder
to become effective, without notice to Borrower, on the
effective date of each change in the Bank One Base Rate;
provided, however, if at any time the rate of interest
specified in clause (b) preceding shall exceed the Maximum
Rate, thereby causing the interest on the Fourth Advancing
Credit Loan to be limited to the Maximum Rate, then any
subsequent reduction in the Bank One Base Rate shall not
reduce the rate of interest on the Fourth Advancing Credit
Loan below the Maximum Rate until the aggregate amount of
interest accrued on the Fourth Advancing Credit Loan equals
the aggregate amount of interest which would have accrued on
the Fourth Advancing Credit Loan if the interest rate
specified in clause (b) preceding had at all times been in
effect. All past due principal and interest shall bear
interest at the Maximum Rate.
Section 3.24. Expiration of Commitment to Lend under Fourth
Advancing Credit. The maximum obligation of Lender to make
Advances under Section 3.22 hereof shall not at any time
exceed, either singularly or cumulatively, the Fourth
Advancing Credit Committed Sum, and Lender shall have no
obligation to make additional Advances under Section 3.22
hereof and Lender's Commitment to lend to Borrower pursuant
to Section 3.22 hereof shall terminate and expire at 11:00
a.m., Houston, Texas time on the Fourth Advancing Credit
Termination Date; provided that Borrower's Obligations and
the Rights of Lender under the Loan Papers shall continue in
full force and effect until the Obligations have been paid
and performed in full.
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Section 3.25. Procedure for Borrowing Under the Fourth
Advancing Credit Loan. During the Fourth Advancing Credit
Commitment Period, Borrower shall give Lender a written
notice executed on behalf of the Borrower by any Authorized
Financial Officer of the Borrower (the "Notice of Fourth
Advancing Credit Borrowing") of any proposed Borrowing under
the Fourth Advancing Credit Loan which shall be irrevocable.
Each Notice of Fourth Advancing Credit Borrowing shall be
received by Lender not later than 11:00 a.m., Houston, Texas
time, at least one (1) Business Day prior to any proposed
Borrowing requested by Borrower together with copies of
invoices for the equipment purchased or improvements
undertaken. Each such Notice of Fourth Advancing Credit
Borrowing shall be substantially in the form of Exhibit R
attached hereto. Lender, at its option, may from time to
time accept telephonic requests for Advances; provided that
Borrower shall promptly thereafter provide Lender with a
completed Notice of Fourth Advancing Credit Borrowing
together with copies of invoices for the equipment purchased
or improvements undertaken. Lender is hereby authorized to
act in reliance upon a certificate of incumbency from
Borrower's Secretary or Assistant Secretary as to the
identity of the foregoing officers and their due appointment
and authorization to issue Borrowing requests and receive
proceeds of Advances hereunder on behalf of Borrower unless
and until Lender is in actual receipt of written notice by
Borrower of revocation of said appointment and
authorization. Prior to 11:00 a.m. (Houston, Texas, time)
on each Borrowing Date and subject to the provisions of
Section 3.22, Lender shall make available to Borrower in
immediately available funds such requested Advance by
deposit to Borrower's deposit account maintained with Lender
or other reasonable disposition of such funds as Borrower
shall request in writing. Lender may, and is hereby
authorized by Borrower to, endorse on the schedule attached
to the Fourth Advancing Credit Note or on a continuation of
such schedule attached to and made a part of such Fourth
Advancing Credit Note an appropriate notation evidencing the
date and amount of each Advance and payment and prepayment
by Borrower of the principal of and interest on the Fourth
Advancing Credit Loan evidenced by such Fourth Advancing
Credit Note, but the failure of Lender to make any such
endorsement or any incorrect endorsement shall not subject
Lender to any
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liability hereunder and shall not limit or otherwise affect
the obligations of Borrower under such Fourth Advancing
Credit Note.
Section 3.26. Use of Proceeds of Fourth Advancing Credit
Loan. The proceeds of the Advances comprising the Fourth
Advancing Credit Loan shall be used to pay (or reimburse
Borrower for amounts already spent by Borrower since October
1, 1996) for up to eighty-five percent (85%) of the costs of
Borrower for improvements on the realty described on
Schedule 3 attached to the Credit Agreement, up to eighty-
five percent (85%) of the cost of improvements, eighty
percent (80%) of the cost of new equipment, eighty percent
(80%) of the cost of used, refurbished equipment and sixty
percent (60%) of the cost of used, unrefurbished equipment;
provided, however, that with respect to any used,
unrefurbished equipment, if Borrower should subsequently
refurbish such equipment, then the limit shall be increased
to eighty percent (80%) and Borrower may increase the amount
borrowed hereunder on account of such equipment to bring the
total to eighty percent (80%) of the cost of such equipment
and the cost of refurbishing such equipment.
Section 3.27. Reduction or Termination of Fourth Advancing
Committed Sum. Borrower may at any time by giving at least
three (3) Business Days' notice in writing to Lender
terminate or reduce the Fourth Advancing Credit Committed
Sum; provided, however, that no such reduction of the Fourth
Advancing Credit Committed Sum shall be effective unless the
amount by which the Fourth Advancing Credit Committed Sum is
reduced shall be ONE HUNDRED THOUSAND AND NO/100
($100,000.00) or an integral multiple thereof. Once reduced
or terminated, the Fourth Advancing Credit Committed Sum may
not be increased or reinstated without the prior written
consent of Lender.
Section 3.28. Fourth Advancing Credit Commitment Fee.
Borrower agrees to pay to Lender a fee (the "Fourth
Advancing Credit Commitment Fee") on the average daily
unused portion of the Fourth Advancing Credit Commitment,
from February 14, 1997 to and including the Fourth Advancing
Credit Termination Date, at the rate of one-half of one
percent (1/2%) per annum based on a 365 day year and
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the actual number of days elapsed payable in arrears, on
April 1, 1997, July 1, 1997, October 1, 1997 and on the
Fourth Advancing Credit Termination Date.
1.13 Article IV. Article IV is hereby amended to substitute the
following for Article IV in its entirety:
Term Loan
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Section 4.01. Commitment for Term Loan. Subject to the
terms and conditions of this Agreement, and provided that no
Default or Event of Default has occurred and is continuing
on the Closing Date, Lender agrees to make the Term Loan to
Borrower under the Term Note, in the amount of TEN MILLION
SIX HUNDRED FIFTY-SEVEN THOUSAND AND NO/100 DOLLARS
($10,657,000.00), which amount represents a renewal and
extension, in whole or in part, of the principal
indebtedness evidenced by:
(a) that certain Promissory Note dated October 1, 1995
in the principal amount of $11,622,000.00 executed by
Borrower and payable to the order of Lender; and
(b) that certain Promissory Note dated December 13,
1995 in the principal amount of $2,000,000.00 executed by
Borrower and payable to the order of Lender.
Section 4.02. Term Note. The obligation of Borrower to
repay the Term Loan shall be evidenced by the Term Note
executed by Borrower, payable to the order of Lender, in the
principal amount of the Term Loan and dated February 14,
1997. The principal of the Term Loan, plus accrued and
unpaid interest thereon, shall be due and payable in:
(a) nine (9) consecutive installments each equal to SIX
HUNDRED FORTY-NINE THOUSAND AND NO/100 DOLLARS
($649,000.00) of principal, together with all accrued and
unpaid interest, the first of such installments being due
and payable on or before April 1, 1997 and like installments
being due and payable on the first day of each succeeding
third calendar month thereafter through and including April
1, 1999; and
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(b) a final installment due and payable on July 1, 1999
in an amount equal to the remaining unpaid principal amount
outstanding on the Term Loan, together with all accrued and
unpaid interest.
The Term Loan shall bear interest prior to maturity at a
varying rate per annum equal from day to day to the lesser
of (a) the Maximum Rate or (b) the sum of the Bank One Texas
Base Rate in effect from day to day plus one-half of one
percent (1/2%), each such change in the rate of interest
charged hereunder to become effective, without notice to
Borrower, on the effective date of each change in the Bank
One Texas Base Rate; provided, however, if at any time the
rate of interest specified in clause (b) preceding shall
exceed the Maximum Rate, thereby causing the interest on the
Term Loan to be limited to the Maximum Rate, then any
subsequent reduction in the Bank One Texas Base Rate shall
not reduce the rate of interest on the Term Loan below the
Maximum Rate until the aggregate amount of interest accrued
on the Term Loan equals the aggregate amount of interest
which would have accrued on the Term Loan if the interest
rate specified in clause (b) preceding had at all times been
in effect. All past due principal and interest shall bear
interest at the Maximum Rate.
1.14 Article X. Article X is hereby amended to substitute the
following for Section 10.04 in its entirety:
Section 10.04. Lease Obligations. Permit aggregate
payments of Borrower and Subsidiaries under leases of real
or personal property to exceed ONE MILLION SIX HUNDRED
THOUSAND AND NO/100 DOLLARS ($1,600,000.00) in the aggregate
during any fiscal year.
2. Condition Precedent. The obligation of Lender to make any Advances
pursuant to Sections 2.01 or 3.22 of the Agreement is subject to the condition
precedent that the Lender shall have received all of the following, each duly
executed and in form and substance satisfactory to Lender:
(a) Promissory Note dated February 14, 1997 in the principal amount
of $25,000,000.00 executed by Borrower to the order of Lender,
after execution and delivery being the Revolving Credit Note;
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(b) Promissory Note dated February 14, 1997 in the principal amount
of $10,657,000.00 executed by Borrower to the order of Lender,
after execution and delivery being the Term Note;
(c) Promissory Note dated February 14, 1997 in the principal amount
of $3,000,000.00 executed by Borrower to the order of Lender,
after execution and delivery being the Fourth Advancing Credit
Note;
(d) Ratifications or amendments of existing Security Documents and/or
new Security Documents as may be requested by Lender to continue
or establish a Lien in favor or for the benefit of Lender in or
against (i) all of Borrower's accounts, accounts receivable,
equipment, machinery, fixtures, raw materials, work-in-process,
inventory, chattel paper, documents, instruments and general
intangibles, whether now owned or hereafter acquired, and all
products and proceeds thereof, and (ii) the realty described in
Schedule 3 of the Credit Agreement, the appurtenances thereto and
improvements thereon;
(e) Certified copies of resolutions of the Board of Directors of
Borrower authorizing or ratifying the execution, delivery and
performance, respectively, of those of this Fourth Amendment, the
Revolving Credit Note, the Fourth Advancing Second Credit Note,
the Term Note and all other documents provided for in this Third
Amendment to which each is a party;
(f) The articles of incorporation of Borrower certified by the
Secretary of State of the State of incorporation, and dated
reasonably near the date of this Third Amendment;
(g) Certificates of the appropriate government officials of the
jurisdiction of incorporation of Borrower as to its existence and
good standing, dated reasonably near the date of this Third
Amendment; and
(h) A favorable opinion of legal counsel to Borrower.
3. Representations and Warranties. The representations and warranties
made in Article VIII of the Credit Agreement by Borrower to Lender are true and
correct as of the date of execution of this Third Amendment.
4. Defined Terms. Words and terms used herein which are defined in the
Credit Agreement are used herein as defined in the Credit Agreement, except as
specifically modified by the terms of this Third Amendment. Any of the terms
used in this Third Amendment which are not defined in the Credit Agreement shall
be used therein as herein defined.
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5. Preservation of the Credit Agreement. Except as specifically modified
by the terms of this Third Amendment, all of the terms, provisions, covenants,
warranties and agreements contained in the Credit Agreement shall remain in full
force and effect.
6. Applicable Law. This Third Amendment shall be deemed to be a contract
made under, and shall be construed in accordance with, the laws of the State of
Texas.
7. Entire Agreement. The Credit Agreement as amended by this Third
Amendment and the other Loan Papers contain the entire agreement between the
parties relating to the transactions contemplated hereby. All prior or
contemporaneous understandings, representations, statements and agreements,
whether written or oral, are merged herein and superseded by the Credit
Agreement as amended by this Third Amendment. THIS WRITTEN AGREEMENT AND THE
OTHER LOAN PAPERS REPRESENT 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.
IN WITNESS WHEREOF, the parties have executed this Third Amendment as of
the date first above written.
BORROWER:
DRIL-QUIP, INC.
By:
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J. Mike Walker
Vice President
LENDER:
BANK ONE, TEXAS, NATIONAL
ASSOCIATION
By:
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Charles Kingswell-Smith
Vice President
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EXHIBIT O
PROMISSORY NOTE
$25,000,000.00 Houston, Texas February ___, 1997
FOR VALUE RECEIVED, the undersigned, DRIL-QUIP, INC., a Texas
corporation ("Maker"), hereby promises to pay to the order of BANK ONE, TEXAS,
NATIONAL ASSOCIATION, a national banking association ("Payee"), at its offices
at 910 Travis, Houston, Harris County, Texas, on June 1, 1999, in lawful money
of the United States of America, the principal sum of TWENTY-FIVE MILLION AND
NO/100 DOLLARS ($25,000,000.00), or so much thereof as may be advanced and
outstanding hereunder, together with interest on the outstanding principal
balance hereof, at a varying rate per annum which shall from day to day be equal
to the lesser of (a) the maximum rate permitted by applicable law as the same
exists from day to day during the term hereof ("Maximum Rate"), including, as to
Article 5069-1.04, Vernon's Texas Civil Statutes (and as the same may be
incorporated by reference in other Texas statutes), but otherwise without
limitation, that rate based upon the "indicated rate ceiling" or (b) the sum of
the Bank One Base Rate (hereinafter defined) of Payee in effect from day to day
plus one-fourth of one percent (1/4%), each such change in the rate of interest
charged hereunder to become effective, without notice to Maker, on the effective
date of each change in the Bank One Base Rate; provided however, if at any time
the rate of interest specified in clause (b) preceding shall exceed the Maximum
Rate, thereby causing the interest rate hereon to be limited to the Maximum
Rate, then any subsequent reduction in the Bank One Base Rate will not reduce
the rate of interest hereon below the Maximum Rate until the total amount of
interest accrued hereon equals the amount of interest which would have accrued
hereon if the rate specified in clause (b) preceding had at all times been in
effect.
Accrued and unpaid interest shall be due and payable quarterly in arrears
during the term hereof, on the 1st day of each successive April, July, October
and January commencing on April 1, 1997, until payment in full of the
outstanding principal hereunder. All principal hereof, together with all
accrued and unpaid interest thereon, shall be due and payable on maturity. All
past due principal and interest shall bear interest at the Maximum Rate.
Whenever any payment hereunder shall be stated to be due on a day that is
not a day Payee is open for business, such payment may be made on the next
succeeding day Payee is open for business and interest shall continue to accrue
during such extension.
As used herein, the term "Bank One Base Rate" means, at any time the lesser
of (i) the rate of interest per annum then most recently established by Payee as
its Bank One Base Rate in effect
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from day to day, with each change in the rate of interest charged as the Bank
One Base Rate to become effective, without notice to Maker, on the effective
date of each change in the Bank One Base Rate, such Bank One Base Rate to be
computed on the basis of a year composed of 365 days for the actual number of
days elapsed (including the first day but excluding the last day) or (ii) the
Maximum Rate (as herein defined).
This note is the Revolving Credit Note provided for and as defined in that
certain Credit Agreement dated March 30, 1994 as amended by First Amendment to
Credit Agreement dated December 20, 1994, Second Amendment to Credit Agreement
dated December 13, 1995 and that certain Third Amendment to Credit Agreement
dated of even date herewith by and among Maker and Payee (such instruments as
the same may be amended or modified from time to time, are hereinafter referred
to as the "Agreement").
Maker may prepay the principal of this note upon the terms and conditions
specified in the Agreement. Maker may borrow, repay and reborrow hereunder upon
the terms and conditions specified in the Agreement.
Notwithstanding anything to the contrary contained herein, no provisions of
this note shall require the payment or permit the collection of interest in
excess of the Maximum Rate. If any excess of interest in such respect is herein
provided for, or shall be adjudicated to be so provided, in this note or
otherwise in connection with this loan transaction the provisions of this
paragraph shall govern and prevail, and neither Maker nor the sureties,
guarantors, successors or assigns of Maker shall be obligated to pay the excess
amount of such interest, or any other excess sum paid for the use, forbearance
or detention of sums loaned pursuant hereto. If for any reason interest in
excess of the Maximum Rate shall be deemed charged, required or permitted by any
court of competent jurisdiction, any such excess shall be applied as a payment
and reduction of the principal of indebtedness evidenced by this note; and, if
the principal amount hereof has been paid in full, any remaining excess shall
forthwith be paid to Maker.
If default be made in the payment of principal or interest under this note
and such default shall continue for three (3) Business Days after notice thereof
to Maker pursuant to the Agreement, as defined in the Agreement, or upon the
occurrence of any other Event of Default as such term is defined in the
Agreement, the holder hereof may, at its option, declare the entire unpaid
principal of and accrued interest on this note immediately due and payable
without additional notice, demand or presentment, all of which are hereby
waived, and upon such declaration, the same shall become and shall be
immediately due and payable, and the holder hereof shall have the right to
foreclose or otherwise enforce all liens or security interests securing any sum
or sums owed by the holder hereof to Maker. Failure of the holder hereof to
exercise this option shall not constitute a waiver of the right to exercise the
same upon the occurrence of a subsequent Event of Default.
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If the holder hereof expends any effort in any attempt to enforce payment
of all or any part or installment of any sum due the holder hereunder, or if
this note is placed in the hands of an attorney for collection, or if it is
collected through any legal proceedings, Maker agrees to pay all collection
costs and fees incurred by the holder, including reasonable attorneys' fees.
This note is performable in Houston, Harris County, Texas, and Maker and
each surety, guarantor, endorser and other party ever liable for payment of any
sums of money payable on this note, jointly and severally waive the right to be
sued hereon elsewhere. This note shall be governed by and construed in
accordance with the laws of the state of Texas and the applicable laws of the
United States of America.
Maker and each surety, guarantor, endorser and other party ever liable for
payment of any sums of money payable on this note jointly and severally waive
presentment and demand for payment, protest, notice of protest and non-payment
of dishonor, notice of acceleration, notice of intent to accelerate, notice of
intent to demand, diligence in collecting, and grace, and consent to all
extensions without notice for any period or periods of time and partial
payments, before or after maturity, without prejudice to the holder. Maker
acknowledges and understands that under the laws of the State of Texas, unless
waived, Maker has the right to notice of Payee's intent to accelerate the
indebtedness evidenced by this note, the right to notice of the actual
acceleration of the indebtedness evidenced by this note, and the right to
presentment of this note by Payee's demand for payment. Maker acknowledges that
it understands that it can waive these rights and by Maker's execution of this
note it agrees to waive its right to notice of intent to accelerate, its right
to notice of acceleration, and its right to presentment or other demand for
payment. The holder shall similarly have the right to deal in any way, at any
time, without one or more of the foregoing parties without notice to any other
party, and to grant any such party and extensions of time for payment of any of
said indebtedness, or to release part or all of the collateral securing this
note, or to grant any other indulgences or forbearances whatsoever, without
notice to any other party and without in any way affecting the personal
liability of any party hereunder.
This note is executed in renewal and extension, but not in novation or
discharge, of that certain Promissory Note dated October 1, 1995, in the
original principal amount of $20,000,000.00, executed by Maker for the benefit
of Payee.
Maker hereby authorizes the holder hereof to endorse on the Schedule
attached to this note or any continuation thereof, all advances made to Maker
hereunder and all payments made on account of the principal thereof, which
endorsements shall be prima facie evidence as to the outstanding principal
amount of this note; provided, however, any failure by the holder hereof to make
endorsement shall not limit or otherwise affect the obligations of Maker under
the Agreement or this note.
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DRIL-QUIP, INC.
By:
------------------------------------
J. Mike Walker, Vice President
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EXHIBIT P
PROMISSORY NOTE
$10,657,000.00 Houston, Texas February ___, 1997
FOR VALUE RECEIVED, the undersigned, DRIL-QUIP, INC., a Texas
corporation ("Maker"), hereby promises to pay to the order of BANK ONE, TEXAS,
NATIONAL ASSOCIATION, a national banking association ("Payee"), at its offices
at 910 Travis, Houston, Harris County, Texas, in lawful money of the United
States of America, the principal sum of TEN MILLION SIX HUNDRED FIFTY-SEVEN
THOUSAND AND NO/100 DOLLARS ($10,657,000.00), plus accrued and unpaid interest
thereon as hereinafter calculated, as follows:
(a) nine (9) quarterly installments each in the principal amount of
SIX HUNDRED FORTY-NINE THOUSAND AND NO/100 DOLLARS ($649,000.00), together
with all accrued and unpaid interest, with the first of such installments
due and payable on April 1, 1997, and like successive installments of
principal plus accrued and unpaid interest due and payable on the 1st day
of each succeeding July, October, January and April thereafter, through and
including April 1, 1999; and
(b) a tenth (10th) and final installment in the amount of all
outstanding principal, plus accrued and unpaid interest, due and
payable on the maturity of this note, July 1, 1999.
The outstanding principal balance hereof shall bear interest prior to
maturity at a varying rate per annum which shall from day to day be equal to the
lesser of (a) the maximum rate permitted by applicable law as the same exists
from day to day during the term hereof ("Maximum Rate"), including, as to
Article 5069-1.04, Vernon's Texas Civil Statutes (and as the same may be
incorporated by reference in other Texas statutes), but otherwise without
limitation, that rate based upon the "indicated rate ceiling" or (b) the sum of
the Bank One Base Rate (hereinafter defined) of Payee in effect from day to day
plus one-half of one percent (1/2%), each such change in the rate of interest
charged hereunder to become effective, without notice to Maker, on the effective
date of each change in the Bank One Base Rate; provided however, if at any time
the rate of interest specified in clause (b) preceding shall exceed the Maximum
Rate, thereby causing the interest rate hereon to be limited to the Maximum
Rate, then any subsequent reduction in the Bank One Base Rate will not reduce
the rate of interest hereon below the Maximum Rate until the total amount of
interest accrued hereon equals the amount of interest which would have accrued
hereon if the rate specified in clause (b) preceding had at all times been in
effect. All past due principal and interest shall bear interest at the Maximum
Rate.
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As used herein, the term "Bank One Base Rate" means, at any, time the
lesser of (i) the rate of interest per annum then most recently established by
Payee as its Bank One Base Rate in effect from day to day, with each change in
the rate of interest charged as the Bank One Base Rate to become effective,
without notice to Maker, on the effective date of each change in the Bank One
Base Rate, such Bank One Base Rate to be computed on the basis of a year
composed of 365 days for the actual number of days elapsed (including the first
day but excluding the last day) or (ii) the Maximum Rate (as herein defined).
This note is the Term Note provided for and as defined in that certain
Credit Agreement dated March 30, 1994 as amended by that certain First Amendment
to Credit Agreement dated December 20, 1994, that certain Second Amendment to
Credit Agreement dated December 13, 1995 and that certain Third Amendment to
Credit Agreement dated of even date herewith by and among Maker and Payee (such
instrument as the same may be amended or modified from time to time, is
hereinafter referred to as the "Agreement").
Maker may prepay the principal of this note upon the terms and conditions
specified in the Agreement.
Notwithstanding anything to the contrary contained herein, no provisions of
this note shall require the payment or permit the collection of interest in
excess of the Maximum Rate. If any excess of interest in such respect is herein
provided for, or shall be adjudicated to be so provided, in this note or
otherwise in connection with this loan transaction the provisions of this
paragraph shall govern and prevail, and neither Maker nor the sureties,
guarantors, successors or assigns of Maker shall be obligated to pay the excess
amount of such interest, or any other excess sum paid for the use, forbearance
or detention of sums loaned pursuant hereto. If for any reason interest in
excess of the Maximum Rate shall be deemed charged, required or permitted by any
court of competent jurisdiction, any such excess shall be applied as a payment
and reduction of the principal of indebtedness evidenced by this note; and, if
the principal amount hereof has been paid in full, any remaining excess shall
forthwith be paid to Maker.
If default be made in the payment of principal or interest under this note
and such default shall continue for three (3) Business Days after notice thereof
to Maker pursuant to the Agreement, as defined in the Agreement, or upon the
occurrence of any other Event of Default, as such term is defined in the
Agreement, the holder hereof may, at its option, declare the entire unpaid
principal of and accrued interest on this note immediately due and payable
without additional notice, demand or presentment, all of which are hereby
waived, and upon such declaration, the same shall become and shall be
immediately due and payable, and the holder hereof shall have the right to
foreclose or otherwise enforce all liens or security interests securing any sum
or sums owed by the holder hereof to Maker. Failure of the holder hereof to
exercise this option shall not constitute a waiver of the right to exercise the
same upon the occurrence of a subsequent Event of Default.
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If the holder hereof expends any effort in any attempt to enforce payment
of all or any part or installment of any sum due the holder hereunder, or if
this note is placed in the hands of an attorney for collection, or if it is
collected through any legal proceedings, Maker agrees to pay all collection
costs and fees incurred by the holder, including reasonable attorneys' fees.
This note is performable in Houston, Harris County, Texas, and Maker and
each surety, guarantor, endorser and other party ever liable for payment of any
sums of money payable on this note, jointly and severally waive the right to be
sued hereon elsewhere. This note shall be governed by and construed in
accordance with the laws of the state of Texas and the applicable laws of the
United States of America.
Maker and each surety, guarantor, endorser and other party ever liable for
payment of any sums of money payable on this note jointly and severally waive
presentment and demand for payment, protest, notice of protest and non-payment
of dishonor, notice of acceleration, notice of intent to accelerate, notice of
intent to demand, diligence in collecting, and grace, and consent to all
extensions without notice for any period or periods of time and partial
payments, before or after maturity, without prejudice to the holder. Maker
acknowledges and understands that under the laws of the State of Texas, unless
waived, Maker has the right to notice of Payee's intent to accelerate the
indebtedness evidenced by this note, the right to notice of the actual
acceleration of the indebtedness evidenced by this note, and the right to
presentment of this note by Payee's demand for payment. Maker acknowledges that
it understands that it can waive these rights and by Maker's execution of this
note it agrees to waive its right to notice of intent to accelerate, its right
to notice of acceleration, and its right to presentment or other demand for
payment. The holder shall similarly have the right to deal in any way, at any
time, without one or more of the foregoing parties without notice to any other
party, and to grant any such party and extensions of time for payment of any of
said indebtedness, or to release part or all of the collateral securing this
note, or to grant any other indulgences or forbearances whatsoever, without
notice to any other party and without in any way affecting the personal
liability of any party hereunder.
This note is executed in renewal and rearrangement but not in novation or
discharge, of (i) that certain Promissory Note dated October 1, 1995 in the
original principal amount of $11,622,000.00, executed by Maker for the benefit
of Payee, and (ii) that certain Promissory Note dated December 13, 1995 in the
original principal amount of $2,000,000.00, executed by Maker for the benefit of
Payee.
Maker hereby authorizes the holder hereof to endorse on the Schedule
attached to this note or any continuation thereof, all advances made to Maker
hereunder and all payments made on account of the principal thereof which
endorsements shall be prima facie evidence as to the outstanding principal
amount of this note; provided, however, any failure by the holder hereof to make
endorsement shall not limit or otherwise affect the obligations of Maker under
the Agreement or this note.
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DRIL-QUIP, INC.
By:
-------------------------------
J. Mike Walker, Vice President
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Identification
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EXHIBIT Q
---------
PROMISSORY NOTE
$3,000,000.00 Houston, Texas February ___, 1997
FOR VALUE RECEIVED, the undersigned, DRIL-QUIP, INC., a Texas
corporation ("Maker"), hereby promises to pay to the order of BANK ONE, TEXAS,
NATIONAL ASSOCIATION, a national banking association ("Payee"), at its offices
at 910 Travis, Houston, Harris County, Texas, in lawful money of the United
States of America, the principal sum of THREE MILLION AND NO/100 DOLLARS
($3,000,000.00), or so much thereof as may be advanced and outstanding
hereunder, plus accrued and unpaid interest thereon as hereinafter calculated,
as follows:
(a) in three (3) installments of accrued and unpaid interest due and
payable on April 1, 1997, July 1, 1997 and October 1, 1997;
(b) fifteen (15) quarterly installments each in the amount of ONE
HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00) of principal, together
with all accrued and unpaid interest, with the first of such installments
due and payable on January 1, 1998, and like successive installments of
principal plus accrued and unpaid interest due and payable on the 1st day
of each succeeding April, July, October and January thereafter, through and
including July 1, 2001; and
(c) a final installment in the amount of all outstanding principal,
plus accrued and unpaid interest due and payable on the maturity of this
note, October 1, 2001.
Whenever any payment hereunder shall be stated to be due on a day that is
not a day Payee is open for business, such payment may be made on the next
succeeding day Payee is open for business and interest shall accrue during such
extension.
The outstanding principal balance hereof shall bear interest prior to
maturity at a varying rate per annum which shall from day to day be equal to the
lesser of (a) the maximum rate permitted by applicable law as the same exists
from day to day during the term hereof ("Maximum Rate"), including, as to
Article 5069-1.04, Vernon's Texas Civil Statutes (and as the same may be
incorporated by reference in other Texas statutes), but otherwise without
limitation, that rate based upon the "indicated rate ceiling" or (b) the sum of
the Bank One Base Rate (hereinafter defined) of Payee in effect from day to day
plus one-half of one percent (1/2%), each such change in the rate of interest
charged hereunder to become effective, without notice to Maker, on the effective
date of
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each change in the Bank One Base Rate; provided however, if at any time the rate
of interest specified in clause (b) preceding shall exceed the Maximum Rate,
thereby causing the interest rate hereon to be limited to the Maximum Rate, then
any subsequent reduction in the Bank One Base Rate will not reduce the rate of
interest hereon below the Maximum Rate until the total amount of interest
accrued hereon equals the amount of interest which would have accrued hereon if
the rate specified in clause (b) preceding had at all times been in effect. All
past due principal and interest shall bear interest at the Maximum Rate.
As used herein, the term "Bank One Base Rate" means, at any, time the
lesser of (i) the rate of interest per annum then most recently established by
Payee as its Bank One Base Rate in effect from day to day, with each change in
the rate of interest charged as the Bank One Base Rate to become effective,
without notice to Maker, on the effective date of each change in the Bank One
Base Rate, such Bank One Base Rate to be computed on the basis of a year
composed of 365 days for the actual number of days elapsed (including the first
day but excluding the last day) or (ii) the Maximum Rate (as herein defined).
This note is the Fourth Advancing Credit Note provided for and as defined
in that certain Credit Agreement dated March 30, 1994 as amended by that certain
First Amendment to Credit Agreement dated December 20, 1994, that certain Second
Amendment to Credit Agreement dated February 13, 1997 and that certain Third
Amendment to Credit Agreement date of even date herewith by and between Maker
and Payee (such instruments as the same may be further amended or modified from
time to time, are hereinafter referred to as the "Agreement").
Maker may prepay the principal of this note upon the terms and conditions
specified in the Agreement.
Notwithstanding anything to the contrary contained herein, no provisions of
this note shall require the payment or permit the collection of interest in
excess of the Maximum Rate. If any excess of interest in such respect is herein
provided for, or shall be adjudicated to be so provided, in this note or
otherwise in connection with this loan transaction the provisions of this
paragraph shall govern and prevail, and neither Maker nor the sureties,
guarantors, successors or assigns of Maker shall be obligated to pay the excess
amount of such interest, or any other excess sum paid for the use, forbearance
or detention of sums loaned pursuant hereto. If for any reason interest in
excess of the Maximum Rate shall be deemed charged, required or permitted by any
court of competent jurisdiction, any such excess shall be applied as a payment
and reduction of the principal of indebtedness evidenced by this note; and, if
the principal amount hereof has been paid in full, any remaining excess shall
forthwith be paid to Maker.
If default be made in the payment of principal or interest under this note
and such default shall continue for three (3) Business Days after notice thereof
to Maker pursuant to the Agreement, as defined in the Agreement, or upon the
occurrence of any other Event of Default, as such term is
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defined in the Agreement, the holder hereof may, at its option, declare the
entire unpaid principal of and accrued interest on this note immediately due and
payable without additional notice, demand or presentment, all of which are
hereby waived, and upon such declaration, the same shall become and shall be
immediately due and payable, and the holder hereof shall have the right to
foreclose or otherwise enforce all liens or security interests securing any sum
or sums owed by the holder hereof to Maker. Failure of the holder hereof to
exercise this option shall not constitute a waiver of the right to exercise the
same upon the occurrence of a subsequent Event of Default.
If the holder hereof expends any effort in any attempt to enforce payment
of all or any part or installment of any sum due the holder hereunder, or if
this note is placed in the hands of an attorney for collection, or if it is
collected through any legal proceedings, Maker agrees to pay all collection
costs and fees incurred by the holder, including reasonable attorneys' fees.
This note is performable in Houston, Harris County, Texas, and Maker and
each surety, guarantor, endorser and other party ever liable for payment of any
sums of money payable on this note, jointly and severally waive the right to be
sued hereon elsewhere. This note shall be governed by and construed in
accordance with the laws of the state of Texas and the applicable laws of the
United States of America.
Maker and each surety, guarantor, endorser and other party ever liable for
payment of any sums of money payable on this note jointly and severally waive
presentment and demand for payment, protest, notice of protest and non-payment
of dishonor, notice of acceleration, notice of intent to accelerate, notice of
intent to demand, diligence in collecting, and grace, and consent to all
extensions without notice for any period or periods of time and partial
payments, before or after maturity, without prejudice to the holder. Maker
acknowledges and understands that under the laws of the State of Texas, unless
waived, Maker has the right to notice of Payee's intent to accelerate the
indebtedness evidenced by this note, the right to notice of the actual
acceleration of the indebtedness evidenced by this note, and the right to
presentment of this note by Payee's demand for payment. Maker acknowledges that
it understands that it can waive these rights and by Maker's execution of this
note it agrees to waive its right to notice of intent to accelerated, its right
to notice of acceleration, and its right to presentment or other demand for
payment. The holder shall similarly have the right to deal in any way, at any
time, without one or more of the foregoing parties without notice to any other
party, and to grant any such party and extensions of time for payment of any of
said indebtedness, or to release part or all of the collateral securing this
note, or to grant any other indulgences or forbearances whatsoever, without
notice to any other party and without in any way affecting the personal
liability of any party hereunder.
Maker hereby authorizes the holder hereof to endorse on the Schedule
attached to this note or any continuation thereof, all advances made to Maker
hereunder and all payments made on account of the principal thereof, which
endorsements shall be prima facie evidence as to the outstanding principal
amount of this note; provided, however, any failure by the holder hereof to
---------------
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make endorsement shall not limit or otherwise affect the obligations of Maker
under the Agreement or this note.
DRIL-QUIP, INC.
By:
-------------------------------
J. Mike Walker, Vice President
-----------------
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EXHIBIT R
---------
FORM OF NOTICE OF FOURTH ADVANCING
CREDIT BORROWING
_________________, 19___
BANK ONE, TEXAS, NATIONAL ASSOCIATION
910 Travis Street
Houston, Texas 77002
Attention: ____________________
Gentlemen:
The undersigned is an Authorized Financial Officer of Dril-Quip, Inc., a
Texas corporation ("Borrower") , and as such is authorized to make and deliver
this Notice of Fourth Advancing Credit Borrowing pursuant to Section 3.25 of
that certain Credit Agreement dated March 30, 1994 as amended by that certain
First Amendment to Credit Agreement dated December 20, 1994, that certain Second
Amendment to Credit Agreement dated December 13, 1995 and that certain Third
Amendment to Credit Agreement dated February 14, 1997 (as may be further amended
from time to time, the "Credit Agreement"), by and between BANK ONE, TEXAS,
NATIONAL ASSOCIATION ("Lender") and Borrower. All terms defined in the Credit
Agreement shall have the same meaning herein. Borrower hereby requests a
Borrowing under the Fourth Advancing Credit Loan from Lender in accordance with
Section 3.25 of the Credit Agreement.
In connection with the foregoing and pursuant to the terms and provisions
of the Credit Agreement, the undersigned hereby certifies that:
(i) Except as disclosed in Schedule I attached hereto, the
representations and warranties contained in Article VIII of the Credit
Agreement are true and correct in all material respects at and as of the
date hereof as though made as of the date hereof.
(ii) No Default or Event of Default has occurred and is continuing.
(iii) The amount of the Fourth Advancing Credit Loan to be made
pursuant to this request, either singularly or together with other
Borrowings previously made under Section 3.22 of the Credit Agreement does
not exceed the Fourth Advancing Credit Committed Sum.
Bank One, Texas, National Association
___________________, 19________
Page 2
(iv) [Proceeds from this Borrowing will be used to pay for up to
eighty-five percent (85%) of the costs of improvements to the realty
described on Schedule 3 to the Credit Agreement].
[Proceeds from this Borrowing will be used to pay for up to sixty
percent (60%) of the cost of certain used, unrefurbished equipment].
[Proceeds from this Borrowing will be used to pay for up to eighty
percent (80%) of the cost of certain new equipment].
[Proceeds from this Borrowing will be used to pay for up to eighty
percent (80%) of the costs of certain used, refurbished equipment].
(v) [Attached hereto are copies of invoices for such materials and
work performed].
[Attached hereto are copies of invoices for such equipment purchased].
(vi) All information supplied herein is true and accurate as of the
date hereof.
The Borrowing Date shall be ___________________________, 19_____.
DRIL-QUIP, INC.
By:________________
Name:______________
Title:_____________