1
EXHIBIT 10.1
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
By and Among
FWA DRILLING COMPANY, INC.
INTERNATIONAL PETROLEUM SERVICE COMPANY
TRIAD DRILLING COMPANY
UNIVERSAL WELL SERVICES, INC.
USC, INCORPORATED
UTI ENERGY CORP.
UTICO, INC.
PANTHER DRILLING, INC.
J.S.M. & ASSOCIATES, INC.
PETERSON DRILLING COMPANY
and
MELLON BANK, N.A.
___________________________________________
Dated June 19, 1998
___________________________________________
2
TABLE OF CONTENTS
Page
----
BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. General Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Confirmation of Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Validity of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 No Challenge to Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 No Novation or Satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Consistency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. The Line; Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Line of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Method of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Savings Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.6 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Interest on the Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Default Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Post Judgment Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.5 Limitation of Interest to Maximum Lawful Rate . . . . . . . . . . . . . . . . . . . . 7
4. Payments And Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1 Interest Payments on the Line . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Principal Payments on the Line . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.3 Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.4 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.5 Line Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.6 Unused Line Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.7 Late Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.8 Termination of Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.9 Prepayment of the Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
i
3
4.10 Payment Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.11 Application of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.12 Loan Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.13 Indemnity; Loss of Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5. Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.1 Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 Surety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.3 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.4 Release of Certain Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.5 Collection of Receivables; Proceeds of Collateral . . . . . . . . . . . . . . . . . 13
6. Representations And Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.1 Valid Organization, Good Standing and Qualification . . . . . . . . . . . . . . . . 14
6.2 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.3 Ownership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.6 No Material Adverse Change in Financial Condition . . . . . . . . . . . . . . . . . 14
6.7 Pending Litigation or Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.8 Due Authorization; No Legal Restrictions . . . . . . . . . . . . . . . . . . . . . 15
6.9 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.10 No Default Under Other Obligations, Orders or
Governmental Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.11 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.13 Title to Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.14 Addresses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.15 Current Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.16 Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.17 Leases and Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.18 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.19 Business Interruptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.20 Interrelatedness of Obligors . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.21 Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . 17
6.22 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.23 Subordinated Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7. General Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.1 Payment of Principal, Interest and Other Amounts Due . . . . . . . . . . . . . . . 18
ii
4
7.2 Limitation on Sale and Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.3 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.4 Investments and Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.5 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.6 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.7 Merger; Consolidation; Business Acquisitions; Subsidiaries . . . . . . . . . . . . 23
7.8 Taxes; Claims for Labor and Materials . . . . . . . . . . . . . . . . . . . . . . 24
7.9 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.10 Existence; Approvals; Qualification; Business Operations;
Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.11 Maintenance of Properties; Intellectual Property . . . . . . . . . . . . . . . . . 27
7.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.13 Inspections; Examinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.14 Default Under Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.15 Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.16 Bank of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.17 Maintenance of Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.18 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.19 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.20 Restriction on Stock Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.21 Name or Address Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.22 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.23 Additional Documents and Future Actions . . . . . . . . . . . . . . . . . . . . . 31
7.24 Material Adverse Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.25 Restrictions on Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.26 Subordinated Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.27 Acquisition Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8. Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.1 Total Funded Debt to EBITDA Ratio . . . . . . . . . . . . . . . . . . . . . . . . 33
8.2 Modified Quick Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.3 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.4 Consolidated Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.5 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.6 Changes to Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9. Accounting Records, Reports and Financial Statements . . . . . . . . . . . . . . . . . . . 34
9.1 Annual Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.2 Quarterly Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.3 Accounts Receivable Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.4 Audit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
iii
5
9.5 SEC and Other Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.6 Requested Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.7 Compliance Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.8 Accountant's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.9 Projections and Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10. Environmental Representations and Covenants . . . . . . . . . . . . . . . . . . . . . . . 36
10.1 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.2 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.3 Covenant Regarding Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.5 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.6 Testing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.7 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.8 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11. Conditions of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.1 Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.2 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.3 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.4 Proceedings and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.5 Delivery of Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.6 Non-Waiver of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12. Certain Conditions to Subsequent Advances . . . . . . . . . . . . . . . . . . . . . . . . 41
12.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.2 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.3 Other Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13. Default and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
13.3 Sale or Other Disposition of Collateral . . . . . . . . . . . . . . . . . . . . . 45
13.4 Actions with Respect to Accounts . . . . . . . . . . . . . . . . . . . . . . . . . 46
13.5 Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
13.6 Turnover of Property Held by Bank . . . . . . . . . . . . . . . . . . . . . . . . 48
13.7 Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
13.8 Remedies Cumulative; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 48
13.9 Certain Fees, Costs, Expense Expenditures and Indemnification . . . . . . . . . . 48
iv
6
13.10 Time is of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.11 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
14. Communications and Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
15. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
16. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
16.1 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
16.2 Forbearance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
16.3 Limitation on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
16.4 Subrogation; Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
17. Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
18. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
18.1 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
18.2 Use of Bank's Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
18.3 No Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
18.4 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
18.5 No Assignment by Obligors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
18.6 Assignment or Sale by Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
18.7 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
18.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
18.9 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
18.10 Modifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
18.11 Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
18.12 Law Governing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
18.13 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
18.14 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
18.15 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
18.16 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
18.17 Joint and Several Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
18.18 Waiver of Right to Trial by Jury . . . . . . . . . . . . . . . . . . . . . . . . . 61
v
7
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (the
"AGREEMENT") is made effective as of June 19, 1998, by and among FWA DRILLING
COMPANY, INC. ("FWA"), INTERNATIONAL PETROLEUM SERVICE COMPANY ("IPSCO"), TRIAD
DRILLING COMPANY ("TRIAD"), UNIVERSAL WELL SERVICES, INC. ("UNIVERSAL"), USC,
INCORPORATED ("USC"), UTI ENERGY CORP. ("UTI"), UTICO, INC. ("UTICO"), PANTHER
DRILLING, INC., formerly known as VIERSEN & COCHRAN DRILLING COMPANY
("PANTHER"), J.S.M. & ASSOCIATES, INC. ("JSM"), PETERSON DRILLING COMPANY,
("PETERSON") and MELLON BANK, N.A. ("BANK"). FWA, IPSCO, Triad, Universal,
USC, JSM, Peterson and Panther are hereinafter sometimes collectively referred
to as the "BORROWERS" and individually as a "BORROWER". UTI and UTICO 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 that certain Amended and Restated Loan and Security
Agreement dated December 7, 1995, as subsequently amended (the "PRIOR LINE OF
CREDIT LOAN AGREEMENT"), Obligors (other than JSM and Peterson) requested and
Bank agreed, inter alia, to extend to the Borrowers (other than Panther, JSM
and Peterson) a line of credit which has, prior to the effective date of this
Agreement, been increased up to a maximum principal amount of Twelve Million
Dollars ($12,000,000.00).
B. Pursuant to those certain Surety Agreements dated December 7, 1995
(collectively, the "PRIOR SURETY AGREEMENTS"), Guarantors agreed to act as
surety for and guarantee the obligations of the Borrowers (other than Panther,
JSM and Peterson) under the Prior Line of Credit Loan Documents (as hereinafter
defined). The Prior Line of Credit Loan Agreement, the Surety Agreements and
all other documents executed in connection therewith may hereinafter be
collectively referred to as the "PRIOR LINE OF CREDIT LOAN DOCUMENTS".
C. Pursuant to that certain Loan and Security Agreement dated April 11,
1997 (the "TERM LOAN AGREEMENT"), Obligors requested and Bank agreed, inter
alia, to extend to Obligors a term loan in the original principal amount of
Twenty-Five Million Dollars ($25,000,000.00) (the "TERM LOAN"). The Term Loan
Agreement and all other documents executed in connection therewith may
hereinafter be collectively referred to as the "TERM LOAN DOCUMENTS". The
Prior Line of Credit Loan Agreement and the Term Loan Agreement may hereinafter
be collectively referred to as the "PRIOR LOAN AGREEMENTS". The Prior Line of
Credit Loan Documents and the Term Loan Documents may hereinafter be
collectively referred to as the "PRIOR LOAN DOCUMENTS". The Term Loan has been
repaid in full.
8
D. Obligors and Bank have agreed to amend and restate the Prior Line of
Credit Loan Agreement (a) increasing the maximum principal amount to Thirty
Million Dollars ($30,000,000.00), (b) adding Panther, JSM and Peterson as co-
borrowers, (d) deleting Panther as a guarantor, (d) revising the financial
covenants, and (e) making the additional changes set forth herein, all on the
terms and conditions set forth herein.
E. Capitalized terms not otherwise defined herein will have the
meanings set forth therefor in SECTION 15 of this Agreement.
NOW, THEREFORE, in consideration of the terms and conditions
contained herein, and of any extensions of credit now or hereafter made to or
for the benefit of Obligors by Bank, the parties hereto, intending to be
legally bound hereby, agree that the Prior Line of Credit Loan Agreement is
amended and restated to read in its entirety as follows:
1. GENERAL ACKNOWLEDGMENTS.
1.1 CONFIRMATION OF BACKGROUND. Obligors hereby ratify,
confirm and acknowledge that the statements contained in the foregoing
background are true and complete in all material respects.
1.2 VALIDITY OF LIENS. All liens and security interests
granted to Bank in the Prior Line of Credit Loan Documents are hereby ratified,
confirmed and continued, and shall secure all Bank Indebtedness and the
performance by Obligors of their respective obligations hereunder. Subject to
the release provisions set forth in SECTION 5.4 below, all UCC-1 Financing
Statements previously executed by Obligors in favor of Bank shall continue to
be in full force and effect and shall continue to operate to perfect the liens
and security interests granted to Bank.
1.3 NO CHALLENGE TO ENFORCEMENT. Obligors acknowledge and
agree that none of them has any defense, set-off, counterclaim or challenge
against the payment of any sums owing under the Prior Line of Credit Loan
Documents.
1.4 NO NOVATION OR SATISFACTION. Obligors acknowledge and
agree that this Agreement constitutes the amendment and restatement of the
Prior Line of Credit Loan Agreement. Except as expressly provided herein,
neither this Agreement nor any other agreement entered into in connection
herewith or pursuant to the terms hereof shall be deemed or construed to be a
compromise, satisfaction, reinstatement, accord and satisfaction, novation or
release of any of the Prior Line of Credit Loan Documents, or any rights or
obligations thereunder, or a waiver by Bank of any of its rights under the
Prior Line of Credit Loan Documents or at law or in equity.
1.5 CONSISTENCY. The terms of this Agreement and the terms
set forth in the Prior Line of Credit Loan Documents and any other document
executed in connection herewith shall be, as far as possible, complementary and
read and interpreted so as to expand, rather than contract, all such terms and
conditions; provided, however, in the event of any inconsistency between
2
9
the terms and conditions set forth in this Agreement and the terms and
conditions set forth in the Prior Line of Credit Loan Documents, this Agreement
shall control. It is expressly agreed that all collateral securing the Bank
Indebtedness is described in this Agreement and such descriptions supersede and
prevail over any contrary descriptions in any of the Loan Documents (including
the Prior Loan Documents).
2. THE LINE; USE OF PROCEEDS.
2.1 LINE OF CREDIT. Bank will establish for Borrowers for
and during the period from the date hereof and until June 30, 2000 (the
"CONTRACT PERIOD"), subject to the terms and conditions hereof, a revolving
line of credit (the "LINE") pursuant to which Bank will from time to time make
loans and other extensions of credit to Borrowers and issue letters of credit
in an aggregate amount not exceeding at any time Thirty Million Dollars
($30,000,000.00). Within the limitations in this Agreement, Borrowers may
borrow, repay and reborrow under the Line. The Line shall be subject to all
terms and conditions set forth in all of the Loan Documents which terms and
conditions are incorporated herein. Borrowers' obligation to repay the loans
and extensions of credit under the Line is evidenced by Borrowers' amended and
restated promissory note (the "LINE NOTE") in the face amount of Thirty Million
Dollars ($30,000,000.00), which shall be in form attached hereto as EXHIBIT
"A". Each Borrower shall be jointly and severally liable for repayment of all
advances and extensions of credit under the Line (including without limitation
all letters of credit issued hereunder regardless of who is named as the
account party) and all other obligations of each Borrower hereunder and under
the Loan Documents.
2.2 METHOD OF ADVANCES. On any Business Day, any Borrower
may request an advance under the Line by delivering to the Bank officer
designated by Bank no later than 2:30 p.m. Philadelphia time on the Business
Day such advance is requested to be funded, in accordance with such procedures
as Bank may from time to time require. Subject to the terms and conditions of
this Agreement, Bank may make the proceeds of an advance available to a
Borrower by crediting such proceeds to such Borrower's deposit account with
Bank. Such request may be by telephone, unless Bank has advised Borrowers that
written requests are required. Bank may require prompt written confirmation of
any telephone request and additional back-up documentation, from time to time.
Each request for an advance under the Line shall be conclusively presumed to be
made by a person authorized by Borrowers to do so.
2.3 SAVINGS CLAUSE. Anything contained in this Agreement or
any other Loan Documents to the contrary notwithstanding, the obligations of
each Borrower with respect to the repayment of the principal balance of the
Line shall be limited to the greater of: (i) the aggregate amount of the
outstanding advances under the Line made to or for the benefit of such Borrower
plus the outstanding face amount of each letter of credit issued under the Line
for the account of such Borrower, or (ii) a maximum aggregate amount equal to
the largest amount that would not render such Borrower's obligations with
respect thereto subject to avoidance as a fraudulent transfer or conveyance
under Section 548 of Title 11 of the United States Code or any applicable
provisions of comparable state law (collectively, the "FRAUDULENT TRANSFER
LAWS"), if and to the extent such
3
10
Borrower (or trustee on its behalf) has properly invoked the protections of the
Fraudulent Transfer Laws. In making such determination, all rights of
subrogation and contribution of a Borrower with respect to such obligations
shall be deemed to be an asset of such Borrower.
2.4 USE OF PROCEEDS. Borrowers agree that the proceeds of
the Line may be used solely for working capital purposes and general corporate
purposes, to finance Permitted Acquisitions and to repay the Subordinated Term
Loan.
2.5 CLOSING. Closing hereunder will take place at a time
and place mutually acceptable to Obligors and Bank effective on the date of
this Agreement.
2.6 LETTERS OF CREDIT. Bank, at its sole discretion, may
issue for the account of one or more of the Borrowers standby letters of credit
in form and content satisfactory to Bank, at its sole discretion, with a term
not to exceed the earlier to occur of: (a) twelve (12) months, or (b) the
expiration of the Contract Period, unless fully secured by cash collateral as
hereinafter provided. Notwithstanding the foregoing, (i) at no time shall the
aggregate face amount of all outstanding letters of credit issued under the
Line exceed the amount of Four Million Dollars ($4,000,000.00); and (ii) at no
time shall the principal balance of the Line, plus the aggregate face amount of
all outstanding letters of credit issued under the Line exceed Thirty Million
Dollars ($30,000,000.00) Borrowers acknowledge and agree that letter of credit
number S837746 in the face amount of Four Hundred Thousand Dollars
($400,000.00) dated December 20, 1994 and issued by Bank for the benefit of
IPSCO and letter of credit number S858718 in the face of One Million Two
Hundred Thousand Dollars ($1,200,000.00) dated June 1, 1998 and issued by Bank
shall be deemed to be standby letters of credit issued under the Line.
Borrowers will execute a letter of credit application and letter of
credit agreement, and such other documents as may be required by Bank in
connection with the issuance of letters of credit hereunder. The outstanding
face amount of all letters of credit issued by Bank pursuant hereto will reduce
each Borrower's ability to borrow under the Line as if such face amount were an
advance under the Line. In the event that Bank pays any sums due pursuant to
such letters of credit for any reason, such payment shall be deemed to be an
advance under the Line repayable by Borrowers pursuant to the terms hereof.
In the event that the Line is terminated for any reason, the
Contract Period expires or demand is made thereunder, Borrowers will deposit
with Bank an amount equal to the undrawn face amount of all letters of credit
then outstanding which have been issued hereunder, plus all fees related
thereto or to accrue thereunder. Such funds will be held by Bank as cash
collateral to secure Borrowers' obligations hereunder.
4
11
3. INTEREST RATE.
3.1 INTEREST ON THE LINE.
(a) INTEREST OPTIONS. The principal balance of the
Line will accrue interest at the Prime Rate in effect from time to time (such
interest rate to change effective immediately upon any change in the Prime
Rate), provided, however, that, subject to the terms of this SECTION 3.1, by
giving Notification, Borrowers may request to have one or more portions of the
outstanding balance of the Line as hereinafter permitted, accrue interest
instead at the LIBOR Based Rate as follows: (i) with respect to the principal
amount of any advance under the Line, from the date of such advance until the
end of the Rate Period specified in the Notification; and/or (ii) with respect
to the principal amount of any portion of the Line outstanding and accruing
interest at the LIBOR Based Rate at the time of the Notification related to
such principal amount, from the expiration of the then current Rate Period
related to such principal amount until the end of the Rate Period specified in
the Notification; and/or (iii) with respect to all or any portion of the
principal amount of the Line outstanding and accruing interest at the Prime
Rate at the time of Notification, from the date set forth in the Notification
until the end of the Rate Period specified in the Notification.
Borrowers understand and agree: (A) that subject to the provisions
of this Agreement, the Prime Rate and the LIBOR Based Rate may apply
simultaneously to different parts of the outstanding principal of the Line, (B)
that different LIBOR Based Rates may apply simultaneously to various portions
of the outstanding principal of the Line for various Rate Periods, (C) that the
LIBOR Based Rate applicable to any portion of outstanding principal of the Line
may be different from the LIBOR Based Rate applicable to any other portion of
outstanding principal, (D) that portions of the Line accruing interest at a
LIBOR Based Rate must be in increments of Five Hundred Thousand Dollars
($500,000.00) each, and (E) that Bank shall have the right to terminate any
Rate Period and the LIBOR Based Rate interest rate applicable thereto, prior to
maturity of such Rate Period, if Bank determines in good faith (which
determination shall be conclusive) that continuance of such interest rate has
been made unlawful by any law, statute, rule or regulation, to which Bank may
be subject, in which event the principal to which such terminated Rate Period
relates thereafter shall earn interest at the Prime Rate. Any termination of a
Rate Period by Bank pursuant to SUBSECTION E) above shall be without premium,
penalty or charge to any of the Obligors.
So long as (y) Borrowers comply with the conditions set forth herein
and (z) no Event of Default has occurred, Bank shall approve Borrowers' request
for a LIBOR Based Rate.
(b) PRIME RATE FALL BACK. After expiration of any
Rate Period, any principal portion of the Line accruing interest at a LIBOR
Based Rate corresponding to such Rate Period which has not been converted or
renewed to a LIBOR Based Rate in accordance with SECTION 3.1 shall accrue
interest automatically at the Prime Rate from the date of expiration of such
Rate Period until paid in full or until conversion to a LIBOR Based Rate in
accordance with SECTION 3.1. With respect to any principal amount (whether an
advance of new funds or an already
5
12
outstanding amount), if there is no conversion to or renewal of a LIBOR Based
Rate, for any reason, such principal amount shall be deemed to accrue interest
at the Prime Rate.
(c) INDEMNIFICATION. Obligors shall indemnify Bank
against any loss or expense (including loss of margin) which Bank has sustained
or incurred as a consequence of: (i) any payment of any principal amount
accruing interest at the LIBOR Based Rate on a day other than the last day of
the corresponding Rate Period (whether or not any such payment is made pursuant
to acceleration upon or after an Event of Default, demand by Bank otherwise
made under this Agreement, by reason of an application of proceeds incident to
an insured loss or condemnation of property, or for any other reason, and
whether or not any such payment is consented to by Bank, unless Bank shall have
expressly waived such indemnity in writing); (ii) any attempt by any Borrower
to revoke in whole or part any Notification given pursuant to this Agreement;
(iii) any attempt by any Borrower to convert or renew any principal amount
accruing interest at the LIBOR Based Rate on a day other than the last day of
the corresponding Rate Period (whether or not such conversion or renewal is
consented to by Bank, unless Bank shall have expressly waived such indemnity in
writing or unless Bank shall have terminated the Rate Period pursuant to
SECTION 3.1(A)(E) above); (iv) any conversion of any amount earning interest at
the LIBOR Based Rate on a day other than the last day of the corresponding Rate
Period; or (v) any breach of or default by any Obligor.
(d) SPECIAL REDUCTIONS TO LIBOR BASED RATE. Borrowers
may cause a reduction in the LIBOR Based Rate if Obligors' Total Funded Debt to
EBITDA Ratio is reduced to a certain level. Obligors' Total Funded Debt to
EBITDA Ratio will be tested as of the end of each fiscal quarter to determine
if Borrowers are eligible for such rate reduction. In order to obtain such
rate reduction (i) Obligors shall have submitted to Bank their quarterly
financial statements for the applicable fiscal quarter or the annual audited
year-end financial statements required under SECTIONS 9.1 AND 9.2, together
with the applicable certifications required under SECTIONS 9.7 AND 9.8, and
(ii) no Event of Default or Default shall have occurred (unless waived by Bank
or the applicable covenant is amended to cure such Event of Default or
Default). The rate reduction shall become effective as of the beginning of each
Rate Period which commences after the end of the fiscal quarter for which
Obligors have complied with the applicable rate reduction test as shown by the
financial statements and certifications described in SUBSECTION (I) above. In
the event that Obligors subsequently fail to meet the required test for
subsequent fiscal quarters, such reduction shall automatically be revoked until
such test is subsequently again satisfied.
The required ratio and rate reduction at any applicable date of
determination are as follows: if Obligors' Total Funded Debt to EBITDA Ratio is
less than 1.0 to 1.0, the LIBOR Based Rate shall be reduced by 25 basis points.
3.2 DEFAULT INTEREST. Interest will accrue on the
outstanding principal amount of the Line following the occurrence of an Event
of Default or expiration of the Contract Period at a rate per annum equal to
the sum of two percent (2%) plus the Prime Rate (the "DEFAULT RATE").
6
13
3.3 POST JUDGMENT INTEREST. Any judgment obtained for sums
due hereunder or under the Loan Documents will accrue interest at the highest
applicable default rate set forth above until paid.
3.4 CALCULATION. Interest will be computed on the basis of
a year of 365/366 days and paid for the actual number of days elapsed.
3.5 LIMITATION OF INTEREST TO MAXIMUM LAWFUL RATE. In no
event will the rate of interest payable hereunder exceed the maximum rate of
interest permitted to be charged by applicable law (including the choice of law
rules) and any interest paid in excess of the permitted rate will be refunded
to Obligors. Such refund will be made by application of the excessive amount
of interest paid against any sums outstanding hereunder and will be applied in
such order as Bank may determine. If the excessive amount of interest paid
exceeds the sums outstanding, the portion exceeding the sums outstanding will
be refunded in cash by Bank. Any such crediting or refunding will not cure or
waive any default by Obligors. Obligors agree, however, that in determining
whether or not any interest payable hereunder exceeds the highest rate
permitted by law, any non-principal payment, including without limitation late
charges, will be deemed to the extent permitted by law to be an expense, fee,
premium or penalty rather than interest.
4. PAYMENTS AND FEES.
4.1 INTEREST PAYMENTS ON THE LINE. Borrowers will pay
interest on the principal balance of the Line monthly, on the first day of each
calendar month commencing the first day of the first calendar month following
the date hereof.
4.2 PRINCIPAL PAYMENTS ON THE LINE. Borrowers will pay the
outstanding principal balance of the Line, together with any accrued and unpaid
interest thereon, on the expiration of the Contract Period or, ON DEMAND after
the occurrence of an Event of Default. Prior to the occurrence of an Event of
Default, all payments made by or for the benefit of Borrowers, to the extent
applied to reduce the principal balance of the outstanding advances under the
Line shall be applied first towards repayment of the balance accruing interest
at the Prime Rate, before any payments are made with respect to any portion of
the principal balance accruing interest at a LIBOR Based Rate.
4.3 CHANGE OF CONTROL. Promptly and in any event within ten
(10) Business Days after the occurrence of any Change of Control, the Obligors
will give written notice of such transaction or event to Bank, which notice
shall state the date of such Change of Control, shall describe such Change of
Control in reasonable detail and shall contain an offer (i) to prepay the
unpaid balance of the Line, all interest thereon and all sums due in connection
therewith and (ii) to release the Bank from any further obligations to make
advances or issue letters of credit under the Line effective as of the date
specified therein (the "CHANGE IN CONTROL PREPAYMENT DATE"), which shall be a
Business Day not less than the earlier to occur of (a) one (1) Business Day
prior to the date upon which Obligors have offered to prepay the Subordinated
Term Loan as a result of such Change
7
14
of Control pursuant to the terms of Subordinated Debt Loan Documents, or (b)
thirty (30) Business Days after the date of the notice to Bank of such Change
of Control. Bank shall have the option to require the Obligors to prepay all
or any part of the Line and all interest thereon, to secure the undrawn face
amount of all outstanding letters of credit issued under the Line with cash
collateral to be held by Bank and to terminate any further obligations of Bank
to make advances or issue letters of credit under the Line, and Obligors
hereby, jointly and severally, agree to make such payments and to terminate any
further obligations of Bank to make advances or issue letters of credit under
the Line. Such option may be exercised by Bank by written notice to the
Obligors given no later than ten (10) days prior to the Change in Control
Prepayment Date, specifying the amount to be paid. On the Change in Control
Prepayment Date, Obligors shall pay such amount to Bank and, if requested by
Bank, shall execute a termination of any further obligations of Bank to make
advances or issue letters of credit under the Line; provided that,
notwithstanding its exercise of the option herein provided, Bank may at any
time prior to the Change in Control Prepayment Date waive or revoke in whole or
in part by written notice to Obligors the exercise of its option hereunder.
4.4 LETTER OF CREDIT FEES. For each issuance or renewal of
a standby letter of credit hereunder, Borrowers will pay to Bank its standard
per credit issuance fees plus an amount equal to one and one-half percent (1
1/2%) per annum of the undrawn face amount of such standby letter of credit,
payable quarterly in advance. In addition, Borrowers shall pay such other fees
and charges in connection with the negotiation or cancellation of each standby
letter of credit as may be customarily charged by Bank. Such fees shall be
computed on the basis of a year of 360 days.
4.5 LINE FEE. In consideration of Bank extending the Line
to Borrowers, Borrowers shall pay to Bank a loan fee equal to One Hundred
Twelve Thousand Five Hundred Dollars ($112,500.00). Such fee shall be payable
in full upon the execution of this Agreement. Such fee shall not be refundable
in whole or in part, regardless of whether the full amount of the Line is ever
advanced.
4.6 UNUSED LINE FEE. So long as the Line is outstanding and
has not been terminated and the Bank Indebtedness has not been satisfied in
full, Borrowers shall unconditionally pay to Bank a fee equal to one-fourth of
one percent (1/4%) per annum of the daily unused portion of the Line (which
shall be calculated as the difference between Thirty Million Dollars
($30,000,000.00) (or such greater amount if the maximum committed amount for
the Line is ever increased), minus the sum of (a) the outstanding principal
balance of cash advances under the Line, and (b) the outstanding undrawn amount
of letters of credit issued under the Line at the close of business on the date
such calculation is made), which fee shall be computed on a monthly basis in
arrears and shall be due and payable on the first day of each month commencing
on the first day of the first full month after the date hereof.
4.7 LATE CHARGE. In the event that Obligors fail to pay
when due any principal, interest or other fees or expenses payable hereunder
for a period of at least fifteen (15) days, in addition to paying such sums,
Obligors will pay to Bank a late charge equal to two percent (2%) of such past
due payment as compensation for the expenses incident to such past due payment.
8
15
4.8 TERMINATION OF LINE. Borrowers may terminate the Line
upon fifteen (15) days' written notice to Bank. In the event the Line is
terminated as a result of an Event of Default, expiration of the Contract
Period, or otherwise, the outstanding balance of the Line, together with any
accrued and unpaid interest thereon and any other sums due pursuant to the
terms hereof shall be due and payable immediately.
4.9 PREPAYMENT OF THE LINE. Borrowers may prepay all or any
part of the principal balance of advances under the Line accruing interest at
the Prime Rate at any time, without any premium or fee. Prepayment of any
advances under the Line accruing interest at a LIBOR Based Rate shall be
subject to the provisions of SECTION 3.1(C) and SECTION 4.13. In the event
Bank exercises its right to accelerate payments under the Line following an
Event of Default or otherwise, any tender of payment of the amount necessary to
repay the principal balance of the Line made thereafter at any time by any
Obligor, its successors or assigns or by anyone on behalf of any Obligor shall
be deemed to be a voluntary prepayment and in connection therewith Bank shall
be entitled to receive any sums required to be paid under the foregoing
prepayment restrictions.
4.10 PAYMENT METHOD. Obligors irrevocably authorize Bank to
debit all payments required to be made by Obligors hereunder or under the Line,
on the date due, from any deposit account maintained by any Obligor with Bank.
Otherwise, Obligors will be obligated to make such payments directly to Bank.
All payments are to be made in immediately available funds. If Bank accepts
payment in any other form, such payment shall not be deemed to have been made
until the funds comprising such payment have actually been received by or made
available to Bank.
4.11 APPLICATION OF PAYMENTS. Any and all payments on
account of the Line will be applied first to accrued and unpaid interest, then
to unpaid principal of Prime Rate loans, then to unpaid principal of LIBOR
Based Rate loans, then to other sums due hereunder or under the Loan Documents.
Upon the occurrence of an Event of Default, Bank may apply such payments in
such order as Bank, in its discretion, elects, provided that Bank will use its
best efforts to minimize prepayment of LIBOR Based Rate loans prior to the
expiration of the applicable Rate Period. If Obligors make a payment or
payments and such payment or payments, or any part thereof, are subsequently
invalidated, declared to be fraudulent or preferential, set aside or are
required to be repaid to a trustee, receiver, or any other person under any
bankruptcy act, state or federal law, common law or equitable cause, then to
the extent of such payment or payments, the obligations or part thereof
hereunder intended to be satisfied shall be revived and continued in full force
and effect as if said payment or payments had not been made.
4.12 LOAN ACCOUNT. Bank will open and maintain on its books
a loan account (the "LOAN ACCOUNT") with respect to advances made, repayments,
prepayments, the computation and payment of interest and fees and the
computation and final payment of all other amounts due and sums paid to Bank
under this Agreement. Except in the case of manifest error in computation, the
Loan Account will be presumed correct as to the amount at any time due to Bank
from Obligors under this Agreement or the Line.
9
16
4.13 INDEMNITY; LOSS OF MARGIN. Obligors will indemnify Bank
against any loss or expense which Bank sustains or incurs as a consequence of
an Event of Default, including, without limitation, any failure of Obligors to
pay when due (at maturity, by acceleration or otherwise) any principal,
interest, fee or any other amount due under this Agreement or the other Loan
Documents. If Bank sustains or incurs any such loss or expense it will from
time to time notify Obligors in writing of the amount reasonably determined in
good faith by the Bank to be necessary to indemnify Bank for the loss or
expense. Such amount will be due and payable by Obligors to Bank within ten
(10) days after presentation by Bank of a statement setting forth a brief
explanation of and Bank's calculation of such amount, which statement shall be
presumed correct absent manifest error. Any amount payable to the Bank under
this Section will bear interest at the Default Rate from the due date until
paid, both before and after judgment.
In the event that any future law, rule, regulation, treaty or
official directive, interpretation or application by any central bank, monetary
authority or governmental authority, or the future compliance with any
guideline or request of any central bank, monetary authority or governmental
authority (whether or not having the force of law):
(a) subjects Bank (or any LIBOR-rate funding office of
or utilized by Bank in connection with any portion of the Line) to any tax with
respect to any amounts payable under this Agreement or the other Loan Documents
by Obligors or otherwise with respect to the transactions contemplated under
this Agreement or the other Loan Documents (except for taxes on or determined
by the overall net income of Bank imposed by the United States of America or
any political subdivision thereof); or
(b) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit, capital maintenance, capital adequacy, or
similar requirement against assets held by, or deposits in or for the account
of, or loans or advances or commitment to make loans or advances by the Bank
(or any LIBOR-rate funding office of or utilized by Bank in connection with any
portion of the Line); or
(c) imposes upon Bank (or any LIBOR-rate funding
office of or utilized by Bank in connection with any portion of the Line) any
other condition with respect to advances or extensions of credit or the
commitment to make advances or extensions of credit under this Agreement, and
the result of any of the foregoing is to increase the costs of Bank (or any
LIBOR-rate funding office of or utilized by Bank in connection with any portion
of the Line), reduce the income receivable by or return on equity of Bank (or
any LIBOR-rate funding office of or utilized by Bank in connection with any
portion of the Line) or impose any expense upon Bank (or any LIBOR-rate funding
office of or utilized by Bank in connection with any portion of the Line) with
respect to any advances or extensions of credit or commitments to make advances
or extensions of credit under this Agreement, Bank shall so notify Obligors in
writing. Obligors agree to pay Bank the amount of such increase in cost,
reduction in income, reduced return on equity or capital, or additional expense
within ten (10) days after presentation by Bank of a statement concerning such
10
17
increase in cost, reduction in income, reduced return on equity or capital, or
additional expense. Such statement shall set forth a brief explanation of the
amount and Bank's calculation of the amount (in determining such amount the
Bank may use any reasonable averaging and attribution methods), which statement
shall be presumed correct absent manifest error. If the amount set forth in
such statement is not paid within ten (10) days after such presentation of such
statement, interest will be payable on the unpaid amount at the highest default
rate payable under the Loans from the due date until paid, both before and
after judgment.
5. SECURITY.
5.1 PERSONAL PROPERTY. As security for the full and timely
payment and performance of the Bank Indebtedness, each Obligor hereby ratifies
and confirms the security interest granted to Bank in the Prior Line of Credit
Loan Documents (except as provided in SECTION 5.4 below) and hereby grants to
Bank a security interest in all of the following:
(a) All of such Obligor's present and future accounts,
contract rights, chattel paper, instruments and documents and all other rights
to the payment of money whether or not yet earned, for services rendered or
goods sold, consigned, leased or furnished by such Obligor or otherwise,
together with (i) all goods (including any returned, rejected, repossessed or
consigned goods), the sale, consignment, lease or other furnishings of which
shall be given or may give rise to any of the foregoing, (ii) all of such
Obligor's rights as a consignor, consignee, unpaid vendor or other lienor in
connection therewith, including stoppage in transit, set-off, detinue, replevin
and reclamation, (ill) all general intangibles related thereto, (iv) all
guaranties, mortgages, security interests, assignments, and other encumbrances
on real or personal property, leases and other agreements or property securing
or relating to any accounts, (v) choses-in-action, claims and judgments, (vi)
any return or unearned premiums, which may be due upon cancellation of any
insurance policies, and (vii) all products and proceeds of any of the
foregoing.
(b) All of such Obligor's present and future inventory
(including but not limited to goods held for sale or lease or furnished or to
be furnished under contracts for service, raw materials, work-in-process,
finished goods and goods used or consumed in such Obligor's business) whether
owned, consigned or held on consignment, together with all merchandise,
component materials, supplies, packing, packaging and shipping materials, and
all returned, rejected or repossessed goods sold, consigned, leased or
otherwise furnished by such Obligor, all documents of title covering any of
such goods or inventory and all products and proceeds of any of the foregoing.
Notwithstanding anything herein or elsewhere in this Agreement to the contrary,
the security interests granted in this SUBSECTION (B) shall not attach to or
encumber or constitute a lien upon the Obligor's drilling rigs, drilling
equipment and drill pipe.
(c) All of such Obligor's right, title and interest in
and to present and future general intangibles constituting proceeds of any
assets described in SUBSECTIONS (A) AND (B) above.
11
18
(d) All of such Obligor's present and future general
ledger sheets, files, records, customer lists, books of account, invoices,
bills, certificates or documents of ownership, bills of sale, business papers,
correspondence, credit files, tapes, cards, computer runs and all other data
and data storage systems whether in the possession of any Obligor or any
service bureau.
(e) All letters of credit now existing or hereafter
issued naming any Obligor as a beneficiary or assigned to any Obligor,
including the right to receive payment thereunder, and all documents and
records associated therewith.
(f) All present and future deposits, funds,
instruments, documents, policies, evidences and certificates of insurance of
such Obligor or in which such Obligor has an interest and all proceeds thereof,
on deposit with or in the possession or control of Bank or owing by Bank to
such Obligor or in transit by mail or carrier to Bank or in the possession of
any other Person acting on Bank's behalf, without regard to whether Bank
received the same in pledge, for safekeeping, as agent for collection or
otherwise, or whether Bank has conditionally released the same, and in all
assets of such Obligor in which Bank now has or may at any time hereafter
obtain a lien, mortgage, or security interest for any reason.
(g) All proceeds of the foregoing.
5.2 SURETY. As further security for the Bank Indebtedness,
Guarantors shall execute and deliver to Bank their unconditional, unlimited
surety agreements in form and content acceptable to Bank (the "SURETY
AGREEMENTS").
5.3 GENERAL. The collateral described above in SECTION 5.1
is collectively referred to herein as the "COLLATERAL". The above-described
security interests and liens shall not be rendered void by the fact that no
Bank Indebtedness exists as of any particular date, but shall continue in full
force and effect until all Bank Indebtedness has been repaid and Bank has no
agreement or commitment outstanding pursuant to which Bank may extend credit to
or on behalf of any Obligor. IT IS THE EXPRESS INTENT OF THE OBLIGORS THAT ALL
OF THE COLLATERAL SHALL SECURE NOT ONLY THE OBLIGATIONS UNDER THE LOAN
DOCUMENTS, BUT ALSO ALL OTHER PRESENT AND FUTURE OBLIGATIONS (NOW EXISTING OR
HEREAFTER ARISING) OF EACH OBLIGOR TO BANK. Obligors acknowledge and agree
that (except as provided in SECTION 5.4 below) all security interests granted
to Bank pursuant to the Prior Line of Credit Loan Documents are continued and
remain in effect, that the Bank's lien position with respect to the Collateral
shall relate back to the respective dates referenced in the Prior Line of
Credit Loan Documents and that all financing statements previously filed with
respect to the Collateral shall remain in full force and effect.
5.4 RELEASE OF CERTAIN COLLATERAL. Bank hereby agrees that
its liens and security interests in the assets of Obligors shall only extend to
the collateral described in SECTION 5.1 above and hereby releases its lien and
security interests in all other assets of Obligors. Notwithstanding anything
herein or elsewhere in this Agreement to the contrary, the security interests
12
19
granted in SECTION 5.1 above shall not attach to or encumber or constitute a
lien upon the Obligors' drilling rigs, drilling equipment and drill pipe.
5.5 COLLECTION OF RECEIVABLES; PROCEEDS OF COLLATERAL.
(a) Obligors will collect their accounts receivable
only in the ordinary course of business. Prior to the occurrence of an Event
of Default, such accounts receivable shall be deposited in operating accounts
maintained by Obligors to be ultimately transferred to a deposit account
maintained with the Bank. Upon request by Bank after occurrence of an Event of
Default, Obligors will notify all of their account debtors to forward all
accounts receivable collections owed to Obligors to a lockbox maintained by
Bank and will forward all other checks, drafts and monies received by Obligors
which are proceeds of the Collateral to such lockbox. In connection therewith,
Obligors will execute such lockbox agreements as may be required by Bank and
will pay to Bank all customary fees in connection with any lockbox arrangement.
(b) For purposes of perfecting Bank's security
interest, Obligors agree that all monies, checks, notes, instruments, drafts or
other payments relating to or constituting proceeds of any accounts receivable
or other Collateral of Obligors which come into the possession or under the
control of Obligors or any employees, agents or other persons acting for or in
concert with Obligors, shall be received and held in trust for Bank. For
purposes of perfecting Bank's security interest, Obligors shall deliver or
cause to be delivered to Bank, with appropriate endorsement and assignment to
Bank with full recourse to Obligors, all instruments, notes and chattel paper
constituting an account receivable or proceeds thereof or other Collateral.
Bank is hereby authorized to open all mail addressed to any Obligor and endorse
all checks, drafts or other items for payment on behalf of any Obligor. Bank is
granted a power of attorney by each Obligor with full power of substitution to
execute on behalf of such Obligor and in such Obligor's name or to endorse such
Obligor's name on any check, draft, instrument, note or other item of payment
or to take any other action or sign any document in order to effectuate the
foregoing. Such power of attorney being coupled with an interest is
irrevocable.
6. REPRESENTATIONS AND WARRANTIES. Obligors represent and
warrant as follows:
6.1 VALID ORGANIZATION, GOOD STANDING AND QUALIFICATION.
Each Obligor is a corporation duly incorporated, validly existing and in good
standing under the laws of the state of its incorporation, has full power and
authority to execute, deliver and comply with the Loan Documents, and to carry
on its business as it is now being conducted and is duly licensed or qualified
as a foreign corporation in good standing under the laws of each jurisdiction
in which the character or location of the properties owned by it or that
business transacted by it requires such licensing or qualification, except
where the failure to be so licensed or qualified would not have a material
adverse effect on the Collateral, assets, business, operations or financial
condition of an Obligor or its ability to perform its obligations under the
Loan Documents.
13
20
6.2 LICENSES. Obligors and their employees, servants and
agents have all licenses, registrations, approvals and other authority as may
be necessary to enable them to own and operate their business and perform all
services and business for the Obligors which they have agreed to perform in any
state, municipality or other jurisdiction, except where the failure to have
such licenses, registrations, approvals or other authority would not have a
material adverse effect on the Collateral, assets, business, operations or
financial condition of an Obligor or its ability to perform its obligations
under the Loan Documents.
6.3 OWNERSHIP INTERESTS. The ownership of all stock,
debentures, options, warrants, bonds and other securities (debt and equity) of
Obligors (other than UTI) and all pledges, proxies, voting trusts, powers of
attorney and other agreements affecting the ownership or voting rights of said
interests is as set forth on SCHEDULE 6.3 attached hereto. SCHEDULE 6.3 also
sets forth, to the best of Obligors' knowledge, as of April 28, 1998 the
ownership interests in UTI of all Persons (including without limitation Remy)
who own 10% or more of the outstanding and issued stock of UTI.
6.4 SUBSIDIARIES. Except as set forth on SCHEDULE 6.4
attached hereto, no Obligor owns any shares of stock or other equity interests
in any Person, directly or indirectly (by any Subsidiary or otherwise).
6.5 FINANCIAL STATEMENTS. Obligors have furnished to Bank
the audited consolidated and the unaudited consolidating financial statements
of Obligors certified without qualification by independent public accountants
for the fiscal year ending as of December 31, 1997 and all management and
comment letters from such accountants in connection therewith. Such financial
statements (together with the related notes and comments), are materially
correct and complete, fairly present the financial condition and the assets and
liabilities of Obligors at such date, and have been prepared in accordance with
GAAP in all material respects.
6.6 NO MATERIAL ADVERSE CHANGE IN FINANCIAL CONDITION.
There has been no material adverse change in the financial condition of
Obligors taken as a whole since December 31, 1997.
6.7 PENDING LITIGATION OR PROCEEDINGS. Except as set forth
on SCHEDULE 6.7 attached hereto, there are no judgments outstanding or actions,
suits or proceedings pending or, to the best of Obligors' knowledge, threatened
by written notice against or affecting any Obligor, at law or in equity or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
which in the aggregate, if finally determined adversely to any Obligor would
reasonably be expected to result in a judgment or liability in excess of Five
Hundred Thousand Dollars ($500,000.00), or which individually or in the
aggregate may materially and adversely affect any of their business activities,
properties or financial condition, their right to carry on business activities
as now conducted, or their ability to perform their respective obligations
under this Agreement or the Loan Documents.
14
21
6.8 DUE AUTHORIZATION; NO LEGAL RESTRICTIONS. The execution
and delivery by Obligors of the Loan Documents, the consummation of the
transactions contemplated by the Loan Documents and the fulfillment and
compliance with the respective terms, conditions and provisions of the Loan
Documents: (a) have been duly authorized by all requisite corporate action of
each Obligor, (b) will not conflict with or result in a breach of, or
constitute a default (or might, upon the passage of time or the giving of
notice or both, constitute a default) under, any of the terms, conditions or
provisions of any applicable statute, law, rule, regulation or ordinance or any
Obligor's Certificate or Articles of Incorporation or By-Laws or any indenture,
mortgage, loan or credit agreement or instrument to which any Obligor is a
party or by which any of them may be bound or affected, or any judgment or
order of any court or governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, and (c) will not result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the property or assets of any Obligor under the terms or
provisions of any such agreement or instrument, except liens in favor of Bank.
6.9 ENFORCEABILITY. The Loan Documents have been duly
executed by Obligors and delivered to Bank and constitute legal, valid and
binding obligations of Obligors, enforceable in accordance with their terms.
6.10 NO DEFAULT UNDER OTHER OBLIGATIONS, ORDERS OR
GOVERNMENTAL REGULATIONS. No Obligor is in violation of its Certificate or
Articles of Incorporation or in default in the performance or observance of any
of its obligations, covenants or conditions contained in any indenture or other
agreement creating, evidencing or securing any Indebtedness or pursuant to
which any such Indebtedness is issued or under any other agreement or
instrument or any judgment, decree, order, statute, rule or governmental
regulation, applicable to it or by which its properties may be bound or
affected, except such violations or defaults which do not have a material
adverse effect on the Collateral, assets, business, operations or financial
condition of an Obligor or its ability to perform its obligations under the
Loan Documents.
6.11 CONSENTS. No consent, approval or authorization of or
designation, declaration or filing (other than the filing of financing
statements) with any governmental authority or any other Person on the part of
any Obligor is required in connection with the execution, delivery or
performance by any Obligor of the Loan Documents or the consummation of the
transactions contemplated thereby.
6.12 TAXES. Obligors have filed all tax returns which they
are required to file and have paid, or made provision for the payment of, all
taxes which have or may have become due pursuant to such returns or pursuant to
any assessment received by them, except such taxes (other than real estate
taxes which must be paid regardless of challenge), if any, as are being
contested in good faith and as to which adequate reserves have been provided
and except where the failure to file such a tax return would not have a
material adverse effect on the Collateral, assets, business, operations or
financial condition of an Obligor or its ability to perform its obligations
under the Loan
15
22
Documents. Such tax returns are complete and accurate in all material respects.
No Obligor knows of any proposed additional assessment or basis for any
assessment of additional taxes.
6.13 TITLE TO COLLATERAL. The Collateral (including without
limitation all assets acquired pursuant to the Permitted Acquisitions) is and
will be owned by Obligors free and clear of all liens and other encumbrances of
any kind (including liens or other encumbrances upon properties acquired or to
be acquired under conditional sales agreements or other title retention
devices), excepting only liens in favor of the Bank and those liens and
encumbrances permitted under SECTION 7.9 below. Obligors will defend the
Collateral against any claims of all Persons other than the Bank.
6.14 ADDRESSES. During the past five (5) years, no Obligor
has been known by any names (including trade names) other than those set forth
in SCHEDULE 6.14 attached hereto and no Obligor has been located at any
addresses other than those set forth on SCHEDULE 6.14 attached hereto. The
portions of the Collateral which are tangible property and each Obligor's books
and records pertaining thereto will at all times be located at the addresses
set forth on SCHEDULE 6.14; or such other location determined by Obligors after
prior notice to Bank and delivery to Bank of any items requested by Bank to
maintain perfection and priority of Bank's security interests and access to
Obligors' books and records. SCHEDULE 6.14 identifies the chief executive
office of each Obligor.
6.15 CURRENT COMPLIANCE. Obligors are currently in
compliance with all of the terms and conditions of the Loan Documents.
6.16 PENSION PLANS. Except as disclosed on SCHEDULE 6.16
hereto, (a) no Obligor has any obligations with respect to any employee pension
benefit plan ("PLAN") (as such term is defined in the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), (b) no events, including,
without limitation, any "Reportable Event" or "Prohibited Transaction" (as
those terms are defined under ERISA), have occurred in connection with any Plan
of any Obligor which might constitute grounds for the termination of any such
Plan by the Pension Benefit Guaranty Corporation ("PBGC") or for the
appointment by any United States District Court of a trustee to administer any
such Plan, (c) all of the Obligors' Plans meet with the minimum funding
standards of Section 302 of ERISA, and (d) no Obligor has existing liability to
the PBGC. No Obligor is subject to or bound to make contributions to any
"multi-employer plan" as such term is defined in Section 4001(a)(3) of ERISA.
6.17 LEASES AND CONTRACTS. Obligors have complied in all
material respects with the provisions of all material leases, contracts or
commitments of any kind (such as employment agreements, collective bargaining
agreements, powers of attorney, distribution agreements, patent license
agreements, contracts for future purchase or delivery of goods or rendering of
services, bonus, pension and retirement plans or accrued vacation pay,
insurance and welfare agreements) to which they are a party and are not in
default thereunder. To the best of Obligors' knowledge, no other party is in
default in any material respect under any such leases, contracts or other
commitments and no
16
23
event has occurred which, but for the giving of notice or the passage of time
or both, would constitute an event of default thereunder.
6.18 INTELLECTUAL PROPERTY. Each Obligor owns or possesses
the irrevocable right to use all of the patents, trademarks, service marks,
trade names, filed or registered copyrights, licenses, franchises and permits
and rights with respect to the foregoing necessary to own and operate its
properties and to carry on its business as presently conducted and presently
planned to be conducted without conflict with the rights of others. SCHEDULE
6.18 sets forth an accurate list and description of each such patent,
trademark, service mark, trade name, filed or registered copyright, license,
franchise and permit and right with respect to the foregoing, together with all
registration or application numbers or information with respect thereto.
6.19 BUSINESS INTERRUPTIONS. Within five (5) years prior to
the date hereof, neither the business, Collateral nor operations of any Obligor
have been materially and adversely affected in any way by any casualty, strike,
lockout, combination of workers, order of the United States of America, or any
state or local government, or any political subdivision or agency thereof,
directed against that Obligor. There are no pending or threatened labor
disputes, strikes, lockouts or similar occurrences or grievances against the
business being operated by any Obligor.
6.20 INTERRELATEDNESS OF OBLIGORS. The business operations
of Obligors are interrelated and complement one another and such entities have
a common business purpose, with intercompany bookkeeping and accounting
adjustments used to separate their respective properties, liabilities, and
transactions. To permit their uninterrupted and continuous operations, such
entities now require and will from time to time hereafter require funds and
credit accommodations for general business purposes. The proceeds of advances
under the Line and credit facilities extended hereunder will directly or
indirectly benefit each Obligor hereunder, severally and jointly, regardless of
which Borrower requests or receives part or all of the proceeds of the
advances.
6.21 ACCURACY OF REPRESENTATIONS AND WARRANTIES. No
representation or warranty by Obligors contained herein or in any certificate
or other document furnished by Obligors pursuant hereto or in connection
herewith fails to contain any statement of material fact necessary to make such
representation or warranty not misleading in any material respect in light of
the circumstances under which it was made. There is no fact which any Obligor
knows and has not disclosed to Bank, which does or may materially and adversely
affect any Obligor or any of their operations.
6.22 SOLVENCY. After giving effect to the transactions
contemplated by the Loan Documents, this Agreement and the Subordinated Debt
Loan Documents, (a) the fair market value of the assets of each Obligor is in
excess of the total amount of its liabilities (including, without limitation,
contingent liabilities); (b) the present fair saleable value of the assets of
each Obligor is greater than its probable liability on its existing debts as
such debts become absolute and matured; (c) each Obligor is able and expects to
be able to pay its debts (including, without limitation, contingent
17
24
debts and other commitments) as they mature; and (d) each Obligor has capital
sufficient to carry on its business as conducted and as proposed to be
conducted.
6.23 SUBORDINATED TERM LOAN. No event of default or event
which, with the giving of notice, passage of time or both, has occurred and is
continuing under the Subordinated Debt Loan Documents, which would constitute
an event of default under the Subordinated Debt Loan Documents. As of the date
hereof, the outstanding principal balance of the Subordinated Term Loan is
$25,000,000.00.
7. GENERAL COVENANTS. Except with the prior written consent of
Bank, Obligors will comply with the following:
7.1 PAYMENT OF PRINCIPAL, INTEREST AND OTHER AMOUNTS DUE.
Each Obligor will pay when due all Bank Indebtedness and all other amounts
payable by such Obligor hereunder.
7.2 LIMITATION ON SALE AND LEASEBACK. No Obligor will enter
into any arrangement whereby it will sell or transfer any real property or
improvements thereon or other fixed assets owned by it and having a fair market
value in the aggregate of more than $1,000,000.00, and then or thereafter rent
or lease as lessee such property, improvements or assets or any part thereof,
for substantially the same purposes as the property, improvements or assets
sold or transferred.
7.3 LIMITATION ON INDEBTEDNESS.
(a) No Obligor will have at any time outstanding to
any Person other than Bank, any Indebtedness for borrowed money, Capitalized
Lease Obligations, or any outstanding letters of credit, except:
(i) Accounts payable incurred in the ordinary
course of that Obligor's business and accrued expenses arising out of
transactions (other than Indebtedness for borrowed money) in the ordinary
course of that Obligor's business;
(ii) Existing Indebtedness for borrowed money and
Capitalized Lease Obligations described on SCHEDULE 7.3;
(iii) Future purchase money Indebtedness and
Capitalized Lease Obligations in an amount not to exceed (i) $5,000,000
incurred within the 12 month period ending June 30, 1999, and (ii) $5,000,000
incurred within the 12 month period ending June 30, 2000, provided that, the
aggregate amount of such purchase money Indebtedness and Capitalized Lease
Obligations incurred after the date of this Agreement shall in no event exceed
$10,000,000 in the aggregate;
(iv) The Subordinated Term Loan;
18
25
(v) Intercompany Indebtedness owed by one
Obligor to another, provided that such Indebtedness is subordinated to the Bank
Indebtedness on terms acceptable to Bank.
(vi) Swaps entered into in the ordinary course of
business for the purpose of hedging and not for the purpose of speculation;
(vii) Indebtedness in connection with bid and
performance bonds, surety bonds and letters of credit issued for the purpose of
supporting the performance obligations of an Obligor provided in the ordinary
course of such Obligor's business;
(viii) Indebtedness arising from agreements
providing for reasonable indemnification, adjustments to the purchase price or
similar obligations, or from guarantees, letters of credit, surety bonds or
performance bonds securing such obligations of an Obligor, all of which must
have been incurred or assumed in connection with the sale of business assets of
an Obligor for the purpose of financing such sale and only to the extent such
sale of assets is permitted under this Agreement;
(ix) Indebtedness that refinances, renews,
extends or refunds any of the permitted Indebtedness described in SUBSECTIONS
(II) OR (III) above, provided that, (A) the principal amount of such new
Indebtedness does not exceed the principal amount of the Indebtedness being
refinanced, renewed, extended or refunded, (B) the terms of such new
Indebtedness are no more restrictive or onerous than the Indebtedness being
refinanced, renewed, extended or refunded, and (C) no Default or Event of
Default has occurred and is continuing or would result from such new
Indebtedness;
(x) Indebtedness arising from the honoring by a
bank or other financial institution of a check, draft or similar instrument
inadvertently drawn against insufficient funds in the ordinary course of
business; provided that, such Indebtedness is extinguished within two (2)
Business Days;
(xi) Indebtedness for borrowed money for which an
Obligor becomes liable as a successor by merger or by virtue of an assumption
of liabilities in connection with an acquisition permitted under SECTION 7.7,
provided that, the aggregate principal balance of all of such Indebtedness for
all Obligors does not exceed Five Hundred Thousand Dollars ($500,000.00)
outstanding at any time; and
(xii) Indebtedness for borrowed money not
otherwise permitted under this SECTION 7.3, provided that, the aggregate
principal balance of all of such Indebtedness for all Obligors does not exceed
Five Hundred Thousand Dollars ($500,000.00) outstanding at any time.
19
26
The exception permitted under SUBSECTION (A)(III) shall be permitted
only provided that (a) no Default or Event of Default has occurred and is
continuing, and (b) any action taken by any Obligor which would constitute a
permitted exception would not cause or result in an Event of Default. The
Subordinated Term Loan may not be refunded or refinanced without the consent of
the Bank.
(b) In the event that any Indebtedness for borrowed
money or the capitalized portion (as determined in accordance with GAAP) of any
Capitalized Lease Obligations in excess of (i) $500,000, individually, or (ii)
$1,500,000 in the aggregate for all such liabilities involve documents
containing financial covenants which are more restrictive with respect to any
Obligor than the financial covenants of this Agreement and the other Loan
Documents, Obligors agree to notify Bank promptly and agree to enter into a
modification to this Agreement and the Loan Documents, as applicable, to
include such more restrictive financial covenants as Bank may elect.
(c) No intercreditor agreements shall be required with
other lenders or lessors if the purchase money Indebtedness or Capitalized
Lease Obligations permitted under SUBSECTION (A)(III) above is:
(i) a full recourse liability which does not
exceed (A) $500,000, individually, or (B) $1,500,000 in the aggregate; or
(ii) a liability for which recourse to any
Obligor is limited solely to the asset financed.
With respect to all other permitted purchase money Indebtedness and
Capitalized Lease Obligations, Obligors shall obtain from the applicable lender
or lessor an intercreditor agreement acceptable to Bank, providing the Bank
with notice of any default under such permitted purchase money Indebtedness or
Capitalized Lease Obligations, a forty-five (45) day period in which to cure or
cause Obligors to cure such default, and containing a forty-five (45) day
standstill provision during which the lender or lessor agrees not to exercise
any rights or remedies against any Obligor or the financed asset.
7.4 INVESTMENTS AND LOANS. No Obligor will have or make any
investments in all or a material portion of the capital stock or securities of
any Person, or any loans, advances or extensions of credit to any Person,
except:
(a) Investments in direct or indirect obligations of,
or obligations unconditionally guaranteed by, the United States of America, any
state thereof or any agency or instrumentality of any of the foregoing and
maturing within twelve (12) months from the date of acquisition;
(b) Investments in commercial paper of Bank or
commercial paper rated "Prime-1" by Moody's Investors Services or "A-1" by
Standard & Poor's Corporation, or with
20
27
an equivalent rating by another rating agency of nationally recognized
standing, maturing within three hundred sixty-five (365) days from the date of
acquisition;
(c) (i) Certificates of deposit maturing within
twelve (12) months from the date of acquisition issued by the Bank and money
market fund or other investments offered by or maintained with the Bank or its
Affiliates; and (ii) demand deposit, operating accounts and other like banking
accounts maintained with other national banks having assets of at least Fifty
Million Dollars ($50,000,000.00), subject to the restrictions set forth in
SECTION 7.16;
(d) Bona fide advances to employees and officers of
that Obligor for the purpose of paying relocation expenses or travel and
related expenses incurred for proper business purposes of that Obligor;
(e) Investments and loans listed on SCHEDULE 7.4
attached hereto;
(f) Loans from one Obligor to another;
(g) Working interests or other ownership interests in
oil or gas wells;
(h) Investments in connection with and required to
complete Permitted Acquisitions;
(i) Negotiable instruments endorsed for deposit or
collection of similar instruments in the ordinary course of business;
(j) Repurchase agreements and reverse repurchase
agreements with Bank or any of Bank's Affiliates;
(k) Investments permitted under SECTION 7.19 hereof;
(l) Investments permitted under SECTION 7.7 hereof;
(m) The acquisition or ownership of capital stocks or
obligations or securities received in settlement of debts (created in the
ordinary course of business) owing to any Obligor;
(n) Investments permitted under SECTION 7.3(A)(VI)
hereof; and
(o) Investments not otherwise permitted under this
SECTION 7.4, provided that, the aggregate value of all of such investments for
all Obligors does not exceed Five Hundred Thousand Dollars ($500,000.00)
outstanding at any time.
21
28
The exceptions permitted under SUBSECTIONS 7.4(F) AND (G) shall be
permitted only provided that (i) no Default or Event of Default has occurred
and is continuing, and (ii) any action taken by any Obligor which would
constitute a permitted exception would not cause or result in an Event of
Default.
7.5 GUARANTIES. Except for (a) the Surety Agreements, (b)
the guaranties required under the Subordinated Debt Loan Documents, (c)
customary guaranties and indemnities executed in connection with Permitted
Acquisitions, (d) guaranties by one Obligor of the obligations of another
Obligor, and (e) reimbursement obligations with respect to letters of credit,
bid and performance bonds and surety bonds permitted under SECTIONS 7.3(A)(VII)
AND 7.3(A)(VIII), no Obligor will directly or indirectly guarantee, endorse
(other than for collection or deposit in the ordinary course of business),
discount, sell with recourse or for less than the face value or agree
(contingently or otherwise) to purchase or repurchase or otherwise acquire, or
otherwise become directly or indirectly liable for, or agree (contingently or
otherwise) to supply or advance funds (whether by loan, stock purchase, capital
contribution or otherwise) in respect of, any Indebtedness, obligations or
liabilities of any Person.
7.6 DISPOSITION OF ASSETS.
(a) No Obligor will sell, lease, transfer or otherwise
dispose of all, substantially all, or any portion of its property or assets,
except for (i) drilling contracts and day rate drilling contracts for
inventory, equipment, and drilling rigs in the ordinary course of business for
fair consideration, (ii) sales of inventory (other than drilling rigs, related
drilling equipment and drilling pipe) in the ordinary course of business for
fair consideration, (iii) the sale for fair consideration of equipment or other
fixed assets (including drilling rigs, related drilling equipment and drilling
pipe) having a net book value of not more than Three Million Dollars
($3,000,000.00) in the aggregate in any fiscal year, and (iv) sales, leases or
transfers of property or assets from one Obligor to another.
(b) Notwithstanding the foregoing, Obligors may sell,
lease, transfer or otherwise dispose of fixed assets with a book value in
excess of Three Million Dollars ($3,000,000.00) in the aggregate in any fiscal
year as part of a transfer to an unrelated third party in a bona fide,
arms-length transaction, provided that (i) the Obligor gives Bank at least ten
(10) Business Days prior written notice together with a copy of the sale
agreement, bill of sale or other applicable agreement, (ii) the sale is for a
cash purchase price (or on deferred payment terms if the purchase price does
not exceed $1,000,000) at least equal to the reasonable fair market value of
such assets, and (iii) the proceeds of such sale are paid to Bank as a
permanent reduction of the Line or are used by the Obligors within six (6)
months after consummation of such sale, lease, transfer or disposition is
completed, to acquire new operating assets for use in one of the Lines of
Business of the Obligors.
(c) Notwithstanding anything herein or elsewhere to
the contrary, Universal may sell all or any part of its assets, or UTI may sell
all of the capital stock of Universal, to an unrelated third party in a bona
fide, arms-length sale, provided that (i) Universal gives Bank at
22
29
least ten (10) Business Days prior written notice of any such sale together
with a copy of the sale agreement and a summary of the business terms of such
sale, (ii) the sale is for a cash purchase price at least equal to the
reasonable fair market value of Universal's assets, (iii) the proceeds of such
sale remain subject to the restrictions on liens and encumbrances in SECTION
7.9, and (iv) within twelve (12) months after the date such sale is closed,
Universal or UTI, as applicable, utilizes the proceeds of such sale to purchase
for itself or on behalf of another Obligor new assets to be used in one of
Obligors' Lines of Business, and such new assets to the extent they are
inventory or receivables and subject for the lien and security interest in
favor of Bank and are subject to the restrictions of SECTION 7.9.
(d) The exceptions permitted under SECTION 7.6(B)
shall be permitted only provided that (a) no Default or Event of Default has
occurred and is continuing, and (b) any action taken by any Obligor which would
constitute a permitted exception would not cause or result in an Event of
Default.
7.7 MERGER; CONSOLIDATION; BUSINESS ACQUISITIONS;
SUBSIDIARIES.
(a) No Obligor will merge into or consolidate with any
Person, acquire any material portion of the stock, ownership interests, assets
or business of any Person, permit any Person to merge into it, or form any new
Subsidiaries, other than as provided below.
(b) Notwithstanding the foregoing, any of the Obligors
(or any Subsidiary thereof) may acquire the stock or assets of another Person,
business unit or operating entity, provided that (i) the purchase price
therefor (including all assumed liabilities, seller financing or other debt,
equity interests issued or other consideration, but not including payments for
bona-fide employment contracts) does not exceed the then applicable Acquisition
Purchase Price Limit, (ii) the Obligors give Bank at least ten (10) Business
Days prior written notice of any such acquisition together with a copy of the
Acquisition Agreement and a summary of the business terms of such acquisition,
(iii) any entity acquired by any Obligor or formed to acquire the stock or
assets in connection with such acquisition, or any Subsidiary of an Obligor
resulting from a merger or consolidation used to effect such acquisition, shall
become a co- borrower of the Bank Indebtedness on the same terms set forth in
the Loan Documents, shall deliver to Bank such due diligence materials and
documents regarding such entity as Bank may require, and shall execute and
deliver to Bank such documents as Bank may require to join in the Loan
Documents as a co-borrower and to grant Bank a first priority perfected
security interest in such entity's assets which would constitute Collateral as
defined herein, and (iv) the Obligors shall demonstrate to Bank's reasonable
satisfaction that Obligors will continue to be in compliance with all financial
covenants set forth in SECTION 8 hereof after taking into account the proposed
acquisition on the effective date of such acquisition and for the remaining
term of the Contract Period. The consummation of all acquisitions involving a
purchase price in excess of the then applicable Acquisition Purchase Price
Limit shall be subject to the prior written approval of Bank. Obligors will
include in each acquisition, merger or similar agreement entered into involving
an acquisition requiring the consent of Bank, that Obligor's obligation to
consummate such acquisition is subject to the prior written consent of Bank.
23
30
(c) Notwithstanding the foregoing, any Obligor may
merge into another Obligor or transfer its assets to any other Obligor.
(d) Notwithstanding anything herein or elsewhere to
the contrary, all acquisitions of any material portion of the stock, ownership
interests, assets or business of any Person contemplated by Obligors shall
require, prior to the consummation thereof, the written consent of Bank (i) if
a Default or an Event of Default has occurred and is continuing, or (ii) if any
action taken by any Obligor in connection with any acquisition would cause or
result in an Event of Default.
7.8 TAXES; CLAIMS FOR LABOR AND MATERIALS. Each Obligor
will pay or cause to be paid when due all taxes, assessments, governmental
charges or levies imposed upon it or its income, profits, payroll or any
property belonging to it, including without limitation all withholding taxes,
and all claims for labor, materials and supplies which, if unpaid, might become
a lien or charge upon any of its properties or assets; provided that it shall
not be required to pay any such tax (other than real estate taxes which must be
paid regardless of challenge), assessment, charge, levy or claim so long as the
validity thereof shall be contested in good faith by appropriate proceedings
promptly initiated and diligently conducted by it, and neither execution nor
foreclosure sale or similar proceedings shall have been commenced in respect
thereof (or such proceedings shall have been stayed pending the disposition of
such contest of validity), and it shall have set aside on its books, or at the
request of Bank deposited with Bank, adequate reserves with respect thereto.
No Obligor will file or consent to the filing of, any consolidated income tax
return with any Person other than a Subsidiary.
7.9 LIENS. No Obligor will create, incur or permit to exist
any mortgage, pledge, encumbrance, lien, security interest or charge of any
kind (including liens or charges upon properties acquired or to be acquired
under conditional sales agreements or other title retention devices) on its
property or assets, whether now owned or hereafter acquired, or upon any
income, profits or proceeds therefrom, except:
(a) Liens and security interests held by Bank;
(b) Liens incurred or deposits made in the ordinary
course of business (i) in connection with worker's compensation, unemployment
insurance, social security and other like laws or (ii) to secure the
performance of bids, leases, surety bonds, government contracts, performance
and return of money bonds, statutory obligations, other similar obligations,
not incurred in connection with either (A) the borrowing of money or (B) the
deferred purchase price of goods or inventory;
(c) Liens incurred in connection with services
rendered by carriers, warehousemen, landlords, mechanics, repairmen or
suppliers, provided that, such liens are terminated or bonded over within
thirty (30) days after Obligors receive notice thereof.
24
31
(d) Encumbrances consisting of zoning restrictions,
easements, restrictions on the use of real property or minor irregularities of
title thereto, none of which impairs the use of such property by that Obligor
in the operation of its business;
(e) Existing liens and security interests listed on
SCHEDULE 7.9 attached hereto; or
(f) Purchase money liens or Capitalized Leases,
provided that:
(i) the property subject to any of the foregoing
is acquired or leased by that Obligor in the ordinary course of its business
and the lien on any such property is created contemporaneously with such
acquisition;
(ii) purchase money Indebtedness or Capitalized
Lease Obligations so created shall not exceed the cost as of the time of
acquisition or lease of the property covered thereby;
(iii) the purchase money Indebtedness or
Capitalized Lease Obligations shall only be secured by the property so acquired
or leased or the proceeds thereof (not including any accounts); and
(iv) the purchase money Indebtedness or
Capitalized Lease Obligations are permitted by the provisions of SECTION 7.3.
(g) Liens for taxes not yet delinquent or which are
being contested in good faith by appropriate proceedings, provided that,
adequate reserves with respect thereto are maintained on the books of the
applicable Obligors, in conformity with GAAP;
(h) Judgment and attachment liens not giving rise to
an Event of Default or liens created by or arising from any litigation or legal
proceeding that are currently being contested in good faith by appropriate
proceedings diligently conducted, and for which adequate reserves have been
made to the extent required by GAAP;
(i) Liens on the assets of any entity existing at the
time such entity is acquired by any Obligor whether by merger, consolidation,
purchase of assets or otherwise; provided that such liens (i) are not created,
incurred or assumed by such entity in contemplation of such entity's being
acquired by an Obligor; (ii) do not extend to any other assets of any Obligor;
and (iii) the Indebtedness secured by such lien is permitted pursuant to
SECTION 7.3(A)(XI) OR (XII);
(j) Set off rights arising in connection with
customary terms of International Swaps and Derivatives Association swap
documentation;
25
32
(k) Leases or subleases granted to others and not
interfering in any material respect with the business of any of the Obligors;
(l) Liens in favor of collecting or payor banks having
a right of setoff, revocation or chargeback with respect to money or
instruments of any of the Obligors on deposit with or in possession of such
bank;
(m) Any renewal of or substitution for any lien
permitted by any of the preceding clauses; provided that, the debt secured is
not increased nor the lien extended to any additional assets; and
(n) Liens securing any Indebtedness described in
SECTION 7.3(A)(IX), secured only by liens on those assets that secured such
Indebtedness prior to the renewal, extension, refinancing or refund or by liens
otherwise permitted hereunder.
The creation of liens by Obligors shall be permitted under
SUBSECTION (F) only if (i) no Event of Default has occurred and is continuing,
and (ii) any action taken by any Obligor which would constitute a permitted
exception would not cause or result in an Event of Default.
To the extent that any Indebtedness secured by a lien permitted
under SUBSECTIONS (E) OR (F) is refinanced, renewed, extended or refunded, such
liens may continue to secure the refinancing, renewal, extended or refunded
Indebtedness.
No Obligor shall enter into any agreement with any other Person
which shall prohibit the Obligor from granting, creating or suffering to exist,
or otherwise restrict in any way (whether by covenant, by identifying such
event as a default under such agreement or otherwise) the ability of that
Obligor to grant, create or suffer to exist, any lien, security interest or
other charge or encumbrance upon or with respect to any of its assets in favor
of the Bank.
No Obligor will apply for or obtain any letters of credit for the
payment of or to secure the payment for any inventory or other assets to be
acquired by that Obligor, except letters of credit issued by Bank pursuant
hereto.
Notwithstanding anything herein or elsewhere to the contrary,
Obligors shall not be permitted to create, incur or permit to exist any
encumbrance, lien or security interest against or in any of the Collateral,
provided that, if an encumbrance, lien or security interest arises not as a
result of an Obligor executing a security, pledge or similar agreement, and
such encumbrance, lien or security interest encumbers any of the Collateral,
Obligors shall have a period of fifteen (15) days after the earlier of (i) any
Obligor receives notice that such an encumbrance, lien or security interest is
being claimed or asserted, or (ii) a responsible officer of any Obligor has
actual knowledge that such encumbrance, lien or security interest is being
claimed or asserted, in which to obtain a release or discharge of such
encumbrance, lien or security interest.
26
33
7.10 EXISTENCE; APPROVALS; QUALIFICATION; BUSINESS
OPERATIONS; COMPLIANCE WITH LAWS. Each Obligor (a) will obtain, preserve and
keep in full force and effect its separate corporate existence and all rights,
licenses, registrations and franchises necessary to the proper conduct of its
business or affairs; (b) will qualify and remain qualified as a foreign
corporation in each jurisdiction in which the character or location of the
properties owned by it or the business transacted by it requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the Collateral, assets, business, operations or
financial condition of an Obligor or its ability to perform its obligations
under the Loan Documents; (c) will continue to operate its business as
presently operated and will not engage in any new businesses outside of Lines
of Business without the prior written consent of Bank; and (d) will comply in
all material respects with the requirements of all applicable laws and all
rules, regulations (including environmental regulations) and orders of
regulatory agencies and authorities having jurisdiction over it.
7.11 MAINTENANCE OF PROPERTIES; INTELLECTUAL PROPERTY. Each
Obligor will maintain, preserve, protect and keep, or cause to be maintained,
preserved, protected and kept its real and personal property used or useful in
the conduct of its business in good working order and condition, reasonable
wear and tear excepted, and will pay and discharge when due the cost of repairs
to and maintenance of the same.
With respect to any and all trademarks, registrations, copyrights,
patents, patent rights and applications for any of the foregoing, each Obligor
shall maintain and protect the same and shall take and assert any and all
remedies available to that Obligor to prevent any other Person from infringing
upon or claiming any interest in any such trademarks, registrations,
copyrights, patents, patent rights or application for any of the foregoing.
7.12 INSURANCE. Each Obligor will carry adequate insurance
issued by an insurer acceptable to Bank, in amounts acceptable to Bank (at
least adequate to comply with any co-insurance provisions) and against all such
liability and hazards as are usually carried by entities engaged in the same or
a similar business similarly situated or as may be required by Bank. In the
case of insurance on any of the Collateral, Obligors shall carry insurance in
amounts equal to the full insurable value thereof and cause Bank to be named as
loss payee (with a lender's loss payable endorsement) and additional insured
with respect to all liability insurance, as its interests may appear with
thirty (30) days' notice to be given Bank by the insurance carrier prior to
cancellation or material modification of such insurance coverage.
Obligors shall cause to be delivered to Bank the insurance policies
therefor and at least three (3) Business Days prior to the expiration of any
such insurance, additional policies or duplicates thereof or in the
alternative, certificates of insurance evidencing the renewal of such insurance
and payment of the premiums therefor. Obligors shall direct all insurers that
in the event of any loss involving any Collateral or the cancellation of any
insurance policy covering the Collateral, the insurers shall make payments for
such loss and pay all return or unearned premiums directly to Bank and not to
Obligors, or any of them, and Bank jointly.
27
34
In the event of any loss involving any Collateral, Obligors will
give Bank immediate notice thereof and Bank may make proof of loss whether the
same is done by Obligors. Bank is granted a power of attorney by any Obligor
with full power of substitution to file any proof of loss in any Obligor's or
Bank's name, to endorse any Obligor's name on any check, draft or other
instrument evidencing insurance proceeds, and to take any action or sign any
document to pursue any insurance loss claim involving any Collateral. Such
power being coupled with an interest is irrevocable.
In the event of any loss involving any Collateral, Bank, at its
option, may (a) retain and apply all or any part of the insurance proceeds to
reduce, in such order and amounts as Bank may elect, the Bank Indebtedness, or
(b) disburse all or any part of such insurance proceeds to or for the benefit
of an Obligor for the purpose of repairing or replacing Collateral after
receiving proof satisfactory to Bank of such repair or replacement, in either
case without waiving or impairing the Bank Indebtedness or any provision of
this Agreement. Any deficiency thereon shall be paid by Obligors to Bank upon
demand. Obligors shall not take out any insurance covering the Collateral
without having Bank named as loss payee or additional insured thereon, as
applicable. Obligors shall bear the full risk of loss from any loss of any
nature whatsoever with respect to the Collateral.
Notwithstanding the foregoing, in the event that an Obligor suffers
a casualty loss involving any inventory which was Collateral and desires to use
the proceeds of its casualty loss insurance to repair or replace damaged
inventory which was Collateral hereunder, Bank will permit that Obligor to
utilize the proceeds of such insurance solely to purchase such replacement
inventory, provided that: (i) Obligor confirms to Bank in writing that it
intends to continue its business operations and has business interruption
insurance in effect providing for the payment of proceeds in amounts acceptable
to Bank, (ii) Obligor submits to Bank its business plan for operations after
such casualty loss, which plan must be in form and content satisfactory to
Bank, (iii) Bank will hold such insurance proceeds and will disburse such
proceeds upon receipt by Bank of evidence satisfactory to Bank that such
proceeds will be used to purchase inventory as required above, (iv)
disbursement of proceeds will be in compliance with such procedures as Bank may
require, e.g. checks payable to the inventory supplier, and (v) no Event of
Default or Default has occurred and is continuing.
7.13 INSPECTIONS; EXAMINATIONS. Obligors hereby irrevocably
authorize and direct all accountants and auditors employed by any Obligor at
any time to exhibit and deliver to Bank copies of any and all of Obligors'
financial statements, trial balances or other accounting records of any sort in
the accountant's or auditor's possession and copies of all reports submitted to
Obligors by such accountants or auditors, including management letters,
"comment" letters and audit reports, and to disclose to Bank any information
they may have concerning Obligors' financial status and business operations.
Obligors further authorize all federal, state and municipal authorities to
furnish to Bank copies of reports or examinations relating to Obligor, whether
made by an Obligor or otherwise.
The officers of Bank, or such Persons as any of them may designate,
may visit and inspect any of the properties of Obligors, examine (either by
Bank's employees or by independent
28
35
accountants) any of the Collateral or other assets of Obligors, including the
books of account of Obligors, and discuss the affairs, finances and accounts of
Obligors with its officers and with its independent accountants, at such times
as Bank may desire.
Bank may conduct at any time and from time to time, and Obligors
will fully cooperate with, field examinations of the inventory, accounts
receivable and business affairs of Obligors. Obligors shall reimburse Bank for
its out-of-pocket costs in connection with such examinations.
7.14 DEFAULT UNDER OTHER INDEBTEDNESS. If any Indebtedness
of any Obligor is declared or becomes due and payable before its expressed
maturity by reason of default or otherwise or, to the knowledge of an Obligor,
the holder of any such Indebtedness shall have the right (or upon the giving of
notice or the passage of time, or both, shall have the right) to declare such
Indebtedness to be so due and payable, Obligors will immediately give Bank
written notice of such declaration, acceleration or right of declaration.
7.15 PENSION PLANS. Obligors will (a) keep in full force and
effect any and all Plans which are presently in existence or may, from time to
time, come into existence under ERISA and will remain a member of each
multi-employer Plan in which any Obligor is a member, unless such Plans can be
terminated or withdrawal from such multi-employer Plan can be accomplished
without material liability to any Obligor in connection with such termination
(as distinguished from any continuing funding obligation); (b) make
contributions to all of Obligors' Plans in a timely manner and in a sufficient
amount to comply with the requirements of ERISA; (c) comply with all material
requirements of ERISA which relate to such Plans so as to preclude the
occurrence of any Reportable Event, Prohibited Transaction or material
"accumulated funding deficiency" as such term is defined in ERISA; and (d)
notify Bank immediately upon receipt by any Obligor of any notice of the
institution of any proceeding or other action which may result in the
termination of any Plan and deliver to Bank, promptly after the filing or
receipt thereof, copies of all reports or notices which any Obligor files or
receives under ERISA with or from the Internal Revenue Service, the PBGC, or
the U.S. Department of Labor.
7.16 BANK OF ACCOUNT. Obligors will maintain Bank as their
major bank of account, unless otherwise agreed by Bank in writing. Subject to
SECTION 5.5, Obligors may maintain operating accounts into which their accounts
receivable are deposited for ultimate transfer to a deposit account maintained
with the Bank. Obligors may also maintain local operating accounts for
convenience as necessary. Obligors will notify Bank in writing and on a
continuing basis, of all deposit accounts and certificates of deposit
(including the numbers thereof) maintained with or purchased from any other
financial institutions.
7.17 MAINTENANCE OF MANAGEMENT. Obligors will cause their
business to be continuously managed by Vaughn E. Drum and P. Blake Dupuis or
such other persons (serving in such management positions) as may be reasonably
satisfactory to Bank. Obligors will notify Bank promptly in writing of any
change in their board of directors or executive officers.
29
36
7.18 CAPITAL STOCK. UTI will not redeem, repurchase or
otherwise make or pay any distribution or dividend upon, or payment or
distribution to acquire, any of its capital stock or other Equity Securities.
Notwithstanding the foregoing, UTI may redeem, acquire or repurchase its Equity
Securities (a) to pay purchase price reductions or in settlement of indemnity
claims required in connection with any acquisition permitted under SECTION 7.7
in which UTI issues its common stock or other Equity Securities as part of the
purchase price, (b) in connection with the terms of UTI's existing employee
benefit plans in the ordinary course of UTI's business, provided that the
amount expended for such stock purchases related to the benefit plans does not
exceed $1,000,000 in any one fiscal year, (c) in connection with any exercise
of stock options, warrants or other rights to acquire Equity Securities that do
not result in the distribution of cash by UTI other than for fractions of a
unit of any Equity Securities, and (d) in connection with a stock buy-back plan
approved by the Board of Directors of UTI and disclosed to Bank, provided that,
the amount expended for such stock purchases does not exceed Ten Million
Dollars ($10,000,000.00) in the aggregate.
7.19 TRANSACTIONS WITH AFFILIATES. No Obligor will enter
into directly or indirectly any transaction or material group of related
transactions (including without limitation the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
Affiliate (other than another Obligor) except in the ordinary course and
pursuant to the reasonable requirements of each Obligor's business and upon
fair and reasonable terms no less favorable to such Obligor than would be
obtainable in a comparable arm's-length transaction with a Person not an
Affiliate.
No Obligor will make any loans or extensions of credit to any of its
Affiliates (that are not Obligors), shareholders, directors or officers, except
as hereinafter expressly provided. Each Obligor will cause all of its
Indebtedness at any time owed to its Affiliates (that are not Obligors),
shareholders, directors and officers to be subordinated in all respects to all
present and future Bank Indebtedness and will not make any payments thereon,
except as approved by Bank in writing.
Notwithstanding the foregoing, the restrictions set forth above in
this SECTION 7.19 will not apply to (a) the payment of reasonable and customary
regular fees to directors of UTI who are not employees of UTI; (b) loans and
advances to officers, directors and employees of Obligors for travel,
entertainment and moving and other relocation expenses made in direct
furtherance and in the ordinary course of business of Obligors; (c) any other
transaction with any employee, officer or director of Obligors pursuant to
employee benefit or compensation arrangements entered into in the ordinary
course of business and approved by the Board of Directors of Obligors; or (d)
customary investment banking or similar transactions with an Affiliate,
provided that compensation paid to such Affiliate and related expenses and
reimbursements are in customary amounts as would be determined in arm's-length
negotiations.
Obligors agree to give Bank prompt notice of each Affiliate
transaction involving cash or other compensation in excess of $500,000 (not
including Equity Securities issued as compensation).
30
37
The exceptions permitted under SECTION 7.19 shall be permitted only
provided that (a) no Default or Event of Default has occurred and is
continuing, and (b) any action taken by any Obligor which would constitute a
permitted exception would not cause or result in an Event of Default.
Nothing in this SECTION 7.19 shall prohibit, limit or restrict the
transactions permitted under SECTIONS 7.3, 7.4, 7.5, 7.6, 7.7, 7.15, 7.18 OR
7.20 hereof.
7.20 RESTRICTION ON STOCK TRANSFER. No Obligor, other than
UTI, will directly or indirectly issue, transfer, sell or otherwise dispose of,
or part with control of, or permit the transfer of, any shares of its capital
stock, except for issuance, transfer, sale or disposition by one Obligor to
another.
7.21 NAME OR ADDRESS CHANGE. No Obligor will change its name
or address except upon thirty (30) days prior written notice to Bank and
delivery to Bank of any items requested by Bank to maintain perfection and
priority of Bank's security interests and access to Obligors' books and
records.
7.22 NOTICES. Obligors will promptly notify Bank of (a) any
action or proceeding brought against any Obligor wherein such action or
proceeding would, if determined adversely to any Obligor result in liability of
any Obligor in excess of One Million Dollars ($1,000,000.00) in the aggregate
with all other actions and proceedings, (b) the occurrence of any Default or
Event of Default, (c) the failure of any Obligor to observe any of its
undertakings under the Loan Documents, or (d) any material adverse change in
the assets, business, operations or financial condition of any Obligor.
7.23 ADDITIONAL DOCUMENTS AND FUTURE ACTIONS. Each Obligor
will, at its sole cost, take such actions and provide Bank from time to time
with such agreements, financing statements and additional instruments,
documents or information as the Bank may in its discretion deem reasonably
necessary or advisable to perfect, protect, maintain or enforce the security
interests in the Collateral, to permit Bank to protect or enforce its interest
in the Collateral, or to carry out the terms of the Loan Documents. Each
Obligor hereby authorizes and appoints Bank as its attorney-in-fact, with full
power of substitution, to take such actions as Bank may deem advisable to
protect the Collateral and its interests thereon and its rights hereunder, to
execute on that Obligor's behalf and file at that Obligor's expense financing
statements, and amendments thereto, in those public offices deemed necessary or
appropriate by Bank to establish, maintain and protect a continuously perfected
security interest in the Collateral, and to execute on that Obligor's behalf
such other documents and notices as Bank may deem advisable to protect the
Collateral and its interests therein and its rights hereunder. Such power
being coupled with an interest is irrevocable. Each Obligor irrevocably
authorizes the filing of a carbon, photographic or other copy of this
Agreement, or of a financing statement, as a financing statement and agrees
that such filing is sufficient as a financing statement.
31
38
7.24 MATERIAL ADVERSE CONTRACTS. No Obligor will become or
be a party to any contract or agreement which has a materially adverse impact
on that Obligor's ability to perform under this Agreement or any other
agreement with Bank to which that Obligor is a party.
7.25 RESTRICTIONS ON USE OF PROCEEDS. No Obligor will carry
or purchase with the proceeds of the Line any "margin security" within the
meaning of Regulations U, G, T or X of the Board of Governors of the Federal
Reserve System.
7.26 SUBORDINATED TERM LOAN. Obligors will not amend, modify
or restate any of the provisions of the Subordinated Term Loan or any of the
Subordinated Debt Loan Documents, in any way which in Bank's judgment would
adversely affect the Bank Indebtedness, the Collateral, the Subordination
Agreement, any Obligor's business, operations or financial condition, or any
rights or remedies of Bank. Without limitation, no modification shall be made
which increases the interest rate, fees or other sums payable in connection
with the Subordinated Term Loan or under the Subordinated Debt Loan Documents,
shortens or accelerates the maturity or due date of any payments under the
Subordinated Term Loan, grants any security interest to secure all or any part
of the Subordinated Term Loan, makes any financial covenant or ratio more
restrictive, or results in any situation in which a default could occur under
the Subordinated Term Loan without such event constituting an Event of Default
hereunder.
The provisions in the Subordination Agreement permitting the
Subordinated Lenders to enter into amendments or modifications of the
Subordinated Debt Loan Documents with respect to interest rate increases and
fees shall not be deemed to be a consent or agreement by Bank to any increase
in the interest rate of the Subordinated Term Loan or any new or increased fees
payable in connection with the Subordinated Term Loan. Such amendments or
modifications shall still require the consent by Bank. Obligors will give Bank
a copy of any proposed amendment, modification or restatement of any
Subordinated Debt Loan Document at least ten (10) days prior to the execution
thereof. Obligors will not enter into any such amendment, modification or
restatement, if Bank has notified Obligors that it would be a violation of this
SECTION 7.26.
No Obligor will, directly or indirectly, repurchase, redeem, or
defease prior to the date when due or otherwise make any prepayment prior to
the date when due, or effect any prepayment that is optional on the part of
such Obligor, on any Indebtedness for borrowed money (other than the
Subordinated Term Loan) without the prior written consent of Bank, except that
no such consent is required for and UTI may effect (a) any transaction in which
UTI's capital stock is exchanged for Indebtedness owed by any of the Obligors,
including any cashless warrant exercise arrangements in which warrants are
exercised without cash payment by the Person so exercising, or exchange of
indebtedness owed by any of the Obligors for capital stock of UTI, (b)
permitted prepayments under this Agreement, (c) prepayments required or
permitted under the terms of the Subordinated Debt Loan Documents, and (d)
prepayments of Indebtedness owed to Bank in accordance with or required under
this Agreement. Obligors will give Bank a copy of each notice of default or
other substantive notice received by any Obligors from any Subordinated Lender,
as soon as possible but no later than two (2) Business Days after such
Obligor's receipt. Obligors will also deliver to Bank a copy of each
32
39
compliance certificate or other report or certificate delivered by any Obligor
to any Subordinated Lender simultaneously with delivery to such Subordinated
Lender. Nothing contained in this SECTION 7.26 shall limit, restrict, waive or
adversely affect any of Bank's rights or remedies under the Subordination
Agreement.
Promptly upon becoming aware of the existence of any default or
event of default under the Subordinated Debt Loan Documents, Obligors will give
Bank written notice specifying the nature thereof and describing what action
the Obligors are taking or propose to take with respect thereto.
Notwithstanding anything herein or elsewhere to the contrary, no
Obligor will make any payment on any of the Subordinated Term Loan, if an Event
of Default or Default has occurred and is continuing, or such payment would
result in an Event of Default.
7.27 ACQUISITION DOCUMENTS. Obligors will not amend or
modify any of the documents or agreements executed and delivered in connection
with any prior acquisitions or in connection with any future acquisitions
approved or permitted under SECTION 7.7 in any material way or waive any
material rights thereunder.
8. FINANCIAL COVENANTS. Except with the written consent of Bank,
Obligors will comply with the following:
8.1 TOTAL FUNDED DEBT TO EBITDA RATIO. Obligors will
maintain a Total Funded Debt to EBITDA Ratio of not more than 1.5 to 1.0 as of
the end of each fiscal quarter, calculated on a rolling four (4) quarters basis
for the four (4) full fiscal quarters then ended:
8.2 MODIFIED QUICK RATIO. Obligors will maintain a Modified
Quick Ratio of not less than 1.25 to 1.0 as of the end of each fiscal quarter.
8.3 INTEREST COVERAGE RATIO. Obligors will maintain an
Interest Coverage Ratio of not less than 4.0 to 1.0 as of the end of each
fiscal quarter, calculated on a rolling four (4) quarters basis for the four
(4) full fiscal quarters then ended.
8.4 CONSOLIDATED TANGIBLE NET WORTH. Obligors will maintain
a Consolidated Tangible Net Worth of at least One Hundred Million Dollars
($100,000,000.00) as of June 30, 1998 and as of the end of each fiscal quarter
thereafter, provided that, such minimum required Consolidated Tangible Net
Worth shall be increased each fiscal quarter by an amount equal to seventy-five
percent (75%) of Obligors' Net Income for the immediately preceding fiscal
quarter during the term of this Agreement, commencing with the fiscal quarter
ending September 30, 1998. The minimum required Consolidated Tangible Net
Worth shall not be reduced by any net losses suffered by Obligors during any
fiscal quarter.
33
40
8.5 CAPITAL EXPENDITURES. Obligors will not cause, suffer
or permit Obligors' aggregate annual Capital Expenditures (not including the
expenditures comprising the purchase price of Permitted Acquisitions) to exceed
(i) $15,000,000 for the six month period ended December 31, 1998, (ii)
$20,000,000 for the twelve month period ended December 31, 1999, and (iii)
$10,000,000 for the six month period ended June 30, 2000. Such permitted
Capital Expenditures are on a non-cumulative basis as to unused or unaccrued
portions for any fiscal year. However, amounts accrued in accordance with GAAP
in one year but not disbursed, may be disbursed in a subsequent year and
counted (without duplication) towards the Capital Expenditures limit in the
year for which the accrual was made.
8.6 CHANGES TO FINANCIAL COVENANTS. The Bank may condition
extension of the Line after the Contract Period upon revision of the foregoing
financial covenants as Bank in its sole discretion may require.
9. ACCOUNTING RECORDS, REPORTS AND FINANCIAL STATEMENTS.
Obligors will maintain books of record and account in which full, correct and
current entries in accordance with GAAP will be made of all of their dealings,
business and affairs, and Obligors will deliver to Bank the following:
9.1 ANNUAL STATEMENTS. As soon as available and in any
event within ninety (90) days after the end of each fiscal year of Obligors:
(a) the audited, consolidated and unaudited
consolidating income and retained earnings statements of Obligors for such
fiscal year,
(b) the audited, consolidated and unaudited
consolidating balance sheet of Obligors as at the end of such fiscal year, and
(c) the audited, consolidated statement of cash flows
of Obligors for such fiscal year,
setting forth in comparative form the corresponding figures as at the end of
the previous fiscal year, all in reasonable detail, including all supporting
schedules and comments. The foregoing statements and balance sheets shall be
prepared in accordance with GAAP and shall be audited by independent certified
public accountants of recognized standing acceptable to Bank in the reasonable
exercise of its discretion with respect to which such accountants shall deliver
their unqualified opinion. Bank approves Ernst & Young as acceptable certified
public accountants. Such statements shall also be certified by the chief
financial officer of Obligors to be accurate.
9.2 QUARTERLY STATEMENTS. As soon as available and in any
event within forty-five (45) days after the close of each fiscal quarter of
Obligors:
34
41
(a) the consolidated and consolidating income and
retained earnings statements of Obligors for such quarter;
(b) the consolidated and consolidating balance sheet
of Obligors as of the end of such quarter; and
(c) the consolidated statement of cash flows of
Obligors for such quarter;
setting forth in comparative form the corresponding figures as at the end of
the corresponding quarter of the previous fiscal year (if applicable), all in
reasonable detail, subject to year end adjustments and certified by the chief
financial officer of Obligors to be a fair representation in all material
respects of the financial condition and results of operation of the Obligors
for such period and to have been prepared in all material respects in
accordance with GAAP.
9.3 ACCOUNTS RECEIVABLE STATEMENTS. Together with the
quarterly statements required under SECTION 9.2, a summary schedule of the
Borrowers' accounts receivable and the aging thereof, on a summary basis, all
certified by the chief financial officer of Obligors to be a fair
representation of accounts receivable of Obligors. Obligors will also provide
Bank with all information reasonably requested by Bank with respect to any
account debtor.
9.4 AUDIT REPORTS. Promptly upon receipt thereof, one copy
of each other report submitted to any Obligor, by independent accountants,
including management letters, "comment" letters, in connection with any annual,
interim or special audit report made by them of the books of any Obligor.
9.5 SEC AND OTHER REPORTS. Promptly upon their becoming
available, (a) any effective registration statement (other than a registration
statement on Form S-8) and all related materials being publicly filed in
connection with any securities offering of any Obligor, if any, (b) one copy of
each financial statement, report, notice or proxy statement sent by any Obligor
to its creditors and stockholders generally and of each regular or periodic
report, and any effective registration statement (other than a registration
statement on Form S-8) or final prospectus filed by any Obligor with any
securities exchange or the Securities and Exchange Commission or any successor
agency, (c) copies of any orders in any proceedings to which any Obligor is a
party, issued by any governmental agency, Federal or state, having jurisdiction
over any Obligor which would have a material adverse effect on the Collateral,
assets, business, operations or financial condition of an Obligor or its
ability to perform its obligations under the Loan Documents, and (d) any press
releases issued by any Obligor.
9.6 REQUESTED INFORMATION. With reasonable promptness, all
such other data, information and projections in respect of the condition,
operation and affairs of any Obligor as Bank may reasonably request from time
to time.
35
42
9.7 COMPLIANCE CERTIFICATES. Within the periods provided in
SECTIONS 9.1 AND 9.2 above, a certificate of the chief financial officer of
Obligors: (a) stating that, to the best of such officer's knowledge after due
inquiry, Obligors have observed, performed and complied with each and every
undertaking contained herein, (b) setting forth the information and
computations (in sufficient detail) required in order to establish whether
Obligors were operating in compliance with the financial covenants in SECTION 8
of this Agreement, and (c) certifying that, to the best of such officer's
knowledge after due inquiry, as of the date of such certification, there does
not exist any Event of Default or Default. Such certificate will be in the
form of EXHIBIT "B" attached hereto.
9.8 ACCOUNTANT'S CERTIFICATE. Within the period provided in
SECTION 9.1, a report of the independent public accountants who render an
opinion with respect to the financial statements referred to therein, stating
that they have reviewed the terms of this Agreement and that in making the
examinations necessary to their certification mentioned in SECTION 9.1, they
have reviewed the accounts and condition of Obligors during the accounting
period covered by their certificate and that such review did not disclose the
existence of any condition or event which constitutes a Default or Event of
Default (or that such conditions or events existed, describing them).
9.9 PROJECTIONS AND CASH FLOW. As soon as available and in
any event prior to the end of each fiscal year of Obligors, projected
consolidated income statement, balance sheet and cash flow statement of
Obligors on a quarterly basis for the next succeeding four (4) fiscal quarters
prepared by the chief financial officer of Obligors. Obligors covenant that
(a) all projections required by this section shall be prepared by the chief
financial officer of Obligors and shall represent the best available good faith
estimate of Obligors regarding the course of Obligors' business for the period
covered thereby; (b) the assumptions set forth in the projections delivered
hereafter shall be reasonable and realistic based on then current economic
conditions; and (c) Obligors shall have no knowledge at the time of delivery of
future projections of any reason why Obligors shall not be able to meet the
performance levels set forth in said projections.
10. ENVIRONMENTAL REPRESENTATIONS AND COVENANTS.
10.1 REPRESENTATIONS. Obligors represent to Bank that to the
best of Obligors' knowledge: (a) the Environmental Affiliates are in
compliance in all material respects with all Environmental Requirements and
Obligors have no knowledge of any circumstances which may prevent or interfere
with such compliance in the future; (b) the Environmental Affiliates have all
material licenses, permits, approvals and authorizations required under
applicable Environmental Requirements; (c) there are no pending or threatened
claims against any of the Environmental Affiliates or any of their assets
related to the failure to comply with any Environmental Requirements, or any
facts or circumstances which could give rise to such a claim; (d) no facility
or property now or previously owned, operated or leased by any Environmental
Affiliate is an Environmental Cleanup Site; (e) no Environmental Affiliate has
treated, stored, transported, handled or disposed of Special Materials at or
adjacent to any Environmental Cleanup Site; (f) there are no liens or claims
for cost reimbursement outstanding or threatened against any Environmental
Affiliate or any of their assets, or any facts or circumstances which could
give rise to such a lien or claim; and (g) there are no facts
36
43
or circumstances which, under the provisions of any Environmental Requirements,
could restrict in any material respect the use, occupancy or transferability of
any of the Collateral or any of the facilities owned, leased or operated by any
Environmental Affiliate.
10.2 REAL PROPERTY. Obligors represent and warrant to Bank
that, to the best of Obligors' knowledge, there are no Special Materials
presently located on or, to the best of their knowledge, near any real property
owned, leased or operated by any Environmental Affiliate (collectively, "REAL
PROPERTY") except for Special Materials which are and have at all times been
treated, stored, transported, handled and disposed of in compliance in all
material respects with all Environmental Requirements. Obligors represent to
Bank that, to the best of Obligors' knowledge, the Real Property is not now
being used nor, to the best of their knowledge, has it ever been used in the
past for activities involving Special Materials, including but not Limited to
the use, generation, collection, storage, treatment, or disposal of any Special
Materials except for Special Materials which are and have at all times been
treated, stored, transported, handled and disposed of in compliance in all
material respects with all Environmental Requirements. Without limiting the
generality of the foregoing, the Real Property is not being used nor, to the
best of Obligors' knowledge, have they ever been used in the past for a
landfill, surface impoundment or other area for the treatment, storage or
disposal of solid waste (including solid waste such as sludge).
Obligors and the Bank hereby acknowledge and agree that they have
received a report entitled Phase I and Environmental Assessment covering real
property in Victoria, Texas, (the "REPORT"), prepared by Southern Ecology
Management, Inc. and Miller Environmental Service, Inc. (the "CONSULTANTS")
pursuant to which the Consultants describe certain matters that may affect the
environmental remediation obligations of UTI and Triad related to the
acquisition of Southland. The representations and warranties of the Obligors
with respect to compliance with environmental laws set forth in this Agreement
are hereby qualified by the terms and content of the Report. The Obligors
represent and warrant that compliance with the terms and recommendations in the
Report will not materially and adversely affect the business, financial
condition or results of operations of the Obligors taken as a whole.
10.3 COVENANT REGARDING COMPLIANCE. Obligors shall take or
cause all Environmental Affiliates to take, at Obligors' and such Environmental
Affiliate's sole expense, such actions as may be necessary to comply in all
material respects with all Environmental Requirements, as hereinafter defined.
If any Environmental Affiliate shall fail to take such action, Bank may make
advances or payments towards performance or satisfaction of the same but shall
be under no obligation to do so. All sums so advanced or paid, including all
sums advanced or paid by Bank in connection with any judicial or administrative
investigation or proceeding relating thereto, including, without limitation,
attorney's fees, fines, or other penalty payments, shall be at once repayable
by Obligors and all sums so advanced or paid shall become a part of the Bank
Indebtedness.
The Environmental Affiliates will maintain all licenses, permits,
approvals and authorizations required under applicable Environmental
Requirements. In connection with off-site treatment, storage, handling,
transportation or disposal of Special Materials, the Environmental
37
44
Affiliates will conduct such activities only at facilities and with carriers
who operate in compliance with all Environmental Requirements and will obtain
certificates of compliance or disposal from all contractors retained in
connection with such activities.
10.4 NOTICES. In the event Obligors become aware of any
past, present or future facts or circumstances which have given rise or could
give rise to a claim against any Environmental Affiliate related to a failure
to comply with any Environmental Requirements, Obligors will promptly give Bank
notice thereof, together with a written statement of an officer of Obligors
setting forth the details thereof and the action with respect thereto taken or
proposed to be taken by the Environmental Affiliates.
10.5 INDEMNITY. Obligors agree to indemnify, defend and hold
harmless Bank, its parents, subsidiaries, successors and assigns, and any
officer, director, shareholder, employee, Affiliate or agent of Bank, for all
loss, liability, damage, cost and expenses, including, without limitation,
attorney's fees and disbursements (including the reasonable allocated cost of
in-house counsel and staff) arising from or related to (a) the release of any
Special Materials at any facility at any time owned, leased or operated by any
Obligor or any Environmental Affiliate, (b) the release of any Special
Materials treated, stored, transported, handled, generated or disposed of by or
on behalf of any Obligor or any Environmental Affiliate, at any third party
owned site, (c) any claim against Borrowers or any Environmental Affiliate that
they have failed to comply with all Environmental Requirements, and (d) the
breach by Obligors of any representation or covenant in this SECTION 10.
10.6 TESTING. Bank shall have the right from time to time to
designate such persons ("Environmental Consultants") as Bank may select to
visit, inspect, examine and test all properties owned, leased or operated by
and all products and wastes generated, treated, stored, transported, handled or
disposed of by or on behalf of any Environmental Affiliate, for the purpose of
investigating compliance with Environmental Requirements, any actual or
potential claims related thereto, and any condition which could result in
potential liability, cost or expenses to the Bank. Obligors will permit, and
will cause all Environmental Affiliates to permit, such Environmental
Consultants to have access to all of such properties, products and wastes and
all books, records and reports related to compliance by the Environmental
Affiliates with all Environmental Requirements. Obligors will supply, and will
cause all Environmental Affiliates to supply, Bank or the Environmental
Consultants with all information, records, correspondence, audits, reviews and
materials related to compliance by the Environmental Affiliates with all
Environmental Requirements and will make available to Bank or the Environmental
Consultants appropriate personnel employed by or consultants retained by the
Environmental Affiliates having knowledge of such matters.
The cost of such visits, inspections, examination and tests shall be
borne by the Obligors. In the event Bank pays such costs, such sums shall be
at once repayable by Obligors and all sums so advanced or paid by Bank shall
become part of the Bank Indebtedness. Notwithstanding the foregoing, the Bank
shall have no obligation to perform any tests, examinations or inspections or
to monitor the Environmental Affiliates' compliance with all Environmental
Requirements.
38
45
10.7 SURVIVAL. The representations and covenants of Obligors
contained in this SECTION 10, including without limitation the indemnification
obligation of Obligors, shall survive the occurrence of any event whatsoever,
including the payment of the Bank Indebtedness or any investigation by or
knowledge of Bank.
10.8 DEFINITIONS. For purposes of the foregoing:
(a) "ENVIRONMENTAL CLEANUP SITE" shall mean any
location which is listed or proposed for listing on the National Priorities
List, on CERCLIS or on any similar state list of sites requiring investigation
or cleanup, or which is the subject of any pending or threatened action, suit,
proceeding or investigation related to or arising from any alleged violation of
any Environmental Requirements.
(b) "ENVIRONMENTAL REQUIREMENTS" means any and all
applicable federal, state or local laws, statutes, ordinances, regulations or
standards, administrative or court orders or decrees, common law doctrines or
private agreements, relating to (i) pollution or protection of the environment
and natural resources, (ii) exposure of employees or other persons to Special
Materials, (iii) protection of the public health and welfare from the effects
of Special Materials and their products, by-products, wastes, emissions,
discharges or releases, and (iv) regulation, licensing, approval or
authorization of the manufacture, generation, use, formulation, packaging,
labeling, transporting, distributing, handling, storing or disposing of any
Special Materials.
(c) "SPECIAL MATERIALS" means any and all materials
which, under Environmental Requirements, require special handling in use,
generation, collection, storage, treatment or disposal, or payment of costs
associated with responding to the lawful directives of any court or agency of
competent jurisdiction. Special Materials shall include, without limitation:
(i) any flammable substance, explosive, radioactive material, hazardous
material, hazardous waste, toxic substance, solid waste, pollutant, contaminant
or any related material, raw material, substance, product or by-product of any
substance specified in or regulated or otherwise affected by any Environmental
Requirements (including but not limited to any "hazardous substance" as defined
in the Comprehensive Environmental Response, Compensation and Liability Act of
1980 as amended or any similar state or local law), (ii) any toxic chemical or
other substance from or related to industrial, commercial or institutional
activities, and (iii) asbestos, gasoline, diesel fuel, motor oil, waste and
used oil, heating oil and other petroleum products or compounds,
polychlorinated biphenyls, radon, urea formaldehyde and lead-containing
materials.
11. CONDITIONS OF CLOSING. The obligation of Bank to make
available the Line is subject to the performance by Obligors of all of their
agreements to be performed hereunder and to the following further conditions
(any of which may be waived by Bank):
11.1 LOAN DOCUMENTS. Obligors and all other required persons
and entities will have executed and delivered to Bank the Loan Documents.
39
46
11.2 REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Obligors set forth in the Loan Documents and the Subordinated
Debt Loan Documents will be true at and as of the date hereof, except for such
representations and warranties that are by their express terms limited to a
specific prior date.
11.3 NO DEFAULT. No condition or event shall exist or have
occurred which would constitute a Default or Event of Default hereunder or
under the Subordinated Loan Documents.
11.4 PROCEEDINGS AND DOCUMENTS. All proceedings taken by
Obligors in connection with the transactions contemplated by this Agreement and
all documents incident to such transactions shall be satisfactory in form and
substance to Bank and Bank's counsel, and Bank shall have received all
documents or other evidence which it reasonably may request in connection with
such proceedings and transactions. Each Obligor shall have delivered to Bank a
certificate, in form and substance satisfactory to Bank, dated the date hereof
and signed on behalf of that Obligor by an officer of that Obligor, certifying
(a) true copies of the Articles of Incorporation and Bylaws of that Obligor in
effect on such date, (b) true copies of all corporate actions taken by that
Obligor relative to the Loan Documents, and (c) the names, true signatures and
incumbency of the officers of that Obligor authorized to execute and deliver
this Agreement and the other Loan Documents. Bank may conclusively rely on
such certificate unless and until a later certificate revising the prior
certificate has been received by Bank.
11.5 DELIVERY OF OTHER DOCUMENTS. The following documents
shall have been delivered by or on behalf of Obligors to Bank, all of which
must be in form and content satisfactory to Bank:
(a) GOOD STANDING CERTIFICATES. A good standing
certificate certifying to the good standing and corporate status of each
Obligor in its state of incorporation, good standing/foreign qualification
certificates from all other jurisdictions in which Borrowers are required to be
qualified to do business, as the Bank may require.
(b) AUTHORIZATION DOCUMENTS. Evidence of
authorization of each Obligor's execution and full performance of this
Agreement, the Loan Documents and all other documents and actions required
hereunder.
(c) OPINION OF COUNSEL. An opinion of counsel for
Obligors in form and content satisfactory to Bank, covering matters related to
the laws of Pennsylvania, Oklahoma, Texas, Delaware (as to corporate law
matters only) and such other jurisdictions as required by Bank.
(d) LIEN SEARCH. Copies of record searches
(including UCC searches and judgments, suits, tax and other lien searches)
confirming that Bank has a first priority security interest in the Collateral,
acceptable to Bank.
40
47
(e) OTHER DOCUMENTS. Such other documents as may be
required by Bank.
11.6 NON-WAIVER OF RIGHTS. By completing the closing
hereunder, or by making advances hereunder, Bank does not thereby waive a
breach of any warranty or representation made by any Obligor hereunder or any
agreement, document, or instrument delivered to Bank or otherwise referred to
herein, and any claims and rights of Bank resulting from any breach or
misrepresentation by any Obligor are specifically reserved by Bank.
12. CERTAIN CONDITIONS TO SUBSEQUENT ADVANCES. Subsequent
advances and issuances of letters of credit under the Line shall be conditioned
upon the following conditions and each request by an Obligor for an advance or
issuance of a letter of credit shall constitute a representation by Obligors to
Bank that each condition has been met or satisfied:
12.1 REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Obligors contained herein or in the Loan Documents shall be true
at and as of the date of such advance as if made on such date, and each request
for an advance shall constitute reaffirmation by Obligors that such
representations and warranties are then true.
12.2 NO DEFAULT. No condition or event shall exist or have
occurred at or as of the date of such advance which would constitute a Default
or Event of Default hereunder.
12.3 OTHER REQUIREMENTS. Bank shall have received all
certificates, authorizations, affidavits, schedules and other documents which
are provided for hereunder or under the Loan Documents, or which Bank may
reasonably request.
13. DEFAULT AND REMEDIES.
13.1 EVENTS OF DEFAULT. The occurrence and continuation, of
any one or more of the following events shall constitute an Event or Events of
Default hereunder:
(a) The failure of Obligors to pay any amount of
principal or interest on the Line Note, or any fee or other sums payable
hereunder, or any other Bank Indebtedness on the date on which such payment is
due, whether on demand, at the stated maturity or due date thereof, or by
reason of any requirement for the prepayment thereof, by acceleration or
otherwise, provided that, with respect to payments of sums other than principal
and interest, such failure to pay continues unremedied for a period of ten (10)
days after such sums are first due;
(b) The failure of any Obligors to duly perform or
observe any obligation, covenant or agreement on its part contained herein or
in any other Loan Document, provided that, notwithstanding the foregoing,
Obligors' failure to comply with the provisions of SECTIONS 7.4, 7.11, 7.12
(other than the requirement that insurance coverage be maintained at all
41
48
times), 9.3 AND 9.9 shall not constitute an Event of Default hereunder unless
such failure to comply continues unremedied for a period of fifteen (15) days
after the earlier of (i) any Obligor receives notice from Bank of such failure,
or (ii) a responsible officer of any Obligor has actual notice of such failure;
(c) The failure of any Obligor to pay any Indebtedness
for borrowed money in excess of One Million Dollars ($1,000,000.00) due to any
third Person (including without limitation the Subordinated Term Loan) or the
existence of any other event of default under any loan, security agreement,
mortgage or other agreement providing for loans or credit extensions in excess
of One Million Dollars ($1,000,000.00) pertaining thereto binding an Obligor
after the expiration of any notice and/or grace periods permitted in such
documents;
(d) The failure of any Obligor to pay or perform any
other material obligation to Bank under any other agreement or note, not
constituting a Loan Document, after the expiration of any notice and/or grace
periods permitted in such documents;
(e) The adjudication of any Obligor as a bankrupt or
insolvent, or the entry of an Order for Relief any Obligor or the entry of an
order appointing a receiver or trustee for any Obligor of any of their property
or approving a petition seeking reorganization or other similar relief under
the bankruptcy or other similar laws of the United States or any state or any
other competent jurisdiction;
(f) A proceeding under any bankruptcy, reorganization,
arrangement of debt, insolvency, readjustment of debt or receivership law is
filed by or against any Obligor or any Obligor makes an assignment for the
benefit of creditors, or any Obligor takes any action to authorize any of the
foregoing;
(g) The suspension of the operation of any Obligor's
present business (except as permitted under SECTION 7.7(C)), or any Obligor
becoming unable to meet its debts as they mature, or the admission in writing
by any Obligor to such effect, or any Obligor calling any meeting of all or any
material portion of its creditors for the purpose of debt restructure;
(h) All or any part of the Collateral or any material
part of the other assets of any Obligor are attached, seized, subjected to a
writ or distress warrant, or levied upon, or come within the possession or
control of any receiver, trustee, custodian or assignee for the benefit of
creditors;
(i) The entry of a final judgment for the payment of
money against any Obligor which, within ten (10) days after such entry, shall
not have been discharged or execution thereof stayed pending appeal or shall
not have been discharged within five (5) days after the expiration of any such
stay;
42
49
(j) Any representation or warranty of any Obligor in
any of the Loan Documents is discovered to be untrue in any material respect or
any statement, certificate or data furnished by any Obligor pursuant hereto is
discovered to be untrue in any material respect as of the date as of which the
facts therein set forth are stated or certified;
(k) Any Obligor voluntarily or involuntarily dissolves
or is dissolved, terminates or is terminated;
(l) Any Obligor is enjoined, restrained, or in any way
prevented by the order of any court or any administrative or regulatory agency,
the effect of which order restricts an Obligor from conducting all or any
material part of its business;
(m) A material breach by any Obligor occurs under any
material agreement, document or instrument, whether heretofore, now or
hereafter existing between any Obligor and any other Person;
(n) A material and adverse change occurs in the
operations, management or financial condition of the Obligors taken as a whole
or in the value of the Collateral;
(o) The Collateral or the prospects of the payment of
the Bank Indebtedness is jeopardized or impaired in any material respect or
Bank otherwise deems itself insecure with respect to any Obligor's ability to
pay the Bank Indebtedness or otherwise perform hereunder;
(p) Any material uninsured damage to, or loss, theft,
or destruction of, any of the Collateral occurs;
(q) Any strike, lockout, labor dispute, embargo,
condemnation, act of God or public enemy, or other casualty loss occurs
resulting in the cessation or substantial curtailment of production or other
revenue producing activities at any facility of any Obligor for more than
thirty (30) consecutive days;
(r) The loss, suspension, revocation or failure to
renew any license or permit now held or hereafter acquired by any Obligor,
which loss, suspension, revocation or failure to renew might have a material
adverse effect on the business, profits, assets or financial condition of the
Obligors taken as a whole;
(s) Any change in the stock ownership of any Obligor
(other than (i) a change in stock ownership of UTI, or (ii) or a change in
ownership as permitted under SECTION 7.20); any issuance of stock, debentures,
warrants or other Equity Securities of any Obligor (other than (A) any issuance
of stock, debentures, warrants or other Equity Securities of UTI, or (B) any
issuance of stock, debentures, warrants or other equity securities permitted
under SECTION 7.20); or any pledge of the stock of any Obligor (other than UTI)
to any Person other than the Bank;
43
50
(t) Any breach by any Obligor or any creditor of their
obligations under any subordination agreement now or hereafter executed in
favor of Bank, including without limitation, the Subordination Agreement;
(u) The validity or enforceability of this Agreement
or any of the Loan Documents is contested by any Obligor or any stockholder of
any Obligor; or any Obligor denies that it has any or any further liability or
obligation hereunder or thereunder; or
(v) The continuing failure of any Borrower to perform
any obligation under the Subordinated Debt Loan Documents regardless of whether
any Subordinated Lender shall declare an event of default to have occurred as a
result thereof, or the occurrence and continuation of any event of default or
event which with the giving of notice, passage of time or both would constitute
an event of default under the Subordinated Debt Loan Documents.
13.2 REMEDIES. At the option of the Bank, upon the
occurrence and during the continuance of an Event of Default:
(a) The entire unpaid principal of the Line, all other
Bank Indebtedness, or any part thereof, all interest accrued thereon, all fees
due hereunder and all other obligations of Obligors to Bank hereunder or under
any other agreement, note or otherwise arising will become immediately due and
payable without any further demand or notice;
(b) The Line will be terminated and Obligors will
receive no further extensions of credit thereunder;
(c) Bank may increase the interest rate on the Bank
Indebtedness to the Default Rate, without notice;
(d) Bank may enter any premises occupied by any
Obligor and take possession of the Collateral and any records relating thereto;
(e) Bank may exercise each and every right and remedy
granted to it under the Loan Documents, under the Uniform Commercial Code and
under any other applicable law or at equity; and/or
(f) Bank may exercise each and every right and remedy
under the Subordination Agreement.
If an Event of Default occurs under SECTION 13.1(E) or (F), all Bank
Indebtedness shall become immediately due and payable.
44
51
13.3 SALE OR OTHER DISPOSITION OF COLLATERAL. The sale,
lease or other disposition of the Collateral, or any part thereof, by Bank
after an Event of Default may be for cash, credit or any combination thereof,
and Bank may purchase all or any part of the Collateral at public or, if
permitted by law, private sale, and in lieu of actual payment of such purchase
price, may set-off the amount of such purchase price against the Bank
Indebtedness then owing. Any sales of the Collateral may be adjourned from
time to time with or without notice. Bank may cause the Collateral to remain
on any Obligor's premises or otherwise or to be removed and stored at premises
owned by other persons, at Obligors' expense, pending sale or other disposition
of the Collateral. Obligors, at Bank's request, shall assemble the Collateral
consisting of inventory and tangible assets and make such assets available to
Bank at a place to be designated by Bank. Bank shall have the right to conduct
such sales on any Obligor's premises, at any Obligor's expense, or elsewhere,
on such occasion or occasions as Bank may see fit. Any notice required to be
given by Bank of a sale, lease or other disposition or other intended action by
Bank with respect to any of the Collateral which is deposited in the United
States mail, postage prepaid and duly addressed to Obligors at the address
specified in SECTION 14 below, at least five (5) Business Days prior to such
proposed action, shall constitute fair and reasonable notice to Obligors of any
such action. The net proceeds realized by Bank upon any such sale or other
disposition, after deduction for the expenses of retaking, holding, storing,
transporting, preparing for sale, selling or otherwise disposing of the
Collateral incurred by Bank in connection therewith and all other costs and
expenses related thereto including attorney fees, shall be applied in such
order as Bank, in its sole discretion, elects, toward satisfaction of the Bank
Indebtedness. Bank shall account to Obligors for any surplus realized upon
such sale or other disposition, and Obligors shall remain liable for any
deficiency. The commencement of any action, legal or equitable, or the
rendering of any judgment or decree for any deficiency shall not affect Bank's
security interest in the Collateral. Obligors agree that Bank has no
obligation to preserve rights to the Collateral against any other parties.
Bank is hereby granted a license or other right to use, after an Event of
Default, without charge, any Obligor's labels, general intangibles,
intellectual property, equipment, real estate, patents, copyrights, rights of
use of any name, trade secrets, trade names, trademarks, service marks and
advertising matter, or any property of a similar nature, as it pertains to the
Collateral, in completing production of, advertising for sale and selling any
inventory or other Collateral and Obligors' rights under all contracts,
licenses, approvals, permits, leases and franchise agreements shall inure to
Bank's benefit. Bank shall be under no obligation to marshall any assets in
favor of any Obligor or any other party or against or in payment of any or all
of the Bank Indebtedness.
13.4 ACTIONS WITH RESPECT TO ACCOUNTS. Each Obligor hereby
irrevocably makes, constitutes and appoints Bank (and any of Bank's designated
officers, employees or agents) as its true and lawful attorney-in-fact, with
full power of substitution, with power to sign its name and to take any of the
following actions, in its name or the name of Bank, as Bank may determine,
without notice to any Obligor and at Obligors' expense:
(a) Verify the validity and amount of or any other
matter relating to the Collateral by mail, telephone, telecopy or otherwise;
45
52
(b) Upon the occurrence of an Event of Default, notify
all account debtors that Obligors' accounts have been assigned to Bank and that
Bank has a security interest therein;
(c) Upon the occurrence of an Event of Default, direct
all account debtors to make payment of all Obligors' accounts directly to Bank
and forward invoices directly to such account debtors;
(d) Upon the occurrence of an Event of Default, take
control in any manner of any cash or non-cash items of payment or proceeds of
such accounts;
(e) Upon the occurrence of an Event of Default, notify
the United States Postal Service to change the address for delivery of mail
addressed to any Obligor to such address as Bank may designate;
(f) Upon the occurrence of an Event of Default, have
access to any lockbox or postal boxes into which any Obligor's mail is
deposited and receive, open and dispose of all mail addressed to any Obligor
(any sums received pursuant to the exercise of the rights provided in SECTIONS
13.4(A) through (E) above may, at Bank's option, be deposited in a cash
collateral account);
(g) Upon the occurrence of an Event of Default, take
control in any manner of any rejected, returned, stopped in transit or
repossessed goods relating to any accounts;
(h) Upon the occurrence of an Event of Default,
enforce payment of and collect any accounts, by legal proceedings or otherwise,
and for such purpose Bank may:
(i) Demand payment of any accounts or direct any
account debtors to make payment of accounts directly to Bank;
(ii) Receive and collect all monies due or to
become due to any Obligor;
(iii) Exercise all of any Obligor's rights and
remedies with respect to the collection of accounts;
(iv) Settle, adjust, compromise, extend, renew,
discharge or release the accounts;
(v) Sell or assign the accounts on such terms,
for such amount and at such times as Bank deems advisable;
46
53
(vi) Prepare, file and sign any Obligor's name or
names on any Proof of Claim or similar document in any proceeding filed under
federal or state bankruptcy, insolvency, reorganization or other similar law as
to any account debtor;
(vii) Prepare, file and sign any Obligor's name or
names on any Notice of Lien, Claim of Mechanic's Lien, Assignment or
Satisfaction of Lien or Mechanic's Lien or similar document in connection with
the Collateral;
(viii) Endorse the name of each Obligor upon any
chattel papers, documents, instruments, invoices, freight bills, bills of lading
or similar documents or agreements relating to the accounts or goods pertaining
thereto or upon any checks or other media of payment or evidences of a security
interest that may come into Bank's possession;
(ix) Sign the name of each Obligor to
verifications of accounts and notices thereof sent by account debtors to such
Obligor; or
(x) Take all other actions necessary or
desirable to protect any Borrower's or Bank's interest in the accounts.
Obligors ratify and approve all acts of said attorneys and agree that said
attorneys shall not be liable for any acts of commission or omission, nor for
any error of judgment or mistake of fact or law, except gross negligence or
willful misconduct. This power, being coupled with an interest, is
irrevocable. Obligors agree to assist the Bank in the collection and
enforcement of Obligors' accounts and not to hinder, delay or impede the Bank
in its collection or enforcement of said accounts.
13.5 SET-OFF. Without limiting the rights of Bank under
applicable law, Bank has and may exercise a right of set-off, a lien against
and a security interest in all property of any Obligor now or at any time in
Bank's possession in any capacity whatsoever, including but not limited to any
balance of any deposit, trust or agency account, or any other bank account with
Bank, as security for all Bank Indebtedness. At any time and from time to time
following the occurrence of an Event of Default or any Default, Bank may
without notice or demand, set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by Bank to or for the credit of any Obligor
against any or all of the Bank Indebtedness and each Obligor's obligations
under the Loan Documents. Bank shall use its best efforts to provide to the
Obligors prompt written notice of the exercise of any set-off rights, provided
that the failure of Bank to provide such notice shall not limit or affect the
validity or effectiveness of such set-off.
13.6 TURNOVER OF PROPERTY HELD BY BANK. Each Obligor
irrevocably authorizes any Affiliate of Bank, upon and following the occurrence
of an Event of Default, at the request of Bank and without further notice, to
turnover to Bank any property of any Obligor held by such Affiliate, including
without limitation, funds and securities for any Obligor's account and to
47
54
debit, for the benefit of Bank, any deposit account maintained by any Obligor
with such Affiliate (even if such deposit account is not then due or there
results a loss or reduction of interest or the imposition of a penalty in
accordance with law applicable to the early withdrawal of time deposits), in
the amount requested by Bank up to the amount of the Bank Indebtedness, and to
pay or transfer such amount or property to Bank for application to the Bank
Indebtedness.
13.7 DELAY OR OMISSION NOT WAIVER. Neither the failure nor
any delay on the part of Bank to exercise any right, remedy, power or privilege
under the Loan Documents upon the occurrence of any Event of Default or
otherwise shall operate as a waiver thereof or impair any such right, remedy,
power or privilege. No waiver of any Event of Default shall affect any later
Event of Default or shall impair any rights of Bank. No single, partial or
full exercise of any rights, remedies, powers and privileges by the Bank shall
preclude further or other exercise thereof. No course of dealing between Bank
and Obligors shall operate as or be deemed to constitute a waiver of Bank's
rights under the Loan Documents or affect the duties or obligations of
Obligors.
13.8 REMEDIES CUMULATIVE; CONSENTS. The rights, remedies,
powers and privileges provided for herein shall not be deemed exclusive, but
shall be cumulative and shall be in addition to all other rights, remedies,
powers and privileges in Bank's favor at law or in equity. Whenever the Bank's
consent or approval is required or permitted, such consent or approval shall be
at the sole and absolute discretion of Bank.
13.9 CERTAIN FEES, COSTS, EXPENSE EXPENDITURES AND
INDEMNIFICATION. Each Obligor agrees to pay on demand all costs and expenses
of Bank, consisting of:
(a) all costs and expenses in connection with (i) the
preparation, review, negotiation, execution, delivery and administration of the
Loan Documents, and the other documents to be delivered in connection
therewith, or any waivers, consents, amendments, extensions and increases to
any of the foregoing, (ii) the preparation for, negotiations regarding,
consultations concerning, or the defense or prosecution of legal proceedings
involving any claims made or threatened against Bank arising out of or related
to the Loan Documents, the transactions contemplated hereunder as to the
protection of any of the Collateral, or (iii) obtaining any appraisals or
reappraisals of Collateral, periodic lien searches and tax clearance
certificates, as Bank in its discretion deems necessary (including in all
cases, without limitation, reasonable attorney's fees and expenses);
(b) all losses, costs and expenses in connection with
the interpretation, enforcement, protection and preservation of the Bank's
rights or remedies under the Loan Documents, or any other agreement relating to
any Bank Indebtedness, or in connection with legal advice relating to the
rights or responsibilities of Bank (including without limitation court costs,
reasonable attorney's fees, reasonable expenses of accountants and appraisers
and the cost of all appeals); and
48
55
(c) any and all stamp and other taxes payable or
determined to be payable in connection with the execution and delivery of the
Loan Documents, and all liabilities to which Bank may become subject as the
result of delay in paying or omission to pay such taxes.
In the event any Obligor shall fail to pay taxes, insurance,
assessments, costs or expenses which it is required to pay hereunder, or fails
to keep the Collateral free from security interests or lien (except as
expressly permitted herein), or fails to maintain or repair the Collateral as
required hereby, or otherwise breaches any obligations under the Loan
Documents, Bank in its discretion, may make expenditures for such purposes and
the amount so expended (including attorney's fees and expenses, filing fees and
other charges) shall be payable by Obligors on demand and shall constitute part
of the Bank Indebtedness.
With respect to any amount required to be paid by Obligors under
this Section, in the event Obligors fail to pay such amount on demand, Obligors
shall also pay to Bank interest thereon at the Default Rate.
Obligors agree to indemnify and hold harmless, Bank and Bank's
officers, directors, shareholders, employees and agents, from and against any
and all claims, liabilities, losses, damages, costs and expenses (whether or
not such Person is a party to any litigation), including attorney's fees and
costs and costs of investigation, document production, attendance at
depositions or other discovery with respect to or arising out of this
Agreement, the use of any proceeds advanced hereunder, the transactions
contemplated hereunder, or any claim, demand, action or cause of action being
asserted against any Obligor or any of its Affiliates.
Obligors' obligations under this Section shall survive termination
of this Agreement and repayment of the Bank Indebtedness.
13.10 TIME IS OF THE ESSENCE. Time is of the essence in
Obligors' performance of their obligations under the Loan Documents.
13.11 INDEMNIFICATION. Obligors, jointly and severally shall
indemnify, defend and hold Bank, and its directors, agents, employees and
counsel, harmless from and against any and all losses, claims, damages,
liabilities, deficiencies, judgments, penalties, costs or expenses imposed on,
incurred by or asserted against any of them in connection with any litigation,
investigation, claim or proceeding commenced or threatened related to the
negotiation, preparation, execution, delivery, enforcement, performance or
administration of this Agreement, any other Loan Documents, or any undertaking
or proceeding related to any of the transactions contemplated hereby or any
act, omission to act, event or transaction related or attendant thereto and
including, without limitation, amounts paid in settlement, court costs, and the
fees and expenses of counsel, except that Obligors shall not be required to
indemnify, defend or hold harmless Bank from or against any such loss, claim,
damage, liability, deficiency, judgment, penalty or cost to the extent that the
undertaking to indemnify, pay and hold harmless set forth in this section may
be unenforceable because it violates any law or public policy, or results from
Bank's gross negligence or wilful misconduct. Obligors shall
49
56
pay the maximum portion which it is permitted to pay under applicable law to
Bank in satisfaction of indemnified matters under this Section. The foregoing
indemnity shall survive the payment of the Bank Indebtedness and the
termination or non-renewal of this Agreement.
14. COMMUNICATIONS AND NOTICES. All notices, requests and other
communications made or given in connection with the Loan Documents shall be in
writing and, unless receipt is stated herein to be required, shall be deemed to
have been validly given if delivered personally to the individual or division
or department to whose attention notices to a party are to be addressed, or by
private carrier, or registered or certified mail, return receipt requested, in
all cases, with charges prepaid, addressed as follows, until some other address
(or individual or division or department for attention) shall have been
designated by notice given by one party to the other:
To Obligors:
UTI Energy Corp.
16800 Greenspoint Park, Suite 225N
Houston, TX 77060
Attention: P. Blake Dupuis, Chief Financial Officer
To Bank:
Mellon Bank, N.A.
Plymouth Meeting Executive Campus
610 West Germantown Pike, Suite 200
Plymouth Meeting, PA 19462
Attention: Stephen Wilus, Vice President
ALL "PAYMENT IN FULL" CHECKS OR OTHER MEDIA OF PAYMENT MUST BE SENT
TO BANK ONLY TO THE ABOVE ADDRESS.
15. DEFINITIONS. The following words and phrases as used in
capitalized form in this Agreement, whether in the singular or plural, shall
have the meanings indicated:
ACCOUNTING TERMS. As used in this Agreement, or any certificate,
report or other document made or delivered pursuant to this Agreement,
accounting terms not defined elsewhere in this Agreement shall have the
respective meanings given to them under GAAP.
50
57
"ACQUISITION PURCHASE PRICE LIMIT" means as follows:
(a) $40,000,000.00 if the Obligors' Total Funded Debt to
EBITDA Ratio at such time is less than 1.0 to 1.0.
(b) $35,000,000 if the Obligors' Total Funded Debt to
EBITDA Ratio at such time is greater than or equal to 1.0 to 1.0.
Notwithstanding the foregoing, the Acquisition Purchase Price
Limit shall be unlimited as to dollar amount if at least 75% of the
purchase price to be paid as part of the applicable acquisition is paid by
the issuance of Equity Securities of an Obligor.
"AFFILIATE", as to any Person, means each other Person that
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person in question.
"BANK INDEBTEDNESS" shall mean all liabilities, obligations and
Indebtedness of any Obligor to Bank, whether now or hereafter owing or
existing, including, without limitation, all obligations under the Loan
Documents, all obligations to reimburse Bank for payments made by Bank
pursuant to any letter of credit issued for the account or benefit of any
Obligor by Bank, all liabilities and risk exposure related to cash
management services provided by Bank, rate swap agreements, and funds
clearinghouse services, all other obligations or undertakings now or
hereafter made by or for the benefit of any Obligor to or for the benefit of
Bank under any other agreement, promissory note or undertaking now existing or
hereafter entered into by any Obligor with Bank, including, without
limitation, all obligations of any Obligor to Bank under the Line, the Line
Note, the Loan Documents and any documents executed in connection therewith,
or under any guaranty or surety agreement, including, without limitation, the
Surety Agreements, and all obligations of any Obligor to immediately pay to
Bank the amount of any overdraft on any deposit account maintained with
Bank, together with all interest and other sums payable in connection with any
of the foregoing.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day
on which commercial banks in Pennsylvania are authorized by law to close.
"CAPITAL EXPENDITURES" means any expenditure that would be
classified as a capital expenditure on a financial statement prepared in
accordance with GAAP, provided that capital expenditures shall not include
Permitted Acquisitions.
"CAPITALIZED LEASES" means all lease obligations which have been
or should be, in accordance with GAAP, capitalized on the books of the
lessee.
"CAPITALIZED LEASE OBLIGATIONS" means all amounts payable with
respect to a Capitalized Lease.
51
58
"CHANGE OF CONTROL" shall mean the occurrence of both of the
following: (a) Remy Capital Partners III and its Affiliates as a group
(collectively, "REMY") shall cease to be the largest beneficial owner of the
total voting power of all issued and outstanding shares of the capital
stock of UTI (or successor thereto) entitled to vote generally in the
election of directors; and (b) any Person or group (within the meaning of
Rule 13d-5 as in effect on the date hereof under the Securities Exchange
Act of 1934, as amended) shall be the beneficial owner, directly or
indirectly, through a purchase, merger, consolidation or other acquisition
transaction of more than 35% of the total voting power of all issued and
outstanding shares of the capital stock of UTI (or successor thereto)
entitled to vote generally in the election of directors; provided however
that a Person shall not be deemed to have beneficial ownership of the shares
of UTI solely by reason of one or more of (i) the granting of a proxy or
agreement to such Person to vote in a particular manner in connection with a
transaction of the type described in clause (b), (ii) the granting of a
revocable proxy to such Person in connection with a matter to be
considered by stockholders of UTI, (iii) that Person's ownership of a right
to purchase or acquire stock in connection with such Person's purchase of
stock of UTI from UTI or Remy, or (iv) by reason of the ownership of an
underwriter of shares of the capital stock of UTI in connection with a
public offering of such shares; provided further that, in the case of
subclauses (i), (ii) and (iii), no payment or consideration in the form of
cash or property shall have been received in connection with such grants or
purchases.
"CHANGE IN CONTROL PREPAYMENT DATE" shall have the meaning set
forth therefor in SECTION 4.3.
"COLLATERAL" shall have the meaning set forth therefor in SECTION
5.3.
"CONSOLIDATED TANGIBLE NET WORTH", shall mean, at any time, the
amount by which all assets of Obligors, excluding (a) intangible assets, as
that term would be defined under GAAP, and (b) leasehold improvements,
exceed all of Obligors' liabilities, as would be shown on a consolidated
balance sheet of Obligors prepared as of such date in accordance with GAAP.
"CONSULTANTS" shall have the meaning set forth therefor in SECTION
10.2.
"CONTRACT PERIOD" shall have the meaning set forth therefor in
SECTION 2.1.
"CORPORATION" means a corporation, partnership, trust,
unincorporated organization, association, joint stock company, limited
liability company or other legal entity.
"DEFAULT" means any event which with the giving of notice,
passage of time or both would constitute an Event of Default.
"DEFAULT RATE " shall have the meaning set forth therefor in
SECTION 3.2.
"EBITDA" for any period means Net Income of Obligors for such
period, plus Taxes accrued by Obligors in such period, plus Interest
Expenses accrued by Obligors in such period, plus depreciation, depletion
and amortization expenses of Obligors accrued for such period, all determined
in accordance with GAAP and on a consolidated basis.
52
59
"ENVIRONMENTAL AFFILIATE" means Obligors and any other Person for
whom any Obligor at any time has any liability (contingent or otherwise)
with respect to any claims arising out of the failure of Obligors or such
Person to comply with all applicable Environmental Requirements.
"EQUITY SECURITIES" shall mean, for any Person, such Person's
common stock, preferred stock, warrants, options or other rights to
acquire common stock or preferred stock of such Person, and all
securities of such Person convertible into or exchangeable for common
stock or preferred stock of such Person.
"ERISA" shall have the meaning set forth therefor in SECTION 6.16.
"EVENT OF DEFAULT" means each of the events specified in SECTION
13.1.
"FRAUDULENT TRANSFER LAWS" shall have the meaning set forth
therefor in SECTION 2.3.
"GAAP" means generally accepted accounting principles in the United
States of America, in effect from time to time, consistently applied and
maintained.
"INDEBTEDNESS", as applied to a Person, means:
(a) all items (except items of capital stock or of
surplus) which in accordance with GAAP would be included in determining
total liabilities as shown on the liability side of a balance sheet of such
Person as at the date as of which Indebtedness is to be determined;
(b) to the extent not included in the foregoing, all
indebtedness, obligations, and liabilities secured by any mortgage, pledge,
lien, conditional sale or other title retention agreement or other security
interest to which any property or asset owned or held by such Person is
subject, whether or not the indebtedness, obligations or liabilities
secured thereby shall have been assumed by such Person; and
(c) to the extent not included in the foregoing, all
indebtedness, obligations and liabilities of others which such Person has
directly or indirectly guaranteed, endorsed (other than for collection or
deposit in the ordinary course of business), sold with recourse, or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire or
in respect of which such Person has agreed to supply or advance funds
(whether by way of loan, stock purchase, capital contribution or
otherwise) or otherwise to become directly or indirectly liable.
"INTEREST COVERAGE RATIO" means the ratio calculated as of the end
of each fiscal quarter of the Obligors, equal to Obligors' (a) Net Income
for the applicable four (4) quarters then ended, to (b) Interest
Expenses for the applicable four (4) quarters then ended, all determined on
a consolidated basis in accordance with GAAP.
53
60
"INTEREST EXPENSE", as applied to Obligors, means for any period,
the amount of interest accrued on Indebtedness by Obligors for such period,
determined in accordance with GAAP.
"LIBOR BASED RATE" means with respect to advances under the Line
accruing interest at a LIBOR Based Rate as permitted hereunder, for any
day during each Rate Period the per annum rate of interest (computed on a
basis of a year of 360 days and actual days elapsed) determined by Bank by
adding (a) the per annum rate of interest estimated in good faith by Bank in
accordance with its usual procedures (which determination shall be
conclusive) to be the average of the rate per annum for deposits, in an
amount of U.S. Dollars comparable to the amount of principal relating to
such Rate Period and having maturities comparable to such Rate Period,
offered to major money center banks in the London interbank market at or
about 11:00 a. m., London time, two (2) London business days prior to
such Rate Period, plus (b) one hundred fifty (150) basis points. In the
event that the LIBOR Based Rate is unavailable or cannot be ascertained,
Bank shall have the right to designate the LIBOR Based Rate on such
basis as it shall reasonably determine.
"LINE" shall have the meaning set forth therefor in SECTION 2.1.
"LINE NOTE" shall have the meaning set forth therefor in SECTION
2.1.
"LINES OF BUSINESS" means (a) the provision of drilling or
workover services, (b) the provision of other oilfield services to Persons
in the oil and gas industry, and (c) the manufacture, production,
distribution or sale of any products for use in the oil and gas industry.
"LOAN ACCOUNT" shall have the meaning set forth therefor in SECTION
4.12.
"LOAN DOCUMENTS" means this Agreement, the Line Note, the Surety
Agreements, the Subordination Agreement, the UCC-1 Financing Statements and
all other documents, executed or delivered by Obligors in connection
therewith or in connection with the Prior Loan Documents which may still
survive, as they may be amended from time to time.
"MODIFIED QUICK RATIO" means, at any date of determination, the
ratio of (a) the sum of the Obligors' cash and accounts receivable on such
date to (b) the sum of the outstanding principal balance of the Line on such
date, plus the undrawn amount of all letters of credit issued for the
account of any Obligor under the Line on such date.
"NET INCOME" means, as of the date of determination,
consolidated net income (or loss) of Obligors after income and franchise
taxes and shall have the meaning given such term by GAAP, provided that there
shall be specifically excluded therefrom, without duplication: (a) losses
from the sale of capital assets, (b) gains in excess of Two Hundred Fifty
Thousand Dollars ($250,000.00) in any one fiscal year from the sale of capital
assets, (c) net income of any Person (other than an Obligor) in which any
Obligor has an ownership interest, unless received by such Obligor in a
cash distribution, and (d) any gains arising from extraordinary items, as
defined by GAAP.
54
61
"NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement
executed in connection with the Subordinated Term Loan.
"NOTIFICATION" means telephonic notice (which shall be
irrevocable) by Borrowers to Bank that Borrowers have requested that the
LIBOR Based Rate shall apply to some portion of the principal amount of the
Line in accordance with the provisions of SECTION 3.1, which notice shall be
given no later than 10:00 a.m. Philadelphia time, on the day which is at
least three (3) Business Days prior to the day (which shall be a day on
which Bank is open for business) on which such election is to become
effective, which notice shall specify (a) the principal amount to be subject
to such LIBOR Based Rate; (b) whether such amount is a new advance, a
renewal of a previous request of such rate, a conversion from one interest
rate to another, or a combination thereof; (c) the Rate Period selected; and
(d) the date on which such request is to become effective (which date shall
be a date selected in accordance with SECTION 3.1(A). Borrowers agree to
confirm each telephonic Notification in writing delivered to Bank by
telecopy by the close of business on the date the Notification is given.
"PBGC" shall have the meaning set forth therefor in SECTION 6.16.
"PERMITTED ACQUISITIONS" means the acquisitions permitted under
SECTION 7.7.
"PERSON" means an individual, a Corporation or a government
or any agency or subdivision thereof, or any other entity.
"PLAN" shall have the meaning set forth therefor in SECTION 6.16.
"PRIME RATE" means the annual interest rate established from time
to time by Bank and generally known by Bank as its "prime rate", whether
published by it publicly or only for the internal guidance of its loan
officers. The Prime Rate is used merely as a pricing index and is not
and should not be considered to represent the lowest or best rate available
to a borrower.
"PRIOR LINE OF CREDIT LOAN AGREEMENT" shall have the meaning set
forth therefor in RECITAL A.
"PRIOR LINE OF CREDIT LOAN DOCUMENTS" shall have the meaning set
forth therefor in RECITAL B.
"PRIOR LOAN AGREEMENTS" shall have the meaning set forth therefor
in RECITAL C.
"PRIOR LOAN DOCUMENTS" shall have the meaning set forth therefor in
RECITAL C.
"PRIOR SURETY AGREEMENTS" shall have the meaning set forth therefor
in RECITAL B.
"RATE PERIOD" means for any portion of principal of the Line for
which Borrowers elect a LIBOR Based Rate, the period of time for which
such rate shall apply to such principal. Rate Periods for principal
accruing interest at the LIBOR Based Rate shall be for periods of one, two
or three months and for no other length of time, provided that no Rate
Period may extend beyond the expiration of the Contract Period for the Line.
55
62
"REPORT" shall have the meaning set forth therefor in SECTION 10.2.
"SOUTHLAND" means Southland Drilling Company, Ltd.
"SUBORDINATED DEBT LOAN DOCUMENTS" means all of the documents
executed and delivered in connection with the Subordinated Term Loan,
including without limitation, the Note Purchase Agreement, the $25,000,000.00
Note, the Subordination Agreement and the Warrant Agreement.
"SUBORDINATED LENDERS" means collectively Canpartners Investment
IV, LLC and its permitted successors and assigns.
"SUBORDINATED TERM LOAN" means the subordinated term loan in
the face amount of $25,000,000 extended by the Subordinated Lenders to
certain of the Obligors in accordance with the terms of the Subordinated
Debt Loan Documents.
"SUBORDINATION AGREEMENT" means the Subordination and
Intercreditor Agreement among Obligors, the Subordinated Lenders and Bank,
dated April 11, 1997 as it may be amended, modified or restated.
"SUBSIDIARY" means a Corporation (a) which is organized under the
laws of the United States or any State thereof, or any other county or
jurisdiction, (b) which conducts substantially all of its business and has
substantially all of its assets within the United States, and (c) of which
more than fifty percent (50%) of its outstanding voting stock of every class
(or other voting equity interest) is owned by any Obligor or one or more of
its Subsidiaries.
"SURETY AGREEMENTS" shall have the meaning set forth therefor in
SECTION 5.2.
"TAXES" means all income and other taxes, levies, imposts,
deductions, charges or withholdings paid or payable by any Obligor in
connection with the business, existence or other activities of such
Obligor, and all liabilities, penalties and fees with respect thereto,
determined in accordance with GAAP.
"TERM LOAN" shall have the meaning set forth therefor in RECITAL C.
"TERM LOAN AGREEMENT" shall have the meaning set forth therefor in
RECITAL C.
"TERM LOAN DOCUMENTS" shall have the meaning set forth therefor in
RECITAL C.
56
63
"TOTAL FUNDED DEBT" means as of the date of determination, on
a consolidated basis for all Obligors, the sum of (i) all Indebtedness for
borrowed money of Obligors (including without limitation the principal
balance of the Line and the Subordinated Term Loan), plus (ii) the undrawn
available amount of all letters of credit issued for the account of any
Obligor, plus (iii) the capitalized portion (as defined by GAAP) of all
Capitalized Lease Obligations of Obligors, plus (iv) all indebtedness,
obligations and liabilities of others for borrowed money which any Obligor
has directly or indirectly guarantied (excluding customary indemnity
obligations in connection with Permitted Acquisitions) or with respect to
which any Obligor is otherwise directly or indirectly liable.
"TOTAL FUNDED DEBT TO EBITDA RATIO" means as of the date of
determination the ratio of (a) Obligors' Total Funded Debt as of the date
of determination to (b) Obligors' EBITDA for the four (4) fiscal quarter
period then ended on the date of determination.
16. WAIVERS.
16.1 WAIVERS. In connection with any proceedings under the
Loan Documents, including without limitation any action by Bank in replevin,
foreclosure or other court process or in connection with any other action
related to the Loan Documents or the transactions contemplated hereunder,
Obligors waive:
(a) all errors, defects and imperfections in such
proceedings;
(b) all benefits under any present or future laws
exempting any property, real or personal, or any part of any proceeds thereof
from attachment, levy or sale under execution, or providing for any stay of
execution to be issued on any judgment recovered under any of the Loan
Documents or in any replevin or foreclosure proceeding, or otherwise providing
for any valuation, appraisal or exemption;
(c) all rights to inquisition on any real estate,
which real estate may be levied upon pursuant to a judgment obtained under any
of the Loan Documents and sold upon any writ of execution issued thereon in
whole or in part, in any order desired by Bank;
(d) presentment for payment, demand, notice of demand,
notice of nonpayment, protest and notice of protest of any of the Loan
Documents, including the Line Note;
(e) any requirement for bonds, security or sureties
required by statute, court rule or otherwise;
(f) any demand for possession of Collateral prior to
commencement of any suit; and
57
64
(g) all rights to claim or recover attorney's fees and
costs in the event that any Obligor is successful in any action to remove,
suspend or prevent the enforcement of a judgment entered by confession.
16.2 FORBEARANCE. Bank may release, compromise, forbear with
respect to, waive, suspend, extend or renew any of the terms of the Loan
Documents, without notice to any Obligor.
16.3 LIMITATION ON LIABILITY. Obligors shall be responsible
for and Bank is hereby released from any claim or liability in connection with:
(a) Safekeeping any Collateral;
(b) Any loss or damage to any Collateral;
(c) Any diminution in value of the Collateral; or
(d) Any act or default of another Person.
Bank shall only be liable for any act or omission on its part
constituting gross negligence or wilful misconduct. In the event that Bank
breaches its required standard of conduct, Obligors agree that Bank's liability
shall be only for direct damages suffered and shall not extend to punitive,
consequential or incidental damages. In the event any Obligor brings suit
against Bank in connection with the transactions contemplated hereunder and
Bank is found not to be liable, Obligors will indemnify and hold Bank harmless
from all costs and expenses, including attorney's fees, incurred by Bank in
connection with such suit. This Agreement is not intended to obligate Bank to
take any action with respect to the Collateral or to incur expenses or perform
any obligation or duty of any Obligor.
16.4 SUBROGATION; SUBORDINATION. Any and all rights of
subrogation that any Obligor may have against another Obligor or against any
collateral or security for any Bank Indebtedness, and any and all rights of
contribution, indemnity and/or substitution that any Obligor may have against
another Obligor shall be junior and subordinate to all Bank Indebtedness, to
any rights that Bank may have against all Obligors, and to all right, title and
interest that Bank may have in any such collateral or security for the Bank
Indebtedness. Bank may use, sell or dispose of any item of collateral or
security for the Bank Indebtedness as it sees fit without regard to any
subrogation rights any Obligor may have, and upon any such disposition or sale
of such collateral or security any rights of subrogation that any Obligor may
have with respect to such collateral or security shall terminate.
Until the Bank Indebtedness shall have been indefeasibly paid in
full, no Obligor shall take, or permit to be taken, any action to exercise (a)
any right of subrogation arising in respect of the Bank Indebtedness, (b) any
right of contribution arising in respect of the Bank Indebtedness that
58
65
any Obligor may have, (c) any right to enforce any remedy which Bank now has or
may hereafter have against any Obligor or (d) any benefit of, and any right to
participate in, any security now or hereafter held by Bank. If any amount
shall be paid to any Obligor on account of such subrogation or contribution
rights at any time when all Bank Indebtedness shall not have been paid in full,
such amount shall be held in trust for Bank and shall forthwith be paid over to
Bank to be credited and applied against the Bank Indebtedness, whether matured
or unmatured, in accordance with the terms hereof.
17. SUBMISSION TO JURISDICTION. Obligors hereby consent to the
jurisdiction of any state or federal court located within the Commonwealth of
Pennsylvania, and irrevocably agree that, subject to the Bank's election, all
actions or proceedings relating to the Loan Documents or the transactions
contemplated hereunder shall be litigated in such courts. Obligors waive any
objection which they may have based on lack of personal jurisdiction, improper
venue or forum non conveniens to the conduct of any proceeding in any such
court and waive personal service of any and all process upon them, and consent
that all such service of process be made by mail or messenger directed to them
at the address set forth in SECTION 14. Nothing contained in this SECTION 17
shall affect the right of Bank to serve legal process in any other manner
permitted by law or affect the right of Bank to bring any action or proceeding
against any Obligor or its property in the courts of any other jurisdiction.
18. MISCELLANEOUS.
18.1 BROKERS. The transaction contemplated hereunder was
brought about and entered into by Bank and Obligors acting as principals and
without any brokers, agents or finders being the effective procuring cause
hereof. Obligors represent to Bank that Obligors have not committed Bank to
the payment of any brokerage fee or commission in connection with this
transaction. If any such claim is made against Bank by any broker, finder or
agent or any other Person, Obligors agree to indemnify, defend and hold Bank
harmless against any such claim, at Obligors' own cost and expense, including
Bank's attorneys' fees. Obligors further agree that until any such claim or
demand is adjudicated in Bank's favor, the amount claimed and/or demanded shall
be deemed part of the Bank Indebtedness secured by the Collateral.
18.2 USE OF BANK'S NAME. No Obligor shall use Bank's name or
the name of any of Bank's Affiliates in connection with any of its business or
activities except as may otherwise be required by the rules and regulations of
the Securities and Exchange Commission or any like regulatory body and except
as may be required in its dealings with any governmental agency.
18.3 NO JOINT VENTURE. Nothing contained herein is intended
to permit or authorize any Obligor to make any contract on behalf of Bank, nor
shall this Agreement be construed as creating a partnership, joint venture or
making Bank an investor in any Obligor.
18.4 SURVIVAL. All covenants, agreements, representations
and warranties made by Obligors in the Loan Documents or made by or on their
behalf in connection with the
59
66
transactions contemplated herein shall be true at all times this Agreement is
in effect and shall survive the execution and delivery of the Loan Documents,
any investigation at any time made by Bank or on its behalf and the making by
Bank of the loans or advances to Obligors. All statements contained in any
certificate, statement or other document delivered by or on behalf of any
Obligor pursuant hereto or in connection with the transactions contemplated
hereunder shall be deemed representations and warranties by Obligors.
18.5 NO ASSIGNMENT BY OBLIGORS. No Obligor may assign any of
its rights hereunder without the prior written consent of Bank, and Bank shall
not be required to lend hereunder except to Obligors as they presently exist.
18.6 ASSIGNMENT OR SALE BY BANK. Bank may sell, assign or
participate all or a portion of its interest in the Loan Documents and in
connection therewith may make available to any prospective purchaser, assignee
or participant any information relative to any Obligor in its possession,
provided that, there are at no time more than six (6) other co-lenders or
participants and provided further that, the amount of each co-lender's or
participant's interest in the commitments under the Line and the original
balance of the Line are not less than $5,000,000 in the aggregate at the time
of assignment or purchase.
18.7 BINDING EFFECT. This Agreement and all rights and
powers granted hereby will bind and inure to the benefit of the parties hereto
and their respective permitted successors and assigns.
18.8 SEVERABILITY. The provisions of this Agreement and all
other Loan Documents are deemed to be severable, and the invalidity or
unenforceability of any provision shall not affect or impair the remaining
provisions which shall continue in full force and effect.
18.9 NO THIRD PARTY BENEFICIARIES. The rights and benefits
of this Agreement and the Loan Documents shall not inure to the benefit of any
third party.
18.10 MODIFICATIONS. No modification of this Agreement or any
of the Loan Documents shall be binding or enforceable unless in writing and
signed by or on behalf of the party against whom enforcement is sought.
18.11 HOLIDAYS. If the day provided herein for the payment of
any amount or the taking of any action falls on a Saturday, Sunday or public
holiday at the place for payment or action, then the due date for such payment
or action will be the next succeeding Business Day.
18.12 LAW GOVERNING. This Agreement has been made, executed
and delivered in the Commonwealth of Pennsylvania and will be construed in
accordance with and governed by the laws of such Commonwealth, without regard
to any rules or principles regarding conflict of laws or any rule or canon of
construction which interprets agreements against the draftsman.
60
67
18.13 INTEGRATION. The Loan Documents shall be construed as
integrated and complementary of each other, and as augmenting and not
restricting Bank's rights, powers, remedies and security. The Loan Documents
contain the entire understanding of the parties thereto with respect to the
matters contained therein and supersede all prior agreements and understandings
between the parties with respect to the subject matter thereof and do not
require parol or extrinsic evidence in order to reflect the intent of the
parties. In the event of any inconsistency between the terms of this Agreement
and the terms of the other Loan Documents, the terms of this Agreement shall
prevail.
18.14 EXHIBITS AND SCHEDULES. All exhibits and schedules
attached hereto are hereby made a part of this Agreement.
18.15 HEADINGS. The headings of the Articles, Sections,
paragraphs and clauses of this Agreement are inserted for convenience only and
shall not be deemed to constitute a part of this Agreement.
18.16 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this Agreement
by signing any such counterpart.
18.17 JOINT AND SEVERAL LIABILITY. If there is more than one
Obligor hereunder, all agreements, conditions, covenants and provisions of the
Loan Documents shall be the joint and several obligation of each Obligor.
18.18 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 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
AGREEMENT 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.
61
68
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
FWA DRILLING COMPANY, INC.
By: /s/ P. Blake Dupuis
---------------------------------------
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
INTERNATIONAL PETROLEUM
SERVICE COMPANY
By: /s/ P. Blake Dupuis
---------------------------------------
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
TRIAD DRILLING COMPANY
By: /s/ P. Blake Dupuis
---------------------------------------
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
UNIVERSAL WELL SERVICES, INC.
By: /s/ P. Blake Dupuis
---------------------------------------
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
USC, INCORPORATED
By: /s/ P. Blake Dupuis
---------------------------------------
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
62
69
[SIGNATURES CONTINUED FROM THE PREVIOUS PAGE]
UTI ENERGY CORP.
By: /s/ P. Blake Dupuis
---------------------------------------
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
UTICO, INC.
By: /s/ P. Blake Dupuis
---------------------------------------
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
PANTHER DRILLING, INC.,
FORMERLY KNOWN AS
VIERSEN & COCHRAN
DRILLING COMPANY
By: /s/ P. Blake Dupuis
---------------------------------------
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
J.S.M. & ASSOCIATES, INC.
By: /s/ P. Blake Dupuis
---------------------------------------
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
PETERSON DRILLING COMPANY
By: /s/ P. Blake Dupuis
---------------------------------------
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
63
70
[SIGNATURES CONTINUED FROM THE PREVIOUS PAGE]
MELLON BANK, N.A.
By: /s/ Stephen Wilus
--------------------------------------
Stephen Wilus, Vice President
71
EXHIBITS
Exhibit "A" - Line Note
Exhibit "B" - Form of Compliance Certificate
SCHEDULES
Schedule 6.3 Ownership Interests, Pledges, etc.
Schedule 6.4 Subsidiaries
Schedule 6.7 Pending or Threatened Litigation or Proceedings
Schedule 6.14 Names (including trade names) and Addresses, identifying
chief executive office
Schedule 6.16 Employee Pension Benefit Plan Obligations
Schedule 6.18 Intellectual Property
Schedule 7.3 Permitted Indebtedness for Borrowed Money
Schedule 7.4 Permitted Investments and Loans
Schedule 7.9 Permitted Liens and Security Interests