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EXHIBIT 10.19
LOAN AND SECURITY AGREEMENT
BY AND BETWEEN
FLEET CAPITAL CORPORATION
AND
BAYARD DRILLING TECHNOLOGY, INC.
AND
TREND DRILLING CO.
DATED: MAY 1, 1997
$10,000,000
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TABLE OF CONTENTS
Page
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SECTION 1. CREDIT FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Revolving Credit Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Letters of Credit; LC Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 All Loans to Constitute One Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Joint and Several Liability; Rights of Contribution . . . . . . . . . . . . . . . . . . . 2
1.5 Structure of Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. INTEREST, FEES AND CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Computation of Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Closing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Letter of Credit and LC Guaranty Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.6 Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.7 Audit and Appraisal Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.8 Reimbursement of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.9 Bank Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3. LOAN ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Manner of Borrowing Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Application of Payments and Collections . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.4 Loan Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 Statements of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4. TERM AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.1 Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 5. SECURITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.1 Security Interest in Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 Cross-Collateralization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.3 Lien Perfection; Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.4 Lien on Realty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 6. COLLATERAL ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.2 Administration of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.3 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.4 Administration of Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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6.5 Payment of Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 7. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.1 General Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.2. Continuous Nature of Representations and Warranties . . . . . . . . . . . . . . . . . . . 22
7.3. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.2 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.3 Specific Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 9. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.1 Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.2 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.3 Other Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.4 Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.5 Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.6 Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.7 Good Standing Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.8 Opinion Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.9 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.10 Disbursement Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.11 Dominion Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.12 Landlord Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.13 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.14 Evidence of Perfection and Priority of Liens in Collateral . . . . . . . . . . . . . . . . 30
9.15 Subordination of Chesapeake Debt and Energy Spectrum Debt . . . . . . . . . . . . . . . . 30
9.16 CIT Intercreditor Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.17 Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.18 CIT Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.19 Sale/Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.20 Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.21 Purchase of Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.22 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.23 Trend Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.24 No-Offset Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.25 Trend Financial Statements . . . . . . . . . . . . . . . . . . . .ERROR! BOOKMARK NOT DEFINED.
9.26 Lender shall have received the Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT . . . . . . . . . . . . . . . . . . . . 30
10.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.2 Acceleration of the Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.3 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.4 Remedies Cumulative; No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.1 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.2 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.3 Modification of Agreement; Sale of Interest . . . . . . . . . . . . . . . . . . . . . . . 36
11.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.6 Cumulative Effect; Conflict of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.7 Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.8 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.9 Lender's Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.10 Credit Inquiries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.11 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.12 Entire Agreement; Appendix A and Exhibits and Schedules . . . . . . . . . . . . . . . . . 39
11.13 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.14 GOVERNING LAW; CONSENT TO FORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.15 WAIVERS BY BORROWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.16 ORAL AGREEMENTS INEFFECTIVE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.17 Nonapplicability of Article 5069-15.01 et seq. . . . . . . . . . . . . . . . . . . . . . . 41
11.18 Certain Matters of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made this 1st day of May, 1997, by
and between FLEET CAPITAL CORPORATION ("Lender"), a Rhode Island corporation
with an office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, LB 21, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇; and Bayard Drilling Technologies, Inc., a Delaware corporation
("Bayard"), and Trend Drilling Co., an Oklahoma corporation ("Trend") (Bayard
and Trend being referred to individually, collectively, and jointly and
severally, as "Borrower"), each Borrower having its chief executive office and
principal place of business at ▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇. Capitalized terms used in this Agreement have the meanings assigned to
them in Appendix A, General Definitions. Accounting terms not otherwise
specifically defined herein shall be construed in accordance with GAAP
consistently applied.
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a total credit facility of up to $10,000,000
available upon Borrower's request therefor, as follows:
1.1 Revolving Credit Loans.
1.1.1 Loans and Reserves. Lender agrees, during the term of
this Agreement and for so long as no Default or Event of Default exists, to
make Revolving Credit Loans to Borrower from time to time, as requested by
Borrower in the manner set forth in Section 3.1.1 hereof, up to a maximum
principal amount at any time outstanding equal to the Borrowing Base. Lender
shall have the right to establish reserves in such amounts, and with respect to
such matters, as Lender shall deem necessary or appropriate, against the amount
of Revolving Credit Loans which Borrower may otherwise request under this
Section 1.1.1, including, without limitation, with respect to (i) any sums
chargeable against Borrower's Loan Account as Revolving Credit Loans under any
section of this Agreement; (ii) amounts owing by Borrower to any Person to the
extent secured by a Lien on, or trust over, any Property of Borrower other than
the CIT Debt and the CIT Sale/Leaseback; (iii) all amounts of past due rent or
other charges owing at such time by Borrower to any landlord of any premises
where any of the Collateral is located; and (iv) such other matters, events,
conditions or contingencies as to which Lender, in its reasonable judgment,
determines reserves should be established from time to time hereunder.
1.1.2 Use of Proceeds. The Revolving Credit Loans shall be used
solely for Borrower's general corporate purposes capital needs in a manner
consistent with the provisions of this Agreement and Applicable Law. In no
event shall any proceeds of any Revolving Credit Loans be used to purchase or
to carry, reduce, retire or refinance any Indebtedness incurred to purchase or
carry any margin stock (within the meaning of Regulations G or U of the Federal
Reserve Board).
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1.2 Letters of Credit; LC Guaranties. Lender agrees, for so long as
no Default or Event of Default exists and if requested by Borrower, to (i)
issue its, or cause to be issued by its Affiliates, standby Letters of Credit
for the account of Borrower or (ii) execute LC Guaranties by which Lender or
its Affiliates shall guaranty the payment or performance by each Borrower of
its reimbursement obligations with respect to standby Letters of Credit,
provided that the LC Amount at any time shall not exceed $2,000,000. No Letter
of Credit or LC Guaranty may have an expiration date that is after the last day
of the Original Term. Any amounts paid by Lender under any LC Guaranty or in
connection with any Letter of Credit shall be treated as Revolving Credit
Loans, shall be secured by all of the Collateral and shall bear interest and be
payable at the same rate and in the same manner as Revolving Credit Loans.
1.3 All Loans to Constitute One Obligation. All Loans shall
constitute one general joint and several obligation of Borrowers, and shall be
secured by Lender's security interest in and Lien upon all of the Collateral,
and by all other security interests and Liens heretofore, now or at any time or
times hereafter granted by any Borrower to Lender.
1.4 Joint and Several Liability; Rights of Contribution.
(A) Each Borrower states and acknowledges that: (i) pursuant
to this Agreement, Borrowers desire to utilize their borrowing potential on a
consolidated basis to the same extent possible if they were merged into a
single corporate entity and that this Agreement reflects the establishment of
credit facilities which would not otherwise be available to such Borrower if
each Borrower were not jointly and severally liable for payment of all of the
Obligations; (ii) it has determined that it will benefit specifically and
materially from the advances of credit contemplated by this Agreement; (iii) it
is both a condition precedent to the obligations of Lender hereunder and a
desire of the Borrowers that each Borrower execute and deliver to Lender this
Agreement; and (iv) Borrowers have requested and bargained for the structure
and terms of and security for the advances contemplated by this Agreement.
(B) Each Borrower hereby irrevocably and unconditionally: (i)
agrees that it is jointly and severally liable to Lender for the full and
prompt payment of the Obligations and the performance by each Borrower of its
obligations hereunder in accordance with the terms hereof; (ii) agrees to fully
and promptly perform all of its obligations hereunder with respect to each
advance of credit hereunder as if such advance had been made directly to it;
and (iii) agrees as a primary obligation to indemnify Lender on demand for and
against any loss incurred by Lender as a result of any of the obligations of
any one or more of the Borrowers being or becoming void, voidable,
unenforceable or ineffective for any reason whatsoever (subject to the Lender's
obligations under the terms of this Agreement and the Loan Documents), whether
or not known to Lender or any Person, the amount of such loss being the amount
which Lender would otherwise have been entitled to recover from any one or both
of the Borrowers.
(C) It is the intent of each Borrower that the indebtedness,
obligations and liability hereunder of no one of them be subject to challenge
on any basis, including, without limitation, pursuant to any applicable
fraudulent conveyance or fraudulent transfer laws. Accordingly, as of the date
hereof, the liability of each Borrower under this Section 1.4, together
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with all of its other liabilities to all Persons as of the date hereof and as
of any other date on which a transfer or conveyance is deemed to occur by
virtue of this Agreement, calculated in amount sufficient to pay its probable
net liabilities on its existing Indebtedness as the same become absolute and
matured ("Dated Liabilities") is, and is to be, less than the amount of the
aggregate of a fair valuation of its property as of such corresponding date
("Dated Assets"). To this end, each Borrower under this Section 1.4, (i)
grants to and recognizes in each other Borrower, ratably, rights of subrogation
and contribution in the amount, if any, by which the Dated Assets of such
Borrower, but for the aggregate of subrogation and contribution in its favor
recognized herein, would exceed the Dated Liabilities of such Borrower or, as
the case may be, (ii) acknowledges receipt of and recognizes its right to
subrogation and contribution ratably from each of the other Borrowers in the
amount, if any, by which the Dated Liabilities of such Borrower, but for the
aggregate of subrogation and contribution in its favor recognized herein, would
exceed the Dated Assets of such Borrower under this Section 1.4. In
recognizing the value of the Dated Assets and the Dated Liabilities, it is
understood that Borrowers will recognize, to at least the same extent of their
aggregate recognition of liabilities hereunder, their rights to subrogation and
contribution hereunder. It is a material objective of this Section 1.4 that
each Borrower recognizes rights to subrogation and contribution rather than be
deemed to be insolvent (or in contemplation thereof) by reason of an arbitrary
interpretation of its joint and several obligations hereunder. In addition to
and not in limitation of the foregoing provisions of this Section 1.4, the
Borrowers and Lender hereby agree and acknowledge that it is the intent of each
Borrower and of Lender that the obligations of each Borrower hereunder be in
all respects in compliance with, and not be voidable pursuant to, applicable
fraudulent conveyance and fraudulent transfer laws.
1.5 Structure of Credit Facility. Each Borrower agrees and
acknowledges that the present structure of the credit facilities detailed in
this Agreement is based in part upon the financial and other information
presently known to Lender regarding each Borrower, the corporate structure of
Borrowers, and the present financial condition of each Borrower. Each Borrower
hereby agrees that Lender shall have the right, in its sole credit judgment, to
require that any or all of the following changes be made to these credit
facilities: (i) restrict loans and advances between Borrowers, (ii) establish
separate lockbox and dominion accounts for each Borrower, and (iii) establish
such other procedures as shall be reasonably deemed by Lender to be useful in
tracking where Loans are made under this Agreement and the source of payments
received by Lender on such Loans.
SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
2.1.1 Rates of Interest. The outstanding principal amount of
the Loans shall bear interest at a fluctuating rate per annum equal to the
lesser of (a) one and one-half percent (1.5 %) above the Base Rate (the
"Applicable Annual Rate") and (b) the Maximum Legal Rate. The rate of interest
applicable to all Loans shall increase or decrease by an amount equal to any
increase or decrease in the Base Rate, effective as of the opening of business
on the day that any such change in the Base Rate occurs.
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2.1.2 Default Rate of Interest. Upon and after the occurrence
of an Event of Default, and during the continuation thereof, the principal
amount of all Loans shall bear interest at a rate per annum equal to the lesser
of (a) two percent (2.00%) above the Applicable Annual Rate and (b) the Maximum
Legal Rate.
2.1.3 Maximum Interest. (A) Notwithstanding anything to the
contrary in this Agreement or otherwise, (i) if at any time the amount of
interest computed on the basis of an Applicable Annual Rate or a Default Rate
would exceed the amount of such interest computed upon the basis of the maximum
rate of interest permitted by applicable state or federal law in effect from
time to time hereafter (the "Maximum Legal Rate"), the interest payable under
this Agreement shall be computed upon the basis of the Maximum Legal Rate, but
any subsequent reduction in such Applicable Annual Rate or Default Rate, as
applicable, shall not reduce such interest thereafter payable hereunder below
the amount computed on the basis of the Maximum Legal Rate until the aggregate
amount of such interest accrued and payable under this Agreement equals the
total amount of interest which would have accrued if such interest had been at
all times computed solely on the basis of an Applicable Annual Rate or Default
Rate, as applicable; and (ii) unless preempted by federal law, an Applicable
Annual Rate or Default Rate, as applicable, from time to time in effect
hereunder may not exceed the "indicated ceiling rate" from time to time in
effect under Tex. Rev. Civ. Stat. ▇▇▇. art 5069-1.04(c) (▇▇▇▇▇▇ 1987). If the
applicable state or federal law is amended in the future to allow a greater
rate of interest to be charged under this Agreement than is presently allowed
by applicable state or federal law, then the limitation of interest hereunder
shall be increased to the maximum rate of interest allowed by applicable state
or federal law as amended, which increase shall be effective hereunder on the
effective date of such amendment, and all interest charges owing to Lender by
reason thereof shall be payable in accordance with Section 3.2.2 hereof.
(B) Excess Interest. No agreements, conditions,
provisions or stipulations contained in this Agreement or any other instrument,
document or agreement between Borrower and Lender or default of Borrower, or
the exercise by Lender of the right to accelerate the payment of the maturity
of principal and interest, or to exercise any option whatsoever contained in
this Agreement or any other Loan Document, or the arising of any contingency
whatsoever, shall entitle Lender to contract for, charge, or receive, in any
event, interest exceeding the Maximum Legal Rate. In no event shall Borrower
be obligated to pay interest exceeding such Maximum Legal Rate and all
agreements, conditions or stipulations, if any, which may in any event or
contingency whatsoever operate to bind, obligate or compel Borrower to pay a
rate of interest exceeding the Maximum Legal Rate, shall be without binding
force or effect, at law or in equity, to the extent only of the excess of
interest over such Maximum Legal Rate. In the event any interest is contracted
for, charged or received in excess of the Maximum Legal Rate ("Excess
Interest"), Borrower acknowledges and stipulates that any such contract,
charge, or receipt shall be the result of an accident and bona fide error, and
that any Excess received by Lender shall be applied, first, to reduce the
principal then unpaid hereunder; second, to reduce the other Obligations; and
third, returned to Borrower, it being the intention of the parties hereto not
to enter at any time into a usurious or otherwise illegal relationship.
Borrower recognizes that, with fluctuations in the Base Rate and the Maximum
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Legal Rate, such a result could inadvertently occur. By the execution of this
Agreement, Borrower covenants that (i) the credit or return of any Excess
Interest shall constitute the acceptance by Borrower of such Excess Interest,
and (ii) to the extent permitted by law, Borrower shall not seek or pursue any
other remedy, legal or equitable, against Lender, based in whole or in part
upon contracting for, charging or receiving of any interest in excess of the
maximum authorized by applicable law. For the purpose of determining whether
or not any Excess Interest has been contracted for, charged or received by
Lender, all interest at any time contracted for, charged or received by Lender
in connection with this Agreement shall be amortized, prorated, allocated and
spread in equal parts during the entire term of this Agreement.
(C) Incorporation by this Reference. The provisions of
Section 2.1.3(B) shall be deemed to be incorporated into every document or
communication relating to the Obligations which sets forth or prescribes any
account, right or claim or alleged account, right or claim of Lender with
respect to Borrower (or any other obligor in respect of Obligations), whether
or not any provision of Section 2.1.3(B) is referred to therein. All such
documents and communications and all figures set forth therein shall, for the
sole purpose of computing the extent of the Obligations of Borrower (or any
other obligor) asserted by Lender thereunder, be automatically re-computed by
Borrower or any such obligor, and by any court considering the same, to give
effect to the adjustments or credits required by Section 2.1.3(B).
2.2 Computation of Interest and Fees. Interest, Letter of Credit and
LC Guaranty fees and commitment fees hereunder shall be calculated daily and
shall be computed on the actual number of days elapsed over a year of 360 days.
For the purpose of computing interest hereunder, all items of payment received
by Lender shall be deemed applied by Lender on account of the Obligations
(subject to final payment of such items) one (1) Business Day after receipt by
Lender of such items in Lender's account located in Atlanta, Georgia, and
Lender shall be deemed to have received such items of payment on the date
specified in Section 3.3 hereof.
2.3 Closing Fee. Borrower shall pay to Lender a closing fee of
$175,000, which shall be fully earned and (except to the extent otherwise
required by Applicable Law) nonrefundable on the Closing Date. This closing
fee shall be paid as follows: (i) $75,000 shall be paid concurrently with the
initial Loan hereunder, and (ii) the remaining $100,000 shall be paid on or
before December 31, 1997.
2.4 Letter of Credit and LC Guaranty Fees. Borrower shall pay to
Lender for standby Letters of Credit and LC Guaranties of standby Letters of
Credit, two percent (2.00 %) per annum of the aggregate face amount of such
Letters of Credit and LC Guaranties outstanding from time to time during the
term of this Agreement, plus all normal and customary charges associated with
the issuance thereof, which fees and charges shall be deemed fully earned upon
issuance of each such Letter of Credit or LC Guaranty, shall be due and payable
on the first Business Day of each month and shall not be subject to rebate or
proration upon the termination of this Agreement for any reason.
2.5 Commitment Fee. Borrower shall pay to Lender a commitment fee
equal to one-half of one percent (.5%) per annum of the amount by which the
Average Monthly Revolving
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Credit Loan Balance is less than the Total Credit Facility. The commitment fee
shall be payable monthly, in arrears, on the last day of each calendar month
hereafter.
2.6 Servicing Fee. Borrower shall pay to Lender an annual servicing
fee of $20,000. This servicing fee shall be paid as follows: (i) $5,000 on
the Closing Date, and (ii) in equal installments of $5,000, payable on the
first day of each April, July, October, and January thereafter.
2.7 Audit and Appraisal Fees. Borrower shall reimburse Lender for
all actual out-of-pocket costs and expenses incurred by Lender in connection
with audits and appraisals of Borrower's books and records and such other
matters as Lender shall deem appropriate. All such out-of-pocket expenses
shall be payable on demand.
2.8 Reimbursement of Expenses. If, at any time or times regardless
of whether or not an Event of Default then exists, Lender incurs reasonable
legal expenses or any accounting expenses or any other costs or out-of-pocket
expenses in connection with (i) the negotiation and preparation of this
Agreement or any of the other Loan Documents, any amendment of or modification
of this Agreement or any of the other Loan Documents, or any sale or attempted
sale of any interest herein to any other Person; (ii) the administration of
this Agreement or any of the other Loan Documents and the transactions
contemplated hereby and thereby; (iii) any litigation, contest, dispute, suit,
proceeding or action (whether instituted by Lender, Borrower or any other
Person) in any way relating to the Collateral, this Agreement or any of the
other Loan Documents or Borrower's affairs; (iv) any attempt to enforce any
rights of Lender against Borrower or any other Person which may be obligated to
Lender by virtue of this Agreement or any of the other Loan Documents,
including the Account Debtors; or (v) any attempt to inspect, verify, protect,
preserve, restore, collect, sell, liquidate or otherwise dispose of or realize
upon the Collateral; then all such legal and accounting expenses, other costs
and out of pocket expenses of Lender shall be charged to Borrower. All amounts
chargeable to Borrower under this Section 2.8 shall be Obligations secured by
all of the Collateral, shall be payable on demand to Lender and shall bear
interest from the date such demand is made until paid in full at the rate
applicable to Revolving Credit Loans from time to time. Borrower shall also
reimburse Lender for expenses incurred by Lender in its administration of the
Collateral to the extent and in the manner provided in Section 6 hereof.
2.9 Bank Charges. Borrower shall pay to Lender, on demand, any and
all normal and customary fees, costs or expenses which Lender pays to a bank or
other similar institution arising out of or in connection with (i) the
forwarding to Borrower or any other Person on behalf of Borrower, by Lender, of
proceeds of loans made by Lender to Borrower pursuant to this Agreement and
(ii) the depositing for collection, by Lender, of any check or item of payment
received or delivered to Lender on account of the Obligations.
2.10 Line Debit for Charges. Lender may, at its option, make a
Revolving Credit Loan to reimburse itself for any and all amounts payable by
Borrower to Lender hereunder. Alternatively, Lender may invoice Borrower for
any such amounts and, in such case and
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notwithstanding anything contained herein to the contrary, interest shall not
begin to accrue on such amounts until five (5) days after the delivery by
Lender of such invoice.
SECTION 3. LOAN ADMINISTRATION
3.1 Manner of Borrowing Revolving Credit Loans. Borrowings under the
credit facility established pursuant to Section 1 hereof shall be as follows:
3.1.1 Loan Requests. A request for a Revolving Credit Loan
shall be made, or shall be deemed to be made, in the following manner: (i)
Borrower shall give Lender notice of its intention to borrow, in which notice
Borrower shall specify the amount of the proposed borrowing and the proposed
borrowing date, no later than 11:00 a.m. Dallas, Texas time on the proposed
borrowing date; provided, however, Lender shall have the right to refuse to
accept such a request or make a Revolving Credit Loan if at such time there
exists a Default or an Event of Default; and (ii) the becoming due of any
amount required to be paid under this Agreement or under any of the other Loan
Documents, whether as principal, accrued interest, fees or other charges, shall
be deemed irrevocably to be a request by Borrower from Lender for a Revolving
Credit Loan on the due date of, and in an aggregate amount required to pay,
such principal, accrued interest, fees or other charges, and the proceeds of
any such Revolving Credit Loan may be disbursed by Lender by way of direct
payment of the relevant Obligation (whether or not any Default, Event of
Default or Out-of-Formula Condition exists at the time of or would result from
such Revolving Credit Loan) and shall bear interest at the rate of interest
applicable to Revolving Credit Loans. As an accommodation to Borrower, Lender
may permit telephonic requests for loans and electronic transmittal of
instructions, authorizations, agreements or reports to Lender by Borrower.
Unless Borrower specifically directs Lender in writing not to accept or act
upon telephonic or electronic communications from Borrower, Lender shall have
no liability to Borrower for any loss or damage suffered by Borrower as a
result of Lender's honoring of any requests, execution of any instructions,
authorizations or agreements or reliance on any reports communicated to Lender
telephonically or electronically and purporting to have been sent to Lender by
any individual from time to time designated by Borrower as an authorized
officer and Lender shall have no duty to verify the origin or authenticity of
any such communication.
3.1.2 Disbursement. Borrower hereby irrevocably authorizes
Lender to disburse the proceeds of each Revolving Credit Loan requested, or
deemed to be requested, pursuant to this Section 3.1.2 as follows: (i) the
proceeds of each Revolving Credit Loan requested under Section 3.1.1(i) shall
be disbursed by Lender in lawful money of the United States of America in
immediately available funds, in the case of the initial borrowing, in
accordance with the terms of the written disbursement letter from Borrower, and
in the case of each subsequent borrowing, by wire transfer to such bank account
as may be agreed upon by Borrower and Lender from time to time or elsewhere if
pursuant to a written direction from Borrower; and (ii) the proceeds of each
Revolving Credit Loan requested under Section 3.1.1(ii) shall be disbursed by
Lender by way of direct payment of the relevant interest or other Obligation.
3.1.3 Authorization. Borrower hereby irrevocably authorizes
Lender, in Lender's sole discretion, to advance to Borrower, and to charge to
Borrower's Loan Account
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hereunder as a Revolving Credit Loan, a sum sufficient to pay all interest
accrued on the Obligations during the immediately preceding month and to pay
all costs, fees and expenses at any time owed by Borrower to Lender hereunder.
3.2 Payments. All payments with respect to any of the Obligations
shall be made to Lender on the date when due, in Dollars and in immediately
available funds, without any offset or counterclaim. Except where evidenced by
notes or other instruments issued or made by Borrower to Lender specifically
containing payment provisions which are in conflict with this Section 3.2 (in
which event the conflicting provisions of said notes or other instruments shall
govern and control), the Obligations shall be payable as follows:
3.2.1 Principal. Principal payable on account of Revolving
Credit Loans shall be payable by Borrower to Lender immediately upon the
earliest of (i) the receipt by Lender or Borrower of any proceeds of any of the
Collateral, to the extent of said proceeds, (ii) the occurrence of an Event of
Default in consequence of which Lender elects to accelerate the maturity and
payment of the Obligations, or (iii) termination of this Agreement pursuant to
Section 4 hereof; provided, however, that if an Out-of-Formula Condition shall
exist at any time, Borrower shall, on demand, repay the Obligations to the
extent necessary to eliminate the Out-of-Formula Condition.
3.2.2 Interest. Interest accrued on the Revolving Credit Loans
shall be due on the earliest of (i) the first calendar day of each month (for
the immediately preceding month), computed through the last calendar day of the
preceding month, (ii) the occurrence of an Event of Default in consequence of
which Lender elects to accelerate the maturity and payment of the Obligations
or (iii) termination of this Agreement pursuant to Section 4 hereof.
3.2.3 Costs, Fees and Charges. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrower as and when provided in
Section 2 hereof, to Lender or to any other Person designated by Lender in
writing.
3.2.4 Other Obligations. The balance of the Obligations
requiring the payment of money, if any, shall be payable by Borrower to Lender
as and when provided in this Agreement, the Other Agreements or the Security
Documents, or, if no date of payment is otherwise specified in the Loan
Documents, on demand.
3.3 Application of Payments and Collections. All items of payment
received by Lender by 12:00 noon, Dallas, Texas time, on any Business Day shall
be deemed received on that Business Day. All items of payment received after
12:00 noon, Dallas, Texas time, on any Business Day shall be deemed received on
the following Business Day. Borrower irrevocably waives the right to direct
the application of any and all payments and collections at any time or times
hereafter received by Lender from or on behalf of Borrower, and Borrower does
hereby irrevocably agree that Lender shall have the continuing exclusive right
to apply and reapply any and all such payments and collections received at any
time or times hereafter by Lender or its agent against the Obligations, in such
manner as Lender may deem advisable, notwithstanding any entry by Lender upon
any of its books and records. If as the result of collections of
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Accounts as authorized by Section 6.2.6 hereof a credit balance exists in the
Loan Account, such credit balance shall not accrue interest in favor of
Borrower, but shall be available to Borrower at any time or times for so long
as no Default or Event of Default exists. Lender may, at its option, offset
such credit balance against any of the Obligations upon and after the
occurrence of an Event of Default.
3.4 Loan Account. Lender shall establish an account on its books
(the "Loan Account") and shall enter all Loans as debits to the Loan Account
and shall also record in the Loan Account all payments made by Borrower on any
Obligations and all proceeds of Collateral which are finally paid to Lender,
and may record therein, in accordance with customary accounting practice, other
debits and credits, including interest and all charges and expenses properly
chargeable to Borrower.
3.5 Statements of Account. Lender will account to Borrower monthly
with a statement of Loans, charges and payments made pursuant to this Agreement
supported, if requested by Borrower, by appropriate documentation, and such
account rendered by Lender shall be deemed final, binding and conclusive upon
Borrower unless Lender is notified by Borrower in writing to the contrary
within sixty (60) days after the date each accounting is deemed to have been
sent pursuant to Section 11.8 hereof. Such notice shall only be deemed an
objection to those items specifically objected to therein.
SECTION 4. TERM AND TERMINATION
4.1 Term of Agreement. Subject to Section 4.2 hereof and Lender's
right to cease making Loans to Borrower upon or after the occurrence of any
Default or Event of Default, this Agreement shall be in effect for a period of
three (3) years from the date hereof, through and including April 30, 2000 (the
"Original Term").
4.2 Termination.
4.2.1 Termination by Lender. After the occurrence and during
the continuation of an Event of Default, Lender may terminate this Agreement
without notice.
4.2.2 Termination by Borrower. Upon at least sixty (60) days
prior written notice to Lender, Borrower may, at its option, terminate this
Agreement; provided, however, no such termination shall be effective until
Borrower has paid all of the Obligations in immediately available funds and all
Letters of Credit and LC Guaranties have expired or have been cash
collateralized to Lender's satisfaction. Any notice of termination given by
Borrower shall be irrevocable unless Lender otherwise agrees in writing, and
Lender shall have no obligation to make any Loans or issue or procure any
Letters of Credit or LC Guaranties on or after the termination date stated in
such notice. Borrower may elect to terminate this Agreement in its entirety
only. No section of this Agreement or type of Loan available hereunder may be
terminated singly.
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4.2.3 Termination Charges.
(i) On the effective date of termination of this
Agreement for any reason, Borrower shall pay to Lender (in addition to the then
outstanding principal, accrued interest and other charges owing under the terms
of this Agreement and any of the other Loan Documents) as liquidated damages
for the loss of the bargain and not as a penalty, an amount equal to three
percent (3%) of the Total Credit Facility if termination occurs during the
first twelve-month period of the Original Term (May 1, 1997, through April 30,
1998); two percent (2%) of the Total Credit Facility if termination occurs
during the second twelve-month period of the Original Term (May 1, 1998,
through April 30, 1999); and one percent (1%) of the Total Credit Facility if
termination occurs during the third twelve-month period of the Original Term
(May 1, 1999, through April 30, 2000). If termination occurs on the last day
of the Original Term, no termination charge shall be payable.
(ii) In the event that (a) Borrowers make a prepayment
of the CIT Debt pursuant to the terms of Section 1.06(b)(ii) of the CIT Loan
Agreement, (b) the Borrowers deliver a written request to CIT, as agent, to
release from the Liens granted to CIT, as agent thereunder, certain Drilling
Rigs or other collateral securing the CIT Debt, (c) Borrowers deliver a written
request to Lender to release the Liens of Lender with respect to the Drilling
Rigs and other collateral requested to be released by CIT, as agent, and (d)
Lender, in its capacity as Lender hereunder and in its capacity as a co-lender
under the CIT Loan Agreement, either fails to respond to such request or does
not approve such request, in either case within ten (10) Business Days from the
date of delivery of such request to Lender, then, in such event, Borrower may,
by written notice to Lender delivered within ten (10) Business Days after the
effective date of Lender's response, notify Lender of its intent to terminate
this Agreement and to payoff and remove Lender as a co-lender under the CIT
Loan Agreement no later than sixty (60) days after such notice. Such notice to
terminate by Borrowers shall be irrevocable. Notwithstanding the provisions of
Section 4.2.3(i) above, in the event Borrowers, within such sixty (60) day
period, terminate this Agreement and indefeasibly pay in full all Obligations
of Borrowers to Lender under this Agreement and terminate, with respect to
Lender as a co-lender, the CIT Loan Agreement and indefeasibly pay in full all
obligations, liabilities and amounts owing to Lender as a co-lender under the
CIT Loan Agreement, then Lender shall waive the application of the pre-payment
fees under Section 4.2.3(i) with respect to such termination and, with respect
to Lender in its capacity as a co-lender under the CIT Loan Agreement, waive
the application of the pre-payment fees under Section 1.06(b)(ii) of the CIT
Loan Agreement with respect to such termination.
4.2.4 Effect of Termination. All of the Obligations shall be
immediately due and payable upon the termination date stated in any notice of
termination of this Agreement. All undertakings, agreements, covenants,
warranties and representations of Borrower contained in the Loan Documents
shall survive any such termination and Lender shall retain its Liens in the
Collateral and all of its rights and remedies under the Loan Documents
notwithstanding such termination until Borrower has paid the Obligations to
Lender, in full, in immediately available funds, together with the applicable
termination charge, if any. Notwithstanding the payment in full of the
Obligations, Lender shall not be required to terminate its security interests
in the
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Collateral unless, with respect to any loss or damage Lender may incur as a
result of dishonored checks or other items of payment received by Lender from
Borrower or any Account Debtor and applied to the Obligations, Lender shall, at
its option (i) have received a written agreement, executed by Borrower and by
any Person whose loans or other advances to Borrower are used in whole or in
part to satisfy the Obligations, indemnifying Lender from any such loss or
damage; or (ii) have retained such monetary reserves and Liens on the
Collateral for such period of time as Lender, in its reasonable discretion, may
deem necessary to protect Lender from any such loss or damage.
SECTION 5. SECURITY INTERESTS
5.1 Security Interest in Collateral. To secure the prompt payment
and performance to Lender of all of the Obligations, each Borrower hereby
grants to Lender a continuing security interest in and Lien upon all of each
Borrower's assets, including all of the following Property and interests in
Property of Borrower, whether now owned or existing or hereafter created,
acquired or arising and wheresoever located:
(i) All Accounts;
(ii) All Inventory;
(iii) All Equipment;
(iv) All General Intangibles;
(v) All investment property (as defined in Section 9.115 of
the Code);
(vi) All real Property;
(vii) All Drilling Rigs;
(viii) All Drilling Contracts;
(ix) All monies and other Property of any kind now or at any
time or times hereafter in the possession or under the control of Lender or a
bailee or Affiliate of Lender;
(x) All accessions to, substitutions for and all replacements,
products and cash and non-cash proceeds of (i) through (ix) above, including,
without limitation, proceeds of and unearned premiums with respect to insurance
policies insuring any of the Collateral; and
(xi) All books and records (including, without limitation,
customer lists, credit files, computer programs, print-outs, and other computer
materials and records) of Borrower pertaining to any of (i) through (x) above.
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5.2 Cross-Collateralization. Each Borrower agrees that the
Collateral pledged by such Borrower hereunder shall secure all of the
Obligations of the Borrower. Upon and after an Event of Default by any
Borrower, Lender may pursue all rights and remedies that Lender may have
against all or any part of the Collateral regardless of which Borrower has
legal title to such Collateral. Each Borrower hereby acknowledges that this
cross-collateralization of the Collateral owned by such Borrower is in
consideration of Lender extending the credit hereunder and is mutually
beneficial to each Borrower.
5.3 Lien Perfection; Further Assurances. Borrower shall execute such
UCC-1 financing statements as are required by the Code and such other
instruments, assignments or documents as are necessary to perfect Lender's Lien
upon any of the Collateral and shall take such other action as may be required
to perfect or to continue the perfection of Lender's Lien upon the Collateral.
Unless prohibited by Applicable Law, Borrower hereby authorizes Lender to
execute and file any such financing statement on Borrower's behalf. The
parties agree that a carbon, photographic or other reproduction of this
Agreement shall be sufficient as a financing statement and may be filed in any
appropriate office in lieu thereof. At Lender's reasonable request, Borrower
shall also promptly execute or cause to be executed and shall deliver to Lender
any and all documents, instruments and agreements deemed necessary by Lender to
give effect to or carry out the terms or intent of the Loan Documents.
5.4 Lien on Realty. The due and punctual payment and performance of
the Obligations shall also be secured by a Lien upon all real Property of
Borrower now or hereafter acquired by Borrower and wheresoever located.
Concurrently with the purchase of any real Property by Borrower, a
mortgage/deed of trust shall be executed by Borrower in favor of Lender and
shall be duly recorded, at Borrower's expense, in each office where such
recording is required to constitute a fully perfected Lien on the real Property
covered thereby. In connection with the purchase of such real Property,
Borrower shall deliver to Lender, at Borrower's expense, detailed surveys and
mortgagee title insurance policies issued by a title insurance company
satisfactory to Lender, which policies shall be in form and substance
satisfactory to Lender; provided, however, Lender hereby agrees that no
mortgagee's title insurance or survey shall be required if the real Property is
acquired for, or has been independently appraised at a value of, less than
$1,000,000.
SECTION 6. COLLATERAL ADMINISTRATION
6.1 General
6.1.1 Location of Collateral. All tangible items of Collateral,
other than Inventory in transit and Drilling Rigs, the locations of which are
reported to Lender pursuant to Section 6.4.4 hereof, motor vehicles and
investment property held in an account with a securities intermediary, shall at
all times be kept by Borrower and its Subsidiaries at one or more of the
business locations set forth in Exhibit A hereto and shall not, without the
prior written approval of Lender, be moved therefrom except, prior to an Event
of Default and Lender's acceleration of the maturity of the Obligations in
consequence thereof, for (i) sales of Inventory in the ordinary
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course of business, and (ii) removals in connection with dispositions of
Equipment that are authorized by Section 6.4.2 hereof.
6.1.2 Insurance of Collateral. Borrower shall maintain and pay
for insurance upon all Collateral wherever located and with respect to
Borrower's business, covering casualty, hazard, public liability and such other
risks in such amounts and with such insurance companies as are reasonably
satisfactory to Lender. Borrower shall deliver the originals or certified
copies of such policies to Lender with satisfactory lender's loss payable
endorsements, which policies shall name Lender as loss payee, assignee or
additional insured, as appropriate. Each policy of insurance or endorsement
shall contain a clause requiring the insurer to give not less than thirty (30)
days prior written notice to Lender in the event of cancellation of the policy
for any reason whatsoever, unless such cancellation is a result of non-payment
of premiums in which case 10 days prior written notice shall be given to
Lender, and a clause specifying that the interest of Lender shall not be
impaired or invalidated regardless of any breach of or violation by Borrower of
any warranties, declarations or conditions contained in said policy. If
Borrower fails to provide and pay for such insurance, Lender may, at its
option, but shall not be required to, procure the same and charge Borrower
therefor. Borrower agrees to deliver to Lender, promptly as rendered, true
copies of all reports made in any reporting forms to insurance companies.
6.1.3 Protection of Collateral. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, any and all excise, property, sales, and use taxes imposed by any
Applicable Law on any of the Collateral or in respect of the sale thereof, and
all other payments required to be made by Lender to any Person to realize upon
any Collateral shall be borne and paid by Borrower. If Borrower fails to
promptly pay any portion thereof when due, Lender may, at its option, but shall
not be required to, pay the same and charge Borrower therefor. Lender shall
not be liable or responsible in any way for the safekeeping of any of the
Collateral or for any loss or damage thereto (except for reasonable care in the
custody thereof while any Collateral is in Lender's actual possession) or for
any diminution in the value thereof, or for any act or default of any
warehouseman, carrier, forwarding agency, or other Person whomsoever, but the
same shall be at Borrower's sole risk.
6.2 Administration of Accounts.
6.2.1 Records, Schedules and Assignments of Accounts. Borrower
shall keep accurate and complete records of its Accounts and all payments and
collections thereon and shall submit to Lender on such periodic basis as Lender
shall request a sales and collections report for the preceding period, in form
satisfactory to Lender. On or before the fifteenth day of each month from and
after the date hereof, Borrower shall deliver to Lender, in form acceptable to
Lender, a detailed aged trial balance of all Accounts existing as of the last
day of the preceding month, specifying the names, addresses, face value, dates
of invoices and due dates for each Account Debtor obligated on an Account so
listed ("Schedule of Accounts"), and, upon Lender's request therefor, copies of
proof of delivery and the original copy of all documents, including, without
limitation, repayment histories and present status reports relating to the
Accounts so scheduled and such other matters and information relating to the
status of then existing Accounts as Lender shall reasonably request. In
addition, if Accounts in an aggregate face amount in
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excess of $250,000 become ineligible because they fall within one of the
specified categories of ineligibility set forth in the definition of Eligible
Accounts or otherwise established by Lender, Borrower shall notify Lender of
such occurrence on the first Business Day following the day such occurrence
becomes known to Borrower and the Borrowing Base shall thereupon be adjusted to
reflect such occurrence. If requested by Lender, Borrower shall execute and
deliver to Lender agings and formal written assignments of all of its Accounts
weekly or daily, which shall include all Accounts that have been created since
the date of the last assignment, together with copies of invoices or invoice
registers related thereto.
6.2.2 Discounts, Allowances, Disputes. If Borrower grants any
discounts, allowances or credits that are not shown on the face of the invoice
for the Account involved, Borrower shall report such discounts, allowances or
credits, as the case may be, to Lender as part of the next required Schedule of
Accounts. If any amounts due and owing in excess of $250,000 are in dispute
between Borrower and any Account Debtor, Borrower shall provide Lender with
written notice thereof at the time of submission of the next Schedule of
Accounts, explaining in detail the reason for the dispute, all claims related
thereto and the amount in controversy. Upon and after the occurrence of an
Event of Default, Lender shall have the right to settle or adjust all disputes
and claims directly with the Account Debtor and to compromise the amount or
extend the time for payment of the Accounts upon such terms and conditions as
Lender may deem advisable, and to charge the deficiencies, costs and expenses
thereof, including attorney's fees, to Borrower.
6.2.3 Taxes. If an Account includes a charge for any tax
payable to any governmental taxing authority, Lender is authorized, in its sole
discretion, to pay the amount thereof to the proper taxing authority for the
account of Borrower and to charge Borrower therefor; provided, however, that
Lender shall not be liable for any such taxes to any governmental taxing
authority that may be due by Borrower.
6.2.4 Account Verification. Whether or not a Default or an
Event of Default has occurred, any of Lender's officers, employees or agents
shall have the right, at any time or times hereafter, in the name of Lender,
any designee of Lender or Borrower, to verify the validity, amount or any other
matter relating to any Accounts by mail, telephone, facsimile transmission or
otherwise. Borrower shall cooperate fully with Lender in an effort to
facilitate and promptly conclude any such verification process.
6.2.5 Maintenance of Dominion Account. Borrower shall maintain
a Dominion Account pursuant to a lockbox arrangement acceptable to Lender with
such banks as may be selected by Borrower and be acceptable to Lender.
Borrower shall issue to any such banks an irrevocable letter of instruction
directing such banks to deposit all payments or other remittances received in
the lockbox to the Dominion Account for application on account of the
Obligations. All funds deposited in the Dominion Account shall immediately
become the property of Lender and Borrower shall obtain the agreement by such
banks in favor of Lender to waive any offset rights against the funds so
deposited.
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6.2.6 Collection of Accounts, Proceeds of Collateral. To
expedite collection, Borrower shall endeavor in the first instance to make
collection of its Accounts for Lender. All remittances received by Borrower in
respect of Accounts, together with the proceeds of any other Collateral, shall
be held as Lender's property by Borrower as trustee of an express trust for
Lender's benefit and Borrower shall immediately deposit same in kind in the
Dominion Account. Lender retains the right at all times after the occurrence of
an Event of Default to notify Account Debtors that Accounts have been assigned
to Lender and to collect Accounts directly in its own name and to charge the
collection costs and expenses, including reasonable attorneys' fees to
Borrower.
6.3 Intentionally Omitted.
6.4 Administration of Equipment.
6.4.1 Records and Schedules of Drilling Rigs and Equipment.
Borrower shall keep accurate records itemizing and describing the kind, type,
quality, quantity and value of its Drilling Rigs and Equipment and all
dispositions made in accordance with Section 6.4.2 hereof, and shall furnish
Lender with a current schedule containing the foregoing information on at least
an annual basis and more often if requested by Lender. Immediately on request
therefor by Lender, Borrower shall deliver to Lender any and all evidence of
ownership, if any, of any of the Drilling Rigs and Equipment.
6.4.2 Dispositions of Drilling Rigs and Equipment. Borrower
will not sell, lease or otherwise dispose of or transfer any of the Drilling
Rigs or Equipment or any part thereof without the prior written consent of
Lender; provided, however, that the foregoing restriction shall not apply, for
so long as no Default or Event of Default exists, to (i) dispositions of
Equipment or Drilling Rigs which, in the aggregate during any fiscal year of
Borrower, has a fair market value or book value, whichever is less, of
$1,000,000 or less, (ii) replacements of Drilling Rigs and Equipment that are
substantially worn, damaged or obsolete with Drilling Rigs and Equipment of
like kind, function and value, provided that the replacement Equipment or
Drilling Rigs shall be acquired prior to or concurrently with any disposition
of the Drilling Rigs and Equipment that is to be replaced, the replacement
Drilling Rigs and Equipment or Drilling Rigs shall be free and clear of Liens
other than Permitted Liens that are not Purchase Money Liens, or (iii)
dispositions of Equipment and Drilling Rigs permitted under Section 8.2.9
hereof.
6.4.3 Condition of Equipment. Each Borrower represents and
warrants to Lender that its Equipment and Drilling Rigs are in good operating
condition and repair according to customary oil and gas industry practice, and
all necessary replacements of and repairs thereto shall be made so that the
value and operating efficiency of the Equipment and Drilling Rigs shall be
maintained and preserved in accordance with such practice, reasonable wear and
tear excepted. Borrower will not permit any of the Equipment and Drilling Rigs
to become affixed to any real Property leased to Borrower so that an interest
arises therein under the real estate laws of the applicable jurisdiction unless
the landlord of such real Property has executed a landlord waiver or leasehold
mortgage in favor of and in form acceptable to Lender, and Borrower will not
permit any of the Equipment or Drilling Rigs to become an accession to any
personal
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Property that is subject to a Lien unless the Lien is a Permitted Lien (other
than a Purchase Money Lien).
6.4.4 Location of Drilling Rigs. Not later than fifteen (15)
days after the end of each month hereafter, Borrower shall cause to be prepared
and furnish to Lender a schedule indicating the precise location of each
Drilling Rig of each Borrower as of the end of such month.
6.5 Payment of Charges. All amounts chargeable to Borrower under
Section 6 hereof shall be Obligations secured by all of the Collateral, shall
be payable on demand and shall bear interest from the date such advance was
made until paid in full at the rate applicable to Revolving Credit Loans from
time to time.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce Lender to
enter into this Agreement and to make advances hereunder, each Borrower
warrants and represents to Lender and covenants with Lender that:
7.1.1. Organization and Qualification. Each Borrower and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each
Borrower and its Subsidiaries is duly qualified and is authorized to do
business and is in good standing as a foreign corporation in each state or
jurisdiction listed on Exhibit B hereto and in all other states and
jurisdictions where the character of its Properties or the nature of its
activities make such qualification necessary, except where the failure to be so
qualified would not have a Material Adverse Effect.
7.1.2. Corporate Power and Authority. Each Borrower is duly
authorized and empowered to enter into, execute, deliver and perform this
Agreement and each of the other Loan Documents to which it is a party. The
execution, delivery and performance of this Agreement and each of the other
Loan Documents have been duly authorized by all necessary corporate action and
do not and will not (i) require any consent or approval of the shareholders of
any Borrower; (ii) contravene any Borrower's charter, articles or certificate
of incorporation or by-laws; (iii) violate, or cause any Borrower to be in
default under, any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award in effect having
applicability to any Borrower; (iv) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which any Borrower is a party or by which it or its
Properties may be bound or affected; or (v) result in, or require, the creation
or imposition of any Lien (other than Permitted Liens) upon or with respect to
any of the Properties now owned or hereafter acquired by any Borrower.
7.1.3. Legally Enforceable Agreement. This Agreement is, and
each of the other Loan Documents when delivered under this Agreement will be, a
legal, valid and binding obligation of each Borrower, enforceable against it in
accordance with its respective terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency
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or similar laws affecting creditors' rights generally or by principles of
equity pertaining to the availability of equitable remedies.
7.1.4. Capital Structure, Exhibit C hereto states (i) the correct
name of each of the Subsidiaries of each Borrower, its jurisdiction of
incorporation and the percentage of its Voting Stock owned by such Borrower,
(ii) the name of each of each Borrower's corporate or joint venture Affiliates
and the nature of the affiliation, (iii) the number, nature and holder of all
outstanding Securities of each Borrower and each Subsidiary of such Borrower
and (iv) the number of authorized, issued and treasury shares of each Borrower
and each Subsidiary of such Borrower. Each Borrower has good title to all of
the shares it purports to own of the stock of each of its Subsidiaries, free
and clear in each case of any Lien, other than Permitted Liens. All such
shares have been duly issued and are fully paid and non-assessable. Except as
set forth on Exhibit C there are no outstanding options to purchase, or any
rights or warrants to subscribe for, or any commitments or agreements to issue
or sell, or any Securities or obligations convertible into, or any powers of
attorney relating to, shares of the capital stock of any Borrower or any of
their respective Subsidiaries. Except for the Shareholder Agreement and the
Registration Rights Agreement, there are no outstanding agreements or
instruments between either Borrower and any of their respective shareholders
relating to the ownership of Borrower's capital stock.
7.1.5. Corporate Names. Neither any Borrower nor any of its
Subsidiaries has been known as or used any corporate, fictitious or trade names
except those listed on Exhibit D hereto. Except as set forth on Exhibit D
neither any Borrower nor any of its Subsidiaries has been the surviving
corporation of a merger or consolidation or acquired all or substantially all
of the assets of any Person.
7.1.6. Business Locations; Agent for Process. Each Borrower's
and its Subsidiaries' chief executive office and other places of business are
as listed on Exhibit A hereto. During the preceding five-year period, neither
any Borrower nor any of its Subsidiaries has had an office or place of business
other than as listed on Exhibit A. Except as shown on Exhibit A no Inventory
of Borrower is stored with a bailee, warehouseman or similar Person, nor is any
Inventory consigned to any Person.
7.1.7. Title to Properties; Priority of Liens. To the best of
Borrower's knowledge, each Borrower and its Subsidiaries have good and
marketable title to and fee simple ownership of, or valid and subsisting
leasehold interests in, all of their real Property, and good title to all of
the Collateral and all of their other Property, in each case, free and clear of
all Liens except Permitted Liens. Each Borrower has paid or discharged all
lawful claims (other than accounts payable permitted to be outstanding under
Section 8.2.3(iv)) which, if unpaid, might become a Lien against any of such
Borrower's Properties that is not a Permitted Lien. The Liens granted to
Lender under Section 5 hereof are first priority Liens, subject only to
Permitted Liens. All of the Drilling Rigs are mobile equipment which are not
designed to be permanently used for any one location and none of the Drilling
Rigs are certificated as motor vehicles under the laws of any jurisdiction.
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7.1.8 Accounts. Lender may rely, in determining which Accounts
of Borrower are Eligible Accounts, on all statements and representations made
by any Borrower with respect to any Account or Accounts. Unless otherwise
indicated in writing to Lender, with respect to each Account:
(i) It is genuine and in all respects what it purports
to be, and it is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide sale and
delivery of goods or rendition of services by Borrower in the ordinary course
of its business and in accordance with the terms and conditions of all purchase
orders, contracts or other documents relating thereto and forming a part of the
contract between Borrower and the Account Debtor;
(iii) It is for a liquidated amount maturing as stated in
the duplicate invoice covering such sale or rendition of services, a copy of
which has been furnished or is available to Lender;
(iv) Such Account, and Lender's security interest
therein, is not subject to any offset, Lien, deduction, defense, dispute,
counterclaim or any other adverse condition, except for disputes resulting in
disputes in service where the amount in controversy is deemed by Lender to be
immaterial, and each such Account is absolutely owing to Borrower and is not
contingent in any respect or for any reason;
(v) Borrower has made no agreement with any Account
Debtor thereunder for any extension, compromise, settlement or modification of
any such Account or any deduction therefrom, except discounts or allowances
which are granted by Borrower in the ordinary course of its business for prompt
payment and which are reflected in the calculation of the net amount of each
respective invoice related thereto and are reflected in the Schedules of
Accounts submitted to Lender pursuant to Section 6.2.1 hereof;
(vi) There are no facts, events or occurrences known to
Borrower which in any way impair the validity or enforceability of any Accounts
or tend to reduce the amount payable thereunder from the face amount of the
invoice and statements delivered to Lender with respect thereto;
(vii) To the best of Borrower's knowledge, the Account
Debtor thereunder (a) had the capacity to contract at the time any contract or
other document giving rise to the Account was executed and (b) such Account
Debtor is Solvent; and
(viii) To the best of Borrower's knowledge, there are no
proceedings or actions which are threatened or pending against any Account
Debtor thereunder which might result in any material adverse change in such
Account Debtor's financial condition or the collectibility of such Account.
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7.1.9 Financial Statements; Fiscal Year. (a) The Consolidated
balance sheet of Bayard as of December 31, 1996, and the related statements of
income, changes in stockholder's equity, and cash flow statement for the
periods ended on such dates, have been prepared in accordance with GAAP, and
present fairly in all material respects the Consolidated financial position of
Bayard at such date and the results of Bayard's operations for such periods in
accordance with GAAP. Since February 28, 1997, there has been no material
adverse change in the condition, financial or otherwise, of Bayard or its
Subsidiaries and since such date there has been no change in the aggregate
value of Equipment and real Property owned by Borrower, except changes in the
ordinary course of business, none of which individually or in the aggregate has
been materially adverse. The fiscal year of each Bayard and each of its
respective Subsidiaries ends on December 31 of each year.
(b) The Consolidated balance sheet of Trend as of
December 31, 1996, and the related statements of income, changes in
stockholder's equity, and cash flow statement for the periods ended on such
dates, have been prepared in accordance with GAAP, and present fairly in all
material respects the Consolidated financial position of Trend at such date and
the results of Trend's operations for such periods in accordance with GAAP.
Since February 28, 1997, there has been no material adverse change in the
condition, financial or otherwise, of Trend or its Subsidiaries and since such
date there has been no change in the aggregate value of Equipment and real
Property owned by Borrower, except changes in the ordinary course of business,
none of which individually or in the aggregate has been materially adverse.
The fiscal year of Trend ends on December 31 of each year.
7.1.10 Full Disclosure. The financial statements referred to in
Section 7.1.9 hereof do not, nor does this Agreement or any other written
statement of any Borrower to Lender, contain any untrue statement of a material
fact or omit a material fact, in either case known to Borrower, necessary to
make the statements contained therein or herein not misleading in light of the
circumstances under which such statement was made. There is no fact or
circumstance known to Borrower which either Borrower or their respective
subsidiaries has failed to disclose to Lender in writing which could reasonably
be expected to have a Material Adverse Effect.
7.1.11. Solvent Financial Condition. Each Borrower and its
respective Subsidiaries are now and, after giving effect to the Loans to be
made and the Letters of Credit and LC Guaranties to be issued hereunder, at all
times will be, Solvent.
7.1.12. Surety Obligations. Except as disclosed on Exhibit
E, neither any Borrower nor any of its Subsidiaries is obligated as surety or
indemnitor under any surety or similar bond or other contract issued or entered
into any agreement to assure payment, performance or completion of performance
of any undertaking or obligation of any Person.
7.1.13. Taxes. Bayard's federal tax identification number
is ▇▇-▇▇▇▇▇▇▇. Trend's federal tax identification number is ▇▇-▇▇▇▇▇▇▇. Each
Borrower and each of its Subsidiaries has filed all federal, state and local
tax returns and other reports it is required by law to file and has paid, or
made provision for the payment of, all Taxes upon it, its income and Properties
as and
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when such Taxes are due and payable, except to the extent being Properly
Contested. The provision for Taxes on the books of Bayard and its Subsidiaries
are adequate for all years not closed by applicable statutes, and for its
current fiscal year.
7.1.14. Intentionally Omitted.
7.1.15. Patents, Trademarks, Copyrights and Licenses. Each
Borrower and its Subsidiaries own or possess all the material patents,
trademarks, service marks, trade names, copyrights and licenses necessary for
the present and planned future conduct of their business without any material
conflict with the rights of others. All patents, trademarks, service marks,
trade names, copyrights, licenses and other similar rights are listed on
Exhibit F hereto.
7.1.16. Governmental Consents. Each Borrower and its
Subsidiaries have, and are in good standing with respect to, all material
governmental consents, approvals, licenses, authorizations, permits,
certificates, inspections and franchises necessary to continue to conduct their
business as heretofore or proposed to be conducted by them and to own or lease
and operate their Properties as now owned or leased by them.
7.1.17. Compliance with Laws. Each Borrower and its
Subsidiaries have duly complied with, and their Properties, business operations
and leaseholds are in compliance in all material respects with, the provisions
of all material Applicable Law and there have been no citations, notices or
orders of material noncompliance issued to any Borrower or any of its
Subsidiaries under any such law, rule or regulation. Each of each Borrower and
its Subsidiaries has established and maintains an adequate monitoring system to
insure that it remains in compliance with all federal, state and local laws,
rules and regulations applicable to it.
7.1.18. Restrictions. Neither any Borrower nor any of
their respective Subsidiaries is a party or subject to any contract, agreement,
or charter or other corporate restriction, which has or could be reasonably
expected to have a Material Adverse Effect. Except as set forth on Exhibit G,
neither Borrower nor any of their respective Subsidiaries is a party or
otherwise subject to any contract or agreement which restricts the right or
ability of Borrower or such Subsidiaries, as the case may be, to incur
Indebtedness upon terms which are more restrictive than the terms of this
Agreement. No contracts or agreements to which either Borrower or any of their
respective Subsidiaries is a party or by which any of their respective
properties are bound prohibits the execution of or compliance with this
Agreement or the other Loan Documents by either Borrower or any of their
respective Subsidiaries, as applicable.
7.1.19. Litigation. Except as set forth on Exhibit H
hereto, there are no actions, suits, proceedings or investigations pending, or
to the knowledge of any Borrower, threatened, against or affecting any Borrower
or any of its Subsidiaries, or the business, operations, Properties, prospects,
profits or condition of any Borrower or any of its Subsidiaries in which the
amount in controversy exceeds $250,000. Neither any Borrower nor any of its
Subsidiaries is in default with respect to any order, writ, injunction,
judgment, decree or rule of any court, governmental authority or arbitration
board or tribunal.
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7.1.20. No Defaults. No event has occurred and no
condition exists which would, upon or after the execution and delivery of this
Agreement or any Borrower's performance hereunder, constitute a Default or an
Event of Default that may reasonably be expected to result in costs to Borrower
in excess of $250,000. Neither any Borrower nor any of its Subsidiaries is in
default, and no event has occurred and no condition exists which constitutes,
or which with the passage of time or the giving of notice or both would
constitute, a default in the payment of any Indebtedness to any Person for
Money Borrowed that may reasonably be expected to result in costs to Borrower
in excess of $250,000.
7.1.21. Leases. Exhibit I hereto is a complete listing of
all capitalized leases of each Borrower and its Subsidiaries with current terms
greater than 180 days or which require aggregate lease payments during the
current term of more than $50,000, and Exhibit J hereto is a complete listing
of all operating leases of each Borrower and its Subsidiaries with current
terms of greater than 180 days or which require aggregate lease payments during
the current term of more than $50,000. Each Borrower and its Subsidiaries is
in full compliance with all of the terms of each of their respective
capitalized and operating leases.
7.1.22. Pension Plans. Except as disclosed on Exhibit K
hereto, neither any Borrower nor any of its Subsidiaries has any Plan. Each
Borrower and each of its Subsidiaries is in full compliance with the
requirements of ERISA and the regulations promulgated thereunder with respect
to each Plan. No fact or situation that could result in a material adverse
change in the financial condition of any Borrower or any of its Subsidiaries
exists in connection with any Plan. Neither any Borrower nor any of its
Subsidiaries has any withdrawal liability in connection with a Multiemployer
Plan.
7.1.23. Trade Relations. There exists no actual or
threatened termination, cancellation or limitation of, or any adverse
modification or change in, the business relationship between any Borrower or
any of its Subsidiaries and any customer or any group of customers whose
purchases individually or in the aggregate are material to the business of such
Borrower or any of its Subsidiaries, or with any material supplier, and there
exists no condition or state of facts or circumstances which would materially
affect adversely any Borrower or any of its Subsidiaries or prevent any
Borrower or any of its Subsidiaries from conducting such business after the
consummation of the transaction contemplated by this Agreement in substantially
the same manner in which it has heretofore been conducted.
7.1.24. Labor Relations. Except as described on Exhibit L
hereto, neither any Borrower nor any of their respective Subsidiaries is a
party to any collective bargaining agreement. There are no material
grievances, disputes or controversies with any union or any other organization
of any Borrower's or any of its Subsidiaries' employees, or threats of strikes,
work stoppages or any asserted pending demands for collective bargaining by any
union or organization.
7.1.25. Acquisition. No default has occurred under any of
the Purchase Documents on the date hereof, and after the date hereof, no
default has occurred that has not been disclosed to Lender.
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7.2. Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature and shall remain accurate, complete and
not misleading at all times during the term of this Agreement, except for
changes in the nature of a Borrower's or its Subsidiaries' business or
operations that would render the information in any Exhibit attached hereto
either inaccurate, incomplete or misleading, so long as Lender has consented to
such changes or such changes are expressly permitted by this Agreement, and
except for such representations and warranties that by their nature are limited
only to a specific date in time.
7.3. Survival of Representations and Warranties. All representations
and warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by
Lender and the parties thereto and the closing of the transactions described
therein or related thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, each Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall:
8.1.1. Visits and Inspections. Permit representatives of Lender,
from time to time, as often as may be reasonably requested, but only during
normal business hours, to (i) visit and inspect its Properties and the
Properties of each of their respective Subsidiaries, and (ii) inspect, audit
and make extracts from its books and records (including, without limitation,
all maintenance records for Drilling Rigs) and discuss with its officers,
employees and independent accountants, its business, assets, liabilities,
financial condition, business prospects and results of operations.
8.1.2. Notices. Notify Lender in writing (i) of the occurrence
of any event or the existence of any fact which renders any representation or
warranty in this Agreement or any of the other Loan Documents inaccurate,
incomplete or misleading in any material respect; (ii) promptly after
Borrower's learning thereof, of the commencement of any litigation affecting
Borrower or any of its Properties, whether or not the claim is considered by
Borrower to be covered by insurance, and of the institution of any
administrative proceeding which if determined adversely to Borrower, would have
a Material Adverse Effect; (iii) at least thirty (30) days prior thereto, of
Borrower's opening of any new office or place of business or Borrower's closing
of Borrower's principal place of business; (iv) promptly after Borrower's
learning thereof, of any material labor dispute to which Borrower may become a
party, any strikes or walkouts relating to any of its plants or other
facilities, and the expiration of any material labor contract to which it is a
party or by which it is bound; (v) promptly after Borrower's learning thereof,
of any material default by any Loan Party under any note, indenture, loan
agreement, mortgage, lease, deed, guaranty or other similar agreement relating
to any Indebtedness of Borrower exceeding $250,000; (vi) promptly after the
occurrence thereof, of any Default or Event of Default; (vii) promptly after
the occurrence thereof, of any default by any obligor under any note or other
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evidence of Indebtedness payable to Borrower in an amount exceeding $250,000;
and (viii) promptly after the rendition thereof, of any judgment rendered
against any Loan Party in an amount exceeding $250,000.
8.1.3 Financial Statements. Keep, and cause each Subsidiary to
keep, adequate records and books of account with respect to its business
activities in which proper entries are made in accordance with GAAP reflecting
all its financial transactions; and cause to be prepared and furnished to
Lender the following (all to be prepared in accordance with GAAP applied on a
consistent basis, unless Borrower's certified public accountants concur in any
change therein and such change is disclosed to Lender and is consistent with
GAAP):
(i) not later than one hundred and twenty (120) days
after the close of each fiscal year of Borrower, unqualified audited financial
statements of Bayard and its Subsidiaries as of the end of such year, on a
Consolidated basis, certified by a firm of independent certified public
accountants of recognized standing selected by Borrower but acceptable to
Lender (except for a qualification for a change in accounting principles with
which the accountant concurs);
(ii) not later than thirty (30) days after the end of
each month hereafter, except for April, May, June and July of 1997 and each
December, which period shall be forty-five (45) days after the end of each such
respective month, unaudited interim financial statements of Borrower and its
Subsidiaries as of the end of such month and of the portion of Borrower's
financial year then elapsed, on a Consolidated and consolidating basis,
certified by the principal financial officer of Borrower as prepared in
accordance with GAAP and fairly presenting in all material respects the
Consolidated financial position and results of operations of Borrower and its
Subsidiaries for such month and period subject only to changes from audit and
year-end adjustments and except that such statements need not contain notes;
provided, however, in the event Borrower becomes subject to, and is in
compliance with, the periodic reporting requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended, the monthly reports described
in this clause (ii) of this Section 8.1.3, shall be delivered to Lender (a)
within forty-five (45) days after the end of any month during which a Form 10-Q
must filed by Borrower with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor and (b) within thirty
(30) days after the end of all other months;
(iii) promptly after the sending or filing thereof, as
the case may be, copies of any proxy statements, financial statements or
reports which Borrower and/or its Subsidiaries has generally made available to
its shareholders and copies of any regular, periodic and special reports or
registration statements which Borrower and/or its Subsidiaries files with the
Securities and Exchange Commission or any governmental authority which may be
substituted therefor, or any national securities exchange;
(iv) promptly after the filing thereof, copies of any
annual report to be filed in accordance with ERISA in connection with each
Plan;
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(v) such other data and information (financial and
otherwise) as Lender, from time to time, may reasonably request, bearing upon
or related to the Collateral or Borrower's and each of its Subsidiaries'
financial condition or results of operations; and
(vi) on or before May 31, 1997, audited financial
statements of Trend for the last three (3) fiscal years of Trend.
Concurrently with the delivery of the financial statements
described in clause (i) of this Section 8.1.3, Borrower shall forward to Lender
a copy of the accountants' letter to each Borrower's management that is
prepared in connection with such financial statements and also shall cause to
be prepared and shall furnish to Lender a certificate of the aforesaid
certified public accountants certifying to Lender that, based upon their
examination of the financial statements of Borrower and its Subsidiaries
performed in connection with their examination of said financial statements,
they are not aware of any Default or Event of Default, or, if they are aware of
such Default or Event of Default, specifying the nature thereof. Concurrently
with the delivery of the financial statements described in clauses (i) and (ii)
of this Section 8.1.3, or more frequently if requested by Lender, Borrower
shall cause to be prepared and furnished to Lender a Compliance Certificate in
the form of Exhibit M hereto executed by the chief financial officer of
Borrower.
8.1.4 Landlord and Storage Agreements. Provide Lender with
copies of all agreements between any Borrower or any of its Subsidiaries and
any landlord or warehouseman which owns any premises at which any Inventory,
Equipment and Drilling Rigs may, from time to time, be kept.
8.1.5 Projections. No later than thirty (30) days prior to the
end of each fiscal year of Borrower, deliver to Lender projections of
Borrower's (consisting of Consolidated (and, if available, consolidating)
balance sheets, income statements and cash flow statements, together with
appropriate supporting details and underlying assumptions) for the forthcoming
three (3) years, year by year, and for the forthcoming fiscal year, month by
month.
8.1.6 Taxes. Pay and discharge, and cause each Subsidiary to pay
and discharge, all Taxes prior to the date on which such Taxes become
delinquent or penalties attach thereto, except and to the extent only that such
Taxes are being Properly Contested.
8.1.7 Compliance with Laws. Comply and cause each Subsidiary to
comply, with all Applicable Laws, including all laws, statutes, regulations and
ordinances regarding the collection, payment and deposit of all Taxes, and all
ERISA and Environmental Laws, and obtain and keep in force any and all
licenses, permits, franchises, or other governmental authorizations necessary
to the ownership of its Properties or to the conduct of its business, which
violation or failure to obtain could reasonably be expected to have a Material
Adverse Effect.
8.1.8 Insurance. In addition to the insurance required herein
with respect to the Collateral, Borrower shall maintain, with financially sound
and reputable insurers, insurance with respect to its Properties and business
against such casualties and contingencies of such type (including product
liability, business interruption, larceny, embezzlement, or other criminal
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misappropriation insurance) as is customary in its business and in such amounts
as is acceptable to Lender.
8.2 Negative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, each Borrower
covenants that, unless Lender has first consented thereto in writing, it will
not:
8.2.1 Mergers; Consolidations; Acquisitions. Merge or
consolidate, or permit any Subsidiary of Borrower to merge or consolidate, with
any Person; nor acquire, nor permit any of its Subsidiary of Borrower to
acquire, all or any substantial part of the Properties of any Person; provided,
however, (i) Trend may merge with and into Bayard and Bayard may acquire all or
a substantial part of the Properties of ▇▇▇▇ on terms substantially similar to
those contained in that certain Letter of Understanding dated April 25, 1997 by
and between ▇▇▇▇ and Bayard; and (ii) subject to Sections 8.2.8 and 10.1.11,
acquisition of assets of another Person for consideration paid in cash or stock
of Borrower.
8.2.2 Loans. Except as provided in Section 8.2.12 hereof and
any intercompany loans between Trend and Bayard, make or permit any of its
Subsidiaries to make, any loans or other advances of money to any Person,
except for travel advances, advances against commissions and other similar
advances in the ordinary course of business.
8.2.3 Total Indebtedness. Create, incur, assume, or suffer to
exist, or permit any of its Subsidiaries to create, incur or suffer to exist,
any Indebtedness, except:
(i) Obligations owing to Lender;
(ii) Subordinated Debt existing on the date of this
Agreement (including, without limitation, the Chesapeake Debt and the Energy
Spectrum Debt);
(iii) Indebtedness between Bayard and Trend;
(iv) accounts payable to trade creditors and current
operating expenses (other than for Money Borrowed) which are not aged more than
thirty (30) days from the due date, in each case incurred in the ordinary
course of business and paid within such time period, unless the same are being
Properly Contested;
(v) Obligations to make lease payments permitted by
Section 8.2.13;
(vi) Permitted Purchase Money Indebtedness;
(vii) contingent liabilities arising out of endorsements
of checks and other negotiable instruments for deposit or collection in the
ordinary course of business;
(viii) liabilities for taxes not yet due and payable;
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(ix) liabilities under performance and bid bonds
incurred by Borrower in the ordinary course of their business up to an
aggregate amount of $1,000,000 at any time;
(x) Indebtedness existing on the date hereof and
described on Exhibit N hereto (including, without limitation, but without
duplication of the indebtedness described above, the CIT Debt and the CIT
Sale/Leaseback);
(xi) Indebtedness incurred by Non-consolidated
Subsidiaries that is non-recourse to either Borrower; and
(xii) Indebtedness not included in paragraphs (i) through
(xi) above which does not exceed at any time, in the aggregate, the sum of
$100,000.
8.2.4 Affiliate Transactions. Enter into or be a party to, or
permit any of its Subsidiaries to enter into or be a party to, any transaction
with any Affiliate or stockholder (excluding transactions between Bayard and
Trend), except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's or such Subsidiary's business and upon fair and
reasonable terms at the time entered into which are fully disclosed to Lender
and are no less favorable than would be obtained in a comparable arm's length
transaction with a Person not an Affiliate or stockholder of Borrower or such
Subsidiary.
8.2.5 Limitation on Liens. Create or suffer to exist, or permit
any its Subsidiaries to create or suffer to exist, any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except:
(i) Liens at any time granted in favor of Lender;
(ii) Liens for taxes (excluding any Lien imposed
pursuant to any of the provisions of ERISA) not yet due or being Properly
Contested;
(iii) Liens arising in the ordinary course of its
business by operation of law or regulation, but only if (a) payment in respect
of any such Lien is not at the time required or (b) the Indebtedness secured by
such Lien is being Properly Contested and such Lien does not materially detract
from the value of the Property or materially impair the use thereof in the
operation of its business;
(iv) security interests on top drives to the extent that
such security interests secure the financing by third parties of at least 80%
of the purchase price of top drives; provided, however, that the aggregate
purchase price of top drives shall not exceed $6,000,000; and provided,
further, that the financings for the purchase of top drives shall be repaid
from the proceeds of contracts for the use of the top drives of equal or longer
duration to the amortization schedules of such financings;
(v) liens securing performance and bid bonds obtained
by Borrower in the ordinary course of their business up to an aggregate amount
of $1,000,000 at any time;
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(vi) liens securing the Indebtedness described in
Section 8.2.3(xi) above;
(vii) such other Liens as appear on Exhibit O hereto
(including, without limitation, the liens securing the CIT Debt); and
(viii) liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the performance of
tenders, statutory obligations, surety, stay, customs and appeal bonds, bids,
leases, government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the payment
of borrowed money).
8.2.6 Subordinated Debt. Make, or permit any of its
Subsidiaries to make, any payment of all or any part of any Subordinated Debt
or take any other action or omit to take any other action in respect of any
Subordinated Debt (including, without limitation, the Chesapeake Debt and the
Energy Spectrum Debt), except in accordance with the subordination agreement
relative thereto.
8.2.7 Distributions. Declare or make, or permit any of its
Subsidiaries to declare or make, any Distributions, except Distributions from
any Subsidiary to a Borrower.
8.2.8 Capital Expenditures. Make Capital Expenditures
(excluding Capital Expenditures of a Non-consolidated Subsidiary) in excess of:
(i) in fiscal 1997, $66,000,000, and
(ii) in fiscal 1998 and each fiscal year thereafter, $5,000,000
plus 50% of the excess of Cash Flow over Borrower's Projected
Debt Service for the fiscal year,
plus in the case of each of subsections (i) and (ii),
(a) the amount of the Additional Securities issued in the
respective fiscal year, but in no event to exceed $3,000,000 in
the aggregate, and
(b) the amount of equity and subordinated debt issued by Bayard,
on terms acceptable to Lender, in such fiscal year if the
proceeds are used for Capital Expenditures within thirty (30)
days of the receipt thereof by Borrower.
8.2.9 Disposition of Assets. Sell, lease or otherwise dispose
of, or permit any of its Subsidiaries to sell, lease or otherwise dispose of,
any of its Properties, including any disposition of Property as part of a sale
and leaseback transaction (other than as contemplated in connection with the
CIT Sale/Leaseback), to or in favor of any Person, except (i) sales of
Inventory in the ordinary course of business for so long as no Event of Default
exists hereunder,
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(ii) a transfer of Property to Borrower by a Subsidiary of Borrower,
(iii) dispositions permitted under Section 6.4.2, or (iv) dispositions
otherwise expressly authorized by this Agreement.
8.2.10 Stock of Subsidiaries. Permit any of its Subsidiaries to
issue any additional shares of its capital stock to any Person other than a
Borrower.
8.2.11 Intentionally Omitted.
8.2.12 Restricted Investment. Make or have, or permit any of its
Subsidiaries to make or have, any Restricted Investment.
8.2.13 Operating Leases. Become, or permit any of its
Subsidiaries to become, a lessee under any operating lease (other than a lease
under which Borrower or any of its Subsidiaries is lessor) of Property having a
current term greater than 180 days if the aggregate lease payment payable
during any current or future period of twelve (12) consecutive months under the
lease in question and all other leases under which Borrower or any of its
Subsidiaries is then lessee would exceed $250,000.
8.2.14 Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than its Subsidiaries.
8.3 Specific Financial Covenants. During the term of this Agreement,
and thereafter for so long as there are any Obligations to Lender, Borrowers
covenant that, unless otherwise consented to by Lender in writing, they shall:
(i) maintain, on a quarterly basis, a Cash Flow
Coverage Ratio of at least 1.25:1.0 from June 30, 1997 to December 31, 1997,
1.50:1.0 in 1998 and 1.75:1.0 thereafter;
(ii) maintain Total Available Liquidity of $4,500,000.00
from January 1, 1997 to December 31, 1997 and $3,000,000.00 in 1998; "Total
Available Liquidity" shall be the sum of the Borrowers' (a) cash and cash
equivalents (excluding cash or cash equivalents pledged to secure letters of
credit, but only to the extent of accrued liabilities for workers compensation
claims), (b) unused capacity available under the CIT Loan Agreement based on
the most recent determination of Collateral Value (as defined in the CIT Loan
Agreement), excluding for purposes of this test the Total Available Liquidity
of any Non-consolidated Subsidiary and (c) Availability; and
(iii) maintain, on a consolidated basis, a ratio of Total
Liabilities to Tangible Net Worth not greater than 1.25:1.0 during 1997 and
1.0:1.0 in 1998 and thereafter (excluding for purposes of this test the Total
Liabilities and Tangible Net Worth of any Non-consolidated Subsidiary).
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SECTION 9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the
other Loan Documents, and without affecting in any manner the rights of Lender
under the other Sections of this Agreement, Lender shall not be required to
make any Loan under this Agreement unless and until each of the following
conditions has been and continues to be satisfied:
9.1 Documentation. Lender shall have received, in form and substance
satisfactory to Lender and its counsel, a duly executed copy of this Agreement
and the other Loan Documents, together with such additional documents,
instruments and certificates as Lender and its counsel shall require in
connection therewith from time to time, all in form and substance satisfactory
to Lender and its counsel.
9.2 No Default. No Default or Event of Default shall exist.
9.3 Other Loan Documents. Each of the conditions precedent set forth
in the other Loan Documents shall have been satisfied.
9.4 Equity. Lender shall have received evidence satisfactory to it
that not less than $7,980,000 in cash has been contributed as equity to the
capital of Borrower by Chesapeake and Energy Spectrum.
9.5 Availability. Lender shall have determined that immediately
after Lender has made the initial Loans contemplated hereby, Borrower has paid
(or made provision for payment of) all closing costs incurred in connection
with the transactions contemplated hereby, the sum of Availability, cash on
hand and the dollar amount of unused availability under the CIT Debt shall not
be less than $13,000,000.
9.6 Articles of Incorporation. Lender shall have received a copy of
the Articles or Certificate of Incorporation of Borrowers and each of its
Subsidiaries, and all amendments thereto, certified by the Secretary of State
or other appropriate official of the jurisdiction of Borrowers' and each
Subsidiary's incorporation.
9.7 Good Standing Certificates. Lender shall have received good
standing certificates for Borrower and each of its Subsidiaries, issued by the
Secretary of State or other appropriate official of Borrower's and each
Subsidiary's jurisdiction of incorporation and each jurisdiction where the
conduct of Borrower's or any of its Subsidiary's business activities or
ownership of its Property necessitates qualification.
9.8 Opinion Letters. Lender shall have received a favorable, written
opinion of counsel to Borrowers, as to the transactions contemplated by this
Agreement, to be in form and substance satisfactory to Lender and Lender's
counsel, in their sole discretion.
9.9 Insurance. Lender shall have received copies of the casualty
insurance policies of Borrower and each of its Subsidiaries, together with loss
payable endorsements on Lender's
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standard form of loss payee endorsement naming Lender as loss payee and copies
of Borrowers' and each such Subsidiary's liability insurance policies, together
with endorsements naming Lender as a co-insured.
9.10 Disbursement Letter. Lender shall have received written
instructions from Borrower directing application of proceeds of the initial
Loans made pursuant to this Agreement, and an initial Borrowing Base
Certificate from Borrower, in form satisfactory to Lender.
9.11 Dominion Account. Lender shall have received the duly executed
agreement establishing the Dominion Account with a financial institution
acceptable to Lender for the collection or servicing of the Accounts.
9.12 Landlord Agreements. Lender shall have received all landlord or
warehouseman agreements with respect to all premises leased by Borrower and its
Subsidiaries and which are disclosed on Exhibit J hereto.
9.13 No Litigation. No action, proceeding, investigation, regulation
or legislation shall have been instituted, threatened or proposed before any
court, governmental agency or legislative body to enjoin, restrain or prohibit,
or to obtain damages in respect of, or which is related to or arises out of
this Agreement or the consummation of the transactions contemplated hereby.
9.14 Evidence of Perfection and Priority of Liens in Collateral.
Lender shall have received copies of all filing receipts or acknowledgments
issued by any governmental authority to evidence any filing or recordation
necessary to perfect the Liens of Lender in the Collateral and evidence in form
satisfactory to Lender that such Liens constitute valid and perfected security
interests and Liens, and that there are no other Liens upon any Collateral
except for Permitted Liens.
9.15 Subordination of Chesapeake Debt and Energy Spectrum Debt. The
Chesapeake Debt and the Energy Spectrum Debt shall have been subordinated to
the prior payment of the Obligations in a manner and pursuant to executed
documentation satisfactory to Lender.
9.16 CIT Intercreditor Agreement. CIT and Lender shall have executed
an intercreditor agreement in form and substance satisfactory to Lender.
9.17 Acquisition. The Acquisition shall have been consummated
substantially in accordance with the terms of the Purchase Documents.
9.18 CIT Commitment. CIT and Lender shall have committed to provide a
$30,577,131.15 term loan to Borrower.
9.19 Sale/Leaseback. CIT and Borrower shall have committed to the CIT
Sale/Leaseback transaction relating to two drilling rigs for an aggregate
consideration of up to $6,300,000 on or before the Closing Date.
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9.20 Subordinated Debt. Chesapeake shall have loaned at least
$18,000,000 to Borrower in the form of Subordinated Debt as of the Closing
Date, and Energy Spectrum shall have loaned at least $2,500,000 to Borrower in
the form of Subordinated Debt as of the Closing Date, in each case on terms
satisfactory to Lender.
9.21 Purchase of Term Loan. Lender shall have purchased and CIT shall
have sold a $7,000,000 interest in the $31,000,000 term loan to be provided by
CIT to Borrower on terms satisfactory to Lender.
9.22 No Material Adverse Change. There shall have been no material
adverse change in any of Borrower's financial condition between December 31,
1996, and the Closing Date.
9.23 Trend Balance Sheet. Lender shall have received copies of
Trend's audited balance sheet for the fiscal year ended December 31, 1996.
9.24 No-Offset Letter. Lender shall have received from Chesapeake and
Chesapeake Operating, Inc., a duly executed no-offset letter in form and
substance acceptable to Lender.
9.25 Mortgage. Lender shall have received the Mortgage, duly executed
by Trend; provided however, Borrower shall have thirty (30) days after the
Closing Date to cause the Mortgage to be duly filed to perfect the Lien created
by the Mortgage. .
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of one or more of the
following events shall constitute an "Event of Default":
10.1.1 Payment of Obligations. Borrower shall fail to pay any of
the Obligations on the due date thereof (whether due at stated maturity, on
demand, upon acceleration or otherwise).
10.1.2 Misrepresentations. Any representation, warranty or other
statement made or furnished to Lender by or on behalf of any Borrower, any
Subsidiary of any Borrower or any other Loan Party in this Agreement, any of
the other Loan Documents or any instrument, certificate or financial statement
furnished in compliance with or in reference thereto proves to have been false
or misleading in any material respect when made or furnished or when reaffirmed
pursuant to Section 7.2 hereof.
10.1.3 Breach of Specific Covenants. Borrower shall fail or
neglect to perform, keep or observe any covenant contained in Sections 5.2,
5.3, 6.1.2, 6.2, 8.1.1, 8.1.3, 8.2 or 8.3 hereof on the date that Borrower is
required to perform, keep or observe such covenant.
10.1.4 Breach of Other Covenants. Borrower shall fail or neglect
to perform, keep or observe any covenant contained in this Agreement (other
than a covenant which is dealt with specifically elsewhere in Section 10.1
hereof) and the breach of such other covenant is not
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cured to Lender's satisfaction within twenty (20) days after the sooner to
occur of Borrower's receipt of notice of such breach from Lender or the date on
which such failure or neglect first becomes known to any officer of Borrower.
10.1.5 Default Under Security Documents/Other Agreements/Purchase
Documents. Any event of default shall occur under, or any Loan Party shall
default in the performance or observance of any term, covenant, condition or
agreement contained in, any of the Security Documents, the Other Agreements or
the Purchase Documents and such default shall continue beyond any applicable
grace period.
10.1.6 Other Defaults. There shall occur any default or event of
default on the part of Borrower or any of its Subsidiaries under any agreement,
document or instrument to which Borrower or any such Subsidiary is a party or
by which Borrower or any of its Subsidiaries or any of their respective
Property is bound, creating or relating to any Indebtedness (other than the
Obligations) in excess of $1,000,000, if the payment or maturity of such
Indebtedness is or may be accelerated in consequence of such event of default
or demand for payment of such Indebtedness is made.
10.1.7 Uninsured Losses. Any material loss, theft, damage or
destruction of any of the Collateral not fully covered (subject to such
deductibles as Lender shall have permitted) by insurance.
10.1.8 Adverse Changes. There shall occur any material adverse
change in the financial condition or business prospects of Borrower and any
Subsidiary taken as a whole.
10.1.9 Insolvency and Related Proceedings. Any Loan Party shall
cease to be Solvent or shall suffer the appointment of a receiver, trustee,
custodian or similar fiduciary, or shall make an assignment for the benefit of
creditors, or any petition for an order for relief shall be filed by or against
a Loan Party under the Bankruptcy Code (and if, with respect to any petition
filed against any Loan Party, such proceeding shall continue for more than
thirty (30) days), or any Loan Party shall make any offer of settlement,
extension or compromise to such Loan Party's unsecured creditors generally.
10.1.10 Business Disruption; Condemnation. There shall occur a
cessation of a substantial part of the business of any Borrower, any Subsidiary
of any Borrower for a period which significantly affects such Borrower's or
such Subsidiary's capacity to continue its business, on a profitable basis; or
any Borrower or any Subsidiary of any Borrower shall suffer the loss or
revocation of any license or permit now held or hereafter acquired by such
Borrower or such Subsidiary which is necessary to the continued or lawful
operation of its business; or any Borrower or any Subsidiary of Borrower shall
be enjoined, restrained or in any way prevented by court, governmental or
administrative order from conducting all or any material part of its business
affairs; or any material lease or agreement pursuant to which any Borrower or
any Subsidiary of any Borrower leases, uses or occupies any Property shall be
canceled or terminated prior to the expiration of its stated term; or any part
of the Collateral shall be taken through condemnation or the value of such
Property shall be impaired through condemnation.
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10.1.11 Change of Ownership. (i) Bayard shall cease to own and
control, beneficially and of record, one hundred percent (100%) of each class
of the issued and outstanding capital stock of Trend; or (ii) Chesapeake, AnSon
Partners and Energy Spectrum shall cease to own and control, beneficially and
of record fifty-one percent (51%), collectively, of Bayard's issued and
outstanding common stock on a fully diluted basis.
10.1.12 ERISA. A Reportable Event shall occur which Lender, in
its sole discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for
any Plan, or if any Plan shall be terminated or any such trustee shall be
requested or appointed, or if Borrower or any Subsidiary of Borrower is in
"default" (as defined in Section 4219(c)(5) of ERISA) with respect to payments
to a Multiemployer Plan resulting from Borrower's or such Subsidiary's complete
or partial withdrawal from such Plan.
10.1.13 Challenge to Agreement. Borrower, any Subsidiary of
Borrower or any other Loan Party, or any Affiliate of any of them, shall
challenge or contest in any action, suit or proceeding the validity or
enforceability of this Agreement, or any of the other Loan Documents, the
legality or enforceability of any of the Obligations or the perfection or
priority of any Lien granted to Lender.
10.1.14 Criminal Forfeiture. Any Borrower or any Subsidiary of
Borrower shall be criminally indicted or convicted under any law that could
lead to a forfeiture of any Property of Borrower or any Subsidiary of Borrower.
10.1.15 Judgments. Any (i) money judgment for the payment of
money in excess of $750,000 is filed against any Borrower or any Subsidiary of
Borrower or any of their respective Property, and such judgment shall remain
unpaid, unsatisfied by insurance, and unstayed for more than thirty (30) days,
whether or not consecutive, or (ii) writ of attachment or similar process is
filed against any Borrower or any Subsidiary of Borrower, or any of their
respective Property, and such writ of attachment or similar process is not
bonded or secured in an amount and manner reasonably satisfactory to lender.
10.1.16 Dominion Account. Borrower shall fail to maintain a
Dominion Account or shall notify Lender that it intends to terminate its
existing Dominion Account.
10.2 Acceleration of the Obligations. Without in any way limiting the
right of Lender to demand payment of any portion of the Obligations payable on
demand in accordance with Section 3.2 hereof, upon or at any time after the
occurrence of an Event of Default, all or any portion of the Obligations shall,
at the option of Lender and without presentment, demand, protest, notice of
intent to accelerate, notice of acceleration, or any other further notice by
Lender, become at once due and payable and Borrower shall forthwith pay to
Lender, the full amount of such Obligations; provided, however, that upon the
occurrence of an Event of Default
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specified in Section 10.1.9 hereof, all of the Obligations shall become
automatically due and payable without declaration, notice or demand by Lender.
10.3 Other Remedies. Upon the occurrence and during the continuance
of an Event of Default, Lender shall have and may exercise from time to time
the following rights and remedies:
10.3.1 All of the rights and remedies of a secured party under
the Code or under other Applicable Law, and all other legal and equitable
rights to which Lender may be entitled, all of which rights and remedies shall
be cumulative and shall be in addition to any other rights or remedies
contained in this Agreement or any of the other Loan Documents, and none of
which shall be exclusive.
10.3.2 The right to take immediate possession of the Collateral,
and to (i) require Borrower to assemble the Collateral, at Borrower's expense,
and make it available to Lender at a place designated by Lender which is
reasonably convenient to both parties, and (ii) enter any premises where any of
the Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the Property of Borrower, Borrower
agrees not to charge Lender for storage thereof).
10.3.3 The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Lender,
in its sole discretion, may deem advisable. Borrower agrees that any
requirement of notice to Borrower of any proposed public or private sale or
other disposition of Collateral by Lender shall be deemed reasonable notice
thereof if given at least ten (10) days prior thereto, and any such sale may be
held at such locations as Lender may designate in said notice. Lender shall
have the right to conduct such sales on Borrower's premises, without charge
therefor, and such sales may be adjourned from time to time in accordance with
Applicable Law. Lender shall have the right to sell, lease or otherwise
dispose of the Collateral, or any part thereof, for cash, credit or any
combination thereof, and Lender 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 price against the
Obligations. The proceeds realized from the sale of any Collateral may be
applied, after allowing two (2) Business Days for collection, first to the
costs, expenses and attorneys' fees incurred by Lender in collecting the
Obligations, in enforcing the rights of Lender under the Loan Documents and in
collecting, retaking, completing, protecting, removing, storing, advertising
for sale, selling and delivering any Collateral; second to the interest due
upon any of the Obligations; and third, to the principal of the Obligations.
If any deficiency shall arise, each Borrower shall remain jointly and severally
liable to Lender therefor.
10.3.4 The right to exercise all of Lender's rights and remedies
under any mortgage/deed of trust with respect to any real Property forming a
part of the Collateral.
10.3.5 Lender is hereby granted a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights of use of any
name, trade secrets, trade names, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the
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Collateral, in advertising for sale and selling any Collateral and Borrower's
rights under all licenses and all franchise agreements shall inure to Lender's
benefit.
10.3.6 Lender may, at its option, require Borrower to deposit
with Lender funds equal to the LC Amount and, if Borrower fails to promptly
make such deposit, Lender may advance such amount as a Revolving Credit Loan
(whether or not an Out of Formula Condition is created thereby). Any such
deposit or advance shall be held by Lender as a reserve to fund future payments
on such LC Guaranties and future drawings against such Letters of Credit. At
such time as all LC Guaranties have been paid or terminated and all Letters of
Credit have been drawn upon or expired, any amounts remaining in such reserve
shall be applied against any outstanding Obligations, or, if all Obligations
have been indefeasibly paid in full, returned to Borrower.
10.4 Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule or in any Guaranty Agreement given to Lender or contained in
any other agreement between Lender and Borrower, heretofore, concurrently, or
hereafter entered into, shall be deemed cumulative to and not in derogation or
substitution of any of the terms, covenants, conditions, or agreements of
Borrower herein contained. The failure or delay of Lender to require strict
performance by Borrower of any provision of this Agreement or to exercise or
enforce any rights, Liens, powers, or remedies hereunder or under any of the
aforesaid agreements or other documents or security or Collateral shall not
operate as a waiver of such performance, Liens, rights, powers and remedies,
but all such requirements, Liens, rights, powers, and remedies shall continue
in full force and effect until all Loans and all other Obligations owing or to
become owing from Borrower to Lender shall have been fully satisfied. None of
the undertakings, agreements, warranties, covenants and representations of
Borrower contained in this Agreement or any of the other Loan Documents and no
Event of Default by Borrower under this Agreement or any other Loan Documents
shall be deemed to have been suspended or waived by Lender, unless such
suspension or waiver is by an instrument in writing specifying such suspension
or waiver and is signed by a duly authorized representative of Lender and
directed to Borrower.
SECTION 11. MISCELLANEOUS
11.1 Power of Attorney. Borrower hereby irrevocably designates,
makes, constitutes and appoints Lender (and all Persons designated by Lender)
as Borrower's true and lawful attorney (and agent-in-fact) and Lender, or
Lender's agent, may, without notice to Borrower and in either Borrower's or
Lender's name, but at the cost and expense of Borrower:
11.1.1 At such time or times as Lender or said agent, in its sole
discretion, may determine, endorse Borrower's name on any checks, notes,
acceptances, drafts, money orders or any other evidence of payment or proceeds
of the Collateral which come into the possession of Lender or under Lender's
control.
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11.1.2 At such time or times upon the occurrence and during the
continuance of an Event of Default as Lender or its agent in its sole
discretion may determine: (i) demand payment of the Accounts from the Account
Debtors, enforce payment of the Accounts by legal proceedings or otherwise, and
generally exercise all of Borrower's rights and remedies with respect to the
collection of the Accounts; (ii) settle, adjust, compromise, discharge or
release any of the Accounts or other Collateral or any legal proceedings
brought to collect any of the Accounts or other Collateral; (iii) sell or
assign any of the Accounts and other Collateral upon such terms, for such
amounts and at such time or times as Lender deems advisable; (iv) take control,
in any manner, of any item of payment or proceeds relating to any Collateral;
(v) prepare, file and sign Borrower's name to a proof of claim in bankruptcy or
similar document against any Account Debtor or to any notice of lien,
assignment or satisfaction of lien or similar document in connection with any
of the Collateral; (vi) receive, open and dispose of all mail addressed to
Borrower and to notify postal authorities to change the address for delivery
thereof to such address as Lender may designate; (vii) endorse the name of
Borrower upon any of the items of payment or proceeds relating to any
Collateral and deposit the same to the account of Lender on account of the
Obligations; (viii) endorse the name of Borrower upon any chattel paper,
document, instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of lading or similar document
or agreement relating to the Accounts, Inventory and any other Collateral; (ix)
use Borrower's stationery and sign the name of Borrower to verifications of the
Accounts and notices thereof to Account Debtors; (x) use the information
recorded on or contained in any data processing equipment and computer hardware
and software relating to the Accounts, Inventory, Equipment and any other
Collateral; (xi) make and adjust claims under policies of insurance; and (xii)
do all other acts and things necessary, in Lender's determination, to fulfill
Borrower's obligations under this Agreement.
11.2 Indemnity. BORROWER HEREBY INDEMNIFIES, HOLDS HARMLESS, AND
SHALL DEFEND LENDER AND ITS DIRECTORS, OFFICERS, AGENTS, COUNSEL AND EMPLOYEES
("INDEMNIFIED PERSONS") FROM AND AGAINST ANY AND ALL LOSSES, LIABILITIES,
DAMAGES, COSTS, EXPENSES, SUITS, ACTIONS AND PROCEEDINGS ("LOSSES") EVER
SUFFERED OR INCURRED BY ANY INDEMNIFIED PERSON ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OTHER TRANSACTION CONTEMPLATED HEREBY, INCLUDING, WITHOUT
LIMITATION, ANY LOSSES CAUSED BY THE NEGLIGENCE OF ANY SUCH INDEMNIFIED PERSON,
BUT NOT INCLUDING ANY LOSSES CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF ANY SUCH INDEMNIFIED PERSON, AND BORROWER SHALL REIMBURSE LENDER
AND EACH OTHER INDEMNIFIED PERSON FOR ANY EXPENSES (INCLUDING IN CONNECTION
WITH THE INVESTIGATION OF, PREPARATION FOR OR DEFENSE OF ANY ACTUAL OR
THREATENED CLAIM, ACTION OR PROCEEDING ARISING THEREFROM, INCLUDING ANY SUCH
COSTS OF RESPONDING TO DISCOVERY REQUESTS OR SUBPOENAS, REGARDLESS OF WHETHER
LENDER OR SUCH OTHER INDEMNIFIED PERSON IS A PARTY THERETO). WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, THIS INDEMNITY SHALL EXTEND TO ANY CLAIMS
ASSERTED AGAINST LENDER OR ANY OTHER INDEMNIFIED PERSON BY ANY PERSON UNDER ANY
ENVIRONMENTAL LAWS OR SIMILAR LAWS BY REASON OF BORROWER'S OR
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ANY OTHER PERSON'S FAILURE TO COMPLY WITH LAWS APPLICABLE TO SOLID OR HAZARDOUS
WASTE MATERIALS OR OTHER TOXIC SUBSTANCES. BORROWER MAY SELECT COUNSEL WITH
RESPECT TO ANY LOSSES; PROVIDED, HOWEVER, EACH INDEMNIFIED PERSON SHALL HAVE
THE RIGHT TO MONITOR THE PROGRESS OF ANY CLAIMS, SUITS AND ADMINISTRATIVE
PROCEEDINGS DEFENDED BY BORROWER HEREUNDER WITH COUNSEL OF SUCH INDEMNIFIED
PERSON'S CHOICE, OR CONDUCT ITS DEFENSE THROUGH COUNSEL OF SUCH INDEMNIFIED
PERSON'S CHOICE, IN THE EVENT THAT (I) SUCH INDEMNIFIED PERSON DETERMINES IN
GOOD FAITH THAT THE CONDUCT OF ITS DEFENSE BY BORROWER COULD BE MATERIALLY
PREJUDICIAL TO SUCH INDEMNIFIED PERSON'S INTERESTS OR THAT OTHER REASONABLE
GROUNDS EXIST WHICH DEMONSTRATE A LACK OF EFFECTIVENESS OR HIGH LEVEL OF
QUALITY IN THE CONDUCT OF SUCH DEFENSE BY BORROWER, AND (II) PRIOR TO RETAINING
SUCH COUNSEL FOR SUCH PURPOSE, SUCH INDEMNIFIED PERSON SHALL CONSULT WITH
BORROWER AND SHALL ATTEMPT IN GOOD FAITH TO AGREE UPON COUNSEL TO CONDUCT THE
DEFENSE ON BEHALF OF BORROWER AND SUCH INDEMNIFIED PERSON, AND IN EACH CASE THE
FEES AND DISBURSEMENTS OF SUCH COUNSEL SHALL BE PAID BY BORROWER; PROVIDED,
HOWEVER, THAT IF SUCH MUTUAL AGREEMENT IS NOT REACHED WITHIN A REASONABLE TIME
ON SELECTING COUNSEL, THEN SUCH INDEMNIFIED PERSON MAY RETAIN ITS OWN COUNSEL
AT BORROWER'S EXPENSE. NOTWITHSTANDING ANY CONTRARY PROVISION OF THIS
AGREEMENT, THE OBLIGATION OF BORROWER UNDER THIS SECTION 11.2 SHALL SURVIVE THE
PAYMENT IN FULL OF THE OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT.
11.3 Modification of Agreement; Sale of Interest. This Agreement may
not be modified, altered or amended, except by an agreement in writing signed
by Borrower and Lender. Borrower may not sell, assign or transfer any interest
in this Agreement, any of the other Loan Documents, or any of the Obligations,
or any portion thereof, including Borrower's rights, title, interests,
remedies, powers, and duties hereunder or thereunder. Borrower hereby consents
to Lender's participation, sale, assignment, transfer or other disposition, at
any time or times hereafter, of this Agreement and any of the other Loan
Documents, or of any portion hereof or thereof, including Lender's rights,
title, interests, remedies, powers, and duties hereunder or thereunder to any
Affiliate of Lender or any Person that purchases all or substantially all of
the assets of Lender. Any other participation, sale, assignment, transfer or
other disposition, at any time or times hereafter, of this Agreement and any of
the other Loan Documents shall be subject to Bayard's prior consent, such
consent not to be unreasonably withheld. If Lender requests such consent in
writing and Bayard does not respond in writing within five (5) Business Days
from the date of delivery of such request, the consent of Bayard shall be
deemed to have been given. In the case of an assignment, the assignee shall
have, to the extent of such assignment, the same rights, benefits and
obligations as it would if it were "Lender" hereunder and Lender shall be
relieved of all obligations hereunder upon any such assignment. Borrower
agrees that it will use its best efforts to assist and cooperate with Lender in
any manner reasonably requested by Lender to effect the sale of participations
in or assignments of any of the Loan Documents or any portion thereof or
interest therein, including assisting in the preparation of appropriate
disclosure
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documents. Borrower further agrees that Lender may disclose credit information
regarding Borrower and its Subsidiaries to any potential Participant or
assignee.
11.4 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under Applicable Law, but if any provision of this Agreement shall be
prohibited by or invalid under Applicable Law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
11.5 Successors and Assigns. This Agreement, the Other Agreements and
the Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower and Lender permitted under Section 11.3
hereof.
11.6 Cumulative Effect; Conflict of Terms. The provisions of the
Other Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.2
hereof and except as otherwise provided in any of the other Loan Documents by
specific reference to the applicable provision of this Agreement, if any
provision contained in this Agreement is in direct conflict with, or
inconsistent with, any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.
11.7 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which counterparts taken together shall constitute
but one and the same instrument.
11.8 Notice. All notices, requests and demands to or upon a party
hereto shall be in writing and shall be sent by certified or registered mail,
return receipt requested, by personal delivery against receipt, by overnight
courier or by facsimile transmissions and shall be deemed to have been validly
served, given or delivered immediately when delivered against receipt or three
(3) Business Days after deposit in the mail, postage prepaid, or with an
overnight courier or, in the case of facsimile transmission, when sent,
answerback received, in each case addressed as follows:
If to Lender: Fleet Capital Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ 21
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Loan Administration Manager
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to: ▇▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower: Bayard Drilling Technologies, Inc.
▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as each party may designate for itself by notice given
in accordance with this Section 11.8; provided, however, that any notice,
request or demand to or upon Lender pursuant to Section 3.1.1 or 4.2.2 hereof
shall not be effective until received by Lender. Any written notice or demand
that is not sent in conformity with the provisions hereof shall nevertheless be
effective on the date that such notice is actually received by the noticed
party.
11.9 Lender's Consent. Unless otherwise provided herein, whenever
Lender's consent is required to be obtained under this Agreement, any of the
Other Agreements or any of the Security Documents as a condition to any action,
inaction, condition or event, Lender shall be authorized to give or withhold
such consent in its sole and absolute discretion.
11.10 Credit Inquiries. Borrower hereby authorizes and permits Lender
(but Lender shall have no obligation) to respond to usual and customary credit
inquiries from third parties concerning Borrower or any of its Subsidiaries.
11.11 Time of Essence. Time is of the essence of this Agreement, the
Other Agreements and the Security Documents.
11.12 Entire Agreement; Appendix A and Exhibits and Schedules. This
Agreement and the other Loan Documents, together with all other instruments,
agreements and certificates executed by the parties in connection therewith or
with reference thereto, embody the entire understanding and agreement between
the parties hereto and thereto with respect to the subject matter hereof and
thereof and supersede all prior agreements, understandings and inducements,
whether express or implied, oral or written. Appendix A and each of the
Exhibits and Schedules attached hereto are incorporated into this Agreement
and by this reference made a part hereof.
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11.13 Interpretation. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
11.14 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
DALLAS, DALLAS COUNTY, TEXAS. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS: PROVIDED,
HOWEVER, THAT IF ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION
OTHER THAN TEXAS, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER
AND PROCEDURE FOR FORECLOSURE OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE
ENFORCEMENT OF LENDER'S OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE
EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT
WITH THE LAWS OF TEXAS. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED,
AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS
OF BORROWER OR LENDER, BORROWER HEREBY CONSENTS AND AGREES THAT THE DISTRICT
COURT OF DALLAS COUNTY, TEXAS, OR, AT LENDER'S OPTION, THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION, SHALL HAVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND
LENDER PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED
TO THIS AGREEMENT. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER
HEREBY WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH BORROWER MAY
HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION
OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS
MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE
ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR THREE (3)
DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF LENDER TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE
ENFORCEMENT BY LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE
TAKING OF ANY ACTION
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UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.
11.15 WAIVERS BY BORROWER. BORROWER WAIVES (I) THE RIGHT TO TRIAL BY
JURY (WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN
DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (II) PRESENTMENT, DEMAND AND
PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON-PAYMENT, INTENT TO
ACCELERATE, ACCELERATION, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION
OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS,
DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY LENDER
ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS
WHATEVER LENDER MAY DO IN THIS REGARD; (III) TO THE EXTENT PERMITTED BY LAW,
NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR
SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO
EXERCISE ANY OF LENDER'S REMEDIES; (IV) TO THE EXTENT PERMITTED BY LAW, THE
BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; AND (V) NOTICE OF
ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A
MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT AND THAT LENDER IS
RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER.
BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS
WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
11.16 ORAL AGREEMENTS INEFFECTIVE. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES, AND THE SAME MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
11.17 Nonapplicability of Article 5069-15.01 et seq. Borrower and
Lender hereby agree that, except for Section 15.10(b) thereof, the provisions
of Tex. Rev. Civ. Stat. ▇▇▇. art. 5069-15.01 et seq. (▇▇▇▇▇▇ 1987) (regulating
certain revolving credit loans and revolving tri-party accounts) shall not
apply to this Agreement or any of the other Loan Documents.
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11.18 Certain Matters of Construction.
(A) References to Other Documents. All references to statutes
and related regulations in this Agreement, the Other Agreements and the
Security Agreements shall include any amendments of same and any successor
statutes and regulations. All references in this Agreement, the Other
Agreements and the Security Agreements to any of the Loan Documents shall
include any and all modifications thereto and any and all extensions or
renewals thereof.
(B) The Term "Borrower" or Borrowers". All references to
"Borrower" or "Borrowers" herein shall refer to and include each of Bayard and
Trend separately and all representations contained herein shall be deemed to be
separately made by each of them, and each of the covenants, agreements and
obligations set forth herein shall be deemed to be the joint and several
covenants, agreements and obligations of them. Any notice, request, consent,
report or other information or agreement delivered to Lender by any Borrower
shall be deemed to be ratified by, consented to and also delivered by the other
Borrower. Each Borrower recognizes and agrees that each covenant and agreement
of "Borrower" or "Borrowers" under this Agreement and the other Loan Documents
shall create a joint and several obligation of the Borrowers, which may be
enforced against Borrowers, jointly, or against each Borrower separately.
Without limiting the terms of this Agreement and the other Loan Documents,
security interests granted under this Agreement and other Loan Documents in
properties, interests, assets and collateral shall extend to the properties,
interests, assets and collateral of each Borrower. Similarly, the term
"Obligations" shall include, without limitation, all obligations, liabilities
and indebtedness of such corporations, or any one of them, to Lender, whether
such obligations, liabilities and indebtedness shall be joint, several, joint
and several or individual.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement has been duly executed in Dallas,
Texas, on the day and year specified at the beginning of this Agreement.
BORROWER:
BAYARD DRILLING TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Title: Chief Executive Officer
TREND DRILLING CO.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Title: President
----------------------------------
Accepted in Dallas, Dallas County, Texas:
LENDER:
FLEET CAPITAL CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: Vice President
----------------------------------
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APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of May 1, 1997, by
and between Fleet Capital Corporation, Bayard Drilling Technologies, Inc. and
Trend Drilling Company, the following terms shall have the following meanings
(terms defined in the singular to have the same meaning when used in the plural
and vice versa):
Account Debtor - any Person who is or may become obligated under
or on account of an Account.
Accounts - all accounts, contract rights, chattel paper,
instruments and documents, whether now owned or hereafter created or
acquired by Borrower or in which Borrower now has or hereafter acquires
any interest.
Acquisition - the purchase by Bayard of all of the issued and
outstanding capital stock of Trend pursuant to the Purchase Documents.
Additional Securities - the Additional Securities (as defined in
that certain Securities Purchase Agreement dated as of April 30, 1997
between and among Bayard, Energy Spectrum, and Chesapeake) that Bayard
may cause Chesapeake to purchase.
Affiliate - a Person (other than a Subsidiary): (i) which
directly or indirectly through one or more intermediaries controls, or
is controlled by, or is under common control with, a Person; (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock
of a Person; or (iii) 5% or more of the Voting Stock (or in the case of
a Person which is not a corporation, 5% or more of the equity interest)
of which is beneficially owned or held by a Person or a Subsidiary of a
Person.
Agreement - the Loan and Security Agreement referred to in the
first sentence of this Appendix A, all Exhibits and Schedules thereto
and this Appendix A, as amended, renewed, extended and restated from
time to time.
Allowed Affiliate Accounts - each Account receivable from
Chesapeake, ▇▇▇▇, or ▇▇▇▇▇ Company which arises in the ordinary course
of Borrower's business from the sale of goods or rendition of services
to such Persons and which is payable in Dollars. Without limiting the
generality of the foregoing, no Account shall be an Allowed Affiliate
Account if: (i) it is due or unpaid more than 90 days after the
original invoice date; (ii) 20% or more of the Accounts from the Account
Debtor are due and unpaid more than 60 days from invoice date or
otherwise are not deemed Allowed Affiliate Accounts hereunder (subject,
however, to redeterminations by Lender if Borrower provides written
evidence to Lender reflecting that sufficient payments have been made on
such Accounts between the date of determination of eligibility and the
date the Schedule of Accounts was delivered to Lender to merit their
inclusion in a Borrowing Base determination);
A-1-1
49
(iii) any covenant, representation or warranty contained in the
Agreement with respect to such Account has been breached; (iv) the
Account Debtor has disputed liability with respect to such Account, or
the Account Debtor has made any claim with respect to any other Account
due from such Account Debtor to Borrower, or the Account otherwise is or
may become subject to any right of setoff, counterclaim, reserve or
chargeback, provided that, in any event, the Accounts of such Account
Debtor shall be ineligible only to the extent of the amount owing by
Borrower to such creditor or supplier or to the extent of such offset,
counterclaim, disputed amount, reserve or chargeback; (v) the Account
Debtor has commenced a voluntary case under the federal bankruptcy laws
or made an assignment for the benefit of creditors, or a decree or order
for relief has been entered by a court having jurisdiction in the
proceedings in respect of the Account Debtor in an involuntary case
under the federal bankruptcy laws or any other petition or other
application for relief under the federal bankruptcy laws has been filed
against the Account Debtor, or if the Account Debtor has failed,
suspended business, ceased to be Solvent, or consented to or suffered a
receiver, trustee, liquidator or custodian to be appointed for it or for
all or a significant portion of its assets or affairs; (vi) it arises
from a sale to an Account Debtor with its principal office, assets or
place of business outside the United States, unless the sale is backed
by an irrevocable letter of credit issued or confirmed by Bank and is in
form and substance acceptable to Lender, payable in the full amount of
the Account in freely convertible Dollars at a place of payment within
the United States; (vii) it arises from a sale to the Account Debtor on
a ▇▇▇▇-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment or any other repurchase or return basis; (viii) the Account
Debtor has relocated to New Jersey, Minnesota, Indiana, West Virginia or
any other state imposing similar conditions on the right of a creditor
to collect accounts receivable unless Borrower has either qualified to
transact business in such state as a foreign corporation or filed a
Notice of Business Activities Report or other required report with the
appropriate officials in those states for the then current year; (ix)
the Account is subject to a Lien other than a Permitted Lien; (x) the
goods giving rise to such Account have not been delivered to and
accepted by the Account Debtor or the services giving rise to such
Account have not been performed by Borrower and accepted by the Account
Debtor or the Account otherwise does not represent a final sale; (xi)
the Account is evidenced by chattel paper or an instrument of any kind,
or has been reduced to judgment; (xii) Borrower has made any agreement
with the Account Debtor for any deduction therefrom, except for
discounts or allowances which are made in the ordinary course of
business for prompt payment and which discounts or allowances are
reflected in the calculation of the face value of each invoice related
to such Account; or (xiii) Borrower has made an agreement with the
Account Debtor to extend the time of payment thereof.
AnSon Company - AnSon Company, an Oklahoma general partnership.
AnSon Partners - AnSon Partners Limited Partnership, an Oklahoma
limited partnership.
Applicable Annual Rate - as defined in Section 2.1.1 of the
Agreement.
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50
Applicable Law - all laws, rules and regulations applicable to
the Person, conduct, transaction, covenant or Loan Documents in
question, including all applicable common law and equitable principles;
all provisions of all applicable state and federal constitutions,
statutes, rules, regulations and orders of governmental bodies; and
orders, judgments and decrees of all courts and arbitrators.
Availability - the amount of money which Borrower is entitled to
borrow from time to time as Revolving Credit Loans, such amount being
the difference derived when the sum of the principal amount of Revolving
Credit Loans then outstanding (including any amounts which Lender may
have paid for the account of Borrower pursuant to any of the Loan
Documents and which have not been reimbursed by Borrower) and the LC
Amount is subtracted from the Borrowing Base. If the amount outstanding
is equal to or greater than the Borrowing Base, Availability is 0.
Average Monthly Revolving Credit Balance - the amount obtained by
adding the aggregate unpaid principal amount of Revolving Credit Loans
plus the LC Amount at the end of each day during the month in question
and by dividing such sum by the number of days in such month.
Bank - Fleet National Bank, and its successors or assigns.
Base Rate - the rate of interest announced or quoted by Bank from
time to time as its prime rate for commercial loans, whether or not such
rate is the lowest rate charged by Bank to its most preferred borrowers;
and, if such prime rate for commercial loans is discontinued by Bank as
a standard, a comparable reference rate designated by Bank as a
substitute therefor shall be the Base Rate.
Borrowing Base - as at any date of determination thereof, an
amount equal to the lesser of:
(a) Total Credit Facility; or
(b) an amount equal to:
(i) 80% of the net amount of Eligible Accounts
outstanding at such date;
PLUS
(ii) 50% of the net amount of Borrower's Turnkey
Accounts;
PLUS
(iii) the lesser of (x) 80% of the net amount of Allowed
Affiliate Accounts and (y) $5,000,000;
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MINUS (subtract from the sum of clauses
(a) and (b) above)
(c) the sum of (i) the LC Amount, plus (ii) the amount
of any reserves established by Lender pursuant to Section 1.1.1
at such date.
For purposes of clauses (l)(b)(i), (b)(ii) and (b)(iii) hereof,
the net amount of Eligible Accounts, Turnkey Accounts, and Allowed
Affiliate Accounts, as the case may be, at any time shall be the face
amount of such Accounts less any and all returns, rebates, discounts
(which may, at Lender's option, be calculated on shortest terms),
credits, allowances or sales, excise or withholding taxes of any nature
at any time issued, owing, claimed by Account Debtors, granted,
outstanding or payable in connection with such Accounts at such time.
Business Day - any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the state of Texas or is a
day on which banking institutions located in such state are closed.
Capital Expenditures - expenditures made or liabilities incurred
for the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than
one year, including the total principal portion of Capitalized Lease
Obligations.
Capitalized Lease Obligation - any Indebtedness represented by
obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
Cash Flow Coverage Ratio - means the ratio of Cash Flow to
Projected Debt Service. For this ratio, "Cash Flow" means, for any
period, the sum of Bayard's consolidated net income plus depreciation,
depletion and amortization less dividends paid and extraordinary items
of income or loss (as determined in accordance with GAAP) in the prior
four quarters. Cash Flow shall exclude the Cash Flow attributable to
any Non-consolidated Subsidiary.
Cash Flow will be calculated as follows:
(i) as of June 30,1997, Cash Flow is equal to the product of (x)
actual Cash Flow for the month of June 1997 times (y) twelve;
(ii) as of September 30, 1997, Cash Flow is equal to the sum of (x)
the product of actual Cash Flow for the month of June 1997 times
nine, plus (y) the sum of actual Cash Flow for the months of
July, August and September 1997.
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(iii) as of December 31, 1997, Cash Flow is equal to the sum of (x) the
product of actual Cash Flow for the month of June 1997 times six,
plus (y) the sum calculated in (ii)(y) above, plus the sum of
actual Cash Flows for the months of October, November and
December 1997;
(iv) as of March 31, 1998, Cash Flow is equal to the sum of (x) the
product of the actual cash flow for the month of June 1997 times
three, plus (y) the sum calculated in (iii)(y) above, plus the
sum of the cash flows for the months of January, February and
March 1998; and
(v) as of June 30, 1998 and for all subsequent periods; Cash Flow is
equal to the sum of the actual Cash Flow for the then preceding
twelve months.
Chesapeake - Collectively and individually, Chesapeake Energy
Corporation, an Oklahoma corporation and Chesapeake Operating, Inc., an
Oklahoma corporation.
Chesapeake Debt - means (a) all the obligations of Bayard to
Chesapeake evidenced by that certain Subordinated Note of even date
herewith in the principal amount of $18,000,000, and (b) all other
amounts now or hereafter owed by Bayard to Chesapeake under the
Subordinated Note and that certain Securities Purchase Agreement of even
date herewith by and between Chesapeake and Bayard, but in no event to
exceed $20,160,000 in the aggregate, plus accrued interest and the
amount of any additional notes issued by Bayard to pay interest on such
debt.
CIT - The CIT Group/Equipment Financing, Inc., a New York
corporation.
CIT Debt - means any and all indebtedness, claims, debts,
liabilities, or obligations of Borrower owing to CIT, individually and
as agent for CIT and Lender, and Lender, of whatever nature, character,
or description, arising solely as a result of the loans made pursuant to
the CIT Loan Agreement, but in no event shall such CIT Debt exceed
$30,577,131.15 plus accrued interest in the aggregate.
CIT Loan Agreement - means that certain Loan Agreement, dated as
of December 10, 1996, by and between CIT and Bayard, as amended and
restated as of May 1, 1997, by and between CIT, Lender, CIT as agent for
CIT and Lender, and Borrower, and any and all other agreements,
documents and instruments currently or hereafter entered into by and
between Borrower, CIT, Lender, and CIT as agent for CIT and Lender, or
executed by Borrower in favor of, or to the order of, CIT, Lender, and
CIT as agent for CIT and Lender, in connection with such Loan Agreement.
CIT Sale/Leaseback - means any and all indebtedness, claims,
debts, liabilities or obligations of Bayard owing to CIT, of whatever
nature, character, or description, arising solely as a result of that
certain Agreement to Purchase and Lease, dated as of May 1, 1997, by and
between Borrower and CIT, and any and all other agreements, documents
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53
and instruments currently or hereafter entered into by and between
Borrower and CIT, or executed by Borrower in favor of, or to the order
of, CIT in connection with such Agreement to Purchase and Lease, but in
no event shall such obligations exceed $7,500,000 in the aggregate.
Closing Date - the date on which all of the conditions precedent
in Section 9 of the Agreement are satisfied and the initial Loan is made
or the initial Letter of Credit or LC Guaranty is issued under the
Agreement.
Code - the Uniform Commercial Code as adopted and in force in the
state of Texas, as from time to time in effect.
Collateral - all of the Property and interests in Property
described in Section 5 of the Agreement, and all other Property and
interests in Property that now or hereafter secure the payment and
performance of any of the Obligations.
Consolidated - the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
Current Assets - at any date means the amount at which all of the
current assets of a Person would be properly classified as current
assets shown on a balance sheet at such date in accordance with GAAP.
Default - an event or condition the occurrence of which would,
with the lapse of time or the giving of notice, or both, become an Event
of Default.
Default Rate - as defined in Section 2.1.2 of the Agreement.
Distribution - in respect of any corporation means and includes:
(i) the payment of any dividends or other distributions on capital stock
of the corporation (except distributions in such stock) and (ii) the
redemption or acquisition of Securities unless made contemporaneously
from the net proceeds of the sale of Securities.
Dollars and the sign "$" - lawful money of the United States of
America.
Dominion Account - a special account of Lender established by
Borrower pursuant to the Agreement at a bank selected by Borrower, but
acceptable to Lender in its reasonable discretion, and over which Lender
shall have sole and exclusive access and control for withdrawal
purposes.
Drilling Contracts - any and all drilling contracts entered into
by either Borrower and any and all rights of either Borrower, including
but not limited to the right to receive payments due or to become due,
thereunder.
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54
Drilling Rigs - all land drilling rigs and drilling equipment now
owned or hereafter acquired by Borrower and all metal products,
machinery, equipment, materials or other goods of any description
whatsoever, used or acquired for use by Borrower and all pumps, drilling
equipment, drill pipe, machinery, equipment, supplies, parts and other
goods of any description whatsoever installed in or affixed to or to be
used in connection with any Drilling Rig or acquired for installation
on, affixation to, or use in connection with any Drilling Rig including,
without limitation, the Drilling Rigs identified on Exhibit P to the
Agreement.
Eligible Account - an Account (other than a Turnkey Account)
arising in the ordinary course of Borrower's business from the sale of
goods or rendition of services which is payable in Dollars and which
Lender, in its sole credit judgment, deems to be an Eligible Account.
Without limiting the generality of the foregoing, no Account shall be an
Eligible Account if: (i) it arises out of a sale made by Borrower to a
Subsidiary or an Affiliate of Borrower or to a Person controlled by an
Affiliate of Borrower, including, without limitation, any Allowed
Affiliate Account; (ii) it is due or unpaid more than 90 days after the
original invoice date; (iii) 20% or more of the Accounts from the
Account Debtor are due and unpaid more than 60 days from invoice date or
otherwise are not deemed Eligible Accounts hereunder; (iv) the total
unpaid Accounts of the Account Debtor exceed 20% of the net amount of
all Eligible Accounts (excluding Accounts receivable from Chesapeake,
Union Pacific Resource Corporation and Sonat Exploration Company, to the
extent of such excess; (v) any covenant, representation or warranty
contained in the Agreement with respect to such Account has been
breached; (vi) the Account Debtor, other than Chesapeake, is also
Borrower's creditor or supplier, or the Account Debtor has disputed
liability with respect to such Account, or the Account Debtor has made
any claim with respect to any other Account due from such Account Debtor
to Borrower, or the Account otherwise is or may become subject to any
right of setoff, counterclaim, reserve or chargeback, provided that, in
any event, the Accounts of such Account Debtor shall be ineligible only
to the extent of the amount owing by Borrower to such creditor or
supplier or to the extent of such offset, counterclaim, disputed amount,
reserve or chargeback; (vii) the Account Debtor has commenced a
voluntary case under the federal bankruptcy laws or made an assignment
for the benefit of creditors, or a decree or order for relief has been
entered by a court having jurisdiction in the proceedings in respect of
the Account Debtor in an involuntary case under the federal bankruptcy
laws or any other petition or other application for relief under the
federal bankruptcy laws has been filed against the Account Debtor, or if
the Account Debtor has failed, suspended business, ceased to be Solvent,
or consented to or suffered a receiver, trustee, liquidator or custodian
to be appointed for it or for all or a significant portion of its assets
or affairs; (viii) it arises from a sale to an Account Debtor with its
principal office, assets or place of business outside the United States,
unless the sale is backed by an irrevocable letter of credit issued or
confirmed by Bank and is in form and substance acceptable to Lender,
payable in the full amount of the Account in freely convertible Dollars
at a place of payment within the United States; (ix) it arises from a
sale to the Account Debtor on a ▇▇▇▇-and-hold, guaranteed sale, sale-or-
return, sale-on-approval, consignment or any other repurchase or return
basis; (x) (a) the Account Debtor
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is the United States of America or any department, agency or
instrumentality thereof, unless Borrower assigns its right to payment of
such Account to Lender, in a manner satisfactory to Lender, so as to
comply with the Assignment of Claims Act of 1940 (31 U.S.C. Section 203
et seq.) or (b) the Account Debtor is a state, county or municipality,
or a political subdivision or agency thereof, which is subject to any
Applicable Law that would disallow an assignment of Accounts on which it
is the Account Debtor; (xi) the Account Debtor is located in New Jersey,
Minnesota, Indiana, West Virginia or any other state imposing similar
conditions on the right of a creditor to collect accounts receivable
unless Borrower has either qualified to transact business in such state
as a foreign corporation or filed a Notice of Business Activities Report
or other required report with the appropriate officials in those states
for the then current year; (xii) the Account is subject to a Lien other
than a Permitted Lien; (xiii) the goods giving rise to such Account have
not been delivered to and accepted by the Account Debtor or the services
giving rise to such Account have not been performed by Borrower and
accepted by the Account Debtor or the Account otherwise does not
represent a final sale; (xiv) the Account is evidenced by chattel paper
or an instrument of any kind, or has been reduced to judgment; (xv)
Borrower has made any agreement with the Account Debtor for any
deduction therefrom, except for discounts or allowances which are made
in the ordinary course of business for prompt payment and which
discounts or allowances are reflected in the calculation of the face
value of each invoice related to such Account; or (xvi) Borrower has
made an agreement with the Account Debtor to extend the time of payment
thereof.
Energy Spectrum - Energy Spectrum Partners LP, a Delaware limited
partnership.
Energy Spectrum Debt - means (a) all the obligations of Energy
Spectrum to Bayard evidenced by that certain Subordinated Note of even
date herewith in the principal amount of $2,520,000, and (b) all other
amounts now or hereafter owed by Energy Spectrum to Bayard under the
Subordinated Note and that certain Securities Purchase Agreement of even
date herewith by and between Energy Spectrum and Bayard, but in no event
to exceed $2,520,000 in the aggregate, plus accrued interest and the
amount of any additional notes issued by Bayard to pay interest on such
debt.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and
consent decrees relating to health, safety or environmental matters.
Equipment - all machinery, apparatus, equipment, Drilling Rigs,
fittings, furniture, fixtures, motor vehicles and other tangible
personal Property (other than Inventory) of every kind and description
used in Borrower's operations or owned by Borrower or in which Borrower
has an interest, whether now owned or hereafter acquired by Borrower and
wherever located, and all parts, accessories and special tools and all
increases and accessions thereto and substitutions and replacements
therefor.
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ERISA - the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations from time to time promulgated
thereunder.
Event of Default - as defined in Section 10.1 of the Agreement.
Excess Interest - as defined in Section 2.1.3(B) of the
Agreement.
GAAP - generally accepted account principles in the United States
of America in effect from time to time.
General Intangibles - all general intangibles of Borrower,
whether now owned or hereafter created or acquired by Borrower,
including all choices in action, causes of action, corporate or other
business records, deposit accounts, inventions, blueprints, designs,
patents, patent applications, trademarks, trademark applications, trade
names, trade secrets, service marks, goodwill, brand names, copyrights,
registrations, licenses, franchises, customer lists, tax refund claims,
computer programs, operational manuals, all claims under guaranties,
security interests or other security held by or granted to Borrower to
secure payment of any of the Accounts by an Account Debtor, all rights
to indemnification and all other intangible property of every kind and
nature (other than Accounts).
Indebtedness - as applied to a Person means, without duplication:
(i) all items 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, including Capitalized Lease Obligations; (ii) all
obligations of other Persons which such Person has guaranteed; (iii) all
reimbursement obligations in connection with letters of credit or letter
of credit guaranties issued for the account of such Person; and (iv) in
the case of Borrower (without duplication), the Obligations.
Indemnified Persons - as defined in Section 11.2 of the
Agreement.
Inventory - all of Borrower's inventory, whether now owned or
hereafter acquired, including, but not limited to, all goods intended
for sale or lease by Borrower, or for display or demonstration; all work
in process; all raw materials and other materials and supplies of every
nature and description used or consumed in Borrower's business; and all
documents evidencing and General Intangibles relating to any of the
foregoing, whether now owned or hereafter acquired by Borrower.
LC Amount - at any time, the aggregate undrawn face amount of all
Letters of Credit and LC Guaranties then outstanding.
LC Guaranty - any guaranty pursuant to which Lender or any
Affiliate of Lender shall guaranty the payment or performance by
Borrower of its reimbursement obligation under any letter of credit.
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Letter of Credit - any letter of credit issued by Lender or any
of Lender's Affiliates for the account of Borrower.
Lien - any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether
such interest is based on common law, statute or contract. The term
"Lien" shall also include reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases
and other title exceptions and encumbrances affecting Property. For the
purpose of the Agreement, Borrower shall be deemed to be the owner of
any Property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for
security purposes.
Loan Account - the loan account established on the books of
Lender pursuant to Section 3.4 of the Agreement.
Loan Documents - the Agreement, the Other Agreements and the
Security Documents.
Loan Party - Each Borrower and each other Person (other than
Lender) who is at any time a party to any Loan Document.
Loans - all loans and advances of any kind made by Lender
pursuant to the Agreement.
Losses - as defined in Section 11.2 of the Agreement.
Material Adverse Effect - the effect of any event or condition
which, alone or when taken together with other events or conditions
occurring or existing concurrently therewith, (a) has a material adverse
effect upon the business, operations, Properties, condition (financial
or otherwise) or business prospects of Borrowers and their Subsidiaries
taken as a whole; (b) has any material adverse effect whatsoever upon
the validity or enforceability of any material provisions of the
Agreement or any of the other Loan Documents; (c) has or may be
reasonably expected to have any material adverse effect upon the value
of the whole or any material part of the Collateral, the Liens of Lender
with respect to the Collateral or any material part thereof or the
priority of such Liens; (d) materially impairs the ability of Borrower
and the other Loan Parties, taken as a whole, to perform their material
obligations under this Agreement or any of the other Loan Documents,
including repayment of the Obligations when due; or (e) materially
impairs the ability of Lender to enforce or collect the Obligations or
realize upon any of the Collateral in accordance with the Loan Documents
and Applicable Law.
Maximum Legal Rate - as defined in Section 2.1.3(A) of the
Agreement.
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Money Borrowed - means (i) Indebtedness arising from the lending
of money by any Person to Borrower; (ii) Indebtedness, whether or not in
any such case arising from the lending by any Person of money to
Borrower, (A) which is represented by notes payable or drafts accepted
that evidence extensions of credit, (B) which constitutes obligations
evidenced by bonds, debentures, notes or similar instruments, or (C)
upon which interest charges are customarily paid (other than accounts
payable) or that was issued or assumed as full or partial payment for
Property, other than accounts payable; (iii) Indebtedness that
constitutes a Capitalized Lease Obligation; (iv) reimbursement
obligations with respect to letters of credit or guaranties of letters
of credit and (v) Indebtedness of Borrower under any guaranty of
obligations that would constitute Indebtedness for Money Borrowed under
clauses (i) through (iii) hereof, if owed directly by Borrower.
Mortgage - the mortgage or deed of trust to be executed by
Borrower in favor of Lender by which Borrower shall grant and convey to
Lender, as security for the Obligations, a Lien upon the real Property
owned in fee by Borrower, located at El Reno, Oklahoma.
Multiemployer Plan - has the meaning set forth in Section
4001(a)(3) of ERISA.
Non-consolidated Subsidiary - a Subsidiary of either Borrower
whose assets are not subject to a Lien in favor of Lender and which has
debt that is non-recourse to the Borrowers or the Borrowers' assets.
Obligations - all Loans, and all other advances, debts,
liabilities, obligations, covenants and duties, together with all
interest, fees and other charges thereon, owing, arising, due or payable
from Borrower to Lender of any kind or nature, present or future,
whether or not evidenced by any note, guaranty or other instrument,
whether arising under the Agreement or any of the other Loan Documents
or otherwise, and whether direct or indirect (including those acquired
by assignment), absolute or contingent, primary or secondary, due or to
become due, now existing or hereafter arising and however acquired.
Original Term - as defined in Section 4.1 of the Agreement.
Other Agreements - any and all agreements, instruments and
documents (other than the Agreement and the Security Documents),
heretofore, now or hereafter executed by Borrower, any Subsidiary of
Borrower or any other third party and delivered to Lender in respect of
the transactions contemplated by the Agreement.
Out-of-Formula Condition - at any date of determination thereof,
a condition such that the outstanding principal amount of Revolving
Credit Loans plus the LC Amount on such date exceeds the Borrowing Base
on such date.
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Participant - each Person who shall be granted the right by
Lender to participate in any of the Loans described in the Agreement and
who shall have entered into a participation agreement in form and
substance satisfactory to Lender.
Permitted Indebtedness - Indebtedness specified in Exhibit N to
the Agreement.
Permitted Lien - a Lien of a kind specified in Section 8.2.5 of
the Agreement.
Permitted Purchase Money Indebtedness - Purchase Money
Indebtedness of Borrower incurred after the date hereof which is secured
by a Purchase Money Lien and which, when aggregated with the principal
amount of all other such Indebtedness and Capitalized Lease Obligations
of Borrower at the time outstanding, does not exceed $6,000,000. For
the purposes of this definition, the principal amount of any Purchase
Money Indebtedness consisting of capitalized leases shall be computed as
a Capitalized Lease Obligation.
Person - an individual, partnership, corporation, limited
liability company, joint stock company, land trust, business trust, or
unincorporated organization, or a government or agency or political
subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for
employees of Borrower that is covered by Title IV of ERISA.
Projected Debt Service - means the sum of the current portion of
each Borrower's long term debt and capitalized lease obligations coming
due in the following four quarters, including any maturities of the
Loans associated with this Agreement. Projected Debt Service shall
exclude the Projected Debt Service attributable to any Non-consolidated
Subsidiary.
Properly Contested - in the case of any Indebtedness of a Loan
Party (including any Taxes) that is not paid as and when due or payable
by reason of such Loan Party's bona fide dispute concerning its
liability to pay same or concerning the amount thereof, that (i) such
Indebtedness and any Liens securing same are being properly contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted, (ii) such Loan Party has established appropriate reserves as
shall be required in conformity with GAAP, (iii) the non-payment of such
Indebtedness will not have a Material Adverse Effect and will not result
in a forfeiture of any assets of such Loan Party; (iv) no Lien is
imposed upon any of such Loan Party's assets with respect to such
Indebtedness unless such Lien is at all times junior and subordinate in
priority to the Liens in favor of Lender (except only with respect to
property taxes that have priority as a matter of applicable state law);
(v) if the Indebtedness results from the entry, rendition or issuance
against a Loan Party or any of its assets of a judgment, writ, order or
decree, such judgment, writ, order or decree is stayed or bonded pending
a timely appeal or other judicial review; and (vi) if such contest is
abandoned, settled or determined adversely to
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such Loan Party, such Loan Party forthwith pays such Indebtedness and
all penalties and interest in connection therewith.
Property - any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
Purchase Documents - the Stock Purchase Agreement, dated as of
February 13, 1997, by and between Bayard and ▇▇▇▇▇▇ ▇. ▇▇▇▇, an
individual acting in his capacity as Trustee of The ▇▇▇▇▇▇ ▇. ▇▇▇▇
Revocable Inter Vivos Trust dated April 23, 1984, pursuant to which
Bayard has agreed to purchase all of the issued and outstanding capital
stock of Trend, and all documents and instruments executed or delivered
in connection therewith.
Purchase Money Indebtedness - means and includes (i) Indebtedness
(other than the Obligations) for the payment of all or any part of the
purchase price of any fixed assets, (ii) any Indebtedness (other than
the Obligations) incurred at the time of or within ten (10) days prior
to or after the acquisition of any fixed assets for the purpose of
financing all or any part of the purchase price thereof, and (iii) any
renewals, extensions or refinancings thereof, but not any increases in
the principal amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets and their proceeds
which secures Purchase Money Indebtedness, but only if such Lien shall
at all times be confined solely to the fixed assets the purchase price
of which was financed through the incurrence of the Purchase Money
Indebtedness secured by such Lien.
Registration Rights Agreements The Amended and Restated
Registration Rights Agreement, dated as of May 1, 1997, by and among
Bayard, Anadarko Drilling Company, ▇.▇. ▇▇▇▇▇▇ Drilling, Inc., ▇▇▇▇
▇▇▇▇▇▇ Energy Equipment Resource, Inc., Grupo de Hercules, Ltd., ▇▇▇▇▇▇-
▇▇▇▇▇▇ Partnership, Ltd., Energy Spectrum, and Chesapeake.
Rentals - as defined in Section 8.2.13 of the Agreement.
Reportable Event - any of the events set forth in Section 4043(b)
of ERISA.
Restricted Investment - any investment made in cash or by
delivery of Property to any Person, whether by acquisition of stock,
Indebtedness or other obligation or Security, or by loan, advance or
capital contribution, or otherwise, or in any Property except the
following:
(i) investments in (a)one or more Subsidiaries
(including Trend) of Borrower to the extent existing on the
Closing Date, and (b) cash investments in Non-consolidated
Subsidiaries not in excess of the net proceeds to either
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Borrower from the concurrent issuance of equity or, subject to
Section 8.2.3, debt on terms acceptable to Lender;
(ii) Property to be used in the ordinary course of
business;
(iii) Current Assets arising from the sale of goods and
services in the ordinary course of business of Borrower and its
Subsidiaries;
(iv) investments in direct obligations of the United
States of America, or any agency thereof or obligations
guaranteed by the United States of America, provided that such
obligations mature within one year from the date of acquisition
thereof;
(v) investments in certificates of deposit maturing
within one year from the date of acquisition issued by a bank or
trust company organized under the laws of the United States or
any state thereof having capital surplus and undivided profits
aggregating at least $100,000,000; and
(vi) investments in commercial paper given the highest
rating by a national credit rating agency and maturing not more
than 270 days from the date of creation thereof.
Revolving Credit Loan - a Loan made by Lender as provided in
Section 1.1 of the Agreement.
Schedule of Accounts - as defined in Section 6.2.1 of the
Agreement.
Security - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
Security Documents - the Guaranty Agreements and all other
instruments and agreements now or at any time hereafter securing the
whole or any part of the Obligations.
Senior Debt - means all Money Borrowed, excluding Subordinated
Debt.
Shareholder Agreement - The Amended and Restated Stockholders and
Voting Agreement, dated May 1, 1997, by and among Bayard and each of the
stockholders of Bayard executing the same.
Solvent - as to any Person, such Person (i) owns Property whose
fair salable value is greater than the amount required to pay all of
such Person's Indebtedness (including contingent debts), (ii) is able to
pay all of its Indebtedness as such Indebtedness matures and (iii) has
capital sufficient to carry on its business and transactions and all
business and transactions in which it is about to engage.
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Subordinated Debt - Indebtedness of Borrower that is subordinated
to the Obligations in a manner satisfactory to Lender, including,
without limitation, the Chesapeake Debt and the Energy Spectrum Debt.
Subsidiary - any corporation of which a Person owns, directly or
indirectly through one or more intermediaries, more than 50% of the
Voting Stock at the time of determination.
Tangible Net Worth - means, at a particular date, the sum of the
Borrowers' capital stock (excluding treasury stock), warrants, surplus
(including earned surplus, capital surplus and the balance of the
current profit and loss account not transferred to surplus) and debt
that is specifically subordinated to the Obligations on the terms
acceptable to the Lender (including the Chesapeake Debt and the Energy
Spectrum Debt) accounted on a consolidated basis appearing on a
consolidated balance sheet prepared in accordance with GAAP as of the
date of determination, excluding, however, from the determination, all
inter-company transactions and after deducting therefrom the net book
value of all assets (after deducting any reserves applicable thereto)
which would be treated as intangibles under GAAP (including, without
limitation, such items as goodwill, trademarks, trade names, patents and
licenses, franchises and operating rights) and excluding the amount of
the Borrowers' equity investment in any Non-consolidated Subsidiary.
Taxes - any present or future taxes, levies, imposts, duties,
fees, assessments, deductions, withholdings or other charges of whatever
nature, including, without limitation, income, receipts, excise,
property, sales, transfer, license, payroll, withholding, social
security and franchise taxes now or hereafter imposed or levied by the
United States, or any state, local or foreign government or by any
department, agency or other political subdivision or taxing authority
thereof or therein and all interest, penalties, additions to tax and
similar liabilities with respect thereto.
Total Credit Facility - $10,000,000.
Total Liabilities - means indebtedness of the Borrowers on a
consolidated basis which would in accordance with GAAP be classified as
current and long term liabilities of a corporation conducting a business
the same as or similar to the Borrowers, but excluding debt that is
specifically subordinated to the Obligations on terms acceptable to the
Lender (including the Chesapeake Debt and the Energy Spectrum Debt) and
total liabilities of any Non-consolidated Subsidiary.
Turnkey Accounts - Accounts arising from oil or gas drilling
contracts between Borrower and owners or operators of oil or gas ▇▇▇▇▇
pursuant to which Borrower assumes primary control over drilling
activity, and is responsible for subcontracting related services.
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Voting Stock - Securities of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors
(or Persons performing similar functions).
▇▇▇▇ - ▇▇▇▇ Drilling Company.
OTHER TERMS. All other terms contained in the Agreement shall have,
when the context so indicates, the meanings provided for by the Code to the
extent the same are used or defined therein.
CERTAIN MATTERS OF CONSTRUCTION. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. In the computation of periods of time
from a specified date to a later specified date, the word "from" means "from
and including" and the words "to" and "until" each means "to but excluding."
The section titles, table of contents and list of Exhibits appear as a matter
of convenience only and shall not affect the interpretation of the Agreement.
All references to statutes and related regulations shall include any amendments
of same and any successor statutes and regulations. All references to any of
the Loan Documents shall include any and all modifications thereto and any and
all extensions or renewals thereof. Wherever the phrase "including" shall
appear in the Agreement, such word shall be understood to mean "including,
without limitation."
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LIST OF EXHIBITS
Exhibit A Borrower's and each Subsidiary's Business Locations
Exhibit B Jurisdictions in which Borrower and each Subsidiary is Authorized
to do Business
Exhibit C Capital Structure of Borrower
Exhibit D Corporate Names
Exhibit E Surety Obligations
Exhibit F Patents, Trademarks, Copyrights and Licenses
Exhibit G Contracts Restricting Borrower's Right to Incur Debts
Exhibit H Litigation
Exhibit I Capitalized Leases
Exhibit J Operating Leases
Exhibit K Pension Plans
Exhibit L Labor Contracts
Exhibit M Compliance Certificate
Exhibit N Permitted Indebtedness
Exhibit O Permitted Liens
Exhibit P Drilling Rigs
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