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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: APRIL 11, 1997
UTI ENERGY CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 001-12542 23-2037823
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
485 DEVON PARK DRIVE, SUITE 112
WAYNE, PENNSYLVANIA 19087
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (610) 971-9600
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EXHIBIT INDEX BEGINS ON PAGE 6.
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ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS
On April 11, 1997, UTI Energy Corp, a Delaware corporation (the
"Company"), acquired the land drilling operations of Southland Drilling Company
Ltd., a Texas limited partnership ("Southland") for approximately $27.1 million
in cash and a five-year warrant to purchase 100,000 shares of the Company's
common stock, $.001 par value ("Common Stock"), at an exercise price of $48.00
per share (the "Southland Acquisition"). The purchase price was determined
through arms-length negotiations between the parties. The acquired assets
include eight land drilling rigs, various equipment and rig components, and
other equipment used in Southland's contract drilling business. The Company
also assumed various drilling contracts of Southland and retained Southland's
rig crews. The Company intends to utilize the Southland assets and crews in
its existing land drilling operations. The Southland Acquisition further
expands the Company's operations in the active oil and gas producing areas in
South Texas and the Gulf Coast and increases the Company's rig fleet to 82
rigs.
The Southland Acquisition was effected pursuant to an Asset Purchase
Agreement dated as of March 5, 1997 (the "Asset Purchase Agreement"), by and
between the Company and Southland. The Southland Acquisition was funded with a
combination of the Company's existing cash, the net proceeds from the private
placement of $25 million principal amount of its 12% Senior Subordinated Notes
due 2001 (the "Subordinated Notes") and the net proceeds from a new $25 million
three year term loan facility with Mellon Bank N.A. (the "Mellon Term Loan").
In connection with the Mellon Term Loan, the Company also increased the amount
available under its line of credit with Mellon Bank N.A. from $8.4 million to
$12.0 million. The Subordinated Notes were issued by the Company at a discount
of 2% and were issued with a seven-year warrant to purchase 400,000 shares of
Common Stock at an exercise price of $32.50 per share. The warrants are also
subject to call at $.25 per warrant after six months under certain
circumstances if the market price of the Common Stock is greater than $45.00
per share over a 90 day period. The indebtedness under the Mellon Term Loan is
secured by substantially all of the Company's rig assets, inventory and
accounts receivable.
The Company also utilized a portion of the net proceeds from the Mellon
Term Loan to refinance approximately $18.6 million in indebtedness that was
incurred in connection with its prior acquisitions of FWA Drilling Company,
Inc., Viersen & Cochran Drilling Company ("Viersen & Cochran") and the contract
drilling assets of Quarles Drilling Corporation. The Company incurred a one-time
pre-payment penalty of approximately $132,000 in connection with such
refinancing. This prepayment penalty was more than offset by a $345,000
prepayment discount that the Company received as a result of its prepayment of
the indebtedness incurred in its prior acquisition of Viersen & Cochran.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired.
To be filed by amendment. It is impracticable for the Company to
provide as of the date of filing of this Form 8-K the required financial
statements and pro forma information relating to the assets purchased from
Southland Drilling Company Ltd. Any such financial statements will be filed by
amendment within 60 days from the date this Form 8-K is due.
(b) Pro forma financial information.
To be filed by amendment. It is impracticable for the Company to
provide as of the date of this Form 8-K the required financial statements and
pro forma information relating to the assets purchased from Southland Drilling
Company Ltd. Any such financial statements will be filed by amendment within
60 days from the date this Form 8-K is due.
(c) Exhibits.
2.1 Asset Purchase Agreement dated March 5, 1997 (the
"Asset Purchase Agreement"), by and between UTI
Energy Corp. and Southland Drilling Company Ltd.
(incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31,
1996). Pursuant to Item 601(b)(2) of Regulation S-K,
certain schedules and similar attachments to the
Stock Purchase Agreement have not been filed with
this exhibit. Schedules 2.1(a), 2.1(b), 2.1(c),
2.1(d) and 2.1(e) contain lists of certain of the
assets purchased by the Company pursuant to the terms
and conditions of the Asset Purchase Agreement. The
Company agrees to furnish supplementally any omitted
schedule to the Securities and Exchange Commission
upon request.
2.2 First Amendment to Asset Purchase Agreement dated
April 11, 1997, by and between the Company, Triad
Drilling Company and Southland Drilling Company, Ltd.
10.1 Warrant Agreement dated April 11, 1997, by and
between the Company and Southland Drilling Company,
Ltd.
10.2 Loan and Security Agreement dated April 11, 1997, by
and among UTI Energy Corp., UTICO, Inc., FWA Drilling
Company, Inc., Triad Drilling Company, Inc.,
Universal Well Services, Inc., USC, Incorporated, and
Panther Drilling, Inc. and Mellon Bank, N.A.
10.3 Fourth Amendment and Modification to the Mellon Line
of Credit dated April 11, 1997, by and among UTI
Energy Corp., UTICO,
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Inc., FWA Drilling Company, Inc., Triad Drilling
Company, Universal Well Services, Inc., USC,
Incorporated and Panther Drilling, Inc. and Mellon
Bank, N.A.
10.4 Note Purchase Agreement dated April 11, 1997, by and
among UTI Energy Corp., UTICO, Inc., FWA Drilling
Company, Inc., Triad Drilling Company, Universal Well
Services, Inc., USC, Incorporated and Panther
Drilling, Inc. and Canpartners Investments IV, L.P.
(incorporated by reference to Schedule 13D relating
to the Company filed on April 22, 1997 by Canpartners
Investments IV, LLC, Canpartners Incorporated,
Mitchell R. Julis, Joshua S. Friedman and R.
Christian B. Evensen).
10.5 Note dated April 11, 1997, payable by FWA Drilling
Company, Inc., Triad Drilling Company, Universal Well
Services, Inc., USC, Incorporated and Panther
Drilling, Inc. to Canpartners Investments IV, L.P.
10.6 Warrant Agreement dated April 11, 1997, by and
between the Company and Canpartners Investments IV,
L.P.
10.7 Warrant dated April 11, 1997, by and between the
Company and Canpartners Investments IV, L.P.
10.8 Registration Rights Agreement dated April 11, 1997,
by and between UTI Energy Corp. and Canpartners
Investments IV, L.P.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UTI ENERGY CORP.
Dated: April 28, 1997 /s/ P. Blake Dupuis
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P. Blake Dupuis
Vice President
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EXHIBIT INDEX
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2.1 Asset Purchase Agreement dated March 5, 1997 (the "Asset Purchase
Agreement"), by and between UTI Energy Corp. and Southland Drilling
Company Ltd. (incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1996). Pursuant
to Item 601(b)(2) of Regulation S-K, certain schedules and similar
attachments to the Stock Purchase Agreement have not been filed with
this exhibit. Schedules 2.1(a), 2.1(b), 2.1(c), 2.1(d) and 2.1(e)
contain lists of certain of the assets purchased by the Company
pursuant to the terms and conditions of the Asset Purchase Agreement.
The Company agrees to furnish supplementally any omitted schedule to
the Securities and Exchange Commission upon request.
2.2 First Amendment to Asset Purchase Agreement dated April 11, 1997, by
and between the Company, Triad Drilling Company and Southland Drilling
Company, Ltd.
10.1 Warrant Agreement dated April 11, 1997, by and between the Company and
Southland Drilling Company, Ltd.
10.2 Loan and Security Agreement dated April 11, 1997, by and among UTI
Energy Corp., UTICO, Inc., FWA Drilling Company, Inc., Triad Drilling
Company, Inc., Universal Well Services, Inc., USC, Incorporated, and
Panther Drilling, Inc. and Mellon Bank, N.A.
10.3 Fourth Amendment and Modification to the Mellon Line of Credit dated
April 11, 1997, by and among UTI Energy Corp., UTICO, Inc., FWA
Drilling Company, Inc., Triad Drilling Company, Universal Well
Services, Inc., USC, Incorporated and Panther Drilling, Inc. and
Mellon Bank, N.A.
10.4 Note Purchase Agreement dated April 11, 1997, by and among UTI Energy
Corp., UTICO, Inc., FWA Drilling Company, Inc., Triad Drilling
Company, Universal Well Services, Inc., USC, Incorporated and Panther
Drilling, Inc. and Canpartners Investments IV, L.P. (incorporated by
reference to Schedule 13D relating to the Company filed on April 22,
1997 by Canpartners Investments IV, LLC, Canpartners Incorporated,
Mitchell R. Julis, Joshua S. Friedman and R. Christian B. Evensen).
10.5 Note dated April 11, 1997, payable by FWA Drilling Company, Inc.,
Triad Drilling Company, Universal Well Services, Inc., USC,
Incorporated and Panther Drilling, Inc. to Canpartners Investments IV,
L.P.
10.6 Warrant Agreement dated April 11, 1997, by and between the Company and
Canpartners Investments IV, L.P.
10.7 Warrant dated April 11, 1997, by and between the Company and
Canpartners Investments IV, L.P.
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<TABLE>
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10.8 Registration Rights Agreement dated April 11, 1997, by and between UTI
Energy Corp. and Canpartners Investments IV, L.P.
</TABLE>
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EXHIBIT 2.2
FIRST AMENDMENT TO
ASSET PURCHASE AGREEMENT
This FIRST AMENDMENT (this "Amendment") to the Asset Purchase
Agreement dated March 5, 1997 (the "Agreement"), by and among UTI Energy Corp.,
a Delaware corporation ("Buyer"), Triad Drilling Corporation, a Delaware
corporation and wholly owned subsidiary of Buyer ("Triad"), and Southland
Drilling Company, Ltd., a Texas limited partnership ("Seller");
WITNESSETH:
WHEREAS, Buyer and Seller entered into the Agreement whereby Buyer
agreed to buy, and Seller agreed to sell, the Purchased Assets in exchange for
the payment by Buyer of the Purchase Price and the assumption by Buyer of the
Assumed Liabilities; and
WHEREAS, as permitted by the Agreement, Buyer desires to assign to
Triad Buyer's right to take title to the Purchased Assets;
NOW, THEREFORE, in consideration of the premises and the mutual terms
and covenants herein contained, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
1. Triad hereby agrees that it shall be bound by and liable for
the obligations of Buyer set forth in Article II of the Agreement.
2. The parties hereto agree that (i) the delivery of the
Purchased Assets described in Section 2.6 of the Agreement shall be made to
Triad instead of Buyer, (ii) Seller shall deliver the documents identified in
Section 4.2 of the Agreement to Triad instead of Buyer, and (iii) Triad shall
deliver the General Assignment referred to in Section 4.3(b).
3. Due to certain changes involving drill pipe, the Cash Purchase
Price shall be reduced by $182,000.
4. Except as expressly amended by this Amendment, the Agreement
remains in full force and effect.
5. Capitalized terms used and not otherwise defined herein have
the meanings given such terms in the Agreement.
(Signatures Begin on the Following Page)
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers hereunto duly authorized as of the date
first above written.
UTI ENERGY CORP.
By: /s/ Vaughn Drum
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Vaughn Drum, President
SOUTHLAND DRILLING COMPANY, LTD.
By: /s/ Neil Hanson
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TRIAD DRILLING CORPORATION
By: /s/ Vaughn Drum
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Vaughn Drum, Chairman of
the Board and Chief
Executive Officer
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EXHIBIT 10.1
FOR THE PURCHASE OF 100,000 SHARES
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR THE LAWS OF ANY STATE AND IS NOT TRANSFERRABLE.
STOCK PURCHASE WARRANT TO PURCHASE SHARES OF
COMMON STOCK OF UTI ENERGY CORP.
This certifies that, for value received, Southland Drilling Company,
Ltd., a Texas limited partnership or its permitted assigns (the "Holder"), is
entitled, subject to the terms and conditions of this Warrant, at any time or
from time to time during the Exercise Period (as hereinafter defined), to
purchase up to 100,000 shares (subject to adjustment pursuant to Section 9
below) of common stock, $.001 par value ("Common Stock"), of UTI Energy Corp.,
a Delaware corporation (the "Company") (the shares of Common Stock issuable
upon exercise of this Warrant, as adjusted under Section 9, being referred to
herein as the "Warrant Shares").
1. FORM OF ELECTION.
The form of election to purchase shares of Common Stock (the
"Form of Election") shall be substantially as set forth in Exhibit A attached
hereto. The price per Warrant Share and the number of Warrant Shares issuable
upon exercise of this Warrant are subject to adjustment upon the occurrence of
certain events, all as hereinafter provided.
2. EXERCISE PERIOD; EXERCISE OF WARRANT.
2.1 Exercise Period. Subject to the terms of this
Warrant, the Holder shall have the right, which may be exercised at
any time or from time to time during the Exercise Period, to purchase
from the Company the number of fully paid and nonassessable Warrant
Shares this Warrant at the time represents the right to purchase, and,
in the event that this Warrant is exercised in respect of fewer than
all of the Warrant Shares purchasable on such exercise, a new warrant
evidencing the remaining Warrant Shares that may be purchased shall be
promptly signed, issued and delivered by the Company to the Holder
pursuant to the provisions of this Section 2. The term "Exercise
Period" shall mean the period commencing on April 11, 1997, and
terminating on April 10, 2002.
2.2 Exercise of Warrant. This Warrant may be exercised
upon surrender to the Company at its principal office (as designated
in Section 12) of this Warrant, together with the Form of Election
duly completed and signed, and upon payment to the Company of the
Warrant Price (as defined in and determined in accordance with the
provisions of Sections 3 and 9 hereof) for the number of Warrant
Shares in respect of which this Warrant is then exercised. Payment of
the aggregate Warrant Price with respect to the portion of this
Warrant being exercised shall be made in cash or by certified or
official bank check, payable to the order of the Company.
Subject to Section 6 hereof, upon the surrender of this
Warrant and payment of the Warrant Price as set forth above, the
Company shall issue and cause to be delivered to the Holder or, upon
the written order of the Holder, to and in such name or names as the
Holder may designate, a certificate or
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certificates for the number of full Warrant Shares so purchased upon
the exercise of this Warrant. Such certificate or certificates shall
be deemed to have been issued and any person so designated to be named
therein shall be deemed to have become a holder of record of such
Warrant Shares as of the date of the surrender of this Warrant and
payment of the Warrant Price, as aforesaid.
3. WARRANT PRICE.
The price per share at which Warrant Shares shall be
purchasable upon exercise of this Warrant initially shall be $48.00 and shall
be subject to adjustment pursuant to Section 9 hereof (such price as so
adjusted is referred to herein as the "Warrant Price").
4. EXCHANGE OF WARRANT.
This Warrant may be exchanged at the option of the Holder when
surrendered at the principal office of the Company for another warrant, or
other warrants of different denominations, of like tenor and representing in
the aggregate the right to purchase a like number of Warrant Shares as this
Warrant then entitles the Holder to purchase. Any Holder desiring to exchange
this Warrant shall make such request in writing delivered to the Company, and
shall surrender this Warrant for exchange. Thereupon, the Company shall
promptly sign and deliver to the person entitled thereto a new warrant or
warrants, as the case may be, as so requested.
5. NO REGISTRATION OF WARRANT.
This Warrant has not been registered under the Securities Act
of 1933, as amended (the "Securities Act"), or any applicable state securities
laws. The Holder represents and agrees that this Warrant and, upon exercise
hereof, any Warrant Shares have been acquired for investment and not with a
view to distribution or resale. The Holder further acknowledges and agrees
that this Warrant may not be transferred, and the Warrant Shares, upon exercise
of this Warrant, may not be transferred without an effective registration
statement therefor under the Securities Act and applicable state securities
laws or an opinion of counsel satisfactory to the Company that registration is
not required thereunder. Unless registered, any Warrant Shares shall bear the
following legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933 or the laws of any state
and may not be transferred in the absence of an effective registration
statement for the securities under the Securities Act of 1933 and
applicable state laws or an opinion of counsel reasonably satisfactory
to the Company that such registration is not required.
6. PAYMENT OF TAXES.
The Company will pay when due and payable any and all U.S.
federal and state transfer taxes and charges that may be payable in respect of
the issuance or delivery of this Warrant or of any Warrant Shares upon the
exercise of this Warrant. The Company shall not, however, be required to (i)
pay any transfer tax that may be payable in respect of any transfer involved in
the issuance or delivery of certificates for Warrant Shares in the name other
than that of the Holder or (ii) to issue or deliver any certificates for
Warrant Shares upon the exercise of this Warrant until such transfer tax shall
have been paid (any such tax being payable by the Holder at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
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7. MUTILATED OR MISSING WARRANT.
In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall execute, issue and deliver in exchange and
substitution for and upon cancellation of the mutilated Warrant, or in lieu of
and substitution for the Warrant lost, stolen or destroyed, a new warrant of
like tenor and representing an equivalent right or interest; but only upon
receipt of evidence satisfactory to the Company of such loss, theft or
destruction of this Warrant and indemnity, if requested, satisfactory to the
Company. The Holder requesting such a substitute warrant shall also comply
with such other reasonable regulations and pay such other reasonable charges as
the Company may prescribe.
8. RESERVATION OF WARRANT SHARES; PURCHASE OF WARRANT BY THE
COMPANY.
8.1 Reservation of Warrant Shares. The Company shall at
all times reserve for issuance from its authorized and unissued shares
of Common Stock the number of shares of Common Stock needed for
issuance upon the exercise of this Warrant. The Company covenants
that all shares of Common Stock issuable as herein provided shall,
when so issued, be duly and validly issued, fully paid and
nonassessable.
8.2 Purchase of Warrant by the Company. The Company
shall not be prohibited, except as limited by law, any other agreement
or herein, from offering to purchase, purchasing or otherwise
acquiring this Warrant from any holder thereof at such times, in such
manner and for such consideration as the Company and such holder may
agree to.
8.3 Cancellation of Purchased or Acquired Warrant. In
the event the Company shall purchase or otherwise acquire this
Warrant, the same shall thereupon be canceled and retired.
9. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF WARRANT SHARES.
9.1 Mechanical Adjustments. The existence of this
Warrant shall not affect in any way the right or power of the Company
or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's
capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior
preference stock ahead of or affecting the Common Stock or the rights
thereof, or the dissolution or liquidation of the Company, or any sale
or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or
otherwise.
If the Company shall effect a subdivision (by stock split,
stock dividend, recapitalization or otherwise) or consolidation (by
reverse stock split or otherwise) of shares or other capital
adjustment of, or the payment of a dividend in capital stock or other
equity securities of the Company on, its Common Stock, or other
increase or reduction of the number of shares of the Common Stock
without receiving consideration therefor in money, services, or
property, or the reclassification of its Common Stock, in whole or in
part, into other equity securities of the Company, then the number,
class and per share price of Warrant Shares shall be appropriately
adjusted (or in the case of the issuance of equity securities as a
dividend on, or in a reclassification of, the Common Stock, this
Warrant shall extend to such other securities) in such a manner as to
entitle the Holder to receive, upon exercise of this Warrant, for the
same aggregate cash compensation, the same total number and class or
classes of shares (or in the case of a dividend of, or
reclassification into, other equity securities, such other securities)
it would have held
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after such adjustment if the Holder had exercised this Warrant in full
immediately prior to the event requiring the adjustment. Comparable
rights shall accrue in the event of successive subdivisions,
consolidations, capital adjustments, dividends or reclassifications of
the character described above.
If the Company shall distribute to all holders of its shares
of Common Stock (including any such distribution made to
non-dissenting stockholders in connection with a consolidation or
merger in which the Company is the surviving corporation and in which
holders of shares of Common Stock continue to hold shares of Common
Stock after such merger or consolidation) evidences of indebtedness or
cash or other assets (other than cash dividends payable out of
consolidated retained earnings not in excess of, in any one year
period, the greater of (a) $.10 per share of Common Stock and (b) two
times the aggregate amount of dividends per share paid during the
preceding calendar year and dividends or distributions payable in
shares of Common Stock or other equity securities of the Company
described in the immediately preceding paragraph), then in each case
the Warrant Price shall be adjusted by reducing the Warrant Price in
effect immediately prior to the record date for the determination of
stockholders entitled to receive such distribution by the fair market
value, as determined in good faith by the Board of Directors of the
Company (whose determination shall be described in a statement filed
in the Company's corporate records and be available for inspection by
the Holder) of the portion of the evidence of indebtedness or cash or
other assets so to be distributed applicable to one share of Common
Stock; provided that in no event shall the Warrant Price be less than
the par value of a share of Common Stock. Such adjustment shall be
made whenever any such distribution is made, and shall become
effective on the date of the distribution retroactive to the record
date for the determination of the stockholders entitled to receive
such distribution. Comparable adjustments shall be made in the event
of successive distributions of the character described above.
After the Company shall make a tender offer for, or grant to
all of its holders of its shares of Common Stock the right to require
the Company to acquire from such stockholders shares of, Common Stock,
at a price in excess of the Current Market Price (a "Put Right") or
the Company shall grant to all of its holders of its shares of Common
Stock the right to acquire shares of Common Stock for less than the
Warrant Price (the "Exercise Right") then, in the case of a Put Right,
the Warrant Price shall be adjusted by multiplying the Warrant Price
in effect immediately prior to the record date for the determination
of stockholders entitled to receive such Put Right by a fraction, the
numerator of which shall be the number of shares of Common Stock then
outstanding minus the number of shares of Common Stock which could be
purchased at the Current Market Price for the aggregate amount which
would be paid if all Put Rights are exercised and the denominator of
which is the number of shares of Common Stock which would be
outstanding if all Put Rights are exercised; and, in the case of a
Purchase Right, the Warrant Price shall be adjusted by multiplying the
Warrant Price in effect immediately prior to the record date for the
determination of the stockholders entitled to receive such Purchase
Right by a fraction, the numerator of which shall be the number of
shares of Common Stock then outstanding plus the number of shares of
Common Stock which could be purchased at the Current Market Price for
the aggregate amount which would be paid if all Purchase Rights are
exercised and the denominator of which is the number of shares of
Common Stock which would be outstanding if all Purchase Rights are
exercised. In addition, the number of shares subject to this Warrant
shall be adjusted by multiplying the number of shares then subject to
this Warrant by a fraction which is the inverse of the fraction used
to adjust the Warrant Price. Notwithstanding the foregoing if any
such Put Rights or Purchase Rights shall terminate without being
exercised, the Warrant Price and number of shares subject to this
Warrant shall be appropriately readjusted to reflect the Warrant Price
and number of shares subject to this Warrant which
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would have been in effect if such unexercised Rights had never
existed. Comparable adjustments shall be made in the event of
successive transactions of the character described above.
After the merger of one or more corporations with or into the
Company, after any consolidation of the Company and one or more
corporations, or after any other corporate transaction described in
Section 424(a) of the Internal Revenue Code of 1986, as amended, the
Holder, at no additional cost, shall be entitled to receive, upon any
exercise of this Warrant, in lieu of the number of shares as to which
this Warrant may then be so exercised, the number and class of shares
of stock or other equity securities to which the Holder would have
been entitled pursuant to the terms of the agreement of merger or
consolidation if at the time of such merger or consolidation the
Holder had been a holder of a number of shares of Common Stock equal
to the number of shares as to which this Warrant may then be so
exercised and, if as a result of such merger, consolidation or other
transaction, the holders of Common Stock are not entitled to receive
any shares of Common Stock pursuant to the terms thereof, the Holder,
at no additional cost, shall be entitled to receive, upon exercise of
this Warrant, such other assets and property, including cash, to which
the Holder would have been entitled if at the time of such merger,
consolidation or other transaction the Holder had been the holder of
the number of shares of Common Stock equal to the number of shares as
to which this Warrant shall then be so exercised. Comparable rights
shall accrue in the event of successive mergers or consolidations of
the character described above.
For purposes of this Section 9.1, "Current Market Price per
share of Common Stock" shall mean the closing price of a share of
Common Stock on the principal national securities exchange on which
the Common Stock is listed or, if the Common Stock is not so listed,
the average bid and asked price of a share of Common Stock as reported
in the NASDAQ System, in each case on the trading day immediately
preceding the first trading day on which, as a result of the
establishment of a record date or otherwise, the trading price
reflects that an acquiror of Common Stock in the public market will
not participate in or receive the payment of any applicable dividend
or distribution.
Except as hereinbefore expressly provided, (i) the issue by
the Company of shares of Common Stock of any class, or securities
convertible into shares of stock of any class, for cash or property,
or for labor or services either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or
other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares
of Common Stock then subject to this Warrant and (ii) no adjustment in
respect of any dividends shall be made during the term of this Warrant
or upon the exercise of this Warrant.
9.2 Voluntary Adjustment by the Company. The Company may
at its option, at any time during the term of this Warrant, reduce the
then current Warrant Price to any amount deemed appropriate by the
Board of Directors of the Company.
9.3 Statement on Warrant. Irrespective of any
adjustments in the Warrant Price with respect to this Warrant or the
number or kind of shares purchasable upon the exercise of this
Warrant, warrants theretofore or thereafter issued may continue to
express the same price and number and kind of shares as are stated in
this Warrant.
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10. REGISTRATION RIGHTS.
10.1 Demand Rights. Subject to the provisions of Section
14(d), on one occasion after the earlier to occur of (a) 120 days
following the completion of a registered public offering of Common
Stock by the Company (other than an offering pursuant to an employee
benefit plan or in connection with a merger or acquisition) and (b)
January 1, 1998, the Holder may request, pursuant to this Section
10.1, that the Company register under the Securities Act the Warrant
Shares (as adjusted under Section 9) issued to the Holder upon
exercise of this Warrant pursuant to a non-underwritten offering
having a period of distribution not to exceed 120 days; provided,
however, the Company shall not be obligated to prepare and file any
registration statement pursuant to this Section 10.1, or prepare or
file any amendment or supplement thereto, at any time when the
Company, in the good faith judgment of its Board of Directors,
expressed by resolution specifying the reason therefor, reasonably
believes that the filing thereof at the time requested, or the
offering of securities pursuant thereto, would materially and
adversely affect a pending or proposed public offering of securities
of the Company, an acquisition, merger, recapitalization,
consolidation, reorganization or similar transaction relating to the
Company or negotiations, discussions or pending proposals with respect
thereto or require premature disclosure of information not otherwise
required to be disclosed to the potential detriment of the Company.
Notwithstanding anything to the contrary contained in this Section
10.1, the Company shall be permitted to suspend the period of sale or
distribution of shares of Common Stock subject to a registration
pursuant to this Section 10.1 at any time when the Company reasonably
believes that the sale or distribution thereof at the time requested
would materially and adversely affect a pending or proposed public
offering of securities of the Company, an acquisition, merger,
recapitalization, consolidation, reorganization or similar transaction
relating to the Company or negotiations, discussions or pending
proposals with respect thereto or require premature disclosure of
information not otherwise required to be disclosed to the potential
detriment of the Company; provided, however, that such period of sale
or distribution shall resume after any such suspension for a number of
days necessary to keep such registration effective for permitted sales
thereunder for a term of 120 days. The filing of a registration
statement, or any amendment or supplement thereto, by the Company may
not be deferred, and the sale and distribution of shares may not be
suspended, in each case pursuant to the foregoing provisions, for more
than 60 days after the abandonment or consummation (or the completion
of the distribution of securities in the case of a public offering) of
any of the proposals or transactions described therein or, in any
event, for more than 120 days, and there may be only two such
suspensions in any one-year period.
10.2 Piggyback Rights. Subject to the provisions of
Section 14(d), if, at any time after the date hereof, the Company
proposes to register under the Securities Act any shares of Common
Stock for sale by it pursuant to an underwritten public offering of
the Common Stock (except with respect to registration statements filed
on Form S-4 or such other forms as shall be prescribed under the
Securities Act for the same purposes as such form), it will at each
such time, prior to the filing of any such registration statement,
give written notice to the Holder of its intention so to do,
regardless of whether the Holder has previously exercised piggyback
registration rights or demand rights as to any other shares of stock
hold by it, and, upon the written request (which must specify the
number of shares of Common Stock to participate in such underwritten
offering) of the Holder delivered to the Company within five days of
receipt of the Company's notice, the Company will use its best efforts
to cause any Warrant Shares as to which registration shall have been
so requested to be included in the shares to be sold pursuant to such
underwritten public offering as covered by the registration statement
proposed to be filed by the Company. Nothing contained in this
Section 10.2 shall, however, limit the Company's right to cancel,
postpone or withdraw any such proposed registration for any reason.
Any request by the Holder pursuant
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<PAGE> 7
to this Section 10.2 to register Warrant Shares for sale in the
underwriting shall be on the same terms and conditions as the shares
of Common Stock to be registered and sold through underwriters under
such registration; provided, however, that as a condition to such
inclusion the Holder shall execute an underwriting agreement
acceptable to the underwriters and, if requested, a custody agreement
having such customary terms as the underwriters shall request,
including indemnification, and if the managing underwriter determines
and advises in writing that the inclusion in the underwriting of all
Warrant Shares proposed to be included by the Holder and any other
shares of Common Stock sought to be registered by any other
stockholder of the Company exercising rights comparable to those of
the Holder under this Warrant (the "Other Common Stock") would, in its
reasonable and good faith judgment, interfere with the successful
marketing of the securities proposed to be registered for underwriting
by the Company or by any holder of Common Stock having the right to
require the Company to file a registration statement to register such
Common Stock, then the number of Warrant Shares and Other Common Stock
requested to be included in the underwriting shall be reduced pro rata
(based upon the number of shares requested to be included in such
underwriting) among the Holder and the holders of Other Common Stock
requesting such registration and inclusion in the underwriting and
may, in the determination of such managing underwriter and consistent
with pro rata reduction, be reduced to zero.
10.3 Procedure. If and whenever the Company is required
by the provisions of this Warrant to use its best efforts to effect
the registration of any Warrant Shares under the Securities Act, the
Company will, subject to the other provisions of this Section 10:
(a) as expeditiously as reasonably practicable,
prepare and file with the Securities and Exchange Commission
(the "Commission") a registration statement on the appropriate
form with respect to such Warrant Shares and use reasonable
efforts to cause such registration statement to become and
remain effective;
(b) as expeditiously as reasonably practicable,
prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the
provisions of the Securities Act with respect to the
disposition of such Warrant Shares covered by such
registration statement in accordance with the intended method
of distribution set forth in such registration statement;
(c) as expeditiously as reasonably practicable,
furnish to the Holder such number of copies of prospectuses
and preliminary prospectuses in conformity with the
requirements of the Securities Act, and such other documents
as the Holder may reasonably request, in order to facilitate
the public sale or other disposition of such Warrant Shares;
provided, however, that the obligation of the Company to
deliver copies of prospectuses or preliminary prospectuses to
the Holder shall be subject to the receipt by the Company of
reasonable assurances from the Holder that it will comply with
the applicable provisions of the Securities Act and of such
other securities laws as may be applicable in connection with
any use by it of any prospectuses or preliminary prospectuses;
(d) as expeditiously as reasonably practicable,
furnish, at the request of the Holder, on the date that
Warrant Shares are to be delivered to the underwriters for
sale pursuant to such registration or, if such Warrant Shares
are not being sold through underwriters, on the date the
registration statement with respect to such Warrant Shares
becomes effective (i) an opinion, dated
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<PAGE> 8
such date, of the independent counsel representing the Company
for the purposes of such registration, addressed to the
underwriters, if any, and to the Holder, stating that such
registration statement has become effective under the
Securities Act and that (A) to the knowledge of such counsel,
no stop order suspending the effectiveness of such
registration statement has been instituted or is pending or
contemplated under the Securities Act; (B) the registration
statement, the related prospectus, and each amendment or
supplement thereto, including all documents incorporated by
reference therein, comply as to form in all material respects
with the requirements of the Securities Act and the applicable
rules and regulations of the Commission thereunder (except
that such counsel need express no opinion as to financial
statements or other financial or statistical or reserve data
contained or incorporated by reference therein); and (C) no
facts have come to the attention of such counsel that caused
such counsel to believe (with customary qualifications) that
either the registration statement or the final prospectus, or
any amendment or supplement thereto, including all documents
incorporated by reference therein, in light of the
circumstances under which they were made, contains any untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading (except that such counsel
need express no belief as to financial statements or other
financial or statistical or reserve data contained or
incorporated by reference therein or as to any information
provided by the stockholders of the Company or any underwriter
for inclusion therein); and (ii) a letter, dated such date,
from the independent certified public accountants of the
Company, addressed to the underwriters, stating that they are
independent certified public accountants within the meaning of
the Securities Act and that in the opinion of such
accountants, the financial statements and other financial data
of the Company included in the registration statement or the
prospectus, or any amendment or supplement thereto, including
all documents incorporated by reference therein, comply as to
form in all material respects with the applicable accounting
requirements of the Securities Act. Such letter from the
independent certified public accountants shall additionally
cover such other customary financial matters (including
information as to the period ending not more than five
business days prior to the date of such letter) with respect
to the registration in respect of which such letter is being
given as such underwriters, if any, or the stockholders of the
Company making such request may reasonably request;
(e) as expeditiously as practicable, use its best
efforts to register or qualify Warrant Shares covered by such
registration statement under such other securities laws of
such United States jurisdictions as the Holder shall
reasonably request (considering the nature and size of the
offering) and do any and all other acts and things which may
be necessary or desirable to enable the Holder to consummate
the public sale or other disposition in such jurisdictions of
Warrant Shares; provided, however, that the Company shall not
be required to qualify to transact business as a foreign
corporation in any jurisdiction in which it would otherwise
not be required to be so qualified or to take any action which
would subject it to general service of process in any
jurisdiction in which it is not then so subject;
(f) bear all Registration Expenses (as defined
below) in connection with all registrations hereunder;
provided, however, that all Selling Expenses (as defined
below) of Warrant Shares and all fees and disbursements of
counsel for the Holder in connection with each registration
pursuant to this Warrant shall be borne by the Holder.
Expenses incurred by the Company in complying with this
Warrant, including, without limitation: (i) all registration,
listing and filing fees; (ii) all printing expenses; (iii) all
fees and disbursements of counsel for the
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<PAGE> 9
Company; (iv) all blue sky fees and expenses; and (v) all fees
and expenses of accountants for the Company are herein
referred to as "Registration Expenses". All underwriting fees
and discounts and brokerage and selling commissions relating
to Warrant Shares to be registered for sale by the Holder and
fees and expenses of the counsel for the Holder and any
underwriter's counsel applicable to the sales by the Holder in
connection with any such registration are herein referred to
as "Selling Expenses"; and
(g) keep each registration pursuant to Section
10.1 hereof effective for a period of up to 90 days or such
shorter period of time until the transfer or sale of all
Warrant Shares so registered has been completed.
10.4 Indemnification.
(a) In the event of a registration of any Warrant
Shares under the Securities Act pursuant to this Warrant, the
Company will indemnify and hold harmless the Holder and any
other Person, if any, who controls the Holder within the
meaning of Section 15 of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to
which such selling stockholder of the Company or such
controlling Person may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or
liabilities or actions in respect thereof arise out of or are
based upon any untrue statement or alleged untrue statement of
any material fact contained, on the effective date thereof, in
any registration statement under which such Warrant Shares
were registered under the Securities Act, any preliminary
prospectus distributed with the consent of the Company or
final prospectus contained therein, or any amendment thereof
or supplement thereto, including all documents incorporated by
reference therein, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the
Holder and each such controlling Person for any legal or any
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will
not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration
statement, such preliminary prospectus, such final prospectus
or such amendment or supplement, including all documents
incorporated by reference therein, in reliance upon and in
conformity with written information furnished to the Company
by or on behalf of the Holder or a controlling Person of the
Holder specifically for use in the preparation thereof.
(b) In the event of any registration of any
Warrant Shares under the Securities Act pursuant to this
Warrant, Holder will indemnify and hold harmless the Company
and each Person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, each officer of
the Company who signs the registration statement, each
director of the Company and each underwriter (if any) and each
Person who controls any underwriter (if any) within the
meaning of Section 15 of the Securities Act, against any and
all such losses, claims, damages, liabilities or actions which
the Company or such officer, director, underwriter (if any) or
controlling Person may become subject under the Securities Act
or otherwise, and will reimburse the Company, each such
officer, director, underwriter (if any) and controlling Person
for any legal or any other expenses reasonably incurred by
such party in connection with investigating or defending any
such loss, claim, damage, liability or action, if (a) such
loss, claim, damage,
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<PAGE> 10
liability or action in respect thereof arises out of or is
based upon any untrue statement or alleged untrue statement
of any material fact contained in any such registration
statement or any such prospectus, or any amendment thereof or
supplement thereto, or arises out of or is based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading and (b) any such statement
or omission of a material fact was made in reliance upon and
in conformity with written information furnished to the
Company by or on behalf of the Holder specifically for use in
connection with the preparation of such registration statement
or prospectus. In connection with any transaction
contemplated by Section 10.2 hereof, the Holder also agrees to
indemnify each such underwriter and each Person who controls
any such underwriter within the meaning of Section 15 of the
Securities Act as may reasonably and customarily be requested
by the underwriters in connection with any underwritten
offering of such Warrant Shares.
(c) Promptly after receipt by any indemnified
Person of notice of any claim or commencement of any action in
respect of which indemnity is to be sought against an
indemnifying Person pursuant to this Warrant, such indemnified
Person shall notify the indemnifying Person in writing of such
claim or of the commencement of such action, and, subject to
provisions hereinafter stated, in case any such action shall
be brought against an indemnified Person and such indemnifying
Person shall have been notified of the same, such indemnifying
Person shall be entitled to participate therein, and, to the
extent it shall wish, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified Person,
and after notice from the indemnifying Person to such
indemnified Person of its election to assume the defense
thereof, such indemnifying Person shall not be liable to such
indemnified Person in connection with the defense thereof;
provided, however, if there exists or will exist a conflict of
interest which would make it inappropriate in the reasonable
judgment of the indemnified Person for the same counsel to
represent both the indemnified Person and such indemnifying
Person then such indemnified Person shall be entitled to
retain its own counsel at the expense of such indemnifying
Person; provided further, however, the indemnifying Person
shall not be required to pay for more than one separate
counsel for all of the indemnified Persons in addition to any
local counsel.
10.5 Termination. If Rule 144 or Rule 145 as promulgated
under the Securities Act or any successor or similar rule or statute
shall permit the sale of Warrant Shares in compliance with the
conditions thereof and the provisions thereof, the rights of the
Holder as to registration provided for in this Warrant as to such
Warrant Shares shall terminate immediately.
11. FRACTIONAL INTERESTS.
The Company shall not be required to issue fractional Warrant
Shares on the exercise of this Warrant and the number of Warrant Shares
issuable upon such exercise shall be rounded down to the nearest whole share.
12. NO RIGHTS AS STOCKHOLDERS.
Nothing contained in this Warrant shall be construed as
conferring upon the Holder the right to vote or to receive dividends or to
consent to or receive notice as a stockholder in respect of any meeting of
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<PAGE> 11
stockholders for the election of directors of the Company or any other matter,
or any rights whatsoever as a stockholder of the Company. If, however, at any
time during the Exercise Period:
(a) the Company shall declare any dividend payable in any
securities upon its shares of Common Stock or make any distribution
(other than a cash dividend or a dividend payable in additional shares
of Common Stock) to the holders of its shares of Common Stock;
(b) the Company shall offer to the holders of its shares
of Common Stock any additional shares of Common Stock or securities
convertible into shares of Common Stock or any right to subscribe to
shares of Common Stock or securities convertible or exchangeable into
shares of Common Stock; or
(c) a dissolution or winding up of the Company (other
than in connection with a consolidation, merger or sale of all or
substantially all of its property, assets and business as an entirety)
shall be proposed;
then in any one or more of such events, the Company shall give notice in
writing of such event to the Holder as provided in Section 13 hereof at least
10 days prior to the date fixed as a record date or the date of closing the
transfer books for the determination of the stockholders entitled to such
dividend, distribution or subscription rights, or for the determination of
stockholders entitled to vote on such proposed dissolution, liquidation or
winding up. Such notice shall specify such record date or date of the closing
of the transfer books, as the case may be. Failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of any
action taken in connection with such dividend, distribution or subscription
rights, or proposed dissolution, liquidation or winding up.
13. NOTICES.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been made when delivered or
mailed first class, postage prepaid:
(i) if to the Holder at:
Southland Drilling Company, Ltd.
Attn: Neil E. Hanson
2925 Briarpark
Houston, Texas 77042
(ii) if to the Company at:
UTI Energy Corp.
Attn: President
485 Devon Park Drive, #112
Wayne, Pennsylvania 19087
or to such other address or addresses as the Holder or the Company may
designate from time to time for itself by a notice pursuant hereto.
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<PAGE> 12
14. SUCCESSORS.
No party hereto may assign its rights or obligations hereunder
without the prior written consent of the other party, except for transfers of
this Warrant in whole or in part, to:
(a) any person or entity who, on the date of such
transfer, is a general or limited partner of Southland Drilling
Company, Ltd.;
(b) the executor, administrator or personal
representative of any individual referred to in paragraph (a) of this
Section 14, in the event of the death or incapacity of such person;
(c) with regard to any entity referred to in paragraph
(a) of this Section 14, any successor in a merger or consolidation
involving such entity, a purchaser of all or substantially all of such
entity's assets, or the stockholders of such an entity in the event of
such entity's liquidation or dissolution; or
(d) any other person or entity not included in (a), (b)
or (c) above; provided however, that upon the assignment or transfer to
such other person or entity, the rights of the Holder of this Warrant
(or any succeeding Warrant pursuant to Sections 4 or 7 or this Section
14) to registration rights pursuant to Section 10 of this Agreement
shall immediately terminate and become null and void;
provided that there is delivered to Buyer an opinion of counsel, in form
reasonably satisfactory to Buyer, that such transfer is exempt from
registration under the Securities Act of 1933, as amended (the "33 Act"), and a
certificate from such transferee representing that such transferee is an
Accredited Investor under the 33 Act. All the covenants and provisions of this
Warrant by or for the benefit of the Company or the Holder shall bind and inure
to the benefit of their respective permitted successors and assigns hereunder.
15. APPLICABLE LAW.
This Warrant shall be governed by and construed in accordance
with the laws of the State of Delaware.
16. BENEFITS OF WARRANT.
Nothing in this Warrant shall give or be construed to give any
person or corporation other than the Company and the Holder any legal or
equitable right, remedy or claim under this Warrant. This Warrant shall be for
the sole and exclusive benefit of the Company and the Holder.
17. CAPTIONS.
The captions of the sections of this Warrant have been
inserted for convenience only and shall have no substantive effect.
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<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be
duly executed as of the 11th day of April, 1997.
UTI ENERGY CORP.
By: /s/ Vaughn E. Drum
------------------------------------
Vaughn E. Drum
President
ATTEST:
- -------------------------------------
SECRETARY
SOUTHLAND DRILLING COMPANY, LTD.
By /s/ Neil Hanson
-------------------------------------
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<PAGE> 14
EXHIBIT A
SUBSCRIPTION FORM
To be Executed by the Holder
to Exercise Warrant
UTI Energy Corporation
The undersigned hereby exercises the right to purchase _____________
shares of common stock covered by this Warrant according to the conditions
thereof and herewith makes payment of the Warrant Price of such shares in full.
[INDIVIDUAL]
Signature
-----------------------------------
Name:
----------------------------------
Address
-------------------------------------
---------------------------------------
---------------------------------------
Dated: , .
------------------ --------
[CORPORATION OR PARTNERSHIP]
--------------------------------------------
(Name of Entity)
By:
-----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address
-------------------------------------
---------------------------------------
---------------------------------------
Dated: , .
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<PAGE> 1
EXHIBIT 10.2
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (the "Agreement") is made
effective the 11th day of April, 1997, by and among FWA DRILLING COMPANY,
INC. ("FWA"), INTERNATIONAL PETROLEUM SERVICE COMPANY ("IPSCO"),
TRIAD DRILLING COMPANY ("Triad"), UNIVERSAL WELL SERVICES, INC.
("Universal"), USC, INCORPORATED ("USC"), UTI ENERGY CORP. ("UTI"),
UTICO, INC. ("UTICO"), PANTHER DRILLING, INC., formerly known as
VIERSEN & COCHRAN DRILLING COMPANY ("Viersen") and MELLON BANK,
N.A. ("Bank"). FWA, IPSCO, Triad, Universal, USC, UTI, UTICO and Viersen are
hereinafter sometimes collectively referred to as the "Borrowers" and
individually as a "Borrower".
BACKGROUND
A. Pursuant to that certain Amended and Restated Loan and Security
Agreement dated December 7, 1995 (as it may be amended from time to time,
including without limitation the fourth amendment of even date herewith the
"Prior Loan Agreement"), FWA, IPSCO, Triad, Universal and USC (collectively, the
"Prior Borrowers") requested and Bank agreed to extend to the Prior Borrowers
certain credit facilities as further described in the Prior Loan Agreement.
B. Pursuant to those certain Surety Agreements dated December 7, 1995
(for UTI and UTICO) and August IS, 1996 (for Viersen) (collectively, the "Prior
Surety Agreements"), UTI, UTICO and Viersen agreed to act as surety for and
guarantee the obligations of the Prior Borrowers under the Prior Loan Documents
(as hereinafter defined). The Prior Loan Agreement, the Prior Surety Agreements
and all other documents executed in connection therewith may hereinafter be
collectively referred to as the "Prior Loan Documents".
C. Borrowers have requested that Bank extend a certain term loan credit
facility to Borrowers, which Bank is willing to do on the terms set forth
herein.
D. Capitalized terms not otherwise defined herein will have the
meanings set forth therefor in Section 13 of this Agreement. Capitalized terms
not otherwise defined in Section 13 of this Agreement or elsewhere in this
Agreement shall have the meanings set forth therefor in the Prior Loan
Agreement.
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, and of any extensions of credit now or hereafter made to or for the
benefit of Borrowers by Bank, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. THE LOAN; USE OF PROCEEDS.
1.1 THE LOAN. Bank will lend to Borrowers and Borrowers will borrow
from Bank the aggregate amount of Twenty-Five Million Dollars
($25,000,000.00)(the "Loan"). Borrowers' obligation to repay the Loan shall be
evidenced by Borrowers' promissory note in the face amount of Twenty-Five
Million Dollars ($25,000,000.00)(the "Note"), which shall be in the form
attached hereto as Exhibit "A", with the blanks appropriately filled in.
<PAGE> 2
1.2 SAVINGS CLAUSE. Anything contained in this Agreement or any other
Loan Documents to the contrary notwithstanding, the obligations of each Borrower
with respect to the repayment of the Loan shall be limited to the lesser of: (i)
the total amount of the Loan, or (ii) a maximum aggregate amount equal to the
largest amount that would not render its obligations with respect thereto
subject to avoidance as a fraudulent transfer or conveyance under Section 548 of
Title 11 of the United States Code or any applicable provisions of comparable
state law (collectively, the "Fraudulent Transfer Laws"), if and to the extent
such Borrower (or trustee on its behalf) has properly invoked the protections of
the Fraudulent Transfer Laws. In making such determination, all rights of
subrogation and contribution of a Borrower with respect to such obligations
shall be deemed to be an asset of such Borrower.
1.3 USE OF PROCEEDS. The proceeds of the Loan shall be advanced to
Borrowers in accordance with procedures reasonably acceptable to Bank. Borrowers
agree that the proceeds of the Loan shall be used (i) to partially fund the
purchase of certain assets of Southland, as further described in the Southland
Acquisition Agreement, which acquisition has been consented to by the Bank, (ii)
to repay existing indebtedness of Borrowers to CIT and the Sam K. Viersen, Jr.
Revocable Trust, (iii) to repay an existing $4,000,000 term loan previously
extended by Bank to Borrowers to finance the Quarles Acquisition, and (iv) to
repay a portion of the balance of the Line under the Prior Loan Agreement used
to finance the Quarles acquisition.
1.4 CLOSING. Closing hereunder will take place at a time and place
mutually acceptable to Borrowers and Bank effective on the date of this
Agreement.
2. INTEREST RATE.
2.1 INTEREST ON THE LOAN. Interest on the unpaid principal balance of
the Loan will accrue until final payment thereof at the rate per annum which is
equal to the Prime Rate in effect from time to time (such interest rate to
change immediately upon any change in the Prime Rate).
2.2 DEFAULT INTEREST. Interest will accrue on the principal balance of
the Loan after the occurrence of an Event of Default at a rate which is two
percent (2%) in excess of the non-default rate otherwise set forth above for the
Loan.
2.3 POST JUDGMENT INTEREST. Any judgment obtained for sums due
hereunder or under the Loan Documents will accrue interest at the applicable
default rate set forth above until paid.
2.4 CALCULATION. Interest will be computed on the basis of a
year of 365/366 days and paid for the actual number of days elapsed.
2.5 LIMITATION OF INTEREST TO MAXIMUM LAWFUL RATE. In no event will the
rate of interest payable hereunder exceed the maximum rate of interest permitted
to be charged by applicable law (including the choice of law rules) and any
interest paid in excess of the permitted rate will be refunded to Borrowers.
Such refund will be made by application of the excessive amount of interest paid
against any sums outstanding hereunder and will be applied in such order as Bank
may determine. If the excessive amount of interest paid exceeds the sums
outstanding, the portion exceeding the sums outstanding will be refunded in cash
by Bank. Any such crediting or refunding will not cure or waive any default by
Borrowers. Borrowers agree, however, that in determining whether or not any
interest payable hereunder exceeds the highest rate permitted by law, any
non-principal payment, including without
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<PAGE> 3
limitation late charges, will be deemed to the extent permitted by law to be
an expense fee, premium or penalty rather than interest.
3. PAYMENTS AND FEES.
3.1 INTEREST PAYMENTS ON THE LOAN. Borrowers will pay interest on the
outstanding principal balance of the Loan monthly, on the first day of each
calendar month commencing the first day of the first calendar month following
the date hereof.
3.2 PRINCIPAL PAYMENTS ON THE LOAN.
(a) Borrowers will pay the outstanding principal balance of
the Loan as follows:
(i) twelve (12) equal and consecutive monthly
installments of Four Hundred Twenty-Five Thousand Dollars ($425,000.00) each,
payable on the first day of each calendar month commencing on May 1, 1997 and
continuing through and including April 1, 1998;
(ii) twelve (12) equal and consecutive monthly
installments of Five Hundred Thousand Dollars ($500,000.00) each, payable on the
first day of each calendar month commencing on May 1, 1998 and continuing
through and including April 1, 1999;
(iii) thirteen (13) equal and consecutive monthly
installments of Six Hundred Fifty Thousand Dollars ($650,000.00) each, payable
on the first day of each calendar month commencing on May 1, 1999 and continuing
through and including May 1, 2000; and
(iv) one (1) final payment of the remaining
principal balance hereof plus all accrued and unpaid interest thereon on
June 1, 2000.
(b) In addition to the foregoing sums, Borrower agrees that
Borrower shall, one Business Day after the closing of any Public Offering by UTI
of UTI's Equity Securities, pay to Bank as a prepayment of principal of the
Note, the Net Cash Proceeds (not to exceed the unpaid principal balance of the
Note and all accrued unpaid interest thereon) received by UTI from such Public
Offering. Such prepayment shall be applied as set forth in Section 3.5 to
principal payments in the inverse order in which they are due.
For purposes of this Section 3.2(b) the following terms shall
have the following meanings:
(i) "Public Offering" shall mean the sale by
UTI of its Equity Securities in any public offering pursuant to an effective
registration statement filed with the securities and Exchange Commission,
provided that "Public Offering" shall not include (i) any offering or sale by
UTI of its Equity Securities in connection with an employee benefit plan, (ii)
any offering or sale by UTI of its Equity Securities in connection with a merger
and using a registration statement on Form 5-4 promulgated by the Securities and
Exchange Commission or any successor thereto, (iii) any offering or sale of
Equity Securities for or on behalf of any other person or selling stockholder,
including pursuant to any registration rights (demand, piggyback or otherwise)
of any kind, and (iv) any offering or sale of Equity Securities for which no
cash proceeds are received by UTI.
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(ii) "Equity Securities" shall mean, for any
person, such person's common stock, preferred stock, warrants, options or other
rights to acquire common stock or preferred stock of such person, and all
securities of such person convertible into or exchangeable for common stock or
preferred stock of such person.
(iii) "Net Cash Proceeds" shall mean the total
gross proceeds from the Public Offering by UTI of its Equity Securities, less
(i) all expenses associated with the sale of such Equity Securities, including
without limitation all underwriters' fees, cost, expenses and discounts,
brokers' fees, printing fees, filing and other fees paid to the Securities and
Exchange Commission or similar governmental authorities outside the United
States, Blue Sky fees and expenses, attorneys' fees, accountants' fees, other
experts' fees, and all other expenses incurred in connection with the Public
Offering by UTI of its Equity Securities, (ii) such amounts as persons other
than UTI are entitled to receive under the terms of such Public Offering; (iii)
such amounts as UTI and the underwriters employed by UTI in such Public Offering
may determine to be necessary to satisfy the purchase price payment obligations
of UTI in connection with a business acquisition identified in such Public
Offering and for which the Bank has given its consent pursuant to the terms of
this Agreement and (iv) all expenses associated with the consummation of such
business acquisition, including all attorney's fees, accountants' fees, other
experts' fees, Hart Scott Rodino Antitrust Improvements Act and other
governmental (including state and local) fees, broker and finders fees and all
other expenses incurred in connection with such business acquisition.
(c) Borrowers also agree to make the prepayments required
under Section 6.6.
3.3 FACILITY FEE. Borrowers shall pay to Bank a facility fee of Two
Hundred Fifty Thousand Dollars ($250,000.00) (the "Facility Fee"). The Facility
Fee shall be deemed fully earned and non- refundable and shall be paid by
Borrowers to Bank upon execution of this Agreement.
3.4 LATE CHARGE. In the event that Borrowers fail to pay when due any
principal, interest or other fees or expenses payable hereunder for a period of
at least fifteen (15) days, in addition to paying such sums, Borrowers will pay
to Bank a late charge equal to five percent (5%), of such past due payment as
compensation for the expenses incident to such past due payment.
3.5 PREPAYMENT OF LOAN. Borrowers may prepay all or any part of the
principal balance of the Loan without any premium or fee, at any time, following
delivery of not less than five (5) days prior written notice to Bank. Certain
prepayments are required as a result of the sale of assets by Borrower or in
connection with certain Public Offerings by UTI and as a result of a Change of
Control. All prepayments will be applied to the regularly scheduled payments in
the inverse order in which they are due.
3.6 PAYMENT METHOD. Borrowers irrevocably authorize Bank to debit all
payments required to be made by Borrowers hereunder, under the Loan, on the date
due, from any deposit account maintained by any Borrower with Bank. Otherwise,
Borrowers will be obligated to make such payments directly to Bank. All payments
are to be made in immediately available funds. If Bank accepts payment in any
other form, such payment shall not be deemed to have been made until the funds
comprising such payment have actually been received by or made available to
Bank.
3.7 APPLICATION OF PAYMENTS. Any and all payments on account of the
Loan will be applied to accrued and unpaid interest, outstanding principal and
other sums due hereunder or under the Loan Documents, in such order as Bank, in
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its discretion, elects. If Borrowers make a payment or payments and such payment
or payments, or any part thereof, are subsequently invalidated, declared to be
fraudulent or preferential, set aside or are required to be repaid to a trustee,
receiver, or any other person under any bankruptcy act, state or federal law,
common law or equitable cause, then to the extent of such payment or payments,
the obligations or part thereof hereunder intended to be satisfied shall be
revived and continued in full force and effect as if said payment or payments
had not been made.
3.8 LOAN ACCOUNT. Bank will open and maintain on its books a loan
account (the "Loan Account") with respect to advances made, repayments,
prepayments, the computation and payment of interest and fees and the
computation and final payment of all other amounts due and sums paid to Bank
under this Agreement. Except in the case of manifest error in computation, the
Loan Account will be conclusive and binding on the Borrowers as to the amount at
any time due to Bank from Borrowers under this Agreement or the Note.
3.9 INDEMNITY; LOSS OF MARGIN. Borrowers will indemnify Bank against
any loss or expense which Bank sustains or incurs as a consequence of an Event
of Default, including, without limitation, any failure of Borrowers to pay when
due (at maturity, by acceleration or otherwise) any principal, interest, fee or
any other amount due under this Agreement or the other Loan Documents. If Bank
sustains or incurs any such loss or expense it will from time to time notify
Borrowers in writing of the amount reasonably determined in good faith by the
Bank to be necessary to indemnify Bank for the loss or expense. Such amount will
be due and payable by Borrowers to Bank within ten (10) days after presentation
by Bank of a statement setting forth a brief explanation of and Bank's
calculation of such amount, which statement shall be presumed correct absent
manifest error. Any amount payable to the Bank under this section will bear
interest at the default rate payable under the Loan from the due date until
paid, both before and after judgment.
In the event that any future law, rule, regulation, treaty or official
directive, interpretation or application by any central bank, monetary authority
or governmental authority, or the future compliance with any guideline or
request of any central bank, monetary authority or governmental authority
(whether or not having the force of law):
(a) subjects Bank to any tax with respect to any amounts
payable under this Agreement or the other Loan Documents by Borrowers or
otherwise with respect to the transactions contemplated under this Agreement or
the other Loan Documents (except for taxes on or determined by the overall net
income of Bank imposed by the United States of America or any political
subdivision thereof); or
(b) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit, capital maintenance, capital adequacy, or
similar requirement against assets held by, or deposits in or for the account
of, or loans or advances or commitment to make loans or advances by the Bank; or
(c) imposes upon Bank any other condition with respect to
advances or extensions of credit or the commitment to make advances or
extensions of credit under this Agreement, and the result of any of the
foregoing is to increase the costs of Bank, reduce the income receivable by or
return on equity of Bank or impose any expense upon Bank with respect to any
advances or extensions of credit or commitments to make advances or extensions
of credit under this Agreement, Bank shall so notify Borrowers in writing.
Borrowers agree to pay Bank the amount of such increase in cost, reduction in
income, reduced return on equity or capital, or additional expense within ten
(10) days after presentation by Bank of a statement concerning such increase in
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<PAGE> 6
cost, reduction in income, reduced return on equity or capital, or additional
expense. Such statement shall set forth a brief explanation of the amount and
Bank's calculation of the amount (in determining such amount the Bank may use
any reasonable averaging and attribution methods), which statement shall be
presumed correct absent manifest error. If the amount set forth in such
statement is not paid within ten (10) days after such presentation of such
statement, interest will be payable on the unpaid amount at the default rate
payable under the Loan from the due date until paid, both before and after
judgment.
4. SECURITY.
4.1 PERSONAL PROPERTY. As security for the full and timely payment and
performance of the Bank Indebtedness, each Borrower hereby ratifies, confirms
and grants to Bank a security interest in all of the following:
(a) All of such Borrower's present and future accounts,
contract rights, chattel paper, instruments and documents and all other rights
to the payment of money whether or not yet earned, for services rendered or
goods sold, consigned, leased or furnished by such Borrower or otherwise,
together with (i) all goods (including any returned, rejected, repossessed or
consigned goods), the sale, consignment, lease or other furnishings of which
shall be given or may give rise to any of the foregoing, (ii) all of such
Borrower's rights as a consignor, consignee, unpaid vendor or other lienor in
connection therewith, including stoppage in transit, set-off, detinue, replevin
and reclamation, (ill) all general intangibles related thereto, (iv) all
guaranties, mortgages, security interests, assignments, and other encumbrances
on real or personal property, leases and other agreements or property securing
or relating to any accounts, (v) chooses-in-action, claims and judgments, (vi)
any return or unearned premiums, which may be due upon cancellation of any
insurance policies, and (vii) all products and proceeds of any of the foregoing.
(b) All of such Borrower's present and future inventory
(including but not limited to goods held for sale or lease or furnished or to be
furnished under contracts for service, raw materials, work-in-process, finished
goods and goods used or consumed in such Borrower's business) whether owned,
consigned or held on consignment, together with all merchandise, component
materials, supplies, packing, packaging and shipping materials, and all
returned, rejected or repossessed goods sold, consigned, leased or otherwise
furnished by such Borrower, all documents of title covering any of such goods or
inventory and all products and proceeds of any of the foregoing.
(c) All of such Borrower's right, title and interest in
present and future general intangibles (including but not limited to tax refunds
and rebates, manufacturing and processing rights, designs, patent rights and
applications therefor, trademarks and registration or applications therefor,
trade names, brand names, logos, inventions, copyrights and all applications and
registrations therefor), licenses, permits, approvals, software and computer
programs, license rights, royalties, trade secrets, methods, processes,
know-how, formulas, drawings, specifications, descriptions, label designs,
plans, blueprints, patterns and all memoranda, notes and records with respect to
any research and development, and all products and proceeds of any of the
foregoing.
(d) All of such Borrower's present and future machinery,
equipment, furniture, fixtures, motor vehicles, tools, dies, jigs, molds,
drilling rigs, wells and production equipment, pipe, engines, fittings,
computers, pumps, barrels, stores and other articles of tangible personal
property of every type together with all parts, substitutions, accretions,
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<PAGE> 7
accessions, attachments, accessories, additions, components and replacements
thereof, all documents of title covering any of such goods or inventory and all
manuals of operation, maintenance or repair, and all products and proceeds of
any of the foregoing.
(e) All of such Borrower's present and future general ledger
sheets, files, records, customer lists, books of account, invoices, bills,
certificates or documents of ownership, bills of sale, business papers,
correspondence, credit files, tapes, cards, computer runs and all other data and
data storage systems whether in the possession of any Borrower or any service
bureau.
(f) All letters of credit now existing or hereafter issued
naming any Borrower as a beneficiary or assigned to any Borrower, including the
right to receive payment thereunder, and all documents and records associated
therewith.
(g) All present and future deposits, funds, instruments,
documents, policies, evidences and certificates of insurance, securities,
investment property, chattel paper and other assets of such Borrower or in which
such Borrower has an interest and all proceeds thereof, including without
limitation, those now or at any time hereafter on deposit with or in the
possession or control of Bank or owing by Bank to such Borrower or in transit by
mail or carrier to Bank or in the possession of any other Person acting on
Bank's behalf, without regard to whether Bank received the same in pledge, for
safekeeping, as agent for collection or otherwise, or whether Bank has
conditionally released the same, and in all assets of such
Borrower in which Bank now has or may at any time hereafter obtain a lien,
mortgage, or security interest for any reason.
(h) All proceeds of the foregoing.
In addition to Borrowers' obligations under the Prior Loan Documents,
Borrowers agree that the Collateral shall also secure Borrowers' obligations to
Bank under this Agreement. Borrowers acknowledge and agree that all security
interests granted to Bank pursuant to the Prior Loan Agreement are continued and
remain in effect, that the Bank's lien position with respect to the Collateral
shall relate back to the date referenced in the Prior Loan Agreement and that
all financing statements previously filed with respect to the Collateral shall
remain in full force and effect.
The security interest granted in this Section 4 shall include, without
limitation: (i) drilling rigs, inventory and other equipment and assets and all
proceeds thereof, in which CIT previously held a security interest under the CIT
Loan Documents, (ii) any assets (other than real property, if any) which
previously secured that certain promissory note in the original principal amount
of Eight Million Dollars ($8,000,000.00) dated August 14, 1996 made by UTI
payable to the order of the Sam K. Viersen, Jr. Revocable Trust (the "Viersen
Note") and all other documents in connection therewith (collectively, the
"Viersen Loan Documents"), and (iii) the assets (other than any real property)
acquired by Triad from Southland pursuant to the Southland Acquisition
Agreement. The Borrowers represent and warrant that the obligations of Borrowers
under the CIT Loan Documents and the Viersen Loan Documents (collectively, the
"Prior Obligation Documents") have been paid in full or will be paid ii) full at
the closing hereunder by Borrowers and that the Prior Obligation Documents upon
payment in full will be terminated and of no further force or effect.
4.2 GENERAL. The collateral described above in Section 4.1 is
collectively referred to herein as the "Collateral". The above-described
security interests and liens shall not be rendered void by the fact that no Bank
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Indebtedness exists as of any particular date, but shall continue in full force
and effect until all ]Bank Indebtedness has been repaid, Bank has no agreement
or commitment outstanding pursuant to which Bank may extend credit to or on
behalf of any Borrower. IT IS THE EXPRESS INTENT OF THE BORROWERS THAT ALL OF
THE COLLATERAL SHALL SECURE NOT ONLY THE OBLIGATIONS UNDER THE LOAN DOCUMENTS,
BUT ALSO ALL OTHER PRESENT AND FUTURE OBLIGATIONS (NOW EXISTING OR HEREAFTER
ARISING) OF EACH BORROWER TO BANK.
5. REPRESENTATIONS AND WARRANTIES. Borrowers represent and
warrant as follows:
5.1 CONFIRMATION OF PRIOR REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Obligors as set forth in the Prior Loan
Agreement, including without limitation those in Section 5 of the Prior Loan
Agreement are true and complete as of the date hereof, except for such
representations and warranties as are by their express terms limited to a prior
specific date. Such representations are hereby incorporated into this Agreement
by reference with the same effect as if they were set forth in this Agreement in
their entirety.
5.2 TITLE TO ACQUIRED ASSETS. The Collateral, including without
limitation the assets acquired pursuant to the Southland Acquisition Agreement
(the "Southland Assets"), is and will be owned by Borrowers free and clear of
all liens and other encumbrances of any kind, except liens in favor of the Bank
and such other liens as may be permitted under the Prior Loan Agreement. The
Southland Assets shall constitute part of the Collateral, and Borrower will
defend all of the Collateral against any claims of all persons or entities other
than (i) claims of the Bank, and (ii) liens permitted under the Prior Loan
Agreement.
5.3 DUE AUTHORIZATION; NO LEGAL RESTRICTIONS. The execution and
delivery by Borrowers of the Loan Documents, the consummation of the
transactions contemplated by the Loan Documents and the fulfillment and
compliance with the respective terms, conditions and provisions of the Loan
Documents: (a) have been duly authorized by all requisite corporate action of
each Borrower, (b) will not conflict with or result in a breach of, or
constitute a default (or might, upon the passage of time or the giving of notice
or both, constitute a default) under, any of the terms, conditions or provisions
of any applicable statute, law, rule, regulation or ordinance or any Borrower's
Certificate or Articles of Incorporation or By-laws, or any indenture, mortgage,
loan or credit agreement or instrument to which any Borrower is a party or by
which it may be bound or affected, or any judgment or order of any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, and (c) will not result in the creation or imposition of
any lien, charge or encumbrance of any nature whatsoever upon any of the
property or assets of any Borrower under the terms or provisions of any such
agreement or instrument, except liens in favor of Bank.
5.4 ENFORCEABILITY. The Loan Documents have been duly executed by
Borrowers and delivered to Bank and constitute legal, valid and binding
obligations of Borrowers, enforceable in accordance with their terms.
5.5 CONSENTS. No consent, approval or authorization of or designation,
declaration or filing with any governmental authority or any other Person on the
part of Borrowers are required in connection with the execution, delivery or
performance by Borrowers of the Loan Documents or the consummation of the
transactions contemplated thereby.
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5.6 CURRENT COMPLIANCE. Borrowers are currently in compliance with all
of the terms and conditions of the Loan Documents.
5.7 INTERRELATEDNESS OF BORROWERS. The business operations of Borrowers
are interrelated and complement one another, and such entities have a common
business purpose, with intercompany bookkeeping and accounting adjustments used
to separate their respective properties, liabilities, and transactions. To
permit their uninterrupted and continuous operations, such entities now require
and will from time to time hereafter require funds and credit accommodations for
general business purposes. The proceeds of advances under the Loan will directly
or indirectly benefit each Borrower hereunder, severally and jointly, regardless
of which Borrower requests or receives part or all of the proceeds of such
advances. The Southland Assets, although owned by Triad, will be used by or for
the benefit of all Borrowers from time to time.
5.8 ACCURACY OF REPRESENTATIONS AND WARRANTIES. No representation or
warranty by Borrowers contained herein or in any certificate or other document
furnished by Borrowers pursuant hereto or in connection herewith fails to
contain any statement of material fact necessary to make such representation or
warranty not misleading in any material respect in light of the circumstances
under which it was made.
5.9 DRILLING RIGS AND RELATED EQUIPMENT. All drilling rigs and related
drilling equipment (collectively, the "Drilling Equipment") used by Borrowers in
drilling operations on their own behalf or on behalf of their customers are
owned by the entities described on Schedule 5.9 attached hereto. Schedule 5.9
sets forth the respective owners of the Drilling Equipment and the states in
which the Drilling Equipment is located. None of the Drilling Equipment consists
of, is located upon or will be part of any vehicle for which a certificate of
title is issued.
6. GENERAL COVENANTS. Except with the prior written consent of Bank,
Borrowers will comply with the following:
6.1 CONFIRMATION OF PRIOR GENERAL COVENANTS. Borrowers acknowledge,
confirm and agree to comply with all covenants of Obligors as set forth in
Section 6 of the Prior Loan Agreement, as amended on the date hereof and as
amended from time to time. Such covenants are hereby incorporated into this
Agreement by reference with the same effect as if they were set forth in the
Agreement in their entirety.
6.2 RESTRICTIONS ON USE OF PROCEEDS. No Borrower will carry or purchase
with the proceeds of the Loan any "margin security" within the meaning of
Regulations U, G, T or X of the Board of Governors of the Federal Reserve
System.
6.3 DRILLING EQUIPMENT. With respect to the Drilling Equipment:
(i) Bank may at any reasonable time inspect the
Drilling Equipment.
(ii) The Drilling Equipment shall at all times remain
separately identifiable personal property and shall not become affixed to any
real property so as to become a fixture.
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(iii) If requested by Bank in writing, Borrowers
will attach to the Drilling Equipment in which Bank has a security interest, a
notice satisfactory to Bank, disclosing Bank's security interest in such
Drilling Equipment.
(iv) Borrowers will not move any of the Drilling
Equipment in which Bank has a security interest, out of any of the states
described in Schedule 5.9 attached hereto or any of the other states in which
Bank has filed UCC financing statements sufficient to perfect Bank's security
interest, naming the owner of such Drilling Equipment, as debtor, and describing
such Drilling Equipment as collateral, unless such Borrower gives the Bank at
least ten (10) Business Days prior written notice and, with such written notice
also provides Bank with duly executed financing statements to perfect Bank's
security interest in such Drilling Equipment upon filing in such new state.
(v) Borrowers will not permit any certificates
of title to exist or to be issued for any of the Drilling Equipment, unless the
Bank's security interest is duly noted thereon, the certificate of title is
delivered to Bank and Borrowers take all other actions which Bank deems
necessary or advisable to protect and perfect Bank's security interest in such
Drilling Equipment.
6.4 SUBORDINATED TERM LOAN. Borrowers will close the financing
contemplated under the Subordinated Debt Loan Documents and utilize the funds
thereunder for payment of the purchase price of the Southland Acquisition.
Borrowers will not amend, modify or restate any of the provisions of the
Subordinated Term Loan or any of the Subordinated Debt Loan Documents, in any
way which in Bank's judgment would adversely affect the Bank Indebtedness, the
Collateral, the Subordination Agreement, any Borrower's business, operations or
financial condition, or any rights or remedies of Bank. Without limitation, no
modification shall be made which increases the interest rate, fees or other sums
payable in connection with the Subordinated Term Loan or under the Subordinated
Debt Loan Documents, shortens or accelerates the maturity or due date of any
payments under the Subordinated Term Loan, grants any security interest to
secure all or any part of the Subordinated Term Loan, makes any financial
covenant or ratio more restrictive, or results in any situation in which a
default could occur under the Subordinated Term Loan without such event
constituting an Event of Default hereunder.
The provisions in the Subordination Agreement permitting the
Subordinated Lender to enter into amendments or modifications of the
Subordinated Debt Loan Documents with respect to interest rate increases and
fees shall not be deemed to be a consent or agreement by Bank to any increase in
the interest rate of the Subordinated Term Loan or any new or increased fees
payable in connection with the Subordinated Term Loan. Such amendments or
modifications shall still require the consent by Bank. Obligors will give Bank a
copy of any proposed amendment, modification or restatement of any Subordinated
Debt Loan Document at least ten (10) days prior to the execution thereof.
Obligors will not enter into any such amendment, modification or restatement, if
Bank has notified Obligors that it would be a violation of this Section 6.4.
No Borrower will, directly or indirectly, repurchase, redeem,
or defease prior to the date when due or otherwise make any prepayment prior to
the date when due, or effect any prepayment that is optional on the part of such
Borrower, on any of the Subordinated Term Loan or any other Indebtedness for
borrowed money without the prior written consent of Bank, except that no such
consent is required for and UTI may effect (A) any transaction in which UTI's
capital stock is exchanged for Indebtedness owed by any of the Borrowers,
including any cashless warrant exercise arrangements in which warrants are
exercised without cash payment by the Person so exercising, or exchange of
indebtedness owed by any of the Borrowers for capital stock of UTI, (B)
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prepayment permitted by Section 13 of the Prior Loan Agreement, (C) mandatory
prepayments required under the terms of the Subordinated Debt Loan Documents,
and (D) prepayments of Indebtedness owed to Bank in accordance with or required
under this Agreement or the Prior Loan Agreement. Borrowers will give Bank a
copy of each notice of default or other substantive notice received by any
Borrower from any Subordinated Lender, as soon as possible but no later than two
(2) Business Days after such Borrowers' receipt. Borrowers will also deliver to
Bank a copy of each compliance certificate or other report or certificate
delivered by any Borrower to any Subordinated Lender simultaneously with
delivery to such Subordinated Lender. Nothing contained in this Section 6.4
shall limit, restrict, waive or adversely affect any of Bank's rights or
remedies under the Subordination Agreement.
Promptly upon becoming aware of the existence of any default
or event of default under the Subordinated Debt Loan Documents, Borrowers will
give Bank written notice specifying the nature thereof and describing what
action the Borrowers are taking or propose to take with respect thereto.
6.5 SOUTHLAND ACQUISITION. Borrowers will not amend or modify the
Southland Acquisition Agreement or any documents collateral thereto in any
material way or waive any material rights thereunder.
6.6 CHANGE OF CONTROL. Promptly and in any event within ten (10)
Business Days after the occurrence of any Change of Control, the Borrowers will
give written notice of such transaction or event to Bank, which notice shall
state the date of such Change of Control, shall describe such Change of Control
in reasonable detail and shall contain an offer to prepay the unpaid balance of
the Line and the Loan, all interest thereon and all sums due in connection
therewith and to terminate the Prior Loan Agreement on the date specified
therein (the "Change In Control Prepayment Date"), which Change in Control
Prepayment Date shall be a Business Day not less than one (I) Business Day prior
to the date upon which Borrowers have offered to prepay the Subordinated Term
Loan as a result of such Change of Control pursuant to the terms of Subordinated
Debt Loan Documents. Bank shall have the option to require the Borrowers to
prepay all or any part of the Line, the Loan and all interest thereon and to
terminate the Prior Loan Agreement, and Borrowers hereby, jointly and severally,
agree to make such prepayment and to terminate the Prior Loan Agreement. Such
option may be exercised by Bank by written notice to the Borrowers given no
later than ten (10) days prior to the Change in Control Prepayment Date,
specifying the amount to be prepaid. On the Change in Control Prepayment Date,
Borrowers shall pay such amount to Bank and, if requested by Bank, shall execute
a termination of agreement for the Prior Loan Agreement; provided that,
notwithstanding its exercise of the option herein provided, Bank may at any time
prior to the Change in Control Prepayment Date waive or revoke in whole or in
part by written notice to Borrowers the exercise of its option hereunder.
6.7 AMENDED, RESTATED AND CONSOLIDATED LOAN AGREEMENT. Borrowers agree
that they will execute and deliver to Bank, an Amended, Restated and
Consolidated Loan and Security Agreement, consistent with and setting forth the
terms of this Loan Agreement and the Prior Loan Agreement, together with such
other collateral documents and agreements, opinions of counsel and other related
items as Bank may request within 60 days after the date of this Agreement.
7. FINANCIAL COVENANTS. Except with the prior written consent of Bank, Borrowers
will comply with the financial covenants of Obligors as set forth in Section 7
of the Prior Loan Agreement, as amended on the date hereof and as amended from
time to time. Such covenants are hereby incorporated into this Agreement by
reference with the same effect as if they were set forth in this Agreement in
their entirety.
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8. ACCOUNTING RECORDS, REPORTS AND FINANCIAL STATEMENTS.
8.1 CONFIRMATION OF PRIOR REPORTING REQUIREMENTS. Borrowers agree to
comply with the financial reporting and other requirements of Obligors as set
forth in Section 8 of the Prior Loan Agreement. Such covenants are hereby
incorporated into this Agreement by reference with the same effect as if they
were set forth in this Agreement in their entirety.
9. ENVIRONMENTAL REPRESENTATIONS AND COVENANTS.
9.1 CONFIRMATION OF PRIOR REPRESENTATIONS. Borrowers represent and
warrant that all representations of Obligors as set forth in Section 9 of the
Prior Loan Agreement are true and complete as of the date hereof, as amended as
of the date hereof. Such representations and warranties are hereby incorporated
into this Agreement by reference with the same effect as if they were set forth
in this Agreement in their entirety.
9.2 CONFIRMATION OF PRIOR COVENANTS. Borrowers acknowledge, confirm and
agree to comply with all environmental covenants and other obligations of
Obligors as set forth in Section 9 of the Prior Loan Agreement, as amended as of
the date hereof. Such covenants are hereby incorporated into this Agreement by
reference with the same effect as if they were set forth in this Agreement in
their entirety.
10. CONDITIONS OF CLOSING. The obligation of Bank to make available the
Loan is subject to the performance by Borrowers of all of their agreements to be
performed hereunder and to the following further conditions (any of which may be
waived by Bank):
10.1 LOAN DOCUMENTS. Borrowers and all other required persons and
entities will have executed and delivered to Bank the Loan Documents, the Fourth
Amendment to the Prior Loan Agreement and all other documents collateral to such
Fourth Amendment.
10.2 REPRESENTATIONS AND WARRANTIES. All representations and warranties
of Borrowers set forth in the Loan Documents, the Prior Loan Documents, the
Subordinated Debt Loan Documents will be true at and as of the date hereof,
except for such representations and warranties that are by their express terms
limited to a specific prior date.
10.3 NO DEFAULT. No condition or event shall exist or have occurred
which would constitute an Event of Default hereunder, under the Prior Loan
Documents or under the Subordinated Loan Documents (or would, upon the giving of
notice or the passage of time or both, constitute such an Event of Default).
10.4 PROCEEDINGS AND DOCUMENTS. All proceedings taken by Borrowers in
connection with the transactions contemplated by this Agreement and all
documents incident to such transactions shall be satisfactory in form and
substance to Bank and Bank's counsel, and Bank shall have received all documents
or other evidence which it reasonably may request in connection with such
proceedings and transactions. Each Borrower shall have delivered to Bank a
certificate, in form and substance satisfactory to Bank, dated the date hereof
and signed on behalf of that Borrower by an officer of that Borrower, certifying
(a) true copies of the Articles of Incorporation and Bylaws of that Borrower in
effect on such date, (b) true copies of all corporate actions taken by that
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Borrower relative to the Loan Documents, and (c) the names, true signatures and
incumbency of the officers of that Borrower in effect on such date, (b) true
copies of all corporate actions taken by that Borrower relative to the Loan
Documents, and (c) the names, true signatures and incumbency of the officers of
that Borrower authorized to execute and deliver this Agreement and the other
Loan Documents. Bank may conclusively rely on such certificate unless and until
a later certificate revising the prior certificate has been received by Bank.
10.5 AMENDMENT TO PRIOR LOAN AGREEMENT. Bank shall have received from
Borrowers a duly executed Fourth Amendment to the Prior Loan Agreement together
with all documents collateral thereto as required by Bank, all of which must be
m form and content satisfactory to Bank and closing shall have been completed
thereunder.
10.6 DELIVERY OF OTHER DOCUMENTS. The following documents shall have
been delivered by or on behalf of Borrowers to Bank, all of which must be in
form and content satisfactory to Bank:
(a) Good Standing Certificates. A good standing certificate
certifying to the good standing and corporate status of each Borrower in its
state of incorporation, good standing/foreign qualification certificates from
all other jurisdictions in which Borrowers are required to be qualified to do
business, as the Bank may require.
(b) Authorization Documents. Evidence of authorization of each
Borrower's execution and full performance of this Agreement, the Loan Documents
and all other documents and actions required hereunder.
(c) Landlord's Release and Waiver Agreements. Bank shall have
received a landlord's release and waiver agreement, satisfactory in form and
substance to Bank, from each landlord for each location leased by any Borrower,
as required by Bank.
(d) Opinion of Counsel. An opinion of counsel for Borrowers in
form and content satisfactory to Bank, covering matters related to the laws of
Pennsylvania, Oklahoma, Texas, Delaware and such other jurisdictions as required
by Bank.
(e) Southland Acquisition Agreement. A copy of the fully
executed Southland Acquisition Agreement and all exhibits and schedules thereto
and all documents collateral thereto, certified to be true and complete.
(f) Assignment of Rights. An Assignment of Rights,
satisfactory to Bank, collaterally assigning Triad's and UTI's rights under the
Southland Acquisition Agreement to Bank.
(g) Lien Search. Copies of record searches (including UCC
searches and judgments, suits, tax and other lien searches) confirming that
Bank has a first priority security interest in the Collateral, acceptable to
Bank.
(h) Appraisal. An appraisal of Borrowers' equipment in form,
content, amount and performed by an appraiser approved by and acceptable to Bank
or its agent or designee in its sole discretion. Such appraisal shall include,
without limitation, an orderly liquidation value of fixed equipment (operating
and idle rigs) and tubular equipment of not less than $50,000.00.
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(i) Financial Statements. Copies of Borrowers' audited
financial statements for the 1996 fiscal year end. Such financial statements
shall be subject to the satisfactory review of Bank in its sole discretion.
(j) Insurance. Evidence of the insurance required under
Section 6.12 of the Prior Loan Agreement, including without limitation insurance
on all Collateral (including Drilling Rigs) naming Bank as loss payee with a
lender's loss payable endorsement.
(k) Releases. Originals of such pay-off letters, releases,
UCC-3 termination statement and other agreements as Bank may require with
respect to Indebtedness owed to CIT and to the Sam K. Viersen, Jr. Revocable
Trust and all collateral securing such Indebtedness.
(l) Other Documents. Such other documents as may be required
by Bank.
10.7 SUBORDINATED TERM LOAN CLOSING. Closing shall have been completed
under the Subordinated Debt Loan Documents, Obligors shall have received the
$24,500,000 in proceeds thereunder and Obligors shall have utilized such funds
to complete closing of the Southland Acquisition. Bank shall have received
signed copies of all Subordinated Debt Loan Documents and the signed
Subordination Agreement all of which must be in form and content acceptable to
Bank in its sole discretion.
10.8 NON-WAIVER OF RIGHTS. By completing the closing hereunder, or by
making advances hereunder, Bank does not thereby waive a breach of any warranty
or representation made by any Borrower hereunder or any agreement, document, or
instrument delivered to Bank or otherwise referred to herein, and any claims and
rights of Bank resulting from any breach or misrepresentation by any Borrower
are specifically reserved by Bank.
11. DEFAULT AND REMEDIES.
11.1 EVENTS OF DEFAULT. The occurrence and continuation, of any one or
more of the following events shall constitute an Event or Events of Default
hereunder:
(a) The failure of Borrowers to pay any amount of principal or
interest on the Note, or any fee or other sums payable hereunder, or any other
Bank Indebtedness on the date on which such payment is due, whether on demand,
at the stated maturity or due date therefor by reason of any requirement for the
prepayment thereof, by acceleration or otherwise, provided that, with respect to
payments of sums other than principal and interest, such failure to pay
continues unremedied for a period of ten (10) days after such sums are first
due;
(b) The failure of any Borrower to duly perform or observe any
obligation, covenant or agreement on its part contained herein under the Prior
Loan Agreement, or m any other Loan Document, provided that, notwithstanding the
foregoing, Borrowers' failure to comply with the provisions of Sections 6.4,
6.11. 6.12 (other than the requirement that insurance coverage be maintained at
all times), 8.3 and 8.8 of the Prior Loan Agreement shall not constitute an
Event of Default hereunder unless such failure to comply continues unremedied
for a period of fifteen (15) days after the earlier of (i) any Borrower receives
notice from Bank of such failure, or (ii) a responsible officer of any Borrower
has actual notice of such failure;
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<PAGE> 15
(c) Any Event of Default (as defined in the Prior Loan
Agreement) shall occur and be continuing; or
(d) The continuing failure of any Borrower to perform any
obligation under the Subordinated Debt Loan Documents regardless of whether any
Subordinated Lender shall call a default as a result thereof, or the occurrence
and continuation of any event of default or event which with the giving of
notice, passage of time or both would constitute an event of default under the
Subordinated Debt Loan Documents; or
(e) Any default occurs and is continuing under the
Subordination Agreement.
11.2 REMEDIES. At the option of the Bank, upon the occurrence and
during the continuance of an Event of Default:
(a) The entire unpaid principal of the Loan, all other Bank
Indebtedness, or any part thereof, all interest accrued thereon, all fees due
hereunder and all other obligations of Borrowers to Bank hereunder or under any
other agreement, note or otherwise arising will become immediately due and
payable without any further demand or notice;
(b) Bank may increase the interest rate on the Loan to the
default rate set forth herein, without notice;
(c) Bank may exercise each and every right and remedy granted
to it under the Prior Loan Documents, all of which are hereby incorporated by
reference with the same effect as if they were set forth in this Agreement in
their entirety.
(d) Bank may enter any premises occupied by any Borrower and
take possession of the Collateral and any records relating thereto;
(e) Bank may exercise each and every right and remedy granted
to it under the Loan Documents, the Prior Loan Documents, under the Uniform
Commercial Code and under any other applicable law or at equity; and/or
(f) Bank may exercise each and every right and remedy under
the Subordination Agreement.
If an Event of Default occurs under SECTION 12.1(E) or (F) of the Prior
Loan Agreement, all Bank Indebtedness shall become immediately due and payable.
11.3 SET-OFF. Without limiting the rights of Bank under applicable law,
Bank has and may exercise a right of set-off, a lien against and a security
interest in all property of any Borrower now or at any time in Bank's possession
in any capacity whatsoever, including but not limited to any balance of any
deposit, trust or agency account, or any other bank account with Bank, as
security Indebtedness. At any time and from time to time following the
occurrence of an Event of Default, or any event which with the giving of notice
or passage of time or both would constitute an Event of Default, Bank may
without notice or demand, set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by Bank to or for the credit of any Borrower
against any or all of the Bank Indebtedness and each Borrower's obligations
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<PAGE> 16
under the Loan Documents. Bank shall use its best efforts to provide to the
Borrower prompt written notice of the exercise of any set-off rights, provided
that the failure of Bank to provide such notice shall not limit or affect the
validity or effectiveness of such set-off.
11.4 TURNOVER OF PROPERTY HELD BY BANK. Each Borrower irrevocably
authorizes- any Affiliate of Bank, upon and following the occurrence of an Event
of Default, at the request of Bank and without further notice, to turnover to
Bank any property of any Borrower held by such Affiliate, including without
limitation, funds and securities for any Borrower's account and to debit, for
the benefit of Bank, any deposit account maintained by any Borrower with such
Affiliate (even if such deposit account is not then due or there results a loss
or reduction of interest or the imposition of a penalty in accordance with law
applicable to the early withdrawal of time deposits), in the amount requested by
Bank up to the amount of the Bank Indebtedness, and to pay or transfer such
amount or property to Bank for application to the Bank Indebtedness.
11.5 DELAY OR OMISSION NOT WAIVER. Neither the failure nor any delay on
the part of Bank to exercise any right, remedy, power or privilege under the
Loan Documents upon the occurrence of any Event of Default or otherwise shall
operate as a waiver thereof or impair any such right, remedy, power or
privilege. No waiver of any Event of Default shall affect any later Event of
Default or shall impair any rights of Bank. No single, partial or full exercise
of any rights, remedies, powers and privileges by the Bank shall preclude
further or other exercise thereof. No course of dealing between Bank and
Borrowers shall operate as or be deemed to constitute a waiver of Bank's rights
under the Loan Documents or affect the duties or obligations of Borrowers.
11.6 REMEDIES CUMULATIVE; CONSENTS. The rights, remedies, powers and
privileges provided for herein shall not be deemed exclusive, but shall be
cumulative and shall be in addition to all other rights, remedies, powers and
privileges in Bank's favor at law or in equity. Whenever the Bank's consent or
approval is required or permitted, such consent or approval shall be at the sole
and absolute discretion of Bank.
11.7 CERTAIN FEES, COSTS. EXPENSE EXPENDITURES AND INDEMNIFICATION.
Each Borrower agrees to pay on demand all costs and expenses of Bank, including
without limitation:
(a) all costs and expenses in connection with (i) the
preparation, review, negotiation, execution, delivery and administration of the
Loan Documents, and the other documents to be delivered in connection therewith,
or any waivers, consents, amendments, extensions and increases to any of the
foregoing, (ii) the preparation for, negotiations regarding, consultations
concerning, or the defense or prosecution of legal proceedings involving any
claims made or threatened against Bank arising out of or related to the Loan
Documents, the transactions contemplated hereunder as to the protection of any
of the Collateral, or (iii) obtaining any appraisals or reappraisals of
Collateral, periodic lien searches and tax clearance certificates, as Bank in
its discretion deems necessary (including in all cases, without limitation,
reasonable attorney's fees and
(b) all losses, costs and expenses in connection with the
interpretation, enforcement, protection and preservation of the Bank's rights or
remedies under the Loan Documents, or any other agreement relating to any Bank
Indebtedness, or in connection with legal advice relating to the rights or
responsibilities of Bank (including without limitation court costs, reasonable
attorney's fees, reasonable expenses of accountants and appraiser and the cost
of all appeals); and
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<PAGE> 17
(c) any and all stamp and other taxes payable or determined to
be payable in connection with the execution and delivery of the Loan Documents,
and all liabilities to which Bank may become subject as the result of delay in
paying or omission to pay such taxes.
In the event any Borrower shall fail to pay taxes, insurance,
assessments, costs or expenses which ft is required to pay hereunder, or fails
to keep the Collateral free from security interests or lien (except as expressly
permitted herein), or fails to maintain or repair the Collateral as required
hereby, or otherwise breaches any obligations under the Loan Documents, Bank in
its discretion, may make expenditures for such purposes and the amount so
expended (including attorney's fees and expenses, filing fees and other charges)
shall be payable by Borrowers on demand and shall constitute part of the Bank
Indebtedness.
With respect to any amount required to be paid by Borrowers under this
section, in the event Borrowers fail to pay such amount on demand, Borrowers
shall also pay to Bank interest thereon at the default rate set forth for the
Loan.
Borrowers agree to indemnify and hold harmless, Bank and Bank's
officers, directors, shareholders, employees and agents, from and against any
and all claims, liabilities, losses, damages, costs and expenses (whether or not
such Person is a party to any litigation), including attorney's fees and costs
and costs of investigation, document production, attendance at depositions or
other discovery with respect to or arising out of this Agreement, the use of any
proceeds advanced hereunder, the transactions contemplated hereunder, or any
claim, demand, action or cause of action being asserted against any Borrower or
any of its Affiliates.
Borrowers' obligations under this section shall survive termination of
this Agreement and repayment of the Bank Indebtedness.
11.8 TIME IS OF THE ESSENCE. Time is of the essence in Borrowers'
performance of their obligations under the Loan Documents.
11.9 INDEMNIFICATION. Borrowers, jointly and severally shall indemnify,
defend and hold Bank, and its directors, agents, employees and counsel, harmless
from and against any and all losses, claims, damages, liabilities, deficiencies,
judgments, penalties, costs or expenses imposed on, incurred by or asserted
against any of them in connection with any litigation, investigation, claim or
proceeding commenced or threatened related to the negotiation, preparation,
execution, delivery, enforcement, performance or administration of this
Agreement, any other Loan Documents, the Prior Loan Documents or any undertaking
or proceeding related to any of the transactions contemplated hereby or any act,
omission to act, event or transaction related or attendant thereto including,
without limitation, anything related in any way to any claim by CIT against
Borrowers or the Bank related to the transactions contemplated hereunder or in
connection with the CIT Loan Documents and including, without limitation,
amounts paid in settlement, court costs, and the fees and expenses of counsel,
except that Borrowers shall not be required to indemnify, defend or hold
harmless Bank from or against any such loss, claim, damage, liability,
deficiency, judgment, penalty or cost to the extent that the undertaking to
indemnify, pay and hold harmless set forth in this section may be unenforceable
because it violates any law or public policy or results from Bank's gross
negligence or wilful misconduct. Borrowers shall pay the maximum portion which
it is permitted to pay under applicable law to Bank in satisfaction of
indemnified matters under this section. The foregoing indemnity shall survive
the payment of the Bank of the Bank Indebtedness and the termination or
non-renewal of this Agreement.
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<PAGE> 18
11.10 LIMITATIONS AFTER DEFAULT. To the extent that any of the
covenants set forth or incorporated by reference in this Loan Agreement permit
exceptions for any general prohibitions or requirements, such exceptions are
permitted only provided that (a) no Event of Default has occurred and is
continuing, and (b) any action taken by any Borrower which would have
constituted a permitted exception would not cause or result in an Event of
Default.
12. COMMUNICATIONS AND NOTICES. All notices, requests and other communications
made or given in connection with the Loan Documents shall be in writing and,
unless receipt is stated herein to be required, shall be deemed to have been
validly given if delivered personally to the individual or division or
department to whose attention notices to a party are to be addressed, or by
private carrier, or registered or certified mail, return receipt requested, in
all cases, with charges prepaid, addressed as follows, until some other address
(or individual or division or department for attention) shall have been
designated by notice given by one party to the other:
To Borrowers:
UTI Energy Corp.
485 Devon Park Drive, Suite 112
Wayne, PA 19087
Attention: P. Blake Dupuis, Chief
Financial Officer
To Bank:
Mellon Bank, N.A.
Plymouth Meeting Executive Campus 610
West Germantown Pike,
Suite 200 Plymouth Meeting, PA 19462
Attention: Anthony Caringi, Asst.
Vice President
ALL "PAYMENT IN FULL" CHECKS OR OTHER MEDIA OF PAYMENT MUST BE SENT TO
BANK ONLY TO THE ABOVE ADDRESS.
13. DEFINITIONS. Capitalized terms not otherwise defined herein shall have
the meanings set forth therein in the Prior Loan Agreement. The following words
and phrases as used in capitalized form in this Agreement, whether in the
singular or plural, shall have the meanings indicated:
13.1 "ACCOUNTING TERM". As used in this Agreement, or any certificate,
report or other document made or delivered pursuant to this Agreement,
accounting terms not defined elsewhere in this Agreement shall have the
respective meanings given to them under GAAP.
13.2 "AFFILIATE", as to any Person, means each other Person that
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person in question.
13.3 "BANK INDEBTEDNESS" shall mean all obligations and Indebtedness of
any Borrower to Bank, whether now or hereafter owing or existing, including,
without limitation, all obligations under the Loan Documents and the Prior Loan
Documents, all obligations to reimburse Bank for payments made by Bank pursuant
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<PAGE> 19
to any letter of credit issued for the account or benefit of any Borrower by
Bank, all other obligations or undertakIngs now or hereafter made by or for the
benefit of any Borrower to or for the benefit of Bank under any other agreement,
promissory note or undertaking now existing or hereafter entered into by any
Borrower with Bank, including, without limitation, all obligations of any
Borrower to Bank under the Note, the Loan Documents, any guaranty or surety
agreement and all obligations of any Borrower to immediately pay to Bank the
amount of any overdraft on any deposit account maintained with Bank, together
with all interest and other sums payable in connection with any of the
foregoing.
13.4 "BUSINESS DAY" means any day except a Saturday, Sunday or other
day on which commercial banks in Pennsylvania are authorized by law to close.
13.5 "CIT" means the CIT Group/Equipment Financing, Inc.
13.6 "CHANGE OF CONTROL" shall mean the occurrence of both of the
following: (a) Remy Capital Partners III and its Affiliates as a group
(collectively, Remy") shall cease to be the largest beneficial owner of the
total votIng power of all issued and outstanding shares of the capital stock of
UTI (or successor thereto) entitled to vote generally in the election of
directors; and (b) any Person or group (within the meanIng of Rule 13d-5 as in
effect on the date hereof under the Securities Exchange Act of 1934, as amended)
shall be the beneficial owner, directly or indirectly, through a purchase,
merger, consolidation or other acquisition transaction of more than 35% of the
total voting power of all issued and outstanding shares of the capital stock of
UTI (or successor thereto) entitled to vote generally in the election of
directors; provided, however, that a Person shall not be deemed to have
beneficial ownership of the shares of UTI solely by reason of one or more of (i)
the granting of a proxy or agreement to such Person to vote in a particular
manner in connection with a transaction of the type described in clause (b),
(ii) the granting of a revocable proxy to such Person in connection with a
matter to be considered by stockholders of UTI, (iii) that Person's ownership of
a right to purchase or acquire stock in connection with such Person's purchase
of stock of UTI from UTI or Remy, or (iv) by reason of the ownership of an
underwriter of shares of the capital stock of UTI in connection with a public
offering of such shares; provided, further, that, in the case of subclauses (i),
(ii) and (iii), no payment or consideration in the form of cash or property
shall have been received in connection with such grants or purchases.
13.7 "CORPORATION" means a corporation, partnership, trust,
unincorporated organization, association, joint stock company, limited liability
company or other legal entity.
13.8 "EVENT OF DEFAULT" means each of the events specified in
Section 11.1.
13.9 "GAAP" means generally accepted accountIng principles in the
United States of America, in effect from time to time, consistently applied and
maintained.
13.10 "INDEBTEDNESS", as applied to a Person, means:
(a) all items (except items of capital stock or of surplus)
which in accordance with GAAP would be included in determining total liabilities
as shown on the liability side of a balance sheet of such Person as at the date
as of which Indebtedness is to be determined;
(b) to the extent not included in the foregoing, all
indebtedness, obligations, and liabilities secured by any mortgage, pledge,
lien, conditional sale or other title retention agreement or other security
interest to which any property or asset owned or held by such Person is subject,
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<PAGE> 20
whether or not the indebtedness, obligations or liabilities secured thereby
shall have been assumed by such Person; and
(c) to the extent not included in the foregoing, all
indebtedness, obligations and liabilities of others which such Person has
directly or indirectly guaranteed, endorsed (other than for collection or
deposit in the ordinary course of business), sold with recourse, or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire or in
respect of which such Person has agreed to supply or advance funds (whether by
way of loan, stock purchase, capital contribution or otherwise) or otherwise to
become directly or indirectly liable.
13.11 "LOAN DOCUMENTS" means this Agreement, the Note, the
Subordination Agreement and all other documents, executed or delivered by
Borrower pursuant to this Agreement, as they may be amended from time to time.
13.12 "NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement
executed as part of the Subordinated Term Loan.
13.13 "PERSON" means an individual, a 'Corporation or a government or
any agency or subdivision thereof, or any other entity.
13.14 "PRIME RATE" means the annual interest rate established from time
to time by Bank and generally known by Bank as its ?$prime rate", whether
published by it publicly or only for the internal guidance of its loan officers.
The Prime Rate is used merely as a pricing index and is not and should not be
considered to represent the lowest or best rate available to a borrower.
13.15 "SOUTHLAND" means Southland Drilling Company, Ltd.
13.16 "SOUTHLAND ACQUISITION" means the acquisition by Triad of
substantially all of the assets of Southland in accordance with the terms of the
Southland Acquisition Agreement.
13.17 "SOUTHLAND ACQUISITION AGREEMENT" means the Asset Purchase
Agreement dated March 5, 1997 between UTI and Southland.
13.18 "SUBORDINATED DEBT LOAN DOCUMENTS" means all of the documents
executed and delivered in connection with the Loan, including without
limitation, the Note Purchase Agreement, the Note, the Subordination Agreement
and the Warrant Agreement.
13.19 "SUBORDINATED LENDERS" means collectively Canpartners Investment
IV, LLC and its permitted successors and assigns.
13.20 "SUBORDINATED TERM LOAN" means the subordinated term loan in the
face amount of $25,000,000 to be extended by the Subordinated Lenders to certain
of the Obligors in accordance with the terms of the Subordinated Debt Loan
Documents, the terms of which must be acceptable to Bank.
13.21 "SUBORDINATION AGREEMENT" means the Subordination and
Intercreditor Agreement among Obligors, the Subordinated Lenders and Bank, in
form and content acceptable to Bank.
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<PAGE> 21
13.22 "SUBSIDIARY" means a Corporation (a) which is organized under the
laws of the United States or any State thereof, or any other county or
jurisdiction, (b) which conducts substantially all of its business and has
substantially all of its assets within the United States, and (c) of which more
than fifty percent (50%) of its outstanding voting stock of every class (or
other voting equity interest) is owned by any Borrower or one or more of its
Subsidiaries.
14. WAIVERS.
14.1 WAIVERS. In connection with any proceedings under the Loan
Documents, including without limitation any action by Bank in replevin,
foreclosure or other court process or in connection with any other action
related to the Loan Documents or the transactions contemplated hereunder,
Borrowers waive:
(a) all errors, defects and imperfections in such proceedings;
(b) all benefits under any present or future laws exempting
any property, real or personal, or any part of any proceeds thereof from
attachment, levy or sale under execution, or providing for any stay of execution
to be issued on any judgment recovered under any of the Loan Documents or in any
replevin or foreclosure proceeding, or otherwise providing for any valuation,
appraisal or exemption;
(c) all rights to inquisition on any real estate, which real
estate may be levied upon pursuant to a judgment obtained under any of the Loan
Documents and sold upon any writ of execution issued thereon in whole or in
part, in any order desired by Bank;
(d) presentment for payment, demand, notice of demand,
notice of nonpayment, protest and notice of protest of any of the Loan
Documents, including the Note;
(e) any requirement for bonds, security or sureties required
by statute, court rule or otherwise;
(f) any demand for possession of Collateral prior to
commencement of any suit; and
(g) all rights to claim or recover attorney's fees and costs
in the event that any Borrower is successful in any action to remove, suspend or
prevent the enforcement of a judgment entered by confession.
14.2 FORBEARANCE. Bank may release, compromise, forbear with respect
to, waive, suspend, extend or renew any of the terms of the Loan Documents,
without notice to any Borrower
14.3 LIMITATION ON LIABILITY. Borrowers shall be responsible for and
Bank is hereby released from any claim or liability in connection with:
(a) Safekeeping any Collateral;
(b) Any loss or damage to any Collateral;
(c) Any diminution in value of the Collateral; or
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<PAGE> 22
(d) Any act or default of another Person.
Bank shall only be liable for any act or omission on its part
constituting gross negligence or wilful misconduct. In the event that Bank
breaches its required standard of conduct, Borrowers agree that Bank's liability
shall be only for direct damages suffered and shall not extend to consequential
or incidental damages. In the event any Borrower brings suit against Bank in
connection with the transactions contemplated hereunder and Bank is found not to
be liable, Borrowers will indemnify and hold Bank harmless from all costs and
expenses, including attorney's fees, incurred by Bank in connection with such
suit. This Agreement is not intended to obligate Bank to take any action with
respect to the Collateral or to incur expenses or perform any obligation or duty
of any Borrower.
14.4 SUBROGATION; SUBORDINATION. Any and all rights of subrogation that
any Borrower have against another Borrower or against any collateral or security
for any Bank Indebtedness may and any and all rights of contribution, indemnity
and/or substitution that any Borrower may have against another Borrower shall be
junior and subordinate to all Bank Indebtedness, to any rights that Bank may
have against all Borrowers, and to all right, title and interest that Bank may
have in any such collateral or security for the Bank Indebtedness. Bank may use,
sell or dispose of any item of collateral or security for the Bank Indebtedness
as it sees fit without regard to any subrogation rights any Borrower may have,
and upon any such disposition or sale of such collateral or security any rights
of subrogation that any Borrower may have with respect to such collateral or
security shall terminate.
Until the Bank Indebtedness shall have been indefeasibly paid in full,
no Borrower shall take, or permit to be taken, any action to exercise (a) any
right of subrogation arising in respect of the Bank Indebtedness, (b) any right
of contribution arising in respect of the Bank Indebtedness that any Borrower
may have, (c) any right to enforce any remedy which Bank now has or may
hereafter have against any Borrower or (d) any benefit of, and any right to
participate in, any security now or hereafter held by Bank. If any amount shall
be paid to any Borrower on account of such subrogation or contribution rights at
any time when all Bank Indebtedness shall not have been paid in full, such
amount shall be held in trust for Bank and shall forthwith be paid over to Bank
to be credited and applied against the Bank Indebtedness, whether matured or
unmatured, in accordance with the terms hereof.
15. SUBMISSION TO JURISDICTION. Borrowers hereby consent to the jurisdiction of
any state or federal court located within the Commonwealth of Pennsylvania, and
irrevocably agree that, subject to the Bank's election, all actions or
proceedings relating to the Loan Documents or the transactions contemplated
hereunder shall be litigated in such courts. Borrowers waive any objection which
they may have based on lack of personal jurisdiction, improper venue or forum
non conveniens to the conduct of any proceeding in any such court and waive
personal service of any and all process upon them, and consent that all such
service of process be made by mail or messenger directed to them at the address
set forth in Section 12. Nothing contained in this Section 15 shall affect the
right of Bank to serve legal process in any other manner permitted by law or
affect the right of Bank to bring any action or proceeding against any Borrower
or its property in the courts of any other jurisdiction.
16. MISCELLANEOUS.
16.1 INCORPORATION BY REFERENCE. All of the representations,
warranties, covenants and conditions set forth in the Prior Loan Agreement are
hereby incorporated into this Agreement by reference with the same effect as if
they were set forth in this Agreement in their entirety. Such representations,
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<PAGE> 23
warranties, covenants and conditions shall survive repayment of the Line and
termination of the Prior Loan Agreement.
All representations, warranties, covenants and conditions set
forth in the Subordinated Debt Loan Documents are hereby incorporated by
reference with the same effect as if they were set forth in this Agreement in
their entirety, provided that such representations, warranties and covenants
shall terminate upon repayment in full of the Subordinated Term Loan.
16.2 BROKERS. The transaction contemplated hereunder was brought about
and entered into by Bank and Borrowers acting as principals and without any
brokers, agents or finders being the effective procuring cause hereof. Borrowers
represent to Bank that Borrowers have not committed Bank to the payment of any
brokerage fee or commission in connection with this transaction. If any such
claim is made against Bank by any broker, finder or agent or any other Person,
Borrowers agree to indemnify, defend and hold Bank harmless against any such
claim, at Borrowers' own cost and expense, including Bank's attorneys' fees.
Borrowers further agree that until any such claim or demand is adjudicated in
Bank's favor, the amount claimed and/or demanded shall be deemed part of the
Bank Indebtedness secured by the Collateral.
16.3 USE OF BANK'S NAME. No Borrower shall use Bank's name or the name
of any of Bank's Affiliates in connection with any of its business or activities
except as may otherwise be required by the rules and regulations of the
Securities and Exchange Commission or any like regulatory body and except as may
be required in its dealings with any governmental agency.
16.4 NO JOINT VENTURE. Nothing contained herein is intended to permit
or authorize any Borrower to make any contract on behalf of Bank, nor shall this
Agreement be construed as creating a partnership, joint venture or making Bank
an investor in any Borrower.
16.5 SURVIVAL. All covenants, agreements, representations and
warranties made by Borrowers in the Loan Documents or made by or on their behalf
in connection with the transactions contemplated herein shall be true at all
times this Agreement is in effect and shall survive the execution and delivery
of the Loan Documents, any investigation at any time made by Bank or on its
behalf and the making by Bank of the loans or advances to Borrowers. All
statements contained in any certificate, statement or other document delivered
by or on behalf of any Borrower pursuant hereto or in connection with the
transactions contemplated hereunder shall be deemed representations and
warranties by Borrowers.
16.6 NO ASSIGNMENT BY BORROWERS. No Borrower may assign any of its
rights hereunder without the prior written consent of Bank, and Bank shall not
be required to lend hereunder except to Borrowers as they presently exist.
16.7 ASSIGNMENT OR SALE BY BANK. Bank may sell, assign or participate
all or a portion of its interest in the Loan Documents and in connection
therewith may make available to any prospective purchaser, assignee or
participant any information relative to any Borrower in its --possession,
provided that there are at no time more than six (6) other co-lenders or
participants, and provided further that, the amount of each co-lender's or
participant's interest in the commitments under the Line and the original
balance of their respective interests in the Loan are not less than $5,000,000
in the aggregate at the time of assignment or purchase.
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<PAGE> 24
16.8 BINDING EFFECT. This Agreement and all rights and powers granted
hereby will bind and inure to the benefit of the parties hereto and their
respective permitted successors and assigns.
16.9 SEVERABILITY. The provisions of this Agreement and all other Loan
Documents are deemed to be severable, and the invalidity or unenforceability of
any provision shall not affect or impair the remaining provisions which shall
continue in full force and effect.
16.10 NO THIRD PARTY BENEFICIARIES. The rights and benefits of this
Agreement and the Loan Documents shall not inure to the benefit of any third
party.
16.11 MODIFICATIONS. No modification of this Agreement or any of the
Loan Documents shall be binding or enforceable unless in writing and signed by
or on behalf of the party against whom enforcement is sought.
16.12 HOLIDAYS. If the day provided herein for the payment of any
amount or the taking of any action falls on a Saturday, Sunday or public holiday
at the place for payment or action, then the due date for such payment or action
will be the next succeeding Business Day.
16.13 LAW GOVERNING. This Agreement has been made, executed and
delivered in the Commonwealth of Pennsylvania and will be construed in
accordance with and governed by the laws of such Commonwealth, without regard to
any rules or principles regarding conflict of laws or any rule or canon of
construction which interprets agreements against the draftsman.
16.14 INTEGRATION. The Loan Documents shall be construed as integrated
and complementary of each other, and as augmenting and not restricting Bank's
rights, powers, remedies and security. The Loan Documents contain the entire
understanding of the parties thereto with respect to the matters contained
therein and supersede all prior agreements and understandings between the
parties with respect to the subject matter thereof and do not require parol or
extrinsic evidence in order to reflect the intent of the parties. In the event
of any inconsistency between the terms of this Agreement and the terms of the
other Loan Documents, the terms of this Agreement shall prevail. All references
to the Prior Loan Agreement shall mean the Prior Loan Agreement as it may from
time to time be amended. If the Prior Loan Agreement is terminated or ceases to
be effective for any reason, the provision thereof specifically referenced or
incorporated by reference in this Agreement shall remain a part of this
Agreement.
16.15 EXHIBITS AND SCHEDULES. All exhibits and schedules attached
hereto are hereby made a part of this Agreement.
16.16 HEADINGS. The headings of the Articles, Sections, paragraphs and
clauses of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part of this Agreement.
16.17 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
16.18 JOINT AND SEVERAL LIABILITY. If there is more than one Borrower
hereunder, all agreements, conditions, covenants and provisions of the Loan
Documents shall be the joint and several obligation of each Borrower.
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<PAGE> 25
16.19 WAIVER OF RIGHT TO TRIAL BY JURY. BORROWERS AND BANK WAIVE ANY
RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a)
ARISING UNDER ANY OF THE LOAN DOCUMENTS OR (b) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF BORROWERS OR BANK WITH RESPECT TO ANY
OF THE LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH
CASE WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. BORROWERS AND BANK AGREE
AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF BORROWERS AND BANK TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY. BORROWERS ACKNOWLEDGE THAT THEY HAVE HAD THE OPPORTUNITY TO
CONSULT WITH COUNSEL REGARDING THIS SECTION, THAT THEY FULLY UNDERSTAND ITS
TERMS, CONTENT AND EFFECT, AND THAT THEY VOLUNTARILY AND KNOWINGLY AGREE TO THE
TERMS OF THIS SECTION.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
FWA DRILLING COMPANY, INC.
By: /s/ P. Blake Dupuis
-----------------------------------
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
INTERNATIONAL PETROLEUM SERVICE COMPANY
By: /s/ P. Blake Dupuis
-----------------------------------
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
TRIAD DRILLING COMPANY
By: /s/ P. Blake Dupuis
-----------------------------------
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
[SIGNATURES CONTINUED ON NEXT PAGE]
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<PAGE> 26
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
UNIVERSAL WELL SERVICES, INC.
By: /s/ P. Blake Dupuis
-----------------------------------
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
USC, INCORPORATED
By: /s/ P. Blake Dupuis
-----------------------------------
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
UTI ENERGY CORP.
By: /s/ P. Blake Dupuis
-----------------------------------
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
UTICO, INC.
By: /s/ P. Blake Dupuis
-----------------------------------
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
PANTHER DRILLING, INC.,
FORMERLY KNOWN AS
VIERSEN & COCHRAN
DRILLING COMPANY
By: /s/ P. Blake Dupuis
-----------------------------------
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
[SIGNATURES CONTINUED ON NEXT PAGE]
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<PAGE> 27
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
MELLON BANK, N.A.
By: /s/ Anthony R. Caringi
----------------------------------------
Anthony R. Caringi, Asst. Vice President
-27-
<PAGE> 28
EXHIBIT
Exhibit "A" - Note
SCHEDULE
Schedule 5.9 - Location of Drilling Equipment
-28-
<PAGE> 29
NOTE
Philadelphia, Pennsylvania
Dated: April 11, 1997
$25,000,000.00
FOR VALUE RECEIVED AND INTENDING TO BE LEGALLY BOUND,the undersigned
(collectively, the "Borrowers") hereby promise to pay to the order of MELLON
BANK, N.A. ("Bank"), the principal sum of Twenty-Five Million Dollars
($25,000,000.00), together with Interest thereon upon the following terms:
1. TERM NOTE. This Note is the "Note" as defined in that certain Loan
and Security Agreement of even date herewith between Borrowers and Bank (such
Loan and Security Agreement, as the sane may be amended, supplemented or
restated from time to time, being the "Loan Agreement") and, as such, shall be
construed in accordance with all terms and conditions thereof. Capitalized terms
not defined herein shall have such meaning as provided in the Loan Agreement.
This Note is entitled to all the rights and remedies provided in the Loan
Agreement and the Loan Documents and is secured by all Collateral as described
therein.
2. INTEREST RATE. Interest on the unpaid principal balance hereof will
accrue from the date of advance until final payment thereof at the rate per
annum which is equal to the Prime Rate of Bank in effect from time to time (such
interest rate to change immediately upon any change in the Prime Rate).
3. DEFAULT INTEREST. Interest will accrue on the outstanding principal
amount hereof following the occurrence of an Event of Default or the final
maturity date hereof, until paid at a rate per annum which is two percent (2%)
in excess of the non-default rate otherwise payable under Paragraph 2 above (the
"Default Rate").
4. POST JUDGMENT INTEREST. Any judgment obtained for sums due
hereunder or under the Loan Documents will accrue interest at the Default Rate
until paid.
5. COMPUTATION. Interest will be computed on the basis of a year
365/366 days and paid for the actual number of days elapsed.
6. PRINCIPAL AND INTEREST PAYMENTS.
(a) Interest Payments. Borrowers will pay interest on the
outstanding principal balance hereof monthly, on the first day of each calendar
month commencing on the first day of the first calendar month following the date
hereof.
(b) Principal Payments. Borrowers will pay the outstanding
principal balance hereof as follows:
(i) twelve (12) equal and consecutive monthly
installments of Four Hundred Twenty-Five Thousand Dollars ($425,000.00) each,
payable on the first day of each calendar month commencing on May 1, 1997 and
contInuing through and including April 1, 1998;
-29-
<PAGE> 30
(ii) twelve (12) equal and consecutive monthly
installments of Five Hundred Thousand Dollars ($500,000.00) each, payable on
the first day of each calendar month commencing on May I, 1998 and continuing
through and including April I, 1999;
(iii) thirteen (13) equal and consecutive monthly
installments of Six Hundred Fifty Thousand Dollars ($650,000.00) each, payable
on the first day of each calendar month commencing on May 1, 1999 and
continuing through and including May 1, 2000; and
(iv) one (I) final payment of the remaining
principal balance hereof plus all accrued and unpaid interest thereon on
June 1, 2000.
Borrowers also agree to make the prepayments required under SECTION
3.2(B) and SECTION 6.6 of the Loan Agreement.
7. PLACE OF PAYMENT. Principal and interest hereunder shall be payable
as provided in the Loan Agreement, or at such other place as Bank, from time to
time, may designate in writIng.
8. DEFAULT: REMEDIES. Upon the occurrence of an Event of Default and so
long as same shall be contInuing, Bank, at its option and without notice to
Borrowers, may declare immediately due and payable the entire unpaid balance of
principal and all other sums due by Borrowers hereunder and under the other Loan
Documents, together with interest accrued thereon at the applicable rate
specified above to the date of the Event of Default and thereafter at the
Default Rate. Payment thereof may be enforced and recovered in whole or in part
at any time and from time to time by one or more of the remedies provided to
Bank in this Note or in the Loan Documents or as otherwise provided at law or in
equity, all of which remedies are cumulative and concurrent.
9. WAIVERS. Borrowers and all endorsers hereby, jointly and severally,
waive presentment for payment, demand, notice of demand, notice of nonpayment or
dishonor, protest and notice of protest of this Note, and all other notices in
connection with the delivery, acceptance, performance, default or enforcement of
the payment of this Note.
10. MISCELLANEOUS. If any provisions of this Note shall be held invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provision hereof. This Note has been delivered in and shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
without regard to the law of conflicts. This Note shall be binding upon
Borrowers and upon Borrowers' successors and assigns and shall benefit Bank and
its successors and assigns. The prompt and faithful performance of all of
Borrowers' obligations hereunder, including without limitation, time of payment,
is of the essence of this Note.
11. JOINT AND SEVERAL LIABILITY. If there is more than one Borrower
executing this Note, all agreements, conditions, covenants and provisions of
this Note shall be the joint and several obligation of each Borrower.
IN WITNESS WHEREOF, Borrowers, intending to be legally bound hereby,
have caused this Note to be duly executed the day and year first above written.
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<PAGE> 31
FWA DRILLING COMPANY, INC.
By:_____________________________________
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
INTERNATIONAL PETROLEUM SERVICE COMPANY
By:_____________________________________
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
TRIAD DRILLING COMPANY
By:______________________________________
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
UNIVERSAL WELL SERVICES, INC.
By:______________________________________
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
USC, INCORPORATED
By:______________________________________
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
[SIGNATURES CONTINUED ON NEXT PAGE]
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<PAGE> 32
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
UTI ENERGY CORP.
By:______________________________________
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
UTICO, INC.
By:______________________________________
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
PANTHER DRILLING, INC.,
FORMERLY KNOWN AS
VIERSEN & COCHRAN
DRILLING COMPANY
By:______________________________________
P. Blake Dupuis, Vice President
(CORPORATE SEAL)
-32-
<PAGE> 1
EXHIBIT 10.3
FOURTH AMENDMENT AND MODIFICATION
TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS FOURTH AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT
(the "AMENDMENT") is made effective as of the 11th day of April, 1997 by and
among FWA DRILLING COMPANY, INC. ("FWA") INTERNATIONAL PETROLEUM SERVICE
COMPANY ("IPSCO"), TRIAD DRILLING COMPANY ("TRIAD"), UNIVERSAL WELL SERVICES,
INC. ("UNIVERSAL"), USC, INCORPORATED, formerly known as UNION SUPPLY COMPANY
("UNION"), UTI ENERGY CORP. ("UTI"), UTICO, INC. ("UTICO"), PANTHER DRILLING,
INC., formerly known as VIERSEN & COCHRAN DRILLING COMPANY ("VIERSEN") and
MELLON BANK, N.A. ("BANK"). FWA, IPSCO, Triad, Universal and Union are
hereinafter sometimes collectively referred to as the "BORROWERS" and
individually as a "BORROWER". UTI, UTICO and Viersen are hereinafter sometimes
collectively referred to as the "GUARANTORS" and individually as a "GUARANTOR".
The Borrowers and the Guarantors are hereinafter sometimes collectively
referred to as the "OBLIGORS" and individually as an "OBLIGOR".
BACKGROUND
A. Pursuant to the terms of the certain Amended and Restated Loan
and Security Agreement dated December 7, 1995, as amended, by and among
Obligors and Bank (the "Loan Agreement"), Bank agreed, inter alia, to extend to
Borrowers a line of credit up to a maximum outstanding principal amount of
Eight Million Four Hundred Thousand Dollars ($8,400,000.00).
B. Concurrently with the transactions contemplated under this
Amendment, Bank is extending to Obligors the Senior Secured Term Loan, as
defined herein.
C. Obligors have requested and Bank has agreed to amend the terms
of the Loan Agreement in accordance with the terms and conditions hereof.
D. Capitalized terms used herein and not otherwise defined herein
shall have such meaning as provided in the Loan Agreement. Certain terms are
defined in Section 29 of this Amendment.
NOW THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. THE LINE. Section 1.1 of the Loan Agreement is
hereby amended and restated to read in its entirety as follows:
"1.1 LINE OF CREDIT. Bank will establish for
Borrowers for and during the period from the date hereof and until June 30,
1998 (the "CONTRACT PERIOD"), subject to the terms and conditions hereof, a
revolving line of credit (the "LINE") pursuant to which Bank will from time to
time make loans or other extensions of credit to Borrowers in an aggregate
amount not exceeding at any time the lesser of (a) the sum of (i) an amount up
to eighty percent (80%) of the amount of each Borrower's Eligibles, plus (ii)
an amount up to fifty percent (50%) of the amount of each Borrower's Eligible
Unbilled Receivables, plus (iii) an amount up to thirty percent (30%) of the
Value of each Borrower's Eligible Inventory, or (b) Twelve Million Dollars
($12,000,000.00). Notwithstanding the foregoing, the maximum amount of
advances against Borrowers' Eligible Unbilled Receivables shall at no time
exceed One Million Dollars ($1,000,000.00) in the aggregate. Within the
limitations in this Agreement and subject to the individual sub-limits set
forth in this Agreement, Borrowers may borrow, repay and reborrow under the
Line. The Line shall be subject to all terms and conditions set forth in all
of the
<PAGE> 2
Loan Documents which terms and conditions are incorporated herein. Borrowers'
obligation to repay the loans and extensions of credit under the Line shall be
evidenced by Borrowers' amended and restated promissory note (the "Line Note")
in the face amount of Twelve Million Dollars ($12,000,000.00), which shall be
in the form attached hereto as Exhibit "A", with the blanks appropriately
filled in.
Notwithstanding anything herein or elsewhere to the contrary,
Eligible Unbilled Receivables shall not include any accounts receivable arising
from drilling services performed or to be performed utilizing any Drilling
Equipment (as hereinafter deemed) in which Bank does not have a valid perfected
first priority security interest or with respect to which Bank has not received
an intercreditor agreement containing notice of default, opportunity to cure
and standstill protection provisions from all other lienholders in form and
content acceptable to Bank."
2. AMENDED AND RESTATED LINE NOTE. Contemporaneously
with their execution of this Amendment, Borrowers shall execute and deliver to
Bank an Amended and Restated Line Note (the "Amended and Restated Line Note")
in the form attached hereto as EXHIBIT "A", evidencing the Borrowers obligation
to repay the Line as amended by this Amendment. EXHIBIT "A" attached to the
Loan Agreement is hereby deleted and replaced with EXHIBIT "A" hereto.
Hereafter, all references in the Loan Agreement or any of the other Loan
Documents to the "LINE NOTE" shall be deemed to be references to the Amended
and Restated Line Note. The indebtedness evidenced by the prior Line Note
remains outstanding as of the date hereof. Borrowers acknowledge and agree
that the Amended and Restated Line Note merely re- evidences the indebtedness
evidenced by the prior Line Note, increases the maximum principal amount
thereof, and is given in substitution and not in payment of such prior Line
Note.
3. LOAN FEE. Section 3.4 of the Loan Agreement is
hereby amended and restated to read in its entirety as follows:
"3.4 LOAN FEE. Borrowers shall pay to Bank an
annual loan fee equal to three-eighths of one percent (3/8%) of the total
amount (drawn and undrawn) of the Line, as it may be increased from time to
time. Such fee shall be payable quarterly in advance."
4. COLLATERAL. Sections 4.1(c), (d) and (g) of the Loan
Agreement are hereby amended and restated in their entirety to read as follows,
a new Subsection (h) of Section 4.1 is hereby added and each Obligor hereby
grants Bank a security interest in the following:
"(c) All of such Obligor' s right, title and
interest in and to present and future general intangibles (including but not
limited to tax refunds and rebates, manufacturing and processing rights,
designs, patent rights and applications therefor, trademarks and registration
or applications therefor, trade names, brand names, logos, inventions,
copyrights and all application and registrations therefor), licenses, permits,
approvals, software and computer programs, license rights, royalties, trade
secrets, methods, processes, know-how, formulas, drawings, specifications,
descriptions, label designs, plans, blueprints, patterns and all memoranda,
notes and records with respect to any research and development, and all
products and proceeds of any of the foregoing."
"(d) All of such Obligor's present and future
machinery, equipment, furniture, fixtures, motor vehicles, tools, dies, jigs,
molds, drilling rigs, wells and production equipment, pipe, engines, fittings,
computers, pumps, barrels, stores and other articles of tangible personal
property of every type together with 211 parts, substitutions, accretions,
accessions, attachments, accessories, additions, components and replacements
thereof, all documents of title covering any of such goods or
-2-
<PAGE> 3
inventory and all manuals of operation, maintenance or repair, and all products
and proceeds of any of the foregoing."
"(g) All present and future deposits, funds,
instruments, documents, policies, evidences and certificates of insurance,
securities, investment property, chattel paper and other assets of such Obligor
or in which such Obligor has an interest and all proceeds thereof, including
without limitation, those now or at any time hereafter on deposit with or in
the possession or control of Bank or owing by Bank to such Obligor or in
transit by mail or carrier to Bank or in the possession of any other Person
acting on Bank's behalf, without regard to whether Bank received the same in
pledge, for safekeeping, as agent for collection or otherwise, or whether Bank
has conditionally released the same, and in all assets of such Obligor in which
Bank now has or may at any time hereafter obtain a lien, mortgage, or security
interest for any reason.
"(h) All proceeds of the foregoing."
The collateral described in revised Sections 4.1 (c). (d), (g)
and (h) shall be included within the defined term "Collateral".
The security interest granted in Section 4 of the Loan
Agreement shall include, without limitation: (i) drilling rigs, inventory and
other equipment and assets and all proceeds thereof, in which CIT previously
held a security interest under the CIT Loan Documents, (ii) any assets (other
than real property, if any) which previously secured that certain promissory
note in the original principal amount of Eight Million Dollars ($8,000,000.00)
dated August 14, 1996 made by UTI payable to the order of the Sam K. Viersen,
Jr. Revocable Trust (the "Viersen Note") and all other documents m connection
therewith (collectively, the "Viersen Loan Documents") and (iii) the assets
acquired by Triad from Southland pursuant to the Southland Acquisition
Agreement. The Obligors represent and warrant that the obligations of Obligors
under the CIT Loan Documents and the Viersen Loan Documents (collectively, the
"Prior Obligation Documents") have been paid in full or will be paid at the
closing hereunder by Obligors and that the Prior Obligation Documents upon
payment in full will be terminated and of no further force or effect.
5. LIMITATION ON INDEBTEDNESS. Section 6.3 of the Loan
Agreement is hereby amended and restated to read in its entirety as follows:
"6.3 Limitation on Indebtedness. (a) No Obligor
will have at any time outstanding to any Person other than Bank, any
Indebtedness for borrowed money, Capitalized Lease Obligations, or any
outstanding letters of credit, except:
(i) Accounts payable incurred in the
ordinary course of that Obligor's business and accrued expenses arising out of
transactions (other than borrowings) in the ordinary course of that Obligor's
business;
(ii) Existing Indebtedness for borrowed
money and Capitalized Lease Obligations described on Schedule 6.3;
(iii) Future purchase money Indebtedness
and Capitalized Lease Obligations in an amount not to exceed (i) $2,500,000
incurred within the 12 month period ending April 10, 1998, (ii) $4,000,000
incurred within the 12 month period ending April 10, 1999, and (iii) $5,000,000
incurred within the 12 month period ending April 10, 2000, provided that the
aggregate
-3-
<PAGE> 4
amount of such purchase money Indebtedness and Capitalized Lease Obligations
incurred after the date of this Amendment shall in no event exceed $10,000,000
in the aggregate;
(iv) The Subordinated Term Loan; and
(v) Intercompany Indebtedness owed by
one Obligor to another, provided that such Indebtedness is subordinated to the
Bank Indebtedness on terms acceptable to Bank.
Any of such permitted Indebtedness may not be refunded or
refinanced without the consent of the Bank.
(b) In the event that any Indebtedness for
borrowed money or the capitalized portion (as determined in accordance with
GAAP) of any Capitalized Lease Obligations in excess of $500,000 contains
financial covenants which are more restrictive with respect to any Obligor than
the financial covenants of this Agreement and the other Loan Documents,
Obligors agree to notify Bank promptly and agree to enter into a modification
to this Agreement and the Loan Documents, as applicable, to include such more
restrictive financial covenants as Bank may elect.
(c) No intercreditor agreements shall be required
if the purchase money Indebtedness or Capitalized Lease Obligations permitted
under Subsection (a)(iii) above is:
(i) a full recourse liability in an
amount less than $500,000, individually, provided that such full recourse
liabilities do not exceed $1,500,000 in the aggregate; or
(ii) a liability for which recourse to
any Obligor is limited solely to the asset financed.
With respect to all other permitted purchase money
Indebtedness and Capitalized Lease Obligations, Obligors shall obtain from the
applicable lender or lessor an intercreditor agreement acceptable to Bank,
providing the Bank with notice of any default, a forty-five (45) day period in
which to cure such default and containing a forty-five (45) day standstill
provision during which the lender or lessor agrees not to exercise any rights
or remedies against any Obligor or the financed asset."
6. WARRANTIES. Section 6.5 of the Loan Agreement is
hereby amended and restated to read in its entirety as follows:
"6.5 Guaranties. Except for the guaranties
contemplated under this Agreement and under the Subordinated Debt Loan
Documents and except for customary guaranties and indemnities executed in
connection with permitted acquisitions hereunder, no Obligor will directly or
indirectly guarantee, endorse (other than for collection or deposit in the
ordinary course of business), discount, sell with recourse or for less than the
face value or agree (contingently or otherwise) to purchase or repurchase or
otherwise acquire, or otherwise become directly or indirectly liable for, or
agree (contingently or otherwise) to supply or advance funds (whether by loan,
stock purchase, capital contribution or otherwise) in respect of, any
Indebtedness, obligations or liabilities of any Person other than another
Obligor."
7. DISPOSITION OF ASSETS. Section 6.6 of the Loan
Agreement is hereby amended and restated to read in it entirety as follows:
-4-
<PAGE> 5
"6.6 Disposition of Assets. (a) No Obligor will
sell, lease, transfer or otherwise dispose of all, substantially all, or any
portion of its property or assets, except for (i) drilling contracts and day
rate drilling contracts for inventory, equipment, and drilling rigs in the
ordinary course of business for fair consideration, (ii) sales of inventory
(other than drilling rigs) in the ordinary course for fair consideration, and
(iii) the sale for fair consideration of equipment or other fixed assets
(including drilling rigs) having a net book value of not more than One Million
Dollars ($1,000,000.00) in the aggregate in any fiscal year, and sales, leases
or transfers of property or as sets from one Obligor to another.
(b) Notwithstanding the foregoing, Obligors may
sell, lease, transfer or otherwise dispose of fixed assets with a book value in
excess of $1,000,000.00 in the aggregate in any fiscal year as part of a
transfer to an unrelated third party in a bona fide, arms-length transaction,
provided that (i) the Obligor gives Bank at least ten (10) Business Days prior
written notice together with a copy of the sale agreement, bill of sale or
other applicable agreement, (ii) the sale is for a cash purchase price at least
equal to the reasonable fair market value of such assets, and (iii) the
proceeds of such sale are paid to Bank as a prepayment on the Senior Secured
Term Loan with any balance applied as a permanent reduction of the Line.
(c) Notwithstanding anything herein or elsewhere
to the contrary, Universal may sell all or any part of its assets, or UTI may
sell all of the capital stock of Universal, to an unrelated third party in a
bona fide, arms-length sale, provided that (i) Universal gives Bank at least
ten (10) Business Days prior written notice of any such sale together with a
copy of the sale agreement and a summary of the business terms of such sale,
(ii) the sale is for a cash purchase price at least equal to the reasonable
fair market value of Universal's assets, (iii) the proceeds of such sale remain
subject to the restrictions on liens and encumbrances in Section 6.9, and (iv)
within twelve (12) months after the date such sale is closed, Universal or UTI,
as applicable, utilizes the proceeds the Senior Secured Term Loan or to
purchase for itself or on behalf of another Obligor new assets to be used in
one of Obligors' Lines of Business."
8. MERGERS; CONSOLIDATIONS; BUSINESS ACQUISITIONS;
SUBSIDIARIES. Section 6.7 of the Loan Agreement is hereby amended and restated
to read in its entirety as follows:
"6.7 Mergers; Consolidations; Business
Acquisitions; Subsidiaries. No Obligor will into or consolidate with any
Person, acquire any material portion of the stock merge ownership interests,
assets or business of any Person, permit any Person to merge into it, or form
any new Subsidiaries, other than the Southland Acquisition by Triad.
Notwithstanding the foregoing, any of the Obligors may (a) acquire the stock or
assets of other operating entities provided that the purchase price therefor
(including all assumed liabilities, seller financing or other debt, equity
interests issued or other consideration, but not including payments for
bona-fide employment contracts) does not exceed Five Million Dollars
($5,000,000.00) in the aggregate in any fiscal year, or Ten Million Dollars
($10,000,000.00) in the aggregate for all such acquisitions (in each case not
including the Southland Acquisition), and (b) acquire working interests or
other ownership interests in oil or gas wells with an aggregate acquisition
cost not to exceed Five Hundred Thousand Dollars ($500,000.00) in any one
fiscal year. Notwithstanding the foregoing, any Obligor may merge into another
Obligor or transfer its assets to any other Obligor. All entities acquired by
any Obligor and any Subsidiary formed by an Obligor shall become borrowers or
guarantors of the Bank Indebtedness at Bank's option and on terms acceptable to
Bank."
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<PAGE> 6
9. DEFAULT UNDER OTHER INDEBTEDNESS. Section 6.14 of
the Loan Agreement is hereby amended and restated to read in its entirety as
follows:
"6.14 Default Under Other Indebtedness. If any
Indebtedness of any Obligor is declared or becomes due and payable before its
expressed maturity by reason of default or otherwise or to the knowledge of an
Obligor, the holder of any such Indebtedness shall have the right (or upon the
giving of notice or the passage of time, or both, shall have the right) to
declare such Indebtedness to be so due and payable, Obligors will immediately
give Bank written notice of such declaration, acceleration or right of
declaration."
10. CAPITAL STOCK; DIVIDENDS. Section 6.18 of the Loan
Agreement is hereby amended and restated to read in its entirety as follows:
"6.18 Capital Stock; No Dividends. UTI will not
redeem, repurchase or otherwise make or pay any distribution or dividend upon,
or payment or distribution to acquire, any of its capital stock or other Equity
Securities (as defined in the New Loan Agreement). Notwithstanding the
foregoing, UTI may redeem, acquire or repurchase its Equity Securities (a) to
pay purchase price reductions or in settlement of indemnity claims required in
connection with any acquisition permitted under Section 6.7 in which UTl issues
its common stock or other Equity Securities as part of the purchase price, (b)
in connection with the terms of UTI's existing employee benefit plans in the
ordinary course of UTI's business, provided that the amount expended for such
stock purchases related to the benefit plans does not exceed $1,000,000 in any
one fiscal year or $2,000,000 in the aggregate, and (c) in connection with any
exercise of stock options, warrants or other rights to acquire Equity
Securities that do not result in the distribution of cash by UTI other than for
fractions of a unit of any Equity Securities.
11. MAINTENANCE OF MANAGEMENT. Section 6.17 of the Loan
Agreement is hereby amended and restated to read in its entirety as follows:
"6.17 Maintenance of Management. Obligors will
cause their business to be continuously managed by Vaughn E. Drum and P. Blake
Dupuis (collectively the "Current Managers") or such other persons (serving in
such management positions) as may be reasonably satisfactory to Bank. Obligors
will notify Bank promptly in writing of any change in their board of directors
or executive officers.
12. TRANSACTIONS WITH AFFILIATES. Section 6.19 of the
Loan Agreement is hereby amended and restated to read in its entirety as
follows
"6.19 Transactions with Affiliates. No Obligor
will enter into directly or indirectly any transaction or material group of
related transactions (including without limitation the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
Affiliate (other than another Obligor) except in the ordinary course and
pursuant to the reasonable requirements of each Obligor's business and upon
fair and reasonable terms no less favorable to such Obligor than would be
obtainable in a comparable arm's-length transaction with a Person not an
Affiliate. No Obligor will make any loans or extensions of credit to any of
its Affiliates (that are not Obligors) shareholders, directors or officers.
Each Obligor will cause all of its Indebtedness at any time owed to its
Affiliates (that are not Obligors), shareholders, directors and officers to be
subordinated in all respects to all present and future Bank Indebtedness and
will not make any payments thereon, except as approved by Bank in writing.
Notwithstanding the foregoing, the restrictions set forth above in this Section
6.19 will not apply to (a) the payment of reasonable and customary regular fees
to directors of UTI who are
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<PAGE> 7
not employees of UTI; (b) loans and advances to officers, directors and
employees of Obligors for travel, entertainment and moving and other relocation
expenses made in direct furtherance and in the ordinary course of business of
Obligors; (c) any other transaction with any employee, officer or director of
Obligors pursuant to employee benefit or compensation arrangements entered into
in the ordinary course of business and approved by the Board of Directors of
Obligors; or (iv) customary investment banking or similar transactions with an
Affiliate, provided that compensation paid to such Affiliate and related
expenses and reimbursements are in customary amounts as would be determined in
arm's- length negotiations. Obligors agree to give Bank prompt notice of each
Affiliate transaction involving cash or other compensation in excess of
$500,000 (not including Equity Securities issued as compensation).
13. UGID NOTE. Section 6.26 of the Loan Agreement is
hereby deleted. Obligors may prepay the outstanding principal balance of the
UGID Note and all accrued unpaid interest thereon.
14. DRILLING RIGS AND RELATED COLLATERAL.
(a) Representations. Obligors represent and
warrant to Bank as follows:
(i) All drilling rigs and related
drilling equipment (collectively, the "Drilling Equipment") used by Obligors in
drilling operations on their own behalf or on behalf of their customers are
owned by the entities described on Schedule 2 attached hereto. Schedule 2 of
the Drilling Equipment and the states in which the Drilling Equipment is
located. None of the Drilling Equipment consists of, is located upon or will
be part of any vehicle for which a certificate of title is issued.
(ii) Such Drilling Equipment is free and
clear of all other liens and encumbrances.
(b) Covenants. Obligors agree as follows:
(i) Bank may at any reasonable time
inspect the Drilling Equipment.
(ii) The Drilling Equipment shall at all
times remain separately identifiable personal property and shall not become
affixed to any real property so as to become a fixture.
(iii) If requested by Bank in writing,
Obligors will attach to the Drilling Equipment in which Bank has a security
interest, a notice satisfactory to Bank, disclosing Bank's security interest in
such Drilling Equipment.
(iv) Obligors will not move any of the
Drilling Equipment in which Bank has a security interest, out of any of the
states in which such Drilling Equipment is currently located as described in
Schedule 2 attached hereto or any of the other states in which Bank has filed
UCC financing statements sufficient to perfect Bank's security interest, naming
the owner of such Drilling Equipment, as debtor, and describing such Drilling
Equipment as collateral, unless such Obligor gives the Bank at least ten (10)
Business Days prior written notice and, with such written notice, also provides
Bank with duly executed financing statements to perfect Bank's security
interest in such Drilling Equipment upon filing in such new state.
(v) Obligors will not permit any
certificates of title to exist or to be issued for any of the Drilling
Equipment, unless the Bank's security interest is duly noted thereon, the
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<PAGE> 8
certificate of title is delivered to Bank and Obligors take all other actions
which Bank deems necessary or advisable to protect and perfect Bank's security
interest in the Drilling Equipment.
15. FINANCIAL COVENANTS. Article 7 of the Loan Agreement
shall be and is hereby amended to read, in its entirety, as follows:
"7.1 Total Funded Debt to EBITDA. Obligors will
maintain a ratio of Total Funded Debt to EBITDA of not more than the following:
<TABLE>
<CAPTION>
Measured as of Required Maximum
-------------- ----------------
<S> <C> <C> <C> <C>
(a) 6/30/97 2.65 to 1.0
(b) 9/30/97 2.50 to 1.0
(c) 12/31/97 2.25 to 1.0
(d) 3/31/98 2.25 to 1.0
(e) 6/30/98 2.0 to 1.0
(f) 9/30/98 2.0 to 1.0
(g) 12/31/98 2.0 to 1.0
(h) 3/31/99 and as of the
end of each fiscal
quarter thereafter 1.50 to 1.0
</TABLE>
Compliance as of 6/30/97 shall be calculated based
upon Obligors' EBITDA for the fiscal quarter ending 6/30/97 multiplied by four
(4). Compliance as of 9/30/97 shall be calculated based upon Obligors' EBITDA
for the two (2) fiscal quarters ending 9/30/97 multiplied by two (2). After
9/30/97 compliance will be calculated on a rolling four quarter basis for the
12 month period then ended.
For purposes of this covenant, "EBITDA" for any
period means Net Income of Obligors for such period, plus Taxes paid by
Obligors in such period, plus Interest Expenses paid by Obligors in such
period, plus depreciation, depletion and amortization expenses of Obligors for
such period, all determined in accordance with GAAP. For purposes of this
covenant, "Total Funded Debt" means as of the date of determination, on a
consolidated basis for all Obligors, the sum of (i) all Indebtedness for
borrowed money of Obligors, plus (ii) the undrawn available amount of all
letters of credit issued for the account of any Obligor, plus (iii) the
capitalized portion (as defined by GAAP) of all Capitalized Lease Obligations
of Obligors, plus (iv) all indebtedness, obligations and liabilities of others
which any Obligor has directly or indirectly guarantied (excluding customary
indemnity obligations in connection with permitted business acquisitions) or
with respect to which any Obligor is otherwise directly or indirectly liable.
7.2 Debt Service Coverage Ratio. Obligors will
maintain a Debt Service Coverage Ratio of not less than 1.15 to 1.00 for the 12
month period ending June 30, 1997 and for each 12-month period ending as of the
end of each fiscal quarter thereafter.
7.3 Interest Coverage Ratio. Obligors will
maintain an Interest Coverage Ratio of not less than (a) 2.00 to 1.00 for the
12 month period ending June 30, 1997; and (b) 2.75 to 1.00 for the 12 month
period ending September 30, 1997 and for each 12 month period ending as of the
end of each fiscal quarter thereafter.
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<PAGE> 9
7.4 Capital Expenditures. Obligors will not
cause, suffer or permit Obligors' aggregate annual Capital Expenditures to
exceed Six Million Dollars ($6,000,000.00) in any fiscal year (not including
the expenditures related to the Southland Acquisition). Such permitted Capital
Expenditures are on a non-cumulative basis as to unused portions for any fiscal
year.
7.5 Changes to Financial Covenants. The Bank may
condition extension of the Line after the Contract Period upon revision of the
foregoing financial covenants as Bank in its sole discretion may require."
16. EVENTS OF DEFAULT. Subsections 12.1(c) and (s) of
the Loan Agreement are hereby amended and restated to read in their entirety as
follows:
"(c) The failure of any Obligor to pay any
Indebtedness for borrowed money in excess of Two Hundred Fifty Thousand Dollars
($250,000.00) due to any third Person (including without limitation the
Subordinated Term Loan) or the existence of any other event of default under
any loan, security agreement, mortgage or other agreement providing for loans
or credit extensions in excess of Two Hundred Fifty Thousand Dollars
($250,000.00) pertaining thereto binding an Obligor after the expiration of any
notice and/or grace periods permitted in such documents;"
(s) Any change in the stock ownership of any
Obligor (other than (i) a change in stock ownership of UTI, (ii) a change in
stock ownership of Universal permitted under Section 6.6 hereof, or (iii) other
than as permitted under Section 6.20), any issuance of stock, debentures,
warrants or other Equity Securities of any Obligor (other than (i) any issuance
of stock, debentures, warrants or other Equity Securities of UTI and (ii) other
than as permitted under Section 6.20) or any pledge of the stock of any Obligor
(other than UTI) to any person other than the Bank;"
17. BANK INDEBTEDNESS. Section 14.3 of the Loan
Agreement is amended and restated in its entirety to read as follows:
"14.3 "Bank Indebtedness" shall mean all
obligations and Indebtedness of any Obligor to Bank, whether now or hereafter
owing or existing, including, without limitation, all obligations under the
Loan Documents, all obligations to reimburse Bank for payments made by Bank
pursuant to any letter of credit issued for the account or benefit of any
Borrowers by Bank, all other obligations or undertakings now or hereafter made
by or for the benefit of any Obligor to or for the benefit of Bank under any
other agreement, promissory note or undertaking now existing or hereafter
entered into by any Obligor with Bank, including, without limitation, all
obligations of any Obligor to Bank under the Senior Secured Term Loan and any
documents executed in connection therewith, or under any guaranty or surety
agreement, including, without limitation, the Surety Agreement, and all
obligations of any Obligor to immediately pay to Bank the amount of any
overdraft on any deposit account maintained with Bank, together with all
interest and other sums payable in connection with any of the foregoing."
18. CROSS DEFAULT. Notwithstanding anything to the
contrary contained in the Loan Documents, the occurrence of an event of default
under (i) the New Loan Agreement or any other documents executed in connection
therewith, (ii) any of the Subordinated Debt Loan Documents, or (iii) the
Subordination Agreement shall constitute an Event of Default under the Line and
the other Loan Documents. Following the occurrence of such Event of Default,
Bank may, at Bank's option and without further notice to any Obligor, exercise
any and all rights available to Bank under any of the Loan Documents, at law,
in equity or otherwise.
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<PAGE> 10
19. CROSS COLLATERALIZATION. In addition to Obligors'
obligations to Bank under the Line and the other Loan Documents, Obligors agree
that the Collateral shall also secure Obligors' obligations to Bank under the
New Loan Agreement.
20. REPRESENTATIONS. Obligors hereby represent and
warrant to Bank as follows:
(a) Financial Statements. Obligors have
furnished to Bank the audited consolidated and consolidating financial
statements of Obligors certified without qualification by independent public
accountants for the fiscal year ending as of December 31, 1996 and all
management and comment letters from such accountants in connection therewith.
Such financial statements (together with the related notes and comments), are
materially correct and complete, fairly present the financial condition and the
assets and liabilities of Obligors at such date, and have been prepared in
accordance with GAAP in all material respects.
(b) No Material Adverse Change in Financial
Condition. There has been no material adverse change in the financial
condition of Obligors taken as a whole since December 31, 1996.
(c) Solvency. After giving effect to the
transactions contemplated by the Loan Documents, the Southland Acquisition
Agreement, the New Loan Agreement and the Subordinated Debt Loan Documents, (a)
the fair market value of the assets of each Obligor is in excess of the total
amount of its liabilities (including, without limitation, contingent
liabilities); (b) the present fair saleable value of the assets of each Obligor
is greater than its probable liability on its existing debts as such debts
become absolute and matured; (c) each Obligor is able and expects to be able to
pay its debts (including, without limitation, contingent debts and other
commitments) as they mature; and (d) each Obligor has capital sufficient to
carry on its business as conducted and as proposed to be conducted.
21. COVENANTS. Obligors will comply with the following:
(a) Subordinated Term Loan. Obligors will close
the financing contemplated under the Subordinated Debt Loan Documents and
utilize the funds thereunder for payment of the purchase price of the Southland
Acquisition. Obligors will not amend, modify or restate any of the provisions
of the Subordinated Term Loan or any of the Subordinated Debt Loan Documents,
in any way which in Bank's judgment would adversely affect the Bank
Indebtedness, the Collateral, the Subordination Agreement, any Obligor's
business, operations or financial condition, or any rights or remedies of Bank.
Without limitation, no modification shall be made which increases the interest
rate, fees or other sums payable in connection with the Subordinated Term Loan
or under the Subordinated Debt Loan Documents, shortens or accelerates the
maturity or due date of any payments under the Subordinated Term Loan, grants
any security interest to secure all or any part of the Subordinated Term Loan,
makes any financial covenant or ratio more restrictive, or results in any
situation in which a default could occur under the Subordinated Term Loan
without such event constituting an Event of Default hereunder.
The provisions in the Subordination Agreement
permitting the Subordinated Lender to enter into amendments or modifications of
the Subordinated Debt Loan Documents with respect to interest rate increases
and fees shall not be deemed to be a consent or agreement by Bank to any
increase in the interest rate of the Subordinated Term Loan or any new or
increased fees payable in connection with the Subordinated Term Loan. Such
amendments or modifications shall still require the consent by Bank. Obligors
will give Bank a copy of any proposed amendment, modification or restatement of
any Subordinated Debt Loan Document at least ten (10) days
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<PAGE> 11
prior to the execution thereof. Obligors will not enter into any such
amendment, modification or restatement, if Bank has notified Obligors that it
would be a violation of this Section 21(a).
No Obligor will, directly or indirectly, repurchase, redeem,
or defease prior to the date when due or otherwise make any prepayment prior to
the date when due, or effect any prepayment that is optional on the part of
such Obligor, on any of the Subordinated Term Loan or any other Indebtedness
for borrowed money, without the prior written consent of Bank, except that no
such consent is required for and UTI is permitted to effect (A) any transaction
in which UTI's capital stock is exchanged for Indebtedness owed by any of the
Obligors, including any cashless warrant exercise arrangements in which
warrants are exercised without cash payment by the Person so exercising, or
exchange of indebtedness owed by any of the Obligors for capital stock of UTI,
(B) prepayment permitted by Section 13 hereof, (C) mandatory prepayments
required under the terms of the Subordinated Debt Loan Documents) and (D)
prepayment of Indebtedness owed to Bank in accordance with Section 3.7 of the
Loan Agreement or otherwise required hereunder. Obligors will give Bank a copy
of each notice of default or other substantive notice received by any Obligor
from any Subordinated Lender, as soon as possible but no later than two (2)
Business Days after such Obligor's receipt. Obligors will also deliver to Bank
a copy of each compliance certificate or other report or certificate delivered
by any Obligor to any Subordinated Lender simultaneously with delivery to such
Subordinated Lender. Nothing contained in this Section 21(a) shall limit,
restrict, waive or adversely affect any of Bank's rights or remedies under the
Subordination Agreement.
Promptly upon becoming aware of the existence of any default
or event of default under the Subordinated Debt Loan Documents, Obligors will
give Bank written notice specifying the nature thereof and describing what
action the Obligors are taking a propose to take with respect thereto.
(b) Southland Acquisition. Obligors will not
amend or modify the Southland Acquisition Agreement or any documents collateral
thereto or waive any of their rights thereunder.
(c) Change of Control. Promptly and in any event
within ten (10) Business Days after the occurrence of any Change of Control,
the Obligors will give written notice of such transaction or event to Bank,
which notice shall state the date of such Change of Control, shall describe
such Change of Control in reasonable detail and shall contain an offer to
prepay the unpaid balance of the Line and the Senior Secured Term Loan, all
interest thereon and all sums due in connection therewith and to terminate this
Loan Agreement on the date specified therein (the "Change in Control Prepayment
Date"), which shall be a Business Day not less than one (1) Business Day prior
to the date upon which Obligors have offered to prepay the Subordinated Term
Loan as a result of such Change of Control pursuant to the terms of
Subordinated Debt Loan Documents. Bank shall have the option to require the
Obligors to prepay all or any part of the Line, the Senior Secured Term Loan
and all interest thereon and to terminate this Loan Agreement, and Obligors
hereby, jointly and severally, agree to make such prepayment and to terminate
this Loan Agreement. Such option may be exercised by Bank by written notice to
the Obligors given no later than ten (10) days prior to the Change in Control
Prepayment Date, specifying the amount to be prepaid. On the Change in Control
Prepayment Date, Obligors shall pay such amount to Bank and, if requested by
Bank, shall execute a termination for this Loan Agreement; provided that,
notwithstanding its exercise of the option herein provided, Bank may at any
time prior to the Change in Control Prepayment Date waive or revoke in whole or
in part by written notice to Obligors the exercise of its option hereunder.
22. RELEASE OF COLLATERAL. Bank hereby agrees that at
the sole cost and expense of Obligors, Bank will release its lien against each
Obligor's drilling rigs and related drilling equipment in
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<PAGE> 12
which Bank has a security interest, promptly upon satisfaction of all of the
following conditions: (a) the Senior Secured Term Loan has been repaid in full,
together with all interest thereon and all fees and other sums payable in
connection therewith, and (b) no Event of Default has occurred and is then
continuing. Bank also agrees that in the event that any Obligor obtains
purchase money financing permitted under Section 6.3 (c) of the Loan Agreement,
as amended, and the purchase money lender requires that there be no other lien
encumbering the financed asset, then Bank will release its lien on such
financed asset upon Obligors' request.
23. CONDITIONS. The obligation of Bank to enter into
this Amendment or to make any further advances under the Line is subject to the
following conditions (any of which may be waived by Bank):
(a) Loan Documents. Obligors and all other
required person and entities will have executed and delivered to Bank this
Amendment, the Amended and Restated Line Note, Amended and Restated Guaranty
and Suretyship Agreements from the Guarantors, Amended and Restated
Subordination Agreements from the Obligors and such other documents as Bank may
require.
(b) Representations and Warranties. All
representations and warranties of Obligors set forth in the Loan Documents, as
amended hereby, the New Loan Agreement, and the Subordinated Debt Loan
Documents are and will be true at and as of the date hereof, except for such
representations and warranties that are by their express terms limited to a
specific prior date.
(c) No Default. No condition or event shall
exist or have occurred which would constitute an Event of Default hereunder
under the New Loan Agreement or the Subordinated Debt Loan Documents (or would,
upon the giving of notice or the passage of time or both, constitute such an
Event of Default).
(d) Proceedings and Documents. All proceedings
taken by Obligors in connection with the transactions contemplated by this
Amendment and all documents incident to such transactions shall be satisfactory
in form and substance to Bank and Bank' s counsel, and Bank shall have received
all documents or other evidence which it reasonably may request in connection
with such proceedings and transactions.
(e) Subordinated Term Loan Closing. Closing
shall have been completed under the Subordinated Debt Loan Documents, Obligors
shall have received the $24,500,000 in proceeds thereunder and Obligors shall
have utilized such funds to complete closing of the Southland Acquisition.
Bank shall have received signed copies of all Subordinated Debt Loan Documents
and the signed Subordination Agreement all of which must be in form and content
acceptable to Bank in its sole discretion. The Subordinated Term Loan must be
unsecured and shall be subordinate to the Bank Indebtedness.
(f) Delivery of Other Documents. The following
documents shall have been delivered by or on behalf of Obligors to Bank, all of
which must be in form an content satisfactory to Bank:
(i) Authorization Documents. Evidence
of authorization of Obligors' execution, delivery and full performance of this
Amendment, the Loan Documents and all other documents and actions required
hereunder.
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<PAGE> 13
(ii) Southland Acquisition Agreement. A
copy of the fully executed Southland Acquisition Agreement and all exhibits and
schedules thereto, and all documents collateral thereto.
(iii) Appraisal. An appraisal of all
Drilling Equipment which appraisal shall be in form, content and amount
acceptable to the Bank.
(iv) Other Documents. Such other
documents as may be required to be submitted to Bank by the terms hereof or any
of the Loan Documents, or as the Bank in its discretion deems advisable.
(g) Senior Secured Term Loan. Bank shall have
received from Obligors the duly executed New Loan Agreement and all documents
collateral thereto, all of which must be in form and content satisfactory to
Bank and closing shall have been completed thereunder.
(h) Non-Waiver of Rights. By completing the
closing hereunder, or by making advances hereunder, Bank does not thereby waive
a breach of any warranty or representation made by any Obligor hereunder or any
agreement, document or instrument delivered to Bank or otherwise referred to
herein, and any claims and rights of Bank resulting from any breach or
misrepresentation by any Obligor are specifically reserved by Bank.
24. AMENDED SCHEDULES. Schedules 5.3, 5.4, 5.7, 5.14,
5.16, 5.18, 6.3, 6.4 and 6.9 to the Loan Agreement are hereby replaced with the
amended Schedules 5.3, 5.4, 5.7, 5.14, 5.16, 5.18, 6.3, 6.4 and 6.9 attached to
this Amendment.
25. CHALLENGE TO ENFORCEMENT. Obligors acknowledge and
agree that they do not have any defense, set-off, counterclaim or challenge
against the payment of any sums owing under the Loan Documents, or the
enforcement of any of the terms or conditions thereof.
26. CONFIRMATION OF COLLATERAL. Nothing contained herein
shall be deemed to be a compromise, satisfaction, accord and satisfaction,
novation or release of any of the Loan Documents, or any rights or obligations
thereunder, or a waiver by Bank of any of its rights under the Loan Documents
or at law or in equity. All liens, security interest, rights and remedies
granted to the Bank in the Loan Documents (as amended) are hereby ratified,
confirmed and continued.
27. GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS.
Obligors represent, warrant and covenant, as applicable, which representations,
warranties and covenants shall survive until all Bank Indebtedness and all
other obligations of Obligors to Bank are paid and satisfied in full, as
follows:
(a) All representations and warranties of
Obligors set forth in the Loan Documents, as amended hereby, except for such
representations and warranties that are by their express terms limited to a
specific prior date, are true and correct as of the date hereof and are hereby
confirmed and restated.
(b) No condition or event exists or has occurred
which would constitute an Event of Default under the Loan Documents (or would,
upon the giving of notice or the passage of time or both, constitute an event
of default).
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<PAGE> 14
(c) The execution and delivery of this Amendment
by Obligors and all documents and agreements to be executed and delivered
pursuant to the terms hereof;
(i) have been duly authorized by all
requisite corporate action of Obligors;
(ii) will not violate or result in the
breach of or constitute a default (upon the passage of time, delivery of notice
or both) under any applicable statute, law, rule, regulation or ordinance or
any indenture, mortgage, loan or other document or agreement to which any
Obligor is a party or by which any of them is bound or affected; or
(iii) will not result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the property or assets of any Obligor, except liens in favor of the Bank.
(d) Obligors ratify and confirm all of their
obligations under the Loan Documents, including without limitation all
obligations of the Guarantors under their respective surety agreements in favor
of Bank which the Guarantors agree shall continue to secure all of the
Borrowers' obligations under the Loan Documents, as modified hereby and all
Bank Indebtedness.
28. INCORPORATION BY REFERENCE. (a) All of the
representations, warranties, covenants and conditions set forth in the New Loan
Agreement are hereby incorporated into this Agreement by reference with the
same effect as if they were set forth in this Agreement in their entirety. Such
representations, warranties, covenants and conditions shall be terminated and
of no further force or effect upon repayment of the Term Loan in full and
termination of the New Loan Agreement. Such termination shall not affect any
representations, warranties, covenants or conditions set forth specifically
(rather than incorporated reference) in this Loan Agreement (as amended) or any
of the Loan Documents.
(b) All representations, warranties, covenants,
restrictions and conditions set forth in the Subordinated Debt Loan Documents
are hereby incorporated by reference with the same effect as if they were set
forth in this Agreement in their entirety, provided that such representations,
warranties, covenants and conditions shall terminate upon repayment in full of
the Subordinated Term Loan.
(c) Obligors and the Bank hereby acknowledge and
agree that they have received a report entitled Phase I and Environmental
Assessment covering real property in Victoria, Texas, (the "Report"), prepared
by Southern Ecology Management, Inc. and Miller Environmental Service, Inc.
(the "Consultants") pursuant to which the Consultants describe certain matters
that may affect the environmental remediation obligations of UTI and Triad
following the closing of the Southland Acquisition. The representations and
warranties of the Obligors with respect to compliance with environmental laws
set forth in this Amendment and in the New Loan Agreement in each of such
documents are hereby qualified by the terms and content of the Report. The
Obligors represent and warrant that compliance with the terms and
recommendations in the Report will not materially and adversely affect the
business, financial condition or results of operations of the Obligors taken as
a whole.
29. NEW DEFINITIONS. Capitalized terms not otherwise
defined herein or in the Loan Agreement shall have the following meanings:
(a) "CIT" means the CIT Group/Equipment
Financing, Inc.
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<PAGE> 15
(b) "Change of Control" shall mean the occurrence
of both of the following: (a) Remy Capital Partners III and its Affiliates as a
group (collectively, Remy") shall cease to be the largest beneficial owner of
the total voting power of all issued and outstanding shares of the capital
stock of UTI (or successor thereto) entitled to vote generally in the election
of directors; and (b) any Person or group (within the meaning of Rule 13d-5 as
in effect on the date hereof under the Securities Exchange Act of 1934, as
amended) shall be the beneficial owner, directly or indirectly, through a
purchase, merger, consolidation or other acquisition transaction of more than
35% of the total voting power of all issued and outstanding shares of the
capital stock of UTI (or successor thereto) entitled to vote generally in the
election of directors; provided, however, that a Person shall not be deemed to
have beneficial ownership of the shares of UTI solely by reason of one or more
of (i) the granting of a proxy or agreement to such Person to vote in a
particular manner in connection with a transaction of the type described in
clause (b), (ii) the granting of a revocable proxy to such Person in connection
with a matter to be considered by stockholders of UTI, (iii) that Person's
ownership of a right to purchase or acquire stock in connection with such
Person's purchase of stock of UTI from UTI or Remy, or (iv) by reason of the
ownership of an underwriter of shares of the capital stock of UTI in connection
with a public offering of such shares; provided, further, that, in the case of
subclauses (i), (ii) and (iii), no payment or consideration in the form of cash
or property shall have been received in connection with such grants or
purchases.
(c) "Lines of Business" means (a) the provision
of drilling or workover services, (b) the provision of other oilfield services
to Persons in the oil and gas industry, and (c) the manufacture, production,
distribution or sale of any products for use in the oil and gas industry.
(d) "New Loan Agreement" means the Loan and
Security Agreement between Obligors and Bank of even date pursuant to which the
Senior Secured Term Loan is being extended.
(e) "Note Purchase Agreement" means the Note
Purchase Agreement executed as part of the Subordinated Term Loan.
(f) "Senior Secured Term Loan" means the
$25,000,000 term loan being extended by Bank to Obligors pursuant to the New
Loan Agreement.
(g) "Southland" means Southland Drilling Company,
Ltd., a Texas limited partnership.
(h) "Southland Acquisition" means the acquisition
by Triad of substantially all of the assets of Southland in accordance with
the terms of the Southland Acquisition.
(i) Southland Acquisition Agreement" means the
Asset Purchase Agreement dated March 5, 1997 between UTI and Southland.
(j) "Subordinated Debt Loan Documents" means all
of the documents executed and delivered in connection with the Subordinated
Term Loan, including without limitation, the Note Purchase Agreement, the
Notes, the Subordination Agreement and the Warrant Agreement.
(k) "Subordinated Lenders" means collectively
Canpartners Investment IV, LLC and its permitted successors and assigns.
-15-
<PAGE> 16
(l) "Subordinated Term Loan" means the
subordinated term loan in the face amount of $25,000,000 to be extended by the
Subordinated Lenders to certain of the Obligors in accordance with the terms of
the Subordinated Debt Loan Documents, the terms of which must be acceptable to
Bank.
(m) "Subordination Agreement" means the
Subordination and Intercreditor Agreement among Obligors, the Subordinated
Lenders and Bank, in form and content acceptable to Bank.
30. ASSIGNMENT OR SALE BY BANK. Section 17.6 is hereby
amended and restated to read in its entirety as follows:
"17.6 Assignment or Sale by Bank. Bank may sell,
assign or participate all or a portion of its interest in the Loan Documents
and in connection therewith may make available to any prospective purchaser,
assignee or participant any information relative to any Obligor in its
possession, provided that there are at no time more than six (6) other
co-lenders or participants and provided further that, the amount of each
co-lender's or participant's interest in the commitments under the Line and the
original balance of their respective interests in the Senior Secured Term Loan
are not less than $5,000,000 in the aggregate at the time of assignment or
purchase."
31. INDEMNIFICATION. Obligors, jointly and severally
shall indemnify, defend and hold Bank, and its directors, agents, employees and
counsel, harmless from and against any and all losses, claims, damages,
liabilities, deficiencies, judgments, penalties, costs or expenses imposed on,
incurred by or asserted against any of them in connection with any litigation,
investigation, claim or proceeding commenced or threatened related to the
negotiation, preparation, execution, delivery, enforcement, performance or
administration of this Amendment, the Loan Agreement any other Loan Documents,
the New Loan Agreement, any documents executed in connection with the New Loan
Agreement or any undertaking or proceeding related to any of the transactions
contemplated hereby or any act, omission to act, event or transaction related
or attendant thereto, including, without limitation, anything related in any
way to any claim by CIT against Obligors or the Bank related to the
transactions contemplated hereunder or in connection with the CIT Loan
Documents, and including, without limitation, amounts paid in settlement, court
costs, and the fees and expenses of counsel except that Borrowers shall not be
required to indemnify, defend or hold harmless Bank from or against any such
loss, claim, damage, liability, deficiency, judgment, penalty or cost to the
extent that the undertaking to indemnify, pay and hold harmless set forth in
this section may be unenforceable because it violates any law or public policy,
or results from Bank's gross negligence or wilful misconduct. Borrowers shall
pay the maximum portion which it is permitted to pay under applicable law to
Bank in satisfaction of indemnified matters under this section. The foregoing
indemnity shall survive the payment of the Bank of the Bank Indebtedness and
the termination or non-renewal of this Agreement.
32. AMENDED, RESTATED AND CONSOLIDATED LOAN AGREEMENT.
Obligors agree that they will execute and deliver to Bank, an Amended,
Restarted and Consolidated Loan and Security Agreement, consistent with and
setting forth the terms of the Loan Agreement, as hereby amended and the New
Loan Agreement, together with such other collateral documents and agreements,
opinions of counsel and other related items as Bank may request within 60 days
after the date of this Amendment. Obligors agree upon request from Bank to
provide Bank with opinions of counsel in form and content acceptable to Bank
from reputable counsel licensed to practice in Ohio, Louisiana and such other
states in which any Drilling Rigs are located, confirming that the choice of
law provisions in the Loan Documents are enforceable in such states, describing
the requirements for perfection of the Bank's security interest in the Drilling
Rigs located in such states, and covering such other matters as Bank may
-16-
<PAGE> 17
reasonably require. Such opinions may be required by Bank after closing
hereunder, shall be obtained by Obligors at their cost and expense, shall be
addressed to Bank and shall be provided to Bank with reasonable promptness
after Bank's request.
33. NO WAIVER. Except as otherwise provided herein,
nothing contained and no actions taken by Bank in connection herewith shall
constitute nor shall they be deemed to be a waiver, release or amendment of or
to any rights, remedies, or privileges afforded to Bank under the Loan
Documents or under the Uniform Commercial Code. Nothing herein shall
constitute a waiver by Bank of Obligors' compliance with the terms of the Loan
Documents, nor shall anything contained herein constitute an agreement by Bank
to enter into any further amendments with Obligors.
34. INCONSISTENCIES. To the extent of any inconsistency
between the terms and conditions of this Amendment and the terms and conditions
of the other Loan Documents, the New Loan Agreement or the Subordinated Debt
Loan Documents, the terms and conditions of this Amendment shall prevail. All
terms and conditions of the Loan Documents not inconsistent herewith shall
remain in full force and effect and are hereby ratified and confirmed by
Obligors.
35. CONSTRUCTION. All references to the Loan Agreement
therein or in any other Loan Documents shall be deemed to be a reference to the
Loan Agreement as hereby amended.
36. BINDING EFFECT. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
37. GOVERNING LAW. This Amendment shall be governed and
construed in accordance with the laws of the Commonwealth of Pennsylvania,
without regard to any rules or principles regarding conflict of laws or any
canon of construction which interprets agreements against the draftsman.
38. SUCCESSORS AND ASSIGNS. This Amendment and all
rights and powers granted hereby will bind and inure to the benefit of the
parties hereto and their respective successors and assigns.
39. HEADINGS. The headings of the sections of this
Amendment are inserted for shall not be deemed to constitute a part of this
Amendment.
40. LIMITATIONS AFTER DEFAULT. To the extent that any of
the covenants set forth in the Loan Agreement (as amended) permit exceptions
for any general prohibitions or requirements, such exceptions are permitted
only provided that (a) no Event of Default has occurred and is continuing, and
(b) any action taken by any Obligor which would have constituted a permitted
exception would not cause or result in an Event of Default.
41. WAIVER OF RIGHT TO TRIAL BY JURY. OBLIGORS AND BANK
WAIVE ANY RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (a) ARISING UNDER ANY OF THE LOAN DOCUMENTS, INCLUDING THIS AMENDMENT OR
(b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF
OBLIGORS OR BANK WITH RESPECT TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE, OBLIGORS AND BANK AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT ANY PARTY TO THIS AMENDMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH
-17-
<PAGE> 18
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF OBLIGORS AND BANK TO THE WAIVER
OF THEIR RIGHT TO TRIAL BY JURY. OBLIGORS ACKNOWLEDGE THAT THEY HAVE HAD THE
OPPORTUNITY TO CONSULT WITH COUNSEL REGARDING THIS SECTION, THAT THEY FULLY
UNDERSTAND ITS TERMS, CONTENT AND EFFECT, AND THAT THEY VOLUNTARILY AND
KNOWINGLY AGREE TO THE TERMS OF THIS SECTION.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
INTERNATIONAL PETROLEUM SERVICE
COMPANY
By: /s/ P. BLAKE DUPUIS
-------------------------------------------
P. Blake Dupuis, Vice President
[Corporate Seal]
TRIAD DRILLING COMPANY
By: /s/ P. BLAKE DUPUIS
-------------------------------------------
P. Blake Dupuis, Vice President
[Corporate Seal]
UNIVERSAL WELL SERVICES, INC.
By: /s/ P. BLAKE DUPUIS
-------------------------------------------
P. Blake Dupuis, Vice President
[Corporate Seal]
[SIGNATURES CONTINUED ON NEXT PAGE]
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<PAGE> 19
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
USC, INCORPORATED, formerly known as
UNION SUPPLY COMPANY
By: /s/ P. BLAKE DUPUIS
-------------------------------------------
P. Blake Dupuis, Vice President
[Corporate Seal]
UTI ENERGY CORP.
By: /s/ P. BLAKE DUPUIS
-------------------------------------------
P. Blake Dupuis, Vice President
[Corporate Seal]
UTICO, INC.
By: /s/ P. BLAKE DUPUIS
-------------------------------------------
P. Blake Dupuis, Vice President
[Corporate Seal]
FWA DRILLING COMPANY, INC.
By: /s/ P. BLAKE DUPUIS
-------------------------------------------
P. Blake Dupuis, Vice President
[Corporate Seal]
[SIGNATURES CONTINUED ON NEXT PAGE]
-19-
<PAGE> 20
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
PANTHER DRILLING, INC., formerly known
as VIERSEN & COCHRAN DRILLING
COMPANY
By: /s/ P. BLAKE DUPUIS
-------------------------------------------
P. Blake Dupuis, Vice President
[Corporate Seal]
MELLON BANK, N.A.
By: /s/ ANTHONY R. CARINGI
-------------------------------------------
Anthony R. Caringi, Asst. Vice President
[Corporate Seal]
-20-
<PAGE> 1
EXHIBIT 10.5
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED EXCEPT IN ACCORDANCE THEREWITH.
THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFER CONTAINED IN THE
NOTE PURCHASE AGREEMENT DATED AS OF APRIL 11, 1997, AMONG THE ISSUERS
OF THIS SECURITY, CERTAIN OF THEIR AFFILIATES AND THE INITIAL PURCHASER
NAMED THEREIN, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE
OFFICES OF UTI ENERGY CORP., AS REGISTRAR, AND WHICH RESTRICTIONS
REQUIRE, AS A CONDITION TO ANY TRANSFER, APPROPRIATE DOCUMENTATION TO
EVIDENCE COMPLIANCE WITH APPLICABLE SECURITIES LAWS, INCLUDING AN
OPINION OF COUNSEL WITH RESPECT THERETO.
NO REGISTRATION OF TRANSFER OF THIS SECURITY WILL BE EFFECTED ON THE
BOOKS OF THE REGISTRAR UNLESS AND UNTIL SUCH RESTRICTIONS ARE COMPLIED
WITH.
FWA DRILLING COMPANY, INC.,
INTERNATIONAL PETROLEUM SERVICE COMPANY,
TRIAD DRILLING COMPANY,
UNIVERSAL WELL SERVICES, INC.,
USC, INCORPORATED
AND
PANTHER DRILLING, INC.
12% SENIOR SUBORDINATED NOTE DUE APRIL 10, 2001
No. 1 $25,000,000.00 April 11, 1997
FOR VALUE RECEIVED, the undersigned, FWA DRILLING COMPANY, INC., a
Delaware corporation, INTERNATIONAL PETROLEUM SERVICE COMPANY, a Pennsylvania
corporation, TRIAD DRILLING COMPANY, a Delaware corporation, UNIVERSAL WELL
SERVICES, INC., a Delaware corporation, USC, INCORPORATED, a Delaware
corporation, and PANTHER DRILLING, INC. (formerly known as Viersen & Cochran
Drilling Company), an Oklahoma corporation (each an "ISSUER" and, collectively,
the "ISSUERS"), hereby jointly and severally promise to pay to CANPARTNERS
INVESTMENTS IV, LLC, a California limited liability company, or registered
assigns, the principal sum of TWENTY--FIVE MILLION AND NO/100 DOLLARS on April
20, 2001, with interest (computed on the basis of a 360-day of twelve 30-day
<PAGE> 2
months) (a) on the unpaid balance thereof at the rate of 12% per annum from the
date hereof, payable quarterly, on the 15th day of January, April, July and
October of each year, commencing with July 15, 1997, until the principal hereof
shall have become due and payable, and (b) to the extent permitted by law on any
overdue payment (including any overdue prepayment) of principal and any overdue
payment of interest (as defined in the Note Purchase Agreement referred to
below), payable quarterly as aforesaid (or, at the option of the registered
Holder hereof, on demand), at a rate per annum from time to time equal to the
Default Rate.
Payments of principal of and interest on with respect to this Note are
to be made in lawful money of the United States of America by the method and to
the address or account specified with respect to the holder hereof pursuant to
Section 2.05 of the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Subordinated Notes (herein
called the "NOTES") issued pursuant to a Note Purchase Agreement dated as of
April 11, 1997 (as the same may be amended, supplemented or otherwise modified
from time to time, the "NOTE PURCHASE AGREEMENT"; capitalized terms used herein
and not otherwise defined herein have the meanings set forth in the Note
Purchase Agreement), among the Issuers, certain affiliates of the Issuers, in
their capacity as guarantors of the Notes, and the Purchaser named therein and
is entitled to the benefits thereof. Each Holder of this Note will be deemed, by
its acceptance hereof, (i) to have agreed to the confidentiality provisions set
forth in Section 9.06 of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 5.02 of the Note Purchase Agreement.
Each Issuer hereby acknowledges and makes this Note a registered
obligation for United States withholding tax purposes. The Company, on behalf of
the Issuers, shall be the registrar for this Note (the "REGISTRAR") with full
power of substitution. In the event the Registrar becomes unable or unwilling to
act as registrar under this Agreement, the Company shall reasonably designate a
successor Registrar. Each Holder who is a foreign person, by its acceptance of
this Note, hereby agrees to provide the Company, for the benefit of the Issuers,
with a completed Internal Service Form W-8 (Certificate of Foreign Status) or a
substantially similar form for such Holder, participants or other affiliates who
are holders of beneficial interests in this Note. Notwithstanding any contrary
provision contained in this Note or any of the other Note Documents, neither
this Note nor any interests therein may be sold, transferred, hypothecated,
participated or assigned to any Person except upon satisfaction of the
conditions specified in this paragraph. Each Holder, by its acceptance of its
Note(s), agrees to be bound by the provisions of this paragraph and to indemnify
and hold harmless the Registrar against any and all loss or liability arising
from the disposition by such Holder of this Note or any interest therein in
violation of this paragraph. The Registrar shall keep at its principal executive
office (or an office or agency designated by it by notice to the last registered
Holder) a ledger, in which, subject to such reasonable regulations as it may
prescribe, but at its expense (except as specified below), it shall provide for
-2-
<PAGE> 3
the registration and transfer of this Note. No sale, transfer, hypothecation,
participation or assignment of this Note or any interest herein shall be
effective for any purpose until it shall be registered on the books of the
Registrar to be maintained for such purpose. The Registrar shall record the
transfer of this Note on the books maintained for this purpose upon receipt by
the Registrar at the office or agency designated by the Registrar of (a) a
written assignment of this Note (or the applicable interest therein), (b) funds
sufficient to pay any transfer taxes payable upon the making of such transfer as
well as the cost of reviewing the documents presented to the Registrar, and (c)
such evidence of due execution as the Registrar shall reasonably require. The
Registrar shall record the transfer of this Note on the books maintained for
such purpose at the cost and expense of the assignee.
This Note is subject to prepayment, in whole or from time to time in
part, at the times and on the terms specified in the Note Purchase Agreement,
but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price and with the effect
provided in the Note Purchase Agreement.
This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of Texas
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
The Holder of this Note, by its acceptance hereof, acknowledges that
this Note is subject to the terms of the Subordination Agreement, as defined in
the Note Purchase Agreement, which contains certain subordination provisions and
is incorporated herein by reference. Notwithstanding any contrary statement
contained in the Note Purchase Agreement or in this Note (other than the
provisions of Section 2.10 of the Note Purchase Agreement), no payment on
account of the principal of, premium, if any, or interest on this Note shall
become due or to be paid except in accordance with the terms of the
Subordination Agreement.
Notwithstanding anything to the contrary contained elsewhere in this
Note or in any other Note Document, the Issuers and the Holder of this Note
hereby agree that all agreements among them under this Note and the other Note
Documents, whether now existing or hereafter arising and whether written or
oral, are expressly limited so that in no contingency or event whatsoever shall
the amount paid, or agreed to be paid, to such Holder for the use, forbearance,
or detention of the money loaned to the Issuers and evidenced hereby or thereby
or for the performance or payment of any covenant or obligation contained herein
or therein, exceed the Highest Lawful Rate. If due to any circumstance
whatsoever, fulfillment of any provisions of this Note or any of the other Note
Documents at the time performance of such provision shall be due shall exceed
the Highest Lawful Rate, then, automatically, the obligation to be fulfilled
shall be modified or reduced to the extent necessary to limit such interest to
the Highest Lawful Rate, and if from any such circumstance the Holder should
-3-
<PAGE> 4
ever receive anything of value deemed interest by applicable law which would
exceed the Highest Lawful Rate, such excessive interest shall be applied to the
reduction of the principal amount then outstanding hereunder or on account of
any other than outstanding Obligations and not to the payment of interest, or if
such excessive interest exceeds the principal unpaid balance then outstanding
hereunder and such other then outstanding Obligations, such excess shall be
refunded to the Issuers. All sums paid or agreed to be paid to such Holder for
the use, forbearance, or detention of the Obligations and other Indebtedness of
the Issuers to the Holders, to the extent permitted by applicable law, shall be
amortized, prorated, allocated or spread throughout the entire term of such
Indebtedness. For purpose of this paragraph, "HIGHEST LAWFUL RATE" means, at any
given time during which any Obligations shall be outstanding hereunder, the
maximum nonusurious interest rate that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Obligations, under
the laws of the State of Texas (or the law of any other jurisdiction whose laws
may be mandatorily applicable notwithstanding other provisions of this Note and
the other Note Documents), or under applicable federal laws which may presently
or hereafter be in effect and which allow a higher maximum nonusurious interest
rate than under the laws of the State of Texas (or such other jurisdiction's
law), in any case after taking into account, to the extent permitted by
applicable law, any and all relevant payments or charges under this Note and any
other Note Documents executed in connection herewith, and any available
exemptions, exceptions and exclusions. The terms and provisions of this
paragraph shall control every other provision of this Note and all agreements
among the Obligators and such Holder.
IN WITNESS WHEREOF, the Issuers have executed this Note on the date
first written above.
FWA DRILLING COMPANY, INC.
By: /s/ Vaughn E. Drum
-------------------------
Name: Vaughn E. Drum
Title: President and CEO
INTERNATIONAL PETROLEUM
SERVICE COMPANY
By: /s/ Vaughn E. Drum
-------------------------
Name: Vaughn E. Drum
Title: President and CEO
-4-
<PAGE> 5
TRIAD DRILLING COMPANY
By: /s/ Vaughn E. Drum
-------------------------
Name: Vaughn E. Drum
Title: President and CEO
UNIVERSAL WELL SERVICES, INC.
By: /s/ Vaughn E. Drum
-------------------------
Name: Vaughn E. Drum
Title: President and CEO
USC, INCORPORATED
By: /s/ Vaughn E. Drum
-------------------------
Name: Vaughn E. Drum
Title: President and CEO
PANTHER DRILLING, INC. (formerly
known as Viersen & Cochran Drilling
Company)
By: /s/ Vaughn E. Drum
-------------------------
Name: Vaughn E. Drum
Title: President and CEO
-5-
<PAGE> 1
EXHIBIT 10.6
EXECUTION COPY
- --------------------------------------------------------------------------------
WARRANT AGREEMENT OF
UTI ENERGY CORP.
400,000 SHARES
Dated as of April 11, 1997
- --------------------------------------------------------------------------------
COMMON STOCK PURCHASE WARRANTS
<PAGE> 2
WARRANT AGREEMENT dated as of April 11, 1997, between UTI Energy
Corp., a Delaware corporation (the "Company") and those persons signatory
hereto (collectively, the "Warrant Holders" or "Holders").
The Company proposes to issue Common Stock Purchase Warrants as
hereinafter described (collectively the "Warrants") to purchase an aggregate of
up to 400,000 shares of its Common Stock, $0.001 par value per share (the
shares of Common Stock issuable on exercise of the Warrants being referred to
herein as the "Warrant Shares"), in favor of the Warrant Holder. Capitalized
terms used herein, if not otherwise defined, are defined in Section 8 hereof.
The Company and the Warrant Holder hereby agree as follows:
SECTION 1. TRANSFERABILITY; NOTICE OF CORPORATE
ACTIONS; FORM OF THE WARRANTS.
1.1 REGISTRATION. The Warrants shall be numbered and
shall be registered on the books of the Company maintained at the principal
executive offices of the Company ("the Warrant Register"). The Company shall
be entitled to treat the Holder of the Warrants, as reflected in the Warrant
Register, as the owner in fact thereof for all purposes and shall not be bound
to recognize any equitable or other claim to or interest in such Warrants on
the part of any other Person.
1.2 TRANSFERABILITY. The Warrants are freely
transferable, subject to applicable federal and state securities laws and
similar laws and restrictions. The Holder of any Warrants so transferred shall
continue to be bound by this Agreement. However, the denomination of any
Warrant hereunder shall be a Warrant exchangeable for a minimum of 1,000
Warrant Shares and shall be in increments of 1,000 Warrant Shares.
1.3 TRANSFER--GENERAL. Subject to the terms hereof, the
Warrants shall be transferable on the Warrant Register upon delivery thereof to
the Company duly endorsed by the Holder or by his duly authorized attorney or
representative, or accompanied by proper evidence of succession, assignment or
authority to transfer. In all cases of transfer by an attorney, the original
power of attorney, duly approved, or a copy thereof, duly certified, shall be
deposited and remain with the Company. In case of transfer by executors,
administrators, guardians or other legal representatives, duly authenticated
evidence of their authority shall be produced, and may be required to be
deposited and to remain with the Company in its discretion. Upon any
registration of transfer, the Company shall countersign and deliver new
Warrants to the Persons entitled thereto. The Company may require the payment
of a sum sufficient to cover any tax or governmental charge that may be imposed
in connection with any such transfer.
1.4 NOTICES OF CORPORATE ACTIONS. Nothing contained in
this Warrant Agreement shall be construed as conferring upon the Holder of
Warrants, (as opposed to the holder of Warrant Shares), the right to vote or to
receive dividends or other distributions or to consent to or receive notice as
a stockholder in respect of any meeting of stockholders for the election of
directors or any other matter, or any rights whatsoever as a stockholder of the
1
<PAGE> 3
Company. However, in the event of: (a) any taking by the Company of a record
of the holders of the Common Stock for the purpose of determining the holders
thereof who are entitled to receive any extraordinary dividend or distribution,
or any right to subscribe for, purchase or otherwise acquire any shares of
capital stock of any class or any other securities or (b) any voluntary or
involuntary dissolution, liquidation or winding-up of the Company, the Company
shall mail to each Warrant Holder in accordance with the provisions of Section
13 hereof a notice specifying (i) the date or expected date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
and the amount and character of such dividend, distribution or right and (ii)
the date or expected date on which any such dissolution, liquidation or
winding-up is to take place, the time, if any such time is to be fixed, as of
which the holders of record of Common Stock shall be entitled to exchange their
shares of Common Stock for the securities or Other Property deliverable upon
such dissolution, liquidation or winding-up and a description in reasonable
detail of the transaction. Such notice shall be mailed to the extent
practicable at least ten (10) days (and at least thirty (30) days if the
transfer books for the Warrant Shares or other class of stock purchasable upon
the exercise of the Warrants shall be closed on the date that notice is given),
but not more than ninety (90) days prior to the date therein specified. In the
event that the Company at any time sends any notice to the holders of its
Common Stock, it shall concurrently send a copy of such notice to each Warrant
Holder.
1.5 FORM OF THE WARRANTS. The text of the Warrants and
of the form of election to purchase Warrant Shares (the "Purchase Form") shall
be substantially as set forth respectively in Exhibits A and B attached hereto.
The price per Warrant Share (the "Warrant Price") and the number of Warrant
Shares issuable upon exercise of each Warrant are subject to adjustment upon
the occurrence of certain events, all as hereinafter provided. The Warrants
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, President or one of its Vice Presidents, under its
corporate seal reproduced thereon, and attested by its Secretary or an
Assistant Secretary.
The Warrants shall be dated as of the date of
countersignature thereof by the Company either upon initial issuance or upon
transfer.
1.6 RESTRICTIVE LEGEND. Except as otherwise provided in
this Section 1.6, each Warrant and each certificate for Warrants or Warrant
Shares and each certificate for Warrant Shares issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted
with a legend in substantially the following form:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR ANY STATE SECURITIES LAW. NO TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE SHALL BE VALID OR EFFECTIVE UNLESS (A)
SUCH TRANSFER IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR (B) THE HOLDER OF THE SECURITIES PROPOSED TO BE
TRANSFERRED SHALL HAVE DELIVERED TO THE COMPANY AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT SUCH PROPOSED
TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND
THAT THE EXERCISE OF THE WARRANTS AND PURCHASE OF THE WARRANT SHARES
WILL BE EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH
HOLDER(S) SHALL HAVE DELIVERED TO THE COMPANY A CERTIFICATE SETTING
FORTH THE BASIS FOR APPLYING SUCH RULE TO THE PROPOSED TRANSFER.
1.7 TERMINATION OF SECURITIES LAWS RESTRICTIONS. The
legend requirements of Section 1.6 shall terminate as to any particular Warrant
or Warrant Shares when the Company shall have received from the Holder thereof
an opinion of counsel reasonably acceptable to the Company to the effect that
such legend is not required in order to ensure compliance with the Securities
Act. Whenever the restrictions imposed by this Agreement shall terminate as to
the Warrants, as hereinabove provided, the Holder hereof shall be entitled to
receive from the Company, at the expense of the Company, a new Warrant or
Warrant Shares bearing no legends.
SECTION 2. TERM OF THE WARRANTS; EXERCISE OF THE WARRANTS;
WARRANT PRICE, ETC.
2.1 TERM OF THE WARRANTS. Subject to the terms of this
Agreement, the Holder shall have the right, which may be exercised from time to
time, from and through the dates set forth in the Warrants, to purchase from
the Company the number of fully paid and nonassessable Warrant Shares which the
Holder may at the time be entitled to purchase on exercise of such Warrant. If
the last day for the exercise of the Warrants shall not be a Business Day, then
the Warrant may be exercised on the next succeeding Business Day.
2.2 VESTING OF THE WARRANTS. The Warrants shall
immediately vest and may be exercised on or after the date hereof in accordance
with the terms of this Agreement and the Warrant Certificate.
2.3 CALL PROVISIONS. In the event that after the date
that is six months and one Business Day from the date of issuance of the
Warrants, (i) the Daily Market Price (as included in the definition of Current
Market Price below) of the Company's Common
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Stock shall equal or exceed $45.00 per Share for twenty consecutive Business
Days immediately prior to the commencement of the Notice Period (as defined
below) and (ii) a currently effective Registration Statement is available (and
no request for a reduction in the amount of shares able to be sold in an
underwritten offering has limited the ability of the Holders to sell Warrant
Shares pursuant to such Registration Statement) for all of the Warrant Shares
during the entire Notice Period and the Company is not otherwise in default of
its obligations hereunder or under the Registration Rights Agreement and (iii)
all of the Warrant Shares may be transferred in a public sale pursuant to a
currently effective registration statement filed under the Securities Act or in
a transaction exempt from the registration and prospectus delivery requirements
of the Securities Act under Section 4(1) and pursuant to Sections 1.2 and 1.3
hereof and (iv) there has been a bona fide offer by the Company to purchase all
of the Notes at 100% or more of their face amount (plus accrued interest) and
(v) the transfer books for the Warrant Shares or other class of stock
purchasable upon the exercise of such Warrants are open on all Business Days,
then the Company shall have the right, for a purchase price of $0.25 per
Warrant, to call the Warrants at the completion of the Notice Period. The
Warrants shall remain subject to prior exercise by the Holders during the
Notice Period, but not thereafter. If a failure of the conditions contained in
subsection (ii), (iii) or (v) shall occur at any time during the Notice Period,
then the Notice Period during which such failure occured shall terminate
immediately and the conditions contained in subsections (i) through (v) shall
again be required to be satisfied and a new Notice Period shall be required to
elapse before the Company shall have the right to call the Warrants at the
completion of such new Notice Period.
2.4 EXERCISE OF THE WARRANTS. The Warrants may be
exercised upon surrender to the Company, at its principal office, of the
original certificate evidencing the Warrant to be exercised, together with the
Purchase Form, in the form of Exhibit B hereto, on the reverse thereof duly
filled in and signed, and upon payment to the Company, of the Warrant Price (as
defined in and determined in accordance with the provisions of Sections 2 and 6
hereof), for the number of Warrant Shares in respect of which such Warrant is
then exercised. Upon partial exercise, a Warrant Certificate for the
unexercised portion shall be delivered to the Holder. Payment of the aggregate
Warrant Price shall be payable (i) in cash, (ii) by certified or official bank
check or wire transfer or (iii) by delivery to the Company of the Company's 12%
Senior Subordinated Notes due 2001 (the "Notes") which shall be valued for this
purpose at the principal amount thereof so delivered plus the accrued and
unpaid interest thereon.
Subject to Section 3 hereof, upon such surrender of
the Warrants and payment of the Warrant Price as aforesaid, the Company shall
issue and cause to be delivered with all reasonable dispatch to or upon the
written order of the Holder and in such name or names as the Holder may
designate, a certificate or certificates for the number of full Warrant Shares
so purchased upon the exercise of such Warrant, together with cash, as provided
in Section 9 hereof, in respect of any fractional Warrant Shares otherwise
issuable upon such surrender. Such certificate or certificates shall be deemed
to have been issued and any Person so designated to be named therein shall be
deemed to have become a holder of record of such Warrant Shares as of the date
of the surrender of such Warrant and payment of the Warrant Price, as
aforesaid; provided, however, that if, at the date of surrender of such Warrant
and payment of such Warrant Price, the transfer books for the Warrant Shares
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or other class of stock purchasable upon the exercise of such Warrant shall be
closed, the certificates for the Warrant Shares in respect of which such
Warrant are then exercised shall be issuable as of the date on which such books
shall next be opened (whether before or after the Expiration Date or the Notice
Period) and until such date the Company shall be under no duty to deliver any
certificate for such Warrant Shares; provided, further, that the transfer books
of record, unless otherwise required by law, shall not be closed at any one
time for a period longer than 20 calendar days and shall not be closed if a
notice pursuant to Section 1.4 has been sent to the Holders.
2.5 WARRANT PRICE. The price per share at which Warrant
Shares shall be purchasable upon exercise of the Warrant (the "Warrant Price")
shall be $32.50, subject to adjustment pursuant to Section 6 hereof.
SECTION 3. PAYMENT OF TAXES AND INDEMNIFICATION.
3.1 PAYMENT OF TAXES. The Company will pay all
documentary stamp taxes, if any, attributable to the issuance of Warrants and
Warrant Shares upon the exercise of the Warrants.
3.2 INDEMNIFICATION. Warrant Holder hereby agrees to
indemnify and hold the Company harmless from any and all taxes on the Warrant
Holder that may result from the issuance of the Warrants or any subsequent
exercise of the Warrants and issuance of the Warrant Shares.
SECTION 4. MUTILATED OR MISSING WARRANTS. In case the Warrants
shall be mutilated, lost, stolen or destroyed, the Company shall issue and
deliver in exchange and substitution for and upon cancellation of the mutilated
Warrants, or in lieu of and substitution for the Warrants lost, stolen or
destroyed, a new certificate of like tenor and representing an equivalent
right or interest; but only upon receipt of evidence reasonably satisfactory to
the Company of such loss, theft or destruction of such Warrant certificate and
indemnity or bond, if requested, also reasonably satisfactory to it. An
applicant for such substitute Warrant certificate shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Company may prescribe.
SECTION 5. RESERVATION OF WARRANT SHARES.
5.1 RESERVATION OF WARRANT SHARES. There have been
reserved, and the Company shall at all times keep reserved, out of its
authorized shares of Common Stock, a number of shares of Common Stock
sufficient to provide for the exercise of the rights of purchase represented by
the outstanding Warrants. The Company covenants that all Warrant Shares which
may be issued upon exercise of Warrants will, upon issue, be fully paid,
nonassessable, free of preemptive rights and free from all taxes, liens,
charges and security interests with respect to the issue thereof. The Warrants
surrendered in the exercise of the rights thereby evidenced shall be canceled
by the Company.
5.2 CANCELLATION OF THE WARRANTS. In the event the
Company shall purchase or otherwise acquire the Warrants, the same shall be
canceled and retired.
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SECTION 6. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF WARRANT
SHARES. The number and kind of securities purchasable upon the exercise of the
Warrants and the Warrant Price shall be subject to adjustment from time to time
upon the happening of certain events, as hereinafter defined.
6.1 STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at
any time the Company shall:
(i) pay a dividend in, or make a distribution of, addi
tional shares of Common Stock to the holders of all the Common Stock
Outstanding,
(ii) subdivide its shares of Common Stock Outstanding into
a larger number of shares of such Common Stock, or
(iii) combine its shares of Common Stock Outstanding into
a smaller number of shares of such Common Stock,
then the Exercise Price shall be adjusted to equal the product of the Exercise
Price in effect immediately prior to such event multiplied by a fraction the
numerator of which is equal to the number of shares of Common Stock Outstanding
immediately prior to the adjustment and the denominator of which is equal to
the number of shares of Common Stock Outstanding immediately after such
adjustment.
6.2. RIGHTS OFFERINGS OF COMMON STOCK. (a) In case the
Company shall issue rights, options or warrants to all holders of its Common
Stock entitling them to subscribe for or purchase shares of Common Stock at a
price per share less than the Current Market Price per share (determined as
provided below) of the Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights, options or warrants, the Exercise
Price in effect at the opening of business on the day following the date fixed
for such determination shall be decreased by multiplying such Exercise Price by
a fraction of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination
plus the number of shares of Common Stock which the aggregate of the offering
price of the total number of shares of Common Stock so offered for subscription
or purchase would purchase at such Current Market Price and the denominator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares of
Common Stock so offered for subscription or purchase, such decrease to become
effective immediately after the opening of business on the day following the
date fixed for such determination. To the extent that shares of Common Stock
are not delivered after the expiration of such rights, options or warrants, the
Exercise Price shall be readjusted (but only with regard to the Warrants
exercised after such expiration) to the Exercise Price that would be in effect
had the adjustment made upon the issuance of such rights, options or warrants
been made upon the basis of delivery of only the number of shares of Common
Stock actually issued. For the purposes of this provision, the number of
shares of Common Stock at any time outstanding shall not include shares held in
the treasury of the Company but shall include shares issuable in respect of
script certificates issued in lieu of fractions of shares of Common Stock. The
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Company will not issue any rights, options or warrants in respect of shares of
Common Stock held in the treasury of the Company. The foregoing provisions of
this Section 6.2 shall not apply to any rights issued to holders of the
Company's Common Stock that are not currently exercisable and shall not apply
until such time that such rights become exercisable.
(b) The provisions of this Section 6.2 shall not apply to any
issuance of Common Stock for which an adjustment is provided for under Section
6.1.
6.3. OTHER DISTRIBUTIONS. In case the Company shall, by
dividend or otherwise, distribute to all holders of its Common Stock evidences
of its indebtedness, shares of any class of capital stock, or other property
(including securities, but excluding (i) any rights, options or warrants
referred to in Section 6.2, (ii) any dividend or distribution paid exclusively
in cash, (iii) any dividend or distribution referred to in Section 6.1, and
(iv) any merger or consolidation or other transactions to which Section 6.5
applies), the Exercise Price shall be reduced by multiplying the Exercise Price
in effect immediately prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution by a
fraction of which the numerator shall be the Current Market Price per share of
the Common Stock on the date fixed for such determination (the "Reference
Date") less the then fair market value (as determined in good faith by the
Board of Directors whose determination shall be conclusive absent manifest
error) on the Reference Date of the portion assets, shares or evidences of
indebtedness of the Company so distributed applicable to one share of Common
Stock and the denominator shall be the Current Market Price per share of the
Common Stock on the Reference Date, such adjustment to become effective
immediately prior to the opening of business on the day following the Reference
Date; provided however, that if such dividend or distribution is ultimately not
paid, the Exercise Price shall be retroactively readjusted as provided in
Section 6.4
6.4. ADJUSTMENT OF NUMBER OF SHARES PURCHASABLE. Upon any
adjustment of the Exercise Price as provided in Section 6 hereof, the Warrant
Holder shall thereafter be entitled to purchase upon the exercise of the
Warrants, at the Exercise Price resulting from such adjustment, the number of
shares of Common Stock (calculated to the nearest 1/100th of a share) obtained
by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of shares of Common Stock issuable on the exercise
hereof immediately prior to such adjustment and dividing the product thereof by
the Exercise Price resulting from such adjustment.
6.5. REORGANIZATION, RECLASSIFICATION, MERGER,
CONSOLIDATION OR DISPOSITION OF ASSETS In case the Company shall reorganize
its capital, reclassify its capital stock, consolidate or merge with or into
another corporation (where the Company is not the surviving corporation or
where there is any change whatsoever in, or distribution with respect to, the
Outstanding Common Stock of the Company), or sell, transfer or otherwise
dispose of all or substantially all of its property, assets or business to
another corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, (i) shares of
common stock of the successor or acquiring corporation or of the Company (if it
is the surviving corporation) or (ii) any cash, shares of stock
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or other securities or property of any nature whatsoever (including warrants or
other subscription or purchase rights) in addition to or in lieu of common
stock of the successor or acquiring corporation ("Other Property") are to be
received by or distributed to the holders of Common Stock of the Company who
are holders immediately prior to such transaction, then the Warrant Holder
shall have the right thereafter to receive, upon exercise of the Warrants, the
number of shares of common stock of the successor or acquiring corporation or
of the Company, if it is the surviving corporation, and Other Property
receivable upon or as a result of such reorganization, reclassification,
merger, consolidation or disposition of assets by a holder of the number of
shares of Common Stock for which the Warrants are exercisable immediately prior
to such event. In such event, the aggregate Exercise Price otherwise payable
for the shares of Common Stock issuable upon exercise of the Warrants shall be
allocated among the shares of common stock and Other Property receivable as a
result of such reorganization, reclassification, merger, consolidation or
disposition of assets in proportion to the respective fair market values of
such shares of common stock and Other Property as determined in good faith by
the Board of Directors of the Company which determination shall be conclusive
absent manifest error. In case of any such reorganization, reclassification,
merger, consolidation or disposition of assets, the successor or acquiring
corporation (if other than the Company) shall expressly assume the due and
punctual observance and performance of each and every covenant and condition of
this Agreement to be performed and observed by the Company and all the
obligations and liabilities hereunder, subject to such modifications as may be
reasonably deemed appropriate (as determined by resolution of the Board of
Directors of the Company) in order to provide for adjustments of any shares of
the common stock of such successor or acquiring corporation for which the
Warrants thus become exercisable, which modifications shall be as equivalent as
practicable to the adjustments provided for in this Section 6. For purposes of
this Section 6.5, "common stock of the successor or acquiring corporation"
shall include stock of such corporation of any class that is not preferred as
to dividends or assets over any other class of stock of such corporation and
that is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities that are convertible into or
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock. The foregoing provisions
of this Section 6.5 shall similarly apply to successive reorganizations,
reclassification, mergers, consolidations or disposition of assets.
6.6. DETERMINATION OF CONSIDERATION. For purposes of
Sections 6.1, 6.2, 6.3 and 6.5 hereof, the consideration received and/or
receivable by the Company in connection with the issuance, sale, grant or
exercise of additional shares of Common Stock, Stock Purchase Rights or
Convertible Securities, irrespective of the accounting treatment of such
consideration, shall be valued as follows:
(1) SECURITIES OR OTHER PROPERTY. In the case of
securities or other property, the fair market value thereof as of the date
immediately preceding such issuance, sale, grant or exercise as determined in
good faith by the Board of Directors of the Company which determination shall
be conclusive absent manifest error.
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(2) DIVIDENDS IN SECURITIES In case the Company shall
declare a dividend or make any other distribution upon any stock of the Company
payable in either case in Common Stock or Convertible Securities, such Common
Stock or Convertible Securities, as the case may be, issuable in payment of
such dividend or distribution shall be deemed to have been issued or sold
without consideration.
(3) MERGER, CONSOLIDATION OR SALE OF ASSETS. In case any
shares of Common Stock, Stock Purchase Rights or Convertible Securities shall
be issued in connection with any merger or consolidation in which the Company
is the surviving corporation, the amount of consideration therefor shall be
deemed to be the fair value of such portion of the assets and business of the
non-surviving corporation attributable to such Common Stock, Stock Purchase
Rights or Convertible Securities, as is determined in good faith by the
Company's Board of Directors which determination shall be conclusive absent
manifest error.
6.7. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS
SECTION. The following provisions shall be applicable to the adjustments
provided for pursuant to this Section 6:
(a) WHEN ADJUSTMENTS TO BE MADE. The adjustments required
by this Section 6 shall be made whenever and as often as any specified event
requiring such an adjustment shall occur. For the purpose of any such
adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.
(b) FRACTIONAL INTERESTS. In computing adjustments under
this Section 6, fractional interests in Common Stock shall be taken into
account to the nearest 1/100th of a share.
(c) WHEN ADJUSTMENT NOT REQUIRED. If the Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend or distribution to which the provisions of Section 6
would apply, but shall, thereafter and before the distribution to stockholders
thereof, legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment shall be required by reason of the
taking of such record and any such adjustment previously made in respect thereof
shall be rescinded and annulled.
(d) MAXIMUM EXERCISE PRICE. Except as provided in
Section 6.1 above, at no time shall the Exercise Price per share of Common
Stock exceed the amount set forth in this Agreement.
(e) CERTAIN LIMITATIONS. Notwithstanding anything herein
to the contrary, the Company agrees not to enter into any transaction that, by
reason of any adjustment under Section 6 above, would cause the Exercise Price
to be less than the par value of the Common Stock, if any, unless the Company
first reduces the par value of the Common Stock to be less than the Exercise
Price that would result from such transaction.
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(f) NOTICE OF ADJUSTMENTS. Whenever the number of shares
of Common Stock for which the Warrants are exercisable or the Exercise Price
shall be adjusted pursuant to this Section 6, the Company shall forthwith
prepare a certificate to be executed by the chief financial officer of the
Company setting forth, in reasonable detail, the event requiring the adjustment
and the method by which such adjustment was calculated, specifying the number
of shares of Common Stock for which the Warrants are exercisable and (if such
adjustment was made pursuant to Section 6.3) describing the number and kind of
any other shares of stock or Other Property for which the Warrants are
exercisable, and any related change in the Exercise Price, after giving effect
to such adjustment or change. The Company shall within a reasonable amount of
time cause a signed copy of such certificate to be delivered to each Holder in
accordance with Section 13. The Company shall keep at its principal office
copies of all such certificates and cause the same to be available for
inspection at said office during normal business hours by any Holder or any
prospective transferee of any Warrants designated by a Holder thereof.
6.8 DISPUTES. In the event that there is any dispute as to
the computation of the price or the number of Warrant Shares required to be
issued upon exercise of Warrants or any other disputed calculation or
adjustment under Section 6 hereof, the Warrant Holders and the Company will
retain an independent and nationally recognized accounting firm to conduct at
the expense of the Company a special procedures engagement of the computations
pursuant to the terms hereof involved in such dispute, including the financial
statements or other information upon which such computations were based. The
determination of such nationally recognized accounting firm shall, in the
absence of manifest error, be binding upon the Warrant Holders and the Company.
If there shall be a dispute as to the selection of such nationally recognized
accounting firm, such firm shall be appointed by the American Institute of
Certified Public Accountants, if willing, otherwise the American Arbitration
Association, upon application by the Company or any holder or holders of at
least 25% of the outstanding Warrants with notice to the others.
SECTION 7. REGISTRATION.
(a) COMPANY REGISTRATION. The Company shall
register the Warrant Shares as may be required from time to time under the
Registration Rights Agreement under the Securities Act, and the Company shall,
at such time, promptly give all holders of Registrable Securities written
notice of such registration.
(b) EXPENSES. The Company shall pay all
Registration Expenses incurred in connection with the registration of
Registrable Securities pursuant to the Registration Rights Agreement.
SECTION 8. DEFINITIONS.
As used in this Warrant Agreement, the following terms shall
have the following respective meanings:
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BUSINESS DAY shall mean any day that is not a
Saturday or Sunday or a day on which banks are required or permitted to be
closed in the State of California.
COMMISSION means the Securities and Exchange
Commission.
COMMON STOCK means (except where the context
indicates that it means the Common Stock of another corporation such as a
Constituent Corporation) the Common Stock of the Company, par value $0.001 per
share, as constituted on its original date of issue by the Company, and any
capital stock into which such Common Stock may thereafter be changed, and shall
also include (i) capital stock of the Company of any other class (regardless of
how denominated) issued to the holders of shares of any Common Stock upon any
reclassification thereof which is also not preferred as to dividends or
liquidation over any other class of stock of the Company and which is not
subject to redemption and (ii) shares of common stock of any successor or
acquiring corporation (as defined in Section 6.5 hereof) received by or
distributed to the holders of Common Stock of the Company in the circumstances
contemplated by Section 6.5 hereof.
CONVERTIBLE SECURITIES shall mean evidences
of indebtedness, shares of stock or other securities that are convertible into
or exchangeable for, with or without payment of additional consideration in
cash or property, shares of Common Stock, either immediately or upon the
occurrence of a specified date or a specified event.
CURRENT MARKET PRICE shall mean as of any
specified date the average of the Daily Market Prices of the Common Stock of
the Company for the shorter of (x) the twenty (20) consecutive Business Days
immediately preceding such date or (y) the period commencing on the Business
Day next following the first public announcement of any event giving rise to an
adjustment of the Exercise Price pursuant to Section 6 and ending on such
specified date. The "Daily Market Price" for each such Business Day shall be:
(i) if the Common Stock is then listed on a national securities exchange or is
listed on NASDAQ and is designated as a National Market System security, the
last sale price, regular way, on such day on the principal stock exchange or
market system on which such Common Stock is then listed or admitted to trading,
or, if no such sale takes place on such day, the average of the closing bid and
asked prices for the Common Stock on such day as reported on such stock
exchange or market system or (ii) if the Common Stock is not then listed or
admitted to trading on any national securities exchange or designated as a
National Market System security on NASDAQ but is traded over-the-counter, the
average of the closing bid and asked prices for the Common Stock as reported on
NASDAQ or the Electronic Bulletin Board or in the National Daily Quotation
Sheets, as applicable.
EXCHANGE ACT means the Securities Exchange
Act of 1934, as amended, or any successor act, and the rules and regulations of
the Commission promulgated thereunder, all as the same shall be in effect at
the time.
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EXERCISE PRICE shall mean, in respect of a
share of Common Stock at any date herein specified, the initial Exercise Price
set forth in this Agreement as adjusted from time to time pursuant to Section 6
hereof.
EXPIRATION DATE means the seventh anniversary
of the date of this Agreement .
FAIR VALUE means, per share of Common Stock
as of any specified date, (i) if the Common Stock is publicly traded on such
date, the Current Market Price per share or (ii) if the Common Stock is not
publicly traded on such date, the fair market value per share of Common Stock
as determined in good faith by the Board of Directors of the Company which
determination shall be conclusive absent manifest error, and set forth in a
written notice to each Holder.
NOTICE PERIOD shall mean the period of ninety
(90) days commencing upon the delivery to the Holders of written notice of the
Company's intention to call the Warrants pursuant to Section 2.3, provided that
conditions (i), (ii), (iii) ,(iv) and (v) of Section 2.3 have been satisfied
and that such conditions (ii), (iii) and (v) continue to have been satisfied
for such 90 days.
OUTSTANDING shall mean, when used with
reference to Common Stock, at any date as of which the number of shares thereof
is to be determined, all issued shares of Common Stock, except shares then
owned or held by or for the account of the Company or any Subsidiary thereof,
and shall include all shares issuable in respect of outstanding scrip or any
certificates representing fractional interests in shares of Common Stock.
ORIGINAL ISSUE DATE shall mean the date on
which the Warrants were issued, as set forth on Exhibit B hereto.
PERSON shall mean any individual, sole
proprietorship, partnership, limited liability company, joint venture, trust,
incorporated organization, association, corporation, institution, public
benefit corporation, entity or government (whether federal, state, county,
city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
REGISTRABLE SECURITIES shall have the meaning
specified for such term in the Registration Rights Agreement.
REGISTRATION EXPENSES shall have the meaning
specified for such term in the Registration Rights Agreement.
REGISTRATION RIGHTS means the right of a
Holder to have its Registrable Securities registered pursuant to Section 7 of
this Agreement and pursuant to the Registration Rights Agreement.
REGISTRATION RIGHTS AGREEMENT means the
Agreement dated as of April 11, 1997 between the Company and the Holders.
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STOCK PURCHASE RIGHTS shall mean any options,
warrants or other securities or rights to subscribe to or exercisable for the
purchase of shares of Common Stock or Convertible Securities, whether or not
immediately exercisable.
SECURITIES ACT means the Securities Act of
1933, as amended, or any successor act thereto, and the rules and regulations
of the Commission promulgated thereunder, all as the same shall be in effect at
the time.
SECTION 9. FRACTIONAL INTERESTS. The Company shall not be
required to issue fractional Warrant Shares on the exercise of the Warrants.
If any fraction of a Warrant Share would, except for the provisions of this
Section 9, be issuable on the exercise of the Warrants (or specified portion
thereof), the Company shall pay an amount in cash equal to the closing price
for one share of the Common Stock on the trading day immediately preceding the
date the Warrants are presented for exercise, multiplied by such fraction.
SECTION 10. NO RIGHTS AS STOCKHOLDER; NOTICES TO HOLDER. Nothing
contained in this Agreement or in the Warrants shall be construed as conferring
upon the Holder or his permitted transferees the right to vote or to receive
dividends or to consent to or receive notice as a stockholder in respect of any
meeting of stockholders for the election of directors of the Company or any
other matter, or any rights whatsoever as a stockholder of the Company.
SECTION 11. INSPECTION OF WARRANT AGREEMENT. The Company shall
keep copies of this Agreement and any notices given or received hereunder
available for inspection by the Holder during normal business hours at its
principal office.
SECTION 12. FINANCIAL AND BUSINESS INFORMATION. Until the
Expiration Date, the Company shall deliver to each Warrant Holder, copies of
all public financial statements, reports and filings, notices and proxy
statements sent or made available by the Company to the holders of any class of
its securities generally at the time that such documents are generally made
available to the Company's stockholders.
SECTION 13. NOTICES. Any notice pursuant to this Agreement by
any Holder to the Company, shall be in writing and shall be mailed first class,
postage prepaid, or delivered to the Company at its office at 485 Devon Park
Dr., Ste 112, Wayne, PA 19087.
Each party hereto may from time to time change the address to
which notices to it are to be delivered or mailed hereunder by notice in
writing to the other party. Any notice mailed pursuant to this Agreement by
the Company to the Holder shall be in writing and shall be mailed first class,
postage prepaid, or delivered to the Holder at his address on the transfer
books and a copy thereof shall be delivered to Canpartners Incorporated IV, LLC
c/o Canyon Partners Incorporated, 9665 Wilshire Boulevard Suite 200, Beverly
Hills, CA 90212, attention: Scott Imbach, Telecopy No. (310) 247-2701.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
13
<PAGE> 15
DELAWARE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES
HERETO AGREE TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF
DELAWARE IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT.
SECTION 15. SUPPLEMENTS AND AMENDMENTS. The Company may from
time to time supplement or amend this Agreement in order to cure any ambiguity
or to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provision herein, or to make any other
provisions in regard to matters or questions arising hereunder which the
Company may deem necessary or desirable and which shall not be inconsistent
with the provisions of the Warrant and which shall not adversely affect the
interests of the Holder.
SECTION 16. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Holders of the Warrants
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 17. MERGER OR CONSOLIDATION OF THE COMPANY. So long as
the Warrants remain outstanding, the Company will not merge or consolidate with
or into, or sell, transfer or lease all or substantially all of its property
to, any other corporation unless the successor or purchasing corporation, as
the case may be (if not the Company), shall expressly assume, by supplemental
agreement, the due and punctual performance and observance of each and every
covenant and condition of this Agreement to be performed and observed by the
Company.
SECTION 18. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any Person other than the Company and
the Holders of the Warrants, any legal or equitable right, remedy or claim
under this Agreement, but this Agreement shall be for the sole and exclusive
benefit of the Company and the Holders.
SECTION 19. CAPTIONS. The captions of the Sections of this
Agreement have been inserted for convenience only and shall have no substantive
effect.
SECTION 20. COUNTERPARTS. This Agreement may be executed in any
number of counterparts each of which so executed shall be deemed to be an
original; but such counterparts together shall constitute but one and the same
instrument.
14
<PAGE> 16
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed as of the day, month and year first above written.
UTI ENERGY CORP., a Delaware corporation
By: /s/ VAUGHN E. DRUM
---------------------------------
Title: President and CEO
---------------------------------
15
<PAGE> 17
Canpartners Incorporated IV, LLC,
a California limited liability company
By: Canpartners Incorporated,
a California corporation,
its managing member
By: /s/ MICHAEL R. JULIS
-------------------------
Name: Michael R. Julis
Title: Vice President
<PAGE> 1
EXHIBIT 10.7
COMMON STOCK PURCHASE WARRANT
400,000 SHARES COMMON STOCK, PAR VALUE $0.001 PER SHARE
OF UTI ENERGY CORP.
Void After 5:00 P.M.
Pacific Daylight Time on April 11, 2004
THIS CERTIFIES THAT, for value received, Canpartners Incorporated IV,
LLC, a California limited liability company, the registered holder of this
Common Stock Purchase Warrant (the "Warrant") or permitted assigns (the
"Holder"), is entitled to purchase from UTI Energy Corp., a Delaware corporation
(the "Company"), at any time until 5:00 P.M. Pacific Daylight Time on April 11,
2004 (the "Expiration Date"), unless this Warrant is earlier called by the
Company pursuant to Section 2.3 of the Warrant Agreement hereinafter mentioned,
at the Warrant Price of $32.50 per share (the "Warrant Price"), the number of
shares of Common Stock of the Company (the "Common Stock") which is equal to the
number of shares set forth above. The number of shares purchasable upon exercise
of this Warrant and the Warrant Price per share shall be subject to adjustment
from time to time as set forth in the Warrant Agreement referred to below.
This Warrant is issued under and in accordance with a Warrant
Agreement, dated as of April 11, 1997, between the Company and the Warrant
Holders and is subject to the terms and provisions contained in the Warrant
Agreement, to all of which the Holder of this Warranty by acceptance hereof
consents. A copy of the Warrant Agreement may be obtained for inspection by the
Holder hereof upon written request to the Company.
This Warrant may be exercised in whole or in part by presentation of
this Warrant with the Purchase Form on the reverse side hereof duly executed and
simultaneous payment of the Warrant Price (subject to adjustment) at the
principal office of the Company. Payment of such price shall be payable at the
option of the Holder hereof in cash or by certified or official bank check or
wire transfer or by delivery to the Company of the Company's 12% Senior
Subordinated Notes due 2001, which should be valued for this purpose at the
principal amount thereof so delivered plus the accrued interest thereon. Terms
relating to exercise of Warrant are set forth more fully in the Warrant
Agreement.
This Warrant may be exercised in whole or in part. Upon partial
exercise, a Warrant Certificate for the unexercised portion shall be delivered
to the Holder. No fractional shares will be issued upon the exercise of this
Warrant but the Company shall pay the cash value of any fraction upon the
exercise of the Warrant. This Warrant is transferable only in limited
circumstances as described in this Warrant Agreement at the office of the
Company in the manner and subject to the limitations set forth in the Warrant
Agreement.
<PAGE> 2
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAW. NO TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE SHALL BE VALID OR EFFECTIVE UNLESS (A) SUCH TRANSFER IS
MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
(B) THE HOLDER OF THE SECURITIES PROPOSED TO BE TRANSFERRED SHALL HAVE
DELIVERED TO THE COMPANY AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
THE COMPANY TO THE EFFECT THAT SUCH PROPOSED TRANSFER IS EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND THAT THE EXERCISE OF THE
WARRANTS AND PURCHASE OF THE WARRANT SHARES WILL BE EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND SUCH HOLDER(S) SHALL HAVE
DELIVERED TO THE COMPANY A CERTIFICATE SETTING FORTH THE BASIS FOR
APPLYING SUCH RULE TO THE PROPOSED TRANSFER.
The Holder hereof may be treated by the Company and all other Persons
dealing with this Warrant as the absolute owner hereof for any purpose and as
the person entitled to exercise the rights represented hereby, or to the
transfer hereof on the books of the Company. Any notice to the contrary
notwithstanding, and until such transfer on which books, the Company may treat
the Holder hereof as the owner for all purposes.
This Warrant does not entitle any Holder hereof to any of the rights of
a stockholder of the Company.
UTI ENERGY CORP.
By: /s/ Vaughn E. Drum
----------------------------
Chief Executive Officer
Attest:
--------------------------
Secretary
DATED: As of April 11, 1997
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<PAGE> 1
EXHIBIT 10.8
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT IN FAVOR OF
THE HOLDERS OF REGISTRABLE SECURITIES
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of April 11, 1997 by and among UTI Energy Corp., a Delaware
corporation (the "Company"), and the holders of Registrable Securities (the
"Holders") signatory to this Agreement.
This Agreement is made pursuant to the Warrant Agreement (the "Warrant
Agreement") dated as of April 11, 1997 by and among the Company and the Warrant
Holders (as defined in the Warrant Agreement), pursuant to which the Holders
are receiving common stock warrants (the "Warrants") in connection with the
purchase of $25,000,000 of the Company's 12% notes pursuant to a note purchase
agreement, dated as of April 11, 1997 between the Company and the purchasers
named therein.
The parties hereby agree as follows:
1. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the
following respective meanings:
(a) AFFILIATE of a specified Person means any
other Person that directly, or indirectly through one or more intermediates,
controls, is controlled by or is under common control with the Person
specified, or who holds or beneficially owns 50% or more of the equity interest
in the Person specified or 50% or more of the voting securities of the Person
specified. A managed account of a Person is also an Affiliate of such Person.
(b) BUSINESS DAY means any day on which
banking institutions in Los Angeles, California are authorized or obligated by
law or executive order to close.
(c) COMMISSION means the Securities and Exchange
Commission.
(d) COMPANY means UTI Energy Corp. or any
successor to it or to its business.
(e) COMMON STOCK means (except where the context
otherwise indicates) the Common Stock of the Company, par value $0.001 per
share, as constituted on its original date of issue by the Company, and any
capital stock into which such Common Stock may thereafter be changed, and shall
also include (i) capital stock of the Company of any other class (regardless of
how denominated) issued to the holders of shares of any Common Stock upon any
reclassification thereof which is also not preferred as to dividends or
liquidation over any other class of stock of the Company and which is not
subject to redemption and (ii) shares of common stock of any successor
corporation or acquiring corporation.
<PAGE> 3
(f) DEMANDING HOLDERS shall have the meaning set
forth in Section 2(a)
(g) DEMAND REGISTRATION shall have the meaning
set forth in Section 2(a).
(h) EXCHANGE ACT means the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Commission
promulgated thereunder.
(i) EXPIRATION DATE means the date on which no
Holder holds any Registrable Securities.
(j) HOLDERS shall have the meaning set forth in
the first paragraph hereof.
(k) OTHER COMMON STOCK shall have the meaning set
forth in Section 4(b) hereof.
(l) PERSON means any individual, corporation,
partnership, joint venture, association, joint-stock company, limited liability
company, trust, unincorporated organization or government or other agency or
political subdivision thereof.
(m) PIGGYBACK REGISTRATION shall have the meaning
set forth in Section 2(b) hereof.
(n) PIGGYBACK SHARES shall have the meaning set
forth in Section 2(c) hereof.
(o) REGISTRABLE SECURITIES means any Warrant
Shares (as defined below) which may be acquired and owned by a Holder, or any
securities received by a Holder in exchange for such securities and any shares
of Common Stock held by Remy. As to any particular Registrable Securities,
such securities shall cease to be Registrable Securities when (x) such
securities shall have been disposed of pursuant to an effective registration
statement, (y) such securities shall have been transferred to any Person other
than the Holders pursuant to Rule 144 (or any successor provision) or shall be
transferable pursuant to paragraph (k) thereof (or any successor provision)
under the Securities Act, or (z) they shall have ceased to be held by the
Holders or any Affiliate of the Holders or any Transferee of the Holders or
their Affiliates.
(p) REGISTRATION EXPENSES means all expenses
incident to the performance of or compliance with the registration rights
granted herein, including, without limitation, all registration, filing,
listing and NASD fees, all fees and expenses of complying with securities or
blue sky laws, all word processing, duplicating and printing expenses,
messenger and delivery expenses, the fees and expenses of the Company's counsel
and the fees
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<PAGE> 4
and expenses of the Company's independent public accountants, including the
expenses of any special audits, should any such special audit be required, or
"cold comfort" letters required by or incident to such performance and
compliance, and any fees and disbursements of underwriters customarily paid by
issuers and sellers of securities which may be paid by the Company in
connection with the registration of any securities for which the Holders have
the right to Piggyback Registration for the Registrable Securities; provided,
however, that Registration Expenses shall not include the fees and expenses of
the Selling Holders' counsel, any brokerage or similar commissions or charges
or any underwriting discounts, commissions or transfer taxes, if any, all of
which shall be borne by the Selling Holders.
(q) REMY shall have the meaning set forth in
Section 2(c) hereof.
(r) REMY SHARES shall have the meaning set forth
in Section 2(c) hereof.
(s) SECURITIES ACT means the Securities Act of
1933, as amended, or any successor statute thereto, and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder,
all as the same shall be in effect at the time.
(t) SELLING HOLDERS means those Holders who have
requested registration pursuant to this agreement and who are selling
securities hereunder.
(u) SHARES means the Company's common stock, as
constituted on the date hereof, or any stock or other securities, for which
such common stock shall have been exchanged, or any stock or other securities
resulting from any reclassification of such Shares.
(v) TRANSFEREE shall mean the first holder of
Registrable Securities or Remy Shares by a transfer from a Holder or Remy or an
Affiliate of a Holder or Remy provided, however, that a Person acquiring such
Registrable Securities pursuant to a transfer under an effective registration
statement or pursuant to a sale under Rule 144 shall not be a Transferee.
(w) VIOLATION shall have the meaning set forth in
Section 6(a).
(x) WARRANT AGREEMENT means the Warrant
Agreement, dated as of April 11, 1997 between the Company and the Warrant
Holders listed therein.
(y) WARRANTS shall mean any warrants issued
pursuant to the Warrant Agreement.
(z) WARRANT SHARES shall mean the Shares of
Company Common Stock and any other securities issuable upon exercise of the
Warrants.
2. REGISTRATION RIGHTS.
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<PAGE> 5
(a) Until the Expiration Date, on four occasions, but in
no event during the period ending 90 days following the completion of a
registered public offering of Common Stock by the Company (other than an
offering pursuant to an employee benefit plan or in connection with a merger or
acquisition), any Holder or Holders of Registrable Securities then outstanding
(collectively, the "Demanding Holders") may request, pursuant to this Section
2(a), that the Company register under the Securities Act the Registrable
Securities pursuant to a non-underwritten offering having a period of
distribution not to exceed 120 days (a "Demand Registration") provided,
however, the Company shall not be obligated to prepare and file any
registration statement pursuant to this Section 2(a), or prepare or file any
amendment or supplement thereto, at any time when the Company, in the good
faith judgment of its Board of Directors, whose decision shall be conclusive
absent manifest error, reasonably believes that the filing thereof at the time
requested, or the offering of securities pursuant thereto, would materially and
adversely affect a pending or proposed public offering of securities of the
Company, an acquisition, merger, recapitalization, consolidation,
reorganization or similar transaction relating to the Company or its Affiliates
or negotiations, discussions or pending proposals with respect thereto or
require premature disclosure of information not otherwise required to be
disclosed to the potential detriment of the Company or its Affiliates.
Notwithstanding anything to the contrary contained in this Section 2(a), the
Company shall be permitted to suspend the period of sale or distribution of
shares of Common Stock subject to a registration pursuant to this Section 2(a)
at any time when the Company reasonably believes that the sale or distribution
thereof at the time requested would materially and adversely affect a pending
or proposed public offering of securities of the Company, an acquisition,
merger, recapitalization, consolidation, reorganization or similar transaction
relating to the Company or its Affiliates or negotiations, discussions or
pending proposals with respect thereto or require premature disclosure of
information not otherwise required to be disclosed to the potential detriment
of the Company or its Affiliates; provided, however, that such period of sale
or distribution shall resume after any such suspension for a number of days
necessary to keep such registration effective for permitted sales thereunder
for a term of 120 days. The filing of a registration statement, or any
amendment or supplement thereto, by the Company may not be deferred for any
reason whatsoever, and the sale and distribution of shares may not be suspended
for more than 105 days.
(b) If, at any time after the date hereof, the Company
proposes to register under the Securities Act any shares of Common Stock for
sale by it pursuant to an underwritten public offering of the Common Stock
(except with respect to registration statements filed on Form S-4 or such other
forms as shall be prescribed under the Securities Act for the same purposes as
such form), it will at each such time, prior to the filing of any such
registration statement, give written notice to each Holder of Registrable
Securities of such registration (a "Piggyback Registration") regardless of
whether the Holder had previously exercised piggyback registration rights or
demand rights as to any other shares of stock held by it, and, upon the written
request given within 5 days following the date of such notice (which must
specify the number of shares of Common Stock to participate in such
underwritten offering) of the Holder delivered to the Company within five days
of receipt of the Company's notice, the Company will use its best efforts to
cause any Registrable Securities as to which registration shall have been
-4-
<PAGE> 6
so requested to be included in the shares to be sold pursuant to such
underwritten public offering as covered by the registration statement proposed
to be filed by the Company. Nothing contained in this Section 4(b) shall,
however, limit the Company's right to cancel, postpone or withdraw any such
proposed registration for any reason. Any request by the Holder pursuant to
this Section 4(b) to register Registrable Securities for sale in the
underwriting shall be on the same terms and conditions as the shares of Common
Stock to be registered and sold through underwriters under such registration;
provided, however, that as a condition to such inclusion the Holder shall
execute an underwriting agreement acceptable to the underwriters and, if
requested, a custody agreement having such customary terms as the underwriters
shall request, including indemnification, and if the managing underwriter
determines and advises in writing that the inclusion in the underwriting of all
Registrable Securities proposed to be included by the Holder and any other
shares of Common Stock sought to be registered by any other stockholder of the
Company exercising rights comparable to those of the Holder under the Agreement
(the "Other Common Stock") would, in its reasonable and good faith judgment,
interfere with the successful marketing of the securities proposed to be
registered for underwriting by the Company then the number of Registrable
Securities and Other Common Stock requested to be included in the underwriting
shall be reduced pro rata (based upon the number of shares requested to be
included in such underwriting) among the Holder and the holders of Other Common
Stock requesting such registration and inclusion in the underwriting and may,
in the determination of such managing underwriter and consistent with pro rata
reduction, be reduced to zero.
(c) REMY PIGGYBACK REGISTRATION. If at any time the
Company shall contemplate filing a registration statement under the Act in
order to register any shares of the Company's Common Stock beneficially owned
by Remy Capital Partners III L.P. or its successors or assigns or any
Transferees of Remy (collectively, "Remy") for sale in a public offering, the
Company shall give to the Holder not less than thirty days prior written notice
of its intentions, which notice shall specify the number of shares of Common
Stock to be registered pursuant to the contemplated registration statement and
the total number of such shares of Common Stock beneficially owned by Remy to
be registered pursuant to the contemplated registration statement (the "Remy
Shares"). The Holders shall have the right, exercisable by written notice
delivered to the Company not later than the fifteenth day following the date of
the Company's notice, to cause the Company to include in such registration
statement up to a number of Warrant Shares (disregarding fractional shares)
determined by multiplying (x) the total number of Warrant Shares then owned of
record by the Holder, and (y) a fraction, the numerator of which is the number
of Remy Shares and the denominator of which is the number of shares of Common
Stock then held of record by Remy. In the alternative, the Holder may specify
any lesser whole number of Warrant Shares then owned of record by the Holder.
The number of the Holder's Warrant Shares so properly specified is herein
referred to as the "Piggyback Shares". The Company shall include the Piggyback
Shares in any registration statement filed by it which includes the Remy
Shares, and shall thereafter use its reasonable efforts to cause such
registration statement to become effective and to remain effective for the
period required to permit the public offering of the Piggyback Shares, but not
longer than 60 days. However, if all or any part of the proposed registration
is to be underwritten (whether on a "best efforts" or "firm commitment" basis)
the managing underwriter shall have the right
-5-
<PAGE> 7
to exclude the Piggyback Shares, to the extent the inclusion of such Piggyback
Shares and Remy Shares would, in the written opinion of such managing
underwriter, adversely affect the successful distribution of the underwritten
portion of the public offering, provided such exclusion applies on a
proportional basis not only to Piggyback Shares but also to all other
securities proposed to be included other than those to be issued and sold for
the benefit of the Company pursuant to such registration statement. Any
exclusion of Piggyback Shares and other shares shall be made pro rata among all
persons other than the Company whose common stock was to have been included in
the offering, including Remy.
(d) REGISTRATION STATEMENT FORM. The Company may, if
permitted by law, effect any registration requested under Section 2(a) by the
filing of a registration statement on Form S-3 (or any successor or similar
short- form registration statement).
(e) EXPENSES. The Company shall pay all Registration
Expenses incurred in connection with the registration of Registrable Securities
pursuant to Section 2(a), 2(b) or 2(c) hereunder.
(f) EFFECTIVE REGISTRATION STATEMENT. Any registration
effected by the Company pursuant to this Agreement shall not be deemed to have
been effected unless it has become effective with the Commission, provided,
however, that a registration which does not become effective after the Company
has filed a registration statement with respect thereto with the Commission
solely by reason of the Demanding Holders failing to proceed with the
registration shall be deemed to have been effected by the Company in
satisfaction of one of the Company's four demand obligations pursuant to
Section 2(a) to register Registrable Securities pursuant to a Demand
Registration. Notwithstanding the foregoing, a registration statement will not
be deemed to have been effected if after it has become effective with the
Commission, such registration is interfered with by any stop order, injunction
or other order or requirement of the Commission or other governmental agency or
any court proceeding for any reason other than a misrepresentation or omission
by the Holders.
(g) CONFLICTING INSTRUCTIONS FROM HOLDERS. The Company
may rely and shall be protected in relying upon any resolution, certificate,
opinion, request, communication, demand, receipt or other paper or document in
good faith believed by it to be genuine and to have been signed or presented by
the proper party or parties. The Company may act in reliance upon the advice
of its counsel in reference to any matter in connection with this Agreement and
shall not incur any liability for any action taken in good faith in accordance
with such advice.
(i) In the event the Company receives conflicting
instructions regarding any action to be taken or withheld hereunder, the
Company may suspend further action relating to such action until such time as
the conflicting instructions are resolved by the parties giving the same or
until the Company is instructed to take or withhold the requested action by a
final order from which no appeal may be taken issued by a court of competent
jurisdiction.
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<PAGE> 8
3. REGISTRATION PROCEDURES.
(a) Whenever the Company is required to effect the
registration of any Registrable Securities under the Securities Act as provided
in Section 2, the Company, as expeditiously as reasonably practicable and
subject to the terms and conditions herein, will use its best efforts to:
(i) prepare and file with the Commission the requisite
registration statement to effect such registration and use its best efforts to
cause such registration to become effective;
(ii) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for such time as the Company is so obligated pursuant to this
Agreement and to comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such registration statement;
(iii) furnish to the Selling Holders such number of
conformed copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number of copies
of the prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under the Securities Act, in conformity with the requirements of the
Securities Act, and such other documents, as the Selling Holders may reasonably
request;
(iv) as expeditiously as reasonably practicable, use its
best efforts to register or qualify all Registrable Securities covered by such
registration statement under such other United States state securities or blue
sky laws of such jurisdictions as the Selling Holders shall reasonably request,
to keep such registration statement qualification in effect for so long as such
registration remains in effect, and take any other action which may be
reasonably necessary or advisable to enable the Selling Holders to consummate
the disposition in such jurisdictions of the securities owned by the Selling
Holders, except that the Company shall not for any such purpose be required to
(a) qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this subdivision
(iv) be obligated to be so qualified, (b) subject itself to taxation in any
such jurisdiction or (c) consent to general service of process in any such
jurisdiction;
(v) in any underwritten offering, and if reasonable and
customary in the context of such offering, use its best efforts to furnish to
the Selling Holders a signed counterpart, addressed to the Selling Holders or
seller of Registrable Securities (and the underwriters, if any), of
(x) an opinion of counsel for the Company, dated
the effective date of such registration statement (and, if such
registration includes an underwritten public offering, dated the date
of the closing under the underwriting agreement), reasonably
satisfactory to the Selling Holders in their reasonable judgment, and
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<PAGE> 9
(y) if requested, a customary "comfort" letter,
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, dated the date
of the closing under the underwriting agreement), signed by the
independent public accountants who have certified the Company's
financial statements included in such registration statement, covering
substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of
the accountants' letter, with respect to events subsequent to the date
of such financial statements, as are customarily covered in opinions
of issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities and, in
the case of the accountants' letter, such other financial matters as
such seller or such holder (or the underwriters, if any) may
reasonably request;
(vi) immediately notify the Selling Holders at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made, and at
the request of the Selling Holders promptly prepare and furnish to the Selling
Holders a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made;
(vii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act.
(ix) use its best efforts to list all Registrable
Securities covered by such registration statement on any securities exchange on
which any of the Registrable Securities are then listed.
(x) keep each registration pursuant to Section 2(a)
hereof effective for a period of up to 120 days or such shorter period of time
until the transfer or sale of all Warrant Shares so registered has been
completed.
(b) As a condition of these Registration Rights, the
Company may require the Demanding Holders, at their own expense, to furnish the
Company with such information and undertakings regarding such Holders and the
distribution of such securities as the Company may from time to time reasonably
request in writing, and the Holders, by their execution hereof, agree to
provide such information and make such undertakings as are requested.
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<PAGE> 10
(c) The Selling Holders agree (A) that upon receipt of
any notice from the Company of the happening of any event of the kind described
in subdivision (vi) of Section 3(a), the Selling Holders will forthwith
discontinue their disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities until the
Selling Holders' receipt of the copies of the supplemented or amended
prospectus contemplated by subdivision (vi) of Section 3(a) and, if so directed
by the Company, will deliver to the Company all copies, other than permanent
file copies, then in the Selling Holders' possession of the prospectus relating
to such Registrable Securities current at the time of receipt of such notice
and (B) that they will immediately notify the Company, at any time when a
prospectus relating to the registration of such Registrable Securities is
required to be delivered under the Securities Act, of the happening of any
event as a result of which information previously furnished by the Selling
Holders to the Company for inclusion in such prospectus contains an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made.
(d) Notwithstanding anything in this agreement to the
contrary, the Company will not be required to file such a registration
statement if it receives an opinion of counsel in form and substance reasonably
satisfactory to the Selling Holders, or counsel to the Selling Holders, to the
effect that the sale of the Registrable Securities in the manner contemplated
by the Selling Holders may be effected without registration.
4. UNDERWRITTEN OFFERINGS.
(a) UNDERWRITTEN OFFERINGS. If requested by the
underwriters for any underwritten offering by the Selling Holders in connection
with any Piggyback Registration pursuant to Section 2(c), the Selling Holders
will enter into an underwriting agreement with such underwriters for such
offering, containing such terms as are customarily contained in agreements of
this type. The Selling Holders may, at their option (reasonably exercised),
require that any or all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of the Selling Holders
and that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to the
obligations of the Selling Holders.
(b) HOLDBACK AGREEMENTS. (i) Each Holder agrees, if so
required by the managing underwriter, not to effect any public sale or
distribution of Registrable Securities or sales of such Registrable Securities
pursuant to Rule 144 or Rule 144A under the Securities Act, during the seven
days prior to and the 90 days after any firm commitment underwritten
registration pursuant to Section 2(c) has become effective (except as part of
such registration), whether or not the Holder participates in such
registration.
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5. PREPARATION, REASONABLE INVESTIGATION.
In connection with the preparation and filing of each
registration statement under the Securities Act, pursuant to this Agreement,
the Company will give the Selling Holders, the underwriters, if any are
involved, and their respective counsel and accountants, the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers and the independent public accountants who have certified its
financial statements as shall be necessary to conduct a reasonable
investigation within the meaning of the Securities Act.
6. INDEMNIFICATION; CONTRIBUTION. If any Registrable Securities
are included in a registration statement under this Agreement:
(a) To the extent permitted by applicable law, the
Company shall indemnify and hold harmless each Selling Holder, each Person, if
any, who controls such Selling Holder within the meaning of the Securities Act,
and each officer, director, partner, and employee of such Selling Holder and
such controlling Person, against any and all losses, claims, damages,
liabilities and expenses (joint or several), including reasonable attorneys'
fees and disbursements and expenses of investigation, incurred by such party
pursuant to any actual or threatened action, suit, proceeding or investigation,
or to which any of the foregoing Persons may become subject under the
Securities Act, the Exchange Act or other federal or state laws, insofar as
such losses, claims, damages, liabilities and expenses arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "Violation"):
(1) Any untrue statement or alleged untrue
statement of a material fact contained in such registration statement as of the
respective date thereof, including any preliminary prospectus or final
prospectus contained therein, or any amendments or supplements thereto;
(2) The omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make the
statements therein not misleading; or
(3) Any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any applicable state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any applicable state securities law; provided, however,
that the indemnification required by this Section 6(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
expense if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld), nor shall the Company be
liable under this Section 6(a) in any such case for any such loss, claim,
damage, liability or expense to the extent that it arises out of or is based
upon a Violation which occurs in reliance upon and in conformity with written
information furnished to the Company by the indemnified party expressly for use
in connection with such registration; provided,
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further, that the indemnity agreement contained in this Section 6 shall not
apply to any Holder to the extent that any such loss is based on or arises out
of an untrue statement or alleged untrue statement of a material fact, or an
omission or alleged omission to state a material fact, contained in or omitted
from any preliminary prospectus if the final prospectus shall correct such
untrue statement or alleged untrue statement, or such omission or alleged
omission, and a copy of the final prospectus has not been sent or given to such
person at or prior to the confirmation of sale to such person if such Holder
was under an obligation to deliver such final prospectus and failed to do so.
The Company shall also indemnify any underwriters participating in a Piggyback
Registration in which the Selling Holders are participating.
(b) To the extent permitted by applicable law, each
Selling Holder shall indemnify and hold harmless the Company, each of its
directors, each of its officers who shall have signed the registration
statement, each Person, if any, who controls the Company within the meaning of
the Securities Act, any other Selling Holder, any controlling Person of any
such other Selling Holder; each officer, director, partner, and employee of
such other Selling Holder and such controlling Person and each underwriter to
the extent that such Selling Holder participates in an underwritten
registration, against any and all losses, claims, damages, liabilities and
expenses (joint and several), including reasonable attorneys' fees and
disbursements and expenses of investigation, incurred by such party pursuant to
any actual or threatened action, suit, proceeding or investigation, or to which
any of the foregoing Persons may otherwise become subject under the Securities
Act, the Exchange Act or other federal or state laws, insofar as such losses,
claims, damages, liabilities and expenses arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Selling Holder expressly for use in connection with such
registration; provided, however, that (x) the indemnification required by this
Section 6(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or expense if settlement is effected without the
consent of the relevant Selling Holder of Registrable Securities, which consent
shall not be unreasonably withheld, and (y) in no event shall the amount of any
indemnity under this Section 6(b) exceed the gross proceeds from the applicable
offering received by such Selling Holder.
(c) Promptly after receipt by an indemnified party under
this Section 6 of notice of the commencement of any action, suit, proceeding,
investigation or threat thereof made in writing for which such indemnified
party may make a claim under this Section 6, such indemnified party shall
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel at its own expense except as provided
below. The failure to deliver written notice to the indemnifying party within
a reasonable time following the commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under this Section 6 but shall not
relieve the indemnifying party of any liability that it may have to any
indemnified party otherwise than pursuant to this Section 6. Any such
indemnified party
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<PAGE> 13
shall have the right to employ separate counsel in any such action, claim or
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be the expenses of such indemnified party unless (i) the
indemnifying party has agreed to pay such fees and expenses or (ii) the
indemnifying party shall have failed to promptly assume the defense of such
action, claim or proceeding or (iii) the named parties to any such action,
claim or proceeding (including any impleaded parties) include both such
indemnified party and the indemnifying party, and such indemnified party shall
have been advised by counsel that it has reasonably determined that there may
be one or more legal defenses available to it which are different from or in
addition to those available to the indemnifying party and that the assertion of
such defenses would create a conflict of interest such that counsel employed by
the indemnifying party could not faithfully represent the indemnified party (in
which case, if such indemnified party notifies the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such action, claim or proceeding on behalf of such indemnified
party, it being understood, however, that the indemnifying party shall not, in
connection with any one such action, claim or proceeding or separate but
substantially similar or related actions, claims or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys (together with appropriate local counsel) at any time for all such
indemnified parties. No indemnifying party shall be liable to an indemnified
party for any settlement of any action, proceeding or claim without the written
consent of the indemnifying party which consent shall not be unreasonably
withheld.
(d) If the indemnification required by this Section 6
from the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to in
this Section 6:
(i) The indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified parties in connection
with the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
fault of such indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any Violation has been committed by,
or relates to information supplied by, such indemnifying party or indemnified
parties, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such Violation. The amount paid or payable
by a party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in Section 6(a) and Section 6(b), any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
(ii) The parties hereto agree that it would not be
just and equitable if contribution pursuant to this Section 6(d) were
determined by pro rata allocation or by any other
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<PAGE> 14
method of allocation which does not take into account the equitable
considerations referred to in Section 6(d)(i). No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(e) If indemnification is available under this Section 6,
the indemnifying parties shall indemnify each indemnified party to the full
extent provided in this Section 6 without regard to the relative fault of such
indemnifying party or indemnified party or any other equitable consideration
referred to in Section 6(d); provided, however, that if it is determined by a
final and non-appealable order of a court of competent jurisdiction that a
party receiving indemnification hereunder was not entitled to receive such
indemnification, the additional cost, if any, to the indemnifying party of such
indemnification shall be promptly reimbursed by such improperly indemnified
party to such indemnifying party.
(f) The obligations of the Company and the Selling
Holders of Registrable Securities under this Section 6 shall survive the
completion of any offering of Registrable Securities pursuant to a registration
statement under this Agreement, and otherwise.
7. COVENANTS OF THE COMPANY. The Company hereby agrees and
covenants as follows:
The Company shall file as and when applicable, on a
timely basis, all reports required to be filed by it under the Exchange Act.
If the Company is not required to file reports pursuant to the Exchange Act,
upon the request of any Holder of Registrable Securities, the Company shall
make publicly available the information specified in subparagraph (c)(2) of
Rule 144 of the Securities Act, and take such further action as may be
reasonably required from time to time and as may be within the reasonable
control of the Company, to enable the Holders to transfer Registrable
Securities to a Transferee without registration under the Securities Act within
the limitation of the exemptions provided by Rule 144 under the Securities Act
or any similar rule or regulation hereafter adopted by the Commission.
8. MISCELLANEOUS.
(a) SPECIFIC PERFORMANCE. The parties hereto acknowledge
that there may be no adequate remedy at law if any party fails to perform any
of its obligations hereunder and that each party may be irreparably harmed by
any such failure, and accordingly agree that each party, in addition to any
other remedy to which it may be entitled at law or in equity, may be entitled
to compel specific performance of the obligations of any other party under this
Agreement in accordance with the terms and conditions of this Agreement.
(b) NOTICES. All notices, requests, claims, demands,
waivers and other communications required or permitted hereunder shall be in
writing and shall be deemed to have
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<PAGE> 15
been duly given when delivered by hand, if delivered personally by courier, or
three days after being deposited in the mail (registered or certified mail,
postage prepaid, return receipt requested) as follows:
The Holders at the addresses indicated on
the signature page hereof with a copy to
Canpartners Investments IV, LLC
c/o Canyon Partners Incorporated
9665 Wilshire Boulevard
Suite 200
Beverly Hills, CA 90212
Attn: Scott Imbach,
Telecopy No. (310) 247-2701
Company:
UTI Energy Corp.
485 Devon Park Drive, Suite 112
Wayne, PA 19087
or to such other address as any party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
(c) LAW GOVERNING. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICT OF LAWS.
(d) ATTORNEYS' FEES. In any action or proceeding brought
to enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the successful party shall be entitled to
recover reasonable attorneys' fees (including any fees incurred in any appeal)
in addition to its costs and expenses and any other available remedy.
(e) HEADINGS. The descriptive headings of the several
Sections and paragraphs of this Agreement are inserted for convenience only,
and do not constitute a part of this Agreement and shall not affect in any way
the meaning or interpretation of this Agreement.
(f) ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
other writings referred to herein or delivered pursuant hereto which form a
part hereof contain the entire understanding of the parties with respect to its
subject matter. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter. This
Agreement may be amended and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either
retroactively or prospectively) only by a written instrument duly executed by
the Company and the Holders. Each holder of any Registrable Securities at the
time or thereafter outstanding shall be bound by an amendment or
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<PAGE> 16
waiver authorized by this Section 8.6, whether or not any such Registrable
Securities shall have been marked to indicate such consent.
(g) ASSIGNABILITY. This Agreement shall be binding upon
and inure to the benefit of the respective successors and assigns of the
parties hereto provided, however, that the Registration Rights hereunder shall
only be available to the Holders, their Affiliates and to their Transferees.
(h) COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(i) VALIDITY, DUE AUTHORIZATION. By its execution
hereof, the Company represents and warrants that it has the corporate power to
execute, deliver and perform the terms and provisions of this Agreement and
that it has taken all appropriate and necessary corporate action to authorize
the transactions contemplated hereby and the execution, delivery and
performance of this Agreement.
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<PAGE> 17
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed
as of the day, month and year first above written.
UTI Energy Corp.
By: /s/ VAUGHN E. DRUM
-------------------------------------
Name: Vaughn E. Drum
Title: President and Chief Executive
Officer
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<PAGE> 18
Canpartners Investments IV, LLC,
a California limited liability company
By: Canpartners Incorporated,
a California corporation,
its managing member
By: /s/ MICHAEL R. JULIS
--------------------------------------
Name: Michael R. Julis
Title: Vice President
c/o Canyon Partners Incorporated
9665 Wilshire Boulevard
Suite 200
Beverly Hills, CA 90212
310/247-2700 (O)
310/247-2701 (F)
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