FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Fourth Amendment to Loan and Security Agreement (this "Fourth
Amendment") made and entered into as of the 28th day of May, 2004, is by and
between LaSalle Bank National Association, a national banking association
("LENDER"), with an office located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and Consolidated Oil Well Services, Inc., a Kansas corporation,
having its principal place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇ ("BORROWER").
W I T N E S S E T H:
WHEREAS, prior hereto, Lender provided certain loans, extensions of credit
and other financial accommodations (the "Financial Accommodations") to Borrower
pursuant to (a) that certain Loan and Security Agreement dated as of January 14,
2002, as amended by that certain First Amendment to Loan and Security Agreement
dated as of February 19, 2003, that certain Second Amendment to Loan and
Security Agreement dated as of April 25, 2003, and that certain Third Amendment
to Loan and Security Agreement dated as of April 19, 2004, each by and between
Borrower and Lender (collectively the "Loan Agreement"), and (b) the other
documents, agreements and instruments referenced in the Loan Agreement or
executed and delivered pursuant thereto;
WHEREAS, Borrower has requested that Lender extend the maturity date of
the Revolving Loan to December 31, 2005 (the "Additional Financial
Accommodations"); and
WHEREAS, Lender is willing to provide the Additional Financial
Accommodations, but solely on the terms and subject to the provisions set forth
in this Fourth Amendment and the other agreements, documents and instruments
referenced herein or executed and delivered pursuant hereto.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises and
understandings of the parties hereto set forth herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Lender and Borrower hereby agree as set forth in this Fourth
Amendment.
I. DEFINITIONS.
A. USE OF DEFINED TERMS. Except as expressly set forth in this Fourth
Amendment, all terms which have an initial capital letter where not required by
the rules of grammar are used herein as defined in the Loan Agreement.
B. AMENDED DEFINITIONS. Effective as of the date of this Fourth Amendment,
Section 1 of the Loan Agreement is hereby amended by deleting the definitions of
"Maturity Date" and "Revolving Note" set forth in Section 1 and substituting
therefor the following, respectively:
1
"MATURITY DATE" shall mean December 31, 2005.
"REVOLVING NOTE" shall mean that certain Revolving Note dated as of
May __, 2004, executed and delivered by Borrower to Lender in a maximum
aggregate principal amount not to exceed Two Million and no/100 Dollars
($2,000,000.00), as such Revolving Note is amended, renewed or restated
from time to time.
II. CONDITIONS PRECEDENT. Lender's obligation to provide the Additional
Financial Accommodations to Borrower is subject to the full and timely
performance of the following covenants prior to or contemporaneously with the
execution of this Fourth Amendment:
A. Borrower executing and delivering, or causing to be executed and
delivered to Lender, the following documents, each of which shall be in form and
substance acceptable to Lender:
(i) An original Secretary's Certificate of even date herewith
executed by the Secretary of Borrower to Lender;
(iii) An original Reaffirmation of Continuing Unconditional Guaranty
of even date herewith from each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and Infinity,
Inc.; and
(vii) such other agreements, documents and instruments as Lender may
reasonably request;
B. No Event of Default or any event which with notice, lapse of time or
both would constitute an Event of Default exists under the Loan Agreement, as
amended by this Fourth Amendment, or the Other Agreements (hereinafter defined);
C. No claims, litigation, arbitration proceedings or governmental
proceedings not disclosed in writing to Lender prior to the date of hereof shall
be pending or known to be threatened against Borrower and no known material
development not so disclosed shall have occurred in any claims, litigation,
arbitration proceedings or governmental proceedings so disclosed which in the
opinion of Lender is likely to materially or adversely affect the financial
position or business of Borrower or the capability of Borrower to pay its
obligations and liabilities to Lender; and
D. There shall have been no material or adverse change in the business,
financial condition or results of operations since the date of Borrower's most
recently delivered financial statements to Lender.
III. CONFLICT. If, and to the extent, the terms and provisions of this Fourth
Amendment contradict or conflict with the terms and provisions of the Loan
Agreement, the terms and provisions of this Fourth Amendment shall govern and
control; provided, however, to the extent the terms and provisions of this
Fourth Amendment do not contradict or conflict with the terms and provisions of
the Loan Agreement, the Loan Agreement, as amended by this Fourth Amendment,
shall remain in and have its intended full force and effect, and Lender and
Borrower hereby affirm, confirm and ratify the same.
-2-
IV. SEVERABILITY. Wherever possible, each provision of this Fourth Amendment
shall be interpreted in such manner as to be valid and enforceable under
applicable law, but if any provision of this Fourth Amendment is held to be
invalid or unenforceable by a court of competent jurisdiction, such provision
shall be severed herefrom and such invalidity or unenforceability shall not
affect any other provision of this Fourth Amendment, the balance of which shall
remain in and have its intended full force and effect. Provided, however, if
such provision may be modified so as to be valid and enforceable as a matter of
law, such provision shall be deemed to be modified so as to be valid and
enforceable to the maximum extent permitted by law.
V. REAFFIRMATION. Borrower hereby reaffirms and remakes all of the
representations, warranties, covenants, duties, obligations and liabilities
contained in the Loan Agreement, as amended hereby.
VI. FEES, COSTS AND EXPENSES. Borrower agrees to pay, upon demand, all fees,
costs and expenses of Lender, including, but not limited to, reasonable
attorneys' fees, in connection with the preparation, execution, delivery and
administration of this Fourth Amendment and the other agreements, documents and
instruments executed and delivered in connection herewith or pursuant hereto.
VII. RESERVATION OF RIGHTS. Lender continues to reserve all of its rights and
remedies, including all security interests, assignments and liens pursuant to
the Loan Agreement and the Other Agreements, as well as any rights and remedies
at law, in equity or otherwise. Nothing contained in this Fourth Amendment shall
be or be deemed a waiver of any presently existing or any hereafter arising or
occurring breach, default or event of default, including, nor shall preclude the
subsequent exercise of any of Lender's rights or remedies.
VIII. CHOICE OF LAW. This Fourth Amendment has been delivered and accepted in
Chicago, Illinois, and shall be governed by and construed in accordance with the
laws of the State of Illinois, regardless of the laws that might otherwise
govern under applicable principles of conflicts of law as to all matters,
including matters of validity, construction, effect, performance and remedies.
IX. COUNTERPART. This Agreement may be executed in two or more counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
X. WAIVER OF JURY TRIAL. BORROWER AND LENDER EACH HEREBY WAIVE THEIR RESPECTIVE
RIGHT TO TRIAL BY JURY.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Fourth
Amendment as of the date first written above.
CONSOLIDATED OIL WELL SERVICES, INC., a Kansas corporation LASALLE BANK NATIONAL ASSOCIATION, a national banking
association
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------------------ --------------------------------------------------
Title: President Title: Assistant Vice President
---------------------------------------------------- -------------------------------------------------
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FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Fifth Amendment to Loan and Security Agreement (this "Fifth
Amendment") made and entered into as of the 9th day of July, 2004, is by and
between LaSalle Bank National Association, a national banking association
("LENDER"), with an office located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
and Consolidated Oil Well Services, Inc., a Kansas corporation, having its
principal place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
("BORROWER").
W I T N E S S E T H:
WHEREAS, prior hereto, Lender provided certain loans, extensions of credit
and other financial accommodations (the "Financial Accommodations") to Borrower
pursuant to (a) that certain Loan and Security Agreement dated as of January 14,
2002, as amended by that certain First Amendment to Loan and Security Agreement
dated as of February 19, 2003, that certain Second Amendment to Loan and
Security Agreement dated as of April 25, 2003, that certain Third Amendment to
Loan and Security Agreement dated as of April 19, 2004, and that certain Fourth
Amendment to Loan and Security Agreement dated as of May 28, 2004, each by and
between Borrower and Lender (collectively the "Loan Agreement"), and (b) the
other documents, agreements and instruments referenced in the Loan Agreement or
executed and delivered pursuant thereto;
WHEREAS, Borrower has requested that Lender, among other things (a)
increase the principal amount of Term Loan B, and (b) extend the maturity dates
of the Revolving Loan and Term Loan B to December 31, 2007 (collectively, the
"Additional Financial Accommodations"); and
WHEREAS, Lender is willing to provide the Additional Financial
Accommodations, but solely on the terms and subject to the provisions set forth
in this Fifth Amendment and the other agreements, documents and instruments
referenced herein or executed and delivered pursuant hereto.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises and
understandings of the parties hereto set forth herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Lender and Borrower hereby agree as set forth in this Fifth
Amendment.
I. DEFINITIONS.
A. USE OF DEFINED TERMS. Except as expressly set forth in this Fifth
Amendment, all terms which have an initial capital letter where not required by
the rules of grammar are used herein as defined in the Loan Agreement.
1
B. AMENDED DEFINITIONS. Effective as of the date of this Fifth Amendment,
Section 1 of the Loan Agreement is hereby amended by deleting the definitions of
"Maturity Date", "Permitted Distributions", "Revolving Note" and "Term Note B",
as set forth in Section 1, and substituting therefor the following,
respectively:
"MATURITY DATE" shall mean December 31, 2007.
"MAXIMUM LOAN LIMIT" shall mean Seven Million Four Hundred
Forty-Seven Thousand Six Hundred Eighty and no/100 Dollars
($7,447,680.00).
"PERMITTED DISTRIBUTIONS" shall mean dividends or other cash
payments to Borrower's parent, Infinity, Inc., in an aggregate amount not
to exceed Excess Cash Flow on a cumulative basis beginning August 1, 2004
and continuing thereafter, provided that at the time of each such payment,
(i) no Event of Default, or any event which, if uncured, will become an
Event of Default after notice or lapse of time (or both), then exists or
would be created by such dividends or other cash payments, or (ii) Lender
has not, in Lender's sole discretion, notified Borrower to discontinue all
such dividends or other cash payments.
"REVOLVING NOTE" shall mean that certain Revolving Note dated as of
July 9, 2004, executed and delivered by Borrower to Lender in a maximum
aggregate principal amount not to exceed Two Million and no/100 Dollars
($2,000,000.00), as such Revolving Note is amended, renewed or restated
from time to time.
"TERM NOTE B" shall mean that certain Term Note B dated as of July
9, 2004, executed and delivered by Borrower to Lender in the original
principal amount of Five Million Four Hundred Forty-Seven Thousand Six
Hundred Eighty and no/100 Dollars ($5,447,680.00), as such Term Note B is
amended, renewed or restated from time to time.
C. NEW DEFINITIONS. Effective as of the date of this Fifth Amendment,
Section 1 of the Loan Agreement is hereby amended by adding the following new
definitions in the appropriate alphabetical order:
"CAPITAL EXPENDITURES" shall mean with respect to any period, the
aggregate of all expenditures (whether paid in cash or accrued as
liabilities and including expenditures for capitalized lease obligations)
by Borrower during such period that are required by GAAP, to be included
in or reflected by the property, plant and equipment or similar fixed
asset accounts (or intangible accounts subject to amortization) on the
balance sheet of Borrower.
"EBITDA" shall mean, for any period, the net earnings of Borrower
plus, to the extent deducted in calculating net earnings, expenses for
interest, income taxes and depreciation and amortization, all as
determined in accordance with GAAP consistently applied.
"EXCESS CASH FLOW" shall mean Borrower's EBITDA minus Borrower's
Fixed Charges, minus Capital Expenditures not financed with long term
debt, minus One Dollar ($1.00) on a cumulative basis beginning August 1,
2004, and continuing through the Maturity Date.
-2-
"FIXED CHARGES" shall mean, for any period, the total of (i)
interest expense for such period, plus (ii) payments of principal with
respect to all indebtedness and liabilities for borrowed money (including,
without limitation, payments on capitalized lease obligations) scheduled
or otherwise required to be made during such period, plus (iii) income
taxes paid during such period and any distributions to shareholders in
respect of income taxes for such period, plus (iv) any other dividends or
distributions to shareholders made on or after August 1, 2004.
II. LOAN AGREEMENT MODIFICATIONS.
A. Term Loan B Repayment. Effective as of the date of this Fifth
Amendment, subsection 2(d)(v) of the Loan Agreement is hereby amended by
deleting said subsection in its entirety and substituting the following
therefor:
"(v) Repayment of Term Loan B. Term Loan B shall be repaid as
follows: (a) forty-one (41) successive monthly principal payments of One
Hundred Thirteen Thousand Four Hundred Ninety-Three and 33/100
($113,493.33) each, together with accrued interest to the date of each
payment, beginning July 31, 2004, and continuing on the last day of each
calendar month thereafter through and including November 30, 2007, and (b)
a final payment of all then outstanding Liabilities evidenced by Term Note
B on December 31, 2007. If any such payment due date is not a Business
Day, then such payment may be made on the next succeeding Business Day and
such extension of time shall be included in the computation of the amount
of interest and fees due hereunder."
B. Term Loan B. Effective as of the date of this Fifth Amendment, Section
2(f) of the Loan Agreement is hereby amended by deleting said Section in its
entirety and substituting the following therefor:
"(f) Subject to the terms and conditions of this Agreement and the
Other Agreements, Lender has previously made a term loan to Borrower in
the principal amount of Two Million Two Hundred Thirteen Thousand Nine
Hundred Seven and 94/100 Dollars ($2,213,907.94) ("Term Loan B"). The
current outstanding principal balance of Term Loan B as of July 9, 2004,
is $1,917,029.82. Lender has agreed to lend additional funds to Borrower
to increase the total current outstanding principal balance of Term Loan B
to Five Million Four Hundred Forty-Seven Thousand Six Hundred Eighty and
no/100 Dollars ($5,447,680.00). The proceeds of the additional advance on
Term Loan B shall be used by Borrower to: (a) pay off third party loans
secured by certain of Borrower's equipment, (b) fund certain Capital
Expenditures, and (c) to transfer funds to Borrower's parent for purposes
of investing in certain leasehold rights in land and other oil and gas
well development and operating costs. Term Loan B constitutes a "Loan"
under this Agreement and shall bear interest as provided in Paragraph 4(a)
below. Term Loan B shall be evidenced by and repaid in accordance with
Term Note B."
-3-
C. Interest Rate. Effective as of the date of this Fifth Amendment,
Section 4(a) of the Loan Agreement is hereby amended by deleting said Section in
its entirety and substituting the following therefor:
"(a) Each Loan shall bear interest at the rate of one and
one-quarter percent (1.25%) per annum in excess of the Prime Rate in
effect from time to time, payable on the last Business Day of each month
in arrears. Said rate of interest shall increase or decrease by an amount
equal to each increase or decrease in the Prime Rate effective on the
effective date of each such change in the Prime Rate. Upon the occurrence
of an Event of Default and during the continuance thereof, each Loan shall
bear interest at the rate of two and one-quarter percent (2.25%) per annum
in excess of the interest rate otherwise payable thereon, which interest
shall be payable on demand. All interest shall be calculated on the basis
of a 360-day year."
D. Prepayment Penalty. Effective as of the date of this Fifth Amendment,
the last sentence of Section 10 of the Loan Agreement is hereby amended by
deleting said sentence in its entirety and substituting the following therefor:
"If, during the term of this Agreement, Borrower prepays all of the
Liabilities and this Agreement is terminated, Borrower agrees to pay to
Lender as a prepayment fee, in addition to the payment of all other
Liabilities, an amount equal to (i) three percent (3%) of the Maximum Loan
Limit if such prepayment occurs on or before December 31, 2005, (ii) two
percent (2%) of the Maximum Loan Limit if such prepayment occurs on or
after January 1, 2006, but on or before December 31, 2006, or (iii) one
percent (1%) of the Maximum Loan Limit if such prepayment occurs on or
after January 1, 2007 and prior to the Maturity Date."
E. Notice. Effective as of the date of this Fifth Amendment, Section 19 of
the Loan Agreement is hereby amended by deleting Lender's address in its
entirety and substituting the following therefor:
"LaSalle Bank National Association
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇"
III. CONDITIONS PRECEDENT. Lender's obligation to provide the Additional
Financial Accommodations to Borrower is subject to the full and timely
performance of the following covenants prior to or contemporaneously with the
execution of this Fifth Amendment:
A. Borrower executing and delivering, or causing to be executed and
delivered to Lender, the following documents, each of which shall be in form and
substance acceptable to Lender:
(i) An original executed Revolving Note and Term Note B;
-4-
(ii) An original Secretary's Certificate of even date herewith
executed by the Secretary of Borrower to Lender;
(iii) An original Reaffirmation of Continuing Unconditional Guaranty
of even date herewith from each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and
Infinity, Inc.; and
(iv) Such other agreements, documents and instruments as Lender may
reasonably request;
B. No Event of Default or any event which with notice, lapse of time or
both would constitute an Event of Default exists under the Loan Agreement, as
amended by this Fifth Amendment, or the Other Agreements;
C. No claims, litigation, arbitration proceedings or governmental
proceedings not disclosed in writing to Lender prior to the date of hereof shall
be pending or known to be threatened against Borrower and no known material
development not so disclosed shall have occurred in any claims, litigation,
arbitration proceedings or governmental proceedings so disclosed which in the
opinion of Lender is likely to materially or adversely affect the financial
position or business of Borrower or the capability of Borrower to pay its
obligations and liabilities to Lender; and
D. There shall have been no material or adverse change in the business,
financial condition or results of operations since the date of Borrower's most
recently delivered financial statements to Lender.
IV. CONFLICT. If, and to the extent, the terms and provisions of this Fifth
Amendment contradict or conflict with the terms and provisions of the Loan
Agreement, the terms and provisions of this Fifth Amendment shall govern and
control; provided, however, to the extent the terms and provisions of this Fifth
Amendment do not contradict or conflict with the terms and provisions of the
Loan Agreement, the Loan Agreement, as amended by this Fifth Amendment, shall
remain in and have its intended full force and effect, and Lender and Borrower
hereby affirm, confirm and ratify the same.
V. SEVERABILITY. Wherever possible, each provision of this Fifth Amendment shall
be interpreted in such manner as to be valid and enforceable under applicable
law, but if any provision of this Fifth Amendment is held to be invalid or
unenforceable by a court of competent jurisdiction, such provision shall be
severed herefrom and such invalidity or unenforceability shall not affect any
other provision of this Fifth Amendment, the balance of which shall remain in
and have its intended full force and effect. Provided, however, if such
provision may be modified so as to be valid and enforceable as a matter of law,
such provision shall be deemed to be modified so as to be valid and enforceable
to the maximum extent permitted by law.
VI. REAFFIRMATION. Borrower hereby reaffirms and remakes all of its
representations, warranties, covenants, duties, obligations and liabilities
contained in the Loan Agreement, as amended hereby.
-5-
VII. FEES, COSTS AND EXPENSES.
A. Borrower agrees to pay, upon demand, all fees, costs and expenses of
Lender, including, but not limited to, reasonable attorneys' fees, in connection
with the preparation, execution, delivery and administration of this Fifth
Amendment and the other agreements, documents and instruments executed and
delivered in connection herewith or pursuant hereto.
B. Contemporaneously herewith, Borrower shall pay to Lender a fully-earned
non-refundable amendment fee in the amount of Fifty Thousand and no/100 Dollars
($50,000.00).
VIII. RESERVATION OF RIGHTS. Lender continues to reserve all of its rights and
remedies, including all security interests, assignments and liens pursuant to
the Loan Agreement and the Other Agreements, as well as any rights and remedies
at law, in equity or otherwise. Nothing contained in this Fifth Amendment shall
be or be deemed a waiver of any presently existing or any hereafter arising or
occurring breach, default or event of default, including, nor shall preclude the
subsequent exercise of any of Lender's rights or remedies.
IX. CHOICE OF LAW. This Fifth Amendment has been delivered and accepted in
Chicago, Illinois, and shall be governed by and construed in accordance with the
laws of the State of Illinois, regardless of the laws that might otherwise
govern under applicable principles of conflicts of law as to all matters,
including matters of validity, construction, effect, performance and remedies.
X. COUNTERPART. This Agreement may be executed in two or more counterparts, each
of which will be deemed an original, but all of which together will constitute
one and the same instrument.
XI. WAIVER OF JURY TRIAL. BORROWER AND LENDER EACH HEREBY WAIVE THEIR RESPECTIVE
RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, the parties hereto have duly executed this Fifth
Amendment as of the date first written above.
CONSOLIDATED OIL WELL SERVICES, INC., a Kansas corporation LASALLE BANK NATIONAL ASSOCIATION, a national banking
association
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------------------ --------------------------------------------------
Title: President Title: Assistant Vice President
---------------------------------------------------- -------------------------------------------------
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