Amended & Restated Loan And Security Agreement

LOAN AND SECURITY AGREEMENT


BY AND BETWEEN


FLEET CAPITAL CORPORATION


AND


BAYARD DRILLING TECHNOLOGY, INC.


DATED: JUNE 18, 1998


$10,000,000


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TABLE OF CONTENTS


Page SECTION 1. CREDIT FACILITY 1
1.1 REVOLVING CREDIT LOANS. 1
1.2 LETTERS OF CREDIT; LC GUARANTIES 2
1.3 ALL LOANS TO CONSTITUTE ONE OBLIGATION 2
1.4 RELEASE OF TREND 2 SECTION 2. INTEREST, FEES AND CHARGES 2
2.1 INTEREST 2
2.2 COMPUTATION OF INTEREST AND FEES 4
2.3 AMENDMENT FEE 4
2.4 LETTER OF CREDIT AND LC GUARANTY FEES 4
2.5 COMMITMENT FEE 4
2.6 SERVICING FEE 4
2.7 AUDIT AND APPRAISAL FEES 4
2.8 REIMBURSEMENT OF EXPENSES 4
2.9 BANK CHARGES 5
2.10 LINE DEBIT FOR CHARGES 5 SECTION 3. LOAN ADMINISTRATION 5
3.1 MANNER OF BORROWING REVOLVING CREDIT LOANS 5
3.2 PAYMENTS 6
3.3 APPLICATION OF PAYMENTS AND COLLECTIONS 7
3.4 LOAN ACCOUNT 7


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3.5 STATEMENTS OF ACCOUNT 7 SECTION 4. TERM AND TERMINATION 8
4.1 TERM OF AGREEMENT 8
4.2 TERMINATION 8 SECTION 5. SECURITY INTERESTS 9
5.1 SECURITY INTEREST IN COLLATERAL 9
5.2 INTENTIONALLY OMITTED 9
5.3 LIEN PERFECTION; FURTHER ASSURANCES 9
5.4 LIEN ON REALTY 10 SECTION 6. COLLATERAL ADMINISTRATION 10
6.1 GENERAL 10
6.2 ADMINISTRATION OF ACCOUNTS 11
6.3 INTENTIONALLY OMITTED 12
6.4 ADMINISTRATION OF DRILLING RIGS 13
6.5 PAYMENT OF CHARGES 13 SECTION 7. REPRESENTATIONS AND WARRANTIES 14
7.1 GENERAL REPRESENTATIONS AND WARRANTIES 14
7.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES 19 SECTION 8. COVENANTS AND CONTINUING AGREEMENTS 19
8.1 AFFIRMATIVE COVENANTS 19
8.2 NEGATIVE COVENANTS 22
8.3 SPECIFIC FINANCIAL COVENANTS 29


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4 SECTION 9. CONDITIONS PRECEDENT 29
9.1 DOCUMENTATION 29
9.2 NO DEFAULT 29
9.3 OTHER LOAN DOCUMENTS 29
9.4 CERTIFICATE OF LIMITED PARTNERSHIP 29
9.5 PARTNERSHIP AGREEMENT 29
9.6 ARTICLES OF INCORPORATION; OPERATING AGREEMENT 30
9.7 GOOD STANDING CERTIFICATES 30
9.8 OPINION LETTERS 30
9.9 INSURANCE 30
9.10 DOMINION ACCOUNT 30
9.11 REPRESENTATIONS 30
9.12 NO LITIGATION 30
9.13 EVIDENCE OF PERFECTION AND PRIORITY OF LIENS IN COLLATERAL 30
9.14 CIT INTERCREDITOR AGREEMENT 30
9.15 NO MATERIAL ADVERSE CHANGE 31 SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT 31
10.1 EVENTS OF DEFAULT 31
10.2 ACCELERATION OF THE OBLIGATIONS 33
10.3 OTHER REMEDIES 33
10.4 REMEDIES CUMULATIVE; NO WAIVER 35 SECTION 11. MISCELLANEOUS 35
11.1 POWER OF ATTORNEY 35


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11.2 INDEMNITY 36
11.3 MODIFICATION OF AGREEMENT; SALE OF INTEREST 37
11.4 SEVERABILITY 37
11.5 SUCCESSORS AND ASSIGNS 38
11.6 CUMULATIVE EFFECT; CONFLICT OF TERMS 38
11.7 EXECUTION IN COUNTERPARTS 38
11.8 NOTICE 38
11.9 LENDER'S CONSENT 39
11.10 CREDIT INQUIRIES 39
11.11 TIME OF ESSENCE 39
11.12 ENTIRE AGREEMENT; APPENDIX A AND EXHIBITS AND SCHEDULES 39
11.13 INTERPRETATION 40
11.14 GOVERNING LAW; CONSENT TO FORUM 40
11.15 WAIVERS BY BORROWER 41
11.16 ORAL AGREEMENTS INEFFECTIVE 41
11.17 NONAPPLICABILITY OF CHAPTER 346 OF THE TEXAS FINANCE CODE 41
11.18 CERTAIN MATTERS OF CONSTRUCTION 42
11.19 RELEASE 42
11.20 AMENDMENT AND RESTATEMENT 42
11.21 JOINDER 42


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Exhibit 10.13


AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT


THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made this 18th day of June, 1998, by and between FLEET CAPITAL CORPORATION ("Lender"), a Rhode Island corporation with an office at 2711 North Haskell Avenue, Suite 2100, LB 21, Dallas, Texas 75204, and Bayard Drilling Technologies, Inc., a Delaware corporation ("Bayard" or "Borrower"), with its chief executive office and principal place of business at 4005 N.W. Expressway, Oklahoma City, Oklahoma 73116 and joined in by Bayard Drilling, L.P., a Delaware limited partnership ("Drilling LP") for the purposes described in Section 11.21 below (the "Agreement"). Capitalized terms used in this Agreement have the meanings assigned to them in Appendix A, General Definitions. Accounting terms not otherwise specifically defined herein shall be construed in accordance with GAAP consistently applied.


SECTION 1. CREDIT FACILITY


Subject to the terms and conditions of, and in reliance upon the representations and warranties made in, this Agreement and the other Loan Documents, Lender agrees to make a total credit facility of up to $10,000,000 available upon Borrower's request therefor, as follows:


1.1 Revolving Credit Loans.


1.1.1 Loans and Reserves. Lender agrees, during the term of this Agreement and for so long as no Default or Event of Default exists, to make Revolving Credit Loans to Borrower from time to time, as requested by Borrower in the manner set forth in Section 3.1.1 hereof, up to a maximum principal amount at any time outstanding equal to the Borrowing Base. Lender shall have the right to establish reserves in such amounts, and with respect to such matters, as Lender shall deem necessary or appropriate, against the amount of Revolving Credit Loans which Borrower may otherwise request under this Section 1.1.1, including, without limitation, with respect to (i) any sums chargeable against Borrower's Loan Account as Revolving Credit Loans under any section of this Agreement; (ii) amounts owing by Borrower and/or Drilling LP to any Person to the extent secured by a Lien on, or trust over, any Property of Borrower and/or Drilling LP other than the CIT Debt; (iii) all amounts of past due rent or other charges owing at such time by Borrower and/or Drilling LP to any landlord of any premises where any of the Collateral is located; and (iv) such other matters, events, conditions or contingencies as to which Lender, in its reasonable judgment, determines reserves should be established from time to time hereunder.


1.1.2 Use of Proceeds. The Revolving Credit Loans shall be used solely for general corporate purposes and capital needs of the Borrower and its Subsidiaries, in a manner consistent with the provisions of this Agreement and Applicable Law. In no event shall any proceeds of any Revolving Credit Loans be used to purchase or to carry, reduce, retire or refinance any Indebtedness incurred to purchase or carry any margin stock (within the meaning of Regulations G or U of the Federal Reserve Board).


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1.2 Letters of Credit; LC Guaranties. Lender agrees, for so long as no Default or Event of Default exists and if requested by Borrower, to (i) issue its, or cause to be issued by its Affiliates, standby Letters of Credit for the account of Borrower or (ii) execute LC Guaranties by which Lender or its Affiliates shall guaranty the payment or performance by Borrower of its reimbursement obligations with respect to standby Letters of Credit, provided that the LC Amount at any time shall not exceed $2,000,000. No Letter of Credit or LC Guaranty may have an expiration date that is after the last day of the Original Term. Any amounts paid by Lender under any LC Guaranty or in connection with any Letter of Credit shall be treated as Revolving Credit Loans, shall be secured by all of the Collateral and shall bear interest and be payable at the same rate and in the same manner as Revolving Credit Loans.


1.3 All Loans to Constitute One Obligation. All Loans shall constitute one general obligation of Borrower, and shall be secured by Lender's security interest in and Lien upon all of the Collateral, and by all other security interests and Liens heretofore, now or at any time or times hereafter granted by Borrower or any Subsidiary to Lender.


1.4 Release of Trend. Trend is hereby released from its obligations under the Original Loan Agreement. Such release shall not affect Trend's obligations as Guarantor or party to a Security Agreement.


SECTION 2. INTEREST, FEES AND CHARGES


2.1 Interest.


2.1.1 Rates of Interest. The outstanding principal amount of the Loans shall bear interest at a fluctuating rate per annum equal to the lesser of (a) one and one-half percent (1.5 %) above the Base Rate (the "Applicable Annual Rate") and (b) the Maximum Legal Rate. The rate of interest applicable to all Loans shall increase or decrease by an amount equal to any increase or decrease in the Base Rate, effective as of the opening of business on the day that any such change in the Base Rate occurs.


2.1.2 Default Rate of Interest. Upon and after the occurrence of an Event of Default, and during the continuation thereof, the principal amount of all Loans shall bear interest at a rate per annum equal to the lesser of (a) two percent (2.00%) above the Applicable Annual Rate and (b) the Maximum Legal Rate.


2.1.3 Maximum Interest. (A) Notwithstanding anything to the contrary in this Agreement or otherwise, (i) if at any time the amount of interest computed on the basis of an Applicable Annual Rate or a Default Rate would exceed the amount of such interest computed upon the basis of the maximum rate of interest permitted by applicable state or federal law in effect from time to time hereafter (the "Maximum Legal Rate"), the interest payable under this Agreement shall be computed upon the basis of the Maximum Legal Rate, but any subsequent reduction in such Applicable Annual Rate or Default Rate, as applicable, shall not reduce such interest thereafter payable hereunder below the amount computed on the basis of the Maximum Legal Rate until the aggregate amount of such interest accrued and payable under this Agreement


2 8 equals the total amount of interest which would have accrued if such interest had been at all times computed solely on the basis of an Applicable Annual Rate or Default Rate, as applicable; and (ii) unless preempted by federal law, an Applicable Annual Rate or Default Rate, as applicable, from time to time in effect hereunder may not exceed the applicable "annual ceiling" as defined in Chapter 303, Optional Interest Rate Ceilings of the Texas Finance Code. If the applicable state or federal law is amended in the future to allow a greater rate of interest to be charged under this Agreement than is presently allowed by applicable state or federal law, then the limitation of interest hereunder shall be increased to the maximum rate of interest allowed by applicable state or federal law as amended, which increase shall be effective hereunder on the effective date of such amendment, and all interest charges owing to Lender by reason thereof shall be payable in accordance with Section 3.2.2 hereof.


(B) Excess Interest. No agreements, conditions, provisions or stipulations contained in this Agreement or any other instrument, document or agreement between Borrower and Lender or default of Borrower, or the exercise by Lender of the right to accelerate the payment of the maturity of principal and interest, or to exercise any option whatsoever contained in this Agreement or any other Loan Document, or the arising of any contingency whatsoever, shall entitle Lender to contract for, charge, or receive, in any event, interest exceeding the Maximum Legal Rate. In no event shall Borrower be obligated to pay interest exceeding such Maximum Legal Rate and all agreements, conditions or stipulations, if any, which may in any event or contingency whatsoever operate to bind, obligate or compel Borrower to pay a rate of interest exceeding the Maximum Legal Rate, shall be without binding force or effect, at law or in equity, to the extent only of the excess of interest over such Maximum Legal Rate. In the event any interest is contracted for, charged or received in excess of the Maximum Legal Rate ("Excess Interest"), Borrower acknowledges and stipulates that any such contract, charge, or receipt shall be the result of an accident and bona fide error, and that any Excess received by Lender shall be applied, first, to reduce the principal then unpaid hereunder; second, to reduce the other Obligations; and third, returned to Borrower, it being the intention of the parties hereto not to enter at any time into a usurious or otherwise illegal relationship. Borrower recognizes that, with fluctuations in the Base Rate and the Maximum Legal Rate, such a result could inadvertently occur. By the execution of this Agreement, Borrower covenants that (i) the credit or return of any Excess Interest shall constitute the acceptance by Borrower of such Excess Interest, and (ii) to the extent permitted by law, Borrower shall not seek or pursue any other remedy, legal or equitable, against Lender, based in whole or in part upon contracting for, charging or receiving of any interest in excess of the maximum authorized by applicable law. For the purpose of determining whether or not any Excess Interest has been contracted for, charged or received by Lender, all interest at any time contracted for, charged or received by Lender in connection with this Agreement shall be amortized, prorated, allocated and spread in equal parts during the entire term of this Agreement.


(C) Incorporation by this Reference. The provisions of Section 2.1.3(B) shall be deemed to be incorporated into every document or communication relating to the Obligations which sets forth or prescribes any account, right or claim or alleged account, right or claim of Lender with respect to Borrower (or any other obligor in respect of Obligations including, without limitation, Drilling LP), whether or not any provision of Section 2.1.3(B) is


3 9 referred to therein. All such documents and communications and all figures set forth therein shall, for the sole purpose of computing the extent of the Obligations of Borrower (or any other obligor) asserted by Lender thereunder, be automatically re-computed by Borrower or any such obligor, and by any court considering the same, to give effect to the adjustments or credits required by Section 2.1.3(B).


2.2 Computation of Interest and Fees. Interest, Letter of Credit and LC Guaranty fees and commitment fees hereunder shall be calculated daily and shall be computed on the actual number of days elapsed over a year of 360 days. For the purpose of computing interest hereunder, all items of payment received by Lender shall be deemed applied by Lender on account of the Obligations (subject to final payment of such items) one (1) Business Day after receipt by Lender of such items in Lender's account located in Atlanta, Georgia, and Lender shall be deemed to have received such items of payment on the date specified in Section 3.3 hereof.


2.3 Amendment Fee. Borrower shall pay to Lender, on the Amendment Date, an amendment fee in the amount of $20,000.


2.4 Letter of Credit and LC Guaranty Fees. Borrower shall pay to Lender for standby Letters of Credit and LC Guaranties of standby Letters of Credit, two percent (2.00%) per annum of the aggregate face amount of such Letters of Credit and LC Guaranties outstanding from time to time during the term of this Agreement, plus all normal and customary charges associated with the issuance thereof, which fees and charges shall be deemed fully earned upon issuance of each such Letter of Credit or LC Guaranty, shall be due and payable on the first Business Day of each month and shall not be subject to rebate or proration upon the termination of this Agreement for any reason.


2.5 Commitment Fee. Borrower shall pay to Lender a commitment fee equal to one-half of one percent (.5%) per annum of the amount by which the Average Monthly Revolving Credit Loan Balance is less than the Total Credit Facility. The commitment fee shall be payable monthly, in arrears, on the last day of each calendar month hereafter.


2.6 Servicing Fee. Borrower shall pay to Lender an annual servicing fee of $20,000. This servicing fee shall be paid in equal installments of $5,000, payable on the first day of each April, July, October, and January thereafter.


2.7 Audit and Appraisal Fees. Borrower shall reimburse Lender for all actual out-of-pocket costs and expenses incurred by Lender in connection with audits and appraisals of Borrower and/or any Subsidiary's books and records and such other matters as Lender shall deem appropriate. All such out-of-pocket expenses shall be payable on demand.


2.8 Reimbursement of Expenses. If, at any time or times regardless of whether or not an Event of Default then exists, Lender incurs reasonable legal expenses or any accounting expenses or any other costs or out-of-pocket expenses in connection with (i) the negotiation and preparation of this Agreement or any of the other Loan Documents, any amendment of or modification of this Agreement or any of the other Loan Documents, or any sale or attempted


4 10 sale of any interest herein to any other Person; (ii) the administration of this Agreement or any of the other Loan Documents and the transactions contemplated hereby and thereby; (iii) any litigation, contest, dispute, suit, proceeding or action (whether instituted by Lender, Borrower or any other Person) in any way relating to the Collateral, this Agreement or any of the other Loan Documents or Borrower's or any Loan Party's affairs; (iv) any attempt to enforce any rights of Lender against Borrower or any other Person which may be obligated to Lender by virtue of this Agreement or any of the other Loan Documents, including the Account Debtors; or (v) any attempt to inspect, verify, protect, preserve, restore, collect, sell, liquidate or otherwise dispose of or realize upon the Collateral; then all such legal and accounting expenses, other costs and out of pocket expenses of Lender shall be charged to Borrower. All amounts chargeable to Borrower under this Section 2.8 shall be Obligations secured by all of the Collateral, shall be payable on demand to Lender and shall bear interest from the date such demand is made until paid in full at the rate applicable to Revolving Credit Loans from time to time. Borrower shall also reimburse Lender for expenses incurred by Lender in its administration of the Collateral to the extent and in the manner provided in Section 6 hereof.


2.9 Bank Charges. Borrower shall pay to Lender, on demand, any and all normal and customary fees, costs or expenses which Lender pays to a bank or other similar institution arising out of or in connection with (i) the forwarding to Borrower or any other Person on behalf of Borrower, by Lender, of proceeds of loans made by Lender to Borrower pursuant to this Agreement and (ii) the depositing for collection, by Lender, of any check or item of payment received or delivered to Lender on account of the Obligations.


2.10 Line Debit for Charges. Lender may, at its option, make a Revolving Credit Loan to reimburse itself for any and all amounts payable by Borrower to Lender hereunder. Alternatively, Lender may invoice Borrower for any such amounts and, in such case and notwithstanding anything contained herein to the contrary, interest shall not begin to accrue on such amounts until five (5) days after the delivery by Lender of such invoice.


SECTION 3. LOAN ADMINISTRATION


3.1 Manner of Borrowing Revolving Credit Loans. Borrowings under the credit facility established pursuant to Section 1 hereof shall be as follows:


3.1.1 Loan Requests. A request for a Revolving Credit Loan shall be made, or shall be deemed to be made, in the following manner: (i) Borrower shall give Lender notice of its intention to borrow, in which notice Borrower shall specify the amount of the proposed borrowing and the proposed borrowing date, no later than 11:00 a.m. Dallas, Texas time on the proposed borrowing date; provided, however, Lender shall have the right to refuse to accept such a request or make a Revolving Credit Loan if at such time there exists a Default or an Event of Default; and (ii) the becoming due of any amount required to be paid under this Agreement or under any of the other Loan Documents, whether as principal, accrued interest, fees or other charges, shall be deemed irrevocably to be a request by Borrower from Lender for a Revolving Credit Loan on the due date of, and in an aggregate amount required to pay, such principal, accrued interest, fees or other charges, and the proceeds of any such Revolving Credit Loan may


5 11 be disbursed by Lender by way of direct payment of the relevant Obligation (whether or not any Default, Event of Default or Out-of-Formula Condition exists at the time of or would result from such Revolving Credit Loan) and shall bear interest at the rate of interest applicable to Revolving Credit Loans. As an accommodation to Borrower, Lender may permit telephonic requests for loans and electronic transmittal of instructions, authorizations, agreements or reports to Lender by Borrower. Unless Borrower specifically directs Lender in writing not to accept or act upon telephonic or electronic communications from Borrower, Lender shall have no liability to Borrower for any loss or damage suffered by Borrower as a resul ...