EXHIBIT 10.7
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as
of February 20, 2003, is executed by and among T-3 ENERGY SERVICES, INC., a
Delaware corporation (the "Borrower"), certain Banks party hereto (the "Banks")
and XXXXX FARGO BANK TEXAS, NATIONAL ASSOCIATION, a national banking
association, as agent for itself and the other Banks (the "Agent").
RECITALS:
A. The Borrower, the Agent and the Banks are party to that
certain Credit Agreement dated as of December 17, 2001 (as amended, extended,
renewed, or restated from time to time, the "Agreement"), pursuant to which the
Banks have extended credit to the Borrower in the form of a (a) revolving credit
facility to the Borrower not to exceed $41,500,000 outstanding at any time, with
a $2,500,000 sublimit for letters of credit and (b) single advance term loan in
the original principal amount of $16,500,000.
B. The Borrower, the Agent and the Banks desire to amend the
Agreement to modify certain covenants and other terms and conditions, and to
de-designate certain Subsidiaries as Guarantors, subject to the terms and
conditions contained herein.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows intending to be legally
bound (all provisions of this Amendment being effective as of the date hereof):
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Capitalized terms used in this Amendment, to the
extent not otherwise defined herein, shall have the same meanings as in the
Agreement, as amended hereby.
ARTICLE II
AMENDMENTS
Section 2.01 Amendment to Section 10.3. Section 10.3(d) of the Agreement is
hereby amended and restated in its entirety as follows:
"(d) any such merger or consolidation of the Borrower or a
Subsidiary of the Borrower into, with or to any other Person or any
such purchase or other acquisition by the Borrower or any Subsidiary of
the Borrower of the assets or stock of any other Person where (i)
immediately before and immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing; (ii) the Borrower and its Subsidiaries, taken as a
whole, are in pro forma compliance with all the financial covenants set
forth in Article XI taking into account such purchase or acquisition;
(iii) such Person (or its board of directors or similar body) has
approved such acquisition or other purchase; (iv) taking into account
and including all such transactions since the Effective Date, (A) the
aggregate consideration to be paid or Funded Debt incurred (or assumed)
by the Borrower and its Subsidiaries in connection with any single
purchase or acquisition is not greater than $10,000,000 and (B) the
aggregate consideration to be paid or Funded Debt incurred (or assumed)
by the Borrower and its Subsidiaries in connection with all such
purchases or acquisitions is not greater than $30,000,000; and (v)
prior to the consummation of any such purchase or acquisition, the
Borrower delivers to the Agent evidence satisfactory to the Agent that,
after giving effect to such purchase or acquisition, the amount
available to be borrowed pursuant to Section 2.1(a) of this Agreement
shall be greater than or equal to $5,000,000; and"
Section 2.02 Amendment to Section 11.3. Section 11.3 of the Agreement is
hereby amended and restated in its entirety, as follows:
Section 11.3 Funded Debt to EBITDA Ratio. The Borrower and its
Subsidiaries will maintain at all times, on a consolidated basis, a
Funded Debt to EBITDA Ratio of not greater than (a) 3.00 to 1.00 from
January 1, 2003 through and including June 30, 2003, (b) 2.75 to 1.00
from July 1, 2003 through and including December 31, 2003, and (c) 2.50
to 1.00 at all times thereafter. The Funded Debt to EBITDA Ratio shall
be calculated and tested quarterly as of the last day of each Fiscal
Quarter for the Calculation Period ending on the last day of such
Fiscal Quarter.
Section 2.03 Revocation of Designation of Certain Guarantors. The Borrower
has represented to the Agent that the following Subsidiaries (collectively, the
"De-Designated Subsidiaries") are not Material Subsidiaries:
(a) First Texas Credit Corporation;
(b) Xxxxx, Inc.;
(c) Xxx Machinery Movers, Inc.;
(d) United Wellhead Services of Louisiana, Inc.;
(e) Wellhead Recycling, Inc.;
(f) ARC Disposition, Inc. (f/k/a American Rivet Company,
Inc.);
(g) Philform, Inc.;
(h) OF Acquisition, L.P.;
(i) T-3 Management LP, Inc.;
(j) Cor-Val LP, Inc.;
(k) Preferred Industries LP, Inc.; and
(l) O&M Equipment LP, Inc.
Therefore, pursuant to Section 4.19(c) of the Agreement, the Borrower
hereby revokes its designation of each of the De-Designated Subsidiaries as a
Guarantor. The Agent and the Required Banks hereby (a) accept such foregoing
revocation, and (b) agree that no mandatory
prepayment under Section 4.4(a) is due in respect of such revocation. Upon this
Amendment being effective (irrespective of any notice requirement in Section
4.19(c)), (a) each such De-Designated Subsidiary is hereby released from all of
its obligations under any and all Loan Documents in accordance with Section
4.19(c) of the Agreement, and (b) the Agent has delivered (i) all appropriate
lien release documents and Uniform Commercial Code termination statements to
release its Liens on the assets owned and/or leased by the De-Designated
Subsidiaries, (ii) the originals of any applicable Guaranty Agreement executed
by each such De-Designated Subsidiary, (iii) the original stock certificates
described on Exhibit B attached to this Agreement (and the original stock powers
that correspond to such stock certificates), and (iv) such other documents,
releases or other instruments in respect of such revocation as the Borrower may
reasonably request.
Section 2.04 Amendment to Section 10.3(c). Section 10.3(c) of the Agreement is
hereby amended and restated in its entirety as follows:
"(c) any such purchase or other acquisition by the
Borrower of the assets or stock of any Guarantor or any Subsidiary of
the Borrower, or by any Guarantor of the assets or stock of any
Subsidiary of the Borrower;"
Section 2.05 Addition of Section 10.12. The following language is added to
the Agreement as Section 10.12:
Section 10.12 Restrictions on Certain Subsidiaries.
Notwithstanding any other provision of the Agreement, the Borrower will
not permit any of T-3 Management LP, Inc., Cor-Val LP, Inc., Preferred
Industries LP, Inc., or O&M Equipment LP, Inc. to: (i) incur, create or
assume any Debt, (ii) grant any Liens on its assets, (iii) incur,
create or assume any liabilities other than liabilities arising by
operation of law and the costs of maintaining its corporate existence,
or (iv) engage in any trade or business other than acting as a limited
partner in the limited partnership in which it currently acts as a
limited partner.
ARTICLE III
Conditions Precedent
Section 3.01 Conditions to Effectiveness of Amendment. This Amendment
shall not be effective until the Agent shall have received each of the documents
or other items described on Exhibit A attached to this Amendment, in form and
substance satisfactory to the Agent and the Agent's counsel.
ARTICLE IV
Ratifications, Representations and Warranties
Section 4.01 Ratifications. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and the other Loan Documents and except as expressly
modified and superseded by this Amendment, the terms and provisions of the
Agreement and the other Loan Documents are ratified and confirmed
and shall continue in full force and effect. The Borrower, the Agent and the
Banks agree that the Agreement as amended hereby shall continue to be legal,
valid, binding and enforceable in accordance with its terms.
Section 4.02 Representations and Warranties. The Borrower hereby represents and
warrants to the Agent and the Banks that (i) the execution, delivery and
performance of this Amendment and any and all other Loan Documents executed or
delivered in connection herewith have been authorized by all requisite corporate
action on the part of the Borrower and will not violate the certificate of
incorporation, bylaws or other organizational documents of the Borrower, (ii)
the representations and warranties contained in the Agreement, as amended
hereby, and any other Loan Document are true and correct on and as of the date
hereof as though made on and as of the date hereof except for those that relate
solely to a specific date or have changed as a result of transactions permitted
by the Credit Agreement, (iii) after giving effect to this Amendment, no Default
or Event of Default has occurred and is continuing, and (iv) after giving effect
to this Amendment, the Borrower is in full compliance with all covenants and
agreements contained in the Agreement as amended hereby.
ARTICLE V
Miscellaneous
Section 5.01 Survival of Representations and Warranties. All representations
and warranties made in this Amendment or any other Loan Document including any
Loan Document furnished in connection with this Amendment shall survive the
execution and delivery of this Amendment and the other Loan Documents, and no
investigation by the Agent or any Bank shall affect the representations and
warranties or the right of the Agent or any Bank to rely upon them.
Section 5.02 Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 5.03 APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS
EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE
IN HOUSTON, XXXXXX COUNTY, TEXAS AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
Section 5.04 Successors and Assigns. This Amendment is binding upon and shall
inure to the benefit of the Agent, the Banks and the Borrower and their
respective successors and assigns, except the Borrower may not assign or
transfer its rights or obligations hereunder without the prior written consent
of the Agent and the Banks.
Section 5.05 Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
Section 5.06 Effect of Waiver. No consent or waiver, express or implied, by the
Agent or any
Bank to or for any breach of or deviation from any covenant, condition or duty
by the Borrower shall be deemed a consent or waiver to or of any other breach of
the same or any other covenant, condition or duty.
Section 5.07 Headings. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
Section 5.08 ENTIRE AGREEMENT. THIS AMENDMENT, THE AGREEMENT AND THE OTHER LOAN
DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO RELATING
TO THIS AMENDMENT AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS
AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
EXECUTED effective as of the date first written above.
BORROWER:
T-3 ENERGY SERVICES, INC.
By: /s/ XXXXXX X. XXXXXXX
--------------------------------------------------
Xxxxxx X. Xxxxxxx, Vice President
AGENTS AND BANKS:
XXXXX FARGO BANK TEXAS, NATIONAL
ASSOCIATION, as Agent and a Bank
By: /s/ XXXXX XXXXXX
--------------------------------------------------
Xxxxx Xxxxxx, Assistant Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION,
as Co-Arranger, Syndication Agent and a Bank
By: /s/ XXXXXX X. XXXX
--------------------------------------------------
Name: Xxxxxx X. Xxxx
Title: Duly Authorized Signatory
COMERICA BANK - TEXAS, as a Bank
By: /s/ XXXXXXXX XXXXX
--------------------------------------------------
Name: Xxxxxxxx Xxxxx
Title: Vice President
WHITNEY NATIONAL BANK, as a Bank
By: /s/ XXXXX X. SANTA XXXX III
--------------------------------------------------
Name: Xxxxx X. Santa Xxxx III
Title: Vice President
The undersigned Guarantors hereby consent and agree to this Amendment
and agree that the guaranty agreement respecting the Obligations, as applicable,
to which it is party shall remain in full force and effect and shall continue to
be the legal, valid and binding obligation of the Guarantors enforceable against
the Guarantors in accordance with its terms.
Bolt Manufacturing Co., Inc.
Control Products of Louisiana, Inc.
Cor-Val Holdings, Inc.
Xxxxxxxx Metal Forming, Inc.
Xxxxxx Pump & Services, Inc.
O&M Equipment Holdings, Inc.
Preferred Industries Holdings, Inc.
The Xxx Group, Inc.
Total Power Systems, Inc.
TPS Total Power Systems, Inc. (f/k/a TPS Coastal
Electric, Inc.)
T-3 Machine Tools, Inc. (f/k/a Regal Machine Tool,
Inc.)
T-3 Management Holdings, Inc.
WHIR Acquisition, Inc.
By: /s/ XXXXXX X. XXXXXXX
------------------------------------------------
Xxxxxx X. Xxxxxxx, Vice President of each
of the foregoing companies
A&B Bolt & Supply, Inc.
Manifold Valve Services, Inc.
LSS-Lone Star-Houston, Inc.
Pipeline Valve Specialty, Inc.
United Wellhead Services, Inc.
By: /s/ XXXXXX X. XXXXXXX
------------------------------------------------
Xxxxxx X. Xxxxxxx, Vice President
T-3 Support Services, Inc.
By: /s/ XXXXXX X. XXXXXXX
------------------------------------------------
Xxxxxx X. Xxxxxxx, Vice President
T-3 Financial Services LP, Inc.
By: /s/ XXXXXXX X. XXXXXX
------------------------------------------------
Xxxxxxx X. Xxxxxx, President
Cor-Val L.P.
By: Cor-Val Holdings, Inc.,
its sole general partner
By: /s/ XXXXXX X. XXXXXXX
------------------------------------------------
Xxxxxx X. Xxxxxxx, Vice President
T-3 Management Services, L.P.
By: T-3 Management Holdings, Inc.,
its sole general partner
By: /s/ XXXXXX X. XXXXXXX
------------------------------------------------
Xxxxxx X. Xxxxxxx, Vice President
Preferred Industries, L.P.
By: Preferred Industries Holdings, Inc.,
its sole general partner
By: /s/ XXXXXX X. XXXXXXX
------------------------------------------------
Xxxxxx X. Xxxxxxx, Vice President
O&M Equipment, L.P.
By: O&M Equipment Holdings, Inc.,
its sole general partner
By: /s/ XXXXXX X. XXXXXXX
------------------------------------------------
Xxxxxx X. Xxxxxxx, Vice President
T-3 Financial Services, L.P.
By: T-3 Management Holdings, Inc.,
its sole general partner
By: /s/ XXXXXX X. XXXXXXX
------------------------------------------------
Xxxxxx X. Xxxxxxx, Vice President
