EXHIBIT 10.1
[Execution]
AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT
AMENDMENT, dated as of September ___, 2002, by and among ICO Worldwide,
Inc., a Texas corporation ("Worldwide"), Wedco, Inc., a New Jersey corporation
("Wedco"), and Bayshore Industrial Inc., a Texas corporation ("Bayshore", and
together with Worldwide and Wedco, each individually a "Borrower" and
collectively, "Borrowers"), ICO, Inc., a Texas corporation ("Parent"), ICO
Polymers, Inc., a Delaware corporation ("Polymers"), Wedco Technology, Inc., a
New Jersey corporation ("Wedco Tech"), Wedco Petrochemical, Inc., a Delaware
corporation ("Wedco Petro") and ICO Technology, Inc., a Delaware corporation
("ICO Tech", and together with Parent, Polymers, Wedco Tech and Wedco Petro each
individually a "Guarantor" and collectively, "Guarantors"), and ICO P&O, Inc., a
Delaware corporation ("P&O"), and ICO Global Services, Inc., a Delaware
corporation ("Global"), and Congress Financial Corporation (Southwest), a Texas
corporation ("Lender").
WITNESSETH:
WHEREAS, Lender and Borrowers have entered into financing arrangements
pursuant to which Lender may make loans and advances and provide other financial
accommodations to Borrowers as set forth in the Loan and Security Agreement,
dated as of April 9, 2002, among Lender, Borrowers, Guarantors, P&O and Global
(as amended hereby and as the same may hereafter be further amended, modified,
supplemented, extended, renewed, restated or replaced, the "Loan Agreement", and
together with all agreements, documents and instruments at any time executed
and/or delivered in connection therewith or related thereto, as from time to
time amended and supplemented, collectively, the "Financing Agreements").
WHEREAS, Parent, Global, Worldwide, ICO Worldwide Tubular Services Pte
Ltd, a corporation organized under the laws of Singapore ("Tubular"), The
Innovation Company, S.A. de C.V., a corporation organized under the laws of
Mexico ("Innovation", together with Parent, Global, Worldwide and Tubular,
"Sellers" and each individually, a "Seller") and Varco International, Inc., a
Delaware corporation ("Varco"), Varco, L.P., a Delaware limited partnership ("US
Buyer"), Varco Coating Ltd., a corporation organized under the laws of Canada
("Canadian Buyer" and together with Varco and US Buyer, collectively "Buyers"
and each individually, a "Buyer") have agreed that Buyers will purchase the
Oilfield Assets (as hereinafter defined) under the terms and conditions of the
Oilfield Sale Agreements (as hereinafter defined); and
WHEREAS, Worldwide will be converted to a Texas limited partnership
named ICO Worldwide LP ("Worldwide LP") and Worldwide LP will assume all of the
obligations and liabilities of Worldwide; and
WHEREAS, Borrowers and Guarantors have requested that Lender consent to
the sale of the Oilfield Assets to Buyer and consent to the conversion and
assumption by Worldwide LP as aforesaid and agree to certain amendments to the
Loan Agreement in connection therewith; and
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WHEREAS, Lender is willing to provide such consents and agree to such
amendments, subject to the terms and conditions herein; and
WHEREAS, by this Amendment No. 1, Lender, Borrowers and Guarantors
desire and intend to evidence such consents and amendments.
NOW THEREFORE, in consideration of the foregoing and the mutual
agreements and covenants contained herein, the parties hereto agree as follows:
1. Definitions.
a. Amendments to Definitions.
i. Sections 1.4(a), (b), and (c) of the Loan Agreement are
hereby deleted in their entirety and replaced with the
following:
Applicable Applicable
Prime Rate Eurodollar Rate
Excess Availability Leverage Ratio Margin Margin
------------------------------------- ----------------------------- ---------- ---------------
(a) Greater than or equal to 2.00 to 1.00 or less 1/4% 2 1/4%
$10,000,000
(b) Greater than or equal to Greater than 2.00 to 1.00 but 1/2% 2 1/2%
$5,000,000 and less than equal to or less than 3.00 to
$9,999,999 1.00
(c) Less than $4,999,999 Greater than 3.00 to 1.00 3/4% 2 3/4%
ii. Section 1.51 of the Loan Agreement is hereby amended by
deleting the reference to "$10,000,000" contained therein and replacing it with
the following: "$6,000,000".
iii. All references to the term "Maximum Credit" in the Loan
Agreement and any of the other Financing Agreements and each such reference is
hereby amended to mean $15,000,000.
b. Additional Definitions. As used herein, the following terms
shall have the meanings given to them below, and the Loan Agreement and the
other Financing Agreements are hereby amended to include, in addition to and not
in limitation of, the following definitions:
i. "Amendment No. 1" shall mean this Amendment No. 1 to
Loan and
Security Agreement by and among Lender, Borrowers, Guarantors, P&O and Global,
as the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
ii. "ICO Canada Shares" shall mean the outstanding shares of
capital stock of ICO Xxxxxxx Inc., a corporation organized under the laws of
Canada.
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iii. "Interest Coverage Ratio" shall mean, at the end of any
fiscal quarter, the ratio computed for the period consisting of such fiscal
quarter of (A) EBITDA for such fiscal quarter (excluding non-cash charges for
fixed asset and goodwill write downs) to (B) the sum of the Interest Expense for
such fiscal quarter plus preferred dividends paid during such fiscal quarter.
iv. "Oilfield Assets" shall mean, collectively, (A) all of the
assets and properties of Sellers relating to the oilfield services business of
Sellers and acquired by US Buyer pursuant to the Oilfield Sale Agreements
described on Exhibit A hereto and (B) the ICO Canada Shares.
v. "Oilfield Asset Sale Proceeds" shall mean all of the proceeds
payable to Buyers from Sellers under the Oilfield Sale Agreements.
vi. "Oilfield Sale Agreements" shall mean, collectively, the
Purchase Agreement, dated as of July 2, 2002, by and among Buyers and Sellers
and all related agreements, documents and instruments, as the same now exist or
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
vii. "Oilfield Sale Closing Date" shall mean the date of the
closing of the sale of the Oilfield Assets by Sellers to Buyers pursuant to the
Oilfield Sale Agreements.
viii. "P&O Account" shall mean account no. 020011181000 in the
name of P&O maintained at Xxxxx Fargo Bank
Texas, N.A., 0000 Xxxxxxxxx, Xxxxx
000, Xxxxxxx, Xxxxx 00000.
ix. "P&O Permitted Investments" shall mean any of the following:
(1) an investment by P&O (by loan, capital contribution, dividend or otherwise)
in any person or any purchase of the Capital Stock or Indebtedness or all or a
substantial part of the assets or property of any person, or the formation or
acquisition of any Subsidiary, to the same extent and subject to the same terms
and conditions as a Borrower may make such investments or such purchases or form
or acquire any Subsidiary, with such terms and conditions applicable to P&O in
all respects instead, as set forth in Sections 9.10(a), 9.10(b), 9.10(c) and
9.10(d) of the Loan Agreement, except that in no event shall the amount of the
Oilfield Asset Sale Proceeds used in any one such transaction exceed $5,000,000
or for all of such transactions in the aggregate exceed $20,000,000, except as
Lender may otherwise agree; (2) any investment in cash and Cash Equivalents
maintained in the P&O Account; (3) the repurchase of Senior Notes in accordance
with the terms of Section 9.9(c)(vi) of the Loan Agreement with the Oilfield
Asset Sale Proceeds; (4) payments by P&O for the working capital of Borrowers or
Guarantors, including the payment of federal and state income taxes, in the
ordinary course of the business of Borrowers or Guarantors as conducted on the
date hereof (but after giving effect to the sale of the Oilfield Assets) and (5)
such other investments as may be acceptable to Lender.
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c. Interpretation. For purposes of this Amendment No. 1, unless
otherwise defined herein, all terms used herein, including, but not limited to,
those terms used and/or defined in the recitals above, shall have the respective
meanings assigned to such terms in the Loan Agreement.
2. Consent to Asset Sale and Conversion of Worldwide. Subject to the terms
and conditions contained herein, Lender hereby consents to:
a. the sale by Sellers to Buyers of the Oilfield Assets pursuant to
the terms of the Oilfield Sale Agreements as in effect on the date hereof,
provided, that the cash proceeds received by Sellers in respect thereof (net of
expenses in connection with such sale) shall be not less than $117,000,000; and
b. the conversion of Worldwide from a
Texas corporation to Worldwide
LP pursuant to Article 5.17 of the
Texas Business Corporation Act (the
"Conversion") with Worldwide OP, L.L.C., a Delaware limited liability company
(the sole member of which is Global), as its General Partner and Worldwide LP,
L.L.C., a Delaware limited liability company (the sole member of which is
Global), as its limited partner, such conversion to be effective on or prior to
the Oilfield Sale Closing Date.
3. Assumption and Adoption.
a. Effective upon the Conversion, Worldwide LP hereby ratifies,
assumes, adopts and agrees to be bound by the Financing Agreements to which
Worldwide is party. Worldwide LP hereby assumes the payment, discharge,
satisfaction and performance of all Obligations of Worldwide to Lender, and
Worldwide LP hereby acknowledges, confirms and agrees that, contemporaneously
with the Conversion, Lender's security interests in and the liens upon the
assets and properties to which Worldwide LP shall succeed pursuant to the
Conversion, and such security interests and liens and their perfection and
priority, shall continue in all respects in full force and effect. Worldwide LP
ratifies, restates, affirms and confirms all of the terms and conditions of the
Financing Agreements to which Worldwide is a party, as amended pursuant hereto,
and Worldwide LP agrees to be fully bound by the terms of the Financing
Agreements to which Worldwide is a party as if it were the original signatory
thereto.
b. Without limiting the generality of the foregoing, the Conversion
shall in no way limit, impair or adversely affect the Obligations of Worldwide
LP or any other Borrower or Guarantor to Lender, howsoever arising, or any
security interests or liens with respect to the assets of Worldwide LP acquired
pursuant to the Conversion or any security interests or liens with respect to
the assets of any other Borrower or Guarantor in favor of Lender.
4. Release Documents. Upon the satisfaction of each of the conditions set
forth in Section 17 and solely to the extent such items to be released
constitute Oilfield Assets sold by Sellers to Buyers pursuant to the Oilfield
Sale Agreements as in effect on the date hereof, Lender shall, at Borrower's
expense, (a) arrange for the delivery of Uniform Commercial Code partial
releases in respect of the Oilfield Assets covered by the UCC financing
statements previously filed by
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Lender, as secured party, against Worldwide, as debtor, in the appropriate
jurisdiction, (b) execute and deliver a partial release, in form and substance
satisfactory to Lender, with respect to the security interest of Lender in (i)
the trademarks pursuant to the Trademark Collateral Assignment and Security
Agreement, dated as of April 9, 2002, by Worldwide in favor of Lender and (ii)
the patents pursuant to the Patent Collateral Assignment and Security Agreement,
dated as of April 9, 2002, by Worldwide in favor of Lender for filing with the
US Patent and Trademark Office and (c) execute and deliver a release of the
Mortgage.
5. Loans. Section 2.l(c)(iii) of the Loan Agreement is hereby amended by
deleting the reference to "$10,000,000" contained therein and replacing it with
the following: "$6,000,000".
6. Unused Line Fee. Sections 3.2(c)(i), (ii) and (iii) of the Loan
Agreement are hereby deleted in their entirety and replaced with the following:
Unused Line Fee
Excess Availability Leverage Ratio Percentage
--------------------------------- ----------------------------------- ---------------
(i) Greater than or equal to 2.00 to 1.00 or less 3/8%
$10,000,000
(ii) Greater than or equal to Greater than 2.00 to 1.00 but equal 3/8%
$5,000,000 and less than to or less than 3.00 to 1.00
$9,999,999
(iii) Less than $4,999,999 Greater than 3.00 to 1.00 1/2%
7. Additional Conditions Precedent. In addition to, and not in limitation
of, the conditions precedent to Lender making any Loans and/or providing any
Letter of Credit Accommodations to Borrowers set forth in Section 4.2 of the
Loan Agreement, each of the following is an additional condition precedent to
Lender making the Loans and/or providing the Letter of Credit Accommodations:
a. the amount of the value of the assets held in the P&O Account shall
be less than $1,000,000; and
b. P&O shall not have used any of the proceeds from the sale of the
Oilfield Assets held in the P&O Account other than to make a P&O Permitted
Investment.
8. Collection of Accounts. Section 6.3(b)(i) of the Loan Agreement is
hereby amended by deleting the reference to "$15,000,000" contained therein and
replacing it with the following: "$5,000,000".
9. Excess Availability for Collateral Reporting, Etc. Sections 7.1,
9.9, 9.10 and 9.11 of the Loan Agreement are hereby amended by deleting each
reference to "$7,500,000" contained therein and replacing each of them with the
following: "$3,000,000".
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10. Indebtedness. Section 9.9(b) of the Loan Agreement is hereby amended
by deleting the reference to "$5,000,000" contained therein and replacing it
with the following: "$7,500,000".
11. Dividends and Redemptions. Section 9.11 of the Loan Agreement is
hereby amended by adding the following new Section 9.11(e) at the end thereof:
"(e) Borrowers and Guarantors may repurchase or redeem any shares
of any class of Capital Stock; provided, that,
(i) as of the date of such repurchase or redemption and
after giving effect thereto, no Default or Event of Default
shall exist or have occurred and be continuing,
(ii) as of the date of such repurchase or redemption and
after giving effect thereto, the aggregate amount of the Excess
Availability of Borrowers shall have been not less than
$3,000,000 for each of the immediately preceding ten (10)
consecutive days and the aggregate amount of the Excess
Availability of Borrowers shall be not less than $3,000,000,
(iii) in no event shall the proceeds of the Loans or the
loans under any Intercompany Credit Facility be used to make any
payment in respect of such repurchase or redemption, unless as
of the date thereof the P&O Unrestricted Cash shall be less than
$10,000,000,
(iv) such repurchase or redemption shall not violate any law
or regulation or the terms of any indenture, agreement or
undertaking to which any Borrower or Obligor or its or their
property are bound,
(v) such repurchase or redemption shall be paid out of
legally available funds therefor,"
12. Financial Covenants. Section 9.17 of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
"9.17 Interest Coverage Ratio. At any time that the aggregate amount
of the Excess Availability of Borrowers is less than $3,000,000, the
Interest Coverage Ratio for Borrowers (on a combined basis) as of the
end of any fiscal quarter shall have been not less than 1.5 to 1."
13. Events of Default. For purposes of Section 10.1 of the Loan Agreement,
all references to the term "Obligor" contained therein shall include, in
addition and not in limitation, P&O.
14. Change in Business. P&O does not have, and shall not acquire, any
assets or property and does not have, and shall not have or engage in, any
operations or the conduct of any
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business, except for the assets held in the P&O Account and Indebtedness owing
to it pursuant to the Intercompany Credit Facilities provided by P&O to Global
and the Indebtedness of P&O arising under the Senior Notes.
15. Transfer of Oilfield Asset Sale Proceeds to P&O. Subject to the terms
and conditions contained herein, Lender hereby consents to the transfer of the
Oilfield Asset Sale Proceeds by Worldwide to P&O so long as a. such funds are
transferred to the P&O Account, b. such funds are transferred other than as a
payment under the Intercompany Credit Facilities and c. P&O shall not transfer,
assign or otherwise dispose of any of its right, title or interest in or to the
P&O Account.
16. Additional Representations, Warranties and Covenants. Each Borrower
and Guarantor, and each of P&O and Global, represents, warrants and covenants
with and to Lender as follows, which representations, warranties and covenants
are continuing and shall survive the execution and delivery hereof, and the
truth and accuracy of, or compliance with each, together with the
representations, warranties and covenants in the other Financing Agreements,
being a continuing condition of the making of Loans by Lender to Borrowers:
a. The security interests in and liens of Lender in and upon all of
the assets of Borrowers and Guarantors (other than the Oilfield Assets) are and
shall continue to be in full force and effect, including, but not limited to,
all amounts at any time payable to Parent or any of its subsidiaries pursuant to
and in connection with the sale of the Oilfield Assets and the Oilfield Sale
Agreements, and all rights, benefits and remedies of Parent and its Subsidiaries
thereunder.
b. The Oilfield Asset Sale Proceeds, net of all costs, expenses, fees
and commissions in connection therewith shall be deposited only in the P&O
Account.
c. Lender has received a true, correct and complete copy of the
Oilfield Sale Agreements as executed by the parties thereto, together with all
schedules and exhibits thereto.
d. Worldwide GP, L.L.C., a Delaware limited liability company (the
sole member of which is Global), is and shall be the sole general partner of
Worldwide LP and Worldwide LP, L.L.C., a Delaware limited liability company (the
sole member of which is Global), is and shall be the sole limited partner of
Worldwide LP and the sole member of each of Worldwide, GP L.L.C. and Worldwide
LP, L.L.C. is and shall be Global. Such membership interests of Global shall be
held by Global free and clear of any security interests, pledges, liens, charges
or other encumbrances of any nature whatsoever.
e. No Event of Default exists or has occurred as of the date of this
Amendment No. 1.
f. This Amendment No. 1 has been duly executed and delivered by each
Borrower and Guarantor and is in full force and effect as of the date hereof and
the agreements and obligations of each Borrower and Guarantor contained herein
constitute legal, valid and binding
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obligations of each Borrower and Guarantor enforceable against each of them in
accordance with their respective terms.
g. No action of, or filing with, or consent or any governmental or
public body or authority, and no approval or consent of any other party, is or
will be required to authorize, or is or will be otherwise required in connection
with, the execution, delivery and performance of this Amendment No. 1.
h. None of the transactions contemplated by this Amendment No. 1
violate or will violate any applicable law or regulation, or do or will give
rise to a default or breach under any agreement to which any Borrower or
Guarantor is a party or by which any property of any Borrower or Guarantor is
bound.
17. Conditions Precedent. Except for the provisions of Section 2 relating
to the Conversion, which are operative as of the date first written above, the
effectiveness of the amendments and consents contained herein shall be subject
to the satisfaction of each of the following, in a manner satisfactory to Lender
and its counsel:
a. Lender shall have received this Amendment No. 1 duly authorized,
executed and delivered by the parties hereto;
b. on or before the date hereof, Lender shall have received a copy of
the Oilfield Sale Agreements (including all schedules and exhibits), which shall
be satisfactory in form and substance to Lender, duly authorized, executed and
delivered by the parties thereto (provided, that, Lender hereby confirms that
all of the Oilfield Sale Agreements delivered to Lender or its counsel prior to
the September 3, 2002 are in form and substance satisfactory to Lender);
c. no Event of Default, or event, act or condition which with notice
or passage of time or both would constitute an Event of Default, shall exist or
have occurred, and
d. the Oilfield Sale Closing Date shall have occurred and shall have
occurred on or before September 30, 2002, or such later date as Lender may agree
to in writing.
18. Effect of this Amendment. Except as expressly set forth herein, no
other amendments, consents, changes or modifications to the Financing Agreements
are intended or implied, and in all other respects the Financing Agreements are
hereby specifically ratified, restated and confirmed by all parties hereto as of
the effective date hereof and Borrowers and Guarantors shall not be entitled to
any other or further amendment or consent by virtue of the provisions of this
Amendment No. 1 or with respect to the subject matter of this Amendment No. 1.
To the extent of conflict between the terms of this Amendment No. 1 and the
other Financing Agreements, the terms of this Amendment No. 1 shall control. The
Loan Agreement and this Amendment No. 1 shall be read and construed as one
agreement.
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19. Further Assurances. The parties hereto shall execute and deliver such
additional documents and take such additional action as may be necessary or
desirable to effectuate the provisions and purposes of this Amendment No. 1.
20. Governing Law. The validity, interpretation and enforcement of this
Amendment No. 1 and the other Financing Agreements and any dispute arising out
of the relationship between the parties hereto whether in contract, tort, equity
or otherwise, shall be governed by the internal laws of the State of
Texas but
excluding any principles of conflicts of law or other rule of law that would
cause the application of the law of any jurisdiction other than the laws of the
State of
Texas.
21. Binding Effect This Amendment No. 1 shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns.
22. Headings. The headings listed herein are for convenience only and do
not constitute matters to be construed in interpreting this Amendment No. 1.
23. Counterparts. This Amendment No. 1 may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment No. 1, it shall not be
necessary to produce or account for more than one counterpart thereof signed by
each of the parties hereto. Delivery of an executed counterpart of this
Amendment No. 1 by telefacsimile shall have the same force and effect as
delivery of an original executed counterpart of this Amendment No. 1. Any party
delivering an executed counterpart of this Amendment No. 1 by telefacsimile also
shall deliver an original executed counterpart of this Amendment No. 1, but the
failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this Amendment No. 1 as to such
party or any other party.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
to be duly executed and delivered by their authorized officers as of the day and
year first above written.
CONGRESS FINANCIAL CORPORATION
(SOUTHWEST)
By: /s/ Xxxx Xxxxxxx
---------------------------------
Title: Vice President
------------------------------
ICO WORLDWIDE LP, successor to
ICO WORLDWIDE, INC.
By: Worldwide GP, L.L.C.,
its General Partner
By: /s/ Xxx X. Xxxx
---------------------------------
Title: Manager
------------------------------
WEDCO, INC.
By: /s/ Xxx X. Xxxx
---------------------------------
Title: Treasurer & CFO
------------------------------
BAYSHORE INDUSTRIAL, INC.
By: /s/ Xxx X. Xxxx
---------------------------------
Title: Treasurer & CFO
------------------------------
WEDCO TECHNOLOGY, INC.
By: /s/ Xxx X. Xxxx
---------------------------------
Title: Treasurer & CFO
------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
WEDCO PETROCHEMICAL, INC.
By: /s/ Xxx X. Xxxx
---------------------------------
Title: Treasurer & CFO
------------------------------
ICO POLYMERS, INC.
By: /s/ Xxx X. Xxxx
---------------------------------
Title: Treasurer & CFO
------------------------------
ICO, INC.
By: /s/ Xxx X. Xxxx
--------------------------------
Title: CFO & Treasurer
------------------------------
ICO TECHNOLOGY, INC.
By: /s/ Xxx X. Xxxx
---------------------------------
Title: President, CFO & Treasurer
------------------------------
AGREED:
ICO & P&O, INC.
By: /s/ Xxx X. Xxxx
--------------------------------
Title: Controller, Secretary,
Treasurer
-----------------------------
ICO GLOBAL SERVICES, INC.
By: /s/ Xxxxxxx Xxxxxx
--------------------------------
Title: President
------------------------------
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