EXHIBIT 10.16
FOURTEENTH AMENDMENT
TO LOAN AND SECURITY AGREEMENT
This Fourteenth Amendment to Loan and Security Agreement (the "Amendment")
is made and entered into on this 26th of September, 1997, to be effective as of
the respective date herein indicated, by and between RED MAN PIPE & SUPPLY CO.,
an oklahoma corporation ("Borrower"), and FLEET CAPITAL CORPORATION, a Rhode
Island corporation, successor-in-interest by merger to Fleet Capital
Corporation, a Connecticut corporation, formerly known as Shawmut Capital
Corporation, successor-in-interest to Barclays Business Credit, Inc. ("Lender").
PRELIMINARY STATEMENTS:
1. Borrower and Lender have entered into that certain Loan and Security
Agreement dated as of May 3, 1991, as heretofore amended (as amended from time
to time, the "Agreement").
2. Borrower and Lender desire to amend the Agreement and the other
Agreements as hereinafter set forth.
AGREEMENTS:
NOW, THEREFORE, in consideration of the agreements herein contained,
subject to the terms and conditions set forth herein Borrower and Lender hereby
agree as follows, and agree that, subject to satisfaction of the provisions of
Section 7 hereof, the amendments specified below shall be effective from and
after the respective date herein indicated and shall be incorporated into the
Agreement and shall supersede those provisions in the Agreement referenced as
follows:
1. DEFINITIONS
(a) Terms used herein and defined in the Agreement shall have the
meanings set forth in the Agreement, except as otherwise provided herein.
(b) Effective as of September 1, 1997, the following new definitions
are hereby added to Section 1.1 of the Agreement to be inserted in their proper
alphabetical order and to read in their entirety as follows:
"Eurodollar Adjustment Date - the first Business Day of the calendar month
during which Lender receives the Compliance Certificate required by Section
91(M) hereof, beginning with the Compliance Certificate with the effective
date of July 31, 1997 (provided, however, that if the Compliance
Certificate with an effective date of July 31. 1997, is received by Lender
prior to September 1, 1997, the first Eurodollar Adjustment Date shall be
September l, 1997.
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Eurodollar Margin - for all Eurodollar Loans outstanding during the period
beginning on a Eurodollar Adjustment Date and ending on the day preceding the
subsequent Eurodollar Adjustment Date, the applicable percent per annum set
forth in the pricing table below respectively for Revolving Credit Loans and for
the Term Loan opposite the EBITDA calculated for the trailing twelve (12)
calendar month period ending on the effective date of the applicable Compliance
Certificate.
PRICING TABLE
EURODOLLAR
MARGIN FOR EURODOLLAR
REVOLVING MARGIN FOR
CREDIT LOANS TERM LOAN
(i) greater than $20,000,000 (i) 1.00% (i) 1.25%
(ii) Equal to or greater than (ii) 1.25% (ii) 1.50%
$18,000,000, but not
greater than $20,000,000
(iii) Equal to or greater than (iii) 1.50% (iii) 1.75%
$16,000,000, but not
greater than $18,000,000
(iv) Equal to or greater than (iv) 1.75% (iv) 2.00%
$14,000,000, but not
greater than $16,000,000
(v) Equal to or greater than (v) 2.00% (v) 2.25%
$12,000,000, but not
greater than $14,000,000
(vi) Equal to or greater than (vi) 2.25% (vi) 2.50%
$10,000,000, but not
greater than $12,000,000
(vii) Less than $10,000,000 (vii) 2 .50% (vii) 2.75%
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If Borrower shall fail to deliver a Compliance Certificate by the date
required pursuant to Section 9.1(M) of this Agreement, then effective as of the
date such Compliance Certificate becomes delinquent, the applicable Eurodollar
Margin shall be conclusively presumed to equal the highest applicable Eurodollar
Margin specified in the pricing table set forth above, such automatic adjustment
to remain in effect until the first Business Day of the calendar month during
which such delinquent Compliance Certificate is delivered. From and after the
first Business Day of the calendar month during which such delinquent Compliance
Certificate is delivered and until the next Eurodollar Adjustment Date, the
Eurodollar Margin shall be determined by reference to such delinquent Compliance
Certificate and the pricing table set forth above.
Fourteenth Amendment - That certain Fourteenth Amendment to Loan and
Security Agreement executed by Borrower and Lender."
(c) Effective as of September 1, 1997, the definition of "Base Rate
Loan" is amended and restated to read in its entirety as follows:
"Base Rate Loan -- a Revolving Credit Loan or Term Loan which bears
interest at a rate per annum based on the Base Rate."
(d) Effective as of September 1, 1997, the definition of "Borrowing
Base" contained in Section 1.1 of the Agreement is amended and restated to read
in its entirety as follows:
"Borrowing Base - as at any date of determination thereof, an amount
equal to the lesser of:
(a) the Revolving Credit Loan Commitment as of such date, minus the
outstanding principal amount of the Term Loan as of such date; or
(b) an amount up to:
(i) ninety percent (90%) of the net amount (after deduction of such
reserves as Lender deems proper and necessary, in its sole discretion,
including a reserve for sales tax payables) of Eligible Accounts
outstanding at such date;
PLUS
(ii) the lesser of (A) $l5,000,000 or (B) or ninety percent (90%) of
the value of the net amount (after deduction of such reserves as
Lender deems proper and necessary. in its sole discretion, including a
reserve for sales tax payables) of Eligible International Accounts
outstanding at such date;
PLUS
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(iii) the lesser of (A) $35,000,000 or (B) sixty percent (60%) of the
value of (after deduction of such reserves as Lender deems proper and
necessary, in its sole discretion) of Eligible Inventory at such date
consisting of oil country tubular goods held for sale in the ordinary
course of Borrower's business, calculated on the basis of the lower of
cost or market;
PLUS
(iv) the lesser of (A) $35,000,000 or (B) fifty percent (50%) of the
value (after deduction of such reserves as Lender deems proper and
necessary, in its sole discretion) of Eligible Inventory at such date
consisting of consumable supplies held for sale in the ordinary course
of Borrower's business, calculated on the basis of the lower of cost
or market and of Eligible Inventory at such date consisting of line
pipe held for sale in the ordinary course of Borrower's business,
calculated on the basis of the lower of cost or market;
MINUS (subtract from the SUM of clauses (i), (ii),
(iii), and (iv) above)
(v) an amount equal to the sum of (A) the face amount of all LC
Guaranties and Letters of Credit issued by Lender or Affiliates of
Lender and outstanding at such date and (B) any amounts which Lender
may be obligated to pay in the future for the account of Borrower
pursuant to this Agreement, the other Agreements or otherwise.
For purposes hereof, the net amount of Eligible Accounts or Eligible
International Accounts, as the case may be, at any time shall be the face amount
of such Eligible Accounts or such Eligible International Accounts, less any and
all returns, discounts (which may, at Lender's option, be calculated on shortest
terms), credits, allowances or excise taxes of any nature at any time issued,
owing, claimed by Account Debtors, granted, outstanding or payable in connection
with such Accounts at such time."
(e) Effective as of September 1, 1997, the definition of "Eligible
International Accounts" contained in Section 1.1 of the Agreement is amended by
deleting therefrom the reference to the dollar amount "$5,000,000" and
substituting therefor the dollar amount "$10,000,000".
(f) Effective as of September 1, 1997, the definition of "Eurodollar
Loan" is amended and restated to read in its entirety as follows:
"Eurodollar Loan -- a Revolving Credit Loan or Term Loan which bears
interest at a rate per annum based upon the Eurodollar Base Rate."
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(g) Effective as of September 1, 1997, the definition of "Term Note"
contained in Section 1.1 of the Agreement is amended and restated to read in its
entirety as follows:
"Term Note - the term note to be executed by Borrower on or about the date
of execution of the Fourteenth Amendment in favor of Lender to evidence the
Term Loan, which shall be in substantially the form of Exhibit 'K' attached
to the Fourteenth Amendment."
2. THE TERM LOAN. Effective as of the date of execution of this
Amendment, Section 2.1 (B) of the Agreement is hereby amended and restated to
read in its entirety as follows:
"(B) Borrower agrees, represents and warrants that it has requested that
Lender convert $10,000,000 of the principal amount of Revolving Credit
Loans made to Borrower by Lender which are outstanding on the date of
execution of the Fourteenth Amendment, to a term loan (such $10,000,000
term loan made to Borrower on the date of execution of the Fourteenth
Amendment being referred to in this Agreement as the 'Term Loan'). Subject
to the terms and conditions of this Agreement (including, without
limitation, execution and delivery by Borrower of the Term Note), Lender
agrees to make the Term Loan to Borrower on the date of execution of the
Fourteenth Amendment. The Term Loan shall be repayable in accordance with
the terms of the Term Note. and shall be secured by the Collateral."
3. INTEREST AND CHARGES. Effective as of September 1, 1997:
(a) Section 3.1(A) of the Agreement is amended and restated to read in
its entirety as follows:
"The principal amount of the Term Loan outstanding from day-to-day
shall bear interest, calculated daily, at the following rates per
annum (individually called, as applicable, an 'Annual Term Rate'): (i)
each Term Loan which is a Eurodollar Loan shall bear interest at a
rate per annum equal to the lesser of (a) the applicable Eurodollar
Margin applicable to the Term Loan, plus the Eurodollar Base Rate, or
(b) the Maximum Legal Rate, and (ii) each Term Loan which is a Base
Rate Loan shall bear interest at a rate per annum equal to the lesser
of (a) a fluctuating rate per annum equal to 0.50% above the Base
Rate, or (b) the Maximum Legal Rate. The principal amount of the
Revolving Credit Loans outstanding from day-to-day shall bear
interest, calculated daily, at the following rates per annum
(individually called, as applicable an 'Annual Revolving Rate'): (i)
each Revolving Credit Loan which is a Eurodollar Loan shall bear
interest at a rate per annum equal to the lesser of (a) the applicable
Eurodollar Margin applicable to Revolving Credit Loans, plus the
Eurodollar Base Rate or (b) the Maximum Legal Rate, and (ii) each
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Revolving Credit Loan which is a Base Rate Loan shall bear interest at
a rate per annum equal to the lesser of (a) a fluctuating rate per
annum equal to 0.25% above the Base Rate, or (b) the Maximum Legal
Rate. Borrower shall deliver to Lender a notice electing to have the
Revolving Credit Loans and/or the Term Loan, as the case may be, made
hereunder accrue at the Eurodollar Base Rate or the Base Rate (plus,
in each case, the percentages set forth above), and Borrower may
subsequently change the manner in which interest accrues on the
Revolving Credit Loans and/or the Term Loan, as the case may be (from
Eurodollar Base Rate to Base Rate or from Base Rate to Eurodollar Base
Rate) by written notice to Lender, each such change being effective
three (3) Business Days after receipt of such notice by Lender. All
outstanding Revolving Credit Loans shall accrue interest in the same
manner. The entire outstanding principal amount of the Term Loan shall
accrue interest in the same manner. Borrower may not elect to have a
portion of the Revolving Credit Loans accrue interest based upon the
Eurodollar Base Rate, and a portion accrue interest based upon the
Base Rate (plus, in each case, the percentages set forth above).
Borrower may not elect to have a portion of the outstanding principal
amount of the Term Loan accrue interest based upon the Eurodollar Base
Rate, and a portion accrue interest based upon the Base Rate (plus, in
each case, the percentages set forth above). Notwithstanding anything
herein to the contrary, unless otherwise agreed by Lender, the
becoming due of any obligations (other than requested Revolving Credit
Loans) shall be deemed irrevocably to be a request by Borrower for a
Base Rate Loan on the due date on the amount then so due."
(b) Section 3.1 (H) of the Agreement is hereby deleted in its
entirety.
4. UNUSED FACILITY FEE. Effective as of September 1, 1997, Section 3.2(C)
of the Agreement is amended by deleting therefrom the phrase "one-half percent
(0.50%)" and substituting therefor the phrase "three-eighths of one percent
(0.375%)".
5. CAPITALIZATION OF BORROWER. Effective as of September 1, 1997, Section
8.1 of the Agreement is amended and restated to read in its entirety as follows:
"(P) The issued and outstanding stock of Borrower consists of (i) an
aggregate of 157,692 shares of Class A Common Stock, which is voting stock,
(ii) 34,344 shares of Class B Common Stock, which is nonvoting stock. and
(iii) 2,000 shares of Class C Preferred Stock. Borrower has delivered to
Lender true and correct copies of all agreements pursuant to which the
holders of Class C Preferred Stock are entitled to receive distributions,
including a true and correct copy of the Financial Agreement."
6. CAPITAL EXPENDITURES. Effective as of September l, 1997, Section
9.2(H) of the Agreement is amended and restated to read in its entirety as
follows:
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"(H) Make Capital Expenditures or payments on account of Capital Leases
which exceed in the aggregate $2,500,000 for any fiscal year, beginning
with the fiscal year ending October 31, 1997."
7. LEVERAGE RATIO. Effective as of September 1, 1997, Section 9.3(A) of
the Agreement is amended and restated to read in its entirety as follows:
"(A) Maintain a Leverage Ratio not greater than the ratio shown below for
the date corresponding thereto:
Date Amount
November 1, 1996 through October 31, 1997 5.0 to 1.0
November 1, 1997 through October 31, 1998 4.75 to 1.0
November 1, 1998 and thereafter 4.50 to 1.0"
8. EXHIBITS. Effective as of the date of execution of this Amendment, (i)
references in the Agreement to Exhibit "H" shall hereafter be deemed to be
references to Exhibit "H" attached hereto, and (ii) references in the Agreement
to Exhibit "J" shall hereafter be deemed to be references to Exhibit "J"
attached hereto, and (iii) references in the Agreement to Exhibit "K" shall
hereafter be deemed to be references to Exhibit "K" attached hereto.
9. CONDITIONS. The obligation of Lender to be bound by the provisions of
this Amendment shall be subject to the fulfillment of the following conditions
precedent on or before the date hereof:
(a) Lender shall have received all of the following, each in form and
substance satisfactory to Lender, in its sole discretion, and each duly executed
by each party thereto, other than Lender:
(i) This Amendment;
(ii) The Term Note;
(iii) Third Amendment to Sale and Participation Agreement, dated
on or about the date hereof, executed by The CIT Group/Business
Credit, Inc. ("CIT Group") (the "Third Amendment to Participation
Agreement");
(iv) Modifications to such existing real estate lien documents as
shall be required by Lender, duly executed by Borrower;
(v) An amendment to the existing agency fee letter agreement,
duly executed by Borrower; and
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(vi) A11 other documents Lender may request with respect to any
matter relevant to this Amendment or the transactions contemplated
hereby.
(b) No Event of Default shall have occurred and be continuing and no
Default shall exist, unless such Event of Default or Default has been
specifically waived in writing by Lender
(c) Borrower shall have performed and complied with all agreements and
conditions contained in the Agreement and the other Agreements which are
required to be performed or complied with by Borrower before or on the date
hereof.
(d) The representations and warranties contained in the Agreement, as
amended hereby, and the other Agreements shall be true and correct in all
material respects as of the date hereof, with the same force and effect as
though made on and as of this date.
(e) No material adverse change shall have occurred in the business
operations, financial condition or prospects of Borrower, and no material
adverse litigation shall be pending or, to the knowledge of Borrower,
threatened, against Borrower.
(f) All corporate and legal proceedings and all documents required to
be completed and executed by the provisions of, and all instruments to be
executed in connection with the transactions contemplated by, this Amendment and
any related agreements shall be satisfactory in form and substance to Lender.
10. No Waiver. Except as otherwise specifically provided for in this
Amendment, nothing contained herein shall be construed as a waiver by Lender of
any covenant or provision of the Agreement, the other Agreements, this
Amendment, or of any other contract or instrument between Borrower and Lender,
and the failure of Lender at any time or times hereafter to require strict
performance by Borrower of any provision thereof shall not waive, affect or
diminish any right of Lender to thereafter demand strict compliance therewith.
Lender hereby reserves all rights granted under the Agreement, the other
Agreements, this Amendment and any other contract or instrument between Borrower
and Lender.
11. Representations and Warranties. Borrower hereby represents and
warrants to Lender that (a) the execution, delivery and performance of this
Amendment and any and all other Agreements executed and/or delivered in
connection herewith have been authorized by all requisite corporate action on
the part of Borrower and will not violate the Certificate of Incorporation or
Bylaws of Borrower; (b) the representations and warranties contained in the Loan
Agreement, as amended hereby, and any other Agreement are true and correct on
and as of the date hereof and on and as of the date of execution hereof as
though made on and as of each such date; (c) no Default or Event of Default
under the Loan Agreement, as amended hereby, has occurred and is continuing,
unless such Default or Event of Default has been specifically waived in writing
by Lender; and (d) Borrower is in full compliance with all covenants and
agreements contained in the Loan Agreement and the Other Agreements, as amended
hereby.
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12. 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
conf1ned to the provision so held to be invalid or unenforceable.
13. EXPENSES. Borrower shall pay all out-of-pocket expenses of Lender and
CIT Group arising in connection with the preparation, execution and delivery of
this Amendment and the Participation Agreement, including but not limited to,
all reasonable legal fees and expenses incurred by Lender and CIT Group.
14. CONTINUED EFFECT. Except to the extent amended hereby, all terms,
provisions and conditions of the Agreement and all of the other Agreements shall
continue in full force and effect and shall remain enforceable and binding in
accordance with their respective terms.
15. FURTHER ASSURANCES. Borrower shall, at Lender's request, promptly
execute or cause to be executed and delivered to Lender any and all documents,
instruments or agreements deemed necessary by Lender to continue perfection of
Lender s Liens, to facilitate collection of the Collateral or otherwise to give
effect to or carry out the terms or intent of this Amendment.
16. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall for all purposes be deemed an original and all
of which are identical. All parties need not execute the same counterpart.
17. FINAL AGREEMENT. THIS WRITTEN AMENDMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
18. RELEASE. BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE,
COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE
WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS
LIABILITY TO REPAY THE "OBLIGATIONS" OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF
ANY KIND OR NATURE FROM LENDER. BORROWER HEREBY VOLUNTARILY AND KNOWINGLY
RELEASES AND FOREVER DISCHARGES LENDER, ITS PREDECESSORS, AGENTS, EMPLOYEES,
SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF
ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN,
ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR
CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE
THE DATE THIS AMENDMENT IS EXECUTED, WHICH THE BORROWER MAY NOW OR HEREAFTER
HAVE AGAINST LENDER, ITS PREDECESSORS, AGENTS, EMPLOYEES,
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SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS
ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND
ARISING FROM ANY "LOANS", INCLUDING WITHOUT LIMITATION, ANY CONTRACTING FOR,
CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE
HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER
THE LOAN AGREEMENT OR OTHER AGREEMENTS, AND NEGOTIATION FOR AND EXECUTION OF
THIS AMENDMENT.
EXECUTED to be effective as of the date first above written.
RED MAN PIPE & SUPPLY CO., an Oklahoma corporation
By: /s/ Xxx Xxxxx
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Name: XXX XXXXX
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Title: CFO
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FLEET CAPITAL CORPORATION, a Rhode Island
corporation
By: /s/ Xxx X. Xxxxxxxxxxx
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Name: XXX X. XXXXXXXXXXX
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Title: VICE PRESIDENT
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