EXHIBIT 4.12
SIXTH AMENDMENT
Dated as of March 17, 1995
SIXTH AMENDMENT dated as of March 17, 1995 (this "Amendment") to CREDIT
AGREEMENT dated as of February 25, 1993 (as amended by First Amendment dated as
of August 3, 1993, Second Amendment dated as of September 23, 1993, Third
Amendment dated as of December 1, 1993, Fourth Amendment dated as of May 12,
1994, and Fifth Amendment and Waiver dated as of October 31, 1994, the "Credit
Agreement") among VARCO INTERNATIONAL, INC., a California corporation, CITICORP
USA, INC. and CITIBANK, N.A.
PRELIMINARY STATEMENTS. The parties to the Credit Agreement wish to amend
the Credit Agreement in certain respects as hereinafter set forth. Terms
defined in the Credit Agreement are used in this Amendment as defined in the
Credit Agreement and, except as otherwise indicated, all references to Sections
and Articles refer to the corresponding Sections and Articles of the Credit
Agreement.
The parties hereto therefore agree as follows:
SECTION 1. Amendments. Effective as of the Amendment Effective Date (as
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defined in Section 2 hereof), and subject to the satisfaction of the conditions
precedent set forth in Section 2 hereof, the Credit Agreement is hereby amended
as follows:
a. The definition of "Borrowing Base" in Section 1.01 is amended by
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deleting clause (b) and restating it as follows:
(b) seventy percent (70%) of Eligible Inventory
b. The definition of "Change of Control" in Section 1.01 is deleted and
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restated as follows:
"Change of Control" means the acquisition by any Person (or "group" within
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the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) of beneficial ownership of 20% or more of the common stock of the
Borrower, or the occurrence of any transaction which has in substance the same
effect, except that the term "Change of Control" shall not include the
acquisition by Xxxxx Xxxxxx Incorporated of beneficial ownership of 20% or more
(but not in excess of 25%) of the common stock of the Company solely as a result
of any reduction in the number of outstanding shares of common stock
attributable to the Stock Repurchase Program.
c. The definition of "Consolidated Fixed Charges" in Section 1.01 is
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deleted and restated in full as follows:
"Consolidated Fixed Charges" means, for any period, the sum of (a)
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Consolidated Interest Expense for such period plus (b) the amount of any
principal payments on Debt (excluding the Subordinated Note, the Subordinated
Debentures and Debt included in clauses (c) or (d) of the definition of "Debt")
required to be paid during such period.
d. The definition of "Loan Maturity Date" in Section 1.01 is deleted and
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restated in full as follows:
"Loan Maturity Date" means October 31, 1998 or the earlier date of
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termination in whole of the Commitments pursuant to Section 2.07 or 6.01.
e. The definition of "Note" in Section 1.01 is deleted and restated in full
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as follows:
"Note" means the Promissory Note substantially in the form of Exhibit A
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hereto, made by the Borrower in favor of the Lender to evidence the indebtedness
resulting from the Advances.
f. The definition of "Stock Repurchase Program" in Section 1.01 is deleted
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and restated in full as follows:
"Stock Repurchase Program" means the purchase by the Borrower at any time
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or from time to time during the period commencing May 12, 1994 and ending on
December 31, 1995 of its common stock for an aggregate cost not exceeding
$50,000.000.
g. The definition of "Termination Date" in Section 1.01 is deleted and
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restated in full as follows:
"Termination Date" means December 31, 1998 or the earlier date of
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termination in whole of the Commitments pursuant to Section 2.07 or 6.01.
h. Section 2.01 is deleted and restated as follows:
SECTION 2.01 The Advances. The Lender agrees, on the terms and conditions
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hereinafter set forth, to make advances (the "Advances") to the Borrower from
time to time on any Business Day during the period from the date hereof to, but
excluding, the Loan Maturity Date in an amount not to exceed the Availability on
such date and in an aggregate amount not to exceed at any time outstanding
$25,000,000 as such amount may be reduced pursuant to Section 2.07. Each
Advance shall be in an amount not less than $1,000,000 or an integral multiple
of $500,000 in excess thereof, except that a Base Rate Advance may be in an
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amount equal to the maximum Advance available hereunder. Within the limits set
forth in this Section 2.01, the Borrower may borrow, repay pursuant to Section
2.11 and reborrow under this Section 2.01.
i. Section 4.09 is deleted and restated as follows:
SECTION 4.09 Not a Purpose Credit. The Borrower and its Subsidiaries are
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not engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation G, U or X issued by the
Board of Governors of the Federal Reserve System), and no proceeds of any
Advance will be used to purchase or carry any margin stock (other than purchases
of common stock of the Borrower not otherwise prohibited by this Agreement) or
to extend credit to others for the purpose of purchasing or carrying any margin
stock.
j. Section 5.01(i) is deleted and restated as follows:
(i) Use of Proceeds. The Borrower will use the proceeds of the Advances
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for the Stock Repurchase Program and for general corporate purposes.
k. Section 5.02(h) is deleted and restated as follows:
(h) Prepayment of Senior Notes. The Borrower will not and will not permit
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any of its Subsidiaries to prepay, redeem, defease (whether actually or in
substance) or purchase in any manner (or deposit or set aside funds for the
purpose of any of the foregoing), or make any payment in respect of principal
of, the Senior Notes; provided that nothing herein shall prohibit the payment of
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any scheduled principal installments of the Senior Notes.
l. Section 5.02(a) is deleted and restated as follows:
(o) Capital Expenditures. The Borrower will not and will not permit any of
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its Subsidiaries to make or incur any Capital Expenditures during any fiscal
year if the amount of such Capital Expenditures, when added to the aggregate
amount of all other Capital Expenditures made by the Borrower and its
Subsidiaries on a Consolidated basis during such fiscal year, would exceed 50%
of the sum of Consolidated net income of the Borrower and its Subsidiaries for
such fiscal year, plus any
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amount which, in the determination of Consolidated net income for such fiscal
year, has been deducted for depreciation and amortization.
m. Section 5.02(q) is deleted and restated as follows:
(q) Operating Lease Obligations. The Borrower will not and will not permit
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any of its Subsidiaries to create or suffer to exist any obligations for the
payment of rental for any property under leases or agreements to lease with a
term of one year or longer (other than Capital Lease Obligations permitted
pursuant to Section 5.02(p)), except for such obligations providing for
aggregate rentals payable during any fiscal year by the Borrower and its
Subsidiaries on a Consolidated basis not exceeding 3% of Consolidated gross
revenues of the Borrower and its Subsidiaries for such fiscal year.
n. Section 5.03(a) is deleted and restated as follows:
(a) Minimum Consolidated Interest Coverage Ratio. At the end of any fiscal
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quarter the Borrower will not permit the ratio of its Consolidated EBIT to its
Consolidated Interest Expense to be less than 3.0 to 1 for the four consecutive
fiscal quarter period ending on such date.
o. Section 5.03(b) is deleted and restated as follows:
(b) Minimum Consolidated Fixed Charge Coverage Ratio. At the end of any
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fiscal quarter the Borrower will not permit the ratio of Consolidated Cash Flow
to Consolidated Fixed Charges to be less than 1.0 to 1 for the four consecutive
fiscal quarter period ending on such date.
p. Section 5.03(c) is deleted and restated as follows:
(c) Minimum Consolidated Current Ratio. The Borrower will not permit the
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ratio of Consolidated Current Assets to Consolidated Current Liabilities to be
less than 2.2 to 1 as of the last day of any fiscal quarter.
q. Section 5.03(d) is deleted and restated as follows:
(d) Minimum Consolidated Leverage Ratio. The Borrower will not permit the
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ratio of Consolidated Total Liabilities to Consolidated Tangible Net Worth to be
more than (a) 1.5 to 1 at any time prior to January 1, 1996, (b) 1.1 to 1 at
any time from January 1, 1996 to January 1, 1997, and (c) 1.0 to 1 at any time
thereafter.
r. Section 5.03(e) is deleted and restated as follows:
(e) Minimum Consolidated Tangible Net Worth. The Borrower will not permit
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its Consolidated Tangible Net Worth at any time to fall below an amount equal to
the sum of (x) $72,000,000 plus (y) 75% of Consolidated net income of the
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Borrower and its Subsidiaries, on a cumulative basis, for each fiscal quarter of
the Borrower in which such Consolidated net income is positive (beginning with
the fiscal quarter ending on March 31, 1995 and including each fiscal quarter of
the Borrower ending thereafter). The cumulative total in clause (x) above shall
not be reduced or affected by any net losses incurred in any fiscal quarter.
s. Exhibit A is deleted and restated in its entirely in the form of Exhibit
A hereto.
SECTION 2. Conditions to Effectiveness: Consent. This Amendment shall be
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effective as of March 17, 1995 (the "Amendment Effective Date"), subject to the
Lender's receipt of: (i) a counterpart of this Amendment executed by the
Borrower, (ii) a promissory note substantially in the form Exhibit A hereto made
by the Borrower in favor of the Lender (the "Replacement Note"), (iii) a
certificate of the Secretary or an Assistant Secretary of the Borrower
attaching a copy of the resolutions of the Board of Directors of the
Borrower authorizing the execution and delivery of this Amendment and the
Replacement Note and certifying the name and true signature of each officer of
the Borrower executing this Amendment and the Replacement Note on its behalf,
(iv) counterparts of a Consent and Acknowledgment in the form attached as
Exhibit B hereto executed by each Guarantor, (v) evidence satisfactory to the
Lender of the execution and delivery by the Borrower and the holders of at least
66-2/3% in aggregate principal amount of the Senior Notes of a Waiver and Third
Amendment to Note Agreement in the form previously furnished to the Lender (the
"Note Agreement Amendment"), (vi) evidence satisfactory to the Lender of the
execution and delivery by the Borrower and the holders of at least 66-2/3% in
aggregate principal amount of the Senior Notes of the Waiver dated March 8, 1995
in the form previously furnished to the Lender (the "Note Agreement Waiver"),
and (vii) evidence satisfactory to the Lender that the execution of this
Amendment and performance of the Credit Agreement as hereby amended will not
conflict with the Senior Note Agreement and that the covenants of the Senior
Note Agreement have been amended so as to be no more restrictive than the
covenants set forth in Section 5.03 as hereby amended. The Lender and the
Issuing Bank hereby consent to the Note Agreement Amendment and the Note
Agreement Waiver, in each case whether the same is executed and delivered before
or after the execution and delivery of this Amendment.
SECTION 3. Representations and Warranties. The Borrower represents and
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warrants as follows as of the date hereof and the Amendment Effective Date: (a)
the Borrower is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction indicated at the beginning of this
Amendment; (b) the execution, delivery and performance by the Borrower of this
Amendment and the Replacement Note are within the Borrower's corporate powers,
have been duly authorized by all necessary corporate action and do not
contravene the Borrower's charter or by-laws, or any law or any contractual
restriction binding on or affecting the Borrower; (c) no authorization, approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body is required for the due execution and delivery by the
Borrower of this Amendment and the Replacement Note or for the performance by
the Borrower of the Credit Agreement as hereby amended; (d) this Amendment, the
Replacement Note and the Credit Agreement as hereby amended constitute the
legal, valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with their respective terms; (e) except as set forth in
the Notice of Default from the Company to the Lender and the Issuing Bank dated
March 8, 1995 (the "Notice of Default"), all representations and warranties of
the Borrower set forth in Article IV are true and correct, as if repeated and
restated in full herein (except to the extent that such representations and
warranties expressly relate solely to an earlier date and then are correct as of
such date); and (f) except as set forth in the Notice of Default, no Default or
Event of Default has occurred and is continuing.
SECTION 4. Reference to and Effect on the Credit Agreement. Upon the
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effectiveness of Section 1 hereof, on and after the Amendment Effective Date,
(a) each reference in the Credit Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import, and each reference in the Note or
the other Loan Documents to "the Credit Agreement," shall mean and be a
reference to the Credit Agreement as amended by this Amendment and (b) each
reference in the Credit Agreement and the other Loan Documents to the Note shall
mean and be a reference to the Replacement Note. Except as specifically amended
above, the Credit Agreement shall continue to be in full force and effect and is
hereby in all respects ratified and confirmed.
SECTION 5. Execution in Counterparts. This Amendment may be executed in
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any number of counterparts and by any combination of the parties hereto in
separate counterparts, each of which counterparts shall be an original and all
of which taken together shall constitute one and the same Amendment.
SECTION 6. Governing Law. This Amendment shall be governed by, and
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construed in accordance with the laws of the State of New York.
SECTION 7. Expenses. Each party hereto shall bear its own costs and
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expenses (including counsel fees and expenses) in connection with the
preparation, execution and delivery of this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
VARCO INTERNATIONAL, INC.
By:__________________________________
Title:_______________________________
CITICORP USA, INC.
By:__________________________________
Vice President
CITIBANK, N.A.
By:__________________________________
Vice President
EXHIBIT A
PROMISSORY NOTE
$25,000,000 Dated: February 25, 1993
FOR VALUE RECEIVED, the undersigned, Varco International, Inc., a
California corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
Citicorp USA, Inc. (the "Lender") on the Loan Maturity Date (as defined in the
Credit Agreement) the principal amount of $25,000,000 or, if less, the aggregate
principal amount of all Advances made by the Lender to the Borrower pursuant to
the Credit Agreement (as hereinafter defined) outstanding on such date.
The Borrower promises to pay interest on the principal amount of each
Advance from the date of such Advance until such principal amount is paid in
full, at such interest rates, and payable at such times, as are specified in the
Credit Agreement referred to below.
Both principal and interest are payable in lawful money of the United
States of America to the Lender at the office of Citibank, N.A. located at 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 in same day funds. Each Advance made by
the Lender to the Borrower, and all payments made on account of the principal
amount thereof, shall be recorded by the Lender and, prior to any transfer
thereof, endorsed on the grid attached hereto which is a part of this Promissory
Note, provided that the failure of the Lender to record or endorse any such
matters shall not affect the validity of this Note or the obligations of the
Borrower under the Credit Agreement.
This Promissory Note is the Note referred to in, and is entitled to the
benefits of, the Credit Agreement dated as of February 25, 1993 (as amended to
the date hereof and as it may be further amended from time to time, the "Credit
Agreement") among the Borrower, the Lender and Citibank, N.A. as Issuing Bank,
and the Guaranties referred to therein and entered into pursuant thereto. The
Credit Agreement, among other things (i) provides for the making of advances
(the "Advances") by the Lender to the Borrower from time to time in an aggregate
amount not to exceed at any time outstanding the U.S. dollar amount first above
mentioned, the indebtedness of the Borrower resulting from each such Advance
being evidenced by this Promissory Note, and (ii) contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events
and also for prepayments on account of the principal hereof prior to the
maturity hereof upon the terms and conditions therein specified.
This Promissory Note is delivered in exchange and substitution for the
promissory note of the undersigned dated February 25, 1993 in the principal
amount of $13,000,000.
VARCO INTERNATIONAL, INC.
By:__________________________________
Name:______________________
Title:_______________________
EXHIBIT B
CONSENT AND ACKNOWLEDGMENT
Each of the undersigned hereby (a) acknowledges receipt of a draft in the
form attached as Annex I hereto of the Sixth Amendment dated as of March 17,
1995 (the "Amendment") to the Credit Agreement dated as of February 25, 1993
among Varco International, Inc., Citicorp USA, Inc. and Citibank, N.A. (as
amended to the date of the Amendment, the "Credit Agreement"), (b) consents to
the terms of the Amendment and (c) confirms and agrees that each Loan Document
executed by the undersigned pursuant to and as defined in the Credit Agreement
is, and shall continue to be, in full force and effect and is hereby ratified
and confirmed in all respects except that, on and after the effective date of
the Amendment, (i) each reference in each such Loan Document to "the Credit
Agreement," "thereunder," "thereof," "therein" or words of like import referring
to the Credit Agreement shall mean and be a reference to the Credit Agreement as
amended by the Amendment and (ii) each reference to the "Note" shall mean and be
a reference to the Replacement Note (as defined in the Amendment). This Consent
and Acknowledgment may be executed by the undersigned in two or more
counterparts, each of which shall be deemed an original.
BEST INDUSTRIES, INC., a Texas corporation
By:____________________________
Xxxxxxx X. Xxxxxxx
Vice President - Finance
XXXXXX-XXXXXX TOTCO, INC., a Texas corporation
By:____________________________
Xxxxxxx X. Xxxxxxx
Vice President
VARCO INTERNATIONAL INC PTE LTD, a corporation
organized under the laws of the Republic of Singapore
By:____________________________
Xxxxxxx X. Xxxxxxx
Director
By:____________________________
Xxxxxx Xxxxxxxxxx
Director
VARCO (U.K.) LIMITED, a corporation organized
under the Companies Acts in Scotland
By:____________________________
Name:__________________________
Director
By:____________________________
Name:__________________________
Director
000000 XXXXXXX LTD., a corporation organized
under the laws of the Province of Alberta, Canada
By:____________________________
Xxxxxxx X. Xxxxxxx
Vice President - Finance
XXXXX XX OIL TOOLS B.V., a corporation
organized under the laws of the Netherlands
By:____________________________
Name:__________________________
Managing Director
By:____________________________
Name:__________________________
Managing Director
VARCO XXXXXXX, INC., a Texas corporation
By:____________________________
Xxxxxxx X. Xxxxxxx
Vice President - Finance
METROX, INC., a California corporation
By:____________________________
Xxxxxxx X. Xxxxxxx
Vice President
RIG TECHNOLOGY LIMITED
By:____________________________
Xxxxxxx X. Xxxxxxx
Director
By:____________________________
Xxxxxx Xxxxxxxxxx
Director
