EXHIBIT 10.11
NINTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
APRIL 3, 1995
This Ninth Amendment to Loan and Security Agreement (the "Amendment") is
made and entered into effective as of April 3, 1995, by and between RED MAN PIPE
& SUPPLY CO., an Oklahoma corporation ("Borrower"), and SHAWMUT CAPITAL
CORPORATION, a Connecticut 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 6 hereof, the amendments specified below shall be effective from and
after the date hereof 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) The definition of "Base Rate" contained in Section 1.1 of the
Agreement is hereby amended as follows:
(i) The words "Barclays Bank PLC" are deleted and substituted
therefor are the words "Shawmut Bank Connecticut, N.A."
(ii) The words "at its offices in New York, New York" are
deleted.
(c) The definitions of "Borrowing Base" and "Commitment" contained in
Section 1.1 of the Agreement are hereby deleted, and the following shall be
substituted therefor:
"Borrowing Base - as at any date of determination thereof, an amount
equal to the lesser of:
(a) the 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) $3,500,000 or (B) 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 International Accounts outstanding at such date;
PLUS
(iii) the lesser of (A) $15,000,000 or (B) sixty percent
(60%) 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 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) $15,000,000 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."
"Commitment- $50,000,000."
2. SUBSTITUTION OF SHAWMUT BANK CONNECTICUT, N.A. FOR REFERENCES TO
BARCLAVS BANK PLC. All references to the words "Barclays Bank PLC" contained in
the Loan Agreement are deleted and substituted therefor are the words "Shawmut
Bank Connecticut, N.A.."
3. INTEREST AND CHARGES.
(a) Section 3.1(H) of the Agreement is hereby amended by amending and
restating Subsection (i) thereof to read in its entirety as follows:
"(i) October 31. l995, October 31. 1996, October 31, 1997, and
October 31, 1998 Rate Reduction Calculation Dates. So long as no Default or
Event of Default has occurred, and so long as Borrower achieves the respective
performance factors ('Performance Factors') set out below, upon receipt and
review by Lender of the audited financial statements of Borrower provided
pursuant to Section 9.1(J) demonstrating compliance with (x) the hereinafter
described Level I Performance Factors, the Applicable Rate shall be reduced by
0.25%; (y) the hereinafter described Level II Performance Factors, the
Applicable Rate shall be reduced by an additional 0.25%; and (Z) the hereinafter
described Level III Performance Factors, the Applicable Rate shall be reduced by
an additional 0.25%; provided. however, that in no event shall the Applicable
Rate with respect to the Base Rate Loans (as distinguished from the Eurodollar
Loans) be less than the lesser of (A) 0.75% above the Base Rate or (B) the
Maximum Legal Rate. Such Performance Factors shall be measured on each of
October 31, l995, October 31, 1996, October 31, 1997 and October 31, 1998
(hereinafter, a 'Calculation Date'). Such reduction shall (a) with respect to
Base Rate Loans, be made effective on the November 1 following the relevant
Calculation Date, by (i) crediting the Loan Account by the difference between
the amount of interest paid by Borrower to Lender since such effective date and
the amount of interest which would have been paid by Borrower to Lender since
such effective date had the Applicable Rate been so reduced, and (ii)
recalculating all accrued but unpaid interest, and all interest to accrue with
respect to future transactions, at the Applicable Rate, as so reduced, and (b)
with respect to Eurodollar Loans, be effective only for Eurodollar Loans
requested after the date on which Lender has received and reviewed Borrower's
audited financial statements demonstrating compliance with the respective
Performance Factors set out below. The respective Level I Performance Factors,
Level II Performance Factors and Level III Performance Factors required to be
achieved as of the relevant Calculation Date, in order to attain the relevant
reduction in the Applicable Rate as described above, are as follows:
Level I Performance Factors:
(A) The Average Daily Availability for the six months ending on
the relevant Calculation Date shall equal or exceed twenty percent (20%) of the
Average Daily Loan Balance for such period;
(B) The Adjusted Net Earnings from operations, plus taxes (to the
extent deducted therefrom), for the year ending on the relevant Calculation
Date shall be at least $1,800,000; and
(C) Borrower's Leverage Ratio as of the relevant Calculation Date
shall not exceed 4.S to l.0.
Level II Performance Factors:
(A) Achievement of Level I Performance Factors.
(B) The Average Daily Availability for the six months ending on
the relevant Calculation Date shall equal or exceed twenty percent (20%) of the
Average Daily Loan Balance for such period;
(C) The Adjusted Net Earnings from operations, plus taxes (to the
extent deducted therefrom), for the year ending on the relevant Calculation Date
shall be at least $3,000,000; and
(D) Borrower's Leverage Ratio as of such Calculation Date shall
not exceed 4.0 to l.0.
Level III Performance Factors:
(A) Achievement of Level II Performance Factors.
(B) The Average Daily Availability for the six months ending on
the relevant Calculation Date shall equal or exceed thirty percent (30%) of the
Average Daily Loan Balance for such period;
(C) The Adjusted Net Earnings from operations, plus taxes (to the
extent deducted therefrom), for the year ending on the relevant Calculation Date
shall be at least $5,000,000; and
(D) Borrower's Leverage Ratio as of such Calculation Date shall
not exceed 3.0 to l.0.
Borrower shall be entitled to the benefits of the respective rate reduction
at the first such Calculation Date it achieves the respective Performance
Factors necessary for such rate reduction and may achieve more than one level of
rate reduction at a specific Calculation Date. For example, if at October 31,
l995, Borrower is able to satisfy all of the Level I Performance Factors, Level
II Performance Factors, and Level III Performance Factors, Borrower shall
thereupon become entitled to the rate reduction provided for in connection with
each such Performance Factors level.
Any respective rate reduction made pursuant to this Section 3.1(H)(i) shall
remain in effect only for so long as no Default or Event of Default has occurred
and is continuing and Borrower maintains the respective Leverage Ratio required
for such rate reduction described above. If Borrower loses the benefit of a
specific rate reduction it shall have the opportunity to again achieve the
relevant rate reduction by meeting the relevant Performance Factors at the next
Calculation Date."
4. TERM OF AGREEMENT; TERMINATION.
(a) Section 3.3(A) of the Agreement is hereby amended as follows:
(i) The reference to "October 31, 1996" is hereby deleted and
substituted therefor is the date "October 31, 1999."
(ii) The reference to "August 31, 1996" is hereby deleted and
substituted therefor is the date "August 31, 1999."
(b) Section 3.3(C) of the Agreement is hereby amended and restated to
read in its entirety as follows:
"(C) At the effective date of such termination by Borrower,
Borrower shall pay to Lender (in addition to the then outstanding principal,
accrued interest and other charges, fees and expenses owing under this Agreement
and any of the other Agreements), as liquidated damages for the loss of the
bargain and not as a penalty, an amount equal to the applicable percentage set
forth below of the highest of the Average Daily Loan Balances outstanding for
any month during the applicable term set forth below during which such
termination occurs:
APPLICABLE TERM APPLICABLE PERCENTAGE
November 1, 1994
through October 31,
l995 2.0%
Thereafter 1.0%
If termination occurs on the last day of the original Term, or any renewal
term thereafter, Borrower shall not be obligated to pay Lender any liquidated
damages. The termination charge or prepayment premium for amounts outstanding on
the Term Loan shall be computed in accordance with the provisions of the Term
Note."
(c) Section 10.3(F) of the Agreement is hereby amended by deleting
therefrom the date "December 31, 1996" and substituting therefor the date
"October 31, 1999".
5. DISTRIBUTIONS.
(a) Section 9.2(F) of the Agreement is amended and restated to read in
its entirety as follows:
"(F) (i) Make Distributions during any fiscal year in excess of
the aggregate amount of $250,000 (other than compensation of officers and
directors permitted pursuant to Section 9.2(M) hereof, and other than payments
on Indebtedness owing by Borrower to a shareholder of Borrower provided such
Indebtedness is expressly subordinated to the obligations upon terms and
conditions satisfactory to Lender, in its sole discretion, and such payments are
permitted pursuant to the relevant intercreditor or subordination agreement
entered into by such shareholder and Lender)or (ii) make any Distributions
(other than compensation of officers and directors permitted pursuant to Section
9.2(M) hereof) if at such date there exists an Event of Default hereunder."
6. EXHIBITS. All references in the Agreement to Exhibit "J" shall
hereafter be deemed to be references to Exhibit "J" attached hereto.
7. 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) Intercreditor Agreement, duly executed by Xxxxxx Supply
Company ("Xxxxxx"), in favor of Lender, relating to indebtedness payable by
Borrower to Xxxxxx in connection with the acquisition by Borrower of certain
assets of Xxxxxx pursuant to the provisions of that certain Purchase Agreement,
dated March 2, l995, executed by Xxxxxx as "seller" and Borrower as "buyer" (the
"Purchase Agreement") (such acquisition being referred to herein as the
"Acquisition"), and a copy of the note executed by Borrower to Xxxxxx covered by
the Subordination Agreement;
(iii) Collateral Assignment of Asset Purchase Agreement, duly
executed by Borrower, in favor of Lender, and duly accepted by Xxxxxx, covering
the Purchase Agreement;
(iv) A copy of such documentation executed in connection with the
Xxxxxx Acquisition as shall be requested by Lender;
(v) Landlord's Consents, duly executed by Xxxxxx, in favor of
Lender, covering each of the sites being leased by Xxxxxx to Borrower in
connection with the Xxxxxx Acquisition;
(vi) Written instructions from Borrower directing the application
of the indicated portion of the Loans made on the date of the closing of the
Xxxxxx Acquisition to Xxxxxx and/or to any persons or entities holding perfected
liens in the assets being transferred by Xxxxxx to Borrower, along with
appropriate wiring instructions;
(vii) Modifications to such existing real estate lien documents
as shall be required by Lender, duly executed by Borrower;
(viii) A letter from Xxxxxx'x counsel stating that Lender may
rely on such counsel's opinion to Borrower issued in connection with the
Acquisition;
(ix) The written opinion of counsel to Borrower, regarding
Borrower, the consummation of the Acquisition, and the execution of this
Agreement and the other Agreements executed in connection with this Agreement,
and the transactions contemplated hereby; and
(x) All other documents Lender may request with respect to any
matter relevant to this Amendment or the transactions contemplated hereby,
including, without limitation, the Xxxxxx Acquisition.
(b) Lender shall have received an indemnification letter, duly
executed by Xxxxxx, indemnifying Lender against any losses and expenses Lender
might incur as a result of non-compliance by Xxxxxx and/or Borrower with such
bulk transfer laws of Article Six of the Oklahoma Uniform Commercial Code and
the Utah Uniform Commercial Code
(c) Lender shall have received evidence satisfactory to it, in its
sole discretion, that Lender has a perfected, first priority Lien in the assets
transferred to Borrower in connection with the Xxxxxx Acquisition.
(d) 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.
(e) Borrower and Guarantor 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 or Guarantor
before or on the date hereof.
(f) 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.
(g) No material adverse change shall have occurred in the business
operations, financial condition or prospects of Borrower or Guarantor, and no
material adverse litigation shall be pending or, to the knowledge of Borrower or
Guarantor, threatened, against Borrower or Guarantor.
(h) Lender shall have received, in immediately available funds, a non-
refundable closing fee in the amount of $50,000, which closing fee shall be due
and payable, and be deemed fully earned, upon the execution of this Amendment.
(i) on the date of funding to Borrower of the Loans relevant to the
consummation of the Acquisition, Borrower shall have provided Lender with a duly
completed Borrowing Base Certificate, which Borrowing Base Certificate shall be
satisfactory to Lender, in its sole discretion.
(j) The Class C Preferred Stock issued to Xxxxxx Supply in connection
with the Xxxxxx Acquisition shall have characteristics, rights and preferences
satisfactory to Lender, in its sole discretion.
(k) 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.
8. CONSENT TO AND WAIVER REGARDING XXXXXX ACQUISITION. Borrower has (i)
requested permission from the Lender to consummate the Xxxxxx Acquisition and
accordingly purchase the assets of Xxxxxx listed in the Purchase Agreement, and
(ii) requested that Lender waive the covenants embodied respectively in Section
9.2(A), Section 9.2(E), and Section 9.2(O) of the Agreement to the extent such
covenants would be deemed violated due to the consummation of the Xxxxxx
Acquisition. Subject to the satisfaction of the conditions precedent specified
in Section 7 of this Amendment and to the other terms, conditions, and
provisions of this Amendment, Lender hereby consents to the consummation by
Borrower of the Xxxxxx Acquisition and waives the covenants embodied
respectively in Sections 9.2(A), 9.2(E), and 9.2(Q) of the Agreement to the
extent such covenants would be deemed violated due to the consummation of the
Xxxxxx Acquisition; provided, however, the consent and waiver described in this
Section 8 of this Amendment is strictly limited to the Xxxxxx Acquisition and to
the Sections of the Agreement described above as they relate to the Xxxxxx
Acquisition. 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.
9. 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 wananties 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 arld as of each such date; (c) no Default or Event of Default
under the Loan Agreement, as amended hereby, has occulTed 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.
10. 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.
11. EXPENSES. Borrower shall pay all out-of-pocket expenses arising in
connection with the preparation, execution, delivery and administration of this
Amendment, including, but not limited to, all reasonable legal fees and expenses
incurred by Lender.
12. 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.
13. 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.
14. 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..
15. 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.
16. 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, 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.
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
----------------------------
Title: President
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SHAWMUT CAPITAL CORPORATION
By: /s/ Xxx X. Xxxxxxxxxxx
------------------------------
Name: Xxx X. Xxxxxxxxxxx
----------------------------
Title: Vice President
---------------------------
The undersigned Guarantor, having guaranteed to Lender the payment of the
obligations, as such term is deflned in the Unconditional Limited Guaranty (the
"Guaranty") executed by Guarantor on May 3, 1991, hereby acknowledges, confirms,
and agrees that (i) the execution and delivery of this Amendment does not alter,
affect, diminish, release or reduce his liability under the Guaranty, and (ii)
the Guaranty is in full force and effect to secure the obligations described
therein.
/s/ Xxxxx X. Xxxxxxx
---------------------------------
XXXXX X. XXXXXXX
