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EXHIBIT 4.2
WAIVER AND FIRST AMENDMENT
TO LOAN AND SECURITY AGREEMENT
THIS WAIVER AND FIRST AMENDMENT dated as of October 23, 2000
(this "Amendment") to the Amended and Restated Loan and Security Agreement,
dated as of July 10, 2000 (the "Loan Agreement"; capitalized terms defined
therein shall have the same meanings when used herein unless otherwise defined
herein), among each of the direct and indirect Subsidiaries of Grant Prideco,
Inc. ("GPI") specified on Schedule 1 thereto (the "Borrowers"), the financial
institutions from time to time party thereto as lenders (the "Lenders"),
Transamerica Business Credit Corporation, as agent for the U.S. Lenders (the
"Agent"), and Transamerica Commercial Finance Corporation, Canada, as agent for
the Cdn. Lenders (together with the Agent, the "Agents").
WITNESSETH:
WHEREAS, the Borrowers, the Lenders and the Agents are parties
to the Loan Agreement, under which the U.S. Borrowers have granted to the Agent
for the ratable benefit of the Lenders a security interest in all their
Equipment, Inventory and Receivables to secure the obligations of the Borrowers
to the Agents and the Lenders under the Loan Documents;
WHEREAS, Tube-Alloy Corporation proposes to acquire with an
effective date of October 1, 2000 all the Capital Stock of Ideal Machine &
Supply, Inc., a Louisiana corporation ("Ideal"), in consideration for
approximately US$4,300,000 of cash (the "Ideal Acquisition"), and immediately
thereafter cause Ideal to be merged with and into Tube-Alloy Corporation (the
"Ideal Merger");
WHEREAS, Grant Prideco USA, LLC ("Grant USA") has formed a new
Subsidiary, Star Operating Company, a Delaware corporation ("Star"), for the
purpose of acquiring all the assets of Star Iron Works, Inc., a Pennsylvania
corporation, in consideration for approximately US$12,500,000 of cash (the "Star
Acquisition," and together with the Ideal Acquisition, the "Acquisitions"); and
WHEREAS, the Borrowers have requested the Agents and the
Lenders to waive the thirty-day notice requirement set forth in Section 7.2(c)
of the Loan Agreement with respect to the Ideal Merger and amend the Loan
Agreement to add Star as a U.S. Borrower.
NOW, THEREFORE, the Borrowers, the Lenders and the Agents
agree as follows:
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SECTION 1. WAIVER. Section 7.2(c) of the Loan Agreement
requires the Administrative Borrower to give the Agent at least thirty days'
prior written notice of a proposed merger of a Borrower or any Designated
Affiliate with another Person. The Borrowers request that the Lenders and the
Agent waive the thirty-day notice requirement set forth in Section 7.2(c) of the
Loan Agreement before effecting the Ideal Merger. Effective as of the date
hereof, but subject to the satisfaction of the conditions to effectiveness set
forth in Section 3 hereof, the Lenders and the Agents waive the foregoing
thirty-day notice requirement with respect to the Ideal Merger.
SECTION 2. AMENDMENTS TO THE LOAN AGREEMENT. Effective as of
the date hereof, but subject to the satisfaction of the conditions to
effectiveness set forth in Section 3 hereof, the Loan Agreement is amended as
follows:
(a) Section 7.1(h) of the Loan Agreement is amended
by adding the following at the end thereof:
"(vii) Permitted Acquisitions. As soon as
available, and in any event not later than three Business Days
before the consummation of an Acquisition by any Borrower or
Designated Affiliate, a pro forma balance sheet, profit and
loss statement and statement of cash flow of each of GPI and
the Loan Parties party to such Acquisition after giving effect
thereto."
(b) Schedule 1 (Borrowers) to the Loan Agreement is
amended by adding the following at the end thereof:
"8. Star Operating Company, a Delaware
corporation."
(c) Schedule 5.1(a)(xii) (Leased Locations) to the
Loan Agreement is amended by adding the following at the end thereof:
Entity Landlord Property Location
------ -------- -----------------
Tube-Alloy Corporation Xxx X. Xxxxxxxxxxxx, Xxxxx X. 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, XX
Barret, II, Xxxxxx Xxxxxx and Xxxxx 70518
Calais Arnaud
(d) Schedule 6.1(a) (Qualification to do Business in
Foreign Jurisdictions) to the Loan Agreement is amended by adding the following
at the end thereof:
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Entity Del Texas Louisiana Oklahoma Pennsyl New Mexico Alberta
------ --- ----- --------- -------- ------- ----------- -------
Star Operating X X X
Company
(e) Schedule 6.1(b) (Principal Place of Business,
Collateral Jurisdictions) to the Loan Agreement is amended by adding the
following at the end thereof:
Borrower Collateral Jurisdictions
-------- ------------------------
Star Operating Company Xxxxxxxx Xxxxxx, Xxx Xxx, Xxxxxxxxx Xxxxxx, XX 00000
(f) Schedule 6.1(g) (Ownership; Subsidiaries) to the
Loan Agreement is amended by adding the following to the end thereof:
Entity State or Country % of Shares Shareholder
------ ---------------- ----------- -----------
Star Operating Company Delaware 100% Grant Prideco USA, LLC
(g) Schedule 6.1(l) (Former Names; Trade Names) to
the Loan Agreement is amended by adding the following to the end thereof:
Star Operating Company Star Iron Works, Inc.
Tube-Alloy Corporation Ideal Machine & Supply,
Inc.
(h) Schedule 7.2(i) (Permitted Liens) to the Loan
Agreement is amended by adding the following to the end thereof:
Company Jurisdiction UCC Tax Lien Judgment
------- ------------ --- -------- --------
Star Operating Company Pennsylvania #2274/97, dated 9/5/97,
assigned to CIT/Equipment on
4/1/99. Collateral is a
Daewoo Model 18 CNC Turning
Center Machine
(i) Schedule 7.1(r) (Bank Accounts) to the Loan
Agreement is amended by adding the following to the end thereof:
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Account
Company Tax ID Bank Info Account # Type
------- ------ --------- --------- ----
Star Operating Company 00-0000000 Chase 00103406121 Lockbox
Star Operating Company 00-0000000 Chase 000-0-00000 Controlled Disbursement
SECTION 3. CONDITIONS TO EFFECTIVENESS. This Amendment shall
not be effective unless and until each of the following conditions shall have
been satisfied, in the Agent's sole determination, on or before October 31,
2000:
(a) The Agent shall have received the following, each
dated the date of delivery thereof or as of an earlier date acceptable to the
Agent, in form and substance acceptable to the Agent:
(i) a counterpart of this Amendment, duly
executed by each Borrower and acknowledged by each Guarantor;
(ii) a true and correct copy of each purchase
and sale, merger or similar agreement related to each of the
Acquisitions, certified by the Secretary or an Assistant
Secretary of the Administrative Borrower;
(iii) an allonge to the U.S. Notes, each duly
executed by Star;
(iv) an amendment to the Pledge Agreement, duly
executed by Grant USA, pledging to the Agent for the ratable
benefit of the Lenders all the shares of Capital Stock of Star
together with all certificates representing such shares and
undated stock powers therefor;
(v) a Supplement to the Contribution
Agreement in the form of Annex I thereto, duly executed by
Star;
(vi) (A) executed Uniform Commercial Code
financing statements (Form UCC-1) naming the Agent as secured
party and each of Grant USA, Star and Tube-Alloy Corporation
as debtors and (B) termination statements, each in form and
substance satisfactory to the Agent, in each case in proper
form for filing in all jurisdictions that the Agent deems
necessary or desirable to perfect and protect the Liens on the
assets acquired by such Loan Parties in connection with the
Acquisitions created under the Loan Agreement and the Security
Documents and the priority thereof;
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(vii) completed requests for information listing
all effective financing statements or registrations filed in
the jurisdictions referred to in clause (vi) above, that name
each of the Loan Parties specified therein as debtor, together
with copies of such financing statements or verification
statements, as the case may be;
(viii) a completed perfection certificate,
substantially in the form of Exhibit P to the Loan Agreement,
signed by the president or a vice president of Star;
(ix) evidence of the release of all Receivables
acquired by the Loan Parties in connection with the
Acquisitions from any blocked account or lockbox arrangement
theretofore applicable to such Receivables;
(x) a Lockbox Agreement, duly executed by Star
and the Lockbox Bank party thereto;
(xi) a pro forma consolidated and consolidating
balance sheet and profit and loss statement of each of GPI,
Grant Prideco, LP, Tube-Alloy Corporation and Star, after
giving effect to the consummation of the Acquisitions and the
Ideal Merger;
(xii) certified copies of all policies of
insurance required by Section 7.1(f) of the Loan Agreement as
a result of the Acquisitions, together with loss payee
endorsements for all such policies naming the Agent as lender
loss payee and an additional insured;
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(xiii) a good standing certificate for Star from
the Secretary of State of each of Delaware, Pennsylvania and
Texas;
(xiv) a certificate of a Responsible Officer of
the Administrative Borrower certifying that (A) the
representations and warranties of the Loan Parties contained
in the Loan Agreement and the other Loan Documents are true
and correct in all material respects (and subject to the
delivery to the Agent of updated schedules to the Loan
Agreement as provided in Section 6.3 thereof) on and as of the
date of such certificate as if then made, other than
representations and warranties that expressly relate solely to
an earlier date, in which case they are true and correct as of
such earlier date, and (B) no Default or Event of Default has
occurred and is continuing;
(xv) an opinion of counsel for the Loan Parties
covering such matters incident to the transactions
contemplated by this Amendment as the Agent may reasonably
require, which such counsel is hereby requested by the Loan
Parties to provide;
(xvi) copies of the Governing Documents of Star
and a copy of the resolutions of the Board of Directors of
Star authorizing the execution, delivery and performance of
this Amendment and the other Loan Documents to which Star is
or is to be a party, and the transactions contemplated hereby
and thereby, attached to which is a certificate of the
Secretary or an Assistant Secretary of Star certifying (A)
that such copies of the Governing Documents and resolutions of
Star are true, complete and accurate copies thereof, have not
been amended or modified since the date of such certificate
and are in full force and effect and (B) the incumbency, names
and true signatures of the officers of Star authorized to sign
the Loan Documents to which it is a party;
(xvii) a Collateral Access Agreement for the
additional leased Property specified in Section 2(c) of this
Amendment, duly executed by each Person in possession thereof
or with a Lien thereon or other interest therein;
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(xviii) an environmental survey for each
Property acquired by the Loan Parties in connection with the
Acquisitions; and
(xix) such other agreements, instruments,
documents and evidence as the Agent deems necessary in its
sole and absolute discretion in connection with the
transactions contemplated hereby; and
(b) the Borrowers shall have reimbursed the Agent for
all fees, costs and expenses (including, without limitation, the fees and
expenses of Luskin, Xxxxx & Xxxxxx LLP) incurred by the Agent in connection with
the preparation, negotiation, approval, execution and delivery of this
Amendment.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF STAR. Star
represents and warrants as follows:
(a) Organization, Good Standing and Qualification.
Star (i) is a corporation, duly organized, validly existing and in good standing
under the laws of the State of Delaware, (ii) has the corporate power and
authority to own its properties and assets and to transact the businesses in
which it presently is, or proposes to be, engaged and (iii) is duly qualified,
authorized to do business and in good standing in each jurisdiction where it
presently is, or proposes to be, engaged in business, except to the extent that
the failure to so qualify or be in good standing could not reasonably be
expected to have a Material Adverse Effect. Schedule 6.1(a) to the Loan
Agreement, as amended hereby, specifies all the jurisdictions in which Star is
qualified to do business as a foreign corporation as of the date hereof.
(b) Location of Office, Records and Collateral. The
address of the principal place of business and chief executive office of Star
is, and the books and records of Star and all of its chattel paper and records
of Receivables are maintained exclusively in the possession of Star at, the
address specified for Star in Schedule 6.1(b) to the Loan Agreement, as amended
hereby.
(c) Authority. Star has the requisite corporate power
and authority to execute, deliver and perform its obligations under each of the
Loan Documents to which it is or will be a party. All corporate action necessary
for the execution, delivery and performance by Star of the Loan Documents to
which it is or will be a party (including the consent of shareholders where
required) has been taken.
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(d) Enforceability. This Agreement is and, when
executed and delivered, each other Loan Document to which Star is or will be a
party, will be, the legal, valid and binding obligation of Star enforceable in
accordance with its terms, except as enforceability may be limited by (i)
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
(ii) general principles of equity.
(e) No Conflict. The execution, delivery and
performance by Star of each Loan Document to which it is or will be a party do
not and will not breach or violate (i) any of the Governing Documents of Star,
(ii) any Requirement of Law or (iii) any Material Contract and will not result
in the imposition of any Liens upon any of its properties except in favor of the
Agent.
(f) Consents and Filings. No consent, authorization
or approval of, or filing with or other act by, any shareholders of Star, any
Governmental Authority or any other Person is required in connection with the
execution, delivery, performance, validity or enforceability of this Amendment
or any other Loan Document, the consummation of the transactions contemplated
hereby or thereby or the continuing operations of Star following such
consummation, except the filing of financing and termination statements under
the Code.
(g) Ownership; Subsidiaries. All of its Capital Stock
is owned by Grant USA, and it has no Subsidiaries.
SECTION 5. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS.
(a) On and after the date hereof, each reference in
the Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" and
words of like import, and each reference in the other Loan Documents to the Loan
Agreement shall mean and be a reference to the Loan Agreement as amended hereby.
(b) Except as specifically amended above, the Loan
Agreement shall remain in full force and effect and is hereby ratified and
confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
or an amendment to any right, power or remedy of the Agent or any Lender under
any of the Loan Documents, or constitute a waiver of or an amendment to any
provision of any of the Loan Documents.
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(d) The Borrowers, the Lenders and the Agent agree
that none of the Inventory or Receivables acquired by the Borrowers in
connection with the Acquisitions shall be Eligible Inventory or Eligible
Receivables, respectively, until the Agent shall have completed its audit
thereof and determined to its satisfaction (which shall not be effective unless
and until written notice thereof has been received by the Administrative
Borrower from the Agent) the portion thereof that shall constitute Eligible
Inventory or Eligible Receivables.
(e) This Amendment shall constitute a Loan Document.
SECTION 6. COUNTERPARTS; TELECOPIED SIGNATURES. This Amendment
may be executed in counterparts and by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together shall constitute one and the same instrument.
This Amendment may be executed and delivered by telecopier or other facsimile
transmission all with the same force and effect as if the same was a fully
executed and delivered original, manual counterpart.
SECTION 7. GOVERNING LAW. This Amendment shall be governed by,
and construed in accordance with, the internal laws (as opposed to the conflicts
of law provisions other than section 5-1401 of the New York General Obligations
Law) and decisions of the State of New York.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be executed by its (or its general partner's or managing member's)
proper and duly authorized officer as of the date first set forth above.
U.S. BORROWERS
GRANT PRIDECO, LP
By: Grant Prideco Holding, LLC,
its general partner
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------------
Xxxxxx X. Xxxxxx
Vice President
XL SYSTEMS, LP
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------------
Xxxxxx X. Xxxxxx
Vice President
TEXAS ARAI, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------------
Xxxxxx X. Xxxxxx
Vice President
TUBE-ALLOY CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------------
Xxxxxx X. Xxxxxx
Vice President
CDN. BORROWER
GRANT PRIDECO CANADA LTD.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------------
Xxxxxx X. Xxxxxx
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Secretary
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NEW U.S. BORROWER
STAR OPERATING COMPANY
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
U.S. LENDERS
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By: /s/ Authorized Signature
----------------------------------------------
Name:
Title:
BANK OF AMERICA, N.A.
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------------------------
Xxxxx X. Xxxxxxxxx
Senior Vice President
THE CHASE MANHATTAN BANK
By: /s/ Xxxxxx X. Xxxx
----------------------------------------------
Xxxxxx X. Xxxx
Vice President
FLEET CAPITAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------------
Xxxxxx X. Xxxxxx
Senior Vice President
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CDN. LENDER
TRANSAMERICA COMMERCIAL FINANCE
CORPORATION, CANADA
By: Transamerica Business Credit
Corporation, as Attorney-in-Fact
By: /s/ Authorized Signature
---------------------------------------------
Name:
Title:
AGENT
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By: /s/ Authorized Signature
---------------------------------------------
Name:
Title:
CDN. AGENT
TRANSAMERICA COMMERCIAL FINANCE
CORPORATION, CANADA
By: Transamerica Business Credit
Corporation, as Attorney-in-Fact
By: /s/ Authorized Signature
---------------------------------------------
Name:
Title:
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ACKNOWLEDGED AND AGREED AS OF
THE DATE FIRST SET FORTH ABOVE:
GRANT PRIDECO, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxx
Vice President
GRANT PRIDECO USA, LLC
By: /s/ Authorized Signature
-----------------------------------------
Name:
Title:
XL SYSTEMS INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxx
Vice President
TA INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxx
Vice President
GRANT PRIDECO HOLDING, LLC
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxx
Vice President
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GP EXPATRIATE SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
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