EXHIBIT 10.5
THIRD AMENDMENT TO
SECOND AMENDED AND RESTATED LOAN AGREEMENT
THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED LOAN
AGREEMENT (this "Third Amendment" or this "Amendment") dated effective as of
December 19, 2001 is entered into by and among HYDRIL COMPANY, a Delaware
corporation ("Borrower"), the banks listed on the signature pages hereof (along
with any other Person who becomes a lender, the "Lenders"), any Person who
becomes a Guarantor subsequent hereto and BANK ONE, NA, successor-in-interest to
Bank One, Texas, N.A., with its main office in Chicago, Illinois ("Bank One"),
individually as a Lender and as agent for Lenders (in such capacity, the
"Agent").
PRELIMINARY STATEMENT
WHEREAS, Borrower and Bank One, as the Agent and as a Lender,
entered into that certain Second Amended and Restated Loan Agreement dated
August 25, 2000 (the "Original Loan Agreement") under the terms of which Lenders
agreed to make revolving credit loans to Borrower not to exceed $25,000,000; and
WHEREAS, Borrower and Bank One, as the Agent and as a Lender,
entered into that certain First Amendment to Second Amended and Restated Loan
Agreement dated September 29, 2000 (the "First Amendment") pursuant to which
Borrower and Lenders agreed to amend certain terms and provisions of the
Original Loan Agreement; and
WHEREAS, Borrower and Bank One, as the Agent and as a Lender,
entered into that certain Second Amendment to Second Amended and Restated Loan
Agreement dated September 25, 2001 (the "Second Amendment") pursuant to which
Borrower and Lenders agreed to further amend certain terms and provisions of the
Original Loan Agreement, as amended by the First Amendment (the Original Loan
Agreement, as amended by the First Amendment and the Second Amendment, is
hereinafter referred to as the "Loan Agreement"); and
WHEREAS, Borrower has now requested that the Agent and Lenders
modify the Loan Agreement further and change certain terms thereof, and the
Agent and Lenders have agreed to do so; and
WHEREAS, Lenders, the Agent and Borrower wish to execute this
Amendment to evidence such agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained and for other good and valuable consideration,
the receipt and adequacy of
which are hereby acknowledged, Borrower, Lenders and the Agent hereby agree as
follows (all capitalized terms used herein and not otherwise defined shall have
the meanings as defined in the Loan Agreement):
Section 1. Amendment to Section 7.11. Section 7.11 of the Loan
Agreement is hereby deleted in its entirety and is replaced by the following:
"7.11 New Subsidiaries. Borrower will promptly notify the
Agent of the creation of any Subsidiary under the laws of the United
States or any state or territory thereof ("Domestic Subsidiary") and
any Subsidiary under the laws of any foreign jurisdiction ("Foreign
Subsidiary"), and will: (i) in the case of any Domestic Subsidiary, as
applicable, deliver to the Agent, in its capacity as Collateral Agent
under the Collateral Agency Agreement, a stock certificate and stock
power evidencing, or a security agreement and financing statement
pledging, all of the ownership of such Domestic Subsidiary held by
borrower (or any of Borrower's other Subsidiaries) and in the case of
any Foreign Subsidiary, as applicable, deliver to the Agent, in its
capacity as Collateral Agent under the Collateral Agency Agreement, a
stock certificate and stock power evidencing, or a security agreement
and financing statement pledging, sixty-five percent (65%) of the
ownership of such Foreign Subsidiary held by Borrower (or any of
Borrower's other Subsidiaries) and (ii) execute such additional
documents or modifications to the Loan Documents as required to insure
Agent, in its capacity as Collateral Agent under the Collateral Agency
Agreement, holds a perfected security interest in such ownership
interests and, upon request by the Agent, will cause any such
Subsidiary to execute a Guaranty guarantying the Obligations."
Section 2. Amendment to Section 8.4. Section 8.4 of the Loan
Agreement is hereby deleted in its entirety and is replaced by the following:
"8.4 Mergers, Consolidations and Dispositions of Assets. In
any single transaction or series of transactions, directly or
indirectly: (a) liquidate or dissolve; (b) be a party to any merger or
consolidation unless and so long as (i) no Default or Event of Default
has occurred that is then continuing, (ii) immediately thereafter and
giving effect thereto, no event will occur and be continuing which
constitutes a Default, (iii) an Obligor is the surviving Person; (iv)
the surviving Person ratifies and assumes each Loan Document to which
any party to such merger was a party, and (v) Agent is given at least
ten days' prior notice of such merger or consolidation; (c) sell,
convey or lease all or any part of its assets, except for (1) sales of
Inventory in the ordinary course of business; (2) dispositions of
assets, including Collateral, having an aggregate net book value (such
net book value being determined immediately after the consummation of
each such disposition) during the then current fiscal year of the
Company of no more than 15% of the Total Capitalization of the Company
and the Subsidiaries minus all intangibles, as such term is defined in
the definition of Tangible Net Worth, determined as of the last day of
the then most recently ended twelve (12) month period, with the first
twelve (12) month period beginning on the Effective Date, provided,
however, that the aggregate net book value of all assets (other
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than (x) the real property located in Humble, Texas subject to the Deed
of Trust and the Second Lien Deed of Trust, and (y) the California real
property that has been released from the Lien of the Security
Documents) sold in accordance with the terms of this subsection (c)(2)
hereof during the term of this Agreement shall not exceed Twenty
Million and No/100 Dollars ($20,000,000) and further provided that, if
requested by the Borrower in connection with any such sale and after
receipt by the Agent of a letter from the Noteholders (as said term is
defined in the Collateral Agency Agreement) confirming that the
Borrower is entitled to the net proceeds of the sale of such assets,
which letter is substantially in the form of that attached hereto as
Exhibit 8.4 or in a form reasonably satisfactory to the Agent, the
Agent, in its capacity as Agent and as Collateral Agent under the
Collateral Agency Agreement, shall execute releases as are reasonably
necessary to evidence the release of its Liens in the property so sold;
provided, however, the Liens on the real property located in Humble,
Texas subject to the Deed of Trust and the Second Lien Deed of Trust
shall be released only in accordance with the terms of said Deed of
Trust and Second Lien Deed of Trust; (3) dispositions of Collateral
(other than Inventory) in connection with the obsolescence or
replacement thereof; and (4) a one-time transfer on or prior to January
31, 2002 of a material portion of Borrower's assets to a limited
partnership which is a wholly owned Subsidiary of Borrower or which is
a wholly owned Subsidiary of wholly owned Subsidiaries of Borrower;
provided that such transfer shall be accomplished pursuant to and in
accordance with that certain General Conveyance and Assignment
Agreement, dated effective as of December 14, 2001, a copy of which has
been provided to Agent, and provided further that any Subsidiary to
which such assets are being transferred and any Subsidiary owning any
interest in the Subsidiary to which such assets are being transferred
shall execute a guaranty in favor of Agent and the Lenders in the form
attached hereto as Exhibit A; or (d) except for Liens in favor of Agent
in its capacity as Agent and as Collateral Agent under the Collateral
Agency Agreement, pledge, transfer or otherwise dispose of any equity
interest in any of Borrower's Subsidiaries or any Indebtedness of any
of Borrower's Subsidiaries or permit any Subsidiary of Borrower to
issue any additional equity interest."
Section 3. Representations True; No Default. Borrower
represents and warrants that:
(i) this Amendment has been duly authorized, executed
and delivered on its behalf; the Loan Agreement, as amended hereby,
together with the Notes and the other Loan Documents to which Borrower
is a party, constitute valid and legally binding agreements of Borrower
enforceable in accordance with their terms, except as enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, fraudulent transfer, reorganization or moratorium or other
similar law relating to creditors' rights and by general equitable
principles which may limit the right to obtain equitable remedies
(regardless of whether such enforceability is considered in a
proceeding, in equity or at law);
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(ii) the representations and warranties of Borrower
contained in Article 6 of the Loan Agreement are true and correct in
all material respects on and as of the date hereof as though made on
and as of the date hereof, except to the extent such representations
and warranties relate solely to an earlier date or are untrue as a
result of transactions permitted under the Loan Agreement as amended
hereby;
(iii) after giving effect to this Amendment, no
Default or Event of Default under the Loan Agreement has occurred and
is continuing;
(iv) Exhibit 6.9 to the Loan Agreement is true and
correct as of the date hereof; and
(v) The execution of this Amendment and the
guaranties contemplated herein will not result in a breach of any
provision of the Note Agreement and no consent or agreement of the
Noteholders is required to be obtained in connection with the execution
of this Amendment or the guaranties contemplated herein.
Section 4. Expenses, Additional Information. Borrower shall
pay to the Agent all reasonable expenses incurred in connection with the
execution of this Amendment, including all reasonable expenses incurred in
connection with any previous negotiation and loan documentation. Borrower shall
furnish to the Agent and Lenders all such other documents, consents and
information relating to Borrower as the Agent or any Lender may reasonably
require to accomplish the purposes hereof.
Section 5. Effectiveness. This Amendment shall become
effective when, and only when (i) Borrower, Lenders and the Agent shall have
executed and delivered to the Agent a counterpart of this Amendment; and (ii)
Agent shall have received a guaranty from the limited partnership Subsidiary of
Borrower to which Borrower is transferring its assets and from all Subsidiaries
of Borrower which have any interest in such limited partnership Subsidiary.
Section 6. Miscellaneous Provisions.
(a) From and after the execution and delivery of this
Amendment, the Loan Agreement shall be deemed to be amended and modified as
herein provided, and except as so amended and modified the Loan Agreement shall
continue in full force and effect.
(b) The Loan Agreement and this Amendment shall be read and
construed as one and the same instrument.
(c) Any reference in any Loan Document to the Loan Agreement
shall be a reference to the Loan Agreement as amended by this Amendment.
(d) THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND OF THE UNITED STATES OF AMERICA.
(e) This Amendment may be signed in any number of counterparts
and by different parties in separate counterparts and may be in original or
facsimile form, each of which
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shall be deemed an original but all of which together shall constitute one and
the same instrument.
(f) The headings herein shall be accorded no significance in
interpreting this Amendment.
Section 7. Binding Effect. This Amendment shall be binding
upon and inure to the benefit of Borrower, Lenders and the Agent and their
respective successors and assigns, except that Borrower shall not have the right
to assign its rights hereunder or any interest herein.
SECTION 8. FINAL AGREEMENT OF THE PARTIES. THIS AMENDMENT, THE
NOTES, THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE A "LOAN
AGREEMENT" AS DEFINED IN SECTION 26.02(a) OF THE TEXAS BUSINESS AND COMMERCE
CODE AND 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.
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IN WITNESS WHEREOF, the parties have caused this Amendment to
be executed by their respective duly authorized officers to be effective as of
the date first written above.
BORROWER:
HYDRIL COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
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Title: Vice President & CFO
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By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
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Title: Treasurer
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AGENT/BANK:
BANK ONE, NA, Individually, as a
Lender and as the Agent
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
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Title: Vice President
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[Signature Page to Third Amendment]
