EXHIBIT 10.2
SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED LOAN AGREEMENT
THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
(this "Second Amendment" or this "Amendment") dated effective as of September
25, 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 (the Original Loan Agreement, as amended by the First 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 1.1. Section 1.1 of the Loan Agreement
is hereby amended as follows:
(a) The definition of "Base Rate" is hereby deleted in its entirety and
replaced by the following:
"Base Rate means for any day a rate per annum equal to the lesser
of (a) the applicable Margin Percentage from time to time in
effect plus the greater of (1) the Prime Rate for that day and
(2) the Federal Funds Rate for that day plus one-half ( 1/2) of
1% or (b) the Ceiling Rate. If for any reason Agent shall have
determined (which determination shall be prima facie evidence of
the correctness thereof) that it is unable to ascertain the
Federal Funds Rate for any reason beyond its reasonable control,
including, without limitation, the inability or failure of Agent
to obtain sufficient quotations in accordance with the terms
hereof, the Base Rate shall, until the circumstances giving rise
to such inability no longer exist, be the lesser of (a) the Prime
Rate plus the applicable Margin Percentage from time to time in
effect or (b) the Ceiling Rate.
(b) The definition of "Margin Percentage" in Section 1.1 of the Loan Agreement
is hereby amended by deleting the table contained therein and the paragraph
immediately thereafter in their entirety and replacing such table and the
paragraph immediately thereafter with the following:
Revolving Loan Commitment
"Leverage LIBOR Base Rate Fee Percentage
Ratio Margin Margin (unused)
--------- ------ -------------- --------------
greater than 1.0 x 1.25% 0% .25%
greater than 1.0 x less than 1.5 x 1.50% 0% .375%
greater than 1.5 x less than 2.0 x 1.75% 0% .375%
greater than 2.0 x less than 2.5 x 2.00% 0% .50%
and provided still further that, if, at any time, (i) total borrowings
outstanding hereunder plus all Letter of Credit Liabilities is less than
fifty percent (50%) of the Revolving Loan Commitment, the Commitment Fee
Percentage shall equal .50%."
(c) A new definition for "UK Loan Agreement" is hereby added in proper
alphabetical order to Section 1.1 of the Loan Agreement, as follows:
"`UK Loan Agreement' means that certain Loan Agreement dated as of
September 25, 2001 among Hydril U.K. Limited, as Borrower, Bank One,
NA (London Branch), as Agent, Issuer and as a Lender, and the other
Lenders now or hereafter parties thereto, as such may be amended,
modified, restated or supplemented from time to time."
Section 2. Amendment to Section 2.6. The first sentence of Section 2.6 of
the Loan Agreement is hereby deleted in its entirety and replaced by the
following:
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"The Revolving Loans made by each Lender shall be evidenced by a Note
or Notes of Borrower in substantially the form of Exhibit 2.6 hereto
payable to the order of such Lender in a principal amount equal to the
Revolving Loan Commitment of such Lender, and otherwise duly
completed.
Section 3. Amendment to Section 5.1(c). Section 5.1(c) of the Loan
Agreement is hereby deleted in its entirety and replaced by the following:
"(c) Notes. Agent shall have received a Note of Borrower for Bank
One, duly completed and executed, in the original principal amount of
$25,000,000.00."
Section 4. Amendment to Section 7.3(a). Section 7.3(a) of the Loan
Agreement is hereby deleted in its entirety and replaced by the following
(provided that the parties hereto hereby agree and acknowledge that for periods
on or prior to December 31, 2000, the Tangible Net Worth requirements set forth
in the Original Loan Agreement shall control):
"(a) Tangible Net Worth - Tangible Net Worth, at any time during the
term hereof, of not less than the sum of:
(1) $104,233,000.00, plus
(2) 50% of the net income (if positive) of Borrower and its
Subsidiaries, on a consolidated basis, for each Computation
Period, commencing with the Computation Period ending
December 31, 2001, plus
(3) 100% of the net proceeds (whether cash or non-cash) realized
from the issuance after January 1, 2001 of any equity
securities by Borrower or its Subsidiaries to any Person
other than Borrower or another Subsidiary.
For purposes of this Section 7.3(a), the term "Computation Period"
shall mean each fiscal year of Borrower commencing with the fiscal
year ending December 31, 2001."
Section 5. Amendment to Section 7.3(c). Section 7.3(c) of the Loan
Agreement is hereby deleted in its entirety and replaced by the following
(provided that the parties hereto hereby agree and acknowledge that for periods
prior to the date of this Amendment, the Interest Coverage Ratio requirements
set forth in the Original Loan Agreement shall control):
"(c) Interest Coverage Ratio - an Interest Coverage Ratio of not less
than 3.75 - 1.0 at any time during the term hereof."
Section 6. Amendment to Section 7.3(d). Section 7.3(d) of the Loan
Agreement is hereby deleted in its entirety and replaced by the following
(provided that the parties hereto hereby agree and acknowledge that for periods
prior to the date of this
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Amendment, the Leverage Ratio requirements set forth in the Original Loan
Agreement shall control):
"(d) Leverage Ratio - A Leverage Ratio of not greater than 2.5 to 1.0
at any time during the term hereof."
Section 7. Amendment to Section 7.11. Section 7.11 of the Loan
Agreement is hereby amended to add the following phrase to the last sentence of
such Section:
"so long as similar guaranties benefitting the Noteholders, and any
necessary amendment to the Note Agreement allowing such Guaranty, are
made prior thereto or contemporaneously therewith."
Section 8. Amendment to and Waiver of Compliance with Section 8.8(d).
Section 8.8(d) is hereby amended to change the reference to $5,000,000 to
$8,000,000. Furthermore, the Agent, the Issuer and Lenders hereby waive any
failure of Borrower to comply with Section 8.8(d) of the Loan Agreement prior to
the date of this Amendment.
Section 9. Amendment to Section 8.14. Section 8.14 of the Loan
Agreement is hereby deleted in its entirety and replaced by the following:
"8.14 Negative Pledges. Enter into any agreement or contract which
limits or restricts in any way the granting of (i) Liens on any
Property, tangible or intangible, real, personal or mixed, now or
hereafter owned by Borrower or its Subsidiaries (except for any such
restrictions existing in the Note Agreement; the UK Loan Agreement or,
with respect to Hydril SA, the Master Credit Agreement dated as of
June 11, 2001 between Hydril SA and UBS AG, as the same may be
amended, modified, restated or supplemented from time to time); or
(ii) Cover."
Section 10. Amendment to Section 9.1. Section 9.1 of the Loan
Agreement is hereby amended to add a new subsection (o), as follows:
"(o) UK Loan Agreement - the occurrence of an Event of Default under
the UK Loan Agreement."
Section 11. Amendment to Section 11.17. Section 11.17 of the Loan
Agreement is hereby deleted in its entirety and replaced by the following:
"11.17 Conditional Release of Liens. The Agent, the Issuer and each
of Lenders hereby release and discharge all Liens on any of the
Collateral agree that, as of the date of this Amendment, said Liens
are void and no longer of any force or effect; provided that this
release and discharge shall in no way impair or affect Liens granted
pursuant to the Pledge dated as of March 23, 1998 executed by Borrower
in favor of the Agent for the benefit of Lenders, as said Pledge was
ratified by that one certain Master Ratification Agreement executed by
Borrower dated August 25, 2000 (the "Pledge"), or any liens or
security interests arising out of the Pledge to the extent, and only
to the extent, that such Liens relate to the pledge in favor of Agent
for the benefit of Lenders of the stock or equity interest of any
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Foreign Entity (as such term is defined in the Pledge). Borrower
hereby specifically recognizes and acknowledges that all liens and
security interests granted under the Pledge with respect to any
Foreign Entity remain valid and in full force and effect and hereby
ratifies and confirms same in their entirety, it being agreed that
same are for the purpose of creating in favor of Agent for the benefit
of Lenders a pledge of the stock or equity interest of any Subsidiary
of Borrower which is a Foreign Entity. Notwithstanding the above,
Borrower hereby agrees and acknowledges that upon the occurrence of an
Event of Default under the Loan Agreement, all Liens released pursuant
to this Section 11.17 shall be automatically reinstated and Borrower
shall execute any and all documents which Agent determines are
necessary, in Agent's reasonable discretion, to effectuate the full
reinstatement of such Liens and to place new Liens on any Collateral
acquired subsequent to the above-described release of liens Such
Liens shall be reinstated to secure, and any new Liens shall secure,
the Obligations hereunder. In addition, all such Liens shall be on a
pari passu basis with the Noteholders in accordance with the
Intercreditor Agreement."
Section 12. 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);
(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; and
(iv) Exhibit 6.9 to the Loan Agreement is true and correct as of the
date hereof.
Section 13. 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,
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consents and information relating to Borrower as the Agent or any Lender may
reasonably require to accomplish the purposes hereof.
Section 14. 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; (ii) Agent shall have
received a Note from Borrower payable to Bank One, NA, in the original principal
amount of $25,000,000 substantially in the form of Exhibit 2.6 hereto; and (iii)
the Agent has received satisfactory evidence that the Noteholders have agreed
and consented to the terms of this Amendment, including, without limitation, the
conditional release of Liens described herein.
Section 15. 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 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 16. 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 17. 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/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Treasurer
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and CFO
AGENT/BANK:
BANK ONE, NA, Individually, as a
Lender and as the Agent
By: /s/ ▇.▇. ▇▇▇▇, ▇▇.
--------------------------------
Name: ▇.▇. ▇▇▇▇, ▇▇
Title: First Vice President
[Signature Page to Second Amendment to
Second Amended and Restated Loan Agreement]
EXHIBIT 2.6
NOTE
$25,000,000.00 Houston, Texas September 25, 2001
FOR VALUE RECEIVED, HYDRIL COMPANY ("Maker"), a Delaware corporation,
promises to pay to the order of BANK ONE, NA, successor-in-interest to Bank One,
Texas, N.A., with its main office in Chicago, Illinois ("Payee"), at the
location specified for payment in the Loan Agreement (hereinafter defined), in
immediately available funds and in lawful money of the United States of America,
the principal sum of Twenty-Five Million and No/100 Dollars ($25,000,000.00) (or
the unpaid balance of all principal advanced against this note, if that amount
is less), together with interest on the unpaid principal balance of this note
from time to time outstanding at the rate or rates provided in that certain
Second Amended and Restated Loan Agreement (as amended, supplemented, restated
or replaced from time to time, the "Loan Agreement") dated as of August 25,
2000, among Maker, certain signatory banks named therein, and Bank One, NA,
successor-in-interest to Bank One, Texas, N.A., with its main office in Chicago,
Illinois, as Agent; provided, that for the full term of this note the interest
rate produced by the aggregate of all sums paid or agreed to be paid to the
holder of this note for the use, forbearance or detention of the debt evidenced
hereby (including, but not limited to, all interest on this note at the Stated
Rate plus the Additional Interest) shall not exceed the Ceiling Rate. Any term
defined in the Loan Agreement which is used in this note and which is not
otherwise defined in this note shall have the meaning ascribed to it in the Loan
Agreement.
1. Loan Agreement; Advances. This note has been issued pursuant to
the terms of the Loan Agreement, and is one of the Notes referred to in the Loan
Agreement. Advances against this note by Payee or other holder hereof shall be
governed by the terms and provisions of the Loan Agreement. Reference is hereby
made to the Loan Agreement for all purposes. Payee is entitled to the benefits
of the Loan Agreement. The unpaid principal balance of this note at any time
shall be the total of all amounts lent or advanced against this note less the
amount of all payments or permitted prepayments made on this note and by or for
the account of Maker. All loans and advances and all payments and permitted
prepayments made hereon may be endorsed by the holder of this note on a schedule
which may be attached hereto (and thereby made a part hereof for all purposes)
or otherwise recorded in the holder's records; provided, that any failure to
make notation of (a) any advance shall not cancel, limit or otherwise affect
Maker's obligations or any holder's rights with respect to that advance, or (b)
any payment or permitted prepayment of principal shall not cancel, limit or
otherwise affect Maker's entitlement to credit for that payment as of the date
received by the holder.
2. Mandatory Payments of Principal and Interest.
(a) Accrued and unpaid interest on the unpaid principal balance of
this note shall be due and payable on the Interest Payment Dates.
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(b) On the Revolving Loan Termination Date, the entire unpaid
principal balance of this note and all accrued and unpaid interest on the unpaid
principal balance of this note shall be finally due and payable.
(c) All payments hereon made pursuant to this Paragraph 2 shall be
applied first to accrued interest, the balance to principal.
(d) If any payment provided for in this note shall become due on a day
other than a Business Day, such payment may be made on the next succeeding
Business Day (unless the result of such extension of time would be to extend the
date for such payment into another calendar month or beyond the Revolving Loan
Termination Date, and in either such event such payment shall be made on the
Business Day immediately preceding the day on which such payment would otherwise
have been due), and such extension of time shall in such case be included in the
computation of interest on this note.
(e) The Loan Agreement provides for required prepayments of the
indebtedness evidenced hereby upon terms and conditions specified therein.
3. No Usury Intended; Spreading. Notwithstanding any provision to
the contrary contained in this note or any of the other Loan Documents, it is
expressly provided that in no case or event shall the aggregate of (i) all
interest on the unpaid balance of this note, accrued or paid from the date
hereof and (ii) the aggregate of any other amounts accrued or paid pursuant to
this note or any of the other Loan Documents, which under applicable laws are or
may be deemed to constitute interest upon the indebtedness evidenced by this
note from the date hereof, ever exceed the Ceiling Rate. In this connection,
Maker and Payee stipulate and agree that it is their common and overriding
intent to contract in strict compliance with applicable federal and Texas usury
laws (and the usury laws of any other jurisdiction whose usury laws are deemed
to apply to this note or any of the other Loan Documents despite the intention
and desire of the parties to apply the usury laws of the State of Texas). In
furtherance thereof, none of the terms of this note or any of the other Loan
Documents shall ever be construed to create a contract to pay, as consideration
for the use, forbearance or detention of money, interest at a rate in excess of
the Ceiling Rate. Maker or other parties now or hereafter becoming liable for
payment of the indebtedness evidenced by this note shall never be liable for
interest in excess of the Ceiling Rate. If, for any reason whatever, the
interest paid or received on this note during its full term produces a rate
which exceeds the Ceiling Rate, the holder of this note shall credit against the
principal of this note (or, if such indebtedness shall have been paid in full,
shall refund to the payor of such interest) such portion of said interest as
shall be necessary to cause the interest paid on this note to produce a rate
equal to the Ceiling Rate. All sums paid or agreed to be paid to the holder of
this note for the use, forbearance or detention of the indebtedness evidenced
hereby shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread in equal parts throughout the full term of this note, so
that the interest rate is uniform throughout the full term of this note. The
provisions of this Paragraph 3 shall control all agreements, whether now or
hereafter existing and whether written or oral, between Maker and Payee.
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4. Default. The Loan Agreement provides for the acceleration of the
maturity of this note and other rights and remedies upon the occurrence of
certain events specified therein.
5. Waivers by Maker and Others. Except to the extent, if any, that
notice of default is expressly required herein or in any of the other Loan
Documents, Maker and any and all co-makers, endorsers, guarantors and sureties
severally waive notice (including, but not limited to, notice of intent to
accelerate and notice of acceleration, notice of protest and notice of
dishonor), demand, presentment for payment, protest, diligence in collecting and
the filing of suit for the purpose of fixing liability and consent that the time
of payment hereof may be extended and re-extended from time to time without
notice to any of them. Each such person agrees that his, her or its liability on
or with respect to this note shall not be affected by any release of or change
in any guaranty or security at any time existing or by any failure to perfect or
to maintain perfection of any lien against or security interest in any such
security or the partial or complete unenforceability of any guaranty or other
surety obligation, in each case in whole or in part, with or without notice and
before or after maturity.
6. Paragraph Headings. Paragraph headings appearing in this note are
for convenient reference only and shall not be used to interpret or limit the
meaning of any provision of this note.
7. Choice of Law. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE APPLICABLE LAWS OF THE STATE OF TEXAS AND THE UNITED STATES
OF AMERICA FROM TIME TO TIME IN EFFECT.
8. Successors and Assigns. This note and all the covenants and
agreements contained herein shall be binding upon, and shall inure to the
benefit of, the respective permitted legal representatives, heirs, successors
and assigns of Maker and Payee.
9. Records of Payments. The records of Payee shall be prima facie
evidence of the amounts owing on this note.
10. Severabilitv. If any provision of this note is held to be
illegal, invalid or unenforceable under present or future laws, the legality,
validity and enforceability of the remaining provisions of this note shall not
be affected thereby, and this note shall be liberally construed so as to carry
out the intent of the parties to it.
11. Revolving Loan. Subject to the terms and provisions of the Loan
Agreement, Maker may use all or any part of the credit provided to be evidenced
by this note at any time before the Revolving Loan Termination Date. Maker may
borrow, repay and reborrow hereunder, and except as set forth in the Loan
Agreement there is no limitation on the number of advances made hereunder.
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MAKER
HYDRIL COMPANY,
a Delaware corporation
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
[Signature Page to Hydril Company $25,000,000 Note]
