EXHIBIT 10.8
SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
[October 28, 1993]
This Sixth Amendment to Loan and Security Agreement (the "Amendment") is
made and entered into as of October 28, 1993, by and between RED MAN PIPE &
SUPPLY CO., an Oklahoma corporation ("Borrower"), and BARCLAYS BUSINESS CREDIT,
INC., a Connecticut corporation ("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, the
"Agreement").
2. Borrower has requested that the Agreement be further amended to
decrease the interest rate payable by Borrower, extend the term of the Agreement
and increase the aggregate amount of the credit facilities made available to
Borrower by Lender.
3. Borrower and Lender desire to amend the Agreement to make the revisions
described above and make certain other revisions more particularly described
herein.
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 8 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 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:
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(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) $1,500,000 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) $9,000,000 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) the Supply Inventory Maximum in
effect on such date or (B) the Supply Inventory Advance Rate
in effect on such date multiplied by 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;
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MINUS (subtract from the sum of clauses (i), (ii),
(iii) and (iv) above)
(iv) 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 - $25,000,000."
(c) The following definitions are hereby added to Section 1.1 of the
Agreement:
"Eligible International Accounts - an Account arising in the
ordinary course of Borrower's business from the sale of goods or
rendition of services to an Account Debtor outside the United States
which Lender, in its good faith credit judgment, deems to be an
Eligible International Account. Without limiting the generality of the
foregoing, no Account which arises from a sale to an Account Debtor
outside of the United States shall be an Eligible International
Account unless each of the following is true and correct of such
Account: (a) other than for clause (ix) of such definition, such
Account otherwise constitutes an Eligible Account, and (b) such
Account arises from a sale to an Account Debtor acceptable to Lender,
in its sole discretion."
2. INTEREST AND CHARGES.
(a) Section 3.1(A) of the Agreement is hereby deleted, and the
following shall be substituted therefor:
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"(A) The principal amount of the Term Loan outstanding from day-
to-day shall bear interest, calculated daily at a fluctuating rate per
annum equal to the lesser of (i) 1.5% (or such lesser percentage as
may be provided by subsection (H) hereof) above the Base Rate (the
"Annual Term Rate"), or (ii) the Maximum Legal Rate. The principal
amount of the Revolving Credit Loans outstanding from day-to-day shall
bear interest, calculated daily at a fluctuating rate per annum equal
to the lesser of (i) 1.0% (or such lesser percentage as may be
provided by subsection (H) hereof) above the Base Rate (the "Annual
Revolving Rate"), or (ii) the Maximum Legal Rate."
(b) Section 3.1(H) of the Agreement is hereby deleted, and the
following shall be substituted therefor:
"(H) So long as no Default has occurred, in the event that
Borrower achieves the performance factors described below as of each
of the calculation dates specified below, then the Applicable Rate
shall be reduced as follows:
(i) Performance Factors to be Achieved as of October 31,
1994. So long as no Default has occurred, and so long as Borrower
achieves the performance factors set out below, upon the later of
(i) receipt and review by Lender of audited financial statements
of Borrower provided pursuant to Section 9.1(J) demonstrating
compliance with the following performance factors, or (ii)
receipt by Lender of Borrower's Annual Business Plan for the
twelve months ending October 31, 1995, the Applicable Rate shall
be reduced by 0.25%. Such reduction shall be made effective
November 1, 1994 by (a) 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 (b)
recalculating all accrued but unpaid interest, and all interest
to accrue with respect to future transactions, at the Applicable
Rate as so reduced. The performance factors required to be
achieved as of October 31, 1994 in order to reduce the Applicable
Rate are as follows:
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(A) The Average Daily Availability for the six months
ending October 31, 1994 shall equal or exceed thirty percent
(30%) 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 October 31, 1994 shall be at least $3,000,000; and
(C) Borrower's Leverage Ratio as of October 31, 1994
shall not exceed 3.2 to l.0.
Any rate reduction made pursuant to this Section 3.1(H)(i)
shall remain in effect only for so long as no Default has
occurred and is continuing and Borrower maintains the
Leverage Ratio described in (C) above.
(ii) Performance Factors to be Achieved as of October
31, 1995. So long as no Default has occurred, and so long as
Borrower achieves the performance factors set out below,
upon the later of (i) receipt and review by Lender of
audited financial statements of Borrower provided pursuant
to Section 9.1(J) demonstrating compliance with the
following performance factors, or (ii) receipt by Lender of
Borrower's Annual Business Plan for the twelve months ending
October 31, 1996, the Applicable Rate (as the same may or
may not have been reduced pursuant to Section 3.1(H)(i)
above) shall be reduced by 0.25%. Such reduction shall be
made effective November 1, 1995 by (a) 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 (b) recalculating all accrued but
unpaid interest, and all interest to accrue with respect to
future transactions, at the Applicable Rate as so reduced.
The performance factors required to be achieved as of
October 31, 1995 in order to reduce the Applicable Rate are
as follows:
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(A) The Average Daily Availability for the six months
ending October 31, 1995 shall equal or exceed thirty percent
(30%) 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 October 31, 1995 shall be at least $3,500,000; and
(C) Borrower's Leverage Ratio as of October 31, 1995
shall not exceed 3.0 to l.0
Any rate reduction made pursuant to this Section 3.1(H)(ii) shall
remain in effect only for so long as no Default has occurred and
is continuing and Borrower maintains the Leverage Ratio described
in (C) above."
3. TERM OF AGREEMENT. Section 3.3(A) of the Agreement is hereby deleted,
and the following shall be substituted therefor:
"(A) The provisions of this Agreement shall be in effect for the
period through and including October 31, 1996 (the "Original Term"),
unless terminated as provided in Section 3.3(B), or extended pursuant
to this Section 3.3(A). So long as no Default has occurred, the
Original Term shall be automatically extended by one year unless
Borrower has notified Lender, or Lender has notified Borrower, on or
before August 31, 1996, that it does not desire this Agreement to be
extended pursuant to this Section 3.3(A)."
4. EARLY TERMINATION FEE. Section 3.3(C) of the Agreement is hereby
deleted, and the following shall be substituted therefor:
"(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:
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Applicable Term Applicable Percentage
October 28, 1993 through
October 31. 1994 3.0%
November 1, 1994, through
October 31, 1995 2.0%
November 1, 1995, through
October 31, 1996 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."
5. FINANCIAL COVENANTS. Section 9.3(A) of the Agreement is hereby
deleted, and the following shall be substituted therefor:
"(A) Maintain a Leverage Ratio not greater than the ratio shown below
for the date corresponding thereto:
Date Amount
October 28, 1993 to October 31, 1994 4.0 to 1.0
November 1, 1994 to October 31, 1995 3.5 to l.0
November 1, 1995 and Thereafter 3.2 to l.0"
6. CONDITIONS TO ADVANCES UNDER TERM LOAN. Section 10.3 of the Agreement
is hereby deleted, and the following shall be substituted therefor:
"(F) No Term Loan Closing Date shall occur after october 30, 1996."
7. EXHIBITS. A11 references in the Agreement (as amended hereby) to
Exhibit "J" shall hereafter be deemed to be references to Exhibit "J" attached
hereto.
8. 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 the following, duly executed by each
party thereto, other than Lender:
(i) this Amendment; and
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(ii) all other documents Lender may reasonably request with
respect to any matter relevant to this Amendment or the transactions
contemplated hereby.
(b) 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.
(c) 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.
(d) 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.
(e) 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.
9. LIMITED WAIVER. Upon satisfaction of the conditions precedent
specified in Section 8 hereof, Lender shall waive each Default or Event of
Default which occurred or existed prior to the effective date of this Amendment
relating to Borrower's failure during the period from May 31, 1993 through June
30, 1993, and for the month ended September 3O, 1993, to maintain a Leverage
Ratio of not less than 3.3 to 1.0, as required by Section 9.3(A) of the
Agreement. 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.
Except for the Defaults and/or Events of Default specified in the first sentence
of this Section 9, no Default or Event of Default has occurred and is
continuing, unless such Default or Event of Default has been specifically waived
in writing by Lender.
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l0. 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.
11. 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.
12. 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.
13. 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.
14. 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.
EXECUTED as of the date first above written.
RED MAN PIPE & SUPPLY CO.
By: /s/ Xxx Xxxxx
---------------------------------
Name: XXX XXXXX
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Title: VP-Finance
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BARCLAYS BUSINESS CREDIT, INC.
By: /s/ Xxx X. Xxxxxxxxxxx
---------------------------------
Name: XXX X. XXXXXXXXXXX
-------------------------------
Title: Regional Vice President
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The undersigned Guarantor, having guaranteed to Lender the payment of the
obligations, as such term is defined in the
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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, (ii) the Guaranty is in full force and effect
to secure the obligations described therein, and (iii) the obligations secured
by the Guaranty include, without limitation, any Term Loan advanced pursuant to
the terms of this Amendment.
/s/ Xxxxx X. Xxxxxxx
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XXXXX X. XXXXXXX
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