Exhibit 10.1

 

Execution Version

 

FIRST AMENDMENT TO CREDIT AGREEMENT

 

This FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) dated as of
October 22, 2018, is among KLX ENERGY SERVICES HOLDINGS, INC. a Delaware
corporation (the “Company”), each Guarantor that is a signatory hereto, JPMORGAN
CHASE BANK, N.A., as administrative agent for the Lenders (in such capacity,
together with its successors, the “Administrative Agent”), the Issuing Lenders
and the Lenders.

 

Recitals

 

A.            The Company, the Administrative Agent, the Issuing Lenders and the
Lenders are parties to that certain Credit Agreement dated as of August 10, 2018
(as amended, modified, supplemented, restated or amended and restated prior to
the date hereof, the “Credit Agreement”), pursuant to which the Lenders have
agreed to make certain loans to, and extensions of credit on behalf of, the
Company on and after the Funding Date, subject to the terms and conditions of
the Credit Agreement.

 

B.            The Company, the Administrative Agent and the Lenders party hereto
have agreed, subject to the terms and conditions herein, to amend certain
provisions of the Credit Agreement to, among other things, permit the Company to
issue certain senior secured notes as described herein.

 

C.            NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

Section 1.              Defined Terms.  Each capitalized term used herein but
not otherwise defined herein has the meaning given to such term in the Credit
Agreement.

 

Section 2.              Amendments to Credit Agreement.

 

2.1            Amendments to Section 1.2.

 

(a)   The following term is hereby added to Section 1.2 of the Credit Agreement
in the appropriate alphabetical order:

 

“Motley Acquisition” means the acquisition of 100% of the outstanding unit
rights of Motley Services, LLC and its subsidiaries pursuant to that certain
Unit Purchase Agreement dated as of October 22, 2018 (the “Motley Acquisition
Agreement”), without giving effect to any amendments thereto, by and among
District 5 Investments, LP, a limited partnership organized under the laws of
Texas, 3M Capital, Inc. a corporation organized under the laws of Texas, and
Marco D. Davis, as the sellers, KLX Energy Services LLC, a limited liability
company organized under the laws of Delaware, as buyer, and the Borrower, as
parent.

 

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“Motley Acquisition Agreement” has the meaning specified in the definition of
“Motley Acquisition”.

 

“Motley Tax Redemption” means any redemption of Equity Interests of the Company
(that have been issued as consideration in connection with the Motley
Acquisition) in accordance with the Motley Acquisition Agreement and related
share purchase agreements in order to pay the recipient’s income tax liability
with respect to the issuance of such Equity Interests.

 

“Specified Secured Senior Notes” means senior secured notes in an aggregate
principal amount not to exceed $300,000,000, a portion of which will be used to
consummate the Motley Acquisition.

 

“Specified Secured Senior Notes Redemption” means the redemption in full of the
Specified Secured Senior Notes at 100.0% of the principal amount thereof,
together with accrued interest thereon in accordance with the terms of the
Specified Secured Senior Notes in the event that (i) the Motley Acquisition is
not consummated on or prior to  November 30, 2018 or (ii) at any time prior to
November 30, 2018, the Unit Purchase Agreement relating to the Motley
Acquisition is terminated without the Motley Acquisition being consummated.

 

“Unrestricted Cash” means, as of any date of determination, the aggregate amount
of cash and Cash Equivalents on the consolidated balance sheet of the Company
and its Restricted Subsidiaries that are deposited in or credited to deposit
accounts or securities accounts subject to Liens in favor of the Administrative
Agent and that are not “restricted” for purposes of GAAP.

 

(b)   The following terms in Section 1.2 of the Credit Agreement are hereby
amended and restated in their entirety:

 

“Capital Lease” means, of any Person, any lease of (or other arrangement
conveying the right to use) property (whether real, personal or mixed) by such
Person as lessee which would, in accordance with GAAP, be required to be
accounted for as a capital lease on the balance sheet of such Person; provided,
that notwithstanding the foregoing, in no event will any lease that would have
been categorized as an operating lease as determined in accordance with GAAP as
of the Funding Date, be considered a “Capital Lease” as a result of any changes
in GAAP that take effect subsequent to the Funding Date.

 

“Fixed Charge Coverage Ratio” means, on any date for the applicable Measurement
Period, the ratio of (i) Consolidated EBITDA minus Unfinanced Capital
Expenditures to (ii) the sum of Fixed Charges.

 

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“Measurement Period” has the meaning specified in the definition of “Required
Ratio”.

 

“Required Ratio” means, on any date of determination with respect to any
incurrence of Indebtedness under Sections 9.2(f), 9.2(g) (except for the
Specified Secured Senior Notes), 9.2(i) and 9.2(l), for the applicable
Measurement Period, the ratio of (x) Consolidated Total Indebtedness (net of
Unrestricted Cash, only in the event that the aggregate principal amount of
Loans outstanding on such date does not exceed $10,000,000) as of the end of
such period to (y) Consolidated EBITDA for the applicable Measurement Period
shall: (1)(i) with respect to incurrence of Indebtedness under Sections 9.2(f),
9.2(g) (except for the Specified Secured Senior Notes) and 9.2(l), not exceed
2.0 to 1.0 and (ii) with respect to incurrence of Indebtedness under
Section 9.2(i), not exceed 3.0 to 1.0 or (2) with respect to any such
Indebtedness incurred in connection with a Permitted Acquisition or any other
Investment permitted under this Agreement, not exceed (A) such ratio existing
immediately prior to the incurrence of such Indebtedness and the consummation of
such Permitted Acquisition or Investment permitted under this Agreement or
(B) 3.0 to 1.0;

 

provided that, in each case, (A) all pro forma calculations of such ratio within
this definition shall include only those adjustments that are based on
reasonably detailed written assumptions reasonably acceptable to the
Administrative Agent and (B) for any Indebtedness incurred in connection with
Sections 9.2(f) or 9.2(i) or a Permitted Acquisition or Investment, pro forma
calculations of such ratio shall be accompanied by a certificate from a
Responsible Officer on behalf of the Company delivered to the Administrative
Agent no less than fifteen (15) days prior to the incurrence of any such
Indebtedness, certifying that such calculation has been prepared in good faith
based upon reasonable assumptions and giving effect to such incurrence on a pro
forma basis, the Company is in compliance with the Required Ratio.

 

Commencing with the fiscal quarter of the Company ended as of April 30, 2018
(which shall constitute the ‘first fiscal quarter’ of the Company for the
purpose of this annualization), for the purpose of calculating the Required
Ratio, Consolidated EBITDA shall be annualized in the following manner for the
first three fiscal quarters of the Company: (i) for the first fiscal quarter of
the Company ended as of April 30, 2018, Consolidated EBITDA for such fiscal
quarter shall be multiplied by 4, (ii) for the second fiscal quarter of the
Company ending as of July 31, 2018, Consolidated EBITDA for the first two fiscal
quarters of the Company shall be multiplied by 2, and (iii) for the third fiscal
quarter of the Company ending as of October 31, 2018, Consolidated EBITDA for
the first three fiscal quarters of the Company shall be multiplied by 4/3. From
the fourth fiscal quarter of the Company ending as of January 31, 2019

 

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and thereafter, the Required Ratio shall be calculated based on the results for
the immediately preceding four fiscal quarter period for which financial
statements have been delivered to the Administrative Agent or are available on
EDGAR, or otherwise publicly filed.  ‘Measurement Period’ means the most recent
period of four consecutive fiscal quarters (or with respect to the quarters
described in this paragraph, the period described in this paragraph) of the
Company for which financial statements have been or are required to be delivered
pursuant to this Agreement.

 

(c)   The term “Borrower” in the definitions of “Borrowing Base” and “Plan” is
hereby deleted and replaced with the term “Company”.

 

(d)   The definition of “Consolidated EBITDA” is hereby amended by (i) replacing
the words “period of four consecutive fiscal quarters (each a ‘Measurement
Period’)” with the words “Measurement Period” and (ii) adding the words
“Required Ratio or ratio of Consolidated Total Indebtedness to Consolidated
EBITDA” immediately following the words “Fixed Charge Coverage Ratio” in the
last paragraph of such definition.

 

2.2            Amendment to Section 8.2.  Section 8.2 of the Credit Agreement is
hereby amended by adding a new Section 8.2(j) as follows:

 

“(j)            Corporate Information.     The Company shall deliver to the
Administrative Agent and Collateral Agent, with respect to any Credit Party,
promptly (and in any event within no more than thirty (30) days following such
change) written notice of any change in such Person’s (1) legal name,
(2) jurisdiction of organization or formation, (3) identity or corporate
structure or (4) legal identification number. The Company shall take all
necessary action so that the Lien in favor of the Collateral Agent pursuant to
this Agreement and/or the Security Documents is perfected with the same priority
as immediately prior to such change to the extent required by the Credit
Documents. The Company also agrees promptly to notify the Collateral Agent if
any material portion of the Collateral is damaged, destroyed or condemned.”

 

2.3            Amendments to Section 9.2.  Section 9.2 of the Credit Agreement
is hereby amended as follows:

 

(a)   Section 9.2(e) is hereby amended by: deleting sub-clause (C) of
Section 9.2(e) in its entirety; and replacing “$20,000,000” with $40,000,000” in
sub-clause (B) of Section 9.2(e).

 

(b)   Section 9.2(f) is hereby amended by replacing the “and” prior to
sub-clause (B) with “,” and adding the following new sub-clause (C):

 

“and (C) owed under Section 2.01(d) of the Motley Acquisition Agreement.”

 

(c)   Section 9.2(g) is hereby amended by: deleting the “(x)” before the words
“any financial covenant”; deleting the “or” after the words “in this Agreement”
in sub-clause (A) of Section 9.2(g)(iv); deleting paragraph (y) of sub-clause
(A) of Section 9.2(g)(iv) in its entirety; and deleting sub-clause (E) of
Section 9.2(g)(iv) in its entirety.

 

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(d)   The “and” at the end of Section 9.2(j)(vii) shall be deleted, the period
at the end of Section 9.2(k) shall be deleted and replaced with “; and” and the
following new Section 9.2(l) shall be added:

 

“(l)          the Specified Secured Senior Notes to the extent such notes are
issued on or prior to November 30, 2018 and (i) remain outstanding pursuant to
the terms thereof as a result of the consummation of the Motley Acquisition or
(ii) are redeemed pursuant to the Specified Secured Senior Notes Redemption.”

 

2.4            Amendments to Section 9.3.  Section 9.3 of the Credit Agreement
is hereby amended as follows:

 

(a)   Section 9.3(i) of the Credit Agreement is hereby amended by adding the
words “the Motley Acquisition,” immediately following the words “Liens on assets
acquired in connection with”.

 

(b)   Section 9.3(r) of the Credit Agreement is hereby amended by adding the
words “and Section 9.2(l)” immediately following the words “Liens to secure
Indebtedness permitted under Section 9.2(g)”.

 

(c)   The final sentence of Section 9.3 is hereby amended and replaced in its
entirety with the following:

 

“No Liens shall be permitted to exist, directly or indirectly, (i) on the
Collateral (as defined in the Pledge and Security Agreements), other than Liens
permitted under paragraphs (a) to (s) of this Section 9.3, or (ii) on any Real
Property owned by the Company or any Subsidiaries, other than Liens created
under paragraphs (d), (e) and (r) of this Section 9.3 and which, in the case of
paragraph (r) of this Section 9.3, may be senior to any Liens on such Real
Property securing the Finance Obligations; provided that none of the Liens
permitted pursuant to this Section 9.3 may at any time attach to any Credit
Party’s (1) Accounts, other than those permitted under paragraph (a), (n) and
(r) above or created pursuant to any Credit Document and (2) Inventory, other
than those permitted under paragraphs (a), (b), (n) and (r) above or created
pursuant to any Credit Document.”

 

2.5            Amendment to Section 9.7.  Section 9.7 of the Credit Agreement is
hereby amended by deleting the “and” at the end of Section 9.7(l), deleting the
period at the end of Section 9.2(m) and replacing it with “; and” and adding the
following new Section 9.7(n):

 

“(n)       the Motley Acquisition.”

 

2.6            Amendment to Section 9.9.  Section 9.9 of the Credit Agreement is
hereby amended by deleting the “and” at the end of Section 9.9(c), deleting the
period at the end of Section 9.9(d) and replacing it with “; and” and adding the
following new Section 9.9(e):

 

“(e)         The Company and its Restricted Subsidiaries may effect the Motley
Tax Redemption; provided that the aggregate amount of such payments with respect
to the Motley Tax Redemption shall not exceed $5,000,000.”

 

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2.7            Amendment to Section 9.12.  Section 9.12 of the Credit Agreement
is hereby amended by adding the following Section 9.12(c):

 

“(c)       Notwithstanding Sections 9.12(a) and (b), the Specified Secured
Senior Notes may be mandatorily redeemed pursuant to the Specified Secured
Senior Notes Redemption in accordance with Section 9.2(l)”

 

2.8            Amendment to Section 9.14.  Clause (iv) of Section 9.14 of the
Credit Agreement is hereby amended by deleting the words “paragraph (a)” and
“secured” therefrom.

 

Section 3.              Form of Intercreditor Agreement. The Lenders hereby
approve the Intercreditor Agreement in substantially the form attached as Annex
A hereto, or with such modifications thereto as may be agreed by the Required
Lenders, and the subordination of liens on the Collateral as specified therein,
to the Specified Secured Senior Notes as set forth therein. Furthermore, each
party hereto hereby agrees that the Collateral Agent and the Company may agree
such amendments, supplements or other modifications to the Security Documents to
reflect the relative priorities of the Liens on the Collateral as set forth in
the Intercreditor Agreement and the other terms set forth therein.

 

Section 4.              Conditions Precedent.  This Amendment shall become
effective on the date (such date, the “Amendment Effective Date”) when each of
the following conditions is satisfied (or waived in accordance with Section 12.1
of the Credit Agreement):

 

4.1            The Administrative Agent and the Lenders shall have received all
fees and other amounts due and payable in connection with this Amendment or any
other Credit Document on or prior to the Amendment Effective Date, including, to
the extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by the Company pursuant to this Amendment or
any other Credit Document.

 

4.2            The Administrative Agent shall have received a counterpart of
this Amendment signed by the Company and Lenders constituting the Required
Lenders.

 

4.3            The Administrative Agent shall have received a certificate from a
Responsible Officer of the Company certifying that:

 

(a)   The representations and warranties contained in the Credit Agreement are
true and correct in all material respects (unless already qualified by
materiality, in which case such applicable representation and warranty is true
and correct) as of the Amendment Effective Date (or as of such earlier date if
the representation or warranty specifically relates to an earlier date); and

 

(b)   No Default or Event of Default has occurred and is continuing.

 

The Administrative Agent is hereby authorized and directed to declare this
Amendment to be effective (and the Amendment Effective Date shall occur) when it
has received documents confirming or certifying, to the satisfaction of the
Administrative Agent, compliance with the conditions set forth in this Section 4
(or the waiver of such conditions as permitted in Section 

 

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12.1 of the Credit Agreement).  Such declaration shall be final, conclusive and
binding upon all parties to the Credit Agreement for all purposes.

 

Section 5.              Miscellaneous.

 

5.1            Confirmation.  All of the terms and provisions of the Credit
Agreement, as amended by this Amendment, are, and shall remain, in full force
and effect following the effectiveness of this Amendment.

 

5.2            Ratification and Affirmation; Representations and Warranties. 
The Company hereby (a) acknowledges the terms of this Amendment; (b) ratifies
and affirms its obligations under, and acknowledges, renews and extends its
continued liability under, the Credit Agreement and agrees that the Credit
Agreement remains in full force and effect as expressly amended by this
Amendment; (c) agrees that from and after the Amendment Effective Date (i) each
reference to the Credit Agreement in the other Credit Documents shall be deemed
to be a reference to the Credit Agreement, as amended by this Amendment and
(ii) this Amendment does not constitute a novation of the Credit Agreement; and
(d) represents and warrants to the Lenders that as of the date hereof, and
immediately after giving effect to the terms of this Amendment, the execution,
delivery, and performance by the Company and the consummation of the
transactions contemplated by this Amendment (i) are within the Company’s
organizational powers, (ii) have been duly authorized by all necessary action of
the board of directors of the Company, (iii) do not contravene the certificate
of incorporation or bylaws of the Company, (iv) do not contravene any
Requirement of Law or any material Contractual Obligation binding on or
affecting the Company except for immaterial laws or Contractual Obligations, the
noncompliance with which would not reasonably be expected to result in a
Material Adverse Effect, (v) do not result in or require the creation or
imposition of any Lien prohibited by the Credit Agreement and (vi) do not
require any authorization or approval or other action by, or any notice or
filing with, any Governmental Authority except for immaterial authorizations,
approvals, other actions, notices or filings the failure to obtain of which
would not reasonably be expected to have a Material Adverse Effect.

 

5.3            Credit Document.  This Amendment is a Credit Document.

 

5.4            Counterparts.  This Amendment may be executed by one or more of
the parties hereto in any number of separate counterparts, and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.  Delivery of an executed counterpart of a signature page of this
Amendment by facsimile or email transmission shall be effective as delivery of a
manually executed counterpart of this Amendment.

 

5.5            No Oral Agreement.  This Amendment, the Credit Agreement and the
other Credit Documents executed in connection herewith and therewith represent
the final agreement between the parties and may not be contradicted by evidence
of prior, contemporaneous, or unwritten oral agreements of the parties.  There
are no subsequent oral agreements between the parties.

 

5.6            GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE

 

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STATE OF NEW YORK.  Sections 12.10 and 12.11 of the Credit Agreement are hereby 
incorporated herein and apply hereto mutatis mutandis.

 

5.7            Successors and Assigns.  This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date first written above.

 

 

COMPANY:

 

KLX ENERGY SERVICES HOLDINGS, INC.

 

 

 

 

 

 

 

 

By:

/s/ Thomas P. McCaffrey

 

 

Name:

Thomas P. McCaffrey

 

 

Title:

Senior Vice President and Chief Financial Officer

 

 

 

 

Acknowledged and agreed by:

 

 

 

 

 

GUARANTORS:

KLX ENERGY SERVICES LLC

 

 

 

 

 

By:

/s/ Thomas P. McCaffrey

 

Name:

Thomas P. McCaffrey

 

Title:

President

 

 

 

 

 

 

 

 

KLX RE HOLDINGS LLC

 

 

 

 

 

 

 

 

By:

/s/ Thomas P. McCaffrey

 

 

Name:

Thomas P. McCaffrey

 

 

Title:

President

 

First Amendment to Credit Agreement
Signature Page

 

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ADMINISTRATIVE AGENT, COLLATERAL AGENT AND A LENDER:

 

JPMORGAN CHASE BANK, N.A.

 

 

 

 

 

 

 

 

By:

/s/ Kody J. Nerios

 

 

Name:

Kody J. Nerios

 

 

Title:

Authorized Officer

 

First Amendment to Credit Agreement
Signature Page

 

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LENDER:

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

 

 

 

 

 

 

 

 

By:

/s/ William M. Plough

 

 

Name:

William M. Plough

 

 

Title:

Vice President

 

First Amendment to Credit Agreement
Signature Page

 

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