TO REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
Exhibit
10.1
WAIVER
AND AMENDMENT NO. 5
THIS
WAIVER AND AMENDMENT NO. 5 (this “Agreement”) is entered into as of January 13,
2010, by and among BEST ENERGY SERVICES, INC (f/k/a HYBROOK RESOURCES CORP.), a
corporation organized under the laws of the State of Nevada (“Best”), XXX XXXXXX
DRILLING COMPANY, a corporation organized under the laws of the State of Utah
(“BBD”) and BEST WELL SERVICE, INC., a corporation organized under the laws of
the State of Kansas (“BWS”) (Best, BBD and BWS, each a “Borrower”, and
collectively “Borrowers”), the financial institutions party hereto
(collectively, the “Lenders” and individually a “Lender”) and PNC BANK, NATIONAL
ASSOCIATION (“PNC”), as agent for Lenders (PNC, in such capacity, the
“Agent”).
BACKGROUND
Borrowers,
Lenders and Agent are parties to that certain Revolving Credit, Term Loan and
Security Agreement dated as of February 14, 2008 (as amended, restated,
supplemented or otherwise modified from time to time, the “Loan Agreement”)
pursuant to which Agent and Lenders provide Borrowers with certain financial
accommodations.
Borrowers
have requested that Agent and Lenders waive certain Events of Default that have
occurred and are continuing and amend certain provisions of the Loan Agreement
as hereafter provided, and Agent and Lenders are willing to do so on the terms
and conditions hereafter set forth.
NOW,
THEREFORE, in consideration of any loan or advance or grant of credit heretofore
or hereafter made to or for the account of Borrowers by Agent or Lenders, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as
follows:
1.
Definitions. All
capitalized terms not otherwise defined or amended herein shall have the
meanings given to them in the Loan Agreement.
2.
Reservation of
Rights: Borrowers acknowledge that the Events of Default set forth on
Schedule I
hereto (collectively, the “Existing Defaults”) have occurred and are continuing
under the Loan Agreement.
Subject
to Section 3 of this Agreement, Borrower further acknowledges that:
(a) As
a result of the Existing Defaults, Agent has the immediate right to exercise its
rights and remedies under the Loan Agreement, the Other Documents or at
law.
(b) To
the extent Agent makes any additional Advances after the date hereof, such
Advances shall not constitute either a waiver of, nor agreement to forbear by
Agent with respect to, any past, present or future violation, Event of Default
under the Loan Agreement or the Other Documents, including, without limitation,
the Existing Defaults. No such additional Advances by Agent shall,
directly or indirectly, in any way whatsoever, impair, prejudice or otherwise
adversely effect Agent’s right at any time and from time to time to exercise any
right, privilege or remedy in connection with the Loan Agreement or related
documents or amend or alter the provisions of the Loan Agreement or the Other
Documents or constitute a course of dealing or other basis for altering any
Obligation of Borrowers or any other Person or any right, privilege or remedy of
Agent under the Loan Agreement or the Other Documents.
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(c) Although
Agent is not presently taking any immediate action with respect to any of the
Existing Defaults except as set forth above, Agent hereby reserves all its
rights and remedies under the Loan Agreement, the Other Documents and applicable
law, and its election not to exercise any such right or remedy at the present
time shall not (a) preclude Agent from ceasing at any time to make Advances, (b)
limit in any manner whatsoever Borrowers’ obligation to comply with, and Agent’s
right to insist on Borrowers’ compliance with, each and every term of the Loan
Agreement and the Other Documents or (c) constitute a waiver of any Event of
Default or any right or remedy available to Agent under the Loan Agreement, the
Other Documents or applicable law, and Agent hereby expressly reserves its
rights with respect to the same.
(d) No
failure or delay on the part of Agent in exercising any right or remedy under
the Loan Agreement and no course of dealing between Borrowers and Agent shall
operate as a waiver of any such right or remedy nor shall any single or partial
exercise of any right or remedy under the Loan Agreement preclude any other or
further exercise thereof or the exercise of any other right or remedy under the
Loan Agreement. Agent expressly reserves all of its rights and
remedies under the Loan Agreement.
3.
Conditional
Waiver. Subject to the satisfaction of Section 5 below, upon
the completion of a Successful Equity Offering (as defined below), as determined
by Agent in its sole discretion, Agent and Lenders hereby waive the Existing
Defaults. Notwithstanding the foregoing, the conditional waiver of
the Existing Defaults set forth above does not establish a course of conduct
between Borrowers, Agent and Lenders and the Borrowers hereby agree that Agent
and Lenders are not obligated to waive any future Events of Default under the
Loan Agreement or the Other Documents.
4.
Amendment. Subject
to the satisfaction of Section 5 below, the Loan Agreement is hereby amended as
follows:
(a) Section
1.2 of the Loan Agreement is hereby amended by inserting the following defined
term in appropriate alphabetical order:
“Successful Equity
Offering” means an offering of Equity Interests by Best that results in
Best receiving net cash proceeds in an amount not less than $2,100,000 on terms
and conditions satisfactory to Agent in its sole discretion, and all net
proceeds of which are used to repay outstanding Revolving Advances.
(b) Section
1.2 of the Loan Agreement is hereby amended by amending and restating the
following defined terms to read in their entirety as set forth
below:
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“Minimum Rig
Utilization” shall mean, for any applicable period, the daily average
number of Rigs of BWS that earned revenue during such period, excluding weekends
and company holidays.
“Special Advance
Amount” shall mean $1,900,000 during the Special Advance Period and $0 at
all other times.
“Special Advance
Period” shall mean the period commencing on January 13, 2010 and ending
on the earlier of (i) January 30, 2010 or (ii) the completion of a Successful
Equity Offering.
(c) Sections
6.5(a), (b) and (c) are hereby amended to read in their entirety as set forth
below:
“(a) Fixed Charge Coverage
Ratio. Cause to be maintained as of the end of each fiscal
quarter set forth below, for the twelve month period ending on the last day of
such fiscal quarter, a Fixed Charge Coverage Ratio of not less than the ratio
set forth in the table below for such period:
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Twelve
Month Period Ending:
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Minimum
Fixed Charge Coverage Ratio:
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December
31, 2009
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No
Test
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March
31, 2010
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No
Test
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|
June
30, 2010
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No
Test
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September
30, 2010
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No
Test
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December
31, 2010
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No
Test
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March
31, 2011 and each fiscal quarter ending thereafter
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1.00
to 1.0
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(b) Minimum
EBITDA. Maintain as of the end of each fiscal quarter set
forth below, for the applicable period ending on the last day of such fiscal
quarter, EBITDA of Borrowers on a Consolidated Basis of at least the amount set
forth opposite such fiscal quarter:
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Period:
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Minimum
EBITDA
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|||
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Three
month period ending December 31, 2009
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$ | (215,000 | ) | |
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Six
month period ending March 31, 2010
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$ | 29,000 | ||
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Nine
month period ending June 30, 2010
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$ | 378,000 | ||
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Twelve
month period ending September 30, 2010
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$ | 909,000 | ||
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Twelve
month period ending December 31, 2010
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$ | 2,045,000 | ||
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Twelve
month period ending March 31, 2011 and each twelve month period ending on
the final day of each fiscal quarter thereafter
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No
Test
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|||
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(c) Minimum Rig
Utilization. Cause to be maintained as of the end of each
fiscal quarter set forth below, for the applicable period ending on the last day
of such fiscal quarter, Minimum Rig Utilization for BWS of not less than the
number set forth in the table below opposite such fiscal quarter:
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Period:
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Minimum
Rig Utilization:
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Three
month period ending December 31, 2009
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7.5
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Six
month period ending March 31, 2010
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9.7
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Nine
month period ending June 30, 2010
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10.8
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Twelve
month period ending September 30, 2010
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13.0
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Twelve
month period ending December 31, 2010
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15.1
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Twelve
month period ending March 31, 2011 and each twelve month period ending on
the final day of each fiscal quarter thereafter
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17.0
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5.
Conditions of
Effectiveness. This Agreement shall become effective when
Agent shall have received:
(a) four
(4) copies of this Agreement executed by the Required Lenders and each
Borrower;
(b) the
$5,000 portion of the Closing Amendment Fee (as defined below) payable on the
date hereof;
(c) such
other certificates, instruments, documents, agreements and opinions of counsel
as may be required by Agent or its counsel, each of which shall be in form and
substance satisfactory to Agent and its counsel.
6.
Amendment
Fees. As consideration for entering into this Agreement,
Borrowers agree to:
(a) pay
to Agent, for the ratable benefit of the Lenders, an amendment fee in the amount
of $10,000 (the “Closing Amendment Fee”), which fee shall be fully earned on the
date hereof and which fee shall be payable (x) $5,000 on the date of this
Agreement and shall be charged to Borrowers’ Account and (y) $5,000 on February
12, 2010 and which may be charged to Borrowers’ Account on such
date;
(b) pay
to Agent, for the ratable benefit of the Lenders, an amendment fee in the amount
of $50,000 (the “Contingent Amendment Fee”), if Best completes an offering of
Equity Interests (whether in one transaction or in a series of related
transactions) which generates gross cash proceeds to Best of at least
$3,000,0000, and which Contingent Amendment Fee shall be fully earned on the
date hereof and which Contingent Amendment Fee shall be payable immediately upon
the completion of such an issuance of Equity Interests by Best (and which may be
charged to Borrowers’ Account on such date);
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(c) issue
to Agent, concurrently with the completion of a Successful Equity Offering, (x)
amendments to the Existing Warrants (as defined below) reducing the exercise
price for such Existing Warrants to $0.10 per share and (y) a common stock
purchase warrant in form and substance satisfactory to Agent, for 1,250,000
shares of common stock of Best at an exercise price of $0.10 per share (the “New
Warrant”). “Existing Warrants” means (i) that certain Common Stock
Purchase Warrant to purchase 250,000 shares of Common Stock of Best dated May
29, 2009, with Certificate No. CS2009-51-52, (ii) that certain Common Stock
Purchase Warrant to purchase 250,000 shares of Common Stock of Best dated
October 20, 2009, with Certificate No. CS2009-97 and (iii) that certain Common
Stock Purchase Warrant to purchase 250,000 shares of Common Stock of Best dated
November 9, 2009, with Certificate No. CS2009-98.
7.
Conditions
Subsequent. A Successful Equity Offering shall have occurred
by no later than January 31, 2010, on terms and conditions satisfactory to Agent
in its sole discretion, and all proceeds of a Successful Equity Offering shall
be used to repay the outstanding Revolving Advances.
8.
Representations, Warranties
and Covenants. Each Borrower hereby represents, warrants and
covenants as follows:
(a) This
Agreement and the Loan Agreement constitute legal, valid and binding obligations
of such Borrower and are enforceable against such Borrower in accordance with
their respective terms.
(b) Upon
the effectiveness of this Agreement, each Borrower hereby reaffirms all
covenants, representations and warranties made in the Loan Agreement to the
extent the same are not amended or waived hereby and agrees that all such
covenants, representations and warranties shall be deemed to have been remade as
of the effective date of this Agreement.
(c) The
execution, delivery and performance of this Agreement and all other documents in
connection therewith has been duly authorized by all necessary corporate action,
and does not contravene, violate or cause the breach of any agreement, judgment,
order, law or regulation applicable to any Borrower.
(d) No
Event of Default or Default has occurred and is continuing or would exist after
giving effect to this Agreement (other than the Existing Defaults).
(e) No
Borrower has any defense, counterclaim or offset with respect to the Loan
Agreement or the Obligations.
9.
Effect on
the Loan Agreement.
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(a) Upon
the effectiveness of this Agreement, each reference in the Loan Agreement to
“this Agreement,” “hereunder,” “hereof,” “herein” or words of like import shall
mean and be a reference to the Loan Agreement as amended
hereby. Except as specifically amended herein, the Loan Agreement,
and all other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed. This Agreement shall constitute an “Other
Document” for all purposes under the Loan Agreement.
(b) Except
as expressly provided herein, the execution, delivery and effectiveness of this
Agreement shall not operate as a waiver of any right, power or remedy of Agent
or any Lender, nor constitute a waiver of any provision of the Loan Agreement,
or any other documents, instruments or agreements executed and/or delivered
under or in connection therewith.
10. Release. The
Borrowers hereby acknowledge and agree that: (a) neither they nor any
of their Affiliates have any claim or cause of action against Agent or any
Lender (or any of Agent’s or any Lender’s Affiliates, officers, directors,
employees, attorneys, consultants or agents) and (b) Agent and each Lender have
heretofore properly performed and satisfied in a timely manner all of their
respective obligations to the Borrowers under the Loan Agreement and the Other
Documents. Notwithstanding the foregoing, Agent and each Lender wish
(and the Borrowers agree) to eliminate any possibility that any past conditions,
acts, omissions, events or circumstances would impair or otherwise adversely
affect any of Agent’s or such Lender’s rights, interests, security and/or
remedies under the Loan Agreement and the Other
Documents. Accordingly, for and in consideration of the agreements
contained in this Agreement and other good and valuable consideration, each
Borrower (for itself and its Affiliates and the successors, assigns, heirs and
representatives of each of the foregoing) (each a “Releasor” and collectively,
the “Releasors”) does hereby fully, finally, unconditionally and irrevocably
release and forever discharge Agent, each Lender and each of their respective
Affiliates, officers, directors, employees, attorneys, consultants and agents
(each a “Released Party” and collectively, the “Released Parties”) from any and
all debts, claims, obligations, damages, costs, attorneys’ fees, suits, demands,
liabilities, actions, proceedings and causes of action, in each case, whether
known or unknown, contingent or fixed, direct or indirect, and of whatever
nature or description, and whether in law or in equity, under contract, tort,
statute or otherwise, which any Releasor has heretofore had or now or hereafter
can, shall or may have against any Released Party by reason of any act, omission
or thing whatsoever done or omitted to be done on or prior to the date hereof
arising out of, connected with or related in any way to this Agreement, the Loan
Agreement or any Other Document, or any act, event or transaction related or
attendant thereto, or Agent’s or any Lender’s agreements contained therein, or
the possession, use, operation or control of any of the assets of agreements
contained therein, or the possession, use, operation or control of any of the
assets of the Borrowers, or the making of any advance, or the management of such
advance or the Collateral.
11. Governing
Law. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns and
shall be governed by and construed in accordance with the laws of the State of
New York (other than those conflict of law rules that would defer to the
substantive law of another jurisdiction).
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12. Cost and
Expenses. Borrowers hereby agree to pay the Agent, on
demand, all costs and reasonable expenses (including reasonable attorneys’ fees
and legal expenses) incurred in connection with this Agreement and any
instruments or documents contemplated hereunder.
13. Headings. Section
headings in this Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other
purpose.
14. Counterparts; Facsimile
Signatures. This Agreement may be executed by the parties
hereto in one or more counterparts of the entire document or of the signature
pages hereto, each of which shall be deemed an original and all of which taken
together shall constitute one and the same agreement. Any signature
received by facsimile or electronic transmission shall be deemed an original
signature hereto.
[Remainder
of page intentionally left blank]
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IN WITNESS WHEREOF, this
Agreement has been duly executed as of the day and year first written
above.
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PNC
BANK, NATIONAL ASSOCIATION,
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as
Lender and as Agent
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By: /s/ A. Xxxxx Xxxxx
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Name:
A. Xxxxx Xxxxx
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Title:
Vice President
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By: /s/ Xxxx X. Xxxxxxxxxx
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Name:
Xxxx X. Xxxxxxxxxx
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Title:
Chairman
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XXX
XXXXXX DRILLING COMPANY
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By: /s/ Xxxx X. Xxxxxxxxxx
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Name:
Xxxx X. Xxxxxxxxxx
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Title:
CEO
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BEST
WELL SERVICE, INC.
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By: /s/ Xxxx X. Xxxxxxxxxx
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Name:
Xxxx X. Xxxxxxxxxx
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Title:
President
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[Signature
Page to Waiver and Amendment No. 5]
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SCHEDULE
I
Existing
Defaults
1. Events
of Default as a result of the failure of Borrowers to deliver to Agent the
monthly financial statements required pursuant to Section 9.9 of the Loan
Agreement for the months ended July 31, 2009 and August 31, 2009 during the time
periods required by said Section.
2. An
Event of Default as a result of the aggregate balance of Revolving Advances
outstanding exceeding the Formula Amount less, the aggregate Maximum Undrawn
Amount of all issued and outstanding Letters of Credit, in violation of Section
2.5 of the Loan Agreement
3. An
Event of Default as a result of the Borrowers’ failure to comply with the
Minimum EBITDA covenant set forth in Section 6.5(b) of the Loan Agreement for
the three month period ended September 30, 2009.
4. An
Event of Default as a result of the Borrowers’ failure to comply with the
Minimum Rig Utilization covenant set forth in Section 6.5(c) of the Loan
Agreement for the three month period ended September 30, 2009.
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