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EXHIBIT 10.23
FIRST AMENDMENT TO LOAN AGREEMENT
This First Amendment to Loan Agreement dated effective as of March 21,
2000 ("Amendment") is by Joint Energy Development Investments II Limited
Partnership, a Delaware limited partnership ("JEDI-II"), as agent for the Senior
Lenders (as defined below) (in such capacity, the "Senior Agent") and JEDI-II as
agent for the Subordinated Lenders (as defined below) (in such capacity, the
"Subordinated Agent") and ENRON NORTH AMERICA CORP., a Delaware corporation
("Servicer"), in favor of SIERRA WELL SERVICE, INC., a Delaware corporation
("Borrower").
INTRODUCTION
A. The Borrower, the Senior Lenders named therein and Senior Agent
entered into the Senior Loan Agreement dated as of March 31, 1999 (the "Senior
Loan Agreement").
B. The Borrower, the Subordinated Lenders named therein and Subordinated
Agent entered into the Subordinated Loan Agreement dated as of March 31, 1999
(the "Subordinated Loan Agreement" together with the Senior Loan Agreement
collectively referred to herein as the Loan Agreements).
C. Pursuant to certain transactions, JEDI-II has transferred to ENA CLO
I Holding Company I, L.P., a Delaware limited partnership ("Holding Company"),
both the $24,408,000 Senior Secured Loan issued pursuant to the Senior Loan
Agreement and the $25,000,000 Subordinated Secured Loan issued pursuant to the
Subordinated Loan Agreement. Holding Company and Servicer have entered into that
certain Asset Management and Servicing Agreement dated as of December 22, 1999
("Asset Management Agreement"), pursuant to which Holding Company has appointed
Servicer to manage and service, among other assets, the duties, the
responsibilities and covenants required under the Loan Agreements.
D. The Borrower has advised Servicer that the Borrower is not in
compliance with certain covenants of the Loan Agreements and has requested that
Servicer waive the Events of Default occurring as a result thereof.
E. The Borrower is pursuing an initial public offering of the Borrower's
common stock (the "IPO").
F. The Borrower has entered into definitive agreements to acquire
certain assets from Xxxxxxx Xxxxxx ("Xxxxxx") and the stock of TAT (Turnaround
Trucking, Inc.), a Texas corporation, Sundown Operating, Inc., a Texas
corporation, Xxxxxxxx Well Service, Inc., a Texas corporation, Xxxxxx Well
Servicing Co., a New Mexico corporation and Gold Star Service Company, Inc., a
New Mexico corporation. The foregoing acquisitions are collectively referred to
herein as the "Acquisitions." The stockholders of such companies for which
Borrower is acquiring the stock are referred to herein as the "Sellers." The IPO
and the Acquisitions are collectively referred to as the "Transaction."
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G. The Transaction would violate several covenants of the Loan
Agreements, and the Borrower has requested that Servicer and JEDI-II consent to
the Transaction.
H. Servicer is willing to waive such Events of Default and consent to
the Transaction on the terms set forth herein.
THEREFORE, Senior Agent, Subordinated Agent and Servicer, on behalf of
Holding Company, and the Borrower hereby agree as follows:
Section 1. Definitions; References. Unless otherwise defined in this
Amendment, each term used in this Amendment which is defined in the Senior Loan
Agreement has the meaning assigned to such term in the Senior Loan Agreement. As
used in this First Amendment, the following term has the following meanings:
1.1 "Excess Cash" shall mean cash held by the Borrower or
any Subsidiary in excess of $1,500,000.
1.2 "Successful Completion of the IPO" shall mean an IPO
with proceeds sufficient to (i) payoff all Indebtedness,
including accrued but unpaid interest, under the Subordinated
Loan Agreement and (ii) redemption of Borrower's Series A
Preferred Shares, as defined in the Securities Purchase Agreement
between the Borrower and JEDI-II dated as of March 31, 1999, and
all accrued but unpaid dividends.
Section 2. Amendment of Senior Loan Agreement.
2.1. Section 2.2(a)(i) of the Senior Loan Agreement is
amended by replacing the first sentence of Section 2.2(a)(i) with the following:
"The outstanding principal balance of the Senior Loan shall be
due and payable to the Senior Agent for the ratable benefit of
the Senior Lenders beginning with payments of at least
$435,857.15 on each of September 30, 2000 and December 31, 2000.
In the event that Borrower has Excess Cash on either of such
dates, such Excess Cash shall be paid to the Senior Agent for the
ratable benefit of the Senior Lenders up to the amount of
$871,714.29 for each such date. On March 31, 2001, Borrower shall
make a payment of $1,743,428.58 less the amount of any Excess
Cash paid on either September 30, 2000 or December 31, 2000.
Thereafter, on each Payment Date until the Final Maturity Date,
the amount due and payable shall be $871,714.29."
2.2 Section 2.4(a) of the Senior Loan Agreement is amended
by replacing the second sentence thereof with the following:
"The Borrower shall pay to the Senior Agent for the ratable
benefit of the Senior Lenders all accrued but unpaid interest on
the Senior Loan on each Payment Date and on the Final Maturity
Date with the exception of interest payable on March
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31, 2000 which shall be due and payable with interest at the
LIBOR rate plus 2.5% on the earlier of the date of the IPO or
June 30, 2000."
2.3 Section 6.4 shall be amended by adding a new sentence
at the end of such section which reads as follows:
"Borrower shall not permit its general and administrative
expenses, as such expenses are commonly presented in the
Borrower's financial statements, excluding the costs associated
with the Acquisitions to exceed $7,000,000 for the calendar year
2000."
Section 3. Waiver.
3.1. Senior Loan Agreement. Without waiving any other
provision or requirement under the Senior Loan Agreement or the right of
Servicer to require compliance with all provisions of the Senior Loan Agreement
in the future, and without waiving any other Event of Default, present or
future, if any exist or arise, Senior Agent and Servicer hereby waive the Events
of Default occurring as the result of the Borrower's failure to comply with the
provisions of (i) Section 6.5(a)(ii) of the Senior Loan Agreement for the year
ending December 31, 1999, (ii) Section 6.10 as it relates to the lease agreement
between Borrower and Permian Basin Acquisition Group as currently in effect and
(iii) Section 6.3(f), but only until the earlier of (a) one month after the
Successful Completion of the IPO or (b) January 1, 2001.
3.2. Subordinated Loan Agreement. Without waiving any
other provision or requirement under the Subordinated Loan Agreement or the
right of Servicer to require compliance with all provisions of the Subordinated
Loan Agreement in the future, and without waiving any other Event of Default,
present or future, if any exist or arise, Subordinated Agent and Servicer hereby
waive the Events of Default occurring as the result of the Borrower's failure to
comply with the provisions of (i) Section 6.5(a)(ii) of the Subordinated Loan
Agreement for the year ending December 31, 1999, (ii) Section 6.10 as it relates
to the lease agreement between Borrower and Permian Basin Acquisition Group as
currently in effect and (iii) Section 6.3(f), but only until the earlier of (a)
one month after the Successful Completion of the IPO or (b) January 1, 2001.
Section 4. Consent.
4.1 (A) Senior Loan Agreement. Servicer and Senior Agent
hereby (a) consent to the Liens granted by Borrower in favor of the Sellers and
Durham on the property acquired in the Acquisitions which would cause a breach
under Sections 2.2(c) and 6.1, but only to the extent such Liens secure the
indebtedness described in the registration statement relating to the IPO, (b)
consent to the Acquisitions to the extent the Acquisitions would cause a breach
under Section 6.3, provided that additional Indebtedness is incurred solely to
finance the Acquisitions, (c) consent to the Acquisitions to the extent the
Acquisitions would cause a breach under Sections 6.5(a) of the Senior Loan
Agreement, (d) consent to the payment of $1000 in connection with the redemption
and cancellation of the Series C Preferred Share to the extent such redemption
and cancellation would cause a breach under Section 6.4 of the Senior Loan
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Agreement, and (e) consent to the issuance of Common Stock of the Borrower in
the IPO to the extent such issuance would cause a breach under Section 6.13 of
the Senior Loan Agreement, provided there is a Successful Completion of the IPO.
Servicer and Senior Agent hereby waive the Defaults, which would have arisen if
not for the foregoing consents. The foregoing consents and waivers are limited
to the extent described herein and shall not be construed to be a consent to or
a waiver of any other actions prohibited by the Senior Loan Agreement. Servicer
and the Senior Agent reserve the right to exercise any rights and remedies
available to them in connection with any future defaults with respect to
Sections 2.2, 6.1, 6.3, 6.4, 6.5, or 6.13 of the Senior Loan Agreement or any
other provision of any Senior Loan Document.
(B) Subordinated Loan Agreement. Servicer and
Subordinated Agent hereby (a) consent to the Liens granted by Borrower in favor
of the Sellers and Durham on the property acquired in the Acquisitions which
would cause a breach under Sections 2.2(c) and 6.1, but only to the extent such
Liens secure the indebtedness described in the registration statement relating
to the IPO, (b) consent to the Acquisitions to the extent the Acquisitions would
cause a breach under Section 6.3, provided that additional Indebtedness is
incurred solely to finance the Acquisitions, (c) consent to the Acquisitions to
the extent the Acquisitions would cause a breach under Sections 6.5(a) of the
Subordinated Loan Agreement, (d) consent to the payment of $1000 in connection
with the redemption and cancellation of the Series C Preferred Share to the
extent such redemption and cancellation would cause a breach under Section 6.4
of the Subordinated Loan Agreement, and (e) consent to the issuance of Common
Stock of the Borrower in the IPO to the extent such issuance would cause a
breach under Section 6.13 of the Subordinated Loan Agreement, provided there is
a Successful Completion of the IPO. Servicer and Subordinated Agent hereby waive
the Defaults, which would have arisen if not for the foregoing consents. The
foregoing consents and waivers are limited to the extent described herein and
shall not be construed to be a consent to or a waiver of any other actions
prohibited by the Subordinated Loan Agreement. Servicer and the Subordinated
Agent reserve the right to exercise any rights and remedies available to them in
connection with any future defaults with respect to Sections 2.2, 6.1, 6.3, 6.4,
6.5, or 6.13 of the Subordinated Loan Agreement or any other provision of any
Subordinated Loan Document.
4.2 Notwithstanding anything to the contrary contained
herein, each of the consents contained in Section 4.1 of this Waiver shall
expire and no longer be effective as of the earlier of (i) the termination of
the IPO; (ii) the occurrence of the IPO that is not a Successful Completion of
the IPO; or (iii) June 30, 2000 and a Successful Completion of the IPO has not
occurred.
Section 5. Covenant. Borrower covenants and agrees that Borrower will
use a portion of the proceeds from the IPO to retire the Subordinated Secured
Loan including all accrued but unpaid interest and to redeem the Series A
Preferred Shares including all accrued but unpaid dividends.
Section 6. Representations and Warranties of the Borrower. The Borrower
represents and warrants that after giving effect to this Amendment, (i) all of
the representations and warranties contained in the Loan Agreements are true and
correct in all material respects and (ii) no Default or Event of Default shall
be continuing under either of the Loan Agreements.
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Section 7. Effectiveness. This Amendment shall become effective upon the
Borrower, JEDI-II and the Servicer duly and validly executing originals of this
Amendment. This Amendment may be executed in multiple counterparts, each of
which shall be deemed an original and all of which shall constitute one
instrument.
Section 8. Counterparts. This Amendment may be executed by one or more
of the parties hereto in any number of separate counterparts, and all such
counterparts taken together shall be deemed to constitute one and the same
instrument.
Section 9. Choice of Law. This Amendment shall be governed by and
construed and enforced in accordance with the laws of the State of Texas.
THIS WRITTEN AGREEMENT AND THE SENIOR LOAN DOCUMENTS AND SUBORDINATED
LOAN DOCUMENTS, AS DEFINED IN THE LOAN AGREEMENTS, REPRESENT THE FINAL AGREEMENT
AMONG 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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[SIGNATURE PAGE - FIRST AMENDMENT TO LOAN AGREEMENT]
EXECUTED as of the date first set forth above.
SERVICER:
ENRON NORTH AMERICA CORP.
By: /s/ XXXXXXX X. BUY
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Name: Xxxxxxx X. Buy
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Title: Executive Vice President
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SENIOR AGENT AND
SUBORDINATED AGENT:
JOINT ENERGY DEVELOPMENT
INVESTMENTS II LIMITED PARTNERSHIP
By: Enron Capital Management II Limited
Partnership, its General Partner
By: Enron Capital II Corp., its
General Partner
By: /s/ XXXXXXX X. BUY
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Name: Xxxxxxx X. Buy
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Title: Executive Vice President
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Acknowledged and agreed to be effective
as of March 21, 2000, by:
SIERRA WELL SERVICE, INC.
By: /s/ XXXXXXX X. XXXXXXX
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Name: Xxxxxxx X. Xxxxxxx
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Title: President & CEO
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