WAIVER AND AMENDMENT NO. 2 TO REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
Exhibit
10.1
WAIVER
AND AMENDMENT NO. 2
THIS
WAIVER AND AMENDMENT NO. 2 (this “Agreement”) is entered into as of August 19,
2009, 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 (x) waive the Event of Default that has
occurred and is continuing under Section 10.5 of the Loan Agreement as a result
of Borrowers’ violation of the financial covenant contained in Section 6.5(b) of
the Loan Agreement for the fiscal quarter ended June 30, 2009 (the “Existing
Default”) and (y) 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.
Waiver. Subject
to the satisfaction of Section 4 below, Agent and Lenders hereby waive the
Existing Default. Notwithstanding the foregoing, the waiver of the
Existing Default 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.
3.
Amendment. Subject
to the satisfaction of Section 4 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
terms in appropriate alphabetical order:
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“Amendment No. 2”
shall mean Waiver and Amendment No. 2 to Revolving Credit, Term Loan and
Security Agreement dated as of August 19, 2009, by and between Borrowers,
Lenders and Agent.
“Amendment No. 2 Effective
Date” shall mean the date the Agent has determined the Conditions of
Effectiveness in Section 4 of Amendment No. 2 have been satisfied.
(b) The
definition of “Minimum Rig Utilization” appearing in Section 1.2 of the Loan
Agreement is hereby amended to read in its entirety as set forth
below:
“Minimum Rig
Utilization” shall mean, for any applicable period, the ratio (expressed
as a percentage) of (a) the sum for all Rigs of the total days during such
period that each such Rig in the Borrowers’ Rig Fleet Equipment earned revenue
to (b) the sum for all Rigs of the total days that each such Rig in the
Borrowers’ Rig Fleet Equipment was available to earn revenue excluding days in
which a Rig is undergoing refurbishment, upgrades or other scheduled equipment
maintenance projects that are in the ordinary course of business consistent with
reasonable industry standards; provided, that, Borrowers will provide written
notice to Agent if such refurbishment, upgrade or other scheduled equipment
maintenance project causes any Rig to be unable to earn revenue for a period of
more than 90 days.
(c) The
definition of “Term Loan Rate” appearing in Section 1.2 of the Loan Agreement is
hereby amended to read in its entirety as set forth below:
“Term Loan Rate” shall
mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate
plus two and
three-quarters of one percent (2.75%) with respect to Domestic Rate Loans and
(b) the sum of (x) the greater of (i) the Eurodollar Rate or (ii) two percent
(2.0%) plus (y)
four percent (4.00%) with respect to Eurodollar Rate Loans.
(d) Section
3.3 of the Loan Agreement is hereby further amended by inserting the following
new sub-clause (d) at the end thereof:
“(d) Amendment No. 2
Fee. Upon the execution of this Agreement, each Lender shall
have earned its ratable share of a fee equal to $25,000, which fee shall be due
and payable (x) $12,500 on the Amendment No. 2 Effective Date, and (y) $12,500
on the thirtieth (30th) day
following the Amendment No. 2 Effective Date, provided that at the
election of the Agent, such fee shall become immediately due and payable upon
the occurrence and during the continuance of any Event of Default.”
(e) Section
6.5(a) is hereby amended to read in its 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:
2
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Twelve
Month Period Ending:
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Minimum
Fixed Charge Coverage Ratio:
|
|
September
30, 2009
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No
Test
|
|
December
31, 2009
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No
Test
|
|
March
31, 2010
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No
Test
|
|
June
30, 2010
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No
Test
|
|
September
30, 2010
|
1.10
to 1.0
|
|
December
31, 2010
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1.10
to 1.0
|
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March
31, 2011
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1.10
to 1.0
|
(f) Section
6.5(b) is hereby amended to read in its entirety as set forth
below:
“(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:
|
Minimum
EBITDA
|
|||
|
Three
month period ending September 30, 2009
|
$ | (30,000 | ) | |
|
Six
month period ending December 31, 2009
|
$ | 880,000 | ||
|
Nine
month period ending March 31, 2010
|
$ | 1,640,000 | ||
|
Twelve
month period ending June 30, 2010
|
$ | 2,685,000 | ||
|
Twelve
month period ending September 30, 2010
|
$ | 3,795,000 | ||
|
Twelve
month period ending December 31, 2010
|
$ | 3,990,000 | ||
|
Twelve
month period ending March 31, 2011 and each twelve month period ending on
the final day of each fiscal quarter thereafter
|
$ | 4,000,000 | ||
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(g) Section
6.5 (c) of the Loan Agreement is hereby amended to read in its entirety as set
forth below:
“(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
percentage set forth in the table below opposite such fiscal
quarter:
|
Period:
|
Minimum
Rig Utilization:
|
|
Three
month period ending September 30, 2009
|
34%
|
|
Six
month period ending December 31, 2009
|
39%
|
|
Nine
month period ending March 31, 2010
|
40%
|
|
Twelve
month period ending June 30, 2010
|
41%
|
|
Twelve
month period ending September 30, 2010
|
43%
|
|
Twelve
month period ending December 31, 2010
|
43%
|
|
Twelve
month period ending March 31, 2011 and each twelve month period ending on
the final day of each fiscal quarter thereafter
|
43%
|
4.
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
portion of the amendment fee due and payable under Section 3.3(d) of the Loan
Agreement on the Amendment No. 2 Effective Date, which may be charged to
Borrowers’ Account as a Revolving Advance; and
(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.
5.
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.
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(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 (and the waiver of the Existing
Default).
(e) No
Borrower has any defense, counterclaim or offset with respect to the Loan
Agreement or the Obligations.
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6.
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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.
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7.
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.
8.
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).
9.
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.
10. 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.
11. 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:
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/s/ A. Xxxxx Xxxxx, Jr.
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Name:
A. Xxxxx Xxxxx, Jr.
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Title:
Vice President
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By:
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/s/ Xxxx X. Xxxxxxxxxx
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Name:
Xxxx X. Xxxxxxxxxx
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Title:
Chairman and CEO
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XXX
XXXXXX DRILLING COMPANY
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By:
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/s/ Xxxx X. Xxxxxxxxxx
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Name:
Xxxx X. Xxxxxxxxxx
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Title:
Chairman and CEO
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BEST
WELL SERVICE, INC.
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By:
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/s/ Xxxx X. Xxxxxxxxxx
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Name:
Xxxx X. Xxxxxxxxxx
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Title:
Chairman and CEO
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[Signature
Page to Waiver and Amendment No. 2]
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