EXHIBIT 10.37.9
SECOND AMENDMENT TO CREDIT AGREEMENT
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THIS SECOND AMENDMENT TO CREDIT AGREEMENT ("Amendment") is entered into
as of June 10, 2002, by and among BLACK WARRIOR WIRELINE CORP., a Delaware
corporation ("Borrower"), the other Credit Parties signatory hereto, GENERAL
ELECTRIC CAPITAL CORPORATION, a Delaware corporation ("GE Capital"), for itself,
as Lender, and as Agent for Lenders (in such capacity, the "Agent").
RECITALS
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A. Borrower, the other Credit Parties signatory thereto, GE Capital,
the other Lenders signatory thereto from time to time and the Agent are parties
to a certain Credit Agreement dated as of September 14, 2001, as amended by that
certain First Amendment to Credit Agreement, dated as of January 26, 2002 (the
"Credit Agreement;" capitalized terms used herein and not defined herein have
the meanings assigned to them in the Credit Agreement).
B. Borrower has requested that the Lenders amend the Credit Agreement
in certain respects and waive certain Events of Default that have occurred and
are continuing thereunder, and the Lenders have agreed to amend the Credit
Agreement and waive such Events of Default, subject to the terms and conditions
hereof.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and intending to be legally bound, the parties
hereto agree as follows:
A. AMENDMENTS
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1. Amendment to Section 1.1(c)(i). The Credit Agreement is hereby
amended by adding the following new sentence to the end of Section 1.1(c)(i):
Notwithstanding anything to the contrary set forth in this
Agreement, the Lenders shall not be obligated to make, and the Borrower
shall not request, more than one CapEx Advance in any Fiscal Month.
2. Amendment to Section 1.3. The Credit Agreement is hereby further
amended by renumbering subsections 1.3(b)(ii), (iii), (iv), (v) and (vi) to
1.3(b)(iii), (iv), (v), (vi) and (vii), respectively, and adding the following
new subsection 1.3(b)(ii).
(ii) If at any time the aggregate outstanding Term Loan and CapEx
Loan exceed 50% of the Forced Liquidation Value of the Eligible CapEx
Equipment and Eligible Term Equipment, the Borrower shall immediately
repay the aggregate outstanding Term Loan and CapEx Loan, pro rata, to
the extent required to eliminate such excess.
3. Amendment to Section 1.5 of the Credit Agreement. The Credit
Agreement is hereby further amended by adding the following Paragraph (g) to
Section 1.5 of the Credit Agreement:
(g) Notwithstanding anything to the contrary set forth in this
Section 1.5 or elsewhere in this Agreement, Borrower shall not be
permitted to borrow, reborrow, continue or convert any Loans as or into
LIBOR Loans until the earlier of (i) March 31, 2003 and (ii) such time
after March 31, 2003 when the Borrower and its Subsidiaries shall have
complied with the Financial Covenants set forth in Section 6.10 and
Annex F. As of the Second Amendment Date, all outstanding LIBOR Loans
shall be converted to Index Rate Loans.
4. Amendment to Section 6.3 of the Credit Agreement. The Credit
Agreement is hereby further amended by deleting Section 6.3(a) of the Credit
Agreement and by substituting in lieu thereof the following:
(a) No Credit Party shall create, incur, assume or permit to exist
any Indebtedness, except (without duplication) (i) Indebtedness secured
by purchase money security interests and Capital Leases permitted in
Section 6.7(c), (ii) the Loans and the other Obligations, (iii)
unfunded pension fund and other employee benefit plan obligations and
liabilities to the extent they are permitted to remain unfunded under
applicable law, (iv) existing Indebtedness described in Disclosure
Schedule (6.3) and refinancings thereof or amendments or modifications
thereto that do not have the effect of increasing the principal amount
thereof or changing the amortization thereof (other than to extend the
same) and that are otherwise on terms and conditions no less favorable
to any Credit Party, Agent or any Lender, as determined by Agent, than
the terms of the Indebtedness being refinanced, amended or modified,
(v) Permitted Insurance Premium Indebtedness in an aggregate amount not
to exceed $2,000,000 at any one time outstanding and (vi) Indebtedness
specifically permitted under Section 6.17;
5. Amendments to Annex A.
(A) The Credit Agreement is hereby further amended by adding the
following definitions to Annex A of the Credit Agreement in their appropriate
alphabetical order:
"Cumulative Operating Cash Flow" shall mean for any Fiscal Month,
the sum of (i) EBITDA for such Fiscal Month minus Capital Expenditures
paid in cash for such Fiscal Month, plus (ii) EBITDA for each preceding
Fiscal Month commencing with the Fiscal Month ending on May 31, 2002
minus Capital Expenditures paid in cash for each preceding Fiscal Month
commencing with the Fiscal Month ending on May 31, 2002.
"Permitted Insurance Premium Indebtedness" shall mean Indebtedness
of the Borrower incurred to finance insurance premiums of the Borrower
in the ordinary course of business.
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"Second Amendment Date" shall mean June 10, 2002.
(B) The Credit Agreement is hereby further amended by deleting the
definitions of "CapEx Borrowing Base", "Fixed Charges", "Interest Expense" and
"Senior Funded Debt" in Annex A of the Credit Agreement and by substituting in
lieu thereof the following definitions:
"CapEx Borrowing Base" means, as of any date of determination by
Agent, from time to time, an amount equal to the lesser of (i) up to
70% of the arms-length "hard" costs (excluding taxes, transportation,
installation, licensing and other "soft" costs) of all Eligible CapEx
Equipment, (ii) up to 100% of the Forced Liquidation Value of all
Eligible CapEx Equipment and (iii) EBITDA of the Borrower and its
Subsidiaries on a consolidated basis for the Fiscal Month then ended
minus (x) the aggregate amount of all Interest Expense paid in cash
during such period, plus (y) scheduled payments of principal with
respect to Indebtedness during such period, plus (z) $250,000, for
maintenance Capital Expenditures; provided, however, that if the actual
amount of cash CapEx Advances made by the Borrower during any Fiscal
Month (the "Current CapEx") is less than the respective limit specified
for such Fiscal Month in (i) and (ii) above (the "Specified CapEx"),
then the applicable limit for the immediately following Fiscal Month
shall be increased by an amount equal to the difference between the
Current CapEx and the Specified CapEx. For purposes of this Definition,
Capital Expenditures made by the Borrower in Fiscal Month shall be
deemed to be made first with Specified CapEx for such Fiscal Month,
then, from the Carryover Amount, if any. The Agent retains the right
from time to time to adjust the advance rates for the CapEx Borrowing
Base in its sole discretion.
"Fixed Charges" means, with respect to any Person for any fiscal
period, (a) the aggregate of all Interest Expense paid in cash during
such period, plus (b) scheduled payments of principal with respect to
Indebtedness (other than Permitted Insurance Premium Indebtedness to
the extent that such payments are characterized as operating expenses
of the Borrower) during such period, plus (c) Capital Expenditures paid
in cash during such period, plus (d) income taxes paid in cash during
such period.
"Interest Expense" means, with respect to any Person for any fiscal
period, interest expense of such Person paid in cash determined in
accordance with GAAP for the relevant period ended on such date,
including, interest expense with respect to any Funded Debt of such
Person but excluding interest expense with respect to any Permitted
Insurance Premium Indebtedness of such Person.
"Senior Funded Debt" means Funded Debt excluding all Indebtedness
of Borrower incurred under (i) the Subordinated Notes and (ii) Section
6.3(a)(v).
6. Amendments to Annex F.
(A) The Credit Agreement is hereby further amended by deleting
Paragraphs (b) through (d) in Annex F of the Credit Agreement and by
substituting in lieu thereof the following:
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(b) Minimum Fixed Charge Coverage Ratio. Borrower and its
Subsidiaries shall have on a consolidated basis at the end of each
Fiscal Quarter, commencing with the Fiscal Quarter ending March 31,
2003 and continuing thereafter, a Fixed Charge Coverage Ratio for the
12-month period then ended of not less than 1.3:1.0.
(c) Minimum Interest Coverage Ratio. Borrower and its Subsidiaries
on a consolidated basis shall have at the end of each Fiscal Quarter,
commencing with the Fiscal Quarter ending March 31, 2003 and continuing
thereafter, an Interest Coverage Ratio for the 12-month period then
ended of not less 3.0:1.0.
(d) Senior Leverage Ratio. Commencing with the Fiscal Quarter
ending March 31, 2003 and continuing thereafter, Borrower and its
Subsidiaries on a consolidated basis shall maintain a ratio of (i)
Senior Funded Debt measured as of the last day of each Fiscal Quarter
to (ii) EBITDA minus Capital Expenditures paid in cash, in each case
for the four Fiscal Quarters then ended, of not more than to 2.0:1.0.
(B) The Credit Agreement is hereby further amended by adding the
following Paragraph (f) to Annex F of the Credit Agreement:
(f) Maintain, as of the last day of each Fiscal Month, commencing
with the Fiscal Month ending on May 31, 2002, Cumulative Operating Cash
Flow of not less than:
Fiscal Month Cumulative Operating Cash Flow
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May 31, 2002 $ (725,000)
June 30, 2002 $ (575,000)
July 31, 2002 $ (275,000)
August 31, 2002 $ 225,000
September 30, 2002 $ 975,000
October 31, 2002 $ 1,875,000
November 30, 2002 $ 2,975,000
December 31, 2002 $ 4,325,000
January 31, 2003 $ 5,400,000
February 28, 2003 $ 6,600,000
B. WAIVERS
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1. Borrower acknowledges that as of the date hereof, Borrower has
failed to comply with Minimum Fixed Charge Coverage Ratio and Minimum Interest
Coverage Ratio for the Fiscal Quarters ending December 31, 2001 and March 31,
2002, and Senior Leverage Ratio for the Fiscal Quarter ending March 31, 2002 and
as a result of such failure to comply, Events of Default have arisen under
Section 8.1(b) of the Credit Agreement. Further, Borrower acknowledges that as
of the date hereof, if calculated pursuant to Generally Accepted Accounting
Principals, rather than calculated pursuant to the definitions and other
provisions of the Credit Agreement, Borrower has failed to comply with Senior
Leverage Ratio for the Fiscal
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Quarter ending December 31, 2001, and as a result of such failure to comply,
Events of Default would have arisen under Section 8.1(b) of the Credit
Agreement, if so calculated. Lenders hereby waive the Events of Default
described in this Section B(1).
2. Borrower acknowledges that as of the date hereof, an Event of
Default has occurred and is continuing as a result of the failure of the
Borrower to deliver December 31, 2001 audited Financial Statements as required
under Section 4.1 and Annex D of the Credit Agreement. Lender hereby waives the
Event of Default described in this Section B(2).
3. Borrower acknowledges that as of the date hereof, an Event of
Default has occurred and is continuing as a result of the Borrower selling
certain assets as set forth in Exhibit A attached hereto in violation of Section
6.8 of the Credit Agreement. Lender hereby waives the Event of Default described
in this Section B(3).
4. The waivers contained in this Section B are limited solely to the
matters stated above and shall not be deemed to waive or amend any other
provision of the Credit Agreement and shall not serve as a waiver or amendment
of any other matter prohibited by the terms and conditions of the Credit
Agreement. As amended hereby, all terms of the Credit Agreement shall remain in
full force and effect and constitute the legal, valid, binding and enforceable
obligations of the Borrower to the Lenders.
C. REPRESENTATIONS
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Each Credit Party hereby represents and warrants to the Lenders and the
Agent that:
1. The execution, delivery and performance by such Credit Party of this
Amendment (a) are within such Credit Party's corporate power; (b) have been duly
authorized by all necessary corporate and shareholder action; (c) are not in
contravention of any provision of such Credit Party's certificate of
incorporation or bylaws or other organizational documents; (d) do not violate
any law or regulation, or any order or decree of any Governmental Authority; (e)
do not conflict with or result in the breach or termination of, constitute a
default under or accelerate any performance required by, any indenture,
mortgage, deed of trust, lease, agreement or other instrument to which such
Credit Party or any of its Subsidiaries is a party or by which such Credit Party
or any such Subsidiary or any of their respective property is bound; (f) do not
result in the creation or imposition of any Lien upon any of the property of
such Credit Party or any of its Subsidiaries; and (g) do not require the consent
or approval of any Governmental Authority or any other person;
2. This Amendment has been duly executed and delivered for the benefit
of or on behalf of each Credit Party and constitutes a legal, valid and binding
obligation of each Credit Party, enforceable against such Credit Party in
accordance with its terms except as the enforceability hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium and other laws affecting
creditors' rights and remedies in general; and
3. After giving effect to this Amendment, no Default or Event of
Default has occurred and is continuing as of the date hereof.
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D. CAPEX ADVANCES.
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Notwithstanding anything in the Credit Agreement to the contrary, the
Borrower shall be permitted to make, and the Lenders shall advance, a CapEx
Advance in an amount equal to $732,530 on the Second Amendment Date; provided,
that the Forced Liquidation Value, as determined by the appraisal currently
being conducted by Superior, is no less than $40,000,000; and provided, further,
that such CapEx Advance and the Capital Expenditures acquired with the proceeds
of such CapEx Advance shall be excluded from the calculations of the Financial
Covenants.
E. POST-CLOSING COVENANTS
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Borrower hereby agrees to deliver to the Agent the Borrower's audited
Financial Statements for the Fiscal Year ending December 31, 2001 no later than
June 17, 2002. Failure to deliver such Financial Statements by June 17, 2002
shall constitute an Event of Default under Section 8.1 of the Credit Agreement.
F. FEES
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Borrower hereby agrees to pay an amendment fee equal to $100,000 with
fifty percent ($50,000) payable upon execution of this Amendment and the balance
due December 31, 2002. Failure to pay the balance of such amendment fee by
December 31, 2002 shall constitute an Event of Default under Section 8.1 of the
Credit Agreement.
G. OTHER AGREEMENTS
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1. Continuing Effectiveness of Loan Documents. As amended hereby, all
terms of the Credit Agreement and the other Loan Documents shall be and remain
in full force and effect and shall constitute the legal, valid, binding and
enforceable obligations of Borrower. To the extent any terms and conditions in
any of the other Loan Documents shall contradict or be in conflict with any
terms or conditions of the Credit Agreement, after giving effect to this
Amendment, such terms and conditions are hereby deemed modified and amended
accordingly to reflect the terms and conditions of the Credit Agreement as
modified and amended hereby. Upon the effectiveness of this Amendment such terms
and conditions are hereby deemed modified and amended accordingly to reflect the
terms and conditions of the Credit Agreement as modified and amended hereby.
2. Reaffirmation. Borrower hereby restates, ratifies and reaffirms each
and every term and condition set forth in the Credit Agreement and the other
Loan Documents, effective as of the date hereof and after giving effect to this
Amendment, and represents that, after giving effect to this Amendment and the
waivers contained herein, no Default or Event of Default has occurred and is
continuing as of the date hereof.
3. Expenses. Borrower agrees to pay on demand all costs and expenses of
Agent in connection with the preparation, execution, delivery and enforcement of
this Amendment, the closing hereof, and any other transactions contemplated
hereby, including the fees and out-of-pocket expenses of Agent's counsel.
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1. GOVERNING LAW. IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS
OF THE UNITED STATES OF AMERICA.
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SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT
IN WITNESS WHEREOF, this Amendment has been duly executed as of the
date first written above.
BLACK WARRIOR WIRELINE
CORPORATION, as Borrower
By:_________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and Lender
By:_________________________________
Xxxx Xxxxxx
Duly Authorized Signatory
[SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT]
EXHIBIT A
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Asset Date Sold Value
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1. Drilling & Completion Jul-01 $525,000
2. 1997 Ford Crown Victoria Dec-01 $ 2,250
3. Wyoming Land Oct-01 $103,315
