EXHIBIT 10.1
MASTER FINANCING AND SECURITY AGREEMENT
THIS MASTER FINANCING AND SECURITY AGREEMENT (as amended, supplemented or otherwise modified from time to time, this “Agreement”) is between ENCINA EQUIPMENT FINANCE SPV, LLC, a Delaware limited liability company (together with its successors and permitted assigns, if any, “Lender”) and RNGR ENERGY SERVICES, LLC, a Delaware limited liability company ("Parent"), RANGER ENERGY SERVICES, LLC, a Delaware limited liability company ("Ranger"), TORRENT ENERGY SERVICES, LLC, a Delaware limited liability company ("Torrent"), RANGER ENERGY LEASING, LLC, a Delaware limited liability company ("Leasing"); RANGER ENERGY PROPERTIES, LLC, a Delaware limited liability company ("Properties"); ACADEMY OILFIELD RENTALS, LLC, a Delaware limited liability company ("Academy"); RANGER ENERGY EQUIPMENT, LLC, a Delaware limited liability company ("Equipment"); and MALLARD COMPLETIONS, LLC, a Delaware limited liability company ("Mallard"). Each of Parent, Ranger, Torrent, Leasing, Properties, Academy, Equipment, and Mallard shall be referred to herein as a "Borrower" and individually and collectively, jointly and severally, the "Borrowers".
Lender has an office at 83 Wooster Heights Road, Suite 125, Danbury, Connecticut 06810. Each of Borrower’s mailing address and chief executive office is 800 Gessner Street, Suite 1000, Houston, Texas 77024.
For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each of Lender and Borrowers, Lender and Borrowers agree as follows:
This Agreement contains the general terms that apply to financing that shall be provided (subject to the terms and conditions of this Agreement) at the request of Borrowers from time to time by Lender to Borrowers. The total amount of the financing to be provided by Lender to Borrowers is contemplated to be not be less than $35,000,000.00, but shall not exceed $40,000,000.00 (the “Maximum Financing Amount”). The first financing shall be in amount of up to $22,000,000.00 (the “First Financing”), which amount shall be used by Borrowers to acquire certain capital equipment, including pump-down pumps, wireline trucks and associated equipment, service rig ancillary equipment, natural gas mechanical refrigeration units and coolers or similar personal property. Subsequent financings (with all financings made under this Agreement being referred to collectively as the “Financings”) shall be made as agreed by Borrowers and Lender on substantially the same terms and conditions (and, in any event, the same interest rate and amortization schedule) as the First Financing, but in all cases subject to the terms and conditions of this Agreement. In addition, but always subject to the Maximum Financing Amount, in the event that (a) an event of default occurs under the Purchase and Security Agreements (as defined herein) and NOV (as defined herein) accelerates the obligations secured by the Second Lien Collateral (as defined herein) or (b) NOV proposes to amend or modify the Purchase and Security Agreements in any manner that would be materially adverse to Lender (excluding, for the avoidance of doubt, any amendment to update the schedule of rigs or equipment attached thereto upon delivery of additional rigs or equipment contemplated as of the date of this Agreement to be delivered after the date of this Agreement), then at Lender’s sole option, Lender may make a subsequent Financing hereunder within ten (10) business days after such occurrence, with such amount to be paid directly to NOV to pay in full all obligations owing by Borrowers to NOV under the Purchase and Security Agreements that are secured by the Second Lien Collateral, subject to the Maximum Financing Amount. Additional terms that apply to the Financings and the Collateral (as defined below) shall be contained on a Collateral Schedule (as defined below) and a Note (as defined below), provided that the economic terms (including the interest rate and amortization schedule) shall be substantially the same
as the terms applicable to the First Financing. Each Collateral Schedule and the terms of this Agreement incorporated therein by reference are collectively referred to as a “CSMA”. Each CSMA and each Note entered into in connection with that CSMA (as any of the same may be amended, supplemented or otherwise modified from time to time) are together referred to as a “Loan” and collectively as the “Loans”). Each Loan is a separate and independent transaction and contractual obligation between Borrowers and Lender. Capitalized terms used but not defined in this Agreement shall have the meanings assigned to such terms as set forth in the applicable Collateral Schedule or (as the case may be) Note. In the event of a conflict between the terms of this Agreement and the Collateral Schedule or Note, the terms of the Collateral Schedule and Note shall govern with respect to such conflict. Subject to earlier termination set forth in Section 11(b), no Loan shall be made after March 31, 2019.
Borrowers grant to Lender, its successors and permitted assigns, a security interest in and against all personal property listed on any collateral schedule now or in the future executed pursuant hereto (the “Collateral”) and made a part hereof (each a “Collateral Schedule”). This security interest is given to secure the payment and performance of the Loans, together with all debts, obligations and liabilities of any kind whatsoever of Borrowers to Lender and its successors and permitted assigns, whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, as principal or guarantor, and including, without limitation, all principal, interest (including interest accruing prior to or after the initiation of insolvency proceedings, whether or not allowed), charges, expenses, fees, reasonable outside attorneys’ fees and costs, and filing fees, now existing or arising in the future under this Agreement, the CSMAs and certain Promissory Notes from time to time identified on any Collateral Schedule (collectively “Notes” and each a “Note”), and any renewals, extensions and modifications of such debts, obligations and liabilities (such debts, obligations and liabilities under this Agreement, the CSMAs and such Notes are called the “Indebtedness”). For the sake of clarity, the term Collateral includes all of Borrowers’ rights, title and interests in and to (a) any additions, attachments, accessories and accessions thereto, (b) all substitutions, replacements and exchanges therefor, and (c) all property and casualty insurance in respect of such Collateral, and all other proceeds thereof. Notwithstanding the foregoing, in no event shall “Collateral” include, whether now existing or hereafter arising: (A) any accounts, inventory, business interruption insurance or proceeds thereof, or any other personal property constituting collateral securing Borrowers’ obligations under the ABL Credit Agreement (as defined herein) or (B) any contract, chattel paper, instrument or general intangible, any account, any supporting obligation or any payment or other amount, in each case from time to time arising from or in connection with (i) any lease, rental or use of any or all of the foregoing and/or (ii) any service(s) provided, or to be provided, by or on behalf of a Borrower or its affiliates, contractors or representatives using or in connection with any or all of the foregoing. For the sake of clarity, in the event that Collateral is sold by a Borrower, as between Borrowers and Lender, such Collateral shall not be deemed to be Inventory (as such term is defined in the ABL Credit Agreement) and Lender shall be entitled to the proceeds from such sale (which proceeds shall be applied in accordance with Section 5(c) below). Additionally, Borrowers shall not use the proceeds of such Collateral to purchase Inventory.
The payment terms of each Note shall be as set forth therein. The Closing Date of the Loans shall be as agreed by Lender and Borrower, subject to the terms of this Agreement and provided that the last date for any Financings shall be as set forth in Section 1 hereof. Borrowers shall provide Lender with no less than five (5) business days prior written notice of its request for a subsequent Financing. All subsequent Financings are subject to the satisfaction of the conditions set forth in Section 10 of this Agreement.
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Each Borrower represents, warrants and covenants as of the date of this Agreement and as of the date of each Collateral Schedule that:
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(i) The Collateral is, and will remain, in good condition and repair, except for ordinary wear and tear, and Borrower will not be negligent in its care and use. |
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| Date | Leverage Ratio |
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| September 30, 2018 | 5.00 to 1.00 |
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| December 31, 2018 | 3.50 to 1.00 |
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| March 31, 2019 and the last day of each calendar quarter thereafter | 2.50 to 1.00 |
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The defined terms used in Sections 4(p) and 4(q) shall have the following meanings:
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(B) | “Covenant Testing Period” means “Covenant Testing Period”, as such term is defined in, and determined under, the ABL Credit Agreement. |
(C) | “Fixed Charge Coverage Ratio” means “Fixed Charge Coverage Ratio”, as such term is defined in, and determined under, the ABL Credit Agreement. |
(D) | “Leverage Ratio” means “Leverage Ratio”, as such term is defined in, and determined under, the ABL Credit Agreement. |
(E) | “Liquidity” means “Liquidity”, as such term is defined in, and determined under, the ABL Credit Agreement. |
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Borrowers be entitled to retain any of the proceeds of sale of such property beyond thirty (30) days after the sale of such property. Any and all reasonable out-of-pocket costs and expenses incurred by Lender in connection with the sales contemplated by this subsection (c) shall be reimbursed by Borrowers promptly following demand by Lender. |
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with one another and shall take such action as is needed, including without limitation, the granting and releasing of security interests, to achieve the adjustment of the items of Collateral as contemplated herein. |
(a) Borrowers shall at all times bear the entire risk of any loss, theft, damage to, or destruction of, any of the Collateral from any cause whatsoever. |
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sheet, statement of income, retained earnings and cash flows of Borrowers, on a consolidated basis, certified by a Borrower’s chief financial officer or other Financial Officer, within forty-five (45) days after the close of each quarter, provided that, Borrowers shall be deemed to have delivered the financial statements required by this Section 7(b) upon delivery to Lender of a copy of the comparable financial statements that Borrowers or Public Parent are required to deliver under the ABL Credit Agreement. As used herein, “Financial Officer” means the chief executive officer, the president, the chief financial officer or the treasurer of Public Parent or a Borrower (as applicable). As used herein, “Public Parent” means Ranger Energy Services, Inc. |
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The obligations of Lender to make the Loan evidencing the First Financing, including any disbursement of a portion of the Loan on the date of this Agreement (“Closing Date”) shall be subject to the satisfaction (as determined by Lender in its reasonable discretion) of the following conditions precedent:
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(iv) | such other agreements as Lender may reasonably require in order to evidence, grant or perfect its security interest in the Collateral. |
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(e)Payment of Closing Fee and Lender’s Closing Costs and Expenses. Borrowers shall have paid Lender the amount of the Closing Fee due on the date of the disbursement of the Loan and the amount of Lender’s Closing Costs and Expenses relating to such subsequent Loan.
(a) Borrowers shall be in default under this Agreement and under any Loan upon the occurrence of any of the following (each an “Event of Default”, and collectively, the “Events of Default”): |
(i) | Borrowers fail to pay within ten (10) days after its due date any installment or other amount due under any of the Debt Documents; |
(iii) | Borrowers breach any of their insurance obligations under this Agreement or under any other Debt Documents; |
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(xii) | Any Borrower improperly files, or causes to be improperly filed, an amendment or termination statement relating to a filed financing statement describing the Collateral; |
The default declaration shall apply to all Notes and Collateral Schedules, unless specifically excepted by Lender. Any provision of this Agreement to the contrary notwithstanding, Lender may exercise all rights and remedies hereunder independently with respect to each Loan.
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and (ii) terminate the funding of any Loans and all other obligations of the Lender hereunder or under any Debt Documents. The accelerated obligations and liabilities shall bear interest from the occurrence of the Event of Default (both before and after any judgment) until paid in full at the Default Rate (as defined in the Note). The application of the Default Rate shall not be interpreted or deemed to extend any cure period set forth herein, cure any default or otherwise limit Lender’s right or remedies hereunder. Notwithstanding anything to the contrary contained herein, in no event shall this Agreement require the payment or permit the collection of amounts in excess of the maximum permitted by applicable law. |
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nor any delay on the part of Lender to exercise any right, power or privilege under this Agreement shall operate as a waiver, nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise of that or any other right, power or privilege. LENDER SHALL NOT BE DEEMED TO HAVE WAIVED ANY OF ITS RIGHTS UNDER THIS AGREEMENT OR UNDER ANY OTHER DEBT DOCUMENT UNLESS SUCH WAIVER IS EXPRESSED IN WRITING AND SIGNED BY LENDER. A waiver on any one occasion shall not be construed as a bar to or waiver of any right or remedy on any future occasion. Except as provided in Section 11(c) above, Borrowers waive notice of sale or other disposition (and the time and place thereof), and the manner and place of any advertising, and any other notice required to be given under the Uniform Commercial Code. Lender shall have no obligation to marshal any of the Collateral. |
(c) Lender may correct patent errors and fill in all blanks in this Agreement or in any Collateral Schedule consistent with the agreement of the parties. |
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NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OF THE OTHER DEBT DOCUMENTS OR ANY OTHER DOCUMENTS RELATING TO THIS TRANSACTION OR ANY RELATED TRANSACTION. IN THE EVENT OF ANY LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. |
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IN WITNESS WHEREOF, Borrowers, jointly and severally, and Lender, intending to be legally bound hereby, have duly executed this Agreement in one or more counterparts, each of which shall be deemed to be an original, as of the day and year first above written.
Encina Equipment Finance SPV, LLCRNGR Energy Services, LLC
By:/s/ James Giaquinto By:/s/ Darron Anderson
Name:James GiaquintoName:Darron Anderson
Title:Vice President, OpertationsTitle:Chief Executive Officer
and Underwriting
Ranger Energy Services, LLCTorrent Energy Services, LLC
By:/s/ Darron AndersonBy:/s/ Darron Anderson
Name:Darron AndersonName:Darron Anderson
Title:Chief Executive OfficerTitle:Chief Executive Officer
Ranger Energy Leasing, LLCRanger Energy Properties, LLC
By:/s/ Darron AndersonBy:/s/ Darron Anderson
Name:Darron AndersonName:Darron Anderson
Title:Chief Executive OfficerTitle:Chief Executive Officer
Academy Oilfield Rentals, LLCRanger Energy Equipment, LLC
By:/s/ Darron AndersonBy:/s/ Darron Anderson
Name:Darron AndersonName:Darron Anderson
Title:Chief Executive OfficerTitle:Chief Executive Officer
Name:Darron Anderson
Title:Chief Executive Officer
Signature Page – Master Financing and Security Agreement