EXHIBIT 10.4
SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
("Amendment") is entered into as of April 12, 2006, by and among WARRIOR ENERGY
SERVICES CORPORATION (formerly known as Black Warrior Wireline Corp.), a
Delaware corporation ("Borrower"), the other Credit Parties signatory hereto and
GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation ("GE Capital"), for
itself, as Lender, and as Agent for Lenders (in such capacity, the "Agent").
RECITALS
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 Second Amended and Restated Credit Agreement, dated as of December
16, 2005, as amended by that certain First Amendment to Second Amended and
Restated Credit Agreement, dated as of March 15, 2006 (as the same may be
further amended, restated, supplemented or otherwise modified from time to time,
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 Agent and the Lenders amend the
Credit Agreement in certain respects and the Agent and the Lenders have agreed
to amend the Credit Agreement 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
1 Amendment to Annex A. The Credit Agreement is amended by
inserting the following new definitions of "Ford Cross Collateral Cross Default
Agreement", "Second Amendment" and "Second Amendment Effective Date" into Annex
A of the Credit Agreement in the appropriate alphabetical order:
"Ford Cross Collateral Cross Default Agreement" means that
certain Cross Collateral Cross Default Agreement, dated on or about the
Second Amendment Effective Date, between Borrower and Ford Motor Credit
Company, in form and substance satisfactory to Agent.
"Second Amendment" means the Second Amendment to Second
Amended and Restated Credit Agreement, dated as of April 12, 2006, by
and among Borrower, the other Credit Parties signatory thereto, Agent
and Lenders.
"Second Amendment Effective Date" means the date on which the
conditions precedent set forth in Section B of the Second Amendment are
satisfied.
2 Amendment to Section 1.3. Section 1.3 of the Credit
Agreement is hereby amended by deleting paragraph (b)(v) of such Section in its
entirety and replacing it with the following paragraph (b)(v):
(v) If the Borrower issues any Stock in a public offering,
other than Stock issued upon the exercise of warrants, options or other
convertible securities, or the exchange of the foregoing for Stock,
outstanding on the Closing Date, on or before May 15, 2006, no later
than the Business Day following the date of receipt of the cash
proceeds thereof, Borrower shall prepay the Loans, the Second Lien
Loans and the Junior Capital in an amount equal to all such cash
proceeds up to $150,000,000, less underwriting discounts and
commissions and other reasonable costs paid to non-Affiliates in
connection therewith and less monies payable to existing shareholders
with respect to up to 616,303 of shares of Stock held by shareholders
who have elected to sell their shares of Stock in the public offering
(the "Net Equity Proceeds"), in the following manner:
(A) 100% of the first $50,000,000 in Net Equity
Proceeds received by the Borrower shall be applied to prepay or redeem
the Junior Capital;
(B) Net Equity Proceeds in excess of $50,000,000 and
up to $75,000,000 received by the Borrower shall be allocated 40% to
prepay or redeem the Junior Capital, 60% to prepay the Second Lien
Loans;
(C) Net Equity Proceeds in excess of $75,000,000 and
up to $100,000,000 received by the Borrower shall be allocated 60% to
prepay or redeem the Junior Capital, 40% to prepay the Second Lien
Loans; and
(D) Net Equity Proceeds in excess of $100,000,000
received by the Borrower shall be allocated 80% to prepay or redeem the
Junior Capital, 20% to prepay the Second Lien Loans.
To the extent the Junior Capital is paid in full under the
foregoing provisions prior to the prepayment in full of the Second Lien
Loans, the remaining Net Equity Proceeds shall be allocated 100% to the
Second Lien Loans. To the extent the Second Lien Loans are paid in full
under the foregoing provisions, the remaining Net Equity Proceeds shall
be allocated 100% to the Loans. Notwithstanding the foregoing, if any
Event of Default has occurred and is continuing, and Agent has notified
Borrower in writing of such Event of Default (or Second Lien Agent has
notified Borrower in writing of the equivalent event of default under
the Second Lien Credit Agreement), at the time the Borrower receives
Net Equity Proceeds, 100% of such Net Equity Proceeds shall be
allocated to the Loans, without application of any portion thereof to
Junior Capital or Second Lien Loans. Any Net Equity Proceeds allocated
in this clause (v) to prepay the Loans shall be applied in accordance
with Section 1.3(c).
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3 Amendment to Section 6.3. Section 6.3 of the Credit
Agreement is hereby amended by deleting paragraph (a) of such Section in its
entirety and replacing it with the following paragraph (a):
(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 thereof 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 $3,500,000 at any one
time outstanding, (vi) Indebtedness specifically permitted under
Section 6.17, (vii) Second Lien Loans in an aggregate principal amount
not to exceed $25,000,00; provided, that upon repayment in full of the
Second Lien Loans with the Net Equity Proceeds in accordance with
Section 1.3(b), in an aggregate principal amount not to exceed $0,
(viii) Indebtedness under interest rate protection or hedging agreement
or transaction (including, but not limited to, interest rate swaps,
caps, collars, floors and similar transactions) designed to protect or
manage exposure to the fluctuations in the interest rates applicable to
any of the Loans and Second Lien Loans, and (ix) Indebtedness incurred
in connection with the Aircraft Acquisition in an aggregate amount not
to exceed $3,260,000.
4 Amendment to Section 6.7. Section 6.7 of the Credit
Agreement is hereby amended by deleting such Section in its entirety and
replacing it with the following Section 6.7:
6.7 Liens. No Credit Party shall create, incur, assume or
permit to exist any Lien on or with respect to its Accounts or any of
its other properties or assets (whether now owned or hereafter
acquired) except for (a) Permitted Encumbrances; (b) Liens in existence
on the date hereof and summarized on Disclosure Schedule (6.7) securing
the Indebtedness described on Disclosure Schedule (6.3) and permitted
refinancings, extensions and renewals thereof, including extensions or
renewals of any such Liens; provided that the principal amount of the
Indebtedness so secured is not increased and the Lien does not attach
to any other property; (c) Liens created after the date hereof by
conditional sale or other title retention agreements (including Capital
Leases) or in connection with purchase money Indebtedness with respect
to Equipment and Fixtures acquired by any Credit Party in the ordinary
course of business, involving the incurrence of an aggregate amount of
purchase money Indebtedness and Capital Lease Obligations of not more
than $2,000,000 outstanding at any one time for all such Liens
(provided that (i) such Liens attach only to the assets subject to such
purchase money debt, or in the case of Liens of Ford Motor Credit
Company in accordance with the Ford Cross Collateral Cross Default
Agreement, only to vehicles financed by Ford Motor Credit Company and
(ii) such Indebtedness is incurred within twenty (20) days following
such purchase and does not exceed 100% of the purchase price of the
subject assets); (d) Liens securing the Second Lien Loan, subject to
the terms of the Intercreditor Agreement (e) Liens securing the
Subordinated Debt, subject to the terms of the Subordination Agreements
(provided that Liens securing the Excluded Subordinated Note shall be
permitted hereunder for 45 days after the Closing Date notwithstanding
that such Liens are not subject to a Subordination Agreement) and (f)
Liens securing the Indebtedness permitted under Section 6.3(a)(ix) to
the extent such Liens attach only to the 1989 Citation V Jet Aircraft
being acquired pursuant to the Aircraft Acquisition Agreement. In
addition, no Credit Party shall become a party to any agreement, note,
indenture or instrument, or take any other action, that would prohibit
the creation of a Lien on any of its properties or other assets in
favor of Agent, on behalf of itself and Lenders, as additional
collateral for the Obligations, except the Second Lien Loan Documents,
operating leases, Capital Leases or Licenses which prohibit Liens upon
the assets that are subject thereto.
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5 Amendment to Annex F. Annex F of the Credit Agreement is
hereby amended by deleting paragraph (a) of such Annex in its entirety and
replacing it with the following paragraph (a):
(a) Maximum Capital Expenditures. Commencing with Fiscal Year
2006, Borrower and its Subsidiaries on a consolidated basis shall not
make Capital Expenditures (other than Capital Expenditures made by the
Borrower that are financed entirely with the proceeds of CapEx Loans)
during the following periods that exceed in the aggregate the amounts
set forth opposite each of such periods:
Period Maximum Capital Expenditures per
Period
Fiscal Year 2006 $10,000,000
each Fiscal Year thereafter $6,500,000
provided, however, that the foregoing amount of permitted Capital
Expenditures will be increased in any period by the positive amount (if
any) equal to the difference obtained by taking the Capital
Expenditures limit specified above for the immediately prior period
minus the actual amount of any Capital Expenditures expended during
such prior period (the "Carry Over Amount"), and for purposes of
measuring compliance herewith, the Carry Over Amount shall be deemed to
be the last amount spent on Capital Expenditures in that succeeding
year.
B. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Amendment and without
affecting in any manner the rights of the Agent and the Lenders hereunder, it is
understood and agreed that this Amendment shall not become effective, Borrower
shall have no rights under this Amendment and the Agent and the Lenders shall
not be obligated to take, fulfill or perform any action hereunder, until the
Agent shall have received the following:
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(a) counterparts of this Amendment duly executed by all
parties hereto, in form and substance satisfactory to the Agent and its
counsel;
(b) fully executed copies of the Second Amendment to Second
Lien Credit Agreement and the Consent Letter with regard to the
Intercreditor Agreement and final and complete copies of each of the
other documents executed in connection therewith, each of which shall
be in full force and effect on the Second Amendment Effective Date and
shall be in form and substance satisfactory to Agent;
(c) a true and correct copy of the Ford Cross Collateral Cross
Default Agreement; and
(d) such other certificates, documents and agreements
respecting Borrower as the Agent may request in its reasonable
discretion, in form and substance satisfactory to the Agent and its
counsel.
Upon receipt by the Agent of the documents described in the foregoing
clauses (a), (b), (c) and (d), this Amendment shall become effective as of April
12, 2006.
C. REPRESENTATIONS AND WARRANTIES
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. OTHER AGREEMENTS
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. Reaffirmations and Acknowledgments.
(a) 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.
(b) Acknowledgment of Perfection of Security Interest. Borrower hereby
acknowledges that, as of the date hereof, the security interests and liens
granted to the Agent and the Lenders under the Credit Agreement and the other
Loan Documents securing the Loans are in full force and effect, are properly
perfected and are enforceable in accordance with the terms of the Credit
Agreement and the other Loan Documents
3. Expenses. Borrower agrees to pay on demand all costs and expenses of
the 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.
4. 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.
5. Counterparts. This Amendment may be executed by one or more of the
parties hereto in any number of separate counterparts, each of which shall be
deemed an original and all of which, taken together, shall be deemed to
constitute one and the same instrument. Delivery of an executed counterpart of
this Amendment by facsimile transmission or by electronic mail in pdf form shall
be as effective as delivery of a manually executed counterpart hereof.
6. Binding Nature. This Amendment shall be binding upon and inure to
the benefit of the parties hereto, their respective successors, successors-in-
titles, and assigns.
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7. Entire Understanding. This Amendment sets forth the entire
understanding of the parties with respect to the matters set forth herein, and
shall supersede any prior negotiations or agreements, whether written or oral,
with respect thereto.
8. Release. Each Credit Party hereby releases, acquits, and forever
discharges the Agent and each of the Lenders, and each and every past and
present subsidiary, affiliate, stockholder, officer, director, agent, servant,
employee, representative, and attorney of the Agent and the Lenders, from any
and all claims, causes of action, suits, debts, liens, obligations, liabilities,
demands, losses, costs and expenses (including reasonable attorneys' fees) of
any kind, character, or nature whatsoever, known or unknown, fixed or
contingent, which such Credit Party may have or claim to have now or which may
hereafter arise out of or connected with any act of commission or omission of
the Agent or the Lenders existing or occurring prior to the date of this
Amendment or any instrument executed prior to the date of this Amendment
including, without limitation, any claims, liabilities or obligations arising
with respect to the Credit Agreement or the other of the Loan Documents, other
than claims, liabilities or obligations caused by Agent's or any Lender's own
gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction. The provisions of this paragraph shall be binding upon
each Credit Party and shall inure to the benefit of Agent, the Lenders, and
their respective heirs, executors, administrators, successors and assigns.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, this Amendment has been duly executed as of the
date first written above.
WARRIOR ENERGY SERVICES
CORPORATION, as Borrower
By:
-----------------------------------
Name: William L. Jenkins
Title: Chief Executive Officer
[SIGNATURE PAGE TO SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT]
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and a Lender
By:
-----------------------------------
Name:
Title: Duly Authorized Signatory
[SIGNATURE PAGE TO SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT]
CIT BUSINESS CREDIT, INC., as a Lender
By:
-----------------------------------
Name:
Title:
[SIGNATURE PAGE TO SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT]
LASALLE BUSINESS CREDIT, LLC, as a
Lender
By:
-----------------------------------
Name:
Title:
[SIGNATURE PAGE TO SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT]