SECOND
AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (the
“Amendment”), dated as of December 18, 2009, is
made by and among SUPERIOR WELL SERVICES, INC. , a Delaware
corporation (the “Borrower”), EACH OF THE
GUARANTORS (as hereinafter defined), LENDERS (as
hereinafter defined), KEYBANK NATIONAL ASSOCIATION and ROYAL
BANK OF CANADA , each in its capacity as Co-Documentation Agent
and CITIZENS BANK OF PENNSYLVANIA , in its capacity as
Administrative Agent for the Lenders under this Agreement
(hereinafter referred to in such capacity as the
“Administrative Agent”).
WHEREAS , the parties hereto are parties to that certain
Credit Agreement dated as of September 30, 2008, (the “Credit
Agreement”), pursuant to which the Lenders provided a
$250,000,000 revolving credit facility to the Borrower, which
amount has been reduced pursuant to that certain First Amendment to
Credit Agreement to $125,000,000;
WHEREAS , the Borrower desires to amend the Credit Agreement
to modify certain covenants, reduce the commitment amount pursuant
to Section 2.10 of the Credit Agreement, modify the borrowing
base requirements and make certain other changes as set forth in
detail below; and
WHEREAS , the Borrower, the Lenders and the Administrative
Agent desire to amend the Credit Agreement as hereinafter
provided.
NOW, THEREFORE , the parties hereto, in consideration of
their mutual covenants and agreements hereinafter set forth and
intending to be legally bound hereby, covenant and agree as
follows:
Capitalized
terms used herein unless otherwise defined herein shall have the
meanings ascribed to them in the Credit Agreement, as amended by
this Amendment.
2.
Amendments to Credit Agreement .
(a)
Title Page and Introductory Paragraph . The reference to
“$175,000,000, which amount shall be reduced to $125,000,000
on January 1, 2010.” contained on the title page to the
Credit Agreement and in the second introductory paragraph of the
Credit Agreement (which paragraph is immediately prior to
Article 1 of the Credit Agreement) shall be amended and
replaced with “$100,000,000, which amount may be further
reduced to $50,000,000.”
(b) Section 1.1
(Certain Definitions).
(i) The
following definition contained in Section 1.1 (Certain
Definitions) of the Credit Agreement shall be amended and restated
in its entirety:
“
Borrowing Base shall mean at any time the sum of
(i) eighty percent (80%) of Qualified Accounts
(“Accounts Portion”), plus (ii) for the period
from the First
Amendment
Effective Date to and including December 31, 2009, an amount
equal to thirty percent (30%) of the net book value of the Loan
Parties’ property, plant and equipment and thereafter, an
amount equal to twenty percent (20%) of the net book value of the
Loan Parties’ property, plant and equipment (such net book
value of such property plant and equipment shall be determined by
the Administrative Agent in its reasonable discretion and upon the
reasonable reliance on the most recent equipment valuation);
provided however, at such time as the Revolving Credit Commitments
are less than or equal to $50,000,000, subsection (ii) of the
definition of Borrowing Base shall be deleted and the Borrowing
Base shall consist solely of eighty percent (80%) of Qualified
Accounts. Notwithstanding anything to the contrary herein ,
the Required Lenders may, in their reasonable business discretion,
at any time hereafter, with five (5) days prior written notice
to the Borrower, decrease the advance percentage for Qualified
Accounts or net book values of the property, plants and equipment,
or increase the level of any reserves or ineligibles, or define or
maintain such other reserves or ineligibles, as the Required
Lenders may deem necessary or appropriate. Any such change shall
become effective immediately upon written notice from the
Administrative Agent to the Borrower for the purpose of calculating
the Borrowing Base hereunder.”
(ii) The
following definitions contained in Section 1.1 (Certain
Definitions) of the Credit Agreement shall be deleted:
(iii) Section 1.1
[Certain Definitions] of the Credit Agreement is hereby amended to
insert therein, in alphabetical order, the following new
definitions:
“
Commitment Reduction Events shall mean the Initial SWSI Sale
Reduction Event, the Subsequent SWSI Sale Reduction Event and the
Income Tax Refund Reduction Event.”
“
Income Tax Refund Reduction Event shall mean the receipt of
the Borrower of a federal income tax refund of $20,000,000 or more
subsequent to the filing of the Borrower’s 2009 federal
income tax return.”
“
Initial SWSI Sale Reduction Event shall mean the sale of
either (i) a portion of the assets of SWSI Fluids, LLC,
(ii) all or substantially all of the assets of SWSI Fluids,
LLC or (iii) SWSI Fluids, LLC, each as permitted by under this
Agreement.”
“
Second Amendment shall mean that certain Second Amendment to
Credit Agreement, dated as of December 18, 2009, among the
Borrower, the Guarantors, the Lenders and the Administrative
Agent.”
“
Second Amendment Effective Date shall mean the effective
date of the Second Amendment, which date is December 18,
2009.”
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“
Subsequent SWSI Sale Reduction Event shall mean in the event
that only a portion of the assets of SWSI Fluids, LLC is sold
pursuant to an Initial SWSI Reduction Event, a subsequent sale of
any additional assets of SWSI Fluids, LLC as permitted by under
this Agreement.”
(c) Article 2
[Revolving Credit and Swing Loan Facilities] of the Credit
Agreement is hereby amended as follows:
(i) Section 2.1(b)
[Swing Loan Commitment] of the Credit Agreement is hereby amended
and restated as follows:
“(b)
Swing Loan Commitment . Subject to the terms and conditions
hereof and relying upon the representations and warranties herein
set forth, and in order to facilitate loans and repayments between
Settlement Dates, Citizens Bank may, at its option, cancelable at
any time for any reason whatsoever, make swing loans (the
“Swing Loans”) to the Borrower at any time or from time
to time after the date hereof to, but not including, the Expiration
Date, in an aggregate principal amount up to but not in excess of
$15,000,000, which amount shall be further reduced to $10,000,000
at such time as the Revolving Credit Commitments are less than or
equal to $50,000,000 (the “Swing Loan Commitment”),
provided that the aggregate principal amount of Citizens
Bank’s Swing Loans and the Revolving Credit Loans of all the
Lenders at any one time outstanding shall not exceed the lesser of
(1) the Revolving Credit Commitments of all the Lenders or
(2) the Borrowing Base. Within such limits of time and amount
and subject to the other provisions of this Agreement, the Borrower
may borrow, repay and reborrow pursuant to this
Section 2(c)(i).”
(ii) Section 2.10(b)
[Mandatory Reduction] is hereby amended and restated as
follows:
“(b)
Mandatory Reduction . Effective as of the Second Amendment
Effective Date, the Revolving Credit Commitments shall be reduced
to $100,000,000 and each Lender’s Revolving Credit Commitment
shall be reduced ratably in proportion to such Lender’s
Ratable Share and such reduction shall be accompanied by any
necessary prepayment of the Notes, together with accrued Commitment
Fees, and the full amount of interest accrued on the principal sum
to be prepaid, if any (and all amounts referred to in
Section 5.10 [Indemnity] hereof) to the extent necessary to
cause the aggregate Revolving Facility Usage after giving effect to
such prepayments to be equal to or less than the Revolving Credit
Commitments as so reduced. Effective as of , the date of the Income
Tax Refund Reduction Event, the Revolving Credit Commitments shall
be further reduced by an amount equal to $25,000,000 and each
Lender’s Revolving Credit Commitment shall be reduced ratably
in proportion to such Lender’s Ratable Share and such
reduction shall be accompanied by any necessary prepayment of the
Notes, together with accrued Commitment Fees, and the full amount
of interest accrued on the principal sum to be prepaid, if any (and
all amounts referred to in Section 5.10 [Indemnity] hereof) to
the extent necessary to cause the aggregate Revolving Facility
Usage after giving effect to such prepayments to be equal to or
less than the Revolving Credit Commitments as so reduced. Effective
as of the date of the Initial SWSI Sale Reduction Event,
the
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Revolving
Credit Commitments shall be further reduced by an amount equal to
(i) $25,000,000 if such Initial SWSI Sale Reduction Event involves
the sale of SWSI Fluids, LLC or all or substantially all of the
assets of SWSI Fluids, LLC or (ii) an amount equal to the
greater of $12,500,000 or the net book value of all assets then
being sold if such Initial SWSI Sale Reduction Event involves the
sale of a portion of the assets of SWSI Fluids, LLC, and each
Lender’s Revolving Credit Commitment shall be reduced ratably
in proportion to such Lender’s Ratable Share and such
reduction shall be accompanied by any necessary prepayment of the
Notes, together with accrued Commitment Fees, and the full amount
of interest accrued on the principal sum to be prepaid, if any (and
all amounts referred to in Section 5.10 [Indemnity] hereof) to
the extent necessary to cause the aggregate Revolving Facility
Usage after giving effect to such prepayments to be equal to or
less than the Revolving Credit Commitments as so reduced. In the
event that the Initial SWSI Sale Reduction Event involved a sale of
only a portion of the assets of SWSI Fluids, LLC, upon the
occurrence of the Subsequent SWSI Sale Reduction Event, the
Revolving Credit Commitments shall be further reduced by an amount
equal to the difference between $25,000,000 and the amount of the
Revolving Credit Commitment reduction under the Initial SWSI Sale
Reduction Event so that the aggregate amount of the Revolving
Credit Commitment reductions under the Initial SWSI Sale Reduction
Event and the Subsequent SWSI Sale Reduction Event equals
$25,000,000, and each Lender’s Revolving Credit Commitment
shall be reduced ratably in proportion to such Lender’s
Ratable Share and such reductio
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