WAIVER AND AMENDMENT NO.
1
TO REVOLVING CREDIT, TERM LOAN
AND SECURITY AGREEMENT
THIS WAIVER AND AMENDMENT NO. 1 (this
“Agreement”) is entered into as of April 15, 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”), BOB BEEMAN 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 certain Events of
Default set forth on Schedule 1 attached hereto that have
occurred and are continuing (the “Existing Defaults”)
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
Defaults. Notwithstanding the foregoing, the waiver of
the Existing Defaults 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 (x) deleting the defined terms
“Eligible Equipment”, “Eligible Rig Fleet
Equipment” and “Equipment Advance Rate” and (y)
amending the following defined terms to read in their entirety as
set forth below:
“ Advance Rates ” shall mean,
collectively, the Receivables Advance Rate and the Cash Collateral
Advance Rate.
“ Alternate Base Rate ” shall
mean, for any day, a rate per annum equal to the higher of (i) the
Base Rate in effect on such day, (ii) the Federal Funds Open Rate
in effect on such day plus 1/2 of 1% and (iii) the Daily
LIBOR Rate plus 1%. For purposes of this
definition, “ Daily LIBOR Rate ” shall mean, for
any day, the rate per annum determined by Agent by dividing (x) the
Published Rate by (y) a number equal to 1.00 minus the percentage
prescribed by the Federal Reserve for determining the maximum
reserve requirements with respect to any eurocurrency funding by
banks on such day. For the purposes of this definition,
“ Published Rate ” shall mean the rate of
interest published each Business Day in The Wall Street Journal
“Money Rates” listing under the caption “London
Interbank Offered Rates” for a one month period (or, if no
such rate is published therein for any reason, then the Published
Rate shall be the eurodollar rate for a one month period as
published in another publication determined by Agent).
“ EBITDA ” shall mean for any
period the sum of (i) Earnings Before Interest and Taxes for such
period plus (ii) depreciation expenses for such period,
plus (iii) amortization expenses for such period,
plus (iv) the extent deducted in the calculation of net
income, other non-cash charges.
“ Excess Cash Flow ” for any
fiscal period shall mean EBITDA of Borrowers on a Consolidated
Basis for such fiscal period minus Unfinanced Capital
Expenditures made by Borrowers on a Consolidated Basis during such
fiscal period minus taxes actually paid by Borrowers on a
Consolidated Basis during such fiscal period minus payments
of principal of the Term Loan and interest on indebtedness for
borrowed money.
“ Federal Funds Open Rate ”
for any day shall mean the rate per annum (based on a year of 360
days and actual days elapsed) which is the daily federal funds open
rate as quoted by ICAP North America, Inc. (or any successor) as
set forth on the Bloomberg Screen BTMM for that day opposite the
caption “OPEN” (or on such other substitute Bloomberg
Screen that displays such rate), or as set forth on such other
recognized electronic source used for the purpose of displaying
such rate as selected by PNC (an “Alternate Source”)
(or if such rate for such day does not appear on the Bloomberg
Screen BTMM (or any substitute screen) or on any Alternate Source,
or if there shall at any time, for any reason, no longer exist a
Bloomberg Screen BTMM (or any substitute screen) or any Alternate
Source, a comparable replacement rate determined by the PNC at such
time (which determination shall be conclusive absent manifest
error); provided however, that if such day is not a Business Day,
the Federal Funds Open Rate for such day shall be the
“open” rate on the immediately preceding Business
Day. If and when the Federal Funds Open Rate changes,
the rate of interest with respect to any advance to which the
Federal Funds Open Rate applies will change automatically without
notice to the Borrowers, effective on the date of any such
change.
“ Maximum Revolving Advance Amount
” shall mean $4,000,000.
“ Revolving Interest Rate ”
shall mean an interest rate per annum equal to (a) the sum of the
Alternate Base Rate plus two and one-half of one percent
(2.50%) 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) three and three-quarters of one percent (3.75%)
with respect to Eurodollar Rate Loans.
“ Term Loan Rate ” shall mean
an interest rate per annum equal to (a) the sum of the Alternate
Base Rate plus two and one-half of one percent (2.50%) 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) three and three-quarters of one percent (3.75%) with respect to
Eurodollar Rate Loans.
(b) Section 1.2 of the
Loan Agreement is hereby amended by inserting the following defined
terms in appropriate alphabetical order:
“ Amendment No. 1 ” shall
mean Waiver and Amendment No. 1 to Revolving Credit, Term Loan and
Security Agreement dated as of April 15, 2009, by and between
Borrowers, Lenders and Agent.
“ Amendment No. 1 Closing Reserve
” shall mean $500,000 less all proceeds received by
Best from a Permitted Offering after the Amendment No. 1 Effective
Date and utilized to repay Revolving Advances.
“ Amendment No. 1 Effective Date
” shall mean the date the Agent has determined the Conditions
of Effectiveness in Section 4 of Amendment No. 1 have been
satisfied.
“ Permitted Offering ” shall
mean the issuance by Best of Equity Interests or unsecured
Indebtedness convertible into Equity Interests of Best, in either
case, on terms and conditions satisfactory to Agent in its sole
discretion.
(c) Section 2.1(a) of
the Loan Agreement is amended to read in its entirety as set forth
below:
“(a)
Amount of Revolving Advances . Subject to the
terms and conditions set forth in this Agreement, including Section
2.1(b), each Lender, severally and not jointly, will make Revolving
Advances to Borrowers in aggregate amounts outstanding at any time
equal to such Lender’s Commitment Percentage of the lesser of
(x) the Maximum Revolving Advance Amount less the aggregate
Maximum Undrawn Amount of all outstanding Letters of Credit or (y)
an amount equal to the sum of:
(i) up
to 85%, subject to the provisions of Section 2.1(b) hereof (“
Receivables Advance Rate ”), of Eligible Receivables,
plus
(ii) up
to 100%, subject to the provisions of Section 2.1(b) hereof (the
“ Cash Collateral Advance Rate ”), of the Cash
Collateral Deposit, minus
(iii) the
aggregate Maximum Undrawn Amount of all outstanding Letters of
Credit, minus
(iv) such
reserves as Agent may reasonably deem proper and necessary from
time to time in Agent’s reasonable credit judgment,
including, without limitation, the Amendment No. 1 Closing
Reserve.
The amount
derived from the sum of (x) Sections 2.1(a)(y)(i) and (ii) minus
(y) Section 2.1 (a)(y)(iv) at any time and from time to time shall
be referred to as the “Formula Amount”. The
Revolving Advances shall be evidenced by one or more secured
promissory notes (collectively, the “ Revolving Credit
Note ”) substantially in the form attached hereto as
Exhibit 2.1(a) .”
(d) Section 2.4 of the
Loan Agreement is hereby amended to read in its entirety as set
forth below:
“2.4.
Term Loan . Each Lender, severally and not
jointly, as of the date of the consummation of the Second
Acquisitions, had made to Borrowers a Term Loan in the sum equal to
such Lender’s Commitment Percentage of $5,850,000
(the “Initial Term Loan”), of which $4,485,000 is
outstanding on the Amendment No. 1 Effective Date. On
the Amendment No. 1 Effective Date, $14,785,000 of Revolving
Advances outstanding on such date shall be converted into a term
loan, and consolidated with and into the Initial Term Loan,
automatically and without the requirement for any further action by
any Person, so that after giving effect to such conversion the
aggregate principal amount of the Term Loan shall be
$19,270,000. The Term Loan shall be, with respect to
principal, payable monthly commencing on May 1, 2009, and on the
first day of each month thereafter, as follows: (a) $98,500 per
month, from the Amendment No. 1 Effective Date through December 31,
2009, (b) $125,000 per month, from January 1, 2010 through December
31, 2010, and (c) $150,000 per month thereafter, with the balance
payable upon expiration of the Term, subject to acceleration upon
the occurrence of an Event of Default under this Agreement or
termination of this Agreement. The Term Loan shall be
evidenced by one or more secured promissory notes (collectively,
the “Term Note”) in substantially the form attached
hereto as Exhibit 2.4 .”
(e) Section 2.21(b) of
the Loan Agreement is hereby amended to read in its entirety as set
forth below:
“(b) Borrowers
shall prepay the outstanding amount of the Advances in an amount
equal to 25% of Excess Cash Flow for each fiscal year commencing on
or after January 1, 2008, payable upon delivery of the financial
statements to Agent referred to in and required by
Section
