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Exhibit 10.9 Execution Version FIFTH AMENDMENT AND WAIVER TO CREDIT AGREEMENT
This FIFTH AMENDMENT AND WAIVER TO CREDIT AGREEMENT (this “Amendment”) is made
and entered into effective as of June 26, 2020 (the “Fifth Amendment Effective
Date”), by and among (A) FORBES ENERGY SERVICES LTD., a Delaware corporation
(“Parent”); (B) the Subsidiaries of Parent identified on the signature pages
hereto (each of such Subsidiaries, together with Parent, jointly and severally,
the “Borrowers” and, each, a “Borrower”); (C) REGIONS BANK, an Alabama bank, in
its capacities as administrative agent and collateral agent for Lenders, LC
Issuer and the other Secured Parties (“Administrative Agent”); and (D) the
lenders party to the Credit Agreement (collectively, the “Lenders”). RECITALS:
WHEREAS, Borrowers, Administrative Agent and the Lenders are party to that
certain Credit Agreement, dated as of November 16, 2018 (as amended, amended and
restated, supplemented and/or otherwise modified from time to time prior to the
date hereof, the “Credit Agreement”) pursuant to which the Lenders agreed to
extend certain credit facilities to the Borrowers; WHEREAS, on March 20, 2020,
the Borrowers, Administrative Agent and the Lenders entered into that certain
Third Amendment and Temporary Limited Waiver, pursuant to which Administrative
Agent and the Lenders granted a temporary limited waiver with respect to the
qualifications included in the audit opinion of Parent’s independent certified
public accountants delivered in connection with the annual audited financial
statements required by Section 9.6(c) of the Credit Agreement for the Fiscal
Year ended December 31, 2019 (the “March 2020 Temporary Limited Waiver”);
WHEREAS, Borrowers have informed Administrative Agent and the Lenders that (i)
events of default have occurred, or are anticipated to occur, under the Term
Loan Agreement, as a result of the Tax Payment Default (defined below) and the
failure to make scheduled interest payments in cash from and after July 1, 2020
as required under the Term Loan Agreement (collectively, the “Term Loan
Defaults”), and (ii) certain property taxes of Borrowers have become due during
the Fiscal Year ending December 31, 2020 but have not yet been paid (the “Tax
Payment Default”); WHEREAS, Borrowers desire the Administrative Agent and
Lenders to (i) make the March 2020 Temporary Limited Waiver permanent, (ii)
waive any Events of Default that would occur as a result of any Term Loan
Default, (iii) waive the Tax Payment Default and (iv) make certain modifications
to the Credit Agreement, and the Administrative Agent and the Lenders have
agreed to (w) make the March 2020 Temporary Limited Waiver permanent, (x) waive
any Events of Default that would occur as a result of any Term Loan Default, (y)
waive the Tax Payment Default and (z) modify certain provisions contained in the
Credit Agreement, in each case upon the terms and conditions hereafter set
forth; and NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the mutuality, receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows: Section 1.
Definitions. All capitalized terms not defined herein shall have the meanings
given to such terms in the Credit Agreement. Section 2. Amendments to Credit
Agreement. 2.1. Amendments to Credit Agreement. Effective as of the Fifth
Amendment Effective Date, the Credit Agreement is hereby amended as follows: 1
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(a) The following defined term “Fifth Amendment Effective Date” is added in the
appropriate alphabetical order to Section 1.1 of the Credit Agreement as
follows: “Fifth Amendment Effective Date” means June 26, 2020. (b) The following
defined term “Subordinated Notes Indenture” is added in the appropriate
alphabetical order to Section 1.1 of the Credit Agreement as follows:
“Subordinated Notes Indenture” means the Indenture, dated as of March 4, 2019,
between Parent, as issuer, and Wilmington Trust, National Association, as
trustee, with respect to the 5.00% Subordinated Convertible PIK Notes due 2020
issued thereunder. (c) The following defined terms in Section 1.1 of the Credit
Agreement are hereby amended and restated as follows: ““LC Sublimit” means, as
of any date of determination, the lesser of (a) Nine Million Dollars
($9,000,000) and (b) the aggregate unused amount of the Revolving Commitments
then in effect.” ““Revolving Commitment” means, at any time of determination and
with respect to each Lender, such Lender’s obligation to make Revolving Loans,
participate in Swing Line Loans, and participate in LC Obligations. “Revolving
Commitments” means, at any time of determination, the aggregate amount of such
commitments of all Lenders. The amount of each Lender’s Revolving Commitment, if
any, is set forth on Appendix A or in the applicable Assignment Agreement or any
other agreement pursuant to which such Lender becomes a party hereto, subject to
any increase, adjustment or reduction pursuant to the terms and conditions
hereof. The aggregate amount of the Revolving Commitments as of the Fifth
Amendment Effective Date is Nine Million Dollars ($9,000,000).” ““Stated
Revolving Commitment Termination Date” means December 31, 2020.” ““Swing Line
Sublimit” means Zero Dollars ($0).” (d) Section 2.1(a) of the Credit Agreement
is hereby amended as follows: The term “Revolving Commitment Termination Date”
is hereby deleted in its entirety and replaced with the term “Fifth Amendment
Effective Date”. (e) Section 2.3(a) of the Credit Agreement is hereby amended by
inserting the following sentence at the end thereof to read as follows:
“Notwithstanding the foregoing, no Swing Line Loans shall be made to the
Borrowers on or after the Fifth Amendment Effective Date.” (f) Section 2.4(c) of
the Credit Agreement is hereby amended by the inserting the following sentence
at the end thereof to read as follows: “Notwithstanding the foregoing, the
Borrowers shall Cash Collateralize all LC Obligations and Bank Product
Obligations not later than July 31, 2020 and any additional LC Obligations and
Bank Product Obligations shall be Cash Collateralized as incurred.” 2 [Forbes]
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(g) Effective as of June 1, 2020, the Excess Availability requirement in Section
11.1(a) of the Credit Agreement is no longer effective and is hereby deleted in
its entirety and replaced with “[Reserved]”, and for the avoidance of doubt, any
failure to satisfy such requirement on or after June 1, 2020 shall not
constitute a Default. (h) Section 12.1(g) of the Credit Agreement is hereby
amended and restated as follows: “(g) Cross Default. Obligors or Subsidiaries,
or any one or more of them, shall fail to make any payment in respect of
outstanding Debt (other than the Obligations and the obligations under the
Subordinated Notes Indenture) having an aggregate outstanding principal amount
in excess of Two Million Five Hundred Thousand Dollars ($2,500,000) (determined
singly or in the aggregate with other Debt of such Obligors or Subsidiaries)
when due after the expiration of any applicable grace period, or any event or
condition shall occur which results in the acceleration of the maturity of such
Debt (including any required mandatory prepayment or “put” of such Debt to any
such Person) or enables (or, with the giving of notice or passing of time or
both, would enable) the holders of such Debt or a commitment related to such
Debt (or any Person acting on such holders’ behalf) to accelerate the maturity
thereof or terminate any such commitment before its normal expiration (including
any required mandatory prepayment or “put” of such Debt to such Person), or
there shall occur any default under any Bank Product Agreement (including any
Swap Agreement) after the expiration of any applicable cure period set forth
therein; or” Section 3. Ratification. Each Credit Party confirms that all of its
obligations under the Loan Documents (as amended by this Amendment) are in full
force and effect and are performable in accordance with their respective terms
without setoff, defense, counter-claim or claims in recoupment. Each Credit
Party further confirms that the term “Obligations”, as used in the Credit
Agreement, shall include all Obligations of the Credit Parties under the Credit
Agreement (as amended by this Amendment), under any promissory notes issued
under the Credit Agreement, and under each other Loan Document. Section 4.
Waivers. Upon the Fifth Amendment Effective Date, Administrative Agent and the
Lenders hereby (a) make the March 2020 Temporary Limited Waiver permanent, (b)
waive any Events of Default that would occur as a result of any Term Loan
Default, so long as the requisite lenders under the Term Loan Agreement have
agreed to forbear any actions or remedies under the Term Loan Agreement with
respect to the Term Loan Defaults on terms acceptable to Agent, (c) waive the
Tax Payment Default (effective at the time such taxes became due and payable,
and for the avoidance of doubt, such waiver shall continue to apply to the
requirements of Section 9.11 of the Credit Agreement for all unpaid amounts
related to the Tax Payment Default), and (d) waive the failure (if any) to
comply with the requirements to provide notice of Default or Event of Default in
respect of any of the foregoing (clauses (a), (b), (c) and (d), collectively,
the “Specified Waived Matters”); provided, that, for the avoidance of doubt, (i)
the foregoing waivers shall not constitute a (x) waiver of any future compliance
of any covenant that was or may have been violated in connection with the
Specified Waived Matters or (y) consent to any future non-compliance with any
covenant that was or may have been violated in connection with the Specified
Waived Matters, and (ii) this waiver shall neither waive nor affect the ability
of Administrative Agent or any Lender to assert, at any time following any
further Default or Event of Default, any claims available under applicable law
on account of any negligent or intentional misrepresentation (if any) related to
any of the events giving rise to the Specified Waived Matters. Except as
expressly set forth in this Amendment, nothing contained in this Amendment, or
any other communication between or among Administrative Agent, Lenders and any
Credit Party, shall be construed as a waiver by Administrative 3 [Forbes] Fifth
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Agent or Lenders of any covenant or provision of the Credit Agreement, the other
Loan Documents, this Amendment or any other contract or instrument between or
among any Credit Party, Administrative Agent and/or Lenders, or of any similar
future transaction, and the failure of Administrative Agent and/or Lenders at
any time or times hereafter to require strict performance by any Credit Party of
any provision thereof shall not waive, affect or diminish any right of
Administrative Agent and/or Lenders to thereafter demand strict compliance
therewith. Nothing contained in this Amendment shall directly or indirectly in
any way whatsoever either: (a) except as expressly set forth in this Amendment,
impair, prejudice or otherwise adversely affect Administrative Agent’s or any
Lender’s right at any time to exercise any right, privilege or remedy in
connection with the Credit Agreement or any other Loan Documents, each as
amended hereby, (b) except as expressly provided herein, amend or alter any
provision of the Credit Agreement or any other Loan Documents or any other
contract or instrument, or (c) constitute any course of dealings or other basis
for altering any obligation of any Credit Party under the Credit Agreement or
any other Loan Documents or any right, privilege or remedy of the Administrative
Agent or any Lender under the Credit Agreement, any other Loan Documents or any
other contract or instrument. Administrative Agent and Lenders hereby reserve
all rights granted under the Credit Agreement, the other Loan Documents, this
Amendment and any other contract or instrument between or among any Credit
Party, Administrative Agent and Lenders, each as amended hereby. Section 5.
Withdrawal of Default Notice. Administrative Agent and Lenders hereby
acknowledge and agree that the Notice of Default and Reservation of Rights,
dated June 9, 2020 and delivered to the Borrowers, is hereby withdrawn, and no
purported Default or Event of Default described therein has occurred on or prior
to the Fifth Amendment Effective Date. For the avoidance of doubt, as of the
Fifth Amendment Effective Date, the Default Rate shall not apply to any
interest, fees or other Obligations accrued under the Credit Agreement or any
other Loan Document. Section 6. Representations and Warranties. Each Credit
Party represents and warrants to Administrative Agent and Lenders the following:
(a) after giving effect to this Amendment, there does not exist any Default or
Event of Default, and (b) both immediately before and after giving effect to
this Amendment, (i) each Credit Party is in good standing under the laws of the
jurisdiction of its incorporation, organization, or formation, (ii) no
amendment, modification or other change has been made to (A) the articles of
incorporation or organization (or other applicable charter documents), or (B)
the bylaws or operating agreement of each Credit Party since the Closing Date
(other than amendments not adverse to the interests of the Administrative Agent
or the Lenders), and (iii) the execution, delivery and performance of this
Amendment and of the Loan Documents as amended hereby has been duly authorized
by all necessary corporate, company or partnership action. Section 7. Conditions
to Effectiveness. The effectiveness of this Amendment as of the Fifth Amendment
Effective Date is conditioned upon the satisfaction or waiver of the following
conditions precedent. The determination as to whether each condition has been
satisfied may be made in Administrative Agent’s sole discretion, all of which
shall be satisfactory in form and substance to Administrative Agent: 7.1.
Administrative Agent shall have received this Amendment, duly executed by each
of the undersigned signatories. 7.2. On or prior to June 19, 2020, Borrowers
shall have deposited Two Million Six Hundred Eighty Nine Thousand Dollars
($2,689,000) in cash to an account controlled by the Administrative Agent. 4
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7.3. No Default or Event of Default shall have occurred and be continuing on the
Fifth Amendment Effective Date (after giving effect to this Amendment), or would
exist after giving effect to the transactions described in this Amendment on the
Fifth Amendment Effective Date. 7.4. The Credit Parties shall have paid to
Administrative Agent all reasonable and documented fees, costs and expenses
(including reasonable attorneys’ fees, costs and expenses) and other amounts
owed to or incurred by Administrative Agent or Lenders in connection with this
Amendment, to the extent invoiced to Parent in advance of the Fifth Amendment
Effective Date. The Credit Parties shall be deemed to represent and warrant to
Administrative Agent and Lenders that each of the foregoing conditions have been
satisfied upon the release of their respective signatures to this Amendment.
Section 8. Post-Closing Obligations. Borrowers hereby agree as follows: 8.1.
Borrowers shall deposit One Million Dollars ($1,000,000) in cash on or before
June 30, 2020 and One Million Two Hundred Thousand Dollars ($1,200,000) (or such
other amount as is required to Cash Collateralize all LC Obligations and Bank
Product Obligations) in cash on or before July 31, 2020, in each case, to an
account controlled by the Administrative Agent. 8.2. Borrowers shall maintain
CARES Debt of not less than $2,500,000 through July 31, 2020 to fund CARES Act
Permitted Purposes. The Credit Parties hereto agree that any breach of the
post-closing obligations set forth in this Section 8 shall result in an
immediate Event of Default (without giving effect to any cure period). Section
9. Cash Collateralization. At all times when the LC Obligations and Bank Product
Obligations are Cash Collateralized: 9.1. The covenants set forth in Sections 9,
10 and 11 and the Events of Default set forth in Section 12 shall cease to
apply, other than Section 9.2(a) (solely with respect to the preservation and
maintenance of Borrowers’ legal existence), Section 9.2(b), Section 9.6(b)(i)
(limited to quarterly financial statements instead of monthly, which will be
required to be delivered on or before forty-five (45) days after the end of each
Fiscal Quarter, without regard to when or if such are required to be filed with
the Securities and Exchange Commission (or, if such due date is not a Business
Day, then on the next Business Day)), Section 9.6(m), Section 9.11, Section
10.7, Section 12.1(a), Section 12.1(b), Section 12.1(c), Section 12.1(e),
Section 12.1(g) (excluding any Debt for which a forbearance agreement on terms
acceptable to Agent is in effect with respect to the relevant default under such
Debt), Section 12.1(j), Section 12.1(k) (with respect to any Obligor), Section
12.1(l) (with respect to any Obligor), Section 12.1(n), Section 12.1(o) and
Section 12.1(p) (unless a forbearance agreement on terms acceptable to Agent is
in effect with respect to the relevant Event of Default (as defined in the Term
Loan Agreement)). 9.2. All Collateral securing the Obligations, other than Cash
Collateral, shall be released by Administrative Agent on behalf of the Secured
Parties, and Administrative Agent shall terminate the Security Documents (other
than Administrative Agent’s Lien on the Cash Collateral); and Administrative
Agent shall execute and deliver any release documents and make any UCC-3 or
other filings as Borrower Representative reasonably requests to evidence such
release of Collateral. Section 10. Miscellaneous. 5 [Forbes] Fifth Amendment and
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10.1. None of the Lenders, if any, identified in the Credit Agreement, as
amended hereby, as an arranger or bookrunner shall have any right, power,
obligation, liability, responsibility or duty under the Credit Agreement other
than those applicable to all Lenders as such. Without limiting the foregoing,
none of such Lenders shall have or be deemed to have a fiduciary relationship
with any Lender. 10.2. Except as expressly provided in this Amendment, (a) the
Credit Agreement and the other Loan Documents shall continue in full force and
effect, and (b) the terms and conditions of the Credit Agreement and the other
Loan Documents are expressly incorporated herein and ratified and confirmed in
all respects. This Amendment is not intended to be or to create, nor shall it be
construed as, a novation or an accord and satisfaction. From and after the Fifth
Amendment Effective Date, references to the Credit Agreement in each Loan
Document shall be references to the Credit Agreement as amended hereby. The
Lenders party hereto hereby direct and instruct Administrative Agent to execute
and deliver this Amendment and all documents to be executed in connection
herewith, and to induce Administrative Agent to execute and deliver this
Amendment and the other applicable documents, each Lender ratifies and confirms
its obligations under, and the immunities and exculpatory provisions accruing to
Administrative Agent under, the terms of the Credit Agreement and the other Loan
Documents and agrees that, as of the date hereof, such obligations, immunities
and other provisions are without setoff, counterclaim, defense or recoupment.
This Amendment shall constitute a Loan Document. 10.3. Each Credit Party hereby
ratifies and confirms the Liens and security interests granted under the Loan
Documents and further ratifies and agrees that such Liens and security interests
secure all obligations and indebtedness now, hereafter or from time to time made
by, owing to or arising in favor of Administrative Agent or Lenders pursuant to
the Loan Documents (as now, hereafter or from time to time amended). 10.4. Each
Guarantor agrees that its consent is not required to the effectiveness of this
Amendment, and that no consent of any of them is required for the effectiveness
of any future amendment, modification, forbearance or other action with respect
to the Obligations, the Collateral, or any of the other Loan Documents. 10.5.
This Amendment constitutes the entire agreement among the parties hereto with
respect to the subject matter hereof. Neither this Amendment nor any provision
hereof may be changed, waived, discharged, modified or terminated orally, but
only by an instrument in writing signed by the parties required to be a party
thereto pursuant to the Credit Agreement. 10.6. This Amendment, along with each
and every other Loan Document, may be executed by a handwritten signature, by
use of an electronic signature or by a signatory’s adoption of any marking
(including, without limitation, by inserting the electronic text of the name of
a signatory that has been inserted or appended to a document by or on behalf of
such signatory) as the signature of such signatory (which adoption may be
confirmed by an email exchange with the signatory, and such confirmation shall
be conclusive evidence of such adoption for all purposes) and executed in any
number of counterparts (including by facsimile or as a .pdf attachment), and by
the different parties hereto on the same or separate counterparts, each of which
shall be deemed to be an original instrument but all of which together shall
constitute one and the same agreement. The parties agree that each and every
electronic signature or other marking adopted as a signature of, by or on behalf
of a Person (including any signatory for such Person) are the same, and shall be
deemed to be same, as handwritten signatures for all purposes of this Amendment
and the other Loan Documents, including, without limitation, for purposes of the
validity, enforceability and admissibility of this Amendment and any other Loan
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10.7. If any term or provision of this Amendment is adjudicated to be illegal,
invalid or unenforceable under applicable laws or regulations, such provision
shall be inapplicable to the extent of such illegality, invalidity or
unenforceability without affecting the legality, validity or enforceability of
the remainder of this Amendment which shall be given effect so far as possible.
10.8. This Amendment shall be binding upon and inure to the benefit of the
Credit Parties, Administrative Agent and Lenders and their respective successors
and permitted assigns, except that the Credit Parties shall not have the right
to assign any rights hereunder or any interest herein without Administrative
Agent’s and the required Lenders’ prior written consent. 10.9. THIS AMENDMENT
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE CHOICE OF LAW
PROVISIONS SET FORTH IN THE CREDIT AGREEMENT AND SHALL BE SUBJECT TO ANY WAIVER
OF JURY TRIAL AND NOTICE PROVISIONS OF THE CREDIT AGREEMENT. [Signature Pages
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