Exhibit 10.1
CONSENT ANDAMENDMENT NO.14
TO REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
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THIS AMENDMENT NO. 14 (this "Agreement") is entered into as of December __,
2010, 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
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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 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
heretfore 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
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herein shall have the meanings given to them in the Loan Agreement.
2. Reservation of Rights: Borrowers acknowledge that the Events of Default
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set forth on Schedule I hereto (the "Existing Defaults") have occurred and are
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continuing under the Loan Agreement.
(a) As a result of the Existing Defaults, Agent has the immediate right to
exercise its rights and remedies under the Loan Agreement, the Other Documents
or at law.
(b) To the extent Agent makes any additional Advances after the date
hereof, such Advances shall not constitute either a waiver of, nor agreement to
forbear by Agent with respect to the Existing Defaults or any future violation
or Event of Default under the Loan Agreement or the Other Documents, including,
without limitation, the Existing Default. No such additional Advances by Agent
shall, directly or indirectly, in any way whatsoever, impair, prejudice or
otherwise adversely effect Agent's right at any time and from time to time to
exercise any right, privilege or remedy in connection with the Loan Agreement or
related documents or amend or alter the provisions of the Loan Agreement or the
Other Documents or
constitute a course of dealing or other basis for altering any Obligation of
Borrowers or any other Person or any right, privilege or remedy of Agent under
the Loan Agreement or the Other Documents.
(c) Although Agent is not presently taking any immediate action with
respect to the Existing Defaults except as set forth above, Agent hereby
reserves all its rights and remedies under the Loan Agreement, the Other
Documents and applicable law, and its election not to exercise any such right or
remedy at the present time shall not (a) preclude Agent from ceasing at any time
to make Advances, (b) limit in any manner whatsoever Borrowers' obligation to
comply with, and Agent's right to insist on Borrowers' compliance with, each and
every term of the Loan Agreement and the Other Documents or (c) constitute a
waiver of any Event of Default or any right or remedy available to Agent under
the Loan Agreement, the Other Documents or applicable law, and Agent hereby
expressly reserves its rights with respect to the same.
(d) No failure or delay on the part of Agent in exercising any right or
remedy under the Loan Agreement and no course of dealing between Borrowers and
Agent shall operate as a waiver of any such right or remedy nor shall any single
or partial exercise of any right or remedy under the Loan Agreement preclude any
other or further exercise thereof or the exercise of any other right or remedy
under the Loan Agreement. Agent expressly reserves all of its rights and
remedies under the Loan Agreement.
3. Consent. Notwithstanding anything to the contrary contained in the Loan
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Agreement, Agent and Lenders consent to the sale by [BBD](1) of substantially
all of its machinery and equipment ("M&E"), subject to the following terms and
conditions: (i) the M&E will be sold by and auctioneer reasonably acceptable to
Agent (the "Auctioneer") (it being understood that [Kruse Energy] is acceptable
to Agent) and the engagement letter for the Auctioneer shall be in form and
substance satisfactory to Agent; (2) Agent shall have full and complete access
to the Auctioneer and Borrowers shall authorize the Auctioneer to communicate
directly with Agent and to furnish Agent with such information as Agent may
reasonably request from Auctioneer about the sale of the M&E; (3) all sales of
the M&E will be for fair market value and for 100% cash consideration; (4)
Affiliates of the Borrowers shall be prohibited from purchasing the M&E; and (5)
all proceeds from the sale of M&E (net of reasonable costs and expenses approved
by Agent in its reasonable discretion) shall be sent immediately to Agent and
shall be applied to the outstanding balance of the Term Loan in such order as
Agent shall determine in its sole and absolute discretion. Without limiting the
generality of the foregoing, each Borrower hereby agrees to send Agent and
Lenders a copy of all correspondence, reports and other written materials from
or prepared by the Auctioneer and received by such Borrower, and will instruct
the Auctioneer to provide Agent with such copies at Agent's request.
4. Amendments to Loan Agreement. Subject to the satisfaction of Section 5
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below, and effective as of December 1, 2010, the Loan Agreement is hereby
amended as follows:
(a) Section 2.4 of the Loan Agreement is hereby amended by amending and
restating the third sentence thereof to read in its entirety as set forth below:
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1. To be confirmed whether all assets to be sold are owned by BBD or whether
some are owned by Best.
"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)
$97,500 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;
provided, however, that the Term Loan payment with respect to the months of (x)
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May 2010 and June 2010 shall be in the amount of $50,000 payable on May 3, 2010,
and June 1, 2010, respectively, (y) July 2010 and August 2010, shall be in the
amount of $25,000, payable on July 1, 2010 and August 1, 2010, respectively and
(z) September 2010, October 2010, November 2010 and December 2010, shall be in
the amount of $0, and (c) $150,000 per month thereafter; provided, however, that
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the Term Loan payment with respect to the months of January 2011, February 2011
and March 2011 shall be in the amount of $0, 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."
5. Conditions of Effectiveness. This Agreement shall become effective
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when Agent shall have received:
(a) four (4) copies of this Agreement executed by the Required Lenders and
each Borrower;
(b) a common stock purchase warrant for 250,000 shares of common stock of
Best at an exercise price of $0.10 per share in form and substance satisfactory
to Agent and its counsel;
(c) a corrected version of the common stock purchase warrant for 250,000
shares of common stock of Best that was issued in connection with Amendment No.
13 to the Loan Agreement dated September 10, 2010; and
(d) such other certificates, instruments, documents, agreements and
opinions of counsel as may be required by Agent or its counsel, each of which
shall be in form and substance satisfactory to Agent and its counsel.
6. Representations, Warranties and Covenants. Each Borrower hereby
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represents, warrants and covenants as follows:
(a) This Agreement and the Loan Agreement constitute legal, valid and
binding obligations of such Borrower and are enforceable against such Borrower
in accordance with their respective terms.
(b) Upon the effectiveness of this Agreement, each Borrower hereby
reaffirms all covenants, representations and warranties made in the Loan
Agreement to the extent the same are not amended or waived hereby and agrees
that all such covenants, representations and warranties shall be deemed to have
been remade as of the effective date of this Agreement.
(c) The execution, delivery and performance of this Agreement and all other
documents in connection therewith has been duly authorized by all necessary
corporate action, and does not contravene, violate or cause the breach of any
agreement, judgment, order, law or regulation applicable to any Borrower.
(d) No Event of Default or Default has occurred and is continuing or would
exist after giving effect to this Agreement (other than the Existing Default).
(e) No Borrower has any defense, counterclaim or offset with respect to the
Loan Agreement or the Obligations.
7. Effect on the Loan Agreement.
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(a) Upon the effectiveness of this Agreement, each reference in the Loan
Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like
import shall mean and be a reference to the Loan Agreement as amended hereby.
Except as specifically amended herein, the Loan Agreement, and all other
documents, instruments and agreements executed and/or delivered in connection
therewith, shall remain in full force and effect, and are hereby ratified and
confirmed. This Agreement shall constitute an "Other Document" for all purposes
under the Loan Agreement.
(b) Except as expressly provided herein, the execution, delivery and
effectiveness of this Agreement shall not operate as a waiver of any right,
power or remedy of Agent or any Lender, nor constitute a waiver of any provision
of the Loan Agreement, or any other documents, instruments or agreements
executed and/or delivered under or in connection therewith.
8. Release. The Borrowers hereby acknowledge and agree that: (a) neither
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they nor any of their Affiliates have any claim or cause of action against Agent
or any Lender (or any of Agent's or any Lender's Affiliates, officers,
directors, employees, attorneys, consultants or agents) and (b) Agent and each
Lender have heretofore properly performed and satisfied in a timely manner all
of their respective obligations to the Borrowers under the Loan Agreement and
the Other Documents. Notwithstanding the foregoing, Agent and each Lender wish
(and the Borrowers agree) to eliminate any possibility that any past conditions,
acts, omissions, events or circumstances would impair or otherwise adversely
affect any of Agent's or such Lender's rights, interests, security and/or
remedies under the Loan Agreement and the Other Documents. Accordingly, for and
in consideration of the agreements contained in this Agreement and other good
and valuable consideration, each Borrower (for itself and its Affiliates and the
successors, assigns, heirs and representatives of each of the foregoing) (each a
"Releasor" and collectively, the "Releasors") does hereby fully, finally,
unconditionally and irrevocably release and forever discharge Agent, each Lender
and each of their respective Affiliates, officers, directors, employees,
attorneys, consultants and agents (each a "Released Party" and collectively, the
"Released Parties") from any and all debts, claims, obligations, damages, costs,
attorneys' fees, suits, demands, liabilities, actions, proceedings and causes of
action, in each case, whether known or unknown, contingent or fixed, direct or
indirect, and of whatever nature or description, and whether in law or in
equity, under contract, tort, statute or otherwise, which any Releasor has
heretofore had or now or hereafter can, shall or may have against any Released
Party by reason of any act, omission or thing whatsoever done or omitted to be
done on or prior to the date hereof arising out of, connected with or related in
any way to this Agreement, the Loan Agreement or any Other Document, or any act,
event or transaction related or attendant thereto, or Agent's or any Lender's
agreements contained therein, or the possession, use, operation or control of
any of the assets of agreements contained therein, or the possession, use,
operation or control of any of
the assets of the Borrowers, or the making of any advance, or the management of
such advance or the Collateral.
9. Governing Law. This Agreement shall be binding upon and inure to
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the benefit of the parties hereto and their respective successors and assigns
and shall be governed by and construed in accordance with the laws of the State
of New York (other than those conflict of law rules that would defer to the
substantive law of another jurisdiction).
10. Cost and Expenses. Borrowers hereby agree to pay the Agent, on demand,
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all costs and reasonable expenses (including reasonable attorneys' fees and
legal expenses) incurred in connection with this Agreement and any instruments
or documents contemplated hereunder.
11. Headings. Section headings in this Agreement are included herein for
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convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
12. Counterparts; Facsimile Signatures. This Agreement may be executed by
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the parties hereto in one or more counterparts of the entire document or of the
signature pages hereto, each of which shall be deemed an original and all of
which taken together shall constitute one and the same agreement. Any signature
received by facsimile or electronic transmission shall be deemed an original
signature hereto.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year first written above.
PNC BANK, NATIONAL ASSOCIATION,
as Lender and as Agent
By:__________________________
Name:
Title:
BEST ENERGY SERVICES, INC.
By:__________________________
Name:
Title:
BOB BEEMAN DRILLING COMPANY
By:__________________________
Name:
Title:
BEST WELL SERVICE, INC.
By:__________________________
Name:
Title:
[Signature Page to Amendment No. 14]
SCHEDULE I
Existing Default
1. An Event of Default as a result of the Borrowers' failure to pay
certain taxes as required pursuant to Section 4.13 of the Loan Agreement.
2. An Event of Default as a result of the imposition of tax Liens as
evidenced by (i) that certain Tax Warrant of the Kansas Department of Revenue
and (ii) the Notices of Federal Tax Lien received from the Internal Revenue
Service and attached hereto as Exhibit A.
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Schedule I to Amendment No. 14