AMENDMENT NO. 3 TO REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
Exhibit 10.2
AMENDMENT
NO. 3
THIS
AMENDMENT NO. 3 (this “Agreement”) is entered into as of October 19, 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”), XXX XXXXXX
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 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:
12. Definitions. All
capitalized terms not otherwise defined or amended herein shall have the
meanings given to them in the Loan Agreement.
13. Reservation of
Rights: Borrowers acknowledge that Events of Default have occurred and
are continuing under the Loan Agreement, including without limitation, the
following (collectively, the “Existing Defaults”): (x) Events of Default as a
result of the failure of Borrowers to deliver to Agent the monthly financial
statements required pursuant to Section 9.9 of the Loan Agreement for the months
ended July 31, 2009 and August 31, 2009 and (y) an Event of Default as a result
of the aggregate balance of Revolving Advances outstanding exceeding the Formula
Amount less, the aggregate Maximum Undrawn Amount of all issued and outstanding
Letters of Credit in violation of Section 2.5 of the Loan
Agreement.
Borrower
further acknowledges that:
(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.
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(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, any past, present or future violation, Event of Default
under the Loan Agreement or the Other Documents, including, without limitation,
the Existing Defaults. 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 any of 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.
14. 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 inserting the following defined
terms in their appropriate alphabetical order:
“Special Advance
Amount” shall mean $1,385,000 during the Special Advance Period and $0 at
all other times.
“Special Advance
Period” shall mean the period commencing on October __, 2009 and ending
on November 16, 2009.
(b) Section
2.1(a) of the Loan Agreement hereby 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:
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(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, plus
(iii) the
Special Advance Amount in effect at such time, minus
(iv) the
aggregate Maximum Undrawn Amount of all outstanding Letters of Credit, minus
(v) 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 (x) the sum of Sections 2.1(a)(y)(i), (ii) and (iii) minus
(y) Section 2.1 (a)(y)(v) 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).”
(c) Section
2.6(b) of the Loan Agreement hereby is amended by deleting the text “as of the
Business Day on which Agent receives” contained therein and inserting the text
“as of the next Business Day following the Agent’s receipt of” in lieu
thereof.
15. Conditions of
Effectiveness. This Agreement shall become effective when
Agent shall have received:
(a) four
(4) copies of this Agreement executed by the Required Lenders and each
Borrower;
(b) the
$5,000 portion of the Amendment Fee payable on the date hereof;
(c) a
common stock purchase warrant in form and substance satisfactory to Agent for
250,000 shares of common stock of Best at an exercise price of $0.25 per share;
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.
16. Amendment
Fee. As consideration for entering into this Amendment,
Borrowers agree to pay to Agent, for the ratable benefit of the Lenders, an
amendment fee in the amount of $25,000 (the “Amendment Fee”), which fee shall be
fully earned on the date hereof and which fee shall be payable (x) $5,000 on the
date of this Agreement and shall be charged to Borrowers’ Account and (y)
$20,000 on November 16, 2009 and which may be charged to Borrowers’ Account on
such date
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17. Conditions
Subsequent. On or prior to November 3, 2009, Borrowers shall
provide Agent with a letter-of-intent from investors to provide up to $2,000,000
of additional equity capital to Best on terms and conditions reasonably
acceptable to Agent.
18. Representations, Warranties
and Covenants. Each Borrower hereby 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 Defaults).
(e) No
Borrower has any defense, counterclaim or offset with respect to the Loan
Agreement or the Obligations.
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19.
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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.
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20. Release. The
Borrowers hereby acknowledge and agree that: (a) neither 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.
21. Governing
Law. This Agreement shall be binding upon and inure to 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).
22. Cost and
Expenses. Borrowers hereby agree to pay the Agent, on
demand, 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.
23. Headings. Section
headings in this Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other
purpose.
24. Counterparts; Facsimile
Signatures. This Agreement may be executed by 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.
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of page intentionally left blank]
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IN WITNESS WHEREOF, this
Agreement has been duly executed as of the day and year first written
above.
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PNC
BANK, NATIONAL ASSOCIATION,
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as
Lender and as Agent
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By:
/s/ A. Xxxxx
Xxxxx, Jr.
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Name:
A. Xxxxx Xxxxx, Jr.
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Title:
Vice President
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By:
/s/ Xxxx X.
Xxxxxxxxxx
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Name:
Xxxx X. Xxxxxxxxxx
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Title:
Chairman
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XXX
XXXXXX DRILLING COMPANY
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By: /s/
Xxxx X.
Xxxxxxxxxx
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Name:
Xxxx X. Xxxxxxxxxx
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Title:
Chairman
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BEST
WELL SERVICE, INC.
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By:
/s/ Xxxx X.
Xxxxxxxxxx
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Name:
Xxxx X. Xxxxxxxxxx
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Title:
Chairman
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[Signature
Page to Amendment No. 3]
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