AMENDMENT NO.16
TO REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
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THIS AMENDMENT NO. 16 (this "Agreement") is entered into as of January 19,
2011, 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
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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. Subject to the satisfaction of Section 5 below, Agent and
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Lenders consent to Best issuing common stock to [a shareholder] and agree that
any proceeds from an issuance of common stock to [the shareholder] shall not be
required to be applied to repay the Term Loan or reduce the Special Advance
Amount (although such proceeds shall be applied to reduce the outstanding
Revolving Advances, subject to Borrowers' ability to reborrow same) and may be
utilized by Borrowers for their working capital needs and as otherwise permitted
by the Loan Agreement. If [the shareholder]'s investment in Best is not
structured as a purchase of common stock of Best or if the investment is made by
a Person other than [the shareholder], the identity of the investor and the
structure, terms and conditions of such investment must be satisfactory to Agent
in all respects.
4. Amendments to Loan Agreement. Subject to the satisfaction of Section 5
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below, the Loan Agreement is hereby amended as follows:
(a) The definition of Special Advance Amount set forth in Section 1.1 of the
Loan Agreement is hereby amended to read in its entirety as set forth below:
"Special Advance Amount" shall mean (w) $1,750,000, prior to December 21, 2010,
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(x) $1,856,250 from December 21, 2010 through and including January 31, 2011,
(y) $1,750,000 from January 15, 2011 through and including March 30, 2011 and
(z) $0 on and after March 31, 2011.
(b) The Borrowers covenant and agree that the incremental availability
created by the increase in the Special Advance Amount for the period
contemplated by this Agreement will be used solely for the purpose of mobilizing
to rigs to the Eagle Ford in South Texas and, if requested by Agent, Borrowers
will provide a certification to Agent that the incremental availability is being
used for such purpose. For the avoidance of doubt, it is understood and agreed
that (x) the terms and conditions of any issuance of convertible subordinated
notes issued by Best shall be satisfactory to Agent in all respects and (y) all
proceeds received by Borrowers from an issuance of any convertible subordinated
notes shall be utilized to repay Revolving Advances with a concurrent reduction
of the Special Advance Amount.
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) 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 the
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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
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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.
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:
XXX XXXXXX DRILLING COMPANY
By:__________________________
Name:
Title:
BEST WELL SERVICE, INC.
By:__________________________
Name:
Title:
[Signature Page to Amendment No. 16]
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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3. Events of Default as a result of Borrowers' failure to comply with
the financial covenants set forth in Section 6.5(a) the Loan Agreement for the
fiscal quarter ended September 30, 2010.
