JETSTAR CONSOLIDATED HOLDINGS,
INC.
750 N. ST. PAUL, SUITE 530
Dallas, Texas 75201
Basic Energy
Services, Inc.
400 W. Illinois, Suite 800
Midland, TX 79701
Attention:
Kenneth V. Huseman
Re: Amendment
to Merger Agreement
Reference is
hereby made to that certain Agreement and Plan of Merger, dated as
of January 8, 2007 (the “ Merger Agreement
”), among Basic Energy Services, Inc. (“ Basic
”), JS Acquisition LLC, an indirect and wholly owned
subsidiary of Basic (“ Merger Sub ”), and
JetStar Consolidated Holdings, Inc. (“ JetStar
”). Capitalized terms used in this letter agreement but not
otherwise defined herein shall have the meanings ascribed to such
terms in the Merger Agreement.
This letter
agreement (the “ Letter Agreement ”) addresses
our mutual understanding regarding the resolution of various
matters related to the satisfaction of the conditions to the
Closing set forth in Article VI of the Merger Agreement. Each
of Basic, Merger Sub and JetStar agree that, by executing and
delivering this Letter Agreement, they are making binding promises
to each other, supported by good and valuable consideration,
including the parties’ respective rights to assert claims
against each other with respect to the matters set forth herein.
Specifically, the parties hereto have held numerous discussions
regarding the resolution of disputes over:
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A.
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the
presence or Release into the environment of Hazardous Materials,
circumstances forming the basis of violations or alleged violations
of applicable Environmental Law, and alleged Environmental Defects,
in each case at or related to JetStar’s Borger facility, or
at or related to any surrounding properties, or arising from or
relating to the operation thereof, whether or not owned by JetStar
or any of its Subsidiaries, (the “ Borger Environmental
Claims ”);
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B.
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the
calculation of capital expenditures for purposes of determining Net
Working Capital under Section 2.5(d)(iv) of the Merger
Agreement; and
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Basic Energy
Services, Inc.
March 5, 2007
Page 2
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C.
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compliance by Basic and Merger Sub
with the provisions of Section 5.4(a)(ii) of the Merger Agreement
as it relates to Basic’s environmental inspection of various
JetStar locations.
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Each of Basic and
Merger Sub, on the one hand, and JetStar, on the other hand, hereby
agree to the following in full resolution of the matters referenced
above and in order to induce the other party(ies) to effect the
Closing:
1.
Termination of Borger Lease . JetStar Energy Services, Inc.
(“ JSES ”) and Ray Mac Energy, Ltd. (“
Lessor ”) are parties to a lease agreement, dated
February 14, 2006, (the “ Borger Lease ”).
JetStar agrees to terminate the Borger Lease on or prior to the
Closing pursuant to a letter agreement between Lessor and JSES, a
copy of which is attached to this Letter Agreement as
Exhibit A (the “ Borger Lease Termination
Letter ”). JetStar will pay, or will cause JSES to pay,
the costs associated with the termination of the Borger Lease as
set forth in the Borger Lease Termination Letter. Basic and Merger
Sub hereby agree that neither (i) the execution and delivery
of the Borger Lease Termination Letter by JSES nor (ii) the
exercise by JSES of the right to terminate the Borger Lease in
accordance with the terms of the Borger Lease Termination Letter
(including payment of any amounts due thereunder or under the
Borger Lease), or (iii) any of the effects thereof, has caused
or will cause a breach of any representation, warranty or covenant
of JetStar made or given pursuant to the Merger
Agreement.
2.
Incentives Agreement . JSES and the Borger Economic
Development Council (the “ BEDC ”) are parties
to an Incentives Agreement, dated as of February 27, 2006 (the
“ Incentives Agreement ”). Under the Incentives
Agreement, JSES is required to, among other things, maintain and
operate a viable oilfield services business in Borger, Texas until
at least February 2011. Failure to do so will constitute a
breach of the Incentives Agreement and entitle the BEDC to the
payment of liquidated damages under Section 2.03 of the
Incentives Agreement. JetStar hereby agrees to terminate the BEDC
Agreement on or prior to the Closing pursuant to the letter
agreement between JSES and the BEDC, a copy of which is attached to
this Letter Agreement as Exhibit B (the “ BEDC
Termination Letter ”). JetStar will pay, or will cause
JSES to pay, all costs associated with the termination of the
Incent
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