This FORBEARANCE
AGREEMENT (this “Forbearance Agreement”) is
entered into as of September 29, 2011 (the “
Forbearance Effective Date ”), by and among
(i) NYTEX Energy Holdings, Inc. (“ NYTEX Holdings
”), (ii) NYTEX FDF Acquisition, Inc. (“ NYTEX
Acquisition ”), (iii) WayPoint Nytex, LLC (“
WayPoint ”), (iv) New Francis Oaks, LLC (“
New Francis ”), and (v) Francis Drilling Fluids,
Ltd. and any of its subsidiaries (collectively, “ FDF
”). Where applicable, NYTEX Holdings, NYTEX Acquisition,
WayPoint, New Francis and FDF are collectively referred to as the
“ Parties ” or each “ Party
.” Capitalized terms used and not otherwise defined herein
have the meanings assigned to them in the Preferred Stock and
Warrant Purchase Agreement, dated” as of November 23,
2010, among NYTEX Holdings, NYTEX Acquisition and WayPoint, as
amended from time to time (collectively, the “ WayPoint
Purchase Agreement ”) and all related agreements and
documents, each as amended from time to time (collectively,
together with the WayPoint Purchase Agreement, the “
WayPoint Purchase Documents ”).
WHEREAS,
(a) Events of Default have occurred under the WayPoint
Purchase Documents (each such Events of Default, a “
Current Event of Default ” and, collectively, the
“ Current Events of Default ”) including,
without limitation, the Current Events of Default set forth in the
letter dated April 14, 2011, from WayPoint to NYTEX Holdings;
and (b) pursuant to the letter from WayPoint to NYTEX Holdings
dated May 4, 2011 (the “ Put Election Notice
”), as a result of the Current Events of Default, WayPoint
has demanded that, pursuant to the WayPoint Purchase Agreement,
NYTEX Holdings repurchase the Warrants, the shares of Senior
Series A Redeemable Preferred Stock of NYTEX Acquisition and
the one share of Series B Redeemable Preferred Stock of NYTEX
Holdings held by WayPoint for an aggregate purchase price of
$30,000,000, and NYTEX Holdings has failed to timely make such
repurchase, which failure is an additional Current Event of
Default.
WHEREAS, upon the
request of NYTEX Holdings, WayPoint has agreed, subject to the
terms and conditions set forth herein, to forbear during the
Forbearance Period (as defined below) from exercising rights and
remedies under the WayPoint Purchase Documents with respect to the
Current Events of Default and, as additional consideration, subject
to the terms and conditions set forth herein, grant such other and
further relief as expressly set forth in this Forbearance
Agreement; and
NOW, THEREFORE, in
consideration of the foregoing, the terms, covenants and conditions
contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Parties hereto agree as follows:
SECTION 1.
Forbearance; Forbearance Default Rights and
Remedies.
(a)
Acknowledgment of Current Events of Default and Entitlement to
Exercise Rights and Remedies . NYTEX Holdings, NYTEX
Acquisition, New Francis and FDF acknowledge and agree that
(i) the Current Events of Default have occurred and are
continuing and (ii) but for the terms of this Forbearance
Agreement, WayPoint may, if it so elects, exercise its respective
rights and remedies in respect of the Current Events of
Default.
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(b) The
Forbearance. Effective upon the Forbearance Effective Date (as
hereinafter defined), WayPoint agrees that until the occurrence of
the Forbearance Termination Date (as hereinafter defined), WayPoint
will forbear from exercising all of its rights and remedies under
the WayPoint Purchase Documents or otherwise existing pursuant to
any other agreement entered into in connection with the WayPoint
Purchase Agreement, by operation of law or otherwise against NYTEX
Holdings, NYTEX Acquisition, New Francis and FDF solely with
respect to the Current Events of Default. NYTEX Holdings, NYTEX
Acquisition, New Francis and FDF acknowledge and agree that each
Current Event of Default constitutes an Event of Default upon which
action could be taken but for the forbearance described
herein.
(c)
Effect of Forbearance Termination. From and after the
Forbearance Termination Date, the agreement of WayPoint to forbear
as set forth in Section 1(b) shall immediately terminate without
the requirement of any demand, presentment, protest, or notice of
any kind.
(d)
Forbearance Termination Date means the earlier
of:
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i.
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the
occurrence of a Forbearance Default (as defined
below);or
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ii.
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12:00 a.m. (New York City time)
60 days after the Forbearance Effective Date.
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(e)
Forbearance Period means the period beginning on the
Forbearance Effective Date and ending on the Forbearance
Termination Date
(f)
Forbearance Default. A Forbearance Default shall occur,
immediately and without notice, if one or more of the following
shall occur:
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i.
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the
occurrence of any Default or Event of Default other than the
Current Events of Default (without taking into account any grace or
cure periods);
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ii.
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any
creditor of any Party (other than WayPoint), or any of such
creditor’s assignees, agents or designees, including, without
limitation, PNC Bank, National Association (“PNC”)
pursuant to its senior revolving credit and term loan facility (the
“Senior Facility”), commences any enforcement action,
exercises or seeks to exercise any of its or their respective
rights or remedies or takes or seeks to take any action that
renders compliance by NYTEX Holdings, NYTEX Acquisition, New
Francis and FDF with this Forbearance Agreement impossible, or that
otherwise materially impairs or materially adversely affects
WayPoint’s ability to exercise its rights or
remedies;
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iii.
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the
failure by NYTEX Holdings to, no later than 35 days after the
Forbearance Effective Date, either (x) identify a lead
investor in connection with a proposed recapitalization of NYTEX
Holdings, NYTEX Acquisition, New Francis and FDF that would, among
other things, fund the purchase of the WayPoint Securities
contemplated by Sections 3(a)(xiv) and 3(a)(xv) hereof, or
(y) provide WayPoint with evidence of
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progress toward such a proposed
recapitalization that is satisfactory to WayPoint in its sole
discretion;
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iv.
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the
commencement by one or more of NYTEX Holdings, NYTEX Acquisition,
New Francis and FDF of a case under title 11 of the United States
Code or any other act that seeks relief under any comparable
bankruptcy or insolvency regime proceeding, or the commencement
against one or more of NYTEX Holdings, NYTEX Acquisition, New
Francis and FDF of any such case or proceeding;
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v.
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the
failure of any of NYTEX Holdings, NYTEX Acquisition, New Francis
and FDF to timely comply with any term, condition or covenant set
forth in this Forbearance Agreement;
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vi.
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no
later than one (1) Business Day after the Forbearance
Effective Date, FDF shall pay not less than $100,000.00 of the
reasonable out-of-pocket fees, costs and expenses incurred by
WayPoint both on behalf of itself in connection with the Current
Events of Default and on behalf of NYTEX Acquisition, New Francis
and FDF, including the reasonable fees, disbursements and other
charges of their counsel, consultants and advisors to date, and the
remaining amount of such fees, costs and expenses to be paid no
later than 14 days after the Forbearance Effective
Date;
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vii.
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any
change in the members of the Board of Directors of and NYTEX
Acquisition, New Francis and FDF;
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viii.
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the
failure of the NYTEX Acquisition, New Francis and FDF to retain no
later than three (3) Business Days after the Forbearance
Effective Date a Business Improvement Officer or financial and
operational consultant with executive officer authority (the
“ BIO ”) and related personnel reasonably
acceptable to WayPoint (it being understood that firm for such
personnel will be PriceWaterhouseCoopers LLP and that James F. Reed
from that firm as BIO is acceptable to all Parties) pursuant to a
scope of engagement and otherwise on terms and conditions (in each
case) reasonably acceptable to NYTEX Acquisition, New Francis, FDF
and WayPoint, and WayPoint and its representatives shall be granted
direct, regular access to the BIO and all reasonably requested
information related to the performance of the BIO’s duties;
and
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ix.
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the
failure of any representation or warranty made by any of NYTEX
Holdings, NYTEX Acquisition, New Francis and FDF under this
Forbearance Agreement to be true and complete as of the date when
made or any other breach of such representation or
warranty.
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SECTION 2.
Conditions to Effectiveness. This Forbearance
Agreement shall not be effective unless WayPoint shall have
received duly executed counterparts of this Forbearan
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