Document:

exv10wxiya

 

Exhibit 10(i)a

AMENDMENT OF CREDIT AGREEMENT

     THIS AMENDMENT OF CREDIT AGREEMENT (this “Amendment”), dated as of January 3, 2006 is by
and between BASIC EARTH SCIENCE SYSTEMS, INC. (“BESSI”), and AMERICAN NATIONAL BANK,
a national banking association (“ANB”), f/k/a THE BANK OF CHERRY CREEK, N.A. (“BOCC”).

RECITALS

	 	A.	 	BESSI and BOCC entered into an Amended and Restated Letter Agreement
dated March 4, 2002 and an Amendment of Credit Agreement dated August 1, 2004 (the
“Credit Agreement”), setting forth the terms upon which ANB would make advances to
BESSI and by which such advances would be governed and repaid. Capitalized terms used
herein but not defined herein shall have the same meanings as set forth in the Credit
Agreement.
	 
	 	B.	 	BESSI and ANB desire that this Amendment be executed and delivered in order to
amend certain terms and provisions of the Credit Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of $10.00 and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

	 	1.	 	Credit Agreement. The Credit Agreement shall be, and hereby is, amended as
follows as of the date hereof:

	 	a)	 	The following shall be substituted for the paragraph entitled
(“Commitment Amount” on page 2 of the Credit Agreement:

The lesser of $20,000,000 or the Borrowing Base as determined from time
to time as described herein and which is $4,000,000 as of the date of
this agreement.

	 	b)	 	The Maturity Date and the end of the Revolving Period shall be
extended to December 31, 2007.
	 
	 	c)	 	The following shall be substituted for the paragraph entitled
“Interest Rate” on page 2 of the Credit Agreement:

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Interest on the outstanding principal balance of the Loan shall accrue
at an annual rate equal to the fluctuating Prime Rate (as defined in the
Note) plus one quarter of one percentage point (1/4%), the sum of the
foregoing being equal to seven and one-half percent per annum (71/2%) as
of January 3, 2006. After the occurrence of an Event of Default,
interest on the Loan shall accrue at a rate equal to the Prime Rate at
the time of the default plus five percentage points per annum. Borrower
shall pay interest monthly the last day of each calendar month, and on
the Maturity Date.

	 	d)	 	The following shall be substituted for the paragraph entitled
“Facility Fee” on page 3 of the Credit Agreement:

Borrower agrees to pay ANB a facility fee of $15,000 (fifteen thousand
dollars), due and payable upon the execution of the January 3, 2006
amendment hereto. In addition, Borrower agrees to pay ANB future
facility fees in the amount of one-half of one percent (1/2%) of any
increase in the Borrowing Base above $4,000,000. In addition, Borrower
agrees to pay to ANB an Unused Commitment Fee equal to one-half of one
percent (1/2%)per annum on the difference between the Commitment Amount
and the average amount outstanding, payable quarterly in arrears.

	 	2.	 	The Amended Note. The Amended Note shall be amended to reflect a face
amount of $20,000,000, such amendment to be affected by an Allonge (the “Allonge”),
between Borrower and ANB, to be attached to the Amended Note and to be substantially
in the form of Exhibit A attached hereto and made a part hereof.
	 
	 	3.	 	Loan Documents. All references in any document to the Credit
Agreement shall be deemed to refer to the Credit Agreement, as amended pursuant to
this Amendment. All references in any document to the Amended Note shall be deemed to
refer to the Amended Note, as amended pursuant to the Allonge.
	 
	 	4.	 	Conditions Precedent. The obligations of the parties under this Amendment
are subject, at the option of ANB, to the

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	 	 	 	prior satisfaction of the condition that BESSI shall have delivered to ANB the
following (all documents to be satisfactory in form and substance to ANB and, if
appropriate, duly executed and/or acknowledged on behalf of the parties other than
ANB):

	 	a)	 	This Amendment
	 
	 	b)	 	The Allonge
	 
	 	c)	 	Any and all other loan documents required by ANB, including
without limitation amended and restated Security Documents covering all oil
and gas properties owned by BESSI in the states of North Dakota, Montana,
Colorado, Texas and Wyoming.

	 	5.	 	Certification by BESSI. BESSI hereby certifies to ANB that as of the date
of this Amendment: (a) all of BESSI’s representations and warranties contained in the
Credit Agreement are true, accurate and complete in all material respects, (b) BESSI
has performed and complied with all agreements and conditions required to be performed
or complied with by it under the Credit Agreement and/or any Loan Document on or prior
to this date, and (c) neither any Event of Default nor any other event or condition
which, with the giving of notice, the lapse of time, or both, would constitute an
Event of Default has occurred under the Credit Agreement.
	 
	 	6.	 	Continuation of the Credit Agreement. Except as specified in this
Amendment or the Allonge, the provisions of the Credit Agreement and the Amended Note
shall remain in full force and effect, and if there is a conflict between the terms of
this Amendment or the Allonge and those of the Credit Agreement, the Amended Note or
any other document executed and delivered in connection therewith, the terms of this
Amendment and the Allonge shall control.
	 
	 	7.	 	Expenses. BESSI shall pay all expenses incurred in connection with the
transactions contemplated by this Amendment, including without limitation all fees and
expenses of the attorney for ANB and any and all filing and recording fees.
	 
	 	8.	 	Miscellaneous. This Amendment shall be governed by and construed under the
laws of the State of Colorado and shall be binding upon and inure to the benefit of
the parties hereto and their successors and assigns. This Amendment may be executed in
any number of counterparts, each of

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	 	 	 	which shall be an original, but all of which together shall constitute one instrument.

	 
	 	 	 	EXECUTED as of the date first above written.

	 	 	 	 	 	 	 
	 	 	BASIC EARTH SCIENCE SYSTEMS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Ray Singleton

President	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	David Flake

Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	AMERICAN NATIONAL BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Gary W. Vick

Vice President	 	 

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EXHIBIT A

ALLONGE

          Reference is made to an Amended Promissory Note dated March 4, 2002 (the “Note”),
in the face amount of $1,000,000, made by BASIC EARTH SCIENCE SYSTEMS, INC. (“Borrower”),
payable to the order of AMERICAN NATIONAL BANK (“ANB”).

          The Note is hereby modified as follows, effective as of the date hereof:

	 	1.	 	In the caption of the Note and in line 3 of the first paragraph on page 1 of the
Note, “$1,000,000” shall be changed to “$20,000,000”.
	 
	 	2.	 	In lines 2 and 3 of the fifth paragraph on page 1 of the Note, “two percentage
points” shall            be changed to “one-quarter of one percentage point”.

          EXECUTED as of January 3, 2006.

	 	 	 	 	 	 	 
	 	 	BASIC EARTH SCIENCE SYSTEMS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Ray Singleton

President	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	David Flake

Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	AMERICAN NATIONAL BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Gary W. Vick

Vice President	 	 

5exv4w3

 

EXHIBIT 4.3

TRANSLATION

TENANCY AGREEMENT

	 	 	 	 	 	 	 	 	 
	 

	 	Lessor ( Party A )
	 	:
	 	Shenzhen ShekouYuYee Shareholding Co Ltd

	 

	 	Address
	 	:
	 	4/F, 38 Wan Ha Road, Shekou, Nanshan, Shenzhen

	 

	 	Postal code
	 	:
	 	518067	 	 
	 

	 	Agent
	 	:	 	 	 	 
	 

	 	Address
	 	:	 	 	 	 
	 

	 	Postal code
	 	:	 	 	 	 
	 
	 

	 	Lessee (Party B)
	 	:
	 	Jetcrown Industrial (Shenzhen) Limited

	 

	 	Address
	 	:
	 	Wing Village Industrial Estate, Shekou, Shenzhen.

	 

	 	Postal code
	 	:	 	 	 	 
	 	 	Business Registration No. or
Identity Card No. :
	 

	 	Agent
	 	:	 	 	 	 
	 

	 	Address
	 	:	 	 	 	 
	 

	 	Postal code
	 	:	 	 	 	 

            According to “The People’s Republic of China Contract Law”, “The People’s
Republic of China City Property Management Law”, “The Shenzhen Special Economic
Zone Leased Property Ordinance” and its executing regulations, and through the
sufficient negotiation of Party A and Party B, they signed this contract.

	 	1.	 	Party A leases the property situate at 1/F, Block F, Wing Village
Industrial Estate, Shekou Liao Street, Nan Shan District, Shenzhen (below
named “the leased property”) to Party B. The construction area of the
leased property is 1,088 square meters in total. Property Building is
consisted of five floors.

	 
	 	 	 	The owner of the leased property is Shenzhen Shekou Yu Yi Shareholding
Co Ltd. The Property Ownership & Right certificate or other effective
proof of ownership (Rights of Usage) documents number: Shen Nam
Property Lease Number 11888.

	 
	 	2.	 	The rental for the leased property is calculated at DOLLARS
TWENTY- EIGHT RENMINBI ( RMB28.00 ) per square meter of construction area
per month. Total rental is DOLLARS THIRTY THOUSAND FOUR
HUNDRED AND SIXTY-FOUR RENMINBI ( RMB30,464.00 )

 

 

	 	3.	 	The first rental payment of amount THIRTY THOUSAND FOUR HUNDRED AND SIXTY-FOUR
RENMINBI (RMB30,464.00) should be paid by Party B before April 1,2006.

	 
	 	4.	 	Rental shall be paid on or before 5th day of each month, payable to Party A. Party A shall
issue tax invoice to Party B for the rental received.

	 
	 	5.	 	The lease period for the leased property is from April 1, 2006 to March 31, 2008. The lease
period should not exceed the approved land use period. If exceed, the exceeded period is
invalid. Any loss derived from such, would be according to the terms agreed if terms are
included in this agreement; if not, the loss should be borne by Party A.

	 
	 	6.	 	The leased property is for industrial purpose only. In case Party B uses the property for
the other purpose, the written approval of Party A should be sought. Party B should complete
all the reporting and approval procedures with Government Property Management Office in
respect of the change of property use according to the relevant legal regulations.

	 
	 	7.	 	Party A should hand over the leased property for Party B use on 1 April 2005. If the hand
over date is later than that of the aforementioned, Party B is entitled to request to defer
the effective date of the agreement, both parties should provide this term in writing and
should report to relevant government office for records.

	 
	 	8.	 	During the hand over, both parties should have an agreement for the property and its
facilities and add the details on the appendix.

	 
	 	9.	 	When Party A hand over the property, he is entitled to collect a guarantee sum, equals to one
months’ rental. The guarantee sum is DOLLARS OF THIRTY THOUSAND FOUR HUNDRED AND
SIXTY-FOUR RENMINBI (RMB30,464). After receiving the guarantee sum from Party B, Party A
should provide receipt to Party B.

	 
	 	 	 	The following conditions must be satisfied in order for Party A to return the guarantee sum
to Party B:

	 	1.	 	The leased property is returned in original conditions; and
	 
	 	2.	 	All Labour wages are paid off. All fee payable to relevant government
offices are paid off.

	 	10.	 	During the lease period, Party A shall be responsible to pay for the property land-use fee
and any tax in relation to the property rental, property lease management fees. Party B
shall be responsible for the water, electricity,

 

 

	 	 	 	cleaning, management charges or other fees derived from the rental of the leased
property.

	 
	 	11.	 	Party A should ensure the security of the property and its internal facilities are in good
conditions for the lease purpose and complies with the relevant provisions of rules and
regulations.

	 
	 	 	 	If Party B or his property suffers any lose due to the fraud of Party A, Party B
reserve the right to request compensation from Party A.

	 
	 	12.	 	Party B should make sure the property usage complies with the rules and not for illegal
activities purpose during the rental period and Party A can not disturb the usage of the
property when Party B use the leased property in normal circumstances.

	 
	 	13.	 	During the lease period, if there is an occurrence of damage or out of order of the property
and its facilities which will prevent its safe and normal usage, Party B should inform Party A
in time and carry out effective measures; Party A after receiving Party B’s notice should
carry out repair and maintenance works within five days; if Party B cannot reach Party A or
Party A refuses to repair, Party B can repair it instead after getting the certification of
the agreement registration authority. In emergency case which the property need immediate
repair, Party B should carry out the repair and maintenance works and inform Party A in time.
For the above situations, Party A should bear the repair or maintenance expenses. If Party B
can not complies with the above obligations and cause to significant loss, the repair and
maintenance expenses should be borne by Party B.

	 
	 	14.	 	If there is an occurrence of damage or out of order of the property and its facilities which
arising from Party B’s improper or unreasonable use, Party B should bear this responsibility
and repair or provide compensation in time. If Party B refuses to repair or compensate, Party
A can repair it on behalf of Party B after getting the certification of the agreement
registration authority. The repairs and maintenance charges should be borne by Party B.

	 
	 	15.	 	During the lease period, if Party A wants to alter, expand or renovate the property because
of needs, with the agreement of Party B and approval of the relevant government department,
improvement works can be carried out then. Both parties should sign a separate written
agreement on this area. Similarly, Party B can renovate the property with the agreement of
Party A and the approval of the relevant government department. Regarding this area, a
separate written agreement is required as well.

 

 

	 	16.	 	During the lease period, Party B is not allowed to sublet the leased property to third
party either partly or wholly.

	 
	 	17.	 	During the lease period, Party A wants to sell the property either wholly or partly, he
should give one month notice to Party B. Party B has the first priority to purchase the
property under the same conditions offered by the third party. If the property right has been
transferred to a third party, Party A should make sure the new owner completed the contract as
if the property right hasn’t change.

	 
	 	18.	 	During the effective period of this contract, the contract will be terminated or changed upon
either one of the following conditions:

	 	(1)	 	an occurrence of natural disasters or accident, and as a result the contract
cannot be completed;

	 
	 	(2)	 	the government decides to make a requisition of the land on which the
aforesaid property builds and the property has to torn down as a result;

	 
	 	(3)	 	Both parties agree with the arrangement.

	 	19.	 	Party A reserves the right to claim Party B for the compensation of loss due to either one of
the following conditions.

	 	(1)	 	Party B doesn’t pay the rental for more than one month;
	 
	 	(2)	 	Party B doesn’t pay the rental and cause to the loss of Party A exceeding the
amount of Nil;

	 
	 	(3)	 	Party B use the property for illegal purpose and cause to general damage.
	 
	 	(4)	 	Without the permission of Party A and the relevant government department,
Party B change the use of the property and its structure;

	 
	 	(5)	 	Party B in breach of the provision set out in Item (14), in other words, he
refused to bear the responsibility of repair and maintenance or paid the related
expenses and as a result, the property becomes serious damaged;

	 
	 	(6)	 	Without the written permission of Party A and the relevant government
department, Party B renovate the property;

	 
	 	(7)	 	Without the permission of Party A, Party B sublet the property to third
party.

	 	 	 	Apart from the aforementioned claim on Party B for compensation of loss or the breach of
contract, Party A could terminate the contract or change the contract terms accordingly.

 

 

	 	20.	 	Party B reserves the right to claim Party A for the compensation of loss due
to either one of the following conditions.

	 	(1)	 	Party A delayed the handover of the property for over one month;

	 
	 	(2)	 	Party A in breach of the contract term (11), as a result, the property
cannot be used for the purpose as stated before;

	 
	 	(3)	 	Party A in breach of the contract term (13), in other words, he
refused to bear the responsibility of repair and maintenance or paid
the related expenses, and as a result, the property cannot be used for
the purpose as stated before;

	 
	 	(4)	 	Without the agreement of Party B and the approval of the relevant
government department, Party A carries out the alteration, expansion, or
renovation works.

	 	 	 	Apart from the aforementioned claim on Party A for compensation of loss or
the breach of contract, Party B could terminate the contract or change the
contract terms accordingly.

	 
	 	21.	 	Upon the expiry of the contract, Party B should move out within five days of the
expiry and then hand over the property and internal facilities to Party A in good
condition. Party B should clear all the outstanding charges with Party A. Party B
doesn’t move out and hand over the property, Party A reserve the right to return
the property and request double rental expenses for the outstanding balances.

	 
	 	22.	 	Upon the expiry of the tenancy agreement, if Party B wants to renew the contract,
he should inform Party A three months in advance of the expiry. If Party A
continues to rent out the property, Party B should be given a first priority to be
the lessee under the same conditions as offered by third party. If both parties
can reach an agreement on renewal, they should sign a new contract which should be
re-registered with the Contract Registration Registry.

	 
	 	23.	 	Both parties should comply with the term conditions state in the contract. The
party who break the contract should indemnify the actual loss and bear the legal
responsibility.

	 
	 	24.	 	If both parties want to insert or delete terms, it can be made in the
Supplementary Clause. The provisions of Supplementary Clause and the main contract
are of equal validity. If there shall be anything that is not provided for by this
agreement, the parties can make any supplement after negotiation, and the
supplement will of equal validity with the main contract only after the
certification of the Contract Registration Registry.

 

 

	 	25.	 	If there shall be any dispute arising through fulfillment, it should be solved by the
discussions and negotiations of the parties. If there shall be no agreement made in
negotiation, mediation can raise a prosecution in People’s Court.

	 
	 	26.	 	This contract takes effect after signed by two parties. Both parties should
take the signed copy to the Contract Registration Registry for registration.

	 
	 	27.	 	This contract is written in Chinese.
	 
	 	28.	 	This contract is made in four copies, Party A will keep two copies, Party B will keep one
copy. And one will be kept in the Contract Registration Registry.

	 	 	 	 	 
	 

	 	Party A ( Signature & Chop ):	 	 
	 

	 	Authorized Representative:          <Signed>	 	 
	 

	 	Contact Telephone No.:	 	 
	 

	 	Bank Account No.:	 	 
	 

	 	Authorized Agent ( Signature & Chop ):
	 	27 February 2006
	 

	 	 	 	 
	 

	 	Party B ( Signature & Chop ):	 	 
	 

	 	Authorized Representative:          <Signed>	 	 
	 

	 	Contact Telephone No.:	 	 
	 

	 	Bank Account No.:	 	 
	 

	 	Authorized Agent ( Signature & Chop ):
	 	27 February 2006
	 

	 	 	 	 
	 

	 	Registrant (Signature):          <Signed>	 	 
	 

	 	 	 	 
	 

	 	Contract Registration Registry (Signature & Chop):          <signed>
	 	March 6, 2006

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