UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 15, 2020
Basic Energy Services, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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1-32693
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54-2091194
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(State or other jurisdiction of
incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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801 Cherry Street, Suite 2100
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Fort Worth, Texas
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76102
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: (817) 334-4100
Not Applicable
(Former name or former address, if changed since last report.)
________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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Common stock, par value $0.01 per share
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BASX*
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The OTCQX Best Market*
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* Until December 2, 2019, Basic Energy Services, Inc.’s common stock traded on the New York Stock Exchange under the symbol “BAS”. On December 3, 2019, Basic Energy Service, Inc.’s common stock began trading on the OTCQX® Best Market tier of the OTC Markets Group Inc. Deregistration under Section 12(b) of the Act became effective on March 16, 2020.
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
Second Lien Delayed Draw Promissory Note and Security Agreement
On October 15, 2020 Basic Energy Services, Inc., a Delaware corporation (the “Company”), entered into that certain Second Lien Delayed Draw Promissory Note, in favor of Ascribe III Investments LLC, a Delaware limited liability company (“Ascribe”), in an aggregate principal amount equal to $15,000,000 (the “Second Lien Promissory Note”). An Initial Advance (as defined in the Second Lien Promissory Note) in an amount of $7,500,000 was drawn on October 15, 2020. The Second Lien Promissory Note is secured by a second lien on certain of the Company’s existing and after-acquired property pursuant to that certain Second Lien Security Agreement, dated as of October 15, 2020, by and among the Company and certain subsidiaries of the Company in favor of Ascribe, as secured party (the “Security Agreement”), which collateral also secures the Company’s Credit Agreement (as defined below) on a first lien basis. The proceeds of the Second Lien Promissory Note will be used for general corporate and working capital purposes.
Ascribe and its affiliates collectively beneficially own 85.2% of the Company’s outstanding stock and common stock equivalents (CSEs). The Company is party to existing agreements with Ascribe which, among other things, grant Ascribe the right to designate directors for nomination for election to the Company’s board of directors. These agreements are filed as exhibits to the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission.
The foregoing summaries of the Second Lien Promissory Note and the Security Agreement do not purport to be complete and are qualified in their entirety by reference to the Second Lien Promissory Note and Security Agreement, copies of which are attached hereto as Exhibit 10.1 and Exhibit 10.2 and are incorporated herein by reference.
Third Amendment to Credit Agreement
The Company is party to that certain ABL Credit Agreement, dated October 2, 2018 (as amended by that certain Limited Consent and First Amendment to ABL Credit Agreement, dated as of March 9, 2020 and as further amended by that certain Second Amendment to ABL Credit Agreement, dated as of June 15, 2020, the “Credit Agreement”), with the guarantors party thereto, the financial institutions party thereto and Bank of America, N.A., a national banking association (“Bank of America”), as administrative agent.
On October 15, 2020, the Company entered into that certain Third Amendment to ABL Credit Agreement by and among the Company, as borrower, the guarantors party thereto, the financial institutions party thereto and Bank of America, as administrative agent (the “ABL Amendment”), pursuant to which, among other things, the issuance of the Second Lien Promissory Note and the grant of the liens in connection therewith were permitted.
The foregoing summary of the ABL Amendment does not purport to be complete and is qualified in its entirety by reference to the ABL Amendment, a copy of which is attached hereto as Exhibit 10.3 and is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K is incorporated by reference herein.
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(d)
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Exhibits
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Exhibit No.
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10.1*
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10.2*
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10.3
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104
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Cover Page Interactive Data File (embedded within the Inline XBRL document).
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* Certain portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The omitted information is (i) not material and (ii) would likely cause competitive harm to the Company if publicly disclosed. The Company agrees to furnish supplementally an unredacted copy of the exhibit to the Securities and Exchange Commission upon its request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Basic Energy Services, Inc.
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Date: October 21, 2020
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By:
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/s/ Adam L. Hurley
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Name:
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Adam L. Hurley
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Title:
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Executive Vice President, Chief Financial Officer
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Treasurer and Secretary
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SECOND LIEN DELAYED DRAW PROMISSORY NOTE
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US $15,000,000
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October 15, 2020
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FOR VALUE RECEIVED, Basic Energy Services, Inc., a Delaware corporation (the “Obligor”), hereby unconditionally promises to pay to Ascribe III Investments LLC, a Delaware limited liability company (the “Payee”), the principal amount set forth in Section 3 hereto, together with interest thereon as provided in Section 2 hereof, on the Maturity Date (as defined below), on the terms and subject to the conditions provided herein.
1.Definitions. In this Note, the following terms shall have the following meanings:
“ABL Agent” has the meaning assigned to such term in the definition of “ABL Credit Agreement”.
“ABL Amendment” has the meaning assigned to such term in Section 5.
“ABL Credit Agreement” means that certain Credit Agreement dated as of October 2, 2018, by and among the Obligor, as borrower, the lenders party thereto and Bank of America, N.A., as administrative agent (the “ABL Agent”), as amended by that certain Limited Consent and First Amendment to ABL Credit Agreement dated as of March 9, 2020, as further amended by that certain Second Amendment to ABL Credit Agreement dated as of June 15, 2020, and as further amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“ABL Security Agreement” means that certain Security Agreement dated as of October 2, 2018, by and among the Obligor, the other grantors party thereto and the ABL Agent, as amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Additional Advance” has the meaning assigned to such term in Section 3.
“Availability Period” means the period from and including November 30, 2020 to the earliest of (a) the Maturity Date, (b) the termination of the Commitments pursuant to Section 4 and the (c) termination of the Commitments pursuant to Section 12(b).
“Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. §101, et seq.).
“Bridge Note” means that certain Senior Secured Promissory Note dated as of March 9, 2020 executed by the Obligor and guaranteed by the Guarantors in favor of Ascribe III Investments LLC, a Delaware limited liability company.
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in New York City (New York) are authorized or required by law to close.
“Collateral” means all of the “Collateral” referred to in the Collateral Documents and all of the other property that is or is intended under the terms of the Collateral Documents to be subject to Liens in favor of the Payee; but, for the avoidance of doubt, Collateral shall not include any equity interest in the Loan Parties or any of their Subsidiaries.
“Collateral Documents” means, collectively, the Security Agreement, the Security Agreement Supplements, security agreements, pledge agreements, and other similar agreements delivered to the Payee pursuant to Section 5 and Section 10, and each of the other agreements, instruments or documents that creates or purports to create a Lien in favor of the Payee.
“Commitments” mean the obligations to make Loans to Obligor pursuant to Section 3, as such amount may be adjusted from time to time in accordance with this Note, including subject to the reduction provisions in Section 4. The aggregate amount of the Payee’s Commitments on the Effective Date is $15,000,000.
“Default” shall mean any event, act or condition that constitutes an Event of Default or that with notice or lapse of time, or both, would constitute an Event of Default.
“Dollars” and “$” means the lawful currency of the United States of America.
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of any political subdivision of the United States of America.
“GAAP” means generally accepted accounting principles in the United States set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession) including, without limitation, the FASB Accounting Standards Codification, that are applicable to the circumstances as of the date of determination, consistently applied.
“Guarantied Obligations” means all of the obligations under this Note now or hereafter existing, whether for principal, interest (including any interest that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), fees, the Payee’s expenses (including any fees or expenses that accrue after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), or otherwise, and any and all documented out-of-pocket expenses (including reasonable counsel fees and expenses) incurred by the Payee in enforcing any rights under the guaranty set forth herein. Without limiting the generality of the foregoing, Guarantied Obligations shall include all amounts that constitute part of the Guarantied Obligations and would be owed by the Obligor to the Payee but for the fact that they are unenforceable or not allowable, including due to the existence of a bankruptcy, reorganization, other Insolvency Proceeding or similar proceeding involving the Obligor or any Guarantor.
“Guarantors” means, collectively, the Domestic Subsidiaries of the Obligor listed on Schedule 1(a) hereto and each other Domestic Subsidiary of the Obligor that shall be required to execute and deliver a guaranty or a guaranty supplement pursuant to Section 9(b).
“Indenture” means that certain Indenture dated as of October 2, 2018 with respect to 10.75% Senior Secured Notes among Obligor and UMB Bank, N.A., as trustee and collateral agent, as amended or supplemented from time to time.
“Initial Advance” has the meaning assigned to such term in Section 3.
“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions, generally with creditors, or proceedings seeking reorganizations, arrangement, or other similar relief.
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).
“Loan” means an extension of credit by Payee to the Obligor under Section 3.
“Loan Documents” means, collectively, this Note and the Collateral Documents.
“Loan Parties” means, collectively, the Obligor and each Guarantor.
“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent), or financial condition of the Obligor or the Obligor and its Subsidiaries, taken as a whole, (b) a material impairment of the rights and remedies of the Payee under any Loan Document, or of the ability of the Loan Parties, taken as a whole, to perform their obligations under the Loan Documents, or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.
“Maturity Date” means January 2, 2024; provided, however, that if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day; provided, further, that if an Acceptable Senior Notes Refinancing (as defined in the ABL Credit Agreement) has not been completed by July 3, 2023, then the “Maturity Date” shall be October 3, 2023.
“Note” means this Second Lien Delayed Draw Promissory Note, as amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental authority or other entity.
“Security Agreement” means that certain Security Agreement dated as of the Effective Date, by and among the Obligor, the other grantors party thereto and the Payee, as amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Security Agreement Supplement” means the form of supplement attached to the Security Agreement as Annex I.
“Solvent” means, with respect to any Person on any date of determination, after taking into account all other payments made by, and indemnification payments from, and reimbursement and contribution obligations of, any other Persons with respect thereto, that on such date (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay the debts and liabilities as they mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute unreasonably small capital and (e) such Person is able to pay its debts and liabilities, contingent obligations and other commitments as they mature in the ordinary course of business. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
“Subsidiary” means, with respect to any Person, a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly or indirectly, through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Obligor.
“UCC” means the New York Uniform Commercial Code, as in effect from time to time; provided, however, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, priority, or remedies with respect to the Payee’s Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies.
2.Interest. Each Loan shall bear interest on the outstanding principal amount thereof from the date such Loan is made hereunder at a rate per annum equal to 9.75%. Interest payable pursuant hereto shall be calculated monthly at the end of each fiscal month on the basis of a 365/366-day year for the actual days elapsed. Accrued and unpaid interest on each Loan shall be due and payable in cash in arrears on the first day of each April, July, October and January, on the Maturity Date, when the unpaid principal amount hereof is declared due and payable, and at such other times as may be specified herein. Upon the occurrence and during the continuance of an Event of Default (as defined below), any overdue principal amount of this Note and, to the extent permitted by applicable law, interest payments or fees or other amounts due and owing hereunder, shall thereafter bear interest (including post-petition interest in any Insolvency Proceeding, whether or not allowed in such Insolvency Proceeding) payable on demand at a rate that is two percent (2.0%) per annum in excess of the Rate otherwise applicable thereto pursuant to the first sentence of this Section 2 (the “Default Rate”). Notwithstanding any provision herein to the contrary, no interest shall accrue under this Note at a rate in excess of the highest applicable rate permitted by law.
3.Loans. On the terms and subject to the conditions contained in this Note, the Payee agrees to make (a) an initial Loan to the Obligor on the date hereof in the aggregate principal amount equal to $7,500,000 (the “Initial Advance”) and (b) additional Loans (each an “Additional Advance”) to the Obligor on any Business Day during the Availability Period in an aggregate principal amount which, after giving effect thereto, does not cause the aggregate amount of Loans outstanding hereunder to exceed the Payee’s Commitments. Any Additional Advance shall be made available to the Obligor upon at least three (3) Business Days advance written notice to the Payee, which notice shall specify the amount to be borrowed and identify the proposed date of borrowing. Each Additional Advance shall be in an aggregate amount not less than $1,000,000 or an integral multiple thereof (or the remaining amount of the Commitments).
4.Reduction of Commitments.
a.Dispositions. In the event that any Loan Party shall sell, transfer, license, lease or otherwise dispose of (such transaction, a “Disposition”) equipment or real property (other than (i) a Disposition to another Loan Party or (ii) a Disposition of equipment or real property in the ordinary course of business) the proceeds of which are not applied to the repayment of indebtedness evidenced by the Bridge Note, then, upon the consummation of such Disposition, the Commitments outstanding at such time shall be automatically reduced on a dollar-for-dollar basis by the amount of net cash proceeds received by such Loan Party in respect such Disposition.
b.Incurrence of Indebtedness. Upon the issuance or incurrence of indebtedness for borrowed money (other than (i) indebtedness constituting Obligations under the ABL Credit Agreement as in effect on the date hereof, (ii) indebtedness owed to another Loan Party or Payee or an affiliate thereof or (iii) indebtedness in respect of capitalized leases or purchase money obligations), then, the Commitments outstanding at such time shall be automatically reduced on a dollar-for-dollar basis by the aggregate principal amount of such indebtedness for borrowed money on the date of such issuance or incurrence.
5.Conditions to Closing and Loans.
a.Conditions to Initial Advance. The obligation of the Payee to make the Initial Advance hereunder is subject to the satisfaction of the following conditions precedent (the date upon which the Payee is in receipt of each of the following items, each in form and substance reasonably satisfactory to the Payee, the “Effective Date”):
i.Loan Documents. The Payee shall have received this Note and the Security Agreement, in each case, duly executed and delivered by the Obligor and the Guarantors.
ii.Fees and Expenses. The Obligor shall have paid (A) a commitment fee in cash in an amount equal to $140,625, which may be netted from the proceeds of the Initial Advance and (B) all reasonable and documented out-of-pocket expenses of the Payee (including, without limitation, the reasonable and documented fees and expenses of Fried, Frank, Harris, Shriver & Jacobson LLP).
iii.No Default and Representations and Warranties. Both before and after giving effect to the Initial Advance, (A) no Default or Event of Default shall have occurred and be continuing, and (B) each of the representations and warranties made by the Obligor herein shall be true and correct in all material respects (to the extent not otherwise qualified by materiality) on and as of such date.
iv.Drawdown Notice. The Payee shall have received a request for the Initial Advance duly executed by an officer of the Obligor with disbursement instructions attached thereto.
v.Financing Statements. The Payee shall have received copies of proper financing statements, filed or duly prepared for filing under the UCC in all jurisdictions that the Payee may deem reasonably necessary in order to perfect and protect the Liens on assets of each of the Obligor and the Guarantors created under the Security Agreement, covering the Collateral described herein and in any Collateral Document.
vi.Secretary’s Certificate. The Payee shall have received a certificate of each of the Obligor and the Guarantors certifying that there has been no change to any of the Obligor’s or Guarantors’ (A) certificate or articles of incorporation, formation or organization or (B) bylaws or operating agreements (or equivalent or comparable constitutive documents) (collectively, “Organization Documents”) since the closing of the ABL Credit Agreement and the Indenture (or otherwise attaching such changed Organization Documents).
vii.Written Consents. The Payee shall have received true, complete and correct copies of the resolutions or written consents authorizing the borrowing by the Obligor of the Initial Advance, including evidence of authorization therefor by the Special Committee of the Board of Directors of the Obligor, and the guarantees of the Guarantied Obligations provided by the Guarantors and the other transactions contemplated hereunder.
viii.Good Standing Certificates. The Payee shall have received good standing certificates of each of the Obligor and the Guarantors, issued by the Secretary of State or other appropriate official of the jurisdiction of incorporation, organization or formation of the Obligor and such Guarantors.
ix.Closing Certificate. The Payee shall have received a certificate executed by an officer of the Obligor certifying that the conditions specified in Section 5(a)(iii) have been satisfied.
x.ABL Amendment. The Obligor shall have entered into an amendment to the ABL Credit Agreement (the “ABL Amendment”) on terms and conditions satisfactory to the Payee.
b.Conditions to each Additional Advance.
i.Fees and Expenses. The Obligor shall have paid (A) solely in connection with the initial Additional Advance made after the Effective Date, a commitment fee in cash in an amount equal to $46,875, which may be netted from the proceeds of such Additional Advance and (B) all reasonable and documented out-of-pocket expenses of the Payee (including, without limitation, the reasonable and documented fees and expenses of Fried, Frank, Harris, Shriver & Jacobson LLP).
ii.No Default and Representations and Warranties. Both before and after giving effect to the Additional Advance, (A) no Default or Event of Default shall have occurred and be continuing, and (B) each of the representations and warranties made by the Obligor herein shall be true and correct in all material respects (to the extent not otherwise qualified by materiality) on and as of such date.
iii.Drawdown Notice. The Payee shall have received a request for the Additional Advance duly executed by an officer of the Obligor with disbursement instructions attached thereto.
iv.Written Consent: The Payee shall have received a true, complete and correct copy of the resolutions or written consent of the Special Committee of the Board of Directors of the Obligor, authorizing the borrowing by the Obligor of the Additional Advance.
6.Representations and Warranties. To induce the Payee to make the Loans, the Obligor hereby represents and warrants to the Payee that:
a.Status. Each of the Obligor and the Guarantors (a) is a duly organized or formed and validly existing corporation or other registered entity in good standing under the laws of the jurisdiction of its organization and has the corporate or other organizational power and authority to own its property and assets and to transact the business in which it is engaged and (b) has duly qualified and is authorized to do business and is in good standing in all jurisdictions where it does business or owns assets, except where the failure to be so qualified could not reasonably be expected to result in a Material Adverse Effect.
b.Power and Authority; Enforceability. Each of the Obligor and the Guarantors has the corporate or other organizational power and authority to execute, deliver and carry out the terms and provisions of this Note and each other Loan Document to which it is a party and has taken all necessary corporate or other organizational action to authorize the execution, delivery and performance of this Note and each other Loan Document. Each of the Obligor and the Guarantors has duly executed and delivered this Note and each other Loan Document to which it is a party and this Note constitutes, and each other Loan Document to which it is a party, constitutes the legal, valid and binding obligation of each of the Obligor and the Guarantors enforceable against the Obligor and each such Guarantor in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, moratorium, reorganization and other similar laws relating to or affecting creditors’ rights generally and general principles of equity (whether considered in a proceeding in equity or law).
c.No Violation. None of the execution, delivery and performance by the Obligor and the Guarantors of this Note and each other Loan Document to which it is a party and compliance with the terms and provisions thereof or the consummation of the other transactions contemplated hereby or thereby on the relevant dates therefor will (i) contravene any applicable provision of any material applicable law of any governmental authority, (ii) violate any provision of the organization documents of the Obligor or any Guarantor or (iii) conflict with the Indenture or, subject to the ABL Amendment, the ABL Credit Agreement.
d.Pari Passu Indebtedness. Obligations under this Note constitute senior indebtedness of the Obligor and rank pari passu in right of payment with all indebtedness of the Obligor under the Indenture and the ABL Credit Agreement; provided, that the Liens on and security interest in the Collateral granted to Payee under and pursuant to the terms of the Security Agreement are junior in priority to the Liens securing the Obligations (under and as defined by the ABL Credit Agreement).
e.Use of Proceeds. The proceeds of the Loans shall be used for general corporate purpose and working capital purposes, including payment of any fees and expenses incurred in connection herewith.
f.Solvency. As of the date hereof, the Obligor and its Subsidiaries, on a consolidated basis, are Solvent.
7.Payment. The full outstanding principal amount of this Note, together with all accrued and unpaid interest hereunder, shall become due and payable on the Maturity Date. All monies due hereunder shall be paid in Dollars. If any payment on this Note shall be due on a day which is not a Business Day, it shall be payable on the next succeeding Business Day. Upon final payment of the full outstanding principal amount of this Note, together with all accrued and unpaid interest hereunder this Note shall be surrendered to the Obligor for cancellation. Amounts borrowed and repaid hereunder may not be reborrowed. All payments hereunder shall be applied to accrued and unpaid interest and to outstanding principal in such order as determined by the Payee in its sole discretion.
8.Prepayment. The Obligor may, at its option, prepay this Note, in whole or in part, at any time or from time to time without penalty or premium and such prepayment shall be accompanied by payment of accrued and unpaid interest through the date of prepayment; provided, that any prepayment (other than a repayment or prepayment made with the proceeds of the Second Lien Refinancing Debt (as defined by the ABL Credit Agreement)) shall be subject to the applicable Payment Conditions under and as defined in the ABL Credit Agreement, as in effect on the date hereof.
9.Guarantee.
a.In recognition of the direct and indirect benefits to be received by the Guarantors from the proceeds of this Note and by virtue of the financial accommodations to be made to the Obligor, each of the Guarantors, jointly and severally, hereby unconditionally and irrevocably guarantees as a primary obligor and not merely as a surety the full and prompt payment when due, whether upon maturity, acceleration, or otherwise, of all of the Guarantied Obligations. If any or all of the Guarantied Obligations becomes due and payable, each of the Guarantors, unconditionally and irrevocably, and without the need for demand, protest, or any other notice or formality, promises to pay such indebtedness to the Payee, together with any and all expenses (including the Payee’s expenses) that may be incurred by the Payee in demanding, enforcing, or collecting any of the Guarantied Obligations (including the enforcement of any collateral for such Guarantied Obligations or any collateral for the obligations of the Guarantors under the guaranty in this Note). If claim is ever made upon the Payee for repayment or recovery of any amount or amounts received in payment of or on account of any or all of the Guarantied Obligations and the Payee repays all or part of said amount by reason of (i) any judgment, decree, or order of any court or administrative body having jurisdiction over the Payee or any of its property, or (ii) any settlement or compromise of any such claim effected by the Payee with any such claimant (including the Obligor or any Guarantor), then and in each such event, each of the Guarantors agrees that any such judgment, decree, order, settlement, or compromise shall be binding upon the Guarantors, notwithstanding any revocation (or purported revocation) of this Guaranty or other instrument evidencing any liability of the Obligor or any Guarantor, and the Guarantors shall be and remain liable to the Payee hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by the Payee. The liability of each of the Guarantors hereunder is primary, absolute, and unconditional, and is independent of any security for or other guaranty of the Guarantied Obligations, whether executed by any other Guarantor or by any other person, and the liability of each of the Guarantors hereunder shall not be affected or impaired by, in each case, to the fullest extent permitted by applicable law, (i) any payment on, or in reduction of, any such other guaranty or undertaking, (ii) any dissolution, termination, or increase, decrease, or change in personnel by the Obligor or any Guarantor, (iii) any payment made to the Payee on account of the obligations which the Payee repays to the Obligor or any Guarantor pursuant to court order in any bankruptcy, reorganization, arrangement, moratorium or other debtor relief proceeding (or any settlement or compromise of any claim made in such a proceeding relating to such payment), and each of the Guarantors waives any right to the deferral or modification of its obligations hereunder by reason of any such proceeding, (iv) any action or inaction by the Payee, or (v) any invalidity, irregularity, avoidability, or unenforceability of all or any part of the obligations or of any security therefor. The guaranty by each of the Guarantors hereunder is a guaranty of payment and not of collection. The obligations of each of the Guarantors hereunder are independent of the obligations of any other
Guarantor or any other person and a separate action or actions may be brought and prosecuted against one or more of the Guarantors whether or not action is brought against any other Guarantor or any other person and whether or not any other Guarantor or any other person be joined in any such action or actions. Each Guarantor hereby confirms that it is the intention of all parties hereto that the guaranty contained herein not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law to the extent applicable to this guaranty and the obligations of each Guarantor hereunder. To effectuate the foregoing intention, the parties hereto hereby irrevocably agree that the obligations of each Guarantor hereunder at any time shall be limited to the maximum amount as will result in the obligations of such Guarantor hereunder not constituting a fraudulent transfer or conveyance.
b.Each Domestic Subsidiary of the Obligor that shall be required to execute and deliver a guaranty or guaranty supplement under and pursuant to the terms of the ABL Credit Agreement shall grant a guarantee of all the Guarantied Obligations by executing and delivering a guaranty supplement here under, in each case, in form and substance reasonably satisfactory to the Payee.
10.Security.
a.Security for this Note. The security interest created by the Security Agreement secures the payment and performance of this Note. Without limiting the generality of the foregoing, the Security Agreement secures the payment of all amounts which constitute part of the obligations owed under this Note and would be owed by the Obligor to the Payee but for the fact that they are unenforceable or not allowable (in whole or in par) as a claim in an Insolvency Proceeding involving the Obligor due to the existence of such Insolvency Proceeding.
b.Maintenance of Insurance.
i.The Obligor and the Guarantors will maintain insurance with respect to the Collateral, covering casualty, hazard, theft, malicious mischief, flood and other risks, with insurers, in such amounts, and with such coverages and deductibles as are at the time of placing such insurance customary for companies similarly situated and which are available at commercially reasonable rates. From time to time upon request, the Obligor shall deliver to the Payee the originals or certified copies of its insurance policies.
ii.In addition to the insurance required under clause (i) with respect to Collateral, maintain insurance with insurers, with respect to the properties and business of the Obligor and the Guarantors, of such type (including product liability, workers’ compensation, larceny, embezzlement, or other criminal misappropriation insurance), in such amounts, and with such coverages and deductibles as are at the time of placing such insurance customary for companies similarly situated and which are available at commercially reasonable rates.
c.Administration of Deposit Accounts. Schedule 10(c) hereto sets forth, as of the Effective Date, all deposit accounts maintained by the Loan Parties. The Borrower shall promptly notify the Payee of any opening or closing of a deposit account by any Loan Party and, with the consent of Payee, will amend Schedule 10(c) hereto to reflect the same.
11.Covenants.
a.Taxes. The Obligor and each Guarantor shall make all payments, whether on account of principal, interest, fees or otherwise, free of and without deduction or withholding for any present or future taxes, duties or other charges (“Taxes”). If the Obligor or a Guarantor is compelled by law to deduct or withhold any Taxes it shall promptly pay to the Payee such additional amount as is necessary to ensure that the net amount received by the Payee is equal to the amount payable by the Obligor or such Guarantor had there been no deduction or withholding
b.Corporate Existence. The Obligor shall do or cause to be done all things necessary to preserve and keep in full force and effect its and its Subsidiaries’ existence, good standing, rights (charter and statutory), licenses and franchises; provided, however, that the Obligor shall not be required to preserve any such Subsidiaries’ right, license or franchise if it shall determine that the
preservation thereof is no longer desirable in the conduct of the business of the Obligor and its Subsidiaries, taken as a whole.
c.Books and Records. The Obligor shall, and shall cause each Subsidiary to, (a) maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Obligor or such Subsidiary, as the case may be; and (b) maintain such books of record and account in material conformity with all applicable requirements of any governmental authority having regulatory jurisdiction over the Obligor or such Subsidiary, as the case may be.
d.Accounting Changes. The Obligor shall not, nor shall it permit any Subsidiary to, make any change in (a) its accounting policies or reporting practices, except as required by GAAP, or (b) its fiscal year.
12.Events of Default.
i.The occurrence of any one or more of the following events shall constitute an Event of Default (an “Event of Default”) under this Note: (i) the failure to pay principal of this Note when due on the Maturity Date or failure to pay interest payable hereunder within (five) 5 Business Days after the same becomes due; provided, that, notwithstanding anything to the contrary contained herein, to the extent the Obligor is not permitted to make a payment under this Note under the terms of the ABL Credit Agreement, failure to make such payment shall not result in an Event of Default hereunder so long as the Obligor makes such payment once permitted under the ABL Credit Agreement; (ii) any representation or warranty made by the Obligor herein, in any other Loan Document or in any document delivered in connection herewith or therewith shall prove to not have been accurate in all material respects on or as of the date made or deemed made or furnished; (iii) the Obligor or any of its subsidiaries shall: (A) apply for, consent to, or acquiesce in the appointment of a trustee, receiver, sequestrator or other custodian for any substantial part of the assets or other property of any such person, or make a general assignment for the benefit of creditors; (B) in the absence of such application, consent or acquiesce to or permit or suffer to exist, the appointment of a trustee, receiver, sequestrator or other custodian for a substantial part of the property of any thereof, and such trustee, receiver, sequestrator or other custodian shall not be discharged within sixty (60) days; provided that the Obligor hereby expressly authorizes the Payee to appear in any court conducting any relevant proceeding during such sixty (60) day period to preserve, protect and defend their rights under this Note; or (C) permit or suffer to exist the commencement of any Insolvency Proceeding relating to the Obligor or any of its subsidiaries, or its or their debts or assets, whether voluntary or involuntary, or any dissolution, winding up or liquidation proceeding, in respect thereof, and, if any such case or proceeding is not commenced by such person, such case or proceeding shall be consented to or acquiesced in by such person, or shall result in the entry of an order for relief or shall remain for sixty (60) days undismissed; provided the Obligor hereby expressly authorizes the Payee to appear in any court conducting any such case or proceeding during such sixty (60) day period to preserve, protect and defend their rights under this Note; (iv) any failure by the Obligor to perform, or comply with, any material term or condition contained in this Note, and any written repudiation or assertion of the invalidity of the Liens or guarantee granted herein or in any other Loan Document; (v) a default shall occur in the payment of any amount when due (subject to any applicable grace period), whether by acceleration or otherwise, of any principal or stated amount of, or interest or fees on, the indebtedness incurred under the Indenture, the Bridge Note or any other indebtedness or guarantee of the Loan Parties having an aggregate principal amount of more than $15,000,000 (other than indebtedness incurred under the ABL Credit Agreement), or a default shall occur in the performance or observance of any obligation or condition with respect to any such indebtedness if the effect of such default is to accelerate, or permit the holders of such indebtedness to accelerate, the maturity of such indebtedness to cause or declare such indebtedness to become immediately due and payable; (vi) a default shall occur in the payment of any amount when due (subject to any applicable grace period), whether by acceleration or otherwise, of any principal or stated amount of, or interest or fees on, the indebtedness incurred under the ABL Credit Agreement, or a default shall occur in the performance or observance of any obligation or condition with respect to any such indebtedness if the effect of such default is to accelerate the maturity of such indebtedness to cause or declare such indebtedness to become immediately due and payable; and (vi) any Change of Control (as
defined in the Indenture) shall have occurred whereupon Holders (as defined in the Indenture) shall have exercised their right to require the Obligor to make a Change of Control Offer pursuant to Section 3.9 of the Indenture.
ii.The Obligor hereby agrees that upon an Event of Default under this Note, the Payee may, upon written notice by the Payee to the Obligor, declare the Commitments to be terminated and declare the unpaid principal balance of and accrued but unpaid interest on this Note to be immediately due and payable; provided, however, that upon the occurrence of an Event of Default described in Section 12(a)(iii) above the Commitments shall be terminated and the unpaid balance and accrued but unpaid interest shall become due and payable without notice or demand. The Payee shall have all other rights and remedies available at law or in equity, under the UCC or pursuant to this Note.
13.Assignment. Without the prior written consent of the Obligor, the Payee shall not have the right at any time to sell, assign, transfer, negotiate or pledge, all or any part of its interest in this Note (and any attempted assignment or transfer by the Payee without such consent shall be null and void). The Obligor’s rights or obligations hereunder nor any interest therein may be assigned or delegated by the Obligor without the prior written consent of the Payee (and any attempted assignment or transfer by the Obligor without such consent shall be null and void). This Note may be transferred only upon surrender of the original Note to the Obligor for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form satisfactory to the Obligor, and, thereupon, a new note for the same principal amount and interest will be issued to, and registered in the name of, the transferee. It is the intention that this Note be treated as a registered obligation and in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder.
14.No Waiver by Payee. No delay or omission by the Payee or any other holder hereof to exercise any power, right or remedy accruing to the Payee or any other holder hereof shall impair any such power, right or remedy or shall be construed to be a waiver of the right to exercise any such power, right or remedy. Payee’s right to accelerate this Note for any late payment or the Obligor’s failure to timely fulfill its other obligations hereunder shall not be waived or deemed waived by the Payee by Payee’s having accepted a late payment or late payments in the past or the Payee otherwise not accelerating this Note or exercising other remedies for the Obligor’s failure to timely perform its obligations hereunder. The Payee shall not be obligated or be deemed obligated to notify the Obligor that it is requiring the Obligor to strictly comply with the terms and provisions of this Note before accelerating this Note and exercising its other remedies hereunder because of the Obligor’s failure to timely perform its obligations under this Note.
15.Obligor Waiver; Indemnity; Expense Reimbursement.
a.The Obligor hereby forever waives (i) presentment, presentment for payment, demand, notices of nonperformance, protest, notice of protest, notice of dishonor of this Note and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note, (ii) any requirement of diligence or promptness on the part of the Payee in the enforcement of its rights under the provisions of this Note or any other Loan Document and (iii) any and all notices of every kind and description which may be required to be given by any statute or rule of law.
b.The Obligor will indemnify the Payee and the directors, officers, employees, advisors and agents thereof and each Person, if any, who controls the Payee (any of the foregoing, an “Indemnified Person”) and hold each Indemnified Person harmless from and against any and all claims, damages, liabilities and expenses (including, without limitation, all reasonable and documented out-of-pocket fees and disbursements of a single firm of counsel to all Indemnified Persons and, if necessary, one firm of local counsel in each appropriate jurisdiction and one firm of special counsel in each appropriate specialty which an Indemnified Person may incur or which may be asserted against it in connection with any claim, litigation, investigation or proceeding (whether or not such Indemnified Person is a party to such litigation or investigation)) involving this Note and the other Loan Documents, the use of any proceeds of the Loans by the Obligor or any Subsidiary or any officer, director or employee thereof (all such claims, damages, liabilities and expenses, “Indemnified Liabilities”), provided that the Obligor shall have no obligation hereunder to any Indemnified Person with respect to Indemnified Liabilities to the extent such Indemnified Liabilities resulted from the gross negligence, bad faith or willful misconduct of such
Indemnified Person, in each case, as determined by a final, non-appealable judgment of a court of competent jurisdiction. No Indemnified Person shall be liable for any damages arising from the use by unauthorized persons of information or other materials sent through electronic, telecommunications or other information transmission systems that are intercepted by such persons or for any special, indirect, consequential or punitive damages in connection with this Agreement. The agreements in this Section 15(b) shall survive repayment of the Loans and all other amounts payable hereunder.
c.The Obligor shall pay (a) all reasonable out of pocket fees and expenses incurred by the Payee (including, but not limited to, (i) the reasonable fees, disbursements and other charges of one primary counsel for the Payee and, to the extent necessary, of one special counsel retained by the Payee in each relevant specialty and of one local counsel retained by the Payee in each relevant jurisdiction and (ii) due diligence expenses) incurred in connection with the preparation, negotiation, execution, delivery and administration of this Note, any amendments, modifications or waivers of the provisions hereof or thereof and any other Loan Document (whether or not the transactions contemplated hereby or thereby shall be consummated) and (b) all out of pocket expenses incurred by the Payee (including the fees, charges and disbursements of any counsel for the Payee) in connection with the enforcement or protection of its rights in connection with this Note and the other Loan Documents, including all such out of pocket expenses incurred during any workout, restructuring or negotiations in respect of the Note.
16.Section Headings. Section headings appearing in this Note are for convenient reference only and shall not be used to interpret or limit the meaning of any provision of this Note.
17.GOVERNING LAW. THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
18.VENUE. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE OBLIGOR OR THE PAYEE ARISING OUT OF OR RELATING HERETO SHALL BE BROUGHT IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, BOROUGH OF MANHATTAN OR, IF THAT COURT DOES NOT HAVE SUBJECT MATTER JURISDICTION, IN ANY STATE COURT LOCATED IN THE CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, THE OBLIGOR, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (A) ACCEPTS GENERALLY AND UNCONDITIONALLY THE JURISDICTION AND VENUE OF SUCH COURTS; (B) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (C) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE ADDRESS PROVIDED NEXT TO ITS NAME ON SCHEDULE 1(a); (D) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (C) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE OBLIGOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (E) AGREES THAT THE PAYEE RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST THE OBLIGOR IN THE COURTS OF ANY OTHER JURISDICTION TO THE EXTENT THAT THE COURTS SPECIFIED ABOVE DO NOT HAVE SUBJECT MATTER JURISDICTION.
19.WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS NOTE OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS NOTE, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 19 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
20.Successors and Assigns. This Note and all the covenants and agreements contained herein shall be binding upon, and shall inure to the benefit of, the respective legal representatives, heirs, successors and permitted assigns of the Obligor and the Payee.
21.Records of Payments. The records of the Payee shall be prima facie evidence of the amounts owing on this Note.
22.Amendments and Waivers. No term of this Note or any other Loan Document may be waived, modified or amended except by an instrument in writing signed by all parties hereto. Any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given.
23.Severability. In the event any one or more of the provisions contained in this Note should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. Each waiver in this Note is subject to the overriding and controlling rule that it shall be effective only if and to the extent that (a) it is not prohibited by applicable law and (b) applicable law neither provides for nor allows any material sanctions to be imposed against the Payee for having bargained for and obtained it.
24.Notices. Any notice, request or other communication required or permitted to be given hereunder shall be given in writing by delivering it against receipt for it, by depositing it with an overnight delivery service or by depositing it in a receptacle maintained by the United States Postal Service, postage prepaid, registered or certified mail, return receipt requested, addressed to the respective parties pursuant to the notice information on the signature pages hereto. All such written notices shall be mailed, faxed or delivered to the applicable address, facsimile number or electronic mail address. The Obligor’s address for notices may be changed at any time and from time to time, but only after five (5) calendar days advance written notice to the Payee and shall be the most recent such address furnished in writing by the Obligor to the Payee. The Payee’s address for notices may be changed at any time and from time to time, but only after five (5) calendar days advance written notice to the Obligor and shall be the most recent such address furnished in writing by the Payee to the Obligor. Actual notice, however and from whomever given or received, shall always be effective when received.
25.ENTIRE AGREEMENT. THIS NOTE TOGETHER WITH EACH OTHER LOAN DOCUMENT EXECUTED AND DELIVERED IN CONNECTION HEREWITH EMBODIES THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PAYEE, THE OBLIGOR, AND THE GUARANTORS WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ALL PRIOR CONFLICTING OR INCONSISTENT AGREEMENTS, CONSENTS AND UNDERSTANDINGS RELATING TO SUCH SUBJECT MATTER. EACH OF THE OBLIGOR AND THE GUARANTORS ACKNOWLEDGES AND AGREES THAT THERE IS NO ORAL AGREEMENT BETWEEN THE OBLIGOR, THE GUARANTORS AND THE PAYEE WHICH HAS NOT BEEN INCORPORATED IN THIS NOTE OR A LOAN DOCUMENT EXECUTED AND DELIVERED IN CONNECTION HEREWITH.
[SIGNATURES FOLLOW]
IN WITNESS WHEREOF, the undersigned have executed this Note as of the date first written above.
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OBLIGOR:
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BASIC ENERGY SERVICES, INC.
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By:
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/s/ Keith L. Schilling
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Name:
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Keith L. Schilling
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Title:
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President and Chief Executive Office
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Notice Information:
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801 Cherry Street, Suite 2100
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Fort Worth, TX 76102
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GUARANTORS
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BASIC ENERGY SERVICES GP, LLC
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BASIC ENERGY SERVICES LP, LLC
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BASIC ESA, INC.
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SCH Disposal, L.L.C.
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TAYLOR INDUSTRIES, LLC
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AGUA LIBRE HOLDCO LLC
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AGUA LIBRE ASSET CO LLC
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AGUA LIBRE MIDSTREAM LLC
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C&J WELL SERVICES, INC.
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INDIGO INJECTION #3, LLC
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KVS TRANSPORTATION, INC.
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By:
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/s/ Keith L. Schilling
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Name:
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Keith L. Schilling
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Title:
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President and Chief Executive Office
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BASIC ENERGY SERVICES, L.P.
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By:
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Basic Energy Services GP, LLC,
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Its General Partner
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By:
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/s/ Keith L. Schilling
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Name:
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Keith L. Schilling
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Title:
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President and Chief Executive Office
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Acknowledged and Agreed By:
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ASCRIBE III INVESTMENTS LLC
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By:
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/s/ Lawrence First
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Name:
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Lawrence First
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Title:
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Managing Director
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Notice Information:
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Ascribe III Investments LLC
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299 Park Avenue, 34th Floor
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New York, NY 10171
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Attention: Lawrence First
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Email: lfirst@ascribecapital.com
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with a copy to (which shall not constitute notice)
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Fried, Frank, Harris, Shriver & Jacobson LLP
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One New York Plaza
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New York, New York 10004
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Attention: Caroline Sandberg
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Email: caroline.sandberg@friedfrank.com
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Schedule 1(a)
Guarantors
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Agua Libre Holdco LLC
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801 Cherry Street, Suite 2100, Fort Worth, TX 76102
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Agua Libre Asset Co LLC
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801 Cherry Street, Suite 2100, Fort Worth, TX 76102
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Agua Libre Midstream LLC
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801 Cherry Street, Suite 2100, Fort Worth, TX 76102
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Basic Energy Services GP, LLC
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801 Cherry Street, Suite 2100, Fort Worth, TX 76102
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Basic Energy Services LP, LLC
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801 Cherry Street, Suite 2100, Fort Worth, TX 76102
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Basic Energy Services, L.P.
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801 Cherry Street, Suite 2100, Fort Worth, TX 76102
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Basic ESA, Inc.
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801 Cherry Street, Suite 2100, Fort Worth, TX 76102
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C&J Well Services, Inc.
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801 Cherry Street, Suite 2100, Fort Worth, TX 76102
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Indigo Injection #3, LLC
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801 Cherry Street, Suite 2100, Fort Worth, TX 76102
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KVS Transportation, Inc.
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801 Cherry Street, Suite 2100, Fort Worth, TX 76102
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SCH Disposal, L.L.C.
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801 Cherry Street, Suite 2100, Fort Worth, TX 76102
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Taylor Industries, LLC
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801 Cherry Street, Suite 2100, Fort Worth, TX 76102
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Schedule 10(c)
Deposit Accounts
Omitted
Notwithstanding anything herein to the contrary, the lien and security interest granted to the Ascribe III Investments LLC pursuant to or in connection with this Second Lien Security Agreement or any Collateral Document, and the exercise of any right or remedy by Ascribe III Investments LLC hereunder or thereunder in respect of the Collateral (as defined herein) are subject to the provisions of that certain Intercreditor Agreement dated as of October 15, 2020 (as amended, restated, supplemented or otherwise modified from time to time, the “Intercreditor Agreement”), between Bank of America, N.A., as the First Lien Representative and Ascribe III Investments LLC, as the Second Lien Representative, and acknowledged by the Loan Parties (as defined herein). In the event of any conflict between the terms of the Intercreditor Agreement and this agreement or any Collateral Document, the terms of the Intercreditor Agreement shall control.
SECOND LIEN SECURITY AGREEMENT
Dated as of October 15, 2020
among
BASIC ENERGY SERVICES, INC.
and the other Debtors parties hereto
in favor of
ASCRIBE III INVESTMENTS LLC
as Secured Party
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SECTION 1. DEFINITIONS
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1
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SECTION 2. GRANT OF SECURITY INTEREST
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3
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2.1
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Grant of Security Interest
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3
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2.2
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Avoidance Limitation
|
4
|
|
2.3
|
Debtors Remain Liable
|
4
|
|
SECTION 3. REPRESENTATIONS AND WARRANTIES
|
|
4
|
|
3.1
|
Title; No Other Liens
|
4
|
|
3.2
|
Perfected Liens
|
5
|
|
3.3
|
Debtor’s Legal Name; Jurisdiction of Organization; Chief Executive Office
|
5
|
|
3.4
|
Certain Collateral
|
5
|
|
3.5
|
Chattel Paper and Instruments
|
5
|
|
3.6
|
Receivables
|
5
|
|
3.7
|
Bank Accounts
|
5
|
|
SECTION 4. COVENANTS AND AGREEMENTS
|
|
5
|
|
4.1
|
Covenants in Note
|
6
|
|
4.2
|
Maintenance of Insurance
|
6
|
|
4.3
|
Maintenance of Perfected Security Interest; Further Documentation; Filing Authorization; Further Assurances; Power of Attorney
|
6
|
|
4.4
|
Changes in Name, etc
|
7
|
|
4.5
|
Delivery of Instruments, Chattel Paper, and Documents
|
7
|
|
4.6
|
Deposit Accounts, Securities Accounts, and Commodity Accounts
|
7
|
|
4.7
|
Modifications of Receivables, Chattel Paper, Instruments and Payment Intangibles
|
8
|
|
4.8
|
Actions With Respect to Certain Collateral
|
8
|
|
SECTION 5. LIMITATION ON PERFECTION OF SECURITY INTEREST
|
|
9
|
|
5.1
|
Chattel Paper and Instruments
|
9
|
|
5.2
|
Documents
|
9
|
|
5.3
|
Letter-of-Credit Rights
|
9
|
|
SECTION 6. REMEDIAL PROVISIONS
|
|
9
|
|
6.1
|
General Interim Remedies
|
9
|
|
6.2
|
Receivables, Chattel Paper, Instruments and Payment Intangibles
|
10
|
|
6.3
|
Contracts
|
10
|
|
6.4
|
Foreclosure
|
10
|
|
6.5
|
Application of Proceeds
|
11
|
|
6.6
|
Waiver of Certain Rights
|
11
|
|
6.7
|
Remedies Cumulative
|
11
|
|
6.8
|
Reinstatement
|
11
|
|
SECTION 7. MISCELLANEOUS
|
|
11
|
|
7.1
|
Amendments
|
11
|
|
7.2
|
Notices
|
11
|
|
7.3
|
No Waiver by Course of Conduct; Cumulative Remedies; No Duty
|
11
|
|
7.4
|
Enforcement Expenses; Indemnification
|
12
|
|
7.5
|
Successors and Assigns
|
12
|
|
7.6
|
[Reserved]
|
12
|
|
7.7
|
Counterparts
|
12
|
|
|
|
|
|
|
|
|
|
|
|
7.8
|
Severability
|
12
|
|
7.9
|
Section Headings
|
12
|
|
7.10
|
Integration
|
12
|
|
7.11
|
GOVERNING LAW ETC
|
12
|
|
7.12
|
Additional Debtors
|
13
|
|
7.13
|
Termination; Releases
|
13
|
|
|
|
|
|
SCHEDULES
|
|
|
|
Schedule 3.3
|
— Organization Information
|
|
|
Schedule 3.4
|
— Certain Collateral
|
|
|
Schedule 3.5
|
— Instruments
|
|
|
Schedule 3.7
|
— Bank Accounts
|
|
|
|
|
|
|
ANNEX
|
|
|
|
Annex I
|
— Security Agreement Supplement
|
|
SECOND LIEN SECURITY AGREEMENT
This SECOND LIEN SECURITY AGREEMENT dated as of October 15, 2020 (this “Agreement”), by and among BASIC ENERGY SERVICES, INC., a Delaware corporation (the “Borrower”), the undersigned subsidiaries of the Borrower (the Borrower and such undersigned subsidiaries collectively being the “Debtors” and individually being a “Debtor”), and ASCRIBE III INVESTMENTS LLC, a Delaware limited liability company, as secured party (in such capacity, the “Secured Party”).
INTRODUCTION
Reference is made to that certain Second Lien Delayed Draw Promissory Note dated as of October 15, 2018 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Note”), by and among the Debtors and the Secured Party, pursuant to which the Debtors (other than the Borrower) have agreed to guarantee, among other things, the full payment and performance of all of the Borrower’s obligations under the Note and the other Loan Documents.
The Debtors share an identity of interest as members of a combined group of companies and will derive substantial direct and indirect economic and other benefits from the extensions of credit under the Note. Therefore, in consideration of the credit expected to be received in connection with the Note, the Debtors jointly and severally agree with the Secured Party as follows:
SECTION 1.
DEFINITIONS
1.1 Terms defined above and elsewhere in this Agreement shall have their specified meanings. Capitalized terms used herein but not defined herein or in the UCC shall have the meanings specified by the Note. All capitalized terms used herein and defined in the UCC (unless otherwise defined herein) shall have the same definitions herein as specified therein.
1.2 Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Debtor, shall refer to such Debtor’s Collateral or the relevant part thereof.
1.3 The following terms shall have the following meanings:
“ABL Cash Collateral Account” means the deposit account established with the ABL Agent entitled “Basic Energy Services, L.P. FBO Bank of America, N.A., as Collateral Pledgee Cash Collateral Account”, Account # 488061556131.
“Collateral” has the meaning specified in Section 2.1.
“Contracts” means all contracts, undertakings, or agreements (other than rights evidenced by Chattel Paper, Documents or Instruments) with any customer of any Debtor to which any Debtor now is, or hereafter will be, bound or a party, beneficiary or assignee thereof or thereto, in any event, including all contracts, undertakings, or agreements in or under which any Debtor may now or hereafter have any right, title or interest, including any agreement relating to the terms of payment or the terms of performance of any Receivable.
“Control Agreement” means any account control agreement entered into pursuant to Section 4.6 of this Agreement.
“Deposit Accounts” means all “deposit accounts” (as defined in the UCC) now or hereafter held in the name of any Debtor, other than any Excluded Account.
“Discharge of First Lien Obligations” has the meaning given to such term in the Intercreditor Agreement.
“Event of Default” means any “Event of Default” under the Note.
“Excluded Accounts” means, collectively, (a) Senior Notes Collateral Accounts, (b) Deposit Accounts exclusively used for payroll, payroll taxes or employee benefits, (c) Deposit Accounts that have a balance of less than $250,000 at all times; provided that the aggregate balance of all such Deposit Accounts described under this clause (c) shall not exceed $2,000,000 in the aggregate at any time, and (d) the ABL Cash Collateral Account.
“Excluded Property” means any of the following property or assets of any Debtor:
(a) General Intangibles and Contracts which by their respective express terms prohibit the grant of a security interest, except to the extent such prohibition is ineffective under the UCC;
(b) permits and licenses to the extent the grant of a security interest therein is prohibited under applicable Law or regulation or by their express terms, except to the extent such prohibition is ineffective under the UCC;
(c) Equity Interests in any Subsidiary of the Borrower;
(d) any Senior Notes Collateral Account and all funds on deposit therein constituting the identifiable Proceeds of Senior Notes Collateral;
(e) any other Senior Notes Collateral; and
(f) the ABL Cash Collateral Account and all funds on deposit therein.
“Intercreditor Agreement” means that certain Intercreditor Agreement dated as of October 15, 2020, by and between the ABL Agent, as first lien representative, and Secured Party, as second lien representative, and acknowledged by the Borrower and the Guarantors, as amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Inventory” means all of each Debtor's present and future inventory, wherever located, including inventory, merchandise, goods and other personal property that are held by or on behalf of any Debtor for sale or lease or are furnished or are to be furnished under a contract of service, or that constitute raw materials, work in process, finished goods, returned goods, or materials or supplies of any kind, nature or description used or consumed or to be used or consumed in such Debtor's business or in the processing, production, packaging, promotion, delivery or shipping of the same, including all supplies, and embedded software. "Inventory" shall also include inventory in joint production with another person, inventory in which any Debtor has an interest as consignor, and inventory that is returned to or stopped in transit by any Debtor, and all combinations and products thereof.
“Investment Property” means, other than any shares or Equity Interests constituting Excluded Property, all investment property now owned or hereafter acquired by any Debtor, wherever located, including (a) all securities, whether certificated or uncertificated, including stocks, bonds, interests in limited liability companies, partnership interests, treasuries, certificates of deposit, and mutual fund shares; (b) all securities entitlements of any Debtor, including the rights of any Debtor to any Securities Account and the financial assets held by a securities intermediary in such Securities Account and any free credit balance or other money owing by any securities intermediary with respect to that account; (c) all Securities Accounts of any Debtor; (d) all commodity contracts of any Debtor; and (e) all Commodity Accounts held by any Debtor.
“Payment Item” means each check, draft or other item of payment payable to a Debtor, including those constituting proceeds of any Collateral.
“Permitted Liens” means any Liens permitted by Section 7.01 of the ABL Credit Agreement.
“Permitted Prior Liens” means the following: (i) with respect to all Collateral, Liens permitted by clause (a) of Section 7.01 of the ABL Credit Agreement, (ii) with respect to Accounts, Instruments and Deposit Accounts, Liens permitted by clauses (c) and (h) of Section 7.01 of the ABL Credit Agreement and, solely with respect to applicable Deposit Accounts, Liens permitted by clause (f) of Section 7.01 of the ABL Credit Agreement, and (iii) with respect to all other property, Permitted Liens.
“Proceeds” means all of each Debtor’s present and future (a) proceeds of the Collateral, whether arising from the collection, sale, lease, exchange, assignment, licensing, or other disposition of the Collateral, (b) any and all payments (in any form whatsoever) made or due and payable from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any Governmental Authority (or any person acting under color of governmental authority), (c) claims against third parties for impairment, loss, damage, or impairment of the value of such property, and (d) any and all proceeds of, and all claims for, any insurance, indemnity, warranty or guaranty payable from time to time with respect to any of the Collateral, including any credit insurance with respect to Receivables, in each case whether represented as money, deposit accounts, accounts, general intangibles, securities, instruments, documents, chattel paper, inventory, equipment, fixtures, or goods.
“Receivables” means all of each Debtor’s present and future Accounts, Accounts from Governmental Authorities and Payment Intangibles, including those arising from the provision of services, sale of Inventory, or renting of equipment to the customers of any Debtor, and rights to payment under all Contracts, income tax refunds, and other rights to the payment of money, together with all of the right, title and interest of any of the Debtors in and to (a) all security pledged, assigned, hypothecated or granted to
or held by any of the Debtors to secure the foregoing, (b) all of any of the Debtors’ right, title and interest in and to any goods or services, the sale of which gave rise thereto, (c) all guarantees, endorsements and indemnifications on, or of, any of the foregoing, (d) all powers of attorney granted to any of the Debtors for the execution of any evidence of indebtedness or security or other writing in connection therewith, (e) all credit information, reports and memoranda relating thereto, and (f) all other writings related in any way to the foregoing.
“Records” means all of each Debtor’s present and future books, accounting records, files, computer files, computer programs, correspondence, credit files, records, ledger cards, invoices, and other records primarily related to any other items of Collateral, including without limitation all similar information stored on a magnetic medium or other similar storage device and other papers and documents in the possession or under the control of any of the Debtors or any computer bureau from time to time acting for any of the Debtors.
“Secured Obligations” means (a) all principal, interest, premium, fees, reimbursements, indemnifications, and other amounts now or hereafter owed by the Borrower under the Note, this Agreement, and the other Loan Documents; (b) all amounts now or hereafter owed by the other Debtors under the Note, this Agreement, and the other Loan Documents; and (c) any increases, extensions, renewals, replacements, and rearrangements of the foregoing obligations under any amendments, supplements, and other modifications of the agreements creating the foregoing obligations, in each case, whether direct or indirect, absolute or contingent.
“Secured Party” has the meaning set forth in the preamble.
“Securities Accounts” means all securities accounts (as defined in the UCC) now or hereafter held in the name of any Debtor.
“Senior Notes Collateral” means the “Collateral” as defined in that certain Security Agreement dated as of October 2, 2018, among the Debtors and UMB Bank, N.A., in its capacity as collateral agent, and includes all of each Debtor’s present or future owned or leased fixtures and equipment wherever located, including drilling platforms and rigs and remotely operated vehicles, trenchers, and other equipment used by any Debtor for the provision of construction services, well operations services, oil and gas production services, contract drilling services, fluid services or other services, trucks, vehicles, motor vehicles, rolling stock, vessels, aircraft, tanks, well service units and equipment, fracturing test tanks, pumping equipment, fluid services equipment, disposal facilities and any manuals, instructions, blueprints, computer software (including software that is imbedded in and part of the equipment).
“Specified Collateral” means all General Intangibles (excluding trademarks, trade names and other intellectual property), Investment Property, Instruments, Documents, Letter-of-Credit Rights, Commercial Tort Claims and Supporting Obligations, in each case pertaining to the property described in clause (a) of Section 2.1.
“State of Organization” means the jurisdiction of organization of each of the Debtors as listed on Schedule 3.3.
“Supporting Obligations” means all supporting obligations, including letters of credit and guaranties issued in support of Accounts, Chattel Paper, Documents, General Intangibles, or Instruments.
“UCC” means the Uniform Commercial Code as in effect on the date hereof in the State of New York, as amended from time to time, and any successor statute.
SECTION 2.
GRANT OF SECURITY INTEREST
2.1 Grant of Security Interest. Each Debtor hereby grants to the Secured Party a security interest in all of such Debtor’s right, title, and interest in and to the following property, in each case whether now owned or existing or hereafter acquired or arising (the “Collateral”), to secure the payment and performance of the Secured Obligations:
(a) all Receivables (including unbilled accounts but excluding Accounts arising solely from the sale, assignment or other disposition of Senior Notes Collateral), Contracts, Chattel Paper and Inventory;
(b) all Specified Collateral;
(c) all Deposit Accounts (other than Excluded Accounts) with any bank or other financial institution (including all cash, cash equivalents, financial assets, negotiable instruments and other evidence of payment, and other funds on deposit therein or credited thereto);
(d) all Securities Accounts (other than Securities Accounts that contain only the identifiable Proceeds of the Senior Notes Collateral) with any securities intermediary (including any and all Investment Property and all funds or other property held therein or credited thereto);
(e) all Commodity Accounts (other than Commodity Accounts that contain only the identifiable Proceeds of the Senior Notes Collateral) with any commodities intermediary (including any and all commodity contracts and all funds and other property held therein or credited thereto);
(f) all Records relating to the foregoing and all accessions to, substitutions for and replacements of the foregoing, together with all customer lists, credit files, computer files, programs, printouts and other computer materials and records related thereto; and
(g) to the extent not otherwise included, all Proceeds (including without limitation, all business interruption insurance and other insurance proceeds related to the above), Supporting Obligations and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing;
provided, however, that notwithstanding anything to the contrary contained herein or in any other Loan Document, this Agreement shall not constitute nor evidence a grant of a security interest, collateral assignment or any other type of Lien in Excluded Property; provided further, that the Proceeds of Excluded Property shall not constitute Excluded Property solely by virtue of being Proceeds thereof but only to the extent that such Proceeds otherwise independently constitute Excluded Property hereunder.
To the extent that the Collateral is not subject to the UCC, each Debtor collaterally assigns all of such Debtor’s right, title, and interest in and to such Collateral to the Secured Party to secure the payment and performance of the Secured Obligations to the full extent that such a collateral assignment is possible under the relevant law.
2.2 Avoidance Limitation. Notwithstanding Section 2.1 above, the amount of any Debtor’s Secured Obligations that are secured by its rights in Collateral subject to a Lien in favor of the Secured Party hereunder or under any other Loan Document shall be limited to the extent, if any, required so that the Liens it has granted under this Agreement shall not be subject to avoidance under Section 548 of the Bankruptcy Code of the United States or to being set aside or annulled under any applicable Law relating to fraud on creditors. In determining the limitations, if any, on the amount of any Debtor’s Secured Obligations that are subject to the Lien on such Debtor’s Collateral hereunder pursuant to the preceding sentence, it is the intention of the parties hereto that any rights of subrogation or contribution which such Debtor may have under the Note, any other agreement, or applicable Law shall be taken into account.
2.3 Debtors Remain Liable. Anything herein to the contrary notwithstanding: (a) each Debtor shall remain liable under the Contracts included in the Collateral to the extent set forth therein to perform such Debtor’s obligations thereunder to the same extent as if this Agreement had not been executed; (b) the exercise by the Secured Party of any rights hereunder shall not release any Debtor from any obligations under the Contracts included in the Collateral; and (c) the Secured Party shall not have any obligation under the Contracts included in the Collateral by reason of this Agreement, nor shall the Secured Party be obligated to perform or fulfill any of the obligations of any Debtor thereunder, including any obligation to make any inquiry as to the nature or sufficiency of any payment any Debtor may be entitled to receive thereunder, to present or file any claim, or to take any action to collect or enforce any claim for payment thereunder.
SECTION 3.
REPRESENTATIONS AND WARRANTIES
To induce the Secured Party to make Loans to the Borrower under the Note, each Debtor hereby represents and warrants to the Secured Party, that:
3.1 Title; No Other Liens. Except for the security interests granted to the Secured Party pursuant to this Agreement and the other Permitted Liens, such Debtor owns each item of the Collateral free and clear of any and all Liens or claims of others. No financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such (a) as
have been filed in favor of the Secured Party, pursuant to this Agreement, and (b) as have been filed in respect of other Permitted Liens.
3.2 Perfected Liens. Subject to Section 5, the security interests granted pursuant to this Agreement (a) based upon the filing of a financing statement with respect to each Debtor describing the Collateral in the office located in the jurisdiction listed on Schedule 3.3 opposite such Debtor, and the taking of all applicable actions in respect of perfection contemplated by Sections 4.5, 4.6, and 4.8 in respect of Collateral, will constitute valid perfected security interests in all of the Collateral subject to Article 9 of the UCC in favor of the Secured Party, as collateral security for such Debtor’s Obligations, enforceable in accordance with the terms hereof and the UCC against all creditors of such Debtor and any Persons purporting to purchase any Collateral from such Debtor and (b) are prior to all other Liens on the Collateral except for Permitted Prior Liens (and subject to the limitations on perfection and method of perfection provided in Section 5).
3.3 Debtor’s Legal Name; Jurisdiction of Organization; Chief Executive Office. On the date of this Agreement, each Debtor’s exact legal name is set forth on the signature page hereof, and from and after an amendment or modification thereto, on a written notification delivered to the Secured Party pursuant to Section 4.4. On the date hereof, such Debtor’s jurisdiction of organization, type of organization, identification number from the jurisdiction of organization (if any), and the location of such Debtor’s chief executive office or sole place of business or principal residence, as the case may be, are specified on Schedule 3.3.
3.4 Certain Collateral.
(a) None of the Collateral constitutes, or is the Proceeds of, farm products, and none of the Collateral has been purchased for, or will be used by any Debtor primarily for, personal, family or household purposes.
(b) Except as set forth on Schedule 3.4 or otherwise notified to the Secured Party pursuant to Section 4.8:
(i) none of the Account Debtors or other persons obligated on any of the Collateral of such Debtor is a Governmental Authority subject to the Federal Assignment of Claims Act or like federal or state statute or rule in respect of such Collateral of the type described in Section 4.8(a); and
(ii) such Debtor holds no Commercial Tort Claims.
3.5 Chattel Paper and Instruments. Each of the Instruments and Chattel Paper pledged by such Debtor hereunder constitutes the legal, valid and binding obligation of the obligor with respect thereto, enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, and general principles of equity. Schedule 3.5 lists all of the Instruments issued to or held by each Debtor as of the date hereof.
3.6 Receivables.
(a) No amount payable to such Debtor under or in connection with any Receivable is evidenced by any Instrument or Chattel Paper which has not been delivered to the ABL Agent or the Secured Party to the extent required by Section 5.
(b) The amounts represented by such Debtor to the Secured Party from time to time as owing to such Debtor in respect of the Receivables will at such times be accurate in all material respects.
3.7 Bank Accounts. Schedule 3.7 lists all Deposit Accounts, Securities Accounts, Commodities Accounts and other bank accounts maintained by or for the benefit of any Debtor as of the date hereof with any bank or financial institution together with a general description of the purpose of such account (e.g., collections, operating, payroll, etc.).
SECTION 4.
COVENANTS AND AGREEMENTS
Each Debtor covenants and agrees with the Secured Party that, from and after the date of this Agreement until this Agreement terminates in accordance with Section 7.13(a):
4.1 Covenants in Note. Such Debtor shall take, or shall refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as the case may be, so that no Default or Event of Default is caused by the failure to take such action or to refrain from taking such action by such Debtor or any of its Subsidiaries.
4.2 Maintenance of Insurance. Such Debtor will comply with the provisions of the Note governing the maintenance of insurance for any of its assets constituting Collateral.
4.3 Maintenance of Perfected Security Interest; Further Documentation; Filing Authorization; Further Assurances; Power of Attorney.
(a) Such Debtor shall maintain the security interest created by this Agreement as a perfected security interest prior to all other Liens other than Permitted Prior Liens (and subject to the limitations on perfection and method of perfection provided in Section 5) and shall defend such security interest against the claims and demands of all Persons whomsoever.
(b) Such Debtor will furnish to the Secured Party from time to time statements and schedules further identifying and describing the assets and property of such Debtor and such other reports in connection with the Collateral as the Secured Party may reasonably request, all in reasonable detail.
(c) Subject in each case to Section 5, each Debtor further agrees to take any other action reasonably requested by the Secured Party to ensure the attachment, perfection and priority of, and the ability of the Secured Party to enforce, the security interest in any and all of the Collateral including, without limitation, (i) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the UCC, to the extent, if any, that any Debtor’s signature thereon is required therefor; (ii) complying with any provision of any statute, regulation or treaty of the United States or any other country as to any Collateral if compliance with such provision is a condition to the attachment, perfection or priority of, or the ability of the Secured Party to enforce, the security interest in such Collateral; and (iii) taking all actions required by the UCC or by other law, as applicable in any relevant UCC jurisdiction, or by other law as applicable in any foreign jurisdiction; provided that so long as the Discharge of the First Lien Obligations has not occurred, no Debtor shall be required to execute or deliver any Control Agreement in favor of the Secured Party.
(d) Each Debtor hereby irrevocably authorizes the Secured Party at any time and from time to time to file in any jurisdiction in which the UCC has been adopted any initial financing statements and amendments thereto that describe the Collateral in a manner generally consistent with Section 2.1 and contain any other information required by the UCC for the sufficiency or filing office acceptance of any initial financing statement or amendment. Each Debtor agrees to furnish any such information to the Secured Party promptly upon request. Each Debtor also ratifies its authorization for the Secured Party to have filed in any UCC jurisdiction any like initial financing statements or amendments thereto if filed prior to the date hereof and in respect of this Agreement.
(e) During the existence of an Event of Default,
(i) at Secured Party’s request, each Debtor shall take any actions reasonably requested by Secured Party with respect to such Event of Default, including diligently endeavoring to cure any material defect existing or claimed with respect to any Collateral, and taking all reasonably necessary and desirable steps for the defense of any legal proceedings affecting any Collateral, including the employment of counsel, the prosecution or defense of litigation, and the release or discharge of all adverse claims;
(ii) subject to the Intercreditor Agreement, Secured Party, whether or not named as a party to any legal proceedings, is authorized to take any additional steps as Secured Party deems necessary or desirable for the defense of any such legal proceedings or the protection of the validity or priority of this Agreement and the liens, security interests, and assignments created hereunder, including the employment of independent counsel, the prosecution or defense of litigation, the compromise or discharge of any adverse claims made with respect to any Collateral and the payment or removal of prior liens or security interests, and the reasonable expenses of Secured Party in taking such action shall be paid by the Debtors; and
(iii) each Debtor agrees that, if such Debtor fails to perform under this Agreement or any other Loan Document, after the Discharge of First Lien Obligations has occurred, Secured Party may, but shall not be obligated to, perform such Debtor’s obligations under this Agreement
or such other Loan Document, and any reasonable expenses incurred by Secured Party in performing such Debtor’s obligations shall be paid by such Debtor. Any such performance by Secured Party may be made by Secured Party in reasonable reliance on any statement, invoice, or claim, without inquiry into the validity or accuracy thereof. The amount and nature of any expense of Secured Party hereunder shall be conclusively established by a certificate of any officer of Secured Party absent manifest error.
(f) Subject to the Intercreditor Agreement, each Debtor hereby irrevocably constitutes and appoints the Secured Party (and all Persons designated by the Secured Party) as such Debtor’s true and lawful attorney (and agent-in-fact) for the purposes provided in this clause (f). After the Discharge of the First Lien Obligations has occurred, the Secured Party, or the Secured Party’s designee, may, without notice and in either its or a Debtor’s name, but at the cost and expense of Debtors
(i) Endorse a Debtor’s name on any Payment Item or other proceeds of Collateral (including proceeds of insurance) that come into the Secured Party’s possession or control.
(ii) During the existence of an Event of Default, (A) notify any Account Debtors of the assignment of their Receivables, demand and enforce payment of Receivables by legal proceedings or otherwise, and generally exercise any rights and remedies with respect to Receivables; (B) settle, adjust, modify, compromise, discharge or release any Receivables or other Collateral, or any legal proceedings brought to collect Receivables or Collateral; (C) sell or assign any Receivables and other Collateral upon such terms, for such amounts and at such times as the Secured Party deems advisable; (D) collect, liquidate and receive balances in Deposit Accounts, Securities Accounts or Commodity Accounts, and take control, in any manner, of proceeds of Collateral; (E) prepare, file and sign a Debtor’s name to a proof of claim or other document in a bankruptcy of an Account Debtor, or to any notice, assignment or satisfaction of Lien or similar document; (F) receive, open and dispose of mail addressed to a Debtor; (G) endorse any Chattel Paper, Document, Instrument, bill of lading, or other document or agreement relating to any Receivables, Inventory or other Collateral; (H) use a Debtor’s stationery and sign its name to verifications of Receivables and notices to Account Debtors;(I) use information contained in any data processing, electronic or information systems relating to Collateral; (J) make and adjust claims under insurance policies; (K) take any action as may be necessary or appropriate to obtain payment under any letter of credit, banker’s acceptance or other instrument for which a Debtor is a beneficiary; and (L) take all other actions as the Secured Party deems appropriate to fulfill any Debtor’s obligations under the Loan Documents.
4.4 Changes in Name, etc. Such Debtor will not, except upon 10 days’ prior written notice to the Secured Party (or such shorter period as may be agreed to by the Secured Party in its sole discretion) and the taking of all actions and the execution of all documents reasonably requested by the Secured Party to maintain the validity, perfection and priority of the security interests provided for herein: (i) change its type of organization, jurisdiction of organization or other legal structure from that referred to in Section 3.3, (ii) change its organizational number if it has one, or (iii) change its name.
4.5 Delivery of Instruments, Chattel Paper, and Documents. If any amount payable under or in connection with any of the Collateral is or becomes evidenced by any Instrument or Chattel Paper, such Instrument or Chattel Paper shall, to the extent required by Section 5, be immediately delivered to the ABL Agent prior to the Discharge of First Lien Obligations and thereafter to the Secured Party, duly indorsed in a manner reasonably satisfactory to the ABL Agent or the Secured Party, as applicable, to be held as Collateral pursuant to this Agreement. If any goods are or become covered by a negotiable Document, such Document shall, to the extent required by Section 5, be immediately delivered to the Secured Party to be held as Collateral pursuant to this Agreement; provided that prior to the Discharge of First Lien Obligations, delivery to ABL Agent shall constitute delivery to Secured Party hereunder.
4.6 Deposit Accounts, Securities Accounts, and Commodity Accounts.
(a) For each Deposit Account, Securities Account or Commodity Account listed on Schedule 3.7 (other than an Excluded Account), the Debtor maintaining such Deposit Account, Securities Account or Commodity Account will take all actions necessary to enable the Secured Party to obtain and/or maintain “control” (within the meaning of Section 9-104 of the UCC) with respect thereto, including, prior to the Discharge of the First Lien Obligations, solely through the execution of Control Agreements in favor of the ABL Agent acting as the Secured Party’s bailee or agent for perfection pursuant to the
Intercreditor Agreement. No Debtor shall cause or permit any Excluded Account to cease to constitute an “Excluded Account” (other than as a result of the closing of such Excluded Account) unless and until such Deposit Account, Securities Account or Commodity Account is subject to the ABL Agent’s or Secured Party’s, as applicable, “control” (within the meaning of Section 9-104 of the UCC), including by the Debtor executing Control Agreements in favor of the ABL Agent acting as the Secured Party’s bailee or agent for perfection pursuant to the Intercreditor Agreement.
(b) For each Deposit Account, Securities Account or Commodity Account created by a Debtor after the date hereof, the Debtor creating and maintaining such Deposit Account shall provide 10 days written notice (or such lesser period as the Secured Party may agree) to the Secured Party prior to the creation of such Deposit Account, Securities Account or Commodity Account and, if at the time of its creation, such Deposit Account, Securities Account or Commodity Account does not or is not intended to constitute an Excluded Account, take all actions necessary and any actions reasonably requested by the Secured Party to enable the Secured Party to obtain “control” (within the meaning of Section 9-104 of the UCC) with respect thereto, including, prior to the Discharge of the First Lien Obligations, solely through the execution of Control Agreements in favor of the ABL Agent acting as the Secured Party’s bailee or agent for perfection pursuant to the Intercreditor Agreement, in each case prior to the transfer of funds into such Deposit Account, Securities Account or Commodity Account.
(c) Notwithstanding anything to the contrary contained in Section 12 of the Note, any failure to comply with the requirements of clauses (a) or (b) of this Section 4.6 shall constitute an immediate Event of Default under the Note and shall not be subject to any grace period.
4.7 Modifications of Receivables, Chattel Paper, Instruments and Payment Intangibles; Administration of Receivables.
(a) No Debtor will, without the Secured Party’s prior written consent (which consent shall not be unreasonably withheld or delayed): (i) compromise or grant any extension of the time of payment of any of the Collateral consisting of Receivables, Chattel Paper, Instruments or Payment Intangibles, (ii) settle the same for less than the full amount thereof, (iii) release, wholly or partly, any obligor liable for the payment thereof or (iv) allow any credit or discount whatsoever thereon; provided, that so long as no Event of Default has occurred and is continuing, this Section 4.7 shall not restrict any extensions, credits, discounts, compromises or settlements granted or made by any Debtor in the ordinary course of such Debtor’s business and consistent with such prudent practices used in industries that are the same as or similar to those in which such Debtor is engaged; provided further, that, during the existence of an Event of Default, the Secured Party’s prior written consent to any of the actions described in clauses (i) through (iv) of this Section 4.7 shall only be required after the Discharge of First Lien Obligations has occurred.
(b) Each Debtor shall keep accurate and complete records of all Accounts, including all payments and collections thereon.
(c) After the Discharge of First Lien Obligations, if an Account of a Debtor includes a charge for any Taxes, the Secured Party is authorized, in its discretion, to pay the amount thereof to the proper taxing authority for the account of such Debtor and, if not collected from the relevant Account Debtor, to charge Debtor therefor; provided, however, that the Secured Party shall not be liable for any Taxes that may be due from the Debtor or with respect to any Collateral.
(d) Whether or not a Default or Event of Default exists, the Secured Party shall have the right at any time, in the name of the Secured Party, any designee of the Secured Party or any Debtor, to verify the validity, amount or any other matter relating to any Receivable of the Debtors by mail, telephone or otherwise. The Debtors shall cooperate fully with the Secured Party in an effort to facilitate and promptly conclude any such verification process.
4.8 Actions With Respect to Certain Collateral.
(a) If any of the Account Debtors or other Persons obligated on any of the Receivables, Chattel Paper, Instruments or Payment Intangibles with a value in excess of $500,000, or on any Contract with a value in excess of $500,000 in any twelve month period, is or becomes a Governmental Authority subject to the Federal Assignment of Claims Act or like federal or state statute or rule in respect of such Collateral, Debtor shall promptly (i) notify the Secured Party in a writing signed by such Debtor that such Account Debtor or other Person obligated on such Collateral is a Governmental Authority subject to the Federal Assignment of Claims Act or like federal or state statute or rule and (ii)
subject to the Intercreditor Agreement, take all actions reasonably required by the Secured Party to ensure the attachment, perfection or priority of, or the ability of the Secured Party to enforce, the security interest in such Collateral.
(b) If any Debtor shall at any time hold or acquire a Commercial Tort Claim with a value in excess of $500,000, such Debtor shall promptly notify the Secured Party in a writing signed by such Debtor of the brief details thereof and grant to the Secured Party in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Secured Party. Notwithstanding the foregoing, any such security interest in Commercial Tort Claims shall, prior to the occurrence of an Event of Default (and after the occurrence of an Event of Default unless the Secured Party has demanded the attachment of such security interest thereto), not be required to attach to the extent the value of any such Commercial Tort Claim does not exceed $500,000.
SECTION 5.
LIMITATION ON PERFECTION OF SECURITY INTEREST
5.1 Chattel Paper and Instruments. The perfection of the security interest granted in Section 2 above in, respectively, Chattel Paper (whether tangible or electronic) and Instruments will, prior to the occurrence of an Event of Default (and after the occurrence of an Event of Default unless, after the Discharge of First Lien Obligations, the Secured Party has required that further actions are taken with respect to the perfection thereof), be effected solely by filing an appropriate financing statement under the applicable UCC so long as (a) with respect to all Chattel Paper and Instruments, the aggregate face amount of all such Chattel Paper and Instruments does not exceed $500,000 and (b) with respect to any individual Chattel Paper or Instrument, the face amount thereof does not exceed $500,000. Notwithstanding the foregoing, if no Event of Default exists, then upon the request of any Debtor the Secured Party shall deliver any Chattel Paper or Instrument in its possession to that Debtor if that Debtor requires possession in order to collect such Chattel Paper or Instrument. In the event that the aggregate face amount of such Chattel Paper and Instruments exceeds $500,000 individually or in the aggregate, the Debtors shall provide prompt written notice thereof to the Secured Party.
5.2 Documents. The perfection of the security interest granted in Section 2 above in Documents will, prior to the occurrence of an Event of Default (and after the occurrence of an Event of Default unless, after the Discharge of First Lien Obligations, the Secured Party has required that further actions are taken with respect to the perfection thereof), be effected solely by filing an appropriate financing statement under the applicable UCC so long as (a) the aggregate value of the goods covered by all such Documents does not exceed $500,000 and (b) the value of the goods covered by any individual Document does not exceed $500,000. In the event that the value of goods covered by such Documents exceeds $500,000 individually or in the aggregate, the Debtors shall provide prompt written notice thereof to the Secured Party.
5.3 Letter-of-Credit Rights. Subject to the Intercreditor Agreement, the perfection of the security interest granted in Letter-of-Credit Rights will be required only with respect to (a) solely following the occurrence of an Event of Default and after the Discharge of First Lien Obligations , upon request by the Secured Party, any individual Letter-of-Credit Right the face amount of which exceeds $2,500,000 and (b) any Letter-of-Credit Rights constituting Supporting Obligations. In the event that the face amount of any individual Letter of Credit Right exceeds $2,500,000 or that any Letter-of-Credit Rights constitute Supporting Obligations, the Debtors shall provide prompt written notice thereof to the Secured Party.
SECTION 6.
REMEDIAL PROVISIONS
During the existence of an Event of Default, the Secured Party may, at the Secured Party’s option, subject to the terms of the Intercreditor Agreement, exercise one or more of the remedies specified elsewhere in this Agreement or the following remedies:
6.1 General Interim Remedies.
(a) To the extent permitted by Law, the Secured Party may exercise all the rights and remedies of a secured party under the UCC.
(b) The Secured Party may prosecute actions in equity or at law for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted or for the enforcement of any other appropriate legal or equitable remedy.
(c) The Secured Party may require any Debtor to promptly assemble any tangible Collateral of such Debtor and make it available to the Secured Party at a place to be designated by the Secured Party. The Secured Party may occupy any premises owned or leased by any Debtor where the Collateral is assembled for a reasonable period in order to effectuate the Secured Party’s rights and remedies hereunder or under law, without obligation to any Debtor with respect to such occupation.
6.2 Receivables, Chattel Paper, Instruments and Payment Intangibles. The Secured Party shall have the right at any time during the existence of an Event of Default, and after the Discharge of First Lien Obligations, to take any of the following actions, in the Secured Party’s own name or in the name of the applicable Debtor: compromise or extend the time for payment of any payments due with respect to any Instrument or Chattel Paper upon such terms as the Secured Party may reasonably determine; endorse the name of the applicable Debtor on checks, instruments, or other evidences of payment with respect to any such Collateral; make written or verbal requests for verification of amount owing on any such Collateral from the maker thereof or obligor thereunder; open mail addressed to such Debtor which the Secured Party reasonably believes relates to any such Collateral and, to the extent of checks or other payments with respect to any such Collateral, dispose of same in accordance with this Agreement; take action in the Secured Party’s name or the applicable Debtor’s name, to enforce collection; and take all other action necessary to carry out this Agreement and give effect to the Secured Party’s rights hereunder. Costs and expenses incurred by the Secured Party in collection and enforcement of amounts owed under any Contracts or otherwise with respect to the Receivables, Chattel Paper, Instruments and/or Payment Intangibles, including attorneys’ fees and out-of-pocket expenses, shall be reimbursed by the applicable Debtor to the Secured Party on demand.
6.3 Contracts. During the existence of an Event of Default, the Secured Party may, at its option, after the Discharge of First Lien Obligations, exercise one or more of the following remedies with respect to the Contracts that constitute Collateral:
(a) (i) take any action permitted under Section 6.2 and (ii) in the place and stead of the applicable Debtor, exercise any other rights of such Debtor under the Contracts in accordance with the terms thereof. Without limitation of the foregoing, each Debtor agrees that under the foregoing circumstances, the Secured Party may give notices, consents and demands and make elections under the Contracts, modify or waive the terms of the Contracts and enforce the Contracts, in each case, to the same extent and on the same terms as such Debtor might have done in accordance with the terms of such Contracts and applicable Law. It is understood and agreed that notwithstanding the exercise of such rights and/or the taking of such actions by the Secured Party, such Debtor shall remain liable for performance of its obligations under the Contracts; and
(b) upon receipt by the Secured Party of notice from any counterparty to any Contract of such Person’s intent to terminate such Contract, the Secured Party shall be entitled to (i) cure or cause to be cured the condition giving rise to such Person’s right of termination of such Contract, or (ii) acquire and assume (or assign and cause the assumption by a third party of) the rights and obligations of the applicable Debtor under such Contract.
6.4 Foreclosure
(a) Subject to the Intercreditor Agreement, the Secured Party may foreclose on the Collateral in any manner permitted by the courts of or in the State of New York or the jurisdiction in which any Collateral is located. If the Secured Party should institute a suit for the collection of the Secured Obligations and for the foreclosure of this Agreement, the Secured Party may at any time before the entry of a final judgment dismiss the same, and take any other action permitted by this Agreement.
(b) To the extent permitted by law and subject to the Intercreditor Agreement, the Secured Party may exercise all the foreclosure rights and remedies of a secured party under the UCC. In connection therewith, the Secured Party may sell any Collateral at public or private sale, at the office of the Secured Party or elsewhere, for cash or credit and upon such other terms as the Secured Party deems commercially reasonable. The Secured Party may sell any Collateral at one or more sales, and the security interest granted hereunder shall remain in effect as to the unsold portion of the Collateral. Each Debtor agrees that to the extent permitted by Law such sales may be made without notice. If notice is required by Law, each Debtor hereby deems ten days advance notice of the time and place of any
public or private sale reasonable notification, recognizing that if any portion of the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, shorter notice may be reasonable. The Secured Party shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Secured Party may adjourn any sale by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was adjourned. In the event that any sale hereunder is not completed or is defective in the opinion of the Secured Party, the Secured Party shall have the right to cause subsequent sales to be made hereunder. Any statements of fact or other recitals made in any bill of sale, assignment, or other document representing any sale hereunder, including statements relating to the occurrence of an Event of Default, acceleration of the Secured Obligations, notice of the sale, the time, place, and terms of the sale, and other actions taken by the Secured Party in relation to the sale may be conclusively relied upon by the purchaser at any sale hereunder. The Secured Party may delegate to any agent the performance of any acts in connection with any sale hereunder, including the sending of notices and the conduct of the sale.
6.5 Application of Proceeds. Unless otherwise specified herein, subject to the Intercreditor Agreement, any cash proceeds received by the Secured Party from the sale of, collection of, or other realization upon any part of the Collateral or any other amounts received by the Secured Party hereunder may be, at the reasonable discretion of the Secured Party applied to the Secured Obligations.
Any surplus cash collateral or cash proceeds held by the Secured Party after payment in full of the Secured Obligations and the termination of any commitments of the Secured Party to any Debtor shall be paid over to such Debtor or to whomever may be lawfully entitled to receive such surplus.
6.6 Waiver of Certain Rights. To the full extent each Debtor may do so, such Debtor shall not insist upon, plead, claim, or take advantage of any Law providing for any appraisement, valuation, stay, extension, or redemption, and such Debtor hereby waives and releases the same, and all rights to a marshaling of the assets of such Debtor, including the Collateral of such Debtor, or to a sale in inverse order of alienation in the event of foreclosure of the liens and security interests hereby created. Such Debtor shall not assert any right under any law pertaining to the marshaling of assets, sale in inverse order of alienation, the administration of estates of decedents or other matters whatever to defeat, reduce, or affect the right of the Secured Party under the terms of this Agreement.
6.7 Remedies Cumulative. The Secured Party’s remedies under this Agreement and the Loan Documents to which any Debtor is a party shall be cumulative, and no delay in enforcing this Agreement and the Loan Documents to which any Debtor is a party shall act as a waiver of the Secured Party’s rights hereunder.
6.8 Reinstatement. The obligations of each Debtor under this Agreement shall continue to be effective or automatically be reinstated, as the case may be, if at any time payment of any of the Secured Obligations is rescinded or otherwise must be restored or returned by the Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Debtor or any other obligor or otherwise, all as though such payment had not been made.
SECTION 7.
MISCELLANEOUS
7.1 Amendments. None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Section 22 of the Note.
7.2 Notices. All notices, requests and demands to or upon the Secured Party hereunder shall be in writing and effected in the manner provided for in Section 24 of the Note.
7.3 No Waiver by Course of Conduct; Cumulative Remedies; No Duty. No failure to exercise, nor any delay in exercising, on the part of the Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that the Secured Party would otherwise have on any future occasion. The rights and remedies provided herein and in the other Loan Documents are cumulative, may be exercised singly or concurrently, and are not exclusive of any other rights or remedies provided by Law. The powers conferred on Secured Party under this Agreement are solely to protect Secured Party’s rights under this Agreement and shall not impose any duty upon it to exercise any such powers. Except
as elsewhere provided hereunder, Secured Party shall have no duty as to any of the Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to the Collateral.
7.4 Enforcement Expenses; Indemnification.
(a) Each Debtor agrees to pay, or reimburse the Secured Party, all reasonable and documented out-of-pocket costs and expenses incurred in connection with the enforcement, attempted enforcement, exercise, or preservation of any rights or remedies under this Agreement or the other Loan Documents to which such Debtor is a party (including all such costs and expenses incurred during any “workout” or restructuring in respect of the Obligations and during any legal proceeding, including any proceeding under any Debtor Relief Law), including fees, charges and disbursements of one primary counsel for the Secured Party and, to the extent necessary, of one special counsel retained by the Secured Party in each relevant specialty and of one local counsel retained by the Secured Party in each relevant jurisdiction.
(b) Each Debtor agrees to pay, and to indemnify and hold the Secured Party harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement.
(c) Each Debtor hereby agrees to indemnify the Indemnitees, as, and to the extent set forth in Section 15 of the Note.
(d) All amounts due under this Section 7.4 shall be payable upon demand therefor. The agreements in this Section shall survive repayment of the Obligations and all other amounts payable under the Note and the other Loan Documents.
7.5 Successors and Assigns. This Agreement shall be binding upon the successors and assigns of each Debtor and shall inure to the benefit of the Secured Party and its successors and assigns; provided that no Debtor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Secured Party.
7.6 [Reserved].
7.7 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or by email as a “.pdf” or “.tif” attachment shall be effective as delivery of a manually executed counterpart of this Agreement. The words “execution,” “signed,” “signature,” and words of like import in this Amendment shall be deemed to include electronic signatures or electronic records, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
7.8 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
7.9 Section Headings. The Section headings used in this Agreement are included for convenience of reference only and shall not affect the interpretation of this Agreement.
7.10 Integration. This Agreement, together with the other Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter.
7.11 GOVERNING LAW ETC.
(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
(b) SUBMISSION TO JURISDICTION. EACH DEBTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY DEBTOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(c) WAIVER OF VENUE. EACH DEBTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 7.2. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
(e) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
7.12 Additional Debtors. Each Subsidiary of the Borrower that is required to execute and deliver to the ABL Agent a security agreement supplement and/or other security and pledge agreements pursuant to the terms of Section 6.12 of the ABL Credit Agreement after the date hereof shall become a Debtor for all purposes of this Agreement upon execution and delivery by such Subsidiary of an instrument in the form of Annex I hereto.
7.13 Termination; Releases.
(a) This Agreement and the security interest created hereby shall terminate upon termination of the [Commitments] and payment in full of all Secured Obligations (other than contingent indemnification obligations), at which time the Secured Party shall execute and deliver to the Debtors or the Debtors’ designee, at the Debtors’ expense, all UCC termination statements and similar documents which the Debtors shall reasonably request from time to time to evidence such termination, and, at the Debtors’ expense, the Secured Party shall return to the Debtors any Collateral then in its possession. Any
execution and delivery of termination statements or documents pursuant to this Section 7.13(a) shall be without recourse to or warranty by the Secured Party.
(b) Any Debtor other than the Borrower shall automatically be released from its obligations hereunder and the security interest granted hereby in the Collateral of such Debtor shall be automatically released in the event that all the Equity Interests of such Debtor shall be sold, transferred or otherwise disposed of to a Person other than a Loan Party or a Subsidiary of a Loan Party in a transaction permitted by the Note. If any of the Collateral shall be sold, transferred or otherwise disposed of by any Debtor in a transaction permitted by the Note, the security interest created hereby in any Collateral that is so sold, transferred or otherwise disposed of shall automatically terminate and be released upon the closing of such sale, transfer or other disposition, and such Collateral shall be sold free and clear of the Lien and security interest created hereby; provided, however, that such security interest will continue to attach to all proceeds of such sales or other dispositions. In connection with any of the foregoing, the Secured Party shall deliver to the Debtors any Collateral then in its possession and shall execute and deliver to the Debtors or the Debtors’ designee, at the Debtors’ expense, all UCC termination statements and similar documents that the Debtors shall reasonably request from time to time to evidence such termination. Any execution and delivery of termination statements or documents pursuant to this Section 7.13(b) shall be without recourse to or warranty by the Secured Party.
(c) Notwithstanding anything to the contrary in this Agreement or any other Loan Document, Collateral may be released from the Lien and security interest created by the Collateral Documents to secure the Loans and obligations under the Note and the other Loan Documents at any time or from time to time in accordance with the provisions of the Intercreditor Agreement.
(d) Each Debtor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement originally filed in connection herewith without the prior written consent of the Secured Party subject to such Debtor’s rights under Section 9-509(d)(2) of the UCC.
7.14 Intercreditor Agreement. Notwithstanding anything to the contrary, (a) the Liens and security interests granted to the Secured Party pursuant to this Agreement are expressly subject to the Intercreditor Agreement and (b) the exercise of any right and remedy by the Secured Party hereunder is subject to the limitations and provisions of the Intercreditor Agreement. In the event of any conflict between the terms of the Intercreditor Agreement and the terms of this Agreement, the terms of the Intercreditor Agreement shall govern.
[Signature pages follow.]
EXECUTED as of the date first above written.
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ASCRIBE III INVESTMENTS LLC,
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as Secured Party
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By:
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/s/ Lawrence First
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Name:
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Lawrence First
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Title:
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Managing Director
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BASIC ENERGY SERVICES GP, LLC
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BASIC ENERGY SERVICES LP, LLC
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BASIC ESA, INC.
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SCH Disposal, L.L.C.
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TAYLOR INDUSTRIES, LLC
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AGUA LIBRE HOLDCO LLC
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AGUA LIBRE ASSET CO LLC
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AGUA LIBRE MIDSTREAM LLC
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C&J WELL SERVICES, INC.
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INDIGO INJECTION #3, LLC
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KVS TRANSPORTATION, INC.
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By:
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/s/ Keith L. Schilling
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Name:
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Keith L. Schilling
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Title:
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President and Chief Executive Office
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BASIC ENERGY SERVICES, L.P.
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By:
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BASIC ENERGY SERVICES GP, LLC,
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its General Partner
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By:
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/s/ Keith L. Schilling
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Name:
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Keith L. Schilling
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Title:
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President and Chief Executive Office
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SCHEDULE 3.3
ORGANIZATION & LOCATION INFORMATION
Omitted.
SCHEDULE 3.4
CERTAIN COLLATERAL
Omitted.
SCHEDULE 3.5
PLEDGED INSTRUMENTS
Omitted.
SCHEDULE 3.7
BANK ACCOUNTS
Omitted.
Annex I to the
Second Lien Security Agreement
This SUPPLEMENT NO. [ ] dated as of [ ] (this “Supplement”), is delivered in connection with (a) that certain Second Lien Security Agreement dated as of October 15, 2020 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”), among Basic Energy Services, Inc., a Delaware corporation (the “Borrower”), certain subsidiaries of the Borrower (such subsidiaries together with the Borrower, the “Debtors”) and Ascribe III Investments LLC, a Delaware limited liability company (the “Secured Party”) and (b) that certain Second Lien Delayed Draw Promissory Note dated as of October 15, 2020 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time,, the “Note”), among the Borrower, the Debtors and the Secured Party.
A. Pursuant to the Note, the Guarantors have agreed to guarantee, among other things, the full payment and performance of all of the Borrower’s obligations under the Note.
B. The Debtors have entered into the Security Agreement as a condition precedent to the effectiveness of the Note or the amendment thereof. Section 7.12 of the Security Agreement and Section 9 of the Note provides that additional Subsidiaries of the Borrower may become Debtors under the Security Agreement and Guarantors under the Note by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary (the “New Debtor”) is executing this Supplement in accordance with the requirements of the Note to become a Debtor under the Security Agreement and a Guarantor under the Note.
C. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement and the Note.
Accordingly, the New Debtor agrees as follows:
SECTION 1. In accordance with Section 7.12 of the Security Agreement, the New Debtor by its signature below becomes a Debtor under the Security Agreement with the same force and effect as if originally named therein as a Debtor, and the New Debtor hereby (a) agrees to all the terms and provisions of the Security Agreement applicable to it as a Debtor thereunder and (b) represents and warrants that the representations and warranties made by it as a Debtor thereunder are true and correct in all material respects on and as of the date hereof. The Schedules to the Security Agreement are hereby supplemented by the Schedules attached hereto with respect to the New Debtor. In furtherance of the foregoing, the New Debtor, as security for the payment and performance in full of the Secured Obligations (as defined in the Security Agreement), does hereby create and grant to the Secured Party a security interest in and lien on all of the New Debtor’s right, title and interest in and to the Collateral of the New Debtor. Each reference to a “Debtor” in the Security Agreement shall be deemed to include the New Debtor.
SECTION 2. In accordance with Section 9 of the Note, the New Debtor by its signature below becomes a Guarantor under the Note with the same force and effect as if originally named therein as a Guarantor, and the New Debtor hereby (a) agrees to all the terms and provisions of the Note applicable to it as a Guarantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Guarantor thereunder are true and correct on and as of the date hereof. Each reference to a “Guarantor” in the Note shall be deemed to include the New Debtor.
SECTION 3. The New Debtor represents and warrants to the Secured Party that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.
SECTION 4. This Supplement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or by email as a “.pdf” or “.tif” attachment shall be effective as delivery of a manually executed counterpart of this Agreement. The words “execution,” “signed,” “signature,” and words of like import in this Amendment shall be deemed to include electronic signatures or electronic records, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State
Annex I to Second Lien Security Agreement
-1-
Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
SECTION 5. Except as expressly supplemented hereby, the Security Agreement and the Note shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
SECTION 7. All communications and notices to the New Debtor under the Security Agreement or the Note shall be in writing and given as provided in Section 24 of the Note to the address for the New Debtor set forth under its signature below.
SECTION 8. The New Debtor agrees to reimburse the Secured Party for its reasonable out of-pocket expenses in connection with this Supplement, including the reasonable out-of-pocket fees and disbursements of counsel for the Secured Party.
Annex I to Second Lien Security Agreement
-2-
IN WITNESS WHEREOF, the New Debtor has duly executed this Supplement as of the day and year first above written.
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[Name of New Debtor],
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By:
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Name:
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Title:
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Address:
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ASCRIBE III INVESTMENTS LLC, as Secured Party
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By:
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Name:
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Title:
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Address:
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Annex I to Second Lien Security Agreement
-3-
Supplemental Schedules
to the Security Agreement
Annex I to Second Lien Security Agreement
-4-
THIRD AMENDMENT
TO ABL CREDIT AGREEMENT
This THIRD AMENDMENT TO ABL CREDIT AGREEMENT (this “Amendment”), is made and entered into as of October 15, 2020, by and among BASIC ENERGY SERVICES, INC., a Delaware corporation (the “Borrower”), the Subsidiaries of the Borrower party to the Amendment (collectively, the “Guarantors”), the financial institutions party to this Amendment constituting the Required Lenders, and BANK OF AMERICA, N.A., a national banking association (“Bank of America”), as administrative agent for the Lenders (in such capacity, “Administrative Agent”), a Swing Line Lender and an L/C Issuer.
A. The Borrower has entered into that certain ABL Credit Agreement, dated as of October 2, 2018 (as amended by that certain Limited Consent and First Amendment to ABL Credit Agreement dated as of March 9, 2020, as further amended by that certain Second Amendment to ABL Credit Agreement dated as of June 15, 2020, and as may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), with the Lenders party thereto and the Administrative Agent;
B. The Borrower has advised the Administrative Agent and the Lenders that it seeks to enter into the Second Lien Note (as defined herein) and obtain loans thereunder;
C. The Administrative Agent, the Required Lenders and the Borrower have agreed to amend the Credit Agreement to permit, among other things, the Second Lien Note and the loans thereunder subject to the terms and conditions set forth herein; and
D. In consideration of the premises and the mutual covenants herein contained, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions. All terms used herein that are defined in the Credit Agreement and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.
2. Amendments.
(a) New Definitions. Section 1.01 of the Credit Agreement is hereby amended by adding the following definitions, in appropriate alphabetical order:
“ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.
“LIBOR Replacement Date” has the meaning specified in Section 3.03(b).
“Pre-Adjustment Successor Rate” has the meaning specified in Section 3.03(b).
“Related Adjustment” means, in determining any LIBOR Successor Rate, the first relevant available alternative set forth in the order below that can be determined by the Administrative Agent applicable to such LIBOR Successor Rate:
(A) the spread adjustment, or method for calculating or determining such spread adjustment, that has been selected or recommended by the Relevant Governmental Body for the relevant Pre-Adjustment Successor Rate (taking into account the interest period, interest payment date or payment period for interest calculated and/or tenor thereto) and which adjustment or method (x) is published on an information service as selected by the Administrative Agent from time to time in its discretion or (y) solely with respect to Term SOFR, if not currently published, which was previously so recommended for Term SOFR and published on an information service acceptable to the Administrative Agent; or
(B) the spread adjustment that would apply (or has previously been applied) to the fallback rate for a derivative transaction referencing the ISDA Definitions (taking into account the interest period, interest payment date or payment period for interest calculated and/or tenor thereto).
“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York.
“Second Lien Intercreditor Agreement” means that certain Intercreditor Agreement dated as of the Third Amendment Effective Date, between Ascribe and Administrative Agent, and acknowledged by the Borrower and Guarantors.
“Second Lien Loans” means one or more term loans in an aggregate amount not to exceed $15,000,000 made by Ascribe to the Borrower pursuant to the Second Lien Note, maturing no earlier than January 2, 2024 (or, if an Acceptable Senior Notes Refinancing has not occurred by July 3, 2023, October 3, 2023) and bearing a non-default interest rate of 9.75% per annum, with quarterly payments of interest and no principal amortization.
“Second Lien Note” means that certain Second Lien Delayed Draw Promissory Note dated as of the Third Amendment Effective Date, by the Borrower and the Guarantors in favor of Ascribe, together with any permitted amendments, modifications, replacements, supplements or restatements made in accordance with the Second Lien Intercreditor Agreement.
“Second Lien Note Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, any of the Borrower and the Guarantors arising under any Loan Document (as defined in the Second Lien Note) or otherwise with respect to any Loan (as defined in the Second Lien Note), and including interest and fees that accrue after the commencement by or against any Loan Party of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.
“Second Lien Refinancing Debt” means Indebtedness in the form of loans or notes issued or incurred by the Borrower and/or any of its Subsidiaries following the Third Amendment Effective Date the proceeds of which shall be used, in part, to refinance the Second Lien Note Obligations in full, for other general corporate purposes and, at the option of the Borrower, to reimburse all or a portion of the Make-Whole Payment; provided that (a) the aggregate principal amount of such Indebtedness shall be not less than $15,000,000, (b) any Liens granted on property of the Borrower and the Guarantors to secure such Indebtedness shall be limited to property not constituting Collateral and (c) such Indebtedness shall otherwise be on terms and conditions reasonably satisfactory to Administrative Agent.
“SOFR” with respect to any Business Day means the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark (or a successor administrator) on the Federal Reserve Bank of New York’s website (or any successor source) at approximately 8:00 a.m. (New York City time) on the immediately succeeding Business Day and, in each case, that has been selected or recommended by the Relevant Governmental Body.
“Term SOFR” means the forward-looking term rate for any period that is approximately (as determined by the Administrative Agent) as long as any of the Interest Period options set forth in the definition of “Interest Period” and that is based on SOFR and that has been selected or recommended by the Relevant Governmental Body, in each case as published on an information service as selected by the Administrative Agent from time to time in its discretion.
“Third Amendment Effective Date” means October 15, 2020.
(b) Existing Definitions. Section 1.01 of the Credit Agreement is hereby amended by amending and restating the following existing definitions set forth therein in their entirety as follows:
“LIBOR Screen Rate” means the LIBOR quote on the applicable screen page the Administrative Agent designates to determine LIBOR (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time).
“LIBOR Successor Rate” has the meaning specified in Section 3.03(b).
“LIBOR Successor Rate Conforming Changes” means, with respect to any proposed LIBOR Successor Rate, any conforming changes to the definition of Base Rate, Interest Period, timing and frequency of determining rates and making payments of interest and other technical, administrative or operational matters (including, for the avoidance of doubt, the definition of Business Day, timing of borrowing requests or prepayment, conversion or continuation notices and length of lookback periods) as may be appropriate, in the discretion of the Administrative Agent, to reflect the adoption and implementation of such LIBOR Successor Rate and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent determines that adoption of any portion of such market practice is not administratively feasible or that no market practice for the administration of such LIBOR Successor Rate
exists, in such other manner of administration as the Administrative Agent determines is reasonably necessary in connection with the administration of this Agreement and any other Loan Document).
“Scheduled Unavailability Date” has the meaning specified in Section 3.03(b).
(c) LIBOR Amendment. Section 1.09 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
1.09 Reserved.
(d) Inability to Determine Rates. Section 3.03 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
(a) The Administrative Agent will promptly notify the Borrower and the Lenders if, in connection with any Loan or request with respect to a Loan, (i) the Administrative Agent determines that (A) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable Loan amount or Interest Period, or (B) adequate and reasonable means do not exist for determining LIBOR for the Loan or Interest Period (including with respect to calculation of the Base Rate); or (ii) the Administrative Agent or the Required Lenders determine for any reason that LIBOR for the Interest Period does not adequately and fairly reflect the cost to Lenders of funding or maintaining the Loan. Thereafter, the Lenders’ obligations to make or maintain affected LIBOR Loans and utilization of the LIBOR component (if affected) in determining Base Rate shall be suspended until the Administrative Agent determines (or is instructed by the Required Lenders) to withdraw the notice. Upon receipt of such notice, the Borrower may revoke any pending request for funding, conversion or continuation of a LIBOR Loan or, failing that, will be deemed to have requested a Base Rate Loan, and the Administrative Agent may (or shall upon request by the Required Lenders) immediately convert any affected LIBOR Loan to a Base Rate Loan and/or disregard the use of LIBOR in determining Base Rate.
(b) Notwithstanding anything to the contrary in this Agreement or any other Loan Documents, if the Administrative Agent determines (which determination shall be conclusive absent manifest error), or the Borrower or Required Lenders notify the Administrative Agent (with, in the case of the Required Lenders, a copy to the Borrower) that the Borrower or Required Lenders (as applicable) have determined, that:
(i) adequate and reasonable means do not exist for ascertaining LIBOR for any Interest Period hereunder or any other tenors of LIBOR, including, without limitation, because the LIBOR Screen Rate is not available or published on a current basis and such circumstances are unlikely to be temporary; or
(ii) the administrator of the LIBOR Screen Rate or a Governmental Authority having jurisdiction over the Administrative Agent or such administrator has made a public statement identifying a specific date after which LIBOR or the LIBOR Screen Rate shall no longer be made available, or used for determining the interest rate of loans, provided that, at the time of such statement, there is no successor administrator that is satisfactory to the Administrative Agent, that will continue to provide LIBOR after such specific date (such specific date, the “Scheduled Unavailability Date”); or
(iii) the administrator of the LIBOR Screen Rate or a Governmental Authority having jurisdiction over such administrator has made a public statement announcing that all Interest Periods and other tenors of LIBOR are no longer representative; or
(iv) syndicated loans currently being executed, or that include language similar to that contained in this Section 3.03, are being executed or amended (as applicable) to incorporate or adopt a new benchmark interest rate to replace LIBOR;
then, (x) in the case of clauses (i)-(iii) above, on a date and time determined by the Administrative Agent (any such date, the “LIBOR Replacement Date”), which date shall be at the end of an Interest Period or on the relevant interest payment date, as applicable, for interest calculated and shall occur reasonably promptly upon the occurrence of any of the events or circumstances under clauses (i), (ii) or (iii) above and, solely with respect to clause (ii) above, no later than the Scheduled Unavailability Date, LIBOR will be replaced hereunder and under the other Loan Documents with, subject to the proviso below, the first available alternative set forth in the order below for any payment period for interest calculated that can be determined by the Administrative Agent, in each case, without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document (the “LIBOR Successor Rate”; and any such rate before giving effect to the Related Adjustment, the “Pre-Adjustment Successor Rate”):
(A) Term SOFR plus the Related Adjustment; and
(B) SOFR plus the Related Adjustment;
and (y) in the case of clause (iv) above, the Borrower and Administrative Agent may amend this Agreement solely for the purpose of replacing LIBOR under this Agreement and under the other Loan Documents in accordance with the definition of “LIBOR Successor Rate” and such amendment will become effective at 5:00 p.m., on the fifth Business Day after the Administrative Agent shall have notified all Lenders and the Borrower of the occurrence of the circumstances described in clause (iv) above unless, prior to such time, Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders object to the implementation of a LIBOR Successor Rate pursuant to such clause;
provided that, if the Administrative Agent determines that Term SOFR has become available, is administratively feasible for the Administrative Agent and would have been identified as the Pre-Adjustment Successor Rate in accordance with the foregoing if it had been so available at the time that the LIBOR Successor Rate then in effect was so identified, and the Administrative Agent notifies the Borrower and each Lender of such availability, then from and after the beginning of the Interest Period, relevant interest payment date or payment period for interest calculated, in each case, commencing no less than thirty (30) days after the date of such notice, the Pre-Adjustment Successor Rate shall be Term SOFR and the LIBOR Successor Rate shall be Term SOFR plus the relevant Related Adjustment.
The Administrative Agent will promptly (in one or more notices) notify the Borrower and each Lender of (x) any occurrence of any of the events, periods or circumstances under clauses (i) through (iii) above, (y) a LIBOR Replacement Date and (z) the LIBOR Successor Rate.
Any LIBOR Successor Rate shall be applied in a manner consistent with market practice; provided that to the extent such market practice is not administratively feasible for the Administrative Agent, such LIBOR Successor Rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent.
Notwithstanding anything else herein, if at any time any LIBOR Successor Rate as so determined would otherwise be less than 1.00%, the LIBOR Successor Rate will be deemed to be 1.00% for the purposes of this Agreement and the other Loan Documents.
In connection with the implementation of a LIBOR Successor Rate, the Administrative Agent will have the right to make LIBOR Successor Rate Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such LIBOR Successor Rate Conforming Changes will become effective without any further action or consent of any other party to this Agreement; provided that, with respect to any such amendment effected, the Administrative Agent shall post each such amendment implementing such LIBOR Successor Rate Conforming Changes to the Borrower and the Lenders reasonably promptly after such amendment becomes effective.
If the events or circumstances of the type described in Section 3.03(b)(i)-(iii) have occurred with respect to the LIBOR Successor Rate then in effect, then the successor rate thereto shall be determined in accordance with the definition of “LIBOR Successor Rate.”
(c) Notwithstanding anything to the contrary herein, (i) after any such determination by the Administrative Agent or receipt by the Administrative Agent of any such notice described under Section 3.03(b)(i)-(iii), as applicable, if the Administrative Agent determines that none of the LIBOR Successor Rates is available on or prior to the LIBOR Replacement Date, (ii) if the events or circumstances described in Section 3.03(b)(iv) have occurred but none of the LIBOR Successor Rates is available, or (iii) if the events or circumstances of the type described in Section 3.03(b)(i)-(iii) have occurred with respect to the LIBOR Successor Rate then in effect and the Administrative Agent determines that none of the LIBOR Successor Rates is available, then in each case, the Administrative Agent and the Borrower may amend this Agreement solely for the purpose of replacing LIBOR or any then current LIBOR Successor Rate in accordance with this Section 3.03 at the end of any Interest Period, relevant interest payment date or payment period for interest calculated, as applicable, with another alternate benchmark rate giving due consideration to any evolving or then existing convention for similar U.S. dollar denominated syndicated credit facilities for such alternative benchmarks and, in each case, including any Related Adjustments and any other mathematical or other adjustments to such benchmark giving due consideration to any evolving or then existing convention for similar U.S. dollar denominated syndicated credit facilities for such benchmarks, which adjustment or method for calculating such adjustment shall be published on an information service as selected by the Administrative Agent from time to time in its discretion and may be
periodically updated. For the avoidance of doubt, any such proposed rate and adjustments shall constitute a LIBOR Successor Rate. Any such amendment shall become effective at 5:00 p.m. on the fifth Business Day after the Administrative Agent shall have posted such proposed amendment to all Lenders and the Borrower unless, prior to such time, Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders object to such amendment.
(d) If, at the end of any Interest Period, relevant interest payment date or payment period for interest calculated, no LIBOR Successor Rate has been determined in accordance with clauses (b) or (c) of this Section 3.03 and the circumstances under clauses (b)(i) or (b)(iii) above exist or the Scheduled Unavailability Date has occurred (as applicable), the Administrative Agent will promptly so notify the Borrower and each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain LIBOR Loans shall be suspended (to the extent of the affected LIBOR Loans, Interest Periods, interest payment dates or payment periods), and (y) the LIBOR component shall no longer be utilized in determining the Base Rate, until the LIBOR Successor Rate has been determined in accordance with clauses (b) or (c). Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of LIBOR Loans (to the extent of the affected LIBOR Loans, Interest Periods, interest payment dates or payment periods) or, failing that, will be deemed to have converted such request into a request for a Revolving Credit Borrowing of Base Rate Loans (subject to the foregoing clause (y)) in the amount specified therein.
(e) Certificates; Other Information. Section 6.02 of the Credit Agreement is hereby amended by amending and restating clause (b) thereto in its entirety to read as follows:
(b) concurrently with the delivery of the financial statements referred to in Sections 6.01(a), (b) and (d), a duly completed Compliance Certificate, including a calculation of the Consolidated Fixed Charge Coverage Ratio whether or not the financial covenant is being tested at such time, signed by the chief executive officer, chief financial officer, treasurer or controller of the Borrower (which delivery may, unless the Administrative Agent, or a Lender requests executed originals, be by electronic communication including fax or email and shall be deemed to be an original authentic counterpart thereof for all purposes);
(f) Administration of Deposit Accounts. Section 6.18 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
6.18 Administration of Deposit Accounts. Schedule 6.18 sets forth all deposit accounts maintained by the Loan Parties, including all Dominion Accounts. The Loan Parties shall take all actions necessary, subject to the terms of the Security Agreement, to establish Administrative Agent’s control of each such deposit account (other than an account exclusively used for payroll, payroll taxes or employee benefits and one or more deposit accounts established for the benefit of the Senior Notes Trustee containing solely proceeds of collateral for the Senior Notes (and not proceeds of the Collateral or any Loans) (each, a “Senior Notes Collateral Account”)), except for a deposit account containing not more than $250,000 at any time; provided that such deposit accounts over which Administrative Agent does not have control shall not contain more than $2,000,000 in the aggregate as of any date. The applicable Loan Party shall be the sole account holder of each deposit account and shall not allow any other Person (other than Administrative Agent or, solely in respect of any Senior Notes Collateral Account, the Senior Notes Trustee or, subject to and as set forth in the Second Lien Intercreditor Agreement, Ascribe) to have control over a deposit account or any property deposited therein. The Borrower shall promptly notify the Administrative Agent of any opening or closing of a deposit account by any Loan Party and, with the consent of Administrative Agent, will amend Schedule 6.18 to reflect same.
(g) Liens. Section 7.01 of the Credit Agreement is hereby amended by (i) deleting the word “and” at the end of clause (o) thereof, (ii) replacing the “.” at the end of clause (p) thereof with “;” and (iii) adding new clauses (q) and (r) which shall read as follows:
(q) until such time as the Borrower incurs the Second Lien Refinancing Debt, junior Liens on Collateral (other than Eligible Pledged Cash) securing the Second Lien Note Obligations and subject to the Second Lien Intercreditor Agreement; and
(r) concurrently with or after repayment in full of the Second Lien Note Obligations, Liens on property of the Borrower and the Guarantors not constituting Collateral and securing the Second Lien Refinancing Debt.
(h) Other Indebtedness. Section 7.02 of the Credit Agreement is hereby amended by (i) deleting the word “and” at the end of clause (n) thereof, (ii) replacing the “.” at the end of clause (o) thereof with “;” and (iii) adding a new clauses (p) and (q) which shall read as follows:
(p) until such time as Borrower incurs the Second Lien Refinancing Debt, Indebtedness under the Second Lien Note and the other Loan Documents (as defined in the Second Lien Note) in an aggregate principal amount not to exceed $15,000,000; and
(q) concurrently with or after repayment in full of the Second Lien Note Obligations, the Second Lien Refinancing Debt.
(i) Transactions with Affiliates. Section 7.08 of the Credit Agreement is hereby amended by (i) deleting the word “and” at the end of clause (h) thereof, (ii) replacing the “.” at the end of clause (i) thereof with “, or” and (iii) adding a new clause (i) which shall read as follows:
(i) the Second Lien Loans and, if applicable, the Second Lien Refinancing Debt (including agreements entered into and any upfront or commitment fees incurred in connection therewith).
(j) Burdensome Agreements. Section 7.09 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
7.09 Burdensome Agreements. Enter into or permit to exist any Contractual Obligation (other than this Agreement, any other Loan Document, any Senior Notes Document (and any refinancing, refunding, renewal or extension thereof permitted by Section 7.02(g)(ii)) and the Second Lien Refinancing Debt) that (a) limits the ability (i) of any Restricted Subsidiary to make Restricted Payments to the Borrower or any Guarantor or to otherwise transfer property to or invest in the Borrower or any Guarantor, except for any agreement in effect (A) on the date hereof and set forth on Schedule 7.09 or (B) at the time any Person becomes a Restricted Subsidiary of the Borrower, so long as such agreement was not entered into solely in contemplation of such Person becoming a Restricted Subsidiary of the Borrower, (ii) of any Restricted Subsidiary to Guarantee the Obligations or (iii) of the Borrower or any Restricted Subsidiary to create, incur, assume or suffer to exist Liens on its property to secure the Obligations; provided, however, that (x) this clause (iii) shall not prohibit any negative pledge incurred or provided in favor of any holder of Indebtedness permitted under Section 7.02(f) solely to the extent any such negative pledge relates to the property financed by or the subject of such Indebtedness or customary restrictions on assignment, encumbrances or subletting in leases and other contracts and (y) this clause (iii) and the preceding clause (i) shall not prohibit customary restrictions and conditions contained in agreements relating to the sale of a Loan Party or an asset pending such sale, provided that such restrictions and conditions apply only to such Loan Party or such asset that is to be sold and such sale is permitted under this Agreement; or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure the Obligations.
(k) Prepayments, Etc. of Indebtedness. Section 7.14 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
7.14 Prepayments, Etc. of Indebtedness. Prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner, or make any payment in violation of any subordination terms of, any Indebtedness, except (a) the prepayment of the Credit Extensions in accordance with the terms of this Agreement, (b) regularly scheduled payments of principal of Indebtedness set forth on Schedule 7.02 (other than relating to the Bridge Note), (c) mandatory prepayments, repurchases or redemptions of the Senior Notes as required under the Senior Notes Indenture as in effect on the date hereof, (d) refinancings, refundings, extensions or renewals of Indebtedness to the extent such refinancing, refunding, extension or renewal is permitted by Sections 7.02(d) or 7.02(g)(ii), as applicable, (together with mandatory repayments, repurchases or redemptions required by the terms thereof) (e) the conversion to or exchange for Equity Interests of convertible or exchangeable debt securities, and customary payments in cash in lieu of fractional shares in connection therewith, (f) any reimbursement for the Make-Whole Payment so long as (i) such reimbursement is made through the issuance of additional Senior Notes or the incurrence of the Second Lien Refinancing Debt or (ii) if such reimbursement is not made pursuant to clause (f)(i), the applicable Payment Conditions are satisfied before and after giving effect thereto, (g) the consummation of the Exchange Transaction, (h) prepayments of Indebtedness relating to the Bridge Note so long as (i) such
prepayments are made solely with proceeds from the sale of fixed assets constituting collateral for the Senior Notes (including the repayment of Capitalized Leases relating to such fixed assets) and not with the proceeds of any Collateral or (ii) if such prepayments are not made pursuant to clause (h)(i), the applicable Payment Conditions are satisfied before and after giving effect thereto or such prepayments are consistent with those described in clause (D) of Section 7.02(g)(ii), (i) prepayments of Indebtedness relating to the Second Lien Refinancing Debt so long as (i) such prepayments are made solely with proceeds from the sale of fixed assets constituting collateral for the Senior Notes (including the repayment of Capitalized Leases relating to such fixed assets) and not with the proceeds of any Collateral or (ii) if such prepayments are not made pursuant to clause (i)(i), the applicable Payment Conditions are satisfied before and after giving effect thereto or, if the Second Lien Refinancing Debt takes the form of notes, such prepayments are consistent with those described in the proviso to clause (D) of Section 7.02(g)(ii), (j) prepayments of Indebtedness relating to the repayment of Capitalized Leases so long as (i) such prepayments are made solely with proceeds from the sale of fixed assets constituting collateral for the Senior Notes and not with the proceeds of any Collateral or (ii) if such prepayments are not made pursuant to clause (j)(i), the applicable Payment Conditions are satisfied before and after giving effect thereto, (k) prepayments of Indebtedness relating to the Second Lien Loans so long as (i) such prepayments are made solely with proceeds from the Second Lien Refinancing Debt or (ii) if such prepayments are not made pursuant to clause (k)(i), the applicable Payment Conditions are satisfied before and after giving effect thereto and (l) any other prepayments or redemptions with respect to Indebtedness not otherwise permitted pursuant to this Section 7.14; provided that, in the case of this clause (l), the applicable Payment Conditions are satisfied before and after giving effect thereto.
(l) Amendments, Etc. of Indebtedness. A new clause (d) is hereby added to Section 7.15 of the Credit Agreement to read as follows:
(d) Amend, modify or change in any manner any term or condition of Second Lien Note or any other material agreements, supplements and other documents executed in connection therewith, except for any amendments or modifications permitted by the Second Lien Intercreditor Agreement.
(m) Events of Default. Section 8.01 of the Credit Agreement is hereby amended by amending and restating clause (e) thereto in its entirety to read as follows:
(e) Cross-Default. (i) Any Loan Party or any Restricted Subsidiary thereof (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of the Bridge Note, the Second Lien Note or the Second Lien Refinancing Debt or any other Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $15,000,000 (including the Senior Notes), or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness (other than secured Indebtedness that becomes due as a result of the voluntary sale or transfer, casualty or condemnation of the assets securing such Indebtedness) or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event under this clause (B) is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which a Loan Party or any Subsidiary thereof is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which a Loan Party or any Subsidiary thereof is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by such Loan Party or such Subsidiary as a result thereof is greater than $15,000,000; or
(n) Electronic Signatures. Section 10.17 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
10.17 Electronic Signatures. This Agreement, the Loan Documents and any other document, amendment, approval, consent, information, notice, certificate, request, statement, disclosure or authorization related to this Agreement (each a “Communication”), including Communications required to be in writing, may be in the form of an Electronic Record and may be executed using Electronic Signatures. Each Loan Party agrees that any Electronic Signature on or associated with any Communication shall be valid and binding on such Loan Party to the same extent as a manual signature, and that any Communication entered into by Electronic Signature, will constitute the legal, valid and binding obligation of such Loan Party enforceable against such in accordance with the terms thereof to the same extent as if manually executed. Any Communication may be executed in as many counterparts as necessary or convenient, including both paper and electronic counterparts, but all such counterparts are one and the same Communication. For the avoidance of doubt, the authorization under this paragraph may include use or acceptance by Administrative Agent and each of the Lenders of a manually signed paper Communication which has been converted into electronic form (such as scanned into PDF format), or an electronically signed Communication converted into another format, for transmission, delivery and/or retention. Administrative Agent and each of the Lenders may, at its option, create one or more copies of any Communication in the form of an imaged Electronic Record (“Electronic Copy”), which shall be deemed created in the ordinary course of such Person’s business, and destroy the original paper document. All Communications in the form of an Electronic Record, including an Electronic Copy, shall be considered an original for all purposes, and shall have the same legal effect, validity and enforceability as a paper record. Notwithstanding anything contained herein to the contrary, Administrative Agent is under no obligation to accept an Electronic Signature in any form or in any format unless expressly agreed to by Administrative Agent pursuant to procedures approved by it; provided, further, without limiting the foregoing, (a) to the extent Administrative Agent has agreed to accept such Electronic Signature, Administrative Agent and each of the Lenders shall be entitled to rely on any such Electronic Signature purportedly given by or on behalf of any Loan Party without further verification and (b) upon the request of Administrative Agent or any Lender, any Electronic Signature shall be promptly followed by such manually executed counterpart. For purposes hereof, “Electronic Record” and “Electronic Signature” shall have the meanings assigned to them, respectively, by 15 USC §7006, as it may be amended from time to time.
3. Conditions to Effectiveness. This Amendment shall become effective as of the date first written above only upon satisfaction in full (or written waiver, including in the form of an email, by the Administrative Agent) of the following conditions precedent to the satisfaction of Administrative Agent and the Lenders (the “Amendment Effective Date”):
(a) Delivery of Documents. Administrative Agent shall have received on or before the Amendment Effective Date the following, each dated the Amendment Effective Date, unless indicated otherwise:
(i) this Amendment, duly executed by the Borrower, the Guarantors, Administrative Agent and the Required Lenders;
(ii) the Second Lien Intercreditor Agreement, duly executed by Ascribe and Administrative Agent and acknowledged by the Borrower and the Guarantors;
(iii) a copy of the fully executed Second Lien Note, Second Lien Security Agreement and all material agreements, supplements and other documents executed in connection therewith, in each case, in form and substance satisfactory to the Administrative Agent;
(iv) a Second Amended and Restated Deposit Account Control Agreement, duly executed by the Administrative Agent, Bank of America, N.A., as Bank, and the Loan Parties party thereto;
(v) a certificate, in form and substance reasonably satisfactory to Administrative Agent, from a Responsible Officer of the Borrower certifying as to the representations and warranties set forth in Sections 4(a), (b), (e) and (f);
(vi) a certificate of each Loan Party certifying (A) that there has been no change to the Loan Parties’ Organization Documents since the Closing Date (or otherwise attaching such changed Organization Documents or resolutions) and (B) resolutions authorizing execution and delivery of this Amendment and the other transactions contemplated hereunder; and
(vii) good standing certificates of each Loan Party, issued by the Secretary of State or other appropriate official of such Loan Party’s jurisdiction of organization;
(b) Initial Funding of Second Lien Loans. Administrative Agent shall have received satisfactory evidence of the Borrower’s receipt of the net proceeds of the initial Second Lien Loans in an amount not less than $7,359,375.
(c) Fees and Expenses. The Borrower shall have paid (i) a consent fee of $10,000 to each Lender executing this Amendment, which fee shall be non-refundable and fully earned and due and payable in cash on the date hereof, and (ii) all other fees and expenses to Administrative Agent incurred on or prior to the Amendment Effective Date that are required to be paid under the Loan Documents, including all invoiced fees and expenses of Administrative Agent’s legal counsel.
4. Representations and Warranties. The Borrower hereby represents and warrants to Administrative Agent and Lenders as follows:
(a) Representations and Warranties. After giving effect to this Amendment, the representations and warranties herein, in Article V of the Credit Agreement and in each other Loan Document are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to materiality in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of such date as though made on and as of such date (except to the extent that any such representation or warranty expressly relates solely to an earlier date, in which case, such representation or warranty shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to materiality in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of such earlier date).
(b) No Default. No Default or Event of Default has occurred and is continuing as of the Amendment Effective Date or would result from this Amendment becoming effective in accordance with its terms.
(c) Authorization, Etc. Each Loan Party is duly authorized to execute, deliver and perform this Amendment and each other Loan Document to which it is a party. The execution, delivery and performance of the Loan Documents, as amended hereby, have been duly authorized by all necessary action, and do not (i) contravene the terms of any Loan Party’s Organization Documents; (ii) conflict with or result in any breach or contravention of, under, or require any payment to be made under any Contractual Obligation to which a Loan Party is a party or affecting a Loan Party or the properties of a Loan Party or any of its Restricted Subsidiaries, except for conflicts, breaches or contraventions that could not reasonably be expected to result in a Material Adverse Effect, (iii) violate any Law or any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which a Loan Party or its property is subject; or (iv) result in the creation or imposition of any Lien on any property of the Borrower or any Restricted Subsidiary except Liens created under the Loan Documents.
(d) Enforceability of Loan Documents. This Amendment is, and each other Loan Document to which any Loan Party is a party, is, a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, except as enforceability may be limited by equitable principles or by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.
(e) Governmental Approvals. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Amendment or any other Loan Document.
(f) Indenture Compliance. None of the execution or performance of this Amendment, the execution or performance of the Second Lien Note and related documents nor borrowing of the Second Lien Loans violates any of the terms of the Senior Notes Indenture, including Sections 3.2 and 3.3 thereof, or any of the other Senior Notes Documents.
5. Continued Effectiveness of the Credit Agreement and Other Loan Documents. Each Loan Party hereby (a) acknowledges and consents to this Amendment, (b) confirms and agrees that the Credit Agreement and each other Loan Document to which it is a party, in each case, to the extent amended hereby, is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that on and after the Amendment Effective Date, all references in any such Loan Document to the “Credit Agreement”, the “Agreement”, “thereto”, “thereof’, “thereunder” or words of like import referring to the Credit Agreement shall mean the Credit Agreement as amended by this Amendment, and (c) confirms and agrees that,
to the extent that any such Loan Document purports to assign or pledge to Administrative Agent, for the benefit of it and the Lenders, or to grant to Administrative Agent, for the benefit of it and the Lenders, a security interest in or Lien on any Collateral as security for the Obligations of the Loan Parties from time to time existing in respect of the Credit Agreement and the other Loan Documents, such pledge, assignment and/or grant of the security interest or Lien is hereby ratified and confirmed in all respects. This Amendment does not and shall not affect any of the obligations of the Loan Parties, other than as expressly provided herein, including, without limitation, the Loan Parties’ obligations to repay the Loans in accordance with the terms of the Credit Agreement or the obligations of the Loan Parties under the other Loan Documents to which they are a party, all of which obligations, as amended hereby, shall remain in full force and effect and are hereby ratified and confirmed. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Administrative Agent or any Lender under the Credit Agreement or any other Loan Document nor constitute a waiver of any provision of the Credit Agreement or any other Loan Document.
6. No Novation. Nothing herein contained shall be construed as a substitution or novation of the Obligations outstanding under the Credit Agreement or instruments securing the same, which shall remain in full force and effect, except as modified hereby.
7. No Representations by Administrative Agent or Lenders. Each Loan Party hereby acknowledges that it has not relied on any representation, written or oral, express or implied, by Administrative Agent or any Lender, other than those expressly contained herein, in entering into this Amendment.
8. Further Assurances. The Loan Parties shall execute any and all further documents, agreements and instruments, and take all further actions, as may be required under any applicable Law or as Administrative Agent may reasonably request, in order to effect the purposes of this Amendment.
9. Miscellaneous.
(a) This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Amendment by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart of this Amendment.
(b) Section and paragraph headings herein are included for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.
(c) UNLESS EXPRESSLY PROVIDED IN ANY LOAN DOCUMENT, THIS AMENDMENT, THE OTHER LOAN DOCUMENTS AND ALL CLAIMS SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES THAT WOULD SELECT THE LAWS OF A DIFFERENT STATE EXCEPT FEDERAL LAWS RELATING TO NATIONAL BANKS.
(d) Each Loan Party hereby acknowledges and agrees that this Amendment constitutes a “Loan Document” under the Credit Agreement.
(e) Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.
(f) By the execution of this Amendment, the Lenders party hereto hereby authorize Administrative Agent to enter into the Second Lien Intercreditor Agreement.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered as of the date set forth on the first page hereof.
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BORROWER:
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BASIC ENERGY SERVICES, INC.
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By:
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/s/ Keith L. Schilling
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Name:
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Keith L. Schilling
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Title:
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President and Chief Executive Office
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Notice Information:
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801 Cherry Street, Suite 2100
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Fort Worth, TX 76102
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GUARANTORS
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BASIC ENERGY SERVICES GP, LLC
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BASIC ENERGY SERVICES LP, LLC
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BASIC ESA, INC.
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SCH Disposal, L.L.C.
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TAYLOR INDUSTRIES, LLC
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AGUA LIBRE HOLDCO LLC
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AGUA LIBRE ASSET CO LLC
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AGUA LIBRE MIDSTREAM LLC
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C&J WELL SERVICES, INC.
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INDIGO INJECTION #3, LLC
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KVS TRANSPORTATION, INC.
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By:
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/s/ Keith L. Schilling
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Name:
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Keith L. Schilling
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Title:
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President and Chief Executive Office
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BASIC ENERGY SERVICES, L.P.
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By:
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Basic Energy Services GP, LLC,
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Its General Partner
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By:
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/s/ Keith L. Schilling
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Name:
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Keith L. Schilling
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Title:
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President and Chief Executive Office
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ADMINISTRATIVE AGENT AND LENDERS:
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BANK OF AMERICA, N.A., as Administrative
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Agent, a Lender, an L/C Issuer and Swing Line
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Lender
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By:
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/s/ Tanner J. Pump
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Name:
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Tanner J. Pump
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Title:
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Senior Vice President
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UBS AG, STAMFORD BRANCH, as a Lender
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and a L/C Issuer
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By:
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/s/ Houssem Daly
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Name:
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Houssem Daly
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Title:
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Associate Director
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By:
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/s/ Anthony Joseph
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Name:
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Anthony Joseph
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Title:
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Associate Director
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TEXAS CAPITAL BANK, NATIONAL
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ASSOCIATION, as a Lender
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By:
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/s/ Dan Clubb
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Name:
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Dan Clubb
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Title:
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SVP
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SIEMENS FINANCIAL SERVICES, INC., as a
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Lender
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By:
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/s/ John Finore
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Name:
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John Finore
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Title:
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Vice President
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By:
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/s/ Richard Holston
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Name:
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Richard Holston
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Title:
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Vice President
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